MOBILE broadband is more cost effective in rural areas than fibre-based connections, suggests a study.

Urban areas pass the cost benefit test of rolling out fibre broadband infrastructure by a large margin, according to researchers at the London School of Economics.

But the opposite is true for rural areas, said Gabriel Ahlfeldt, associate professor of urban economics and land development at the London School of Economics and Political Science.

"In rural areas it would make more sense for governments to adopt less expensive fixed and mobile technologies that deliver decent and reliable speed," he warned.

"In urban areas a levy on landlords, who ultimately benefit from the improvements, could help saving taxpayers' money when rolling out fibre".

The recommendations are published in a discussion paper, which found that internet speeds are closely linked to property values.

Researchers analysed the value of broadband to English households, looking at the link between property prices and broadband availability.

Statistics compiled over a 15-year period, from 1995-2010, show that property prices across the UK increase on average by about 3% when internet speed doubles.

While the increase in value is even greater when starting from slow internet connections, an increase from 8 to 24 megabits per second raises the property value by no more than 1%.

Home owners in London are willing to pay up to 8% above the market price for properties in areas offering very fast internet speeds.

The capital's willingness to pay a premium for good internet coverage strengthens the case for rollout of high speed broadband in densely populated areas, says the study.

Londoners show a greater willingness than the rest of the country to pay for broadband, reflecting very high usage in the capital city for both work and personal reasons.