A Hybrid Model for Rural America

Lately I’ve looked at a lot of what I call a hybrid network model for bringing broadband to rural America. The network involves building a fiber backbone to support wireless towers while also deploying fiber to any pockets of homes big enough to justify the outlay. It’s a hybrid between point-to-multipoint wireless and fiber-to-the home.

I’ve never yet seen a business model that shows a feasible model for building rural FTTP without some kind of subsidy. There are multiple small telcos building fiber to farms using some subsidy funding from the A-CAM portion of the Universal Service Fund. And there are state broadband grant programs that are helping to build rural fiber. But otherwise it’s hard to justify building fiber in places where the cost per passing is $10,000 per household or higher.

The wireless technology I’m referring is a point-to-multipoint wireless network using a combination of frequencies including WiFi and 3.65 GHz. The network consists of placing transmitters on towers and beaming signals to dishes at a customer location. In areas without massive vegetation or other impediments this technology can now reliably deliver 25 Mbps download for 6 miles and higher bandwidth closer to the tower.

A hybrid model makes a huge difference in financial performance. I’ve now seen an engineering comparison of the costs of all-fiber and a hybrid network in half a dozen counties and the costs for building a hybrid network are in the range of 20% – 25% of the cost of building fiber to everybody. That cost reductions can result in a business model with a healthy return that creates significant positive cash over time.

There are numerous rural WISPs that are building wireless networks using wireless backhaul rather than fiber to get bandwidth to the towers. That solution might work at first, although I often see new wireless networks of this sort that can’t deliver the 25 Mbps bandwidth to every customer due to backhaul restraints.  It’s guaranteed that the bandwidth demands from customers on any broadband network will eventually grow to be larger than the size of the backbone feeding the network. Generally, over a few years a network using wireless backhaul will bog down at the busy hour while a fiber network can keep up with customer bandwidth demand.

One key component of the hybrid network is to bring fiber directly to customers that live close to the fiber. This means bringing fiber to any small towns or even small pockets of 20 or more homes that are close together. It also means giving fiber to farms and rural customers that happen to live along the fiber routes. Serving some homes with fiber helps to hold down customer density on the wireless portion of the network – which improves wireless performance. Depending on the layout of a rural county, a hybrid model might bring fiber to as much as 1/3 of the households in a county while serving the rest with wireless.

Another benefit of the hybrid model is that it moves fiber deeper into rural areas. This can provide the basis for building more fiber in the future or else upgrading wireless technologies over time for rural customers.

A side benefit of this business plan is that it often involves build a few new towers. Areas that need towers typically already have poor, or nonexistent cellular cover. The new towers can make it easier for the cellular companies to fill in their footprint and get better cellular service to everybody.

One reason the hybrid model can succeed is the high customer penetration rate that comes when building the first real broadband network into a rural area that’s never had it. I’ve now seen the customer numbers from numerous rural broadband builds and I’ve seen customer penetration rates range between 65% and 85%.

Unfortunately, this business plan won’t work everywhere, due to the limitations of wireless technology. It’s much harder to deploy a wireless network of this type in an area with heavy woods or lots of hills. This is a business plan for the open plains of the Midwest and West, and anywhere else with large areas of open farmland.

County governments often ask me how they can get broadband to everybody in their county. In areas where the wireless technology will work, a hybrid model seems like the most promising solution.

6 thoughts on “A Hybrid Model for Rural America

  1. “Unfortunately, this business plan won’t work everywhere, due to the limitations of wireless technology.” A couple of thoughts:
    1. I had to laugh when, at a FirstNet board of directors meeting, one board member declared they would “cover every square meter in America”. However, if FirstNet/AT&T fiber/wireless either LTE or 5G covers some majority of the lower 48, it does present plenty of fiber capacity for non-FirstNet use (as resold by AT&T)
    2. Speaking of AT&T, their AirGig tchnology runs wirelessly (backhaul as well as last 100 yards) along power lines. Theoretically, a power line goes to every on-grid structure in the nation with wireless delivey the last 100 yards. While it would never serve 100% of the population, it drastically cuts the cost of traditional fiber to the tower infrastructure. This scheme can be replicated by others.

    Like

  2. A critical question that typically goes unasked is why does fiber to the prem — and aerial fiber in particular — cost so damn much, impairing more broad based infrastructure deployment? If aerial fiber construction runs just 20 percent of the cost of buried per the oft stated rule of thumb, why don’t we see lots more of it being deployed given the significant cost advantage?

