“Rural areas underserved by broadband networks” is an evergreen story: it never goes away. No matter how much improvement there is in the coverage, speed of networks or cost, the continual network improvements in urban areas always will mean there is a gap between rural and urban networks.
Consider this graph of user density in the United Kingdom, which shows that 90 percent of U.K. users live on just 40 percent of the land area, with 60 percent of people living on just 10 percent of the land surface. Since terrestrial cabled network cost is directly proportional to density, networks will cost least where density is highest, most where density is lowest.
Population density is even more skewed in the U.S. market, where about 63 percent of people live on just 3.5 percent of the land area, according to the U.S. Census Bureau. Most of the access network cost problem lies in the last couple of percent of U.S. locations.
The good news might be that the amount of bandwidth available in rural areas might soon be reasonable enough to support customer experience for virtually all apps, even if a gap with urban areas persists. The other issue is demand. Even when it is available, many rural residents do not see the need for broadband or faster internet speeds.
A survey of 194 small telcos that are members of the NTCA rural broadband association is instructive. You might be surprised to learn that 23 percent of all connections made available by these rural service providers in 2018 offered at least a 1,000-Mbps connection.
Another 34 percent of connections offer speeds from 100 Mbps to about 999 Mbps. In other words, 57 percent of available connections operate at 100 Mbps or faster.
As typically is the case, that does not mean most customers buy the fastest services. They do not. Actual buying clusters in the range between 4 Mbps and 100 Mbps minimums.
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