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How Rural Broadband Carriers Are Closing the Digital Divide

Article by Sanjai Gangadharan, Area Vice President – South ASEAN at A10 Networks, Inc.

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·       A Stubborn Technology Gap Poses Challenges for Internet Service Providers (ISPs)

·       Using New Technologies to Enable a Faster, More Economical Network Buildout

·       Partnering to Broaden Rural Broadband Access and Create High-value Services

  • Pooling Funding, Revenue, and Risk through Innovative Financing Models

·       Growing the Market with New Customer Segments and Services

Closing the digital divide in underserved rural markets represents a clear challenge and opportunity for internet service providers (ISPs). A recent STL Partners Executive Briefing, How Regional ISPs Are Bridging the Digital Divide through Innovation, explores the unique challenges posed by the rural broadband buildout as well as innovative business models developed by leading companies to help close this technology gap.

A Stubborn Technology Gap Poses Challenges for Internet Service Providers (ISPs)

The digital divide didn’t arise by chance. For many years, a variety of factors have made rural broadband a questionable business proposition, from sparse populations that increase the cost per customer of infrastructure, deployment, operations, and maintenance, to the need to navigate diverse local permitting laws to get access to rights-of-way. Within urban markets, competition among multiple internet service providers (ISPs) has driven rates lower—but according to the FCC, a third of Americans live in areas where only one broadband provider is available, typically at a higher charge.

In this context, STL Partners lays out several considerations for regional internet service providers (ISPs) addressing the rural broadband market, including:

  • Increasing return on investment by identifying value-added services and alternative customer segments such as business-to-business (B2B).
  • Evaluating alternative technologies and pricing models at a cost more suitable for smaller regional service providers than those used by large carriers or achieving economies of scale through a consortium approach.
  • Working with partners to ensure the availability of technology and security skills, which are often in short supply in smaller organizations.
  • Leveraging technologies such as automation, virtualization, and containerization to cost-effectively modernize the core network.
  • Investing in security infrastructure to mitigate risks such as ransomware and Distributed Denial of Service (DDoS) attacks.

While the regional internet service providers (ISPs) targeting the rural broadband market face unique challenges, they also have advantages not available to larger carriers, such as local operations more closely tailored to the needs of their community. By developing new strategies around technology, partnerships, financing, and the introduction of new services and customer segments, rural broadband operators such as Inland CellularAlaska CommunicationsBluewater Regional NetworksDeclaration Networks Group, and Ting Internet are demonstrating a path forward for rural and regional ISPs seeking to capitalize on rural broadband connectivity.

Using New Technologies to Enable a Faster, More Economical Network Buildout

Technology innovation from network access to the network core can provide more cost-efficient ways to connect and scale a rural broadband customer base. Fiber-to-the-home (FTTH)  can deliver speed, bandwidth, and reliability, but in some cases, installation can be impractically expensive for rural deployments where population density is much lower. However, when combined with wireless access technologies such as TV white space (TVWS), fixed wireless, and satellites, broadband coverage can be extended at a fraction of the cost. Cloud-native, converged options for the core stack allow the flexibility to accommodate a variety of access technologies at scale while simplifying the management of service performance across a more diverse environment. Tapping into technology resources beyond the traditional telecoms vendor ecosystem, from open-source communities such as Open Core Network (OCN) Project Group to the Microsoft Airband Initiative and Meta Connectivity’s Terragraph technology, can open new paths for innovation to narrow the technology gap.

Alaska Communications has used technology innovation to overcome the exceptional barriers to broadband posed by the vast expanse, unforgiving terrain, harsh weather, and widely dispersed population of its region. With a fiber-only approach unfeasible, Alaska Communications uses a combination of microwave, satellite, and fixed wireless solutions, as well as Terragraph gigabit wireless mesh technology, to augment its existing fiber infrastructure. As a result, the company can deliver reliable high-speed service at a low cost of ownership and a competitive price for customers.

