Rural Fibre Meets Mobile Backhaul
The rural broadband challenge
Many countries have ambitious goals to connect rural-dwelling citizens outside the main cities, where often a significant proportion of “excluded” homes and businesses can only get very slow or expensive broadband. In some places, rural towns, small villages and isolated farms and cottages cannot get either fixed connections above a few Mbps, or good 4G cellular coverage.
This can be particularly bad in regions with very low population density, difficult terrain and no major highways. Sparsely-populated areas are also often the most economically-disadvantaged, making it even harder for business cases to be built by telcos for investment, as ability-to-pay is lower than in cities. Individual fixed telcos cannot generate a return from retail FTTx build-outs, while competition between three or four mobile operators mean that none, individually, can operate economically.
This contributes to a negative spiral, where those living on the wrong side of the technology divide lack access to the means to earn, learn or contribute to modern society and business. As businesses and governments increasingly move online, they are excluded even further.
Governments and regulators taking action
As a result, governments are increasingly looking at subsidy models, or other incentives to encourage build-out of rural network infrastructure. This can occur at national, regional or rural municipality levels, and with a variety of business models, regulatory requirements (and restrictions) and financial structures. Very few want to build and own full state-owned networks, so smarter approaches are needed – often involving subsidised wholesale models.
Rural or small-town deployments can either take the form of “full fibre” or may be more oriented around a mix of fibre and fixed-wireless access – usually based on either 4G or WiFi-type standards. This will typically hinge on a given location’s topography (eg mountain ranges or island archipelagos tend to lean towards wireless), as well as population density, realistic chargeable access fees, and the government’s ideological attitude to subsidy and competition.
Historically, there has usually been less focus on subsidising cellular deployments in the 3G and 4G eras – usually a combination of competition between MNOs, plus coverage conditions in new spectrum licenses forcing build-out, has been seen as doing enough. Arguably, this hasn’t worked in many places – there are still mobile coverage gaps, as well as a lack of good fixed broadband.
The economics of such networks are almost always still challenging, however. If it has historically been uneconomic for national fixed incumbents and MNOs to individually deploy fibre, xDSL and 4G towers to cover a valley or a village, it is hard to argue that moving to monopoly FTTx and 5G will improve this situation, perhaps even with a subsidy.
Wholesale is probably the answer
Instead, increasing numbers of policy approaches and business-cases are being built around wholesale and open-access. And this model is starting to extend to mobile networks, as well as fixed infrastructure.
Deutsche Glasfaser in Germany, GigaClear in the UK and Enel’s Open Fiber in Italy, are all targeting areas outside the main cities, for example. In most cases, this has focused on wholesale provision of duct/pole, dark fibre, wavelength or bitstream capacity to retail ISPs. These can either target particular towns, or specialise in particular types of customer.
By effectively sharing the costs of the civil infrastructure and main fibre installation, the business case for each retail operator becomes much better. Sometimes the wholesaler also has an affiliated retail division operating at arms-length, although most regulators and governments are wary of the conflicts of interest.
The US market, which has had many rural broadband initiatives such as the recently-announced Rural Digital Opportunity Fund, has less bought-into the wholesale vision so far though.
Going beyond fibre-to-the-premise: the fit with mobile coverage
Wholesale and open-access business models for fibre and network-infrastructure providers are not new. But a new trend and potential opportunity is also emerging – the use of wholesale rural fibre networks for mobile backhaul, as well as residential/enterprise broadband access. While this isn’t 100% driven by the shift of mobile networks to 5G, it is strongly linked.
While mobile backhaul has sometimes featured as an intention for wholesalers, it usually hasn’t been a major contributor to revenues or a strategic direction in reality. And often, it has been a poor fit with public funding: where subsidies are involved, most governments have focused more on residential subscribers (i.e. voters) and local businesses. Underwriting mobile operators’ deployment and operational costs has been a long way down the list of goals, and also sometimes falls foul of state-aid or competition considerations.
But several things are now changing the situation:
- Governments recognise that mobile broadband is demanded by consumers everywhere, much more so than 10 years ago. It’s an electoral concern.
- 5G networks will be deployed with much higher capacities, and higher frequency bands, than 3G or 4G. This requires more backhaul, in more places – and makes historic use of microwave less-suitable in many cases.
- Many use-cases of IoT will be rural-centric. Agriculture is expected to adopt sensors and automated tractors and other machinery. There is a need for full national reach for public-safety agencies’ and first responders’ new mobile networks.
- We may see drone routes over uninhabited areas, with wireless control and monitoring needed if they operate autonomously. Self-driving cars will also need to work everywhere, with a need for some connectivity, even if they can operate safely offline as well.
- New use-cases can take advantage of rural mobile broadband - imagine remotely-driven snowploughs connected with 5G to an operator’s AR headset in an office building in a nearby town.
- 5G brings new types of mobile operators to the market, alongside existing MNO incumbents. Such players, such as neutral-host networks (NHNs), regional or vertical-market players, may have a different stance on how and where they build (or buy) backhaul.
- NHNs are particularly interesting - they are company’s pure-play wholesale radio network, onto which the other MNOs’ subscribers can roam. This could be in rural locations where the economics of shared mobile networks are more favourable, or in city areas or indoors, to satisfy needs to fill coverage-gaps in places where the MNOs can’t easily obtain their own extra sites. Dense Air is looking at this model in various markets such as New Zealand, for instance. In the UK, Telet Research has been doing trials of very-local, village-level wholesale wireless.
In future, we are likely to see multiple tiers of wholesale – for example, the rural network owner selling to a wholesale-backhaul specialist, who then configures its assets for PtP fibre or ethernet services suitable for macro or small cells.
A good example is the forthcoming deployment of the rural-focused National Broadband network in Ireland, which the Irish Government agreed to part-fund in May 2019. It is expected to deploy full-fibre access to about 540,000 homes over the next 7 years. In a response to this paper’s author on Twitter, asking about mobile opportunities as well as FTTP, the main bidder’s chief replied “It’s an open access network for any provider to use for any use case, so backhaul is a perfect use case”.
Yes, we will continue to see microwave or higher-capacity mmWave (millimetre-wave) backhaul used in some cases, or even satellite in very remote areas, but the over-arching story remains clear – rural wholesale networks will be increasingly needed for 4G/5G backhaul and transport, as well as FTTP. It’s important that their owners/operators assess then changing mobile landscape, and also check that regulatory mechanisms allow them to address it in timely fashion.
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