Spending public money to improve mobile connectivity to rural areas lets profitable mobile operators off the hook.  Here's why.

Chancellor George Osborne this week announced that the UK government intends to splash out £150 million on improving mobile phone coverage to rural areas. Not something you can argue with, you'd think, given the parlous state of UK communications. In a week in which the same government proposed - with a straight face - increasing the speed limit on the motorway by 10 miles an hour as a means of improving communications, boosting mobile connectivity is more than sensible. And when you consider the relative cost and impracticality of improving our creaking fixed-line telecommunications, 4G becomes a no brainer.

But argue against it I will, on the basis that the principle beneficiaries of this tax-payer largesse are likely to be the likes of Vodafone (you know, the organisation that recently avoided paying a £6 billion tax bill). Somehow the humble tax-paying public has ended up paying to improve infrastructure in order that telcos can turn a profit - regardless of whether or not an individual uses mobile connectivity.

First, the case for the defence. Osborne said the government monies will ensure that areas that don't receive a good mobile signal will see an improvement. And if you've ever been to place with trees and badgers, you'll know that is badly needed.

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"Working with Ofcom we will aim to extend mobile phone coverage to 99 per cent of the country. Currently in Wales, Scotland and Northern Ireland only 90 percent of the population has good mobile coverage. Across the UK as whole there is only 95 percent coverage," said Osborne.

He said that coverage would be improved through the installation of new masts across the UK, working in partnership with local authorities. Further, he suggested that by 2013 rural areas that currently receive no coverage for phone use will be able to make calls, and by 2014 4G connectivity will offer full data to those areas. Given that there is a more chance of finding unicorns in the Cairngorns than providing good fixed-line broadband, this outcome can only be *A GOOD THING*. But the means of funding it make no sense.

Extending mobile coverage involves installing masts or base stations, which provide the mobile signal. Each station is then connected to the network to enable traffic to be back-hauled and forwarded on around the network, or sent to the mast nearest the user. Such connections are usually fibre, and they can be shared along the same connection using time-division multiplexing (TDM), in which two or more signals take it in turns. Rather than each operator having a national network, in more rural areas this is often a connection owned by a carrier other than the one facilitating the call, with that named carrier sharing or leasing a third-party pipe back to wherever they have a POP (point of presence). The question is who will own and maintain the new masts, and how will usage of it be paid for by the operators.

There are two possibilities here: either the tax payer - via government or local authority or both - will own the non-profitable parts of the network, and in effect subsidise the telcos to carry calls and data to hard-to-reach places. Or the operators themselves will be gifted ready-made infrastructure as a bribe to provide a decent service. Forgive me if neither has me turning cartwheels. (I travel every day via a train network that has an eerily similar setup. It costs a fortune and is - in a word - rubbish.)

There is an alternative. Ofcom should make it clear that in order to be licensed as a mobile operator,  firms have to undertake to provide a national service to a minimum standard, and not cherry pick the easiest and most profitable bits. Set this up as a condition of entry to the market and it can be factored into the cost of all calls and contracts. So all mobile data users share the costs of having a decent mobile network, everywhere.  

Some areas will be profitable, others less so. Tough. That's the cost of being in the market for the mobile network operators. And if you're sitting in a hotspot disliking the idea of paying for rural areas to have good coverage, I can only assume you have never been anywhere without phone signal, never intend to go anywhere that fits that description, and have never placed a phonecall to the country. You have, and you will benefit.

Those companies that provide the best coverage have a competitive advantage, so let them pay for it. And if that means that the cost is passed on to the consumer, at least that is how competition is supposed to work, and the costs can be distibuted fairly. Otherwise we'd be better off with nationalised telecommunications infrastructure, which would be a terrible thing... wouldn't it?

See also: Ofcom delays 4G spectrum auction