The Grand Canyon in Arizona is 18 miles across at its widest point. The only thing wider is the digital divide between the state’s rural and urban areas. Roughly 99% of urban Arizonans have access to fixed terrestrial broadband services that deliver at least 25 Megabits per second (Mbps) down and 3 Mbps up, according to the FCC’s 2021 Broadband Deployment Report . Only 66% of its rural residents do.

Arizona isn’t an anomaly, either. Nearly 99% of all urban Americans have access to broadband versus 82.7% of rural residents.

This problem also is a business opportunity, which is why so many vendors and service providers are positioning their technology of choice as the best way to bridge the digital divide. The main contenders are satellite, fiber, Wi-Fi and fixed wireless access that uses 5G cellular. Each has its strengths and weaknesses.

For example, 5G FWA requires building hundreds of thousands of base stations in remote areas that might be home to only a handful of homes and businesses — a buildout that likely would take years and tens of billions of dollars. That’s a difficult investment to recoup and make profitable.

That’s simply not a viable business model, as a US Cellular white paper acknowledged: “ Our economics require approximately 500 subscribers to build a new tower, and we can’t assume that everyone will adopt the service. The cost of building and maintaining a tower in rural America can be nearly twice as expensive as building a tower in an urban area.”

Satellite and fiber have emerged as the top two contenders. On the surface, satellite seems like the ideal way to close the rural-urban digital divide because it doesn’t require hundreds of thousands of base stations. But satellite has its share of technological and business limitations, too — to the point that in August, the FCC rejected SpaceX’s application for Rural Digital Opportunity Fund (RDOF) subsidies.

FCC Chairwoman Rosenworcel questioned whether it was affordable to ‘subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements, especially when consumer would have to purchase a $600 dish.

Rural America’s high-fiber diet

The FCC’s rejection of SpaceX/Starlink is not a setback in bridging the rural-urban digital divide. It’s actually a milestone toward parity because it ensures that an unproven technology doesn’t divert scarce public subsidies from a proven one.

As Gary Bolton, Fiber Broadband Association president and CEO rightly stated, this is a huge victory for 640,000 families who were relegated to Low Earth Orbit Satellite service. They could have been redlined from being eligible for fiber broadband. There is now clarity and a path forward for fiber to bridge the digital divide.

Fiber has already proven its worth in rural America, where it has 23% of the broadband market and the highest customer satisfaction of all internet-access technologies, according to a 2021 Pivot Group study . By comparison, fixed wireless and satellite have only 10% and 6% penetration, respectively. Cable has the largest share of the rural market, but many customers find it lacking: One third say they want faster speeds.

In fact, broadband speed is a decisive factor when people are deciding where to relocate. According to the 2022 RVA Market Research & Consulting study “A Detailed Review: The Status of U.S. Broadband and The Impact of Fiber Broadband,” 47% of the people who moved to a rural area in the past year chose one where fiber-to-the-home service is available. That preference highlights how rural communities can use fiber to attract retirees, young professionals, families, entrepreneurs and other demographics looking to escape to the beautiful countryside.

Fiber’s 23% share of the rural broadband market also busts the myth that as a wired technology, it takes too much time and money to deploy in sparsely populated areas, including those with challenging terrain such as mountains. Another wired technology — electricity — overcame those challenges 86 years ago with passage of the Rural Electrification Act , which funded utility cooperatives that built out transmission and distribution networks to serve farms, ranches, small towns and other rural places.

Today, more than 250 of those co-ops have built or are planning broadband networks, according to the National Rural Electric Cooperative Association . Many have been in service for the better part of a decade — or longer. For example, in 2006, Blue Ridge Mountain EMC launched FTTH in Georgia. In 2019, it deployed a 7,000-foot line up a mountain, using drones to overcome challenges such as deep gorge and 100-foot-tall pine trees. In 2016, Elevate Fiber, a division of Delta-Montrose Electric Association, launched gigabit FTTH in two Colorado counties by overlaying fiber on its 4,000 miles of distribution lines.

Co-ops are just one example of how fiber isn’t just poised to bridge the rural-urban digital divide. It already is. That’s great news for rural Americans, who don’t have to wait on unproven, pie-in-the-sky technologies such as satellite.

Paul Atkinson is Chief Executive Officer of Optical Networks for STL. This Expert Opinion is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

LAS VEGAS, October 4, 2022 – Several requirements for providers receiving funds from the Broadband Equity, Access, and Deployment program present significant difficulties for wireless internet service providers, said experts at the WISPAPALOOZA conference on Monday.

The BEAD program, administered by the National Telecommunications and Information Administration, will allot $42.5 billion dollars to the states to promote broadband access. States will in turn issue awards from their allotted funds to “subgrantees” – such as wireless internet service providers – for broadband deployment and other projects.

“The biggest concern is the way that NTIA has defined ‘reliable broadband service’ to exclude locations that are served exclusively with unlicensed spectrum,” Stephen Coran, attorney in the broadband and communications practice group at Lerman Senter, told Broadband Breakfast Monday. “There’s nine million people who are getting broadband service that way. Many of them can’t get it any other way and the service is reliable.”

Areas covered solely by unlicensed spectrum are considered unserved by the NTIA. Carol Mattey, principal at Mattey Consulting LLC, told Broadband Breakfast Monday that although WISPs who operate such networks can apply for BEAD funding to alter their networks to meet the NTIA’s definition of “reliable broadband,” navigating BEAD’s complex regulatory framework will be difficult for many small providers.

“Most small providers don’t have the in-house staff or expertise to manage regulatory compliance,” she explained. “They’re…in the business of building networks. They don’t have people [who are] regulatory compliance experts.”

Mattey said small networks will have to adapt to overcome BEAD’s regulatory barriers. “They either have to acquire [regulatory-compliance] resources of share resources with others,” she said.

Possible financial hurdles

States or subgrantees must provide matching funds of at least 25 percent of each project’s cost. In addition, the NTIA’s notice of funding opportunity requires subgrantees to provide a letter of credit from a bank, totaling no less than 25 percent of the subgrantee’s award from the state.

Subgrantees receiving BEAD funding must also comply with Build America, Buy America provisions, which require construction material produced domestically make up at least 55 percent of total project cost – even if foreign sourcing would be cheaper. The NTIA is moving to waive some of these requirements for recipients of the NTIA’s $1-billion Middle Mile grant program.

Many subgrantees must also comply with the Davis-Bacon Act, which empowers the Department of Labor to set wage thresholds for contractors working on federally funded projects.

There was universal consensus that 5G wireless technology would be a game changer for closing the digital divide. The question was whether or not private investment would be enough to deploy the needed infrastructure. A new report shows that capital expenditures from wireless providers reached a record high in 2021, as 5G saw tremendous growth and will continue to help connect households now unserved by broadband.

CTIA’s 2022 Annual Wireless Industry Survey shows that wireless providers invested $35 billion into growing and improving their networks, the fourth consecutive year of industry growth.

CTIA said this is “a powerful trend that emphasizes the societal importance of wireless connectivity and underlines the industry’s commitment to building a robust platform for innovation that connects all communities.”

5G has experienced a quantum leap in growth since it first began rolling out in 2018, as infrastructure reforms that eased deployment barriers have resulted in 5G growing twice as fast as 4G. Since the Federal Communications Commission and state legislatures worked to modernize key siting regulations that could have stymied the technology’s growth, wireless providers have added 70,000 active cell sites. There are now nearly 420,000 operational cell sites across the U.S.

As CTIA notes, “More cell sites enhance coverage, encouraging adoptions and helping to close the digital divide.”

Clearly consumers want faster mobile internet speeds as the number of connective 5G devices grew more than a whopping 500 percent this past year from 14 million to Accenture 85 million. About one-third of American now possess an active 5G device.

CTIA points out that the number of connections that require wireless technology is helping fuel the growth – everything from smart watches to medical sensors. Such data-only devices represent about 42 percent of all wireless connections.

Wireless providers have invested nearly $121 billion into their networks since the launch of 5G.

CTIA notes that in an age of incredible inflation, the wireless industry’s investment, combined with increased market competition, has led to lower prices, “providing a welcome contrast to an economy where consumers have faced priced increases for 94 percent of tracked goods and services nationwide.”

Since 2010, the cost of unlimited data plans has declined 43 percent while wireless speeds have increased 85-fold over the same period.

Investment and competition have also led to new innovations such as 5G for home broadband and 5G fixed wireless. The latter is particularly useful in connecting rural areas where it’s hard to make a business case for fiber due to the cost of the last-mile connections. CTIA notes that 5G home broadband is available in more than 40 million households, providing home connections via spectrum with high capacity and low latency rather than a wired connection.

The report also points out that 5G is helping mitigate the impacts of climate change by creating green jobs in key industries. Accenture has found that 5G-enabled use cases should delivers 20 percent of the U.S.’s emission reduction targets by 2025.

5G is clearly helping usher in a new age of connectivity in this country. CTIA’s statistics are encouraging signs that the latest wireless technology is helping make broadband access available to more Americans than ever before. The best part of this growth is that taxpayer dollars are not being spent.

Johnny Kampis is director of telecom policy for the Taxpayers Protection Alliance. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.