Could 5G close the digital divide between urban and rural communities?
5G access could help rural economies grow and add more high-tech jobs, but the cost and return on investment of installing infrastructure is a major barrier.
Much has been made of the digital divide in cities, especially between low-income communities and their higher-income neighbors. Though another digital divide — the one between rural and urban areas — is just as wide, with just as many associated issues.
Could 5G help to ease that digital divide? While telecom companies have touted the technology rollout in cities, they have been relatively tight-lipped on how their services could roll out to Americans that live in other parts of the country.
According to the Federal Communications Commission (FCC), 80% of the 24 million households in the United States that lack reliable broadband internet are in rural areas. Advocates say 5G could make a major difference in those communities, but there are warnings that installing the infrastructure needed could cost too much and not provide a good enough return on investment, given the relative lack of customers in a service area.
What 5G offers to rural communities
Companies large and small and elected officials have admitted there is a digital divide between rural and urban communities, and that it can cause problems as rural residents cannot do basic tasks that their counterparts in cities can do.
"Kids are having a difficult time completing homework, and people are having a difficult time working from home because they don't have the high-speed internet, so it limits their options," said John Putnam, smart city program manager at Ohio telecom company Cincinnati Bell, during a panel discussion at the Smart Regions Conference in October.
5G also presents the potential to create new high-tech jobs and create new economic opportunities, helping curb the trend of companies choosing only cities for new headquarters and campuses, and instead make them look beyond major population centers. For example. when Amazon was searching for locations for its second headquarters (HQ2), it emphasized the need for an educated workforce, strong transit and infrastructure that could cope.
"If we're able to get into some of the rural areas, it's going to equalize some of the economic development opportunities and the places where some employers want to be located," former Delaware Gov. Jack Markell told Smart Cities Dive. “If they've got a 5G opportunity in some of the more rural parts of a state, all the better for those parts of the state because you've seen such a dichotomy in where jobs are being created more and more in the cities. If we can do some equalization of that, we can prevent the brain flight that so many rural areas have experienced."
In addition to those high-tech opportunities, 5G can also revolutionize existing rural jobs, especially in agriculture. The technology can make the agricultural process more efficient and allowing a quicker transfer of data to provide information about weather, crops and the like, helping farmers understand more about where they operate and could help them make more money from their yields, especially through deploying internet of things (IoT) sensors.
“Now it's only connecting people and houses, but also other parts of the community. That's some of the opportunities that might be even more revolutionizing if you want in those communities, because of the distances and so forth that could help connecting communities in a different way than we've seen in the past," Tormod Larsen, vice president and chief technology officer of wireless technology company ExteNet, told Smart Cities Dive.
"If we're able to get into some of the rural areas, it's going to equalize some of the economic development opportunities and the places where some employers want to be located."
Former Delaware Governor
Aside from boosting jobs, Markell said 5G could help improve network connectivity in rural schools, enabling students to engage in greater and more efficient learning. Meanwhile, local government services could be boosted by better connectivity, while the healthcare industry could also add more remote telemedicine services to help rural patients.
“The better and better connections, the more services that are going to be able to be read online, imaging and the like, telemedicine and the like more and more advanced services,” Markell said. “From the perspective of emergency response. If you think about an ambulance picking up a patient and taking them to the hospital, rather than the EMTs just talking to the doctors at the hospital, actually having a video where they can show the doctor exactly what the doctor is going to be dealing with as soon as they get to the hospital.”
What gets in the way
In trying to push 5G to rural areas, telecom companies say they are faced with high costs to install infrastructure and not enough customers to defray those costs. Companies believe they would need to charge unreasonably high rates in order to cover their costs, which would likely mean fewer subscribers.
Those issues have dogged the installation of rural broadband and fiber and would likely also be an issue for installing 5G infrastructure.
"The trouble is, when you get outside those [urban] areas, the cost to build [fiber] to each door within a rural area can be $4,000, $5,000, $6,000 per door," Putnam said. "As a carrier, I can't invest $5,000 to run fiber in a rural area knowing that I'm going to have 30-50% pay rate and I'm going to bill them $100 a month. My payback is a gazillion years, if I get it all."
