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July 1, 2010
Things Have Changed, But Not Nearly Enough
By Debra Baker, Editor
Back in the days before 3G and 4G, getting a cellphone signal in a rural area (and even in some suburbs with notorious dead spots) was an iffy situation at best. Amazingly enough, on a car trip through the farmland of south central Illinois, I was able to make and receive calls via my Mitsubishi handset and T-Mobile’s towers.
Things have changed, but not nearly enough. Cable operators and telcos still haven’t covered 100 percent of the U.S. footprint with services robust enough to offer broadband at the speeds enjoyed by most of the rest of the world. And pricing has kept many consumers from being plugged in to the Internet. In fact, the number of U.S. businesses and households with Internet connections has dropped slightly this year.
The United States currently is ranked Number 22 when it comes to broadband connection speeds worldwide, according to a recent Akamai study, with AsiaPac far in the lead. There are many business reasons as to why rural areas have not been wired, fibered, towered, etc. In many cases, satellite providers have taken advantage of this competitive situation by being first to market.
Speaking at a NARUC staff event earlier this year, CenturyLink exec David Bartlett pointed out that while it costs his company $35 per subscriber for wired service in urban areas, its capex per sub in rural areas is $300. Looking at things from a network opex point of view, CenturyLink spends $50 per sub in the city and suburbs, and $57 per sub in rural areas. Transit and transport cost the carrier $6 per sub in the city and $150 per sub in the country.
Jim Farmer writes in this issue, “The blunt reality is that this is a capital-intensive business for any operator. Only now are we beginning to emerge from a credit crisis in which available capital was in short supply.”
Things have changed, but not nearly enough. Who will be able to offer more broadband choice and speed to those who live in unserved or underserved areas? Will it be you? According to Farmer, “Cable operators that sit back and wait run the risk of being left behind as other service providers take matters into their own hands.”
On a different note, I’m going to The Independent Show in Baltimore later this month, and I’d love to talk to you.
Email me at dbaker@accessintel.com, and we’ll set something up!
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