Friday, December 13, 2019Canada's Leading Online Business Magazine

A Chance to Level the Playing Field for the Rural Industry

By Hunter MacDonald

Despite years of federal investment and political hand-wringing, the gulf in broadband availability between Canada’s urban and rural population stubbornly refuses to vanish. The most recent federal report found that while 96% of Canadians in urban areas have access to download speeds of 50 Mbps, just 39% of Canadians in rural areas can say the same.

THE GOVERNMENT’S FOCUS for expanding broadband availability often focuses on quality-of-life use-cases such as education and healthcare, which benefit greatly from enhanced connectivity. But studies have shown that historically, access to rural broadband also promoted rural employment and wage growth.

In March, the federal government kicked off an auction for new wireless spectrum, pitting a dozen regional and national operators against each other. At stake are licenses to use lowband 600 MHz spectrum, a valuable section of the airwaves that could confer a long-term competitive advantage to the winners.

But the concern for this auction goes beyond the wireless operators’ profit and loss. The deployment of 600 MHz spectrum, which travels further and penetrates obstacles better than any other wireless data frequency, will provide a unique opportunity to connect Canada’s hardest-to-reach communities. A look south of the border demonstrates the potential advantages of 600 MHz for driving industry growth in rural areas – but also hints at how the government may be squandering an opportunity for major change.

A New Frontier

At their most basic, mobile networks function by sending signals over radio waves, much like FM radio or broadcast TV. If you’ve ever noticed that an FM radio signal is much more consistent than your cellphone signal, you’ve discovered that low-band radio waves – those with a lower frequency – travel further and pass through objects much better than their higher-band counterparts.

This is particularly important for mobile networks, because your cell service provider doesn’t just use one frequency. Canadian operators rely most heavily on mid-band and high-band spectrum, such as 1700 MHz and 2600 MHz, for the majority of their LTE networks. The lowest frequency currently in use is 700 MHz, and it has not been fully deployed across the country. The 600 MHz spectrum that the government is now auctioning off was previously used for broadcast television, and when deployed, will be the furthest-travelling cellular frequency in use.

In practical terms, operators using 600 MHz will see a 25% coverage improvement compared to 700 MHz, and a 200-400% improvement compared to mid-band frequencies like 1800 MHZ. For customers and businesses in rural areas, the benefits are obvious: coverage and speeds will improve, meaning fewer dropped calls and usable mobile internet in more places.

600 MHz’s potential for rural coverage has already been proven to work in the wild. In 2017, US operator T-Mobile spent $8 billion USD on licenses for 600 MHz covering the whole country. In the two years since, hundreds of thousands of rural Americans have reaped the rewards.

T-Mobile has rolled out 600 MHz region-byregion, depending on how quickly each state has been able to clear the airwaves previously used by TV stations. In Kansas and Missouri, some of the first states to receive 600 MHz coverage, average download speeds and coverage are up by around 15% compared to Indiana and Ohio, neighbouring states that are yet to see 600 MHz built out.

When looking at just rural areas within those states, the improvement is even more stark: cell signal is 30% better for T-Mobile subscribers in rural Kansas and Missouri, compared to Indiana and Ohio customers. Achieving that kind of coverage improvement typically takes a longterm infrastructure investment, but it’s been less than two years since T-Mobile first bought its 600 MHz spectrum, which demonstrates the immediate impact that low-band spectrum can have on rural communications.

Rural Industry

In the 21st century, reliable access to highspeed internet is a prerequisite for any business in the services sector. Canada’s economy is increasingly shifting from goods-based industries to the services sector, but with reliable internet access a necessity for service-sector businesses, rural areas are being left behind in the transition.

The challenge becomes particularly stark when looking at business size. Over half of service-sector companies have four or fewer employees, and the overwhelming majority of service-sector companies fall into the category of small businesses. Those companies will not be able to afford the high cost of running physical copper or fiber cables to premises — wireline internet installation in rural areas, even when available, can cost hundreds of thousands of dollars.

Wireless access can solve this problem and drastically reduce start-up costs for rural companies; even if the internet service itself is inferior to wireline internet, lowering the infrastructure costs associated with starting a small business would promote entrepreneurship in rural areas.

Thanks to the improved coverage characteristics of 600 MHz spectrum compared to other wireless frequencies, there is improved potential for rural coverage and the provision of reliable mobile internet to previously underserved communities, which could have great knock-on potential for small business growth in rural areas. Fingers crossed that the winners of the 600 MHz auction realize that opportunity, and build out their networks accordingly.

Hunter Macdonald is co-founder and CEO of Tutela

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