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Cheaper broadband for rural customers – or is it?

Little snail on lan card with orange background

Ofcom has told BT to reduce the wholesale price it charges other broadband providers to use its network in less populated areas. But will it actually result in cheaper prices for rural customers?

Before any of us get too excited, it’s worth pointing out that by ‘cheaper’ Ofcom really means putting prices for rural customers in line with what others around the country are paying anyway.

So although Ofcom’s moves are obviously a good thing, it’s about time this unfair situation was tackled head on.

BT has to drop wholesale prices

Telecoms regulator Ofcom has told BT to cut the price it charges other broadband providers to use its network in less populated, rural areas. These locations are known as ‘Market 1’ areas where BT is the only provider of wholesale broadband services.

Ofcom hopes that this will increase competition between broadband providers in these areas and force the actual price consumers pay to go down.

Or, if the internet services providers (ISPs) don’t pass on these saving, it hopes that this will at least enable them to allocate more bandwidth to each customer and improve speeds. Either way, it’s good news for rural customers.

Rural broadband must improve

People who live out in the sticks have generally had to put up with slower services at higher prices from many ISPs. And it just doesn’t feel right that where you live dictates the broadband service you get. An internet connection isn’t a luxury or optional extra these days – for most it’s an essential service.

I definitely appreciate what Ofcom’s trying to do here, but – a word of caution – it relies on ISPs actually passing on any savings/benefits to their customers. I sincerely hope this does happen, but I won’t be holding my breath.

Do you live in a low-populated area and suffer from slow and expensive broadband? Is enough being done to make sure rural customers don’t have to put up with a raw broadband deal?

whitmarsh says:
25 July 2011

I don’t see how it can be made cheaper for rural users – my ISP doesn’t base its price on where one lives as far as I know. Perhaps some do. My problem is that I live about 3 miles from a rural exchange and that limits the speed to about 2Mbps; that’s what I would like improved.

I would fully endorse the comment made by ‘whitmarsh’. We also live just over 3 miles from the exchange and are always informed we are extremely lucky to be getting broadband at all. Our service is capped at half a meg to ensure we manage to retain a connection.

It simply gives a very basic online facility. However, really in this day and age, we should be able to expect a far better service, especially as we are paying a premium rate for it.

Upgrading the exchanges serving rural areas should be an essential priority so everyone can access a reasonable connection speed.

I agree entirely with Danny and Whitmarsh. I live some 3 miles from the exchange and receive a low and very unreliable sync rate. Contrary to seeking to reduce the cost of my broadband connection, I would be absolutely delighted to be able to pay more if, somehow BT could be persuaded to improve the quality of their network in order to permit better broadband.

The main problem for rural subscribers is not usually one of cost, but is the technical one which requires significant capital investment by BT to improve the rural network. The Ofcom directive to BT actually represents a financial disincentive to invest in the rural network – i.e. it works in the wrong direction and could actually be bad news for rural subscribers.

Paul Murray says:
26 July 2011

Ok… so I have sky everything… except broadband…. free this and free that if I take their 20MB broadband (£5/mth i think it was). But no, where I live I can have 2MB only, and that’ll be £17.50 / month!!!

TonyMK says:
26 July 2011

I’m just moving from the centre of Milton Keynes to a village about 5 miles away, rural but hardly out in the sticks. My ISP’s sales chap had all sorts of deal he could offer until he realised that the local exchange wasn’t unbundled at which point the costs rose from £9 /month to £21/month. When I asked if the exchanged was scheduled to be unbundled he said that it probably wouldn’t make any difference as there were too few subscribers on the exchange to warrant the expense. To crown it all there’s no 3G in the village either!

I am only 300 yards form our Exchange but it is not unbundled. We are stuck with a BT line although, at a price, you can get other ISP’s. I started with BT and moved to O2 (we have their mobiles) and have been with them for over 2 years now. Exchange can manage 8Mb but we get (on a good day) around 6Mb.
Their are no plans for LLU and I cannot any prospect of it improving in the long term.

C J Waller says:
26 July 2011

We use Beyondsl this works via a station in the sky above the equator. We have to send a request to the station in the sky and it then sends the answering signal back to our dish, Up and down work at different speeds and this is not ideal. It is very expensive to use. We are required by law to send our vat returns and other forms to governments. We are forced to use this expensive service as nothing else works. Soon we will all have to send our tax returns via internet. How?

