@RCA 2010: Rural wireless carriers advised to innovate or die

LAS VEGAS – Rural wireless carriers received a brutally honest opinion of what their future may look like if they fail to keep up with rapidly technology changes in the mobile industry during a panel discussion at this year’s Rural Cellular Association event in Las Vegas.
“If you are in the 2G wireless business you are going to be out of business within the next 10 years,” said Amit Patel, CTO for Alcatel-Lucent’s U.S. strategic wireless accounts, told attendees.
Of course, Patel’s comments were tinged a bit by the fact they came from a vendor looking to sell the latest technology to those in attendance, but others on the panel did not seem to disagree with the basic gist of the warning. And for the most part, many rural wireless carriers are interested in updating their networks so that they can take advantage of more advanced devices and services that their customers are interested in.
While rural wireless carriers are being pressured to update their networks, Huawei Technologies Co. Ltd.’s VP of wireless marketing and product management Madan Jagernauth noted that current 2G networks will continue to be needed to handle basic voice and messaging services as the LTE standard is just now beginning to integrate voice capabilities.
“2G will stay around for a long time,” Jagernauth explained. “There really is no need to go with VoIP on 4G.”
Roaming potential
Beyond the do-or-die outlook provided by Patel, the panel touched on a number of issues that are becoming increasingly important to rural wireless providers as they move forward.
One of the most compelling topics was roaming, which over the past several years has been hit by larger carriers either acquiring smaller operators or through the continued build out of their networks.
“Roaming is still critical for the big 4,” Patel said. “But, the big carriers are not looking to create roaming agreements. … T-Mobile might be more motivated, but AT&T is not.”
Patel noted that AT&T Mobility’s recently reported first quarter financial results showed continued strong customer growth for the carrier despite a strong marketing push by rival Verizon Wireless touting the lack of reach of AT&T Mobility’s network.
“Those December ads against AT&T did not drive AT&T to want to fill out its map,” Patel said.
However, AT&T Mobility’s LTE plans could spell a different story. Patel noted that the carrier’s 700 MHz spectrum holdings it has accumulated and said it plans to use for its LTE network are not as wide ranging as those held by Verizon Wireless, which could lead to opportunities for rural carriers with 700 MHz spectrum in areas where AT&T Mobility is lacking.
Another potential for rural carriers is investment firm Harbinger Capital Partners, which recently closed on its acquisition of SkyTerra Communications Inc. The $1.8 billion deal includes stipulations that Harbinger use the 30 megahertz of spectrum it acquired in the deal to build out a nationwide cellular network to supplement the satellite-based services being offered by SkyTerra.
Patel noted that Harbinger will be required to cover 100 million potential customers within three years and 190 million pops within five years, and that rural wireless carriers could be good partners for the build out. Harbinger has reportedly decided to use LTE technology for its network and according to media reports has recently begun talks with T-Mobile USA Inc. as a potential customer on the network.
“Harbinger is looking at a lot of different business models,” Patel added.
Local still matters
Despite the increased competitive pressure from nationwide operators, panel members in general indicated that smaller wireless operators still had an advantage in being able to “localize” themselves with their customer base, an advantage they were urged to continue to take advantage of.
“The strength of rural carriers is that they are involved in their community,” said Huawei’s Jagernauth.
Alcatel-Lucent’s Patel added that the involvement should include customization options that take advantage both of technology changes as well as local knowledge.
“Make your customization geared towards your customer base,” Patel explained. “Tie in local events with local community groups.”