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LTE: The Bridge to the Digital Divide

Steven Berry
10/29/2013
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The wireless industry is at a critical juncture. The Federal Communications Commission (FCC) 's policy decisions in the upcoming 600MHz spectrum auction can either take bold steps to bridge the digital divide once and for all. Or it can exacerbate it.

Regional and rural markets in the US not only represent the greatest need for high-speed LTE wireless build-outs, they also offer great opportunities for carriers that are ready to support them and numerous benefits for consumers they serve.

A recent survey of more than 400 consumers conducted by Current Analysis on the Competitive Carriers Association's behalf shows that rural wireless subscribers overwhelmingly choose expensive, Internet-capable devices. For example, more than 80 percent of the survey's participants plan to purchase a smartphone. Even among consumers making less than $25,000 per year, 70 percent of participants chose smartphones over feature phones.

Various sources place overall smartphone penetration in the US at approximately 60 to 65 percent. So how do we account for the higher rate of smartphone penetration in smaller markets?

We should look to global markets with very high smartphone penetration, such as South Korea, China, and the Nordic countries, to give us some insight into what is happening across rural America. In part, these markets have produced highly sophisticated mobile consumers due to a phenomenon they share with rural US markets -- leapfrogging. Due to a preference for mobility and a lack of access to reliable, affordable, high-speed wireline broadband services, uptake for mobile broadband is extremely high, producing power users.

Along those lines, our survey also found that nearly 40 percent of rural subscribers have either eliminated their wireline service, or plan to do so within the coming year. This trend will likely continue, aided by the fact that the capabilities of wireline services in many rural communities still lag far behind. Data from the White House's June 2013 Broadband Report backs this up:

    Of great concern is also the disparity between urban and rural access, as well as uneven distribution of high-speed access across certain underserved geographies. Today, while almost 100 percent of urban residents have access to download speeds of at least 6 Mbps, only about 82 percent of residents in rural communities can access those speeds. The disparity is even more pronounced at higher speeds: almost 88 percent of urban residents have access to speeds of 25 Mbps, but less than half that percentage, about 41 percent, have access to those speeds in rural communities.

Decisions made by policymakers on issues such as interoperability and the upcoming 600MHz spectrum auction will greatly affect competitive carriers' ability to compete and provide service in these areas. Many rural carriers are ready and willing to build-out these areas, but until these obstacles are addressed, it will be very difficult to do so. With useable spectrum and access to the latest devices, competitive wireless carriers can attempt to close the technology gap in rural communities, unlock major revenue streams for their businesses, and create jobs and opportunities in their communities.

By serving populations that the largest two carriers ignore, competitive carriers -- who serve more than 100 million subscribers in North America and represent more than $10 billion in handset buying power -- are pushing to restore competition and provide real choice. Competitive alternatives are good for consumers and good for the economy.

The Federal Communications Commission (FCC) must design the rules for the upcoming incentive auction that will allow all carriers, both large and small, to participate and have a meaningful opportunity to win needed spectrum. Consumers are choosing and relying on wireless services each and every day; it's time for policymakers to help ensure consumers will have a choice of carriers to meet their needs.

—Steven K. Berry, President & CEO, Competitive Carriers Association (CCA)

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Steve Berry
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Steve Berry,
User Rank: Blogger
10/30/2013 | 11:42:09 AM
Re: LTE in rural areas
That is an excellent question, thanks for bringing it up.  Many smaller rural and regional carriers know the importance of building out 4G LTE services in their areas, and they are doing many innovative things to bring these important services to their customers.  The key to survival for smaller competitive carriers lies in their ability to move to next generation technologies.  All carriers are building out 4G LTE now or are trying to do so, but they need help. 

For example – the recent announcement of an industry solution for interoperability.  Within hours of the announcement, several carriers began implementing plans to build out high speed broadband.  Smaller and regional companies like C Spire Wireless will now be able to provide coverage for over 2.5 million people in the state of Mississippi.  This is extremely significant and beneficial for consumers!

Competitive carriers need access to devices, fair and reasonable roaming arrangements, and they need more spectrum.  If policymakers do not ensure that smaller rural and regional carriers have access to these critical inputs, it will be a tough 'road to hoe'.  This is why the upcoming incentive auctions are so critically important and why CCA is involved every step of the way to ensure our members can survive and thrive in the industry.
DanJones
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DanJones,
User Rank: Blogger
10/29/2013 | 9:58:43 AM
Re: LTE in rural areas
How are things like faster backhaul going to be addressed in this situation?

 

Would we see the CCA carriers partnering with the bigger players to provide that?
Kevin Mitchell
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Kevin Mitchell,
User Rank: Light Sabre
10/29/2013 | 9:33:46 AM
LTE for fixed
LTE is also being used to address the fixed broadband needs of homes and businesses, where DSL or cable is inadequate or non-existent.

In part, because the mobile ecosystem is underdeveloped in some band classes and also because there is a real need for fast broadband in rural areas. These CCA mobile operators are in those communities with assets and LTE spectrum to serve that subscriber demand. This also allows them to participate in the nearly $80B fixed voice market via service bundles. More on that in these blog posts:

http://www.alianza.com/look-to-the-cloud-voice-solution-for-fixed-lte/

http://www.alianza.com/band-class-12-go-beyond-broadband/
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
10/29/2013 | 9:27:30 AM
LTE in rural areas
Thank you for the post, Steve! At first I was surprised to hear the high number of smartphone usage in rural areas, but it makes sense given your analogy to developing markets where consumers are wireless only.

Where are most rural wireless operators at in rolling out LTE? Have they begun, or are they stymied by a lack of roaming agreements and spectrum? I'd be curious to hear if there are any stand-out examples of operators bringing LTE to rural areas and having a lot of success.
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