Mobile for All: Tackling Rural Connectivity

We looked at how technologies such as 4G LTE, 5G, wireless backhaul, and LEO satellites can deliver meaningful connectivity beyond urban areas.

One of our members, Jonathan Wall from Aetha Consulting, contributed valuable insights, comparing the event’s key themes with global experiences. His reflections highlight both the opportunities and the obstacles we face in making mobile truly accessible for everyone.

Challenging economics require sharing

With lower population density – and often less economic development – in rural areas, providing capacity and coverage is more expensive as there are simply fewer subscribers and less revenue per cell site. The easiest way to improve the economics is to share the cost with other MNOs: essentially all mature mobile markets feature passive sharing between operators in the rural fringe of the network, often facilitated by third-party TowerCos.

However, this introduces complexity into the site design and planning as larger and stronger structures are needed to both maximise coverage (by increasing site height) and maximise tenancy. In many European markets, this exacerbates existing local planning barriers, for example, in conservation or heritage areas where standard cell towers may not be given planning permission.

In other contexts, network sharing for extending rural coverage can be a simpler process. Aetha Consulting wrote about how MNOs in Africa have developed extensive sharing relationships here.

Of course, in all of these markets, there are major challenges in delivering power and backhaul to cell sites, particularly in locations further from the existing grid. There are also questions about the sharing model used – passive sharing is simplest, with many examples – however, active sharing is overall most cost-efficient given the savings extend to RAN equipment. Regional active sharing has been deployed highly effectively, for example throughout Scandinavia.

Sharing agreements require high trust

The commercial negotiations for network sharing are the most common area where deals fail. MNOs often query their counterparts’ network plans and unit cost levels, and there is often no common view on the savings or synergy potential from network sharing.

It was therefore unsurprising to hear from the delivery of the UK Shared Rural Network how critical it was to both develop suitable governance processes and put real emphasis on disciplined decision-making with transparent data sharing to trusted deputised parties.

One observation is that it is probably comparably easy for MNOs to reach agreement on rural network shares as compared to full network sharing or merger deals given that a) there are fewer valuable customers at stake and b) there is less loss of autonomy in a partial share. Cynically, I would also suggest that regulatory or licence condition pressure means fewer excuses for a failed deal…

Funding requires government intervention

Even with sharing, the economics of rural coverage are generally insufficient for MNOs alone to commit to wide rollouts. Coverage as a competitive differentiator is an effect that mostly hits specific local areas, which limits MNOs’ incentives for rollout. This means that government intervention is required.

Globally, there are two major models used: the carrot and the stick. The carrot: grants or universal service funds are provided by government to direct investment in rural coverage. The stick: coverage obligations (specific or general) included within spectrum licences – noting that it is important that regulators consider the likely cost to meet licence obligations when setting reserve prices for spectrum licences. We previously wrote about how regulators have become more sophisticated in setting obligations here.

Satellite complements terrestrial connectivity

Satellites have an important role to play in extending mobile coverage deeper into rural areas. There is significant investment in direct-to-device (D2D) connectivity at present, however, we expect capacity constraints to limit its ability to substitute terrestrial mobile signals en masse. Aetha Consulting recently wrote on this hot topic here and here.

Increasing availability of high-bandwidth satellite backhaul, however, makes rural cell site deployment significantly simpler. BT, for example, increasingly supplements its mix of fibre and microwave links with satellite backhaul.

Finally, it is also important to account for the role satellite backhaul plays in increasing the resilience and availability of mobile networks.