With their landline voice revenues in decline, rural telcos are taking increased interest in offering wireless service, as new research from the National Telecommunications Cooperative Association (NTCA) released this week illustrates. As the data also illustrates, however, small carriers face significant challenges in offering wireless services.

Sixty-one percent of NTCA members provide wireless service, the study found. In addition, 45% of respondents not currently offering wireless service indicated they are considering doing so, up from 33% in 2009.

The report titled “NTCA 2011 Wireless Survey Report” notes, however, that rural telcos ability to offer wireless service “will be determined by their success in negotiating the primary barriers indicated by today’s providers, including competition from other carriers, the ability to obtain handsets and equipment and the ability to make necessary investments.”

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As for competition, the average survey respondent competes with between two and five other carriers—and the ability to compete with national carriers was the number one concern cited by respondents, with 75% indicating that concern. The next two biggest concerns were handset/ equipment availability, cited by 61% of respondents and the ability to make necessary investments, cited by 60% of respondents.

Other important concerns were negotiating roaming agreements (55%) and the ability to obtain spectrum at auction (53%).

Perhaps it is surprising that roaming agreements were rated as such an important concern, considering that voice roaming requirements have been in place for quite some time and the FCC in April issued an order requiring national carriers to enter data roaming agreements with smaller carriers at reasonable terms and conditions. But there is still considerable uncertainty about whether this order will stand, considering that Verizon already has challenged it.

The survey went to all NTCA members and received a 25% response rate. According to the NTCA, the respondents provide a representative sample of its members, ranging in size from companies with as few as 18 wireless customers to companies with almost 54,000 wireless customers. The average respondent serves just over 4,000 wireless customers.

The survey contains a wealth of data about rural telco wireless businesses. A few other highlights:

  • Survey respondents reported an average cumulative investment of $5.61 million in wireless facilities and $665,000 in spectrum
  • Forty-one percent of respondents are using unlicensed spectrum to provide wireless services. But 37% of those using unlicensed wireless spectrum said they had experienced difficulties in doing so, mainly interference problems
  • Just over one third (34%) of respondents currently hold at least one wireless license above 2.3 GHz
  • A considerably higher number (73%) have at least one wireless license below 2.3 GHz
  • Wireless technologies deployed by respondents include GSM (38%), CDMA EVDO (35%), CDMA 1X (28%) and WiMax (10%).
  • More than two-thirds (69%) of respondents currently offering wireless plan to deploy next-generation technology, including 43% who plan to deploy LTE, 14% who plan to deploy CDMA EVDO, and 10% who plan to deploy GSM. In addition, UMTS/WCDMA and pre-WiMax were each cited by 5% of respondents.

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3 thoughts on “NTCA: Rural Telcos Increasingly Interested in Offering Wireless Services

  1. Unless the government mandates universal roaming, no plan will ever work. The major providers own the licenses to cover the entire country, but they have no plans to ever build anything outside the major cities. Therefore the small providers who are willing to make an investment to cover rural areas cannot get access to that spectrum to build anything, unless they sign up for something like Verizon's "LTE in Rural America" program http://aboutus.vzw.com/rural/Overview.html whereby a rural carrier can spend their own money to build an LTE system and Verizon will be kind enough to allow them to use their LTE license to operate the system in exchange for roaming rights. Verizon is being kind enough to also allow the smaller carrier's customers to roam on Verizon's system as well, very big of them. This is an ingenius plan, getting the small carrier to spend the money on building the system . In this area, Pioneer Cellular was one of the first to sign up for the program over a year ago. To date, no announcement from Pioneer on any construction plans, though.

    1. Actually the major providers have built quite a bit outside the major cities. Competing against the big guys, even in rural areas, is very challenging and rural companies should make sure to do their homework before entering this space. There may be models that will work but with current roaming, spectrum and handset issues it only becomes more difficut to compete with the large marketing budgets of the big 2 and the low cost route that T-mobile and Sprint are taking.

  2. Definitely need a rural aggregation play. No way small individual rural carriers will survive in a 4G world. Capital requirements are too large and marketing budgets cannot compete. This is a scale business. Good luck.

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