The major cost comes from installing small cells, which are needed to help transmit the 5G signal over long distances. Research from professional services firm PricewaterhouseCoopers (PwC) called for a "small cell revolution" to help make it easier and more cost-effective to roll out the infrastructure.
In its report, PwC said the seven-step process for identifying small cell sites, acquiring permits and installing them is too expensive and arduous, especially if the United States is to roll out 5G quickly. The report cited FCC Commissioner Jessica Rosenworcel, who has said the country will require 800,000 small cells, a contrast to the 200,000 in existence for networks like 4G and 3G.
To combat that, PwC recommended better partnerships between carriers and jurisdictions on cell installation by reforming permitting processes, and establishing a nationwide small cell exchange.
The exchange could be a digital platform with real-time information about availability, connectivity, rent and permitting status as well as relevant data on weather and similar factors. That information exchange could provide more insight into the network for regulators, and allow the sharing of best practices — something that could benefit jurisdictions of any size.
“Unlike the past, where maybe within the span of three years or so, you would get a full nationwide rollout of a mobile technology, we believe that 5G is likely to take place over a longer period given that you don't have a lot of operators with deep pockets to go and fund tens of billions of dollars of infrastructure,” Dan Hays, a principal with PwC US and a report author, told Smart Cities Dive.
But one carrier has been especially bullish about its ability to roll out a nationwide 5G network, albeit with the help of a merger with one of its rivals. T-Mobile has promised mobile broadband speeds in excess of 100 Mbps in 90% of the United States by 2024, and says it is the only network with the capacity to provide nationwide 5G. The company says that its proposed merger with Sprint would also help it hit that ambitious goal, although that will be subject to approval from antitrust regulators.
By 2024, the new T-Mobile's network will deliver mobile broadband speeds in excess of 100 Mbps to 90% of the US ⚡— T-Mobile (@TMobile) October 10, 2018
The potential for uneven 5G deployment due to those infrastructure costs has elected leaders worried in the upper reaches of government, especially from traditionally rural states. But with two recent rulings, some members of the FCC said they have tried to make it easier to deploy 5G infrastructure in rural areas — though it remains to be seen if that will be the case.
In late September, the FCC voted to streamline the process of deploying 5G infrastructure like small cells and cap the fees that jurisdictions can charge.
Commissioner Brendan Carr, who sponsored the proposal, said the new rules would save $2 billion in regulatory costs and would result in $2.4 billion in new investment in 5G infrastructure, of which 97% would go to rural and suburban areas.
"By making small cell deployment less expensive, the FCC will send a clear message that all communities, regardless of size, should share in the benefits of this crucial new technology," Carr said during the FCC’s deliberations. On Twitter, Carr touted a letter signed by more than 20 members of Congress saying that capital must be invested in deployment and so freed up for rural areas.
NEW: Great to see so many Members of Congress support the smart infrastructure policies the FCC will vote on tomorrow. These common sense ideas are key to ensuring that every community benefits from the economic opportunities enabled by 5G & next-gen broadband. #FirstTo5G pic.twitter.com/bKPa3TX9AY— Brendan Carr (@BrendanCarrFCC) September 25, 2018
Rosenworcel disagreed with Carr. She said the full ruling does not include "a single commitment" to invest more in rural communities and noted that not a single carrier has told regulators they will alter their capital investment plans, something she said shows the “hard economics” of functioning in rural areas has not changed.
A separate FCC ruling on spectrum similarly has advocates hoping that 5G can be rolled out in rural communities, although again questions are being raised about whether it will have any impact.
At its October meeting, the FCC voted to update licensing rules for the 3.5 GHz band of spectrum, known as the Citizens Broadband Radio Service (CBRS), a move the commission said in a statement would “promote additional investment and encourage broader deployment in the band.”
Companies are now able to bid on licenses to use the spectrum on a county-by-county basis, a compromise FCC Commissioner Ajit Pai said would “allow most interested parties, large and small, to bid on 3.5 GHz spectrum in order to provide 5G services.” Pai also pointed to support from the Rural Wireless Association and the Competitive Carrier Association for the updates.
