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Report Skeptical of 5G’s Ability to Close Rural Broadband Gap

Randy Sukow Oct 31, 2018

Rural technology investment company CoBank this week released an analysis placing doubt on how much effect fifth-generation fixed wireless access (5G FWA) will have on rural America. Even as major carriers, including Verizon and AT&T plan commercial fixed 5G lunches in urban and suburban areas for late 2018 and 2019, CoBank does not expect 5G to make a difference in rural areas anytime soon.

“If we look at the technological challenges and competitive headwinds facing 5G FWA, it would be prudent to have tempered expectations over the next three to five years. As the technology matures, we do see some operators taking a rifle shot approach in deploying the technology. However, we’re not optimistic about there being widespread adoption,” the report concludes.

CoBank focuses on fixed 5G services. Mobile services, it said, will result in some speed increase for consumers and better network efficiencies for carriers, but their full impact on the market will not be felt for years. However, large carriers say that fixed services offering between 300 Mbps and 1 Gbps, are ready for near-term deployment.

CoBank sees difficulties with the millimeter wave frequencies (above 24 GHz) that carriers are using for early deployments. While they provide high-speed performance over wide channels, they offer significantly less coverage than lower-band mobile signals and penetrate foliage and buildings poorly. That will increase costs in infrastructure deployment and consumer equipment enough to challenge viability, even in non-rural areas, the report finds.

If the top wireless companies deploy only a modest amount of 5G FWA in non-rural areas, the economies scale will only be that much worse for rural deployments. “Equipment manufacturers and chipset companies may start to deemphasize the technology which could result in higher prices, fewer choices, and a slowdown in the evolution,” CoBank said. “We note that signs from the vendor community are beginning to emerge that could be cause for concern.”

CoBank sees somewhat more hope for 5G FWA in mid-bands, such as 5 GHz. The lower band relieves much of the propagation problem. Some rural providers already have built LTE-based fixed service. Some of them could be planning to upgrade to 5G, while other rural internet providers that recently won Connect America Fund Phase II support could look to 5G as a way to meet tight FCC build-out deadlines.

However, CoBank cautions that rural providers will have to watch costs throughout the process. “Rural customers tend to be more price sensitive than typical urban or suburban customers. This is a major consideration for operators when evaluating new capital expenditures,” the report finds.

NRTC agrees that cost considerations are paramount. It recommends that its members establish competitive broadband service at affordable rates by starting with a fiber optic backbone network throughout their service areas. Several wireless last-mile solutions, including 5G, could connect with the fiber backbone. The provider can choose the solution that makes the most economic sense in each area, ultimately leading to fiber-to-the-home service when it is viable.

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