Spring 2018 RURAL TELECOM
In 2018, on the eve of another
huge wireless network build-
out, the cellular industry is
undergoing enormous changes.
Some of these changes will
increase backhaul revenues for
telcos, and others will erode those
revenues. The net result is still far
from clear—and likely will vary
depending on the geographic mar-
kets that telcos serve.
On the Plus Side
Pushing revenues upward are the same forces that have done so for several decades: Consumers
want more wireless capacity, and they want better wireless coverage. In the short term, in most
areas that rural telcos serve, revenue increases based on capacity needs will likely be small. For
example, Derrick Bulawa, chief executive officer (CEO) of BEK Communications (Steele, N.D.), said,
“We have one subscriber per three square miles”—not enough to drive carriers to buy larger, more
expensive circuits—“so the issue here is covering the guy when he goes over the hill.”
Similarly, Eric Cramer, CEO of Wilkes Communications (Wilkesboro, N.C.), said the moderate band-
width increases he’s seeing “are not going to result in significant changes in what we bill.” Until there
are massive increases in traffic, requiring 10 Gbps or 40 Gbps circuits, bandwidth growth can be accom-
modated under the existing cost structure.
In the long run, however, these kinds of massive bandwidth increases will occur. Kevin McGuire,
chief operating officer of Enhanced Telecommunications Corp. (ETC) in Sunman, Ind., pointed out,
“There is no end in sight to the bandwidth requirements of mobile users, especially when you look at the
internet of things, connected cars, agriculture, transportation, government, smart meters—I don’t see any
end to the growth of bandwidth. It will mean more capacity to sites, as well as more sites.”
The explosion of wireless data traffic has provided a reliable source of
revenue for the rural telcos that carry the data over wirelines from cell
towers back to the internet. Though cellular carriers don’t comprise the
entire market for backhaul (broadcasters, public safety agencies and other
entities use cell towers as well), they account for the bulk of the demand.
Thus, cellular carriers’ business strategies will directly affect the fortunes
of telcos—and possibly spur them to rethink their own business strategies.
“There is no end in sight to the bandwidth requirements of mobile
users, especially when you look at the internet of things, connected
cars, agriculture, transportation, government, smart meters—
I don’t see any end to the growth of bandwidth. It will mean more
capacity to sites, as well as more sites.”