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Cost of UK Broadband Set to Rise

There were many informed market observers that warned about the rise of sites such as YouTube and services such as the BBC’s iPlayer but they were initially ignored. However, the massive increase in broadband use across the UK, caused by the type of internet services mentioned above, has seen significant pressure on the wholesale cost of broadband as supplied by British Telecom. BT has appealed direct to the industry regulator OFCOM and it looks as if their demand to raise prices will bear fruit.

Under a 2005 agreement with British Telecom it was agreed that they would ‘unbundle’ the ‘final mile’ of cable connecting homes to BT exchanges and allow rival broadband providers to add their own equipment to BT exchanges. The agreement allowed BT to charge each broadband provider in the UK just under £82 per ‘unbundled’ line but it seems that this price is set to rise.

BT argues that maintenance costs for the copper wire connections have risen substantially and they need to introduce a price rise. It looks as though they may get their wish after OFCOM finish their review later this year. This will mean a rise in broadband costs across the board, much of which will be passed on to the consumer.

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