But Rosenworcel called it a "messy compromise," and said licenses in the band should have been allocated based on census tracts and have shorter license terms, a move she said would have fostered innovation.
And a group of 20 rural advocacy organizations, rural healthcare providers, rural network operators, and public interest advocates said the order did not include “meaningful build-out requirements to rural America.” In a letter to Pai, the group argued that it would be too expensive for all but the largest telecom companies to acquire a license in that spectrum band on a countywide basis.
Larsen said the FCC’s vote on CBRS was a good compromise, allowing for licenses to be 10 years long, as that allows companies to invest. ExteNet has already made moves to partner on wireless networks in CBRS, including with the likes of Cal.net, which provides broadband to rural communities in the Sierra Nevada foothills.
“If you're going to invest in any infrastructure, you're going to need a long-term view of it, so I think that makes sense despite some of the concerns about it as they think it's driving up the cost,” he said.
Reasons for optimism?
If the costs of investing in 5G infrastructure to help roll the technology out nationwide are too burdensome, experts have a few ideas on how to help bear those costs, including using partnerships with local governments and encouraging carriers to work together.
Markell said public-private partnerships (P3s) could be a good way to stimulate 5G activity in rural communities, although that represents a departure from the federal government’s position that leaders should be “clearing the way for innovation” and letting the private sector lead the way.
That change at the national level runs counter to the federal government's past position, which had at one point reportedly floated a nationalized 5G network to protect against the economic and cybersecurity threat of China.
A state’s public service commissions, which regulate public utilities’ rates and services, are an opportune place to start. Markell said if commissioners can be convinced of the need to modernize and upgrade communications networks, they could help ease the way forward.
"Every state's got a public advocate who's focused on making sure that rates stay low, but we also have to focus on making sure that we've got these reliable, secure and resilient systems as an economic necessity," Markell said. "We ought to be making sure the public service commissions understand the need for that, so if there's strong proposals put in place to modernize the underlying communications networks, that they look at those kinds of things favorably.”
Rob Schwartz, president and COO of wireless communications carrier pdvWireless, said utility companies can also play a role in building out 5G infrastructure, given that they are already building transmission lines, generation plants and other infrastructure that could have equipment for 5G added in some situations.
He pointed to the likes of Southern Company, which has built out a private broadband LTE network in almost the entirety of Alabama and Georgia, including rural areas, as a model. Meanwhile, Missouri’s Public Utilities Commission has mandated that providers add 11,000 additional points of communication to help network reliability, which could also be useful for 5G.
“The big cost, what prevents carriers from building out in those places, is it's too expensive to build towers and to bring back haul, fiber and power to those locations,” Schwartz said. “But utilities have the need to do that and they are doing that…So they're having to build out a communication network in those places, and in that case the byproduct of that is having a strong, robust network there that can be leveraged to provide more rural broadband.”
As well as looking to encourage more P3s and cooperation between the public and private sector, Larsen suggested looking to get carriers and telecom companies of all sizes to work together. While the major providers like Verizon, AT&T, Sprint and T-Mobile may not be able to make a business case for rolling out 5G in rural areas, they could instead partner with smaller regional operators, providing them with some additional capital and making use of the local player’s expertise in that market.
“Capital is one thing, focus is another thing, then how do you really provide a service in these markets that will be compelling and maybe have a little bit more of a convergence-type of view of it,” Larsen said. “It's not only having connectivity, it's what you can do with that connectivity in these marketplaces as well.”
Despite all this, Hays warned it is unlikely that 5G will close the digital divide between urban and rural communities, simply because of the economics of building it out in less populous areas.
“Are there advances that are helping? Yes,” he said. “But it doesn't change the fact that if I go from an urban area where I might have a population of 1,000 people per square kilometer and I move to a rural area where I might only have a population of 10 people per square kilometer, it doesn't change the fundamental economics of serving that area. I don't think we're going to see quite the impact on rural communities as some people have indicated.”
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