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Three considers backing out of George Osborne's £150m rural mobile coverage plan

A George Osborne-led plan that aims to deliver full mobile phone coverage, including voice and 3G, to rural areas may be in peril after Three announced that it is considering backing out of the £150 million project, the Guardian has reported.

Three, which counts some eight million UK residents as its customers, said it has concerns over using the masts sponsored by Osborne’s mobile infrastructure project for its equipment because it fears it will not have enough of the mobile spectrum to bring good coverage to rural inhabitants, millions of whom have little or no service.

The network, which is owned by Hong Kong’s Hutchinson Whampoa, believes the structure of the forthcoming 4G auction will favour the other three major UK networks - O2, Vodafone, and Everything Everywhere. Three wants a greater share of the low-frequency spectrum, which the likes of O2 and Vodafone received in earlier government allocations. Low-frequency airwaves, which can send signals further and require fewer masts, would help Three offer better service in rural areas. Without it, the network’s service would work indoors but would be limited beyond that.

The government had hoped to assign contracts for the building of the masts this month, targeting an early 2013 start date to begin rolling out services. But Three’s announcement that it will not make a decision about being a part of the project until after the end of the controversial 4G auction next year could put a damper on the Chancellor’s ambitions.

Osborne, who unveiled the plan last autumn, initially promised that it would ramp up coverage for some six million people living in rural regions, 900,000 of whom do not have full coverage from all four of the country’s major networks. Since then, the project has been dramatically scaled back; the government has admitted that the project would only reach some 60,000 households.

"The focus of the project is on maximising the number of people benefiting from the investment, as far as reasonably possible. It is still our aim to cover the majority of the premises and key roads situated in complete not-spot areas,” a spokesperson for the Department of Culture, Media and Sport, which is responsible for the plan, said.

The project, already facing other obstacles, could be further impacted by Three’s recent revelation, though it’s largely a waiting game at this point. Bidding in the 4G auction will begin early next year, telecom regulator Ofcom recently said.