Rural broadband demand continues to grow in the US
Rural broadband use and demand continues to grow throughout the US according to a new report from Calix. Calix is a global technology company that provides services to support broadband providers. The report shows that rural Internet traffic grew by 53% in the second quarter of this year. As CivSource has reported, the big three broadband providers – AT&T, Verizon and Comcast have all said consistently that there is no business case for rural broadband. Frontier Communications, a rural broadband provider which recently acquired many of Verizon’s rural markets, also announced an expansion into West Virginia as a response to increased demand.
The Calix US Rural Broadband Report is based on Internet traffic information drawn from over 65 US communications service providers and analyses data derived from a subset of Compass Flow Analyse deployments across the US. According to the report, while rural subscribers are starting to see increases in speed and access, two-thirds of rural broadband subscribers in Q2 experienced peak speeds that fell below the 4 Mbps target of the Connect America Fund. The Connect America Fund is a grant project proposed by the Federal Communications Commission (FCC) to help bring rural America online in a way that is comparable to urban centers. The big three providers have opted out of the free money offered to them by the FCC to build out this infrastructure preferring instead to focus on creating shareholder value through artificial scarcity.
“Of particular interest this quarter was both the accelerating pace of Internet traffic in rural America quarter-over-quarter, and the fact that much of this increase was seen over copper networks,” said Miguel Alonso, Calix vice president of software products. “The combination of new copper technologies, a proliferation of video consuming devices, and content moving to the cloud creates a fertile ground for rapid increases in Internet traffic because copper is the most widely deployed access media in the rural U.S. Looking ahead to future quarters, we expect this trend to continue, and promise to provide deeper insights and analysis and we continue to further enhance the report by tracking more applications and endpoints across the U.S.”
Frontier Communications, which opted to take money through Connect America has been rapidly onboarding new rural clients including previous markets owned by Verizon that went unbuilt. Frontier announced a partnership with West Virginia Governor Earl Ray Tomblin to bring some 400,000 homes online in West Virginia. West Virginia was recently ranked as the worst in the nation for broadband access. According to the FCC, 46% or approximately 845,000 people are without access to high speed broadband.
West Virginia has been working to expand statewide broadband access although their original plan to bring more anchor institutions online has been fraught with missteps. The Frontier partnership will focus more on building out a residential subscriber base than bringing on public offices and access points.
Broadband hardware providers are also finding an easy capital raising environment given strong global demand for Internet access. Duluth-based INovo Broadband which makes set-top boxes and modem boxes for telecommunications providers announced that it recently completed a $1.85 million round of financing. INovo competes with companies like Arris which make the modems rented out to individuals who get Internet as part of their cable TV bundles.
INovo launched this year, and company spokesmen have said that they are seeing strong national and international demand for their set-top boxes.