Chicago, Boston, New York, Los Angeles. These were some of the first cities in the U.S. to get LTE and WiMAX, and for good reason. Operators typically deploy new wireless services in major metropolitan areas on the basis of simple economic facts: Big cities have a larger base of potential customers and higher prospects for profitability than less densely populated regions in rural areas of the country.
This doesn’t mean that Americans living in the more remote areas of the country won’t get access to LTE in the near future. Rural operators are working to get next-generation mobile broadband services out to their customers, but they face considerable odds. The lack of interoperability in the 700 MHz band and the absence of FCC action on mandated data roaming pose formidable obstacles to the LTE deployment plans of smaller wireless operators.
Cellular South exemplifies the predicament faced by many rural and regional operators that want to offer LTE service to their customers. The Mississippi-based operator is moving forward on its LTE plans thanks to specialized network equipment and devices built by Samsung, but the company says it had difficulty finding equipment and devices compatible with its 700 MHz spectrum holdings, which are different than the licenses held by AT&T and Verizon Wireless.
Like many rural and regional operators, Cellular South holds a variety of band class 12 licenses in the lower A Block and lower C Block. Verizon’s 700 MHz band class 13 holdings are in the upper C Block and AT&T’s 700 MHz A Block and B Block spectrum licenses are in band class 17. Equipment and devices made specifically for band class 13 or band class 17 aren’t compatible with the band class 12 hardware held by smaller carriers, effectively shutting out rural carriers from the economies of scale enjoyed by AT&T and Verizon.
Cellular South says that the hardware needed for its next-generation mobile broadband services was more expensive and harder to source, and it discovered that customers using its LTE network won’t be able to get nationwide roaming with Verizon or AT&T even though they’re using a common network standard.
“We absolutely feel we’re being hampered by this,” says Eric Graham, vice president of government relations at Cellular South. “It makes it extraordinarily difficult for a new operator to compete.”
At time when mobile broadband is becoming increasingly important to consumers, the lack of interoperability between the different band classes and the difficulty small carriers face in securing data roaming agreements with national operators is proving to be a major impediment for the small and regional wireless providers looking to use their 700 MHz spectrum for LTE, advocates for rural operators say.
Steve Berry, president and CEO of the Rural Cellular Association (RCA), says Cellular South’s predicament is one shared by many RCA members.
“Most of the RCA’s members bought spectrum in the auction for the lower A and B blocks, and some of our carriers also bought some C block spectrum. The goal was – and continues to be – for most of the smaller carriers to be at the cutting edge and deploy 4G on that spectrum. Unfortunately, it’s becoming more difficult than with previous technology rollouts,” Berry says. “There’s no one to roam with, no one to partner with, and very little access to handsets and devices that operate on your band. Interoperability is what’s really missing to encourage massive investments in LTE in rural America.”
CTIA does not have a position on interoperability within the 700 MHz band or on data roaming. The FCC did not respond to requests for comment on when it planned to take up either issue, and there has been no movement on data roaming mandates since it decided to re-open its 2007 investigation into the matter last spring.
Some notable industry players, including Qualcomm, Motorola and LG, said an interoperability requirement for the various 700 MHz bands could delay the launch of devices and services. Verizon challenged Cellular South’s claim that the lack of interoperability in the 700 MHz band posed a barrier to entry for rural operators, saying Cellular South’s ability to procure equipment for its LTE network proved FCC-mandated interoperability was unnecessary.
Amid the controversy and continued inaction by the FCC, rural operators with 700 MHz spectrum are weighing their options for LTE. Some, like Cellular South, are moving ahead even if it means deploying services without a chance of nationwide roaming. Others are holding off on deploying mobile broadband services until they get a better idea of what their options are, but this comes at a price: The FCC may revoke a portion of an operator’s spectrum licenses if it fails to deploy commercial services by certain deadlines.
Verizon’s Plan for Rural LTE
One of the most notable and controversial developments in the future of LTE in rural America came in May 2010, when Verizon announced a program to let rural operators use its 700 MHz spectrum to build out LTE networks in areas outside its current coverage.
