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Why some U.S. homes and businesses still don't have cellular service

Matt Hamblen | April 4, 2013
While large portions of the U.S. are looking forward to faster wireless broadband, some regions don't have even simple cell phone service. What is being done to help?

Gas Field Services employs about 100 people, but doesn't even operate a website because communications are so poor. Satellite has proven unusable on cloud and rainy days, according to Reed, and a T1 wired Ethernet connection to the field office would be too expensive. Reed said that Internet connections have improved slightly because Shentel (Shenandoah Telecommunications) recently ran a wired connection to a location near the office park that allows Gas Field Services to connect to via Wi-Fi routers.

"The big wireless carriers always say, 'Well, it's just West Virginia and the mountains. There's nothing we can do,' and that's been the story for five years," Reed says. "I know it's expensive to build a cell tower or making other improvements, but not doing so definitely hurts West Virginia."

An historical perspective

Since the creation of the telephone, the problem of providing better communications service to underserved rural markets has always come down to market dynamics. Carriers want to