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Rural Broadband Adoption Leaps in 2010
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Broadband Featured Article

January 14, 2011

Rural Broadband Adoption Leaps in 2010



By Gary Kim, Contributing Editor


The overall broadband take rate for rural and independent telcos responding to a recent National Telecommunications Cooperative Association survey is 55 percent, up significantly from 38 percent a year ago.  That 17-percentage-point jump in a single year is virtually unprecedented, as I seem to recall, over the history of these surveys.


The news is further evidence of the narrowing "broadband gap" that historically exists between urban and rural areas. That isn't to say that top-end speeds are equivalent, or that they ever will be. 

The more-important metric is the "typical" or "minimum" headline speed, as even where it is available, not that many consumers actually buy 50 Mbps service. It might be easy to make fun of minimum speeds of 4 Mbps, but that's fast enough to handle most applications any household or business needs at the moment. In fact, beyond 4 Mbps, one might argue, the main value is enough bandwidth to support multiple simultaneous users, as has been the case for business broadband connections. 

About 79 percent of respondents’ customers can receive 200 to 768 kilobits per second (kbps) service, 77 percent can buy 768 kbps to 1.5 Mbps service. About 75 percent of customer can receive service at 1.5 Mbps to 3 Mbps. About 61 percent of consumers can buy service at 3 Mbps to 6 Mbps. About 45 percent can buy service operating at greater than 6 Mbps.  

If that seems unremarkable, consider that population density in most member service areas is in the "one to five" customers per square mile range.  Approximately half of NTCA’s (News - Alert) members are organized as cooperatives and the other half are commercial companies.

Among the survey respondents, 47 percent of survey respondents’ service areas are 500 square miles or larger; 24 percent are at least 2000 square miles.  Some 75 percent of respondents have customer densities in their service area of 10 residential customers per square mile or less.  About 31 percent have customer densities of two residential customers per square mile or less.  

That's an important issue for broadband because bandwidth and distance are inversely related, as well as cost and bandwidth, in the independent telco business. The simple rule of thumb is that higher density and shorter loop lengths mean both higher potential bandwidth and lower construction cost. 

Some 15 percent of all respondents estimate that they could bring all of their customers currently receiving service below 25 Mbps up to that speed for $1 million or less.  An additional 30 percent could do so for between $1 and $10 million, 26 percent at a cost of between $10 and $20 million, 11 percent between $20 and $50 million, and 19 percent estimate the total cost would exceed $50 million.

Among the other cost issues is the "middle mile" transport function. The typical telco that responded to the survey is 128 miles from its primary Internet connection.  So aside from aggregating local customer traffic, the telcos need to backhaul that traffic 128 miles to an Internet point of presence. 


Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Jaclyn Allard


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