An Oct. 31 article in RCR Wireless quoted Sen. Ted Stevens from Alaska as saying, “We should let cell-phone companies get additional price support to expand cell-phone towers into rural America.” Sounds simple, but Sen. Stevens did not run the numbers.
He appears to be unaware of the technology, logistics, siting challenges, zoning restrictions and equipment costs required to build out a rural PCS network covering the entire United States. Tinkering with USF monthly charges to meet this goal may be well meaning theoretically, but in the real world, it’s a preposterous proposition.
A total-coverage rural PCS network as proposed by Sen. Stevens would require a square grid of 200-foot towers about six miles apart (assuming flat topography). A 200-foot tower with foundation, grounding and service panel and security fencing can cost $175,000 to $200,000 depending on tower type and subsurface geology. An access road can cost up to $80,000 per mile depending on subsurface conditions, grade, streams and access to the nearest road.
A tower base station requires 220 volt, 200-amp electrical service and a high-quality telephone line. If a nearby power source were not available, the site would have to be equipped with a generator. Lack of suitable, nearby telephone lines in the area would require the tower to be equipped with a microwave dish and electronic equipment.
Based on the above possibilities, we can estimate the average cost of a rural tower can range from $200,000 to $300,000. For purposes of running these numbers, we will assume an average complete tower (fully ready for installation of a carrier’s PCS equipment) at $250,000. In addition, the average rent for rural sites is about $500 per month. On top of this, the tower owner is also required to pay for site maintenance and generic power for tower-specific equipment. The average cost of site maintenance in northern areas is about $300 per month. As such, the total cost of a carrier-ready 200-foot tower site is about $250,000 plus $800 per month.
A PCS carrier would pay a monthly rent to the tower owner to place antennae and cables on the tower and base-station RF equipment. Since a major portion of the first carrier’s rent goes toward paying the landlord’s rent and maintaining the site, very little is left to pay off the cost of building the tower (plus development costs). Since one carrier is not enough to provide a tower owner with a reasonable return on investment, at least three carriers would be needed to make a tower owner decide to build, a scenario that would most likely not occur in rural areas.
Sen. Stevens’ proposal to use USF funds to build rural wireless networks in lieu of typical wireline service for such areas is based on a cost comparison making both types of service similar or equivalent. To start with a small rural model, a new network covering a 36-mile-by-36-mile area would require 36 new towers at $250,000 each plus approximately $200,000 for one and each additional wireless carrier wanting to mount their equipment on the tower. A one-carrier 36-tower buildout would cost approximately $16.2 million plus $28,800 per month in land rent and maintenance. A three-carrier network would cost $30.6 million plus $28,800 per month in land rent and site maintenance.
Building a new, rural network may require each carrier in the buildout to also build a central switch for each group of BTAs served.
The United States is about 2.6 million square miles in size using only one half the size of Alaska because it doesn’t seem reasonable that the barren north section of Alaska needs wireless service. From current census figures, about 96 percent of U.S. residents live in about 26 percent of the major metropolitan areas already having wireless service. That leaves about 9.67 million people living in rural areas that cover about 1.95 million square miles. If one tower with one carrier on each tower were to be built in a six-mile grid covering this 1.95 million square mile rural area, the buildout would require at least 54,167 towers. The cost of the towers alone would be about $13.5 billion. A single carrier would have to spend $10.8 billion to place RF wireless equipment on each of these towers. A single carrier network covering 1.95 million rural square miles would cost $24.4 billion plus $46 million per month for land rent and site maintenance.
If 20 percent of the U.S. population had a wireless phone, that would mean the rural buildout cost could be spread over 58.5 million wireless customers. That would result in at least a $416 charge for a single-carrier network or a $787 charge for a three-carrier network plus about $10 per year for rent and maintenance. These charges would only apply to the initial buildout costs and monthly fees.
Can it be done without taxpayer assistance? Probably not. Can a complete rural network be built by increasing the USF tax? Again, probably not because that would unfairly place the burden of cost on only a segment of the current population to the benefit of others who may become wireless customers in the future. If the segment paying for the rural buildout were only those living in rural areas, the charge would be so high that no one would move to a wireless phone. If the charge is spread out over all wireless customers, the size of the fee would possibly cause customers to downsize their usage contracts or cancel service.
John Santroch
Waukesha, Wis.
