Regulatory Approaches to Providing Deep Rural Coverage
In a number of markets, governments are working together with the regulator and mobile operators to address coverage “black spots” and deep rural coverage. This new paper explores some of the approaches being adopted.
Coleago’s comprehensive analysis in “Maximising Coverage through Spectrum Awards” examines the economics of coverage expansion in the mobile industry. The paper delineates various levels of coverage obligations and their economic viability for operators, shedding light on the challenges and solutions pertaining to deeply rural areas.
Introduction
The paper identifies five coverage levels, delineating the point where extending coverage becomes uneconomical for operators. Notably, levels beyond commercial viability necessitate regulatory intervention or subsidies for expansion, compelling collaboration between regulators and mobile industry stakeholders.
Coverage Levels and Economics
Level 1: Commercially driven expansion where operators extend coverage until marginal revenue equals incremental costs.
Level 2: Beyond commercial coverage, viable with regulatory intervention.
Level 3: Commercially viable but suitable only for a single operator acting as a natural monopolist.
Level 4: Unviable without subsidy, typically involving deeply rural areas or the last percentile of population.
Level 5: Remote areas where terrestrial mobile networks are not the economical solution, necessitating alternatives like satellite or specialised projects (e.g., Alphabet’s Project Loon).
Regulatory Approaches in Various Markets
France: Agreement through licence renewal for a €3 billion industry-funded programme to cover underserved areas.
United Kingdom: Creation of a Shared Rural Network (SRN) through co-funding by government and industry to address rural coverage gaps.
Germany: Coordinated construction of radio sites by major operators, complemented by government funding to eliminate white spots.
United States: A US$9 billion plan focused on rural areas and agricultural support, intertwined with T-Mobile/Sprint merger conditions.
Australia, Norway, Kazakhstan, Zimbabwe, Mozambique, Kenya: Diverse strategies involving public funding, shared networks, satellite technologies, and partnerships to extend rural coverage.
Considerations for Regulators
Achieving deep rural coverage necessitates collaboration and funding. Furthermore, leveraging licence renewals or spectrum awards provides opportunities for stakeholders to collaborate. Reverse subsidy auctions can efficiently ensure coverage, while joint ventures mitigate competition concerns. To expand into areas unsuitable for mobile networks, regulators must explore alternatives like satellite or specialised projects, necessitating broader stakeholder coordination, including aviation authorities.
Conclusion
The paper underscores the imperative for collaboration between regulators and the mobile industry to extend coverage, especially in deeply rural areas, and emphasises innovative funding mechanisms, joint ventures, and alternative technologies to bridge coverage gaps effectively. Moreover, it highlights the pivotal role of regulators in coordinating diverse stakeholders to achieve ubiquitous connectivity beyond traditional mobile networks.
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