4 key business plan levers to achieve successful rural broadband deployments
Internet access has never been more critical in people’s lives. From work-from-home and remote education to entertainment, gaming, or simply connecting with friends and family, it has become an imperative, an essential utility. Making good-quality broadband access available and affordable in rural areas is an undisputable priority - a vital tool to enable equitable employment and access to education. It also helps spread the wealth across the country and ease the burden on densely populated areas by allowing people working remotely to relocate out of urban centers. It was, therefore, the right timing that the FCC recently announced the results of the first round of its Rural Digital Opportunity Fund (RDOF).
As part of the federal efforts to bridge the digital divide and extend high-speed broadband to rural America, phase one of RDOF will subsidize network expansions of 180 Communication Service Providers (CSPs), utility companies, and consortia of operators, who were the winners of FCC’s reverse auction. They will receive a total of $9.2 billion over ten years to provide broadband to 5.2 million predetermined locations (addresses) in the rural United States. An amount of comparable magnitude is expected for phase two, which has yet to have its rules and timelines announced.
The auction brought fierce competition, setting up some challenging dynamics for the winning bidders. The winners offered substantial discounts over the initial FCC resource provisions, the reduction exceeded 40 percent, resulting in a $1,768 average subsidy granted per site covered. About eighty-five percent of the winning bids committed to delivering the highest performance tier: a minimum of 1 Gb/s download capacity with a maximum of 100ms latency.
Delivering such a high-performance in vast low-density areas, at prices compatible with urban areas (a requirement of the auction), will be a monumental task for these service providers. This is in addition to the many intrinsic pressures and transformations of an industry in the vortex of a blistering digital disruption.
To achieve a profitable business case and thrive in the short and long-terms, these providers must meet four essential business requirements: capex efficiency, operational excellence, effective monetization, and adaptability. Not an easy task from any perspective.
- Capex Efficiency means building at the right cost. Leveraging pay-as-you-grow models to minimize overbuilds. Adopting smart architecture choices that reduce the number of boxes while allowing for scaling bandwidth and adding new capabilities. A network prepared to deliver 10Gb/s access, 100Gb/s middle-mile aggregation, and 100Gb/s multiples in the core, whenever needed.
- Operational Excellence comprises everything involved in simpler and cost-efficient operations. Such as minimizing complexity, energy consumption, and space needs. Or controlling exposure to security and operational risks. Operators will need to take advantage of zero-touch-provisioning tools to gain agility, and advanced analytics to deliver the highest service performance. All while keeping OPEX under control.
- Broadband availability does not necessarily mean broadband adoption. Accelerating adoption is critical, as it is excelling in the customer experience to drive loyalty and maximize lifetime value. Unlocking new revenue streams can also be instrumental in making the new builds pay. Whether through value-added services to the residential broadband customers or by offering connectivity or edge cloud to businesses and other operators in these remote areas, the RDOF winners must build comprehensive monetization plans.
- The fourth business requirement is Adaptability. Infrastructure investments are long-term in nature, and technology is ever-changing. One must conceive architectures and platforms looking beyond the already substantial challenge of making 1Gb/s broadband available in these locations in the next few years. These assets need to continually evolve to support future requirements, react to shifting competition, and address yet-to-be-known applications. The network must be adaptive to enable the provider to seize opportunities and mitigate threats in a shifting scenario. That implies maximum scalability; openness to integrate with new tools, partners, and vendors; high programmability of all platforms; and a vision to move towards leveraging analytics and automation.
At Ciena, we are highly focused on supporting service providers overcome these challenges. Through our Adaptive NetworkTM framework, we bring valuable insights to help them future proof their planning. With our XGS-PON solutions, our Universal Aggregation approach, and our convergent aggregation platforms we minimize the CAPEX of these builds while positioning the networks to excel in operations and open new doors for monetization.
If you are building infrastructure to take broadband to rural America, we can help; we are eager and ready to work with you on this journey.
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