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.
Other insights
The Polish 700 and 800 MHz Spectrum Auction: Insights and Global Lessons
Poland’s final low-band spectrum auction marks a pivotal moment in Europe’s 5G rollout, offering key lessons in auction design, cross-border coordination, and strategic spectrum management.
The Case for Strategic Spectrum Renewal
As spectrum licences approach their expiry date, a strategic approach to spectrum renewal is crucial. Traditional presumption of renewal in favour of incumbents may no longer serve the industry’s needs. Instead, a more strategic approach to renewal can optimise spectrum assignments and improve spectral efficiency by up to 40%.
Best Practice Spectrum Management
The principles of best practice spectrum management are well established and their implementation can enhance the socio-economic value of spectrum and how much operators are prepared to pay to acquire new spectrum. Whilst most regulators in developed markets have adopted best practice, the same cannot be said for developing markets. Coleago recently studied the regulatory environments in 16 African markets and recorded the extent to which best practice had been adopted.
Learning From Best Practice Spectrum Management in Botswana
The Botswana Communications Regulatory Authority conducted a review of its spectrum management strategy to align with international best practice. The Authority was advised by Coleago and in this paper, Project Director Graham Friend highlights the lessons to be learned for other regulators in developing markets.
The End of Telecoms History? – Not Quite!
At the European 5G conference, Stefan Zehle highlighted that differences in mobile data usage across countries result from variations in price and network availability. While European policymakers celebrate 89% 5G coverage, gaps in both outdoor and indoor connectivity limit usage. William Webb’s prediction that data traffic will plateau at 20 GB per user per month by 2027 seems unlikely, given that top users already exceed 100 GB. To fully realise 5G’s potential, policymakers must address these coverage issues in a cost-effective manner.
Insights from a Strategic Spectrum Review
The mobile industry has accumulated a fragmented spectrum portfolio, consisting of various frequency bands that are sub-optimally allocated for modern technologies like 4G and 5G. As operators transition from legacy technologies such as 2G and 3G to newer, bandwidth-intensive solutions, the need for contiguous spectrum blocks has become critical.
