In the USA, 34 million people still lack broadband internet access, and 23.4 million of these live in rural areas. In today’s world, broadband internet is now considered an important utility, and people living in rural communities are increasingly unable to participate in the economic and educational opportunities enjoyed by their urban neighbors.
So Microsoft this week put its proposal forward for a new rural broadband strategy for America, making use of the TV white space spectrum. This is unused spectrum in the UHF television bands in the 600 MHz frequency range, which enables wireless signals to travel over hills and through buildings and trees. The company claims it has considerable experience with this spectrum, having deployed 20 TV white spaces projects in 17 countries that have served 185,000 users.
In its blog, Microsoft says, “In 2010 the FCC adopted rules enabling the use of TV white spaces in the United States. It has taken years of additional work to put in place the building blocks needed for the use of this spectrum to scale in an affordable way. We and others have worked to perfect the hardware and software technology, develop industry-wide standards and innovate our way to a practical business model. These advances have now reached a critical threshold, however, and together with increasing demand for cloud services, the market is poised to accelerate – if we take the right steps.”
It has worked with the Boston Consulting Group on a directional study about the best way to meet the broadband coverage needs of rural America. BCG found that a mixture of technologies is needed to address broadband connectivity for rural communities. Specifically, TV white spaces could reach 80 percent of this underserved rural population that live in communities with a population density between two and 200 people per square mile. Satellite coverage should be used for areas with a population density of less than two people per square mile, and fixed wireless and limited fiber to the home should be used for communities with a density greater than 200 people per square mile.
Microsoft claims this approach enables a dramatic reduction in the cost of bringing broadband rates to rural communities. By relying on this mixture of technologies, the total capital and initial operating cost to eliminate the rural broadband gap falls into a range of $8 to $12 billion. This is roughly 80 percent less than the cost of using fiber cables alone, and over 50 percent cheaper than the cost of current fixed wireless technology like 4G.
“The key now is to stimulate private sector investment and combine this with targeted and efficient public-sector support. Today I outline our thinking on how best to do this,” Microsoft adds.
Rural Airband initiative
To address this need, Microsoft announced its new Rural Airband initiative to bring broadband connectivity to two million people in rural America by 2022. (It’s full white paper is available here.)
The company says its prepared to invest its own resources (with government match funding) to help serve as a catalyst for broader market adoption of this new model. Its commitment over five years includes three levels:
- Direct projects with partners: Microsoft’s Rural Airband initiative will invest in partnerships with telecommunications companies with the goal of bringing broadband connectivity to two million people in rural America by 2022. It says it and its partners will have at least 12 projects up and running in 12 states in the next 12 months. The company insists it is not entering the telecommunications business or even profiting directly from these projects. It will invest in the upfront capital projects needed to expand broadband coverage, seek a revenue share from operators to recoup investment, and then use these revenue proceeds to invest in additional projects to expand coverage further.
- Digital skills training for people of all ages: it will invest in digital skills training for people of all ages in these newly connected communities. Working through Microsoft Philanthropies, it will help train people on the latest technology so they can use this new connectivity to improve education, health care and agriculture, as well as transform their businesses. The company announced a new partnership with the National 4-H Council to do precisely this, building on the 4-H’s capabilities and members across the country.
- Stimulating investment by others through technology licensing: it will stimulate investment by others through technology licensing, to act as a catalyst for market investments by others in order to reach additional rural communities. It is launching a new technology program to share its knowledge with other companies. It says it will also help stimulate investment through royalty-free access to at least 39 patents and sample source code related to technology developed to better enable broadband connectivity through TV white spaces spectrum in rural areas.
Its asks of the public sector in return are as follows:
- Use of spectrum: Microsoft says the FCC needs to ensure the continued use of the spectrum needed for this mixed technology model. Specifically, it will be important for the FCC to ensure that three channels below 700 MHz are available for wireless use on an unlicensed basis in every market in the country, with additional TV white spaces available in smaller markets and rural areas. Among other things, this will help stimulate investment by hardware companies to produce the needed chips for new devices at a higher scale and lower cost.
- Infrastructure investments: the company believes that federal and state infrastructure investments should include targeted funds on a matching basis for the capital investments that will best expand coverage into rural areas that currently lack broadband access today. These funds should be made available for use by multiple technologies based on what is the most cost-effective in the region, including TV white spaces, fixed wireless and satellite usage. They should be awarded based on criteria that prioritizes either accelerating broadband coverage or incentivizing private sector investments in the communities where they are less likely to flow on their own.
- Data collection: there is a need for improved data collection regarding rural broadband coverage. Microsoft says the FCC can help by accelerating its work to collect and report publicly on the state of broadband coverage in rural counties, thereby aiding policy makers and the private sector in making targeted investments.
Industry analyst CCS Insight’s RaghuGopal says Microsoft’s initiative will face obstacles such as the availability of devices for use in the TV white spaces spectrum and chipset support. It adds that Microsoft’s vision isn’t without its detractors. The National Association of Broadcasters, a US trade group representing TV and radio broadcasters, sees the white spaces as its territory and believes Microsoft’s plans to use the spectrum without paying any licensing fees is paradoxical for a company worth $540 billion.
It adds that these accusations of encroachment, free-riding and frequency interference could slow Microsoft’s vision, but competition from established technologies and the ambitions of large telecommunication companies will pose bigger challenges.
We’ve seen initiatives from Google and Facebook to launch major broadband connectivity/access initiatives before. While the underlying commercial motivations of big tech firms are not always well understood, the issue of rural connectivity is a big one, and with the many technologies available to plug this gap, a mixed mode approach as suggested by Boston Consulting Group and as being proposed in this latest plan for the US certainly sounds like a pragmatic approach.