Is your broadband bill set to fall?

BT engineerAndrew Milligan/PA Wire/Press Association Images

The telecoms regulator has announced plans to cap the wholesale prices that BT charges broadband providers. It could mean prices fall dramatically across the country.

So what does it mean for you?

The cuts

Ofcom has announced that it is going to cap the maximum amount that BT can charge other providers to offer broadband through the BT network. At the moment BT's wholesale division, Openreach, is allowed to charge providers up to £91.50 a year per household for the rent of its broadband and phone service. The plan is to reduce that to £87.41, and then to bring it down by 5.9% a year after that.

The biggest cuts, however, will be for those providers who only rent broadband services from BT. The cap for 'unbundled' broadband would be set at £11.92 per household per year. That's down from £14.70 at the moment - and would be followed by cuts of 15.9% a year.

Those who only rent phone services from BT would see the cap fall to £98.81 a year - and then be cut 7.3% a year after that.

This isn't the first time the cap has been lowered, but is far more of a cut than most commentators expected. It isn't a done deal just yet. It has to be approved by the European Commission. However, it has also voiced its support for cuts in the price of broadband, so approval shouldn't be too hard to come by.

What does it mean?

If it goes ahead, Ofcom has said it fully expects cuts to feed into lower broadband prices and cheaper phone bills. It may also reinvigorate competition in the market, so firms start to competitively cut costs again and we could snag a bargain.

Of course, there are no guarantees. There is nothing to stop the companies just using the cuts to build a bigger margin, and refuse to pass on any of the savings to customers. It wouldn't be the first time telephone or broadband companies have disappointed us.

But what do you think? Are you looking forward to lower bills, or do you think it's a bit soon to get the champagne on ice? Let us know in the comments.

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