Broadband services are the drivers of revenue growth in today’s communications market. Competition among cable, telco and satellite providers for broadband customers is fierce. Fortunately, the battle for broadband is not a zero-sum game. The rural market offers a ripe opportunity for expanding the broadband subscriber base and delivering new services to a population clamoring for high-speed data.

According to the Federal Communications Commission’s April 2010 report, “The Broadband Availability Gap,” there are 7 million housing units, representing 14 million people, whose access to broadband does not meet the national broadband availability targets of at least 4 Mbps (download) and 1 Mbps (upload). More than 4 million housing units have no broadband access at all. The U.S. Department of Agriculture also noted in its 2009 report on rural broadband that only 70 percent of rural households with in-home Internet access had a broadband connection compared with 84 percent of urban households. The main reason for this difference: lack of availability.

Sunflower Broadband recognized the value of these unserved rural customers and is pursuing a strategy that combines fixed-wireless technology and fiber to the premise to extend its network reach and to serve new customers. In 2005, the cable operator launched its Wave Runner Wireless service. Based on Motorola’s Canopy products (line-of-site, 2.4 GHz wireless, unlicensed spectrum), Wave Runner Wireless delivers as much as 2 Mbps download and 256 Kbps upload speeds for $49.95 per month. Rod Kutemeir, general manager at Sunflower Broadband, reported that 656 customers subscribe to the service.

But the wireless Internet service is just the launching point for reaching new rural customers. In 2007, Sunflower began deploying CommScope’s BrightPath radio frequency over glass (RFoG) solution. The operator’s RFoG deployments now also include products from Alloptics, Aurora Networks and Hitachi, adds Kutemeir.

Sunflower uses Wave Runner Wireless to introduce new rural subs to its broadband services, and then it builds the RFoG fiber network into those areas. “Customers develop a relationship with us,” said Kutemeir. “Then when we run glass to their house, they are standing there with lemonade, saying ‘Come on in.’”

He added that most customers passed by the RFoG network switch to the company’s DOCSIS 3.0 50 Mbps service, which costs just $10 more a month than Wave Runner Wireless. As rural customers migrate from the wireless service to the DOCSIS 3.0 offering, Sunflower reclaims the Canopy products and installs them in new rural areas that are again outside the reach of its network. Those areas become future prospects for RFoG deployments. Sunflower passes 450 homes with RFoG and has 297 active customers.

Benefits Of RFoG

So why is RFoG suitable for rural areas? “It’s much more cost-effective. We can build out with lower densities per mile of fiber,” said Kutemeir. “With HFC, we need 100 to 150 homes per node. With fiber to the home, we can get to under 10 homes passed per mile and still be profitable.”

From where are these savings gleaned? Because it’s a passive architecture, RFoG eliminates the need for active devices, which saves capital. It also accrues significant maintenance benefits. “Eliminating active devices, power supplies and all of the touch points you have for maintenance simplifies the network dramatically, while still providing the same services that operators deliver on their HFC networks,” said John Dahlquist, vice president/Marketing for Aurora Networks.

RFoG also help operators reach far-flung rural homes. “It provides the opportunity to reach much longer distances,” explained Matt Endsley, vice president/Strategic Accounts/West for ARRIS. Plus “it provides the ability to build in a pay-as-you-go approach,” said John Homsey, senior director/Sales Engineering and Applications Engineering for Hitachi Communication Technologies America. “With RFoG, you construct the fiber past the homes, but only put the equipment necessary in place when customers turn up service.”

Migration To All Digital

But what if, like many rural cable operators, you still maintain a 550 MHz HFC plant? Will your network have the capacity to support the 50 Mbps and 100 Mbps DOCSIS 3.0 broadband data services that will be necessary to remain competitive? Ironically, a development in the video space could provide a solution.

Roughly 60 percent of CableOne’s plant operates at 550 MHz, reported Thomas Might, president and CEO of that company. However, Might admitted that many of those systems lack the bandwidth to support DOCSIS 3.0.

