The Chief Technology Officer (CTO) for business ISP Timico UK, Trefor Davies, has cautioned those whom currently live in remote or rural areas (11.7% of premises, Market 1) not to expect any significant reductions after Ofcom cut the price that BT can charge for broadband services.

On Thursday the communications regulator, Ofcom UK, proposed to reduce, by between 10.75% and 14.75% below inflation, the price that BT Wholesale charges ISPs for broadband services in Market 1 regions (here). These are typically rural telephone exchanges where BT is the only supplier of wholesale broadband services.

Still, these days, unless you're a very light user, bandwidth is where most of the real world broadband costs come from and those remain fairly high (especially on BT's older 20CN broadband connectivity products and platforms). Ofcom is not targeting bandwidth.


Davies anticipates that competition may ultimately drive down end-user prices in related areas, albeit only by a little. However he warned that there was also a "fair chance that ISPs will just pocket the additional margin ... and [a] maintain homogenous pricing policy across the whole country".

It's also possible that BT may simply adjust some of its other prices upwards to compensate, thus cancelling out any potential benefit. After all, forcing BT's rural prices lower doesn't solve the underlying problem that it still costs more to deliver services into remote areas.

In reality the biggest improvement, at least economically speaking, could come from TalkTalk's medium-term plan to skirt the edges of Market 1 by extending its unbundled network coverage from 81% (2,003 LLU exchanges) to 93% (2,703 LLU exchanges) of the UK population. If they can make that work then other ISPs could follow.