We appreciate it’s frustrating when you can’t get a decent broadband service, and often rural consumers ask us why they should pay the same fee for an ‘up to 8 meg’ service when they are often getting a very small fraction of that speed. They sometimes feel they are subsidising the broadband of city dwellers.
There are various ways of answering this question. Firstly, the reason the pricing charged by service providers is the same, is based on the wholesale pricing which does not discriminate based on what speed of service you can get. In fact, those in cities or larger towns are more likely to be on ‘Market 3′ exchanges, which means that the wholesale pricing can be even lower. This means the company that supplies your broadband service (be it BT Retail, or any other retail ISP), won’t find their costs are any lower. The difference in utilisation from a customer on an 8Mbps connection and one on a 0.5Mbps one isn’t necessarily that different, certainly not enough to justify a different price plan for most service providers.
The second way of addressing the question is to look at the cost of delivering broadband in rural areas. As there are fewer users within each telephone exchange, the cost of the link back from the exchange to the central networks is far higher on a “per subscriber” basis. Also, it is likely that the distance between the telephone exchange and homes is longer on average, which slows down the speeds for ADSL based broadband services. I’m afraid that’s down to simple physics. You have to remember the telephone lines were not designed to deliver broadband when they were put into the ground all those decades ago. It may therefore cost more to deliver broadband in rural areas, and one could argue a higher price is warranted. Indeed, this is effectively the case already as you’re less likely to be on a ‘Market 3′ exchange (i.e. you don’t have lots of wholesale operators competing for business). Arguably laying fibre could possibly be cheaper ‘by the mile’ in absolute terms in rural areas as there may not be as many obstacles in the way, but these would still serve fewer people.
Broadband: A social good
On the flip side, there are many reasons why having basic broadband is a ‘social good’–In order to apply for the full range of jobs, searching on the internet is important; to get the best deals online be it for utilities, groceries or other Christmas shopping, you will find more choice online. This means there are good reasons for government to invest to delivery basic broadband for everyone, even if this means the taxpayer subsidising the service. Regardless of developments, it’s likely rural areas will always have slower services than cities (although both will improve and hopefully with fibre we’ll get to the point where the difference becomes less significant), in the same way as you’re less likely to be stuck in rush hour traffic, or breathe polluted air.