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.

Retail Pricing
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.

Wholesale Pricing
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.

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One Response

  1. WebDude on 26 Jan 2011

    You ought to ask yourself where a portion of the cars in that rush hour traffic come from – as they are likely not to be pnly from that city nor just the outskirts, but in many cases, from significant distances away.

    Some of the people living in rural areas have had to seek work in cities but cannot (initially at least) afford to move.

    How much better it could be if teleworking was easier and those who currently commute (spending significant amounts on fuel and time in travel/jams) would not contribute to the pollution or wasteful use of fossil fuel (OK, some other person would burn that fuel, no doubt).

    In the Digital Economy Bill (have not checked the Act) the suggestion was for higher use of data centres, but currently the infrastructure in the South East in general and London in particular suffers from stress and strain with no spare electrical power for new developments in London until after the Olympics are held.

    Areas outside London could do with investment and siting data centres near regional power stations, provided high speed fibre links were made, could decrease the ‘hot spot’ concentration on London, make datacentres more local to many more IT firms, provide for decentralised data storage (allowing backup storage of governmental data and ensure a fire or other calamity would not have such significant detrimental effect that could hamper government departments or the country as a whole).

    Wherever higher speeds are available, whether city or not, BT seems to concentrate their efforts (eg Middlewich, Cheshire, or Bagshot, Surrey, each with under 10,000 lines), while some market towns eg Wrexham, 30,000 lines in total, population approx 100,000 inc villages, are left out of FTTC plans, and surely not for lack of interest or need, with businesses, a University, major hospital etc, there is even a wish to gain city status… Nevertheless, it is still off the map for BT fibre roll-out.

    (2 exchanges, both market 3, fortunately, but Sky only arrived last Summer, Be/O2 not available.)

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