Ofcom has announced plans to end its control of BT's retail prices on 1 August. Ofcom and its predecessor, Oftel, have controlled BT's charges since 1984, steadily reducing prices in real terms. Only since January has BT been able to increase prices at all, and then only in line with the Retail Price Index (RPI).

Over the past 10 years, this policy has reduced charges by about 60 percent.

Consequently, the UK now enjoys relatively inexpensive telecoms services. Ofcom has not made a final decision on whether to end price controls and has requested views in a consultation due to end on 30 May. However, I would not bet on any major change to the proposal.

What effect will the removal of price controls have? As the incumbent, BT still has a major share of the UK market, and under the new rules it will be able, to a certain extent, to dictate the general level of prices. Ofcom is not worried about that because many of the market segments are now fully competitive. It has obtained assurances from BT that disadvantaged consumers will not be adversely affected. In addition, Ofcom will retain its control over wholesale pricing.

I am not totally convinced that this will prevent an increase in telecoms charges. I get the impression that competing operators would like to raise their prices after having had to reduce them in line with BT over the years. Now times have become hard, and in this sort of environment, prices might not be forced down by competition.

So, will Ofcom's regulation of wholesale prices keep down charges to end-users? Ofcom has controlled the price of partial private circuits (PPCs) since 2004. PPCs are used to provide a connection from the end-user to a telecoms operator and are typically used for leased line internet connections.

Ofcom requires BT to reduce its prices each year by an amount that depends on the type of circuit; typically the reduction is the RPI minus four percent. This has certainly reduced the prices charged by ISPs for their leased lines but there are now competing products using Symmetric Digital Subscriber Line (SDSL) broadband for the copper part of the connection. These are considerably cheaper for what the user perceives as an identical service. Unfortunately, PPCs are available just about anywhere, but the SDSL services are not, so what we have is a postcode lottery.

The price controls on PPCs and increased competition between BT and other operators may solve this problem eventually – but is that how the system should work? As a rural resident, I have always felt it unfair that new services are always introduced in cities first and may never reach the countryside at all.

Market forces do very little to solve that problem. Perhaps regulation can do something about it?