NTCA Survey Finds Strong Rural Wireless Investment Plans

Wireless is an important service for rural telecom service providers, as new research from NTCA – The Rural Broadband Association indicates.

Two thirds of NTCA’s small telco members currently offer some form of wireless service – and 35% of companies that don’t offer wireless are considering it, reports the NTCA in its 2014 Wireless Survey Report, issued today. This year’s survey had an 18% response rate.

Among the carriers offering wireless service, 80% said they offer fixed broadband, while 48% said they offer mobile voice, 41% said they offer mobile broadband and 23% said they offer fixed voice.

Among those companies not offering wireless, nearly half (47%) said they had considered it and determined that it was not feasible for them, while 18% said they never considered offering wireless service.

Rural Wireless Investment Plans
Rural wireless carriers have some substantial network investment plans, the NTCA research showed.

Eighty-one percent of respondents who currently offer wireless said they plan to deploy next-generation technology, including 74% who plan to do so within the next two years. The median cumulative investment that respondents have made in wireless facilities, excluding spectrum, is $1.7 million. Median cumulative investment in spectrum is $433,000.

Unlicensed spectrum is important to rural wireless operators, the NTCA survey showed. Nearly half of respondents (49%) said they use unlicensed spectrum to provide some wireless services. A substantial portion of those companies (63%) have had difficulties with the technology however – primarily interference and line-of-sight problems, NTCA said.

Carrier Concerns and Churn
Rural wireless carriers’ biggest concern, cited by 73% of respondents, is their ability to compete with national carriers, according to the NTCA. Other key concerns include their ability to make investments (54%), handset and equipment availability (54%), negotiating roaming agreements (45%), and obtaining spectrum at auction (45%).

Despite these challenges, rural wireless carriers have loyal customers. More than half (56%) have subscriber churn of less than 10% annually, while 32% reported annual churn between 10% and 25%.

In comparison, FCC data shows overall industry churn running at a rate of 24% to 30% annually.

When customers do leave rural carriers, their number one reason is handset availability, cited by 35% of respondents. Other reasons for switching include lower prices from another provider (26%) and the availability of additional services from another provider (4%). The national carriers’ price war apparently has had a significant impact on rural carriers, as only 19% of rural carriers in last year’s survey cited pricing as customers’ reason for switching providers.

Rural wireless carriers apparently are finding it easier to compete on other dimensions, however, as the percentages of carriers indicating that customers left because of device or service availability were higher last year.