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NetAmerica, Ericsson Offer Rural 4G Alternative

NetAmerica Alliance LLC has chosen Ericsson AB (Nasdaq: ERIC) as the sole supplier for an ambitious plan to create a nationwide 4G partnership of spectrum-owning independent telcos.

The idea is to bring next-gen wireless technologies to rural areas faster and more cheaply by wielding the economic influence of a large carrier. (See NetAmerica Taps Ericsson for Rural Wireless Infrastructure.)

The NetAmerica Alliance would serve as a national brand and would negotiate national roaming agreements, tackling another thorny issue for rural wireless operators.

Three rural telcos of the 225 holding Advanced Wireless Services (AWS) or 700MHz wireless spectrum have already agreed to pilot trials with NetAmerica, and the company is in discussion with 60 more, says Roger Hutton, chairman and CEO of NetAmerica.

Berge Ayvazian, senior analyst with Heavy Reading, calls the NetAmerica approach "the most promising method of bringing 4G to rural communities," especially when compared to the Verizon Wireless spectrum-sharing proposal or other WiMax initiatives that target the same market. (See Verizon LTE Plan Not a Rural Slam-Dunk and LTE Watch: Verizon Pushes Ahead With Rural Plans.)

The difference is ownership. The rural telcos bring their spectrum to the party and will own gateway switches and the radio access network. They will sell the service, apps provided by NetAmerica and consumer devices, although those also will be negotiated by the larger consortium.

"All of these [other] schemes to bring 4G to rural America do not involve the operators in those communities actually owning and operating those networks," Ayvazian says. "Here these operators are actually the licensees and through this arrangement will share a packet core and a NOC and tie into a nationwide service and pool their resources to get buying power and build a common network."

But, Ayvazian cautions, NetAmerica must make the business case compelling to a larger group of rural carriers for the alliance to work, because without that critical mass, the proposition loses its appeal.

Rural wireless woes
NetAmerica's strategy is to help its operators be the first to bring 4G service to their local areas, so they can compete with larger carriers who won't arrive with Long Term Evolution (LTE) until later, Hutton says.

Rural carriers have complained that they can't compete with the larger operators when it comes to the cost of network equipment or access to the popular wireless devices, which larger operators often lock up in exclusive deals. And since consumers and businesses in smaller towns are seeking to cut the cord, just like their big city brethren, the rural telcos stand to lose out. (See Rural Wireless Carriers Ready for a Fight.)

On the other hand, rural consumers often complain they cannot get wireless coverage, especially for higher-speed wireless networks, since the larger carriers are focused on building out more densely populated areas.

NetAmerica's efforts could get a boost from the FCC, which in its discussion of future USF funding has put forward wireless as a lower-cost option for reaching more unserved and underserved areas. There has also been persistent talk of reverse auctions for federal funding of broadband projects, with the lowest-cost bidder winning the government's backing. That economic scheme has generally been thought to favor larger operators.

The turf NetAmerica could cover represents 282 million people, more than 122 million households and more than 3 million square miles. Of course, there are more than 1,000 Tier 2 and smaller telcos who don't own spectrum. Hutton says it's possible they may be able to participate in NetAmerica's scheme if they can lease spectrum from neighboring telcos.

"Some of these companies may not be all that interested in overbuilding someone else's footprint," he says.

It's worth noting that rural telcos do collaborate through organizations such as the Rural Cellular Association , the NTCA - The Rural Broadband Association and Organization for the Promotion and Advancement of Small Telecommunications Companies (Opastco) .

Previous commercial efforts to organize national efforts around rural deployment of IPTV and buying video content have seen mixed success. SES Americom shuttered its effort, and Sezmi Corp. has struggled as well. (See SES Shuttering IP-Prime and Sezmi Still Seeking Telco Partners.)

The specifics
Ericsson's part in all this is to serve as a technology partner as NetAmerica assembles LTE radio functionality, an Evolved Packet Core (EPC), a converged network architecture based on IP Multimedia Subsystem (IMS) and a family of 4G-centric home and small business gateways. NetAmerica can also provide NOC and 24x7 monitoring and network management.

NetAmerica's rate structure is based on two separate categories of service, Hutton says. The first one encompasses business services, a national brand, administration of roaming services, and advertising and marketing materials, while the second includes network services such as management of the core network, NOC operations, round-the-clock monitoring and maintenance of the backbone network. The telcos will pay NetAmerica on an escalating per-PoP basis for the first three years, Hutton says. After that, fees can shift to a flat 5 percent of revenues.

— Carol Wilson, Chief Editor, Events, Light Reading

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