To solve that problem, CableOne sought a waiver from the FCC to allow it to deploy low-cost, high-definition (HD) set-top boxes that did not include removable cable cards. Last year, the FCC granted CableOne a waiver for its Dyersburg, Tenn., system. The FCC has since indicated a willingness to eliminate that HD set-top requirement for all systems operating at 550 MHz and lower, and possibly for systems operating at 750 MHz and higher.

What does this mean for CableOne? In December 2010, the operator expects to take delivery of new low-cost ($50) HD set-tops for deployment in Dyersburg. Should the FCC expand the waiver to all 550 MHz systems, CableOne will convert them to all digital. “We will free up 300 megahertz of the 550 MHz by going to all digital. That will allow us to add a lot of HD and DOCSIS 3.0 channel bonding,” Might explained.

The new set-tops also will support future capacity expansion, which is critical for sustaining rural broadband growth. “The boxes are also MPEG-4 capable,” he continued. “So if we start running tight on bandwidth again, we can implement MPEG-4 and reclaim another 40 percent of our bandwidth.”

In 2007, Sunflower Broadband began deploying CommScope’s BrightPath radio frequency over glass (RFoG) solution; it also uses products from Alloptics, Aurora Networks and Hitachi.

DOCSIS 3.0: The Killer App

Whether you’re deploying RFoG or moving to all digital in your rural networks, supporting DOCSIS 3.0 data services is the key broadband driver. With DOCSIS 3.0, cable operators can bond channels to offer speeds as fast as 100 Mbps. Sunflower Broadband already has upgraded all of its systems to DOCSIS 3.0. The company currently offers 50 Mbps service and expects to launch 100 Mbps service by year end. Wave Broadband has upgraded five of its systems to DOCSIS 3.0, and it also offers 50 Mbps service in those areas.

“We believe that the benefits of DOCSIS 3.0 go well-beyond offering 50 Mbps or 100 Mbps service. The ability to load balance, better balance customer usage, and use more down streams is what’s going to make this technology so valuable,” said Steve Friedman, COO at Wave Broadband.

Year Cable Modems DSL Fixed Wireless Fiber To The Home Satellite
2002 59.0 40.4 0.6
2003 60.4 39.2 0.4
2004 59.0 40.6 0.3
2005 57.0 40.9 0.5 0.7 1.0
2006 54.1 43.3 0.7 0.9 0.9
2007 52.4 43.7 0.9 2.0 1.1
2008 52.3 42.3 1.1 3.1 1.2
2009 50.7 42.4 1.8 3.8 1.2
2010 48.5 41.6 2.5 6.2 1.2
2011 46.6 40.1 3.3 8.7 1.3
2012 45.0 39.0 4.3 10.3 1.4
2013 44.2 38.4 4.6 11.5 1.3

Friedman is a bullish about broadband’s role for rural operators. “The reason our business has grown over the years is because of the Internet,” he said. “Yes, we add new services to video and revenues grow. But the real base of the business is the Internet. That’s driven our growth at Wave Broadband. That’s how you grow the business, how you protect your business in the future, and how you satisfy your customers. The Internet leads the way.”

However, you have to get to the Internet. “The Number One challenge facing rural broadband providers is getting good access back into the Internet,” said Friedman, who also serves as chairman of the American Cable Association (ACA). “Many of our members have a problem getting fiber built out far enough to access the national fiber network.”

These rural broadband providers must purchase T1 or DS3 circuits from local telcos to connect their networks to the Internet. “Because there is no competition in many of these markets, telcos can charge exorbitant rates, sometimes up to $100 a megabyte,” said Matt Polka, ACA president and CEO. “Where there is competition, costs can come down to less than $10 a meg.”

It’s not just the high cost of these circuits that causes problems for rural broadband providers; it’s their limited capacity as well. “If I can’t scale my network, customers will see slower speeds. All the speed in my network does no good if I don’t have access to the fiber backbone,” said Friedman.

DSL Competition

Like cable, telcos are pushing their copper plant deeper into rural areas to deliver faster broadband speeds. “Qwest is competing aggressively,” said CableOne’s Might. “It’s traditional digital subscriber line (DSL), but very aggressive DSL.”