Most unfair.

What Ofcom should do is insist on a pricing mechanism that would incentivise the ISP’s/ wholesale provides to provide a faster service. Several houses in my village have, like one of those commenting above, their line speed capped at 0.5 meg. They still have to pay the “up to 8M” price. If Ofcom insisted on pro-rata pricing, so that those capped to some fraction paid only that fraction of the price, then there would be a financial incentive to improve line speeds. It would also lessen the sence of injustice felt by those who get poor service.

Its worth remembering that the “BT” which is being forced to cut its prices isnt the same BT that is an ISP and sells broadband and phone connections.
The 2 are separate entities. It is a pity they dont use different names.

Plusnet which is part of BT do charge extra for Market 1 exchanges !

Chris says:
26 July 2011

Agree with previous comments. We are about three miles from the exchange and have never even got up to half a Mb. yet we pay a high price for it. Needless to say, none of those responsible is prepared to give any idea when things will improve.

Barry Downes says:
26 July 2011

I live about 200 yards from my exchange and although it is a very small village exchange I can get up to 7Mbps during the day but it can be as low as 1Mbps in the evenings and for this “privilege” Sky charge me £17 per month more than their usual rate. This apparently is because the exchange is “unbundled”.

Like others on this subject, I live rurally about 4 miles from an Exchange and have been plagued by download speeds around 550 Kbps for years. Recently I asked my ISP to confirm what my exchange was actually capable of, and they replied 2 Mbps, so they asked me to carry out some tests and send the data back to them. This basically consisted of:
1) removing all telephone connections to the BT master socket
2) providing that the master socket is the latest type with ADSL on the front, and with a broadband socket as well as a telephone socket, remove the front panel panel and plug the Router into the internal test socket via a normal broadband filter
3) leave the Router powered up for at least 72 hours: this is to allow the process within the Exchange to adjust itself to the Router
4) carry out speed tests to two designated websites, at different times, over the three days
5) carry out Ping and Trace route tests and record results.
Regardless of all the recording, the very first speed test I carried out showed an increase from 550 Kbps to 1.9 Mbps. Since then I occasionally check the speed and it’s fairly consistent around 1850 Kbps. So the problem wasn’t my house wiring/connections, it was the mismatch of the Exchange to my Router. I hope this helps others.

TCG says:
27 July 2011

At IP24 1TR my download is 7.6Mps but my upload is only 0.6, with TalkTalk. This does not bother me, particularly, but it would be convenient to have at least 50% equivalence.

The difference in download and upload speeds is a function of the way in which ADSL works.
Typically download speed will be about 10 times faster than upload, so what you are getting is about right.

The problem of good speeds during the day and poor speeds at weekends and evenings is down to congestion and usually down to your ISP not spending enough on “bandwidth” to accommodate all the users , a bit like number of lanes open on a motorway and traffic levels.

Changing ISP for a better usually more expensive one can make a huge difference.

nicknick says:
28 July 2011

Mike refers to “the master socket is the latest type with ADSL on the front” and this is one of the ways you can improve your Broadband.

A search for NTE2000 on ebay will come up with a number of the BT spec replacement faceplates for your BT Master socket and these are straightforward to fit (take a picture of the insides of the current BT socket before removing any wires just in case you need to go back).

If you have to have filters on extension sockets around the house then this can definitely improve you Broadband speed. I am using one and I am 6km away from the Exchange (as the copper goes – 3km as the crow flies) and get around 1.7M

Down sides are a) it must be fitted to the BT master socket, b) telephone extension sockets need to be wired into this new faceplate (not if your extensions are via one of the multiway sockets you plug into the front, as these work as normal) – but it does mean no more need for those filters, and c) your router can only be connected to this new faceplate (via the ADSL socket) – but you can get extension cords for these, (or it won’t normally be a problem if you are using a wireless router)

