I have BT Broadband who told me I could get only 1.5mbs max service on their "up to 8mbs" package. They did lots of tests and 2mbs kept cutting out, so after testing they decided 1.5mbs was the most stable delivery I could expect due to distance from Wadsley bridge Exchange. Fair enough.....but annoying...

3 doors up from me the house has had a 2nd new line installed, and they are getting 5 mbs broadband from Tiscali....

I just am thinking if I get a brand new 2nd line installed, would it all be installed with the latest cable and therefore be better for broadband? If they can get 5 mbs 15 meters up the road, I dont see why I am stuck with 1.5mbs.......it surely will go the same phone exchange and use the same route, aside from the new line section to their house from the pole?

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Same exchange, yes - same route, hella unlikely!

Your best bet is to have a discussion with BT Retail (150) to work out whether you believe a new line will be able to keep and maintain a higher signal quality, it is certainly possible, but don't start splashing out money if you aren't sure.