Can 5G Bridge The Urban-Rural Digital Divide?

Since Covid further exposed the rural digital deficit, many have asked to deploy 5G to provide broadband services in rural areas. Many others are skeptical for various reasons. To sort through the issue, We were commissioned to investigate how 5G can bridge the urban-rural digital divide. In our paper (download here), we review some of the technical characteristics of 5G in the context of rural deployments. The paper will help rural service providers, industry associations, regulators and governments develop an understanding of the capabilities and tradeoffs for 5G in rural areas. In my notes here, I mention some aspects that we left out of the white paper, and highlight additional aspects that I believe are important.

Many Flavors of 5G

There are many different flavors to 5G, especially the 5G radio. Many options exist to cater to different deployment scenarios. Therefore, making blanket references to 5G is unhelpful. It is possible to use frequency spectrum to differentiate between different flavors of 5G, but that is one dimension only, although a good one to start with.

The performance of 5G varies depending on the spectrum assets, antenna configuration and other factors. Much of the commercial 5G equipment target urban deployments, which is understandable since the demand for broadband is highest in these areas. Optimizing for rural areas requires a different implementation of feature set – such as beamforming capabilities to extend range. Vendors would need to see a solid business case to do such optimization. In the meantime, their products largely target urban areas where capacity is a top priority. This leaves fewer options for rural markets to choose from.

Different Deployments Models

5G is the domain of the mobile network operators, while wireless ISPs (WISPs) are competitive in rural locations for fixed wireless access (FWA). There are stark differences in how different categories of service providers approach network deployments. For instance, mobile network operators traditionally avoided providing FWA services on mobile networks. But this trend is changing, particularly in the US where the three major service providers started to offer FWA services in select suburban and rural areas.

The mobile network operators follow deployments templates optimized for their operating markets. Rural connectivity has different trade-offs, and would require a different template to optimize the cost structure. A deployment template – e.g. type of equipment, site topology, tower structure, site acquisition process, backhaul connectivity, etc. – for some rural markets does not necessarily scale well for other rural areas. Many operators hesitate optimizing further on their rural template because the return in investment is low.

Impacts on cost of service

There is a large variation in the cost structure of rural cell sites. While we looked at different scenarios applicable to our case studies, we recognize the variance related to different countries, services and operating conditions. Invariably, the leading cost items are backhaul and power. Site acquisition is a major factor in some markets. 5G will not solve these issues, in fact, 5G could exacerbate the situation since it requires more backhaul and power. I stress this because I came across a few misleading publications with contrary – and false – claims!

The cost of 5G equipment is higher than that of previous generation technologies. To the large service providers, this alone is not a critical issue since they are most concerned about capacity. Urban areas support higher infrastructure costs. Operators can use the cost per bit to justify rolling out 5G services since the demand on capacity is high. But while 5G provides lower cost per bit, it does that at a higher absolute cost. This becomes magnified in rural areas where subscriber density is low and coverage areas are large. Even as the cost of equipment is a relatively small part of the total cost of ownership of wireless networks, capex is a major barrier to overcome in rural areas.

The Other Benefits of 5G

Many of the benefits of 5G are in the flexible architecture, virtualized core implementation, and the many deployment and business models it enables. Such elements play a critical factor in defining the cost of 5G networks that are often underestimated and overlooked. We have left these items out of the paper, but I wanted to mention them here because these aspects enable new operating and business models that can serve rural areas well.

mmWave 5G and LEO Satellites

We have looked at mmWave deployments in suburban areas and compared their economic performance to FTTH (see here). We also separately studies and developed the business case for LEO satellites (see here). LEO satellites are promising for users on the fringes of land-based networks, or obviously where such networks simply don’t exist. As for mmWave, the financials come very short in rural areas. We simply don’t see that as an option in low subscriber-density areas.

Additional Aspects of Rural Connectivity

There are many varieties to rural areas that makes market segmentation necessary. For instance, the FCC requirements for broadband rural connectivity (25/3 Mbps) are very different from that of other regulators and countries. Even the end objectives differ. For instance, we see rising interest in automation of agriculture in the developed economies. In fact, a recent study by the FCC’s Office of Economics and Analytics [see here] showed that doubling the number of rural broadband connections leads to 3.6% increase in corn yield!

A Concluding Request

There’s a notion that Open RAN systems will enable more economical deployments in rural operators. I would love to hear what you think about this. How Open RAN benefits rural area? Why and how Open RAN reduces cost or extends coverage to meet rural RoI requirements? If you have thoughts on such questions, contact me with your thought in private, or publicly in the comments, on this. I would really appreciate it!