Carolina West Wireless: We might pull out of some rural areas

Carolina West Wireless said a decline in its government subsidies 'could result in the decommissioning of cell sites in rural areas, leaving residents without connectivity.'

Mike Dano, Editorial Director, 5G & Mobile Strategies

June 5, 2024

5 Min Read
Aerial views above fields in rural Gallatin County, near Bozeman, Montana
(Source: Timothy Swope/Alamy Stock Photo)

Carolina West Wireless warned policymakers at the FCC that the company is considering decommissioning some of its cell towers in rural areas if the agency doesn't cough up more money to help finance the company's operations.

"Multiple factors – including most importantly – the lack of a stand-alone business model to profitably operate a number of rural sites constructed with federal USF [Universal Service Fund], combined with the loss of legacy high-cost support as contemplated under the 5G Fund rules, could result in the decommissioning of cell sites in rural areas, leaving residents without connectivity and raising substantial public safety issues," Carolina West Wireless wrote in a new filing to the FCC.

As noted by Policyband, the company's filing argues that Carolina West Wireless used government subsidies including from the USF to build a number of cell towers in rural areas. However, the subsidies have been shrinking, and Carolina West Wireless said it won't be able to operate the money-losing sites indefinitely without more government funding.

As a result, Carolina West argued that the FCC should increase the amount of money it funnels to the company, which provides services across 11 counties in northwestern North Carolina.

"Since at least 2011, the federal universal service mechanism has failed to provide support sufficient to maintain high quality services in some areas where Carolina West serves. Carolina West cannot go on supporting money-losing plant in areas that require supplemental operating expense support, and should not be made to do so," the company wrote. "The federal universal service mechanism was designed to provide support to areas such as those highlighted in this waiver request. The citizens living in these affected areas certainly deserve to have access to high quality service, and it is therefore incumbent upon the commission to ensure that services are not only constructed, but also maintained."

Carolina West Wireless' 63-page request redacts the company's financial details, the number of cell towers it might decommission, and the amount of money the company is requesting from the FCC. However, Carolina West Wireless officials told Light Reading in 2019 that the company counted around 90,000 customers using roughly 300 cell towers.

The regulatory context

The FCC instituted the USF program in 1997 to help fund the construction of broadband networks in rural and unserved areas of the country and to help low-income Americans afford telecom services. But the primary sources of funding for the USF are network operators themselves, and current projections show that the funding mechanism for the USF won't last much longer. As a result, Washington, DC, insiders have been debating how the USF might be retooled.

The new filing from Carolina West Wireless is likely intended in part to help spur policymakers at the FCC and in Congress to move forward on a USF overhaul.

Moreover, the company's filing also highlights ongoing discussions about the 5G Fund. The FCC is currently considering how best to allocate up to $9 billion in subsidies in the fund specifically for 5G services in rural areas.

Carolina West Wireless offers 5G in the five largest cities in its North Carolina coverage area. None of those 5G-capable towers is among the ones the company is considering shuttering.

However, several companies in the wireless industry have urged the FCC to hold off on distributing cash in the 5G Fund until after US states finish allocating $42.5 billion in government subsidies through the Broadband Equity Access and Deployment (BEAD) program. They argue that BEAD funding might help build fiber networks deeper into rural locations that could host cell sites. BEAD funding isn't expected to begin filtering through state administrators until next year.

Finally, there's another regulatory factor affecting some wireless services in rural areas. The FCC's "rip and replace" program stems from Congress' passage of the Secure and Trusted Communications Networks Act of 2019, which built on years of fear among US policymakers that telecom equipment from Chinese companies like Huawei could be used to spy on US communications. The act provides almost $2 billion so rural wireless companies can replace suspect equipment in their networks with equipment from "trusted" suppliers. However, Carolina West Wireless is not among the companies receiving funds from that program.

The business context

Carolina West Wireless isn't the only rural wireless operator facing challenges.

As T-Mobile, AT&T and Verizon all expand their networks deeper into rural areas, they're putting additional pressure on the small wireless network operators that were previously the only option in such locations.

"We're going to keep going until it doesn't make sense anymore," Mike Laskowsky, the network manager of United Wireless, told Light Reading last year. The company operates a mobile and fixed wireless network across 120 cell towers in parts of Southwest Kansas. "We're going to stay in mobile as long as we can," he said.

But several smaller wireless network operators have already given up. West Central Wireless in Texas, Missouri's Chariton Valley Communications Corporation (CVCC), Montana's Triangle Mobile and Bluegrass Cellular in Kentucky are among the US companies that have exited the industry by selling their operations to a bigger network operator.

The latest is UScellular – the nation's biggest regional wireless network operator with around 4.5 million customers across almost two dozen states – which is selling its operations to T-Mobile.

The satellite effect

A final factor that may affect smaller wireless network operators in rural parts of the US: satellites. T-Mobile, AT&T and Verizon are all racing to connect their customers' phones to satellites operated by SpaceX and AST SpaceMobile. Such connections could reduce the companies' need to roam onto wireless networks operated by smaller providers.

Indeed, Carolina West Wireless cited a reduction in roaming revenues – from an unnamed operator – as one of the major factors affecting its finances.

"This leg of the stool which once was a major source of Carolina West's revenues continues to erode, with no end in sight," the company wrote.

About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

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