    Like

  3. You obviously haven’t looked at enough (or the right) business plans!!!. Although when most people think of “rural” they picture wide open spaces in Montana or Nevada, the fact is that over 95% of all rural people live in places like upstate New York, Tennessee, western North Carolina, Central Minnesota, Alabama, Missouri, eastern Texas etc. Virtually all of those people live in areas with an average density of 10/12 premises per mile or more. Vermont is the most rural state in America (i.e. the largest % of its population lives outside all Standard Metropolitan Statistical Areas (SMSAs). The average density of Vermont, outside its only SMSA, is 13 premises per mile. This absolutely typical of rural areas in America. The wide-open spaces of Montana, Nevada etc have a lot of territory….but very very few people. In reality, American rural people live in places with average density of 12 premises per mile of road–or higher!! FTTH is financially viable, WITHOUT SUBSIDY, anywhere you can average 6 customers per mile….and far superior to any other technology in any place it is financially viable. (Emphasis on “average”….you don’t need 6 customers on every single mile of plant: 3 miles of zero followed by a village with 24 homes along a mile of road works fine.) I know, because I have built and am building rural FTTH networks to that exact spec. ECFiber in Vermont (www.ecfiber.net) is a roaring success in one of the most rural parts of the most rural state in the USA. ECFiber was actively opposed by both state and federal authorities and received a trivial amount of govt support (approx $1 mil out of total investment over $40 million…..and it could easily have foregone that pittance). At the same time, the incumbents (mainly FairPoint, Comcast and Vermont Tel. have received approx $150 million of govt grants and low interest loans to build obsolete DSL and non-functional fixed wireless in the same areas where ECFiber was building state of the art FTTH. The intent was to put ECFiber out of business by offering services which, though greatly inferior to FTTH, were financed by free govt money and could undercut ECFiber. How is that for irony: Private incumbents received government subsidies in order to crush a small community network financed almost entirely by private money (including small local citizens)!!!??? And, be it noted, this travesty was perpetuated by both Democratic and Republican office holders. ECFiber was 98% financed by private sources–including hundreds of local people who invested in $2500 of their hard-earned savings in “crowd-funding” notes to bring genuine fiber broadband to their villages and farms. (DSL is clearly inferior to FTTH but Vermont Tel fixed wireless is also seriously inferior–esp. in the mountainous, heavily forested geography of Vermont. After 9 years and tens of millions of govt subsidies it is widely–and correctly–seen as a flop and a waste of Federal taxpayers’ money. It is so far behind and below its targeted and promised performance that questions are being seriously raised about it being required to return the money.) Most of ECFiber construction has focussed on the 22 towns that do not have Comcast or Charter. Density in ECFiber territory averages is about 10 potential customers per mile. ECFiber is a municipal co-op (meaning the members of the members of the co-op are towns rather than individuals. As such, it can be argued that it receives a “subsidy” in that it doesn’t pay federal income taxes. (On the other hand, it is committed to complete, universal coverage of every single premise in its territory…which none of the “private” carriers will promise). However, having retired from ECfiber, my wife and Iand I are building another very similar network in north west/central Vermont (www.mcfibervt.com) on a totally private basis using our own money and that of about 15 partners. The geography and demographics of our new area are almost identical to ECFiber. No subsidies at all!! not even the tax-exemption that ECFiber enjoys. But we expect to achieve the same success…..neither we or our partners would have invested our own money otherwise.
    In short, you haven’t looked at enough rural business plans–and certainly not the right ones!!
    Instead, you have drunk too much of the standard propaganda “koolaid” purveyed by the usual “experts” on rural telecom….most of whom are paid consultants and apologists for the incumbent telcos and cable companies!! That includes, unfortunately, politicians of both parties: the Obama administration was as bad as the current one and Peter Shumlin, Democratic governor of Vermont was as bad as his Republican predecessor and successor. Everybody, it seems, takes the money and sells the propaganda of the telecom and cable incumbents.

    Like

    • I haven’t drinked the kool-aid at all. I’m talking about truly rural places, not places that are deemed rural because they are just outside of SMSAs. You go to the west and the midwest and rural America looks nothing like New England. It consists of small towns surrounded by vast areas of sparsely populated areas. A mid-west count that averages 10 households per mile actually consists of two little towns that hold 90% of the people. In land mass, and in terms of a count of rural counties there are far more places that look like rural Minnesota or Arizona than like Vermont. You, my friend, have a New England bias!

      Like

  4. Spot on observations by Tim Nulty. “Rural” as the term has been applied in the context of telecommunications infrastructure has become meaningless with no consensus definition. A real world definition denotes those areas where legacy incumbent telephone and cable companies choose not to expand their “footprints.” Put simply, these are redlined neighborhoods. They can often be found in SMSAs. For example, I live in a SMSA in Northern California. Population density averages well above rural at around 400 per square mile. But many premises here lack landline advanced telecom service because they are in pockets of cut off density redlined by the legacy incumbents.

    One of the most frequent comments I’ve gotten on my blog is from people in all parts of the United States wondering why they are not offered landline service when others within a mile or two — sometimes closer — are offered service. There have also been horror stories in the media of homebuyers confirming the address of the property they are buying has a landline connection only to find out upon moving in there is none available to them even though nearby neighbors have connections. It’s BS to characterize one set of premises as “rural” and unservicable while another in close proximity as not and thus not “rural.” I agree with Tim the term “rural broadband” is essentially incumbent propaganda to rationalize redlining and to preserve incumbent hegemony with government subsidy programs to deploy substandard infrastructure (vs. FTTP) under the guise of deploying “rural broadband.”

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s