Graham Long says:
18 August 2011

On July 20 2011, with much media exposure, the Ofcom press release “Better Value Rural Broadband” confirmed that Ofcom had required BT Wholesale to reduce their broadband network charges to ISP’s by “12% below inflation per year”. The press release goes on to say that “the charge controls will come into effect in mid August 2011 and apply until March 31st 2014. See http://media.ofcom.org.uk/2011/07/20/better-value-rural-broadband/

Ofcom and the press heralded this as a masterstroke that will reduce rural broadband costs where BT Wholesale often have a monopoly in providing wholesale broadband network services to ISP’s who sell bandwidth on to end user customers. These are Market 1 exchanges (an Ofcom definition) where BT is the only broadband network suppliers and are almost exclusively in rural areas. (Market 2 exchanges have 2 or 3 broadband network suppliers and Market 3 exchanges have more then three broadband network suppliers – Market 3 exchanges are almost exclusively in dense urban areas)

This is not what has happened. Instead ISP’s appear to be using this reduction in the charges they pay to BT Wholesale as a way of increasing their profit margin in rural areas, whilst in more urban areas (where there is much more competition between ISP’s) they are passing the reduction on to increase competitive advantage.
This means that the whole initiative has backfired and will actually reduced broadband service levels in rural areas compared to more urban areas.

Take for example the ISP Plusnet which like BT Wholesale is also owned by BT. Although Plusnet have benefited from reduced charges from BT Wholesale since the middle of August, they have not reduced charges for customers on Market 1 exchanges (where BT Wholesale is the only broadband network supplier), but have reduced prices for customers on Market 2 exchanges (where there is competition between 2 or 3 broadband network suppliers). Since Plusnet’s owners are BT, BT will thus recover some of the reduced BT Wholesale fees from all ISP’s by keeping the charges to Plusnet’s Market 1 customers artificially high.

Rather than reducing broadband costs in rural areas on small Market 1 exchanges, Ofcom have simply handed a mechanism to ISP’s for generating increased profit. The ISP Association (the ISP trade association) refuses to say which ISP’s will or may pass the reduction in BT Wholesale charges on to end user customers. If none of them do (and there is no incentive for them to do so, for Market 1 exchanges), the difference between the cost of broadband in rural versus urban areas only looks set to increase!

Dave Smith says:
5 December 2013

Excellent comment, Graham.

In rural areas we complain about being ripped off by higher fuel prices of a few pence per litre, but most of us don’t realise that if we are in Ofcom “Market 1” areas we are being ripped off by paying double, treble, or anything up to THIRTEEN times more for Broadband compared to those in urban areas, and as we know well, we receive a much slower download speed with no possibility of upgrading to a fibre connection.

My son, recently moved to Bristol, reports that he has signed up to Primus ISP for £2 per month (plus line rental) Unlimited Broadband whereas I am currently paying BT £26.15 for a similar Broadband speed and capacity.

By haranguing BT I may be able to get this down to around £16 per month (this is what they are offering new customers) so that’s only EIGHT times more than my son is paying. That is an initial offer rate, after 12 months his payment will go up to a massive £4 per month, still four times lower price than I can be offered.

In “Market 3” areas I can find any number of Broadband and phone deals at these very low prices, because a competitive market is operating, but the definition of Market 1 is that BT is the only wholesale provider, and with no other provider putting their equipment in exchanges, BT have a complete monopoly over this geographical segment, and can charge whatever they can get away with. It would be more honest if Ofcom renamed “Market 1” as “Monopoly 1”.

Brian says:
26 August 2011

What about a campaign to get ISPs to charge based on the speed they deliver rather than the current ‘upto’ speed?

I live about 7km from my exchange and can only get around 900 Kbps. BT have installed Fibre to The Cabinet in my nearest village, but this is still over 2 km away. My ISP (Plusnet) has introduced a Fibre service, but this would still only give me 7 Mbps on a upto 100 Mbps service. Why should I pay an extra £10 per month for 7 Mbps when I am already paying for an upto 20 Mbps service? We should be paying for a service not for a technology. We do not have to pay more to the Electricity Board if we live far away from the Power Station and they have to provide sub stations to deliver a service so why should ISPs be any different?

The amount ISPs charge is largely dictated by how much BTw charge ISPs, especially for rural customers who have little if any choice.
Its one of the features of where you live like many other services and facilities.

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7 February 2013

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