Driving across the country, you naturally expect to lose service in some of the more rural spaces.
But the thing is, there might actually be a network available in that isolated spot. And the fact that you can’t access it is one of the things killing rural carriers today.
According to Carri Bennet, General Counsel for the Rural Wireless Association (RWA), the lack of robust roaming agreements with the dominant U.S. wireless carriers is putting major financial pressure on small, rural carriers.
Unlike their larger counterparts, Bennet said rural wireless carriers are small operations with a subscriber base that clocks in at only a fraction of what the big carriers have. Most RWA members, she said, have a base of around 5,000 subscribers, with the larger members pulling a base of about 50,000 subscribers. The cutoff point for RWA membership, she said, is 100,000 subscribers.
What this translates to, Bennet said, is a smaller revenue stream to support the network, which in turn forces rural carriers to lean on income from roaming agreements to make up some of the difference. More recently, though, Bennet said rural carriers have faced increasing difficulty in locking down these partnerships.
In lieu of roaming agreements, Bennet said nationwide carriers have instead opted to block their subscribers from accessing rural carrier networks where their own networks don’t offer service.
“Let’s say you’re tooling out to California and you hit some areas where (your nationwide carrier) has no coverage, and God forbid something happens,” Bennet said. “Your 911 call will go through because it’s automatic, but if you just needed to make a call to let your loved ones know you’re ok, you wouldn’t be able to make that call because (your carrier) blocked you from accessing that (rural carrier) network. It’s sitting right there, and in a lot of cases taxpayer money, Universal Services money has been used to pay for that network, but you can’t access it.”
Conversely, Bennet said when rural carrier customers head to urban areas served by the nationwide carriers, the rural carriers face roaming rates that can be as much as 10 times more than what the rural carriers charge their own customers for service.
As a result, Bennet said rural carriers sometimes have to deny roaming capabilities for their customers because they can’t afford to foot the bill. Bennet said this leads some rural customers to buy two phones: one from a rural carrier who provides the only cellular service where they live and a second from a nationwide carrier that can be used for trips into urban areas.
“It’s really not fair for a rural American to have to pay for two phones when people in urban and suburban America pay for one phone,” Bennet said.
Verizon did not respond to a request for comment on this story.
AT&T, however, maintained it “continues to have long-standing alliances with many rural operators” but argued in some instances rural operators are actually the ones charging them exorbitant roaming rates.
When selecting its rural partners, AT&T said it looks at “network infrastructure and technology, as well as compatibility with devices” and “the overall economics and consumer value of working with the rural operators.”
“In rare cases where there is a single rural operator in the area, the operator may seek excessive roaming charges from service providers,” AT&T said. “This creates a challenge for providers like us to economically work with the rural operator.”
Bennet said it would be beneficial for both consumers and rural carriers for the Federal Communications Commission (FCC) to regulate roaming so nationwide carriers wouldn’t be able to block their subscribers from accessing rural networks in situations where the larger carrier offers no service.
But rural carriers are also facing a financial squeeze on another front as their Phase I Universal Service funding dwindles even as Phase II’s funding level remains uncertain.
Back in 2012, the FCC auctioned off $300 million to wireless carriers who agreed to expand service to underserved areas in its Phase I offering from the Mobility Fund. A Phase II portion to further expand 4G LTE service in areas that would otherwise go unserved without government help is set to follow, but the funding level – which the FCC suggested total $500 million annually – has yet to be locked down.
According to Bennet, these factors – roaming agreements and federal funding – are two legs of the three-legged support system for rural carriers. And without a sufficiently sturdy third leg – their subscriber base – to make up the slack, the stool is dangerously tilted.
“Our membership has been dwindling because our rural carriers can’t survive in the current marketplace. They’ve been selling out to the bigger carriers because they can’t make it work and they’re not getting relief fast enough,” Bennet said. “So we’ve lost about, over the course of probably the last two years, probably 10 members who have sold their spectrum, shut their network down so that coverage is no longer in that rural area and closed up shop.”
“What I hear repeatedly from them is they can’t make it work because they don’t have enough customer base to support the network while at the same time they’ve lost roaming revenue and they aren’t getting the Universal Service support that they need,” she continued.
Though the RWA is working hard to advocate for rural carrier needs, Bennet said it’s hard for rural carriers with strained resources to match the lobbying power of other telecom giants. The amount of money the RWA has at its disposal is “probably a drop in the bucket” compared to what other titans like Verizon and AT&T can spend, she said.
Heading into 2017, Bennet said the RWA will be focused mainly on making sure Phase II of the Mobility Fund includes sufficient funding for its members. Bennet said the group also plans to advocate for extended support for dual technologies in rural areas where carriers don’t yet have access to the voice solution that goes with LTE and also making sure that reverse auction rules for Phase II funding would be fair enough to give rural carriers a chance for success.
The Rural Wireless Association will host a CTIA partner event, The Rural Wireless Summit Thursday from 11 a.m. to 4 p.m. at the Sands Expo.
