Ofcom has lifted the regulations for wholesale broadband access in areas of the UK where competition is deemed to be effective.
The watchdog said that 70 per cent of the country's wholesale broadband market would be "liberalised" in a bid to promote further innovation and investment.
The regulatory environment had resulted in significant competition, according to Ofcom, which had matured at different rates across the UK. Areas of high population density proved to be the most competitive.
Following a public consultation, Ofcom said it would deregulate parts of the country which are now served by four or more wholesale broadband providers and where no single company has significant market power.
However, areas of the country failing to meet these criteria will remain regulated in the hope of promoting retail competition.
Ofcom cited Hull as an area that would remain regulated, forcing BT and KCOM to provide a wholesale product to other providers "on a fair and reasonable basis".
"This is a major step forward in the UK broadband market reflecting the success we have had in promoting effective competition," said Ofcom chief executive Ed Richards.
"It shows that we are determined to deregulate wherever we can in a way that is consistent with the broader public interest."
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