Might reported that Qwest offers 20 Mbps data service in many of CableOne’s service areas and 40 Mbps DSL in a few. Qwest has also applied for a federal stimulus grant to extend broadband at speeds of 12 to 40 Mbps to rural communities throughout its local service region. ( Editor’s note: Qwest declined CT’s request for an interview for this story.)

FTTH Inroads

Independent telcos also have rural broadband expansion plans. Solarus, the largest independent telephone company in Wisconsin, is conducting a 300-home trial of fiber to the home (FTTH). The company plans to upgrade its entire service territory to FTTH during the next three to five years, said Mike Meinel, director of sales and marketing for Solarus.

“We are building FTTH because the appetite for broadband is growing substantially,” Meinel said. “Ten years ago, when we built fiber to the curb, we thought 5 Mbps pipes were enough. Now people are talking about 100 Mbps to the home.”

Solarus offers two DSL packages — 1 Mbps and 2 Mbps symmetric DSL — to 98 percent of its territory. The service costs $50 when bundled with voice and video ($10 more for the 2 Mbps service). As a competitive local exchange carrier, Solarus also delivers fixed wireless broadband services via its 700 MHz licensed spectrum to 1,000 customers outside of its territory. The wireless service is available at speeds ranging from 768 Kbps symmetric ($39 a month) to 3 Mbps symmetric ($159 per month).

The Telecommunications Industry Association (TIA) predicts fixed wireless solutions will play a growing role in rural broadband, adding 4 million customers between now and 2013, making it second only to FTTH as the fastest-growing broadband technology.

Competition From The Sky

Satellite also plays a role in rural broadband. Such providers as WildBlue and HughesNet deliver broadband services via satellite to roughly 1 million customers, reported Tom Moore, president and CEO of WildBlue; of those, WildBlue serves north of 400,000.

WildBlue provides three levels of service: 512 Kbps/128 Kbps, 1.0 Mbps/200 Kbps and 1.5 Mbps/256 Kbps. Prices range from $49.95 to $79.95 a month plus set-up fees. Moore acknowledged that the WildBlue network is capacity-constrained on the East and West Coasts, and the company no longer is adding customers in those areas. However, it has ambitious plans to address those constraints.

Early in 2011, WildBlue parent company ViaSat intends to launch the ViaSat-1 satellite, which will provide 140 Gbps of capacity and enable the company to deliver services ranging from between 2 Mbps and 10 Mbps download speeds. “ViaSat-1 is not the end point,” Moore said. “In six years, we’ll need a terabyte satellite to keep up. We think we can do that.”

WildBlue also is adding 17 new gateways to its network to complement the 11 that already exist. “These will be located right on a fiber backbone. Each of them will have a 10 Gbps bidirectional path out of them,” Moore explained. The new gateways currently are under construction, and Moore expects WildBlue to begin rolling out its higher-speed services in the spring of 2011. Other planned enhancements include a new CPE device based on WiMAX rather that the current DOCSIS, and new acceleration techniques to compensate for the latency experienced with satellite delivery.

Why Serve Rural America?

According to the U.S. government, rural citizens deserve the same broadband services as urban dwellers now enjoy. Fiber, copper, wireless and satellite technologies exist to cost-effectively reach low-density populations. “There’s more competition in town, so it’s worth it to look for other areas to serve,” said Sunflower Broadband’s Kutemeir. “There’s a whole customer base out there that we can extend to.”

In addition, rural customers are more likely to take the triple play, as there may be few competitive options for telephony in their areas. The possibility of the triple play makes the economics of serving rural subs even better. Churn also is lower.

“Customers who live in the country don’t turn off as often as customers who live in town. It’s a long-term relationship,” added Kutemeir. By extending broadband services into rural areas, providers can expand their subscriber bases and generate new revenues while simultaneously improving their communities.

Jennifer Whalen, a former editor of Communications Technology, is a freelance writer specializing in broadband. Contact her at jwhalen@whalencom.biz.

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