Is Cheap Broadband About to Go the Way of Cheap Petrol, Cheap Flights, Cheap Rice...?

In the past, European competition laws restricted BT's stranglehold on telephone line access throughout the UK. There was a process known as LLU, or 'local-loop unbundling', which permitted companies to establish their own equipment in BT exchanges, paying BT part of the line rental they collected.

The outcome of this was cheaper broadband deals and lower costs all round.

Final link

Broadband providers pay to access the final link between the local exchange and your telephone, the property of BT.

These are the costs which Ofcom has mooted could increase and which will most likely be carried by the consumer.

Yes, the poor old consumer may well be hit just where it hurts most – yet again.

A few of the cheap broadband providers have been angered by this decision as they feel the second-rate service they get from BT's wholesale division, Openreach, doesn't justify the additional price increase.

TalkTalk, undoubtedly the UK's cheapest broadband provider, has probably been the most vocal in this regard and claims that allowing Openreach to increase costs would be damaging to competition and a backward step.

If a provider such as TalkTalk is concerned about it, does this really mean that the end of cheap broadband is on the cards?

Who will be bitten by higher broadband costs?

On the positive side, there are possibly a few ways of avoiding these price increases.

Firstly, if your broadband access is via cable, from Virgin Media broadband for instance, you will definitely not be affected as cable broadband services run independently of BT's telecoms network.

That's an unusual bit of good news for Virgin Media customers then!

Secondly, if you live where there are no LLU services – such as in rural areas where TalkTalk, Tiscali and others haven’t seen the financial rewards in modifying your exchange yet - prices will remain the same.

Location, therefore, is all important.

It seems that price caps will only be removed in areas where competition is sufficiently robust, for instance, where there are a number of broadband providers in the same area all vying for customers.

Thirdly, you are not likely to be affected by any price increases if you are in the middle of a 12 or 18 month contract and the initial terms and conditions should continue to apply.

But, a warning - be on the look out for any amendments which your broadband provider may email to you.