The LTE in Rural America program provides a lease to Verizon’s 700 MHz spectrum in areas outside its current coverage footprint. Rural operators construct the necessary cell sites for the network and are required to secure Ethernet backhaul for the sites, which are linked to Verizon’s core network. The operators pay a per megabyte charge to Verizon as part of the deal. Verizon is also offering national LTE roaming agreements to participants in the program.
The program allows Verizon to expand its footprint into rural areas unlikely to see near-term LTE deployments. Cross Wireless, Pioneer Cellular, Bluegrass Cellular, Cellcom and Thumb Cellular already have signed up for the program. So far, Verizon’s agreements with rural operators through the program cover 1.7 million people across 50,000 square miles and the company has received more than 250 inquiries about participation in the initiative, says Philip Junker, who manages Verizon’s LTE in Rural America program.
“There are areas of the country where we don’t have coverage today and we’d like to extend our footprint with these rural operators,” Junker says. “We won’t rule out any community that’s outside of our coverage area for inclusion in the program.”
For some companies that sign up for Verizon’s offer, the program is a way to provide their customers with national LTE coverage made otherwise unobtainable because of the lack of interoperability within the 700 MHz band. For others, it’s a way to get into the LTE market much faster than they would have been able to otherwise.
Barry Nothstine, vice president of sales and marketing at Bluegrass Cellular, calls Verizon’s program a “win-win” for the company. “It gives us a way to bring 4G to market quickly,” Nothstine says, adding the national roaming agreement also made the deal attractive for Bluegrass, which holds 10 licenses in the lower C Block and five in the lower B Block in areas of Kentucky. “We don’t want our customers to be in an island, not able to access services [nationwide].”
Nothstine couldn’t provide comment on when, or if, Bluegrass would offer services on its own 700 MHz spectrum.
Thumb Cellular, another participant in Verizon’s program, has deployed mobile broadband services in its 13 lower C Block spectrum licenses and says it will begin offering LTE through Verizon’s program as early as the fourth quarter of this year in three Michigan counties.
“They were willing to work with us instead of overbuilding us,” says Ed Eichler, president of Thumb Cellular. “We’re providing the latest service to customers in the rural area that matches anything they can get in the metro area.”
Though the rural operators participating in the program report they feel they’re being treated fairly by Verizon, the RCA believes participating in the program puts rural operators at the mercy of one of their biggest competitors and will make it harder to create economies of scale for band 12 equipment and devices.
“It does you no good if you’re building out someone else’s spectrum because you can’t get devices and interoperability for your own spectrum. In the end, it’s going to make it much more difficult for smaller carriers competing with Verizon to thrive and survive,” Berry says. “A lot of our members would rather be building out their own spectrum.”
Still, Berry concedes that Verizon’s program offers carriers with no other options a way to bring LTE services to their customers. “Some of our members feel that if they’re approached by Verizon and they have a pathway to 4G sooner rather than later, it behooves them [to participate] because of their fiduciary responsibility to the company and their ability to compete in the marketplace,” Berry says.
David Miller, president of Cross Telecom, said in an e-mail interview that the company felt it got a fair deal from Verizon when it decided to participate in the LTE in Rural America program. “The people at Verizon have been very straightforward and upfront with us in all of our dealings, and that is not something we are used to seeing when negotiating with larger carriers,” he said.
Cellcom Chief Technical Officer Jim Lienau says Cellcom’s participation in the program will be beneficial to the company in both the short term and the long term. The company expects to begin offering LTE service to residents in Northeast and Central Wisconsin and select areas of Michigan’s Upper Peninsula as early as the first quarter of 2012. However, Lienau says the program doesn’t address the challenges faced by many rural operators.
“As a participant in Verizon’s rural alliance, we feel it holds both short-term and long-term benefits. However, it does not provide all rural carriers the same benefit and does not solve the problem of national roaming on our own spectrum,” Lienau said in an e-mail interview. “This, as RCA points out, must be resolved and done so quickly. We, as all rural 700 MHz spectrum holders, are required to build out our spectrum. We need to be able to roam nationally to compete effectively.”
Filed Under: Industry regulations