Choice of internet provider, price and download speeds vary hugely for users living just yards apart

Britain's broadband users are still suffering from a postcode lottery that sees some households paying twice as much for a slower service than others living less than 100 yards away.

According to a study of more than 1.7m UK postcodes by , millions of homeowners could be paying as much as £60-£70 more a year for their service than their near neighbours.

The comparison website found that in Calverton, Nottinghamshire, users are paying £5-plus a month more than their neighbours who are just 65 yards away – and they can only download from the internet at a third of the speed.

It says the postcode lottery means 13% of internet users are being penalised as they don't have the choice of cheaper deals simply due to their address. They are also suffering from limited broadband speeds and download limits.

Geographical location plays a big part in the number of suppliers on offer. In some areas customers can choose from around 10 providers; others have just five options. It means that while some are paying as little as £2 a month for their broadband (on top of landline fees), others are being forced to spend £8 or more.

The service and price available is largely dependent on whether the local telephone exchange has been – to use the jargon – "unbundled".

The big broadband suppliers, such as Sky or TalkTalk, have, in recent years, been busy unbundling, putting their own equipment into local telephone exchanges that used to be the sole preserve of BT. Users linked to unbundled exchanges get cheaper deals and faster download speeds, and fewer caps on data usage.

As the big suppliers target the most affluent and residential areas, where they think they will get the most customers, a two-tier broadband service has developed with those whose exchanges have not been touched.

Those living in Scarrow Hill near Brampton, Cumbria, for example, find themselves forced to pay an extra £5 a month as well as receiving inferior download speeds and having too fewer providers to choose from when compared to people who live just down the road.

Herefordshire was revealed as the county with the worst overall service, where users have the narrowest choice of providers – an average of eight – and the slowest download speeds – just 12.3Mbps.

Users in the county also pay the second highest minimum costs in the country of £5.47 a month, second only to Rutland whose residents have to pay on average a minimum of £5.99.

Greater Manchester topped the study as having the best results in those categories: the lowest broadband costs were just £2.99, average download speeds were 28Mbps, and there is typically a choice of 12 providers.

The survey also revealed a north-south divide in the number of available providers.

Those in the south have an average of 10 to choose from, while those in the north have a pool of 11. Southern residents can take some solace in the fact they just nudge the north when it comes to average download speeds: 22Mbps compared to 21Mbps.

Dominic Baliszewski, a telecoms expert at Broadbandchoices, says: "It is amazing just how much the nation's broadband services vary from county to county, and especially street to street.

"Broadband has become a utility in the UK, not a luxury, and it is unacceptable that people are being penalised simply due to where they live."

He adds: "Providers must improve their coverage, and it will be interesting to see what measures are taken in the coming months."

To get a further idea of the price differences Guardian Money did its own quick comparison. We looked at Great Chishill, a village in south Cambridgeshire, and at the city of Cambridge itself.

The current cheapest broadband in Great Chishill is Plusnet's half-price deal at £6.49 for 12 months. This has a 10GB monthly download cap.

In central Cambridge, meanwhile, Tesco is currently offering an uncapped service for just £2 a month.

Miles Brignall © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds



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