Sprint partnership suddenly makes rural LTE a real market

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A new alliance between Sprint and a telecom cooperative called the NetAmerica Alliance sheds light on one of this country’s most persistent communications problems–one which a cursory read of the news itself could easily avoid mentioning.

When the U.S. Dept. of Commerce last measured, only 15 percent of the nation’s rural points-of-presence had access to wireless download speeds of 10 Mbps or greater. That measurement took place in June 2011 for a report published in 2013 (.pdf), though there’s good reason to believe things haven’t improved all that much since then.

Videoconferencing applications require at least 10 Mbps, often as much as 50 Mbps of bandwidth. What class of users would require this much bandwidth for this purpose in rural areas? Agriculture, roadway construction, mining and oil drilling. Wireline connections to the nation’s rural regions are aging and unreliable.

Extending wireless broadband service to the nation’s rural customers has typically required small carriers, with exclusive customers in these districts, to pool together to purchase resalable bandwidth from a major carrier. Since 2010, Verizon has sought to be that carrier, by offering leases for its 700 MHz upper block spectrum (part of the grand prize of the FCC 700 MHz auction) to rural communities, through what that carrier calls the “LTE in Rural America Program.”

Competing with that program is the NetAmerica Alliance, which was founded with the idea of rural carriers pooling together their purchasing power and reselling similarly branded access packages to rural customers. For instance, Alliance members have been offering 4G LTE service to their customers under the collective brand “Bonfire.

“Recognizing the opportunity driven by consumer demand for anywhere, always-on broadband communication, many CSPs strategically acquired spectrum and evaluated deploying 4G LTE to serve that demand,” reads an introduction on NetAmerica’s Web site. “The question they faced was how to do that effectively and profitably in today’s challenging environment. The answer: by not going it alone.”

Meanwhile, Sprint had been building on a plan to compete in rural broadband, with a joint program involving its Clearwire division (now known as Clear) and Dish Network–which just last year was Sprint’s likely merger partner. Now that Softbank acquired Sprint instead, Dish is making moves on its own, using its own chunk of 700 MHz spectrum to offer rural LTE broadband using its own outdoor antennas.

So Thursday’s announcement that Sprint is teaming up with NetAmerica, for what’s being called the Small Market Alliance for Rural Transformation (SMART), could actually create the competitive broadband market that legislators have sworn for years already existed. In his statement, NetAmerica CEO Roger Hutton claimed that previously, a duopoly had existed in rural markets–a duopoly between Verizon and AT&T, with which his Alliance’s members could not compete.

In a keynote speech Thursday at the Global Expo of the Competitive Carriers Association (which will also be participating in the partnership), Softbank chairman Masayoshi Son (who is also now Chairman of Sprint) told attendees the only way for rural carriers to compete against this duopoly effectively is not just by banding together, but offering a single competitive service with the most modern devices. Pointing out that Sprint’s competitive footprint against that of CCA members doesn’t overlap all that much, Son said that Sprint is offering its footprint and portfolio services to rural competitors as “weapons” (his word, which he repeated) against “the duopolists.”

But their duopoly may be weakening anyway. As The Motley Fool first reported Tuesday, AT&T and Verizon actually gave back federal funds that were part of the FCC’s Connect America Fund–established to help expand broadband service to rural areas. AT&T has also reportedly retained lobbyists, apparently with the aim of convincing lawmakers to cancel their obligations, under the National Broadband Plan, to establish rural service.

If AT&T and Verizon are truly walking away from this, Sprint appears willing to welcome rural customers with open arms… and a Tier 1 backbone to boot.

For more:
– see the NetAmerica Alliance site
– download the NTIA doc (.pdf)
– read the ExtremeTech article
– read The Motley Fool article
– see the NetAmerica press release

By Jarrett Neil Ridlinghafer 
CTO of the following –
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Synapse Synergy Group
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Chief Technology Analyst, Author & Consultant
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Hadoop Magazine
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Cloud Consulting International

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