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The cost to provide a rural household with telecommunication
services has always been higher than for an urban household.
For the foreseeable future, the higher cost will remain
a fact of economic life. Population density is a critical
factor in service delivery cost, as costs are shared among
households for telecommunication services. The economics
of rural communication and information delivery is true
whether the "last mile" is by means of traditional
phone service (through copper wire), cable telephony, or
wireless services.
The "last mile" is
simply the connection between the consumer and the telecommunications
network that everybody shares. It has been the most critical
cost factor in the delivery of telecommunications services
since the invention of the telegraph. Despite this, broadband
service has grown rapidly in rural areas, though terrestrial
service is far from universal.
Of all land-based hard-wired
systems, digital subscriber lines (DSL) is the most common
for rural areas. Most farms with broadband have DSL service,
few have cable. Outside of larger rural towns, cable
companies are bypassing rural areas for the most part.
DSL services, with some variation, are only viable to subscribers
within 18,000 feet, as the wire goes, from the central
office switches. Sometimes it is not available beyond 12,000
feet without the additional expense of signal boosters
along the lines.
Operating costs are another problem for rural areas. The
per connection operating costs for a system handling 10,000
lines per square mile are $100. Costs increase exponentially
as density decreases. It costs $292 per connection to handle
5-100 lines per square mile and $694 for less than 5 lines
per square mile.
Wireless and satellite telephony have some promising characteristics
that could overcome the economic disadvantages rural areas
face in the delivery of high-speed Internet access. Wireless
services can sometimes reduce the cost of covering the "last
mile" from a phone company's switch to the household,
but the promise may be limited by the particular wireless
technology employed and the terrain in which it is being
used.
In order for wireless service to overcome dead zones (areas with no service)
in low-population areas, more towers have to be raised, the heights of towers
increased, power boosting increased, or some other method employed.
Satellite access became a true broadband alternative
in 2002 because of technological improvements, but it continues
to have drawbacks. First, a subscriber must have a clear
view of the southern sky. Second, satellites do not scale
well as the subscriber base increases. Mainly this is due
to bandwidth capacity limits. Third is performance and
cost. The typical system capability is 400 kbps download
and 128 kbps upload. By comparison, DSL offers 1.5 mbps
download and 128 kbps upload capacities. The cost is also
typically higher both in upfront as well as monthly charges.
Circumstantial evidence suggests that the higher cost and
lower quality currently available with satellite provision
of broadband Internet has restricted its acceptance among
farmers and other rural Internet users.
Wireless may be the future of broadband Internet access
in rural areas, but spectrum is still a problem. While
cost for urban users of wireless may be higher compared
to DSL and cable, the reverse is true for rural areas.
No matter what the least-cost broadband service is, however,
the delivery cost per user will be higher for rural areas
than urban areas.
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