Partnering to Broaden Rural Broadband Access and Create High-value Services

Internet service providers (ISPs) have developed a variety of partnership models to facilitate digital divide strategies. By pooling resources with public and commercial partners, regional ISPs can cost-effectively accelerate broadband deployments. Cross-industry partner ecosystems such as the Rural Cloud Initiative (RCI) focus on delivering new use cases and applications. Standardized frameworks and open architectures contributed to the Open Core Network (OCN) initiative foster innovation and help future-proof network investments.

Declaration Networks Group advances its rural broadband strategy with the support of public funding and publicly owned TVWS frequencies provided through a partnership with its local municipality. The company is also a participant in the Microsoft Airband Initiative and a co-founder of the Air.U Initiative, a partnership of educational institutions, public groups, and technology companies to close the technology gap on underserved campus communities.

Inland Cellular is leveraging a partnership with RCI to accelerate rural broadband expansion through approaches such as alternative access technologies, edge computing, innovative data services, and offerings to simplify adoption by farm customers. Inland Cellular and RCI are also working on FarmGrid, a solution bringing together rural broadband connectivity, edge computing, and a broad ecosystem of high-value applications to support precision agriculture and unlock the untapped potential of the farm sector.

Pooling Funding, Revenue, and Risk through Innovative Financing Models

New models for hybrid ownership, joint funding, and risk-sharing are helping internet service providers (ISPs) overcome the economic barriers to closing the digital divide. Public-private financing models make relatively low-ROI rural broadband investments more attractive by allowing the carrier to share risk and revenue with local municipalities providing existing infrastructure. Rural electric cooperatives have joined together in consortia to bid for federal funding in the Federal Communications Commission Connect American Fund II (CAF II) reverse auction. Electric cooperatives are also leasing additional fiber capacity from their own communications network and provide “middle-mile” infrastructure to help rural ISPs lower broadband deployment costs. Ting Internet has partnered with the city of Westminster, Maryland to share revenue and risk for a dark fiber infrastructure project.

Growing the Market with New Customer Segments and Services

Higher average revenue per user (ARPU) for residential customers can improve the business case for rural broadband. To this end, internet service providers (ISPs) are turning to new service offerings and use cases around smart home, on-demand video streaming, cloud gaming, and video conferencing. Rural customers can also be highly receptive to mobile-only broadband services, such as uncapped data plans for mobile hotspots since they often forgo broadband internet service at home.

Within the B2B space, managed services providers (MSPs) can support digital divide strategies and initiatives by providing solutions to help rural broadband providers mitigate IPv4 exhaustion, a consequence of proliferating IP-connected devices, and bridge the transition to IPv6 connectivity.

Richweb, for example, provides managed core network services for electric co-ops and other regional ISPs to deliver broadband internet to rural communities in Virginia. As part of its infrastructure-as-a-service offering, the MSP offers routing and peering, as well as carrier-grade network address translation (CGNAT) to help ISPs allocate IPv4 addresses more efficiently as the number of subscribers and IoT devices increase.

Managed and commercial services such as cybersecurity, cloud, managed IT services, and unified communications offer new revenue opportunities as well. Industry verticals from agriculture and energy to healthcare and education have a high need for secure broadband connectivity and services.

Bluewater Regional Networks, originally created to meet the connectivity requirements of its parent utility company, leveraged this investment and expertise to build a high-growth networking business. Working with other local internet service providers (ISPs) and specialist partners in areas such as network design and core network security, the company is now creating a dynamic, adaptive fiber security framework to counter rising threats. Currently serving business customers from SMBs to large enterprises, Bluewater is planning to offer services directly to consumers by 2025. With a strategy to defer ROI in exchange for long-term growth, the company is offering high speeds at relatively low pricing, helping to stimulate competition in underserved areas facing a technology gap.

SMEStreet Edit Desk

SMEStreet Edit Desk is a small group of excited and motivated journalists and editors who are committed to building MSME ecosystem through valuable information and knowledge spread.

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