Verizon says 4G wireless via LTE is coming to rural markets – markets they currently don’t serve with 3G CDMA technology. According to Tony Melone, senior vice president and chief technology officer for Verizon Wireless, who tells CNET, “… we plan to roll out LTE throughout the entire country, including places where we don’t offer our CDMA cell phone service today.” Melone says Verizon will use its nationwide 700 Mhz spectrum footprint for the 4G plan. Should Verizon follow through on this promise, its competitive implications could be far reaching.
We should first clarify – we doubt seriously that Verizon will bring 4G to vast rural territory throughout the U.S. Their definition of rural probably leaves a lot to be desired. But expanding their rural footprint with 4G in any way could have significant ramifications for incumbent rural service providers. Consider that current wireless service provided by big wireless carriers like Verizon and AT&T in rural territories has an impact. It probably represents the most significant competitive threat for many rural service providers today, as customers cut the cord of wireline service and go with wireless exclusively. But it doesn’t stop there. Rural customers don’t have to cut the cord entirely for wireless to have an impact. They also shift their long distance calling to wireless, depriving rural ILECs of long distance access minutes and the lucrative revenue it represents.
This impact is significant and it is happening today with just basic wireless service – not 4G. If you add 4G to the mix and expand its rural footprint, the implications multiply and may now impact rural broadband as well. Rural service providers who only offer DSL may find a legitimate wireless competitor in 4G. If wireless substitution history is an accurate indicator, DSL may indeed be at risk. Incumbent rural service providers may find an increasing number of customers who think wireless works exclusively for not only voice, but broadband too.