More than two out of three Americans now live in homes without landlines, according to the CDC’s National Center for Health Statistics and The Washington Post. Even in rural areas, many homes are cutting ties to telcos and relying exclusively on mobile network operators to keep them connected.
“A lot have switched to cell phones, but their cell service is remote,” said Todd Schroeder, CEO of Oklahoma’s Indian Electric Cooperative (IEC). “They are very unsatisfied with the options that they have.” Schroeder said one reason the co-op recently struck a broadband deal with Cox Communications was to get its members access to the Cox Mobile cellular service.
Cox Mobile is an MVNO that rides on Verizon's network, so the quality of its mobile service is largely dependent on Verizon. And like all mobile network operators, Verizon makes decisions about network upgrades and investments based on projected returns. In remote areas, the incremental return delivered by a new tower or base station can be limited, due to the small number of potential customers and the high cost of backhaul.
But in some areas, the cost of backhaul could be mitigated by subsidized fiber builds funded in part by federal and state grants. The largest of these grant programs is the U.S. Commerce Department’s Broadband Equity, Access and Deployment (BEAD) program, but there are a number of other state broadband grants available to providers as well. As communities get new broadband networks, some may also get 5G cell service, if mobile operators see an opportunity to leverage fiber infrastructure.
Packet optical equipment maker Ciena is actively promoting the use of fiber technology to support both residential broadband and 5G. “Ciena platforms that support shared fiber access technology (XGS-PON) for residential broadband services also support 5G xHaul,” explained Ciena’s Vinicius Santos, solutions marketing senior adviser, broadband and 5G. “There is an opportunity for rural operators to help MNOs expand wireless coverage by providing last mile or middle mile connectivity.”
RELATED: Samsung marries 5G RAN, core with Ciena’s transport
VoIP
Many large internet service providers already offer voice-over-IP, so as rural areas get new internet service from these providers, digital voice services may become available as well. “It’s likely that a lot of BEAD sub-grantees will add voice for an additional revenue stream,” projected Nathan Smith, director of economics and policy at Connected Nation.
Deborah Kish, VP research and workforce development at the Fiber Broadband Association (FBA), notes that ISPs frequently offer voice as a bundled service or an “upsell opportunity.” But in her conversations with FBA members, she does not hear much about BEAD and voice service. “I hear internet, internet, internet, broadband, broadband, broadband, but not specifically voice,” said Kish in an email.
The BEAD Notice of Funding Opportunity does not require grant applicants to offer voice service. But the actual grants will be made by state governments, and each state can set its own rules. Ciena’s Santos expects some state broadband offices to ask applicants to provide voice service. He notes that the FCC’s Rural Digital Opportunity Fund required applicants to offer voice. “There is a high probability that the state offices will also demand it under BEAD,” Santos said.
Forcing BEAD sub-grant recipients to provide phone service could add to the regulatory burden on providers, noted attorney David Bronston, telecom practice lead at Phillips Lytle. Bronston pointed out that broadband services are much less regulated than residential telephone services.
Leasing fiber to mobile network operators might give BEAD applicants the best of both worlds. They can avoid the extra regulation that comes with being a phone company and still highlight the potential of better voice service for customers when they make their proposals to state broadband offices. In addition, fiber leasing will increase projected revenue for broadband providers, which will make their rural networks more sustainable.