What does it take to make rural wireless broadband service succeed? Are the words rural and broadband doomed to be an oxymoron? If a company's market doesn't have significant population density, and the company doesn't have sufficient funding--private or public--to tide it over for the long term, how is it supposed to survive?
I've been wrestling with those questions since I wrote an article last week about the demise of Rocky Mountain Broadband, a rural WiMAX provider that went belly up after trying to deliver wireless broadband service in Aspen, Colo. I have an affinity for Aspen as my ancestors were silver miners there in the late 1800s, before the repeal of the Sherman Silver Act in 1893 decimated Aspen's economy and turned the formerly well-off into dirt-poor paupers overnight. That town is full of boom-and-bust tales, so Rocky Mountain's unlucky end struck a chord with me.
Anyway, John Metelski, principal with Rocky Mountain, felt I was remiss by not mentioning in my article that some tech-savvy hotel guests were starting to take notice of the WiMAX service offered by Rocky Mountain. Unfortunately, the privately funded company's money ran out before those opportunities could be exploited.
John's criticism brought up a really good point, which is, what does it take to keep a rural broadband network going after the initial launch?
Phase I of the Mobility Fund, the first-ever reverse auction for Universal Service support, is slated to occur on Sept. 27 and is designed to accelerate delivery of advanced mobile services to tens of thousands of road miles that currently lack 3G or 4G service. According to FCC rules, winning bidders must deploy either 3G service within two years or 4G service within three years of the award. The Mobility Fund will award up to $300 million to the winning bidders, who will indicate the amount of one-time support they need "to deploy service meeting rigorous performance standards in unserved areas within the required timeframe," said the FCC.
And what comes after that one-time support? I'd be seriously surprised if many of these rural networks become self-sustaining in two or three years, so it will take government handouts to keep them afloat for quite awhile. Phase II of the Mobility Fund is supposed to provide $500 million annually for ongoing support of mobile services, yet I'm skeptical that every winner in Phase I will successfully qualify down the road for Phase II support.
As former rural WiMAX operators OpenRange Communications and Main Street Broadband quickly discovered when they tried to renegotiate the loans they had gotten from the U.S. Department of Agriculture's Rural Utilities Service, "The government giveth, and the government taketh away." I wouldn't want to build a long-term business plan based on future hoped-for funding from what is essentially a bankrupt national government whose funding support often appears downright capricious.
TV white space players are also eyeing rural broadband coverage, but, again, I have to wonder where the money will come from to not just launch their envisioned services but keep them going.
So help me out. What will it take to viably extend wireless broadband into the hinterlands? Can enough money be thrown at the problem to solve it? Are radically innovative technological solutions required? Or should those rural folks all just give up and move into the big city if they want wireless broadband service? Opinions are welcome in the comment section below, and you can also vote in the poll on our home page this week.--Tammy