Ofcom has reduced the prices that BT Wholesale can charge internet service providers (ISPs) for the use of its broadband network in rural areas by 12 percent below inflation per year.

This means that around three million homes and businesses in rural areas of the UK could have access to cheaper broadband, from competitive retail ISPs, by the end of the year.

The telecoms regulator said that it expects the lower price will encourage ISPs to roll out their own networks in rural areas to compete with BT Wholesale, and also prompt BT Wholesale to upgrade services “where it is efficient to do so”.

Ofcom also hopes that the broadband services available in rural areas will be faster because ISPs will be able to buy more capacity for their customers without increasing their costs.

Furthermore, the regulator has exempted ADSL 2+ technology from the price control, to encourage BT to invest in the new technology. ADSL 2+ can support faster broadband speeds than ADSL, with a maximum speed of 24Mbps over the copper network, compared to 8Mbps on ADSL.

The new charge controls will come into effect by mid-August 2011.

Ofcom recently said that it was exploring the possibility of delivering rural broadband on FM radiowaves, while a consortium involving companies such as Microsoft and the BBC have started trials for using TV white space for the delivery of Wi-Fi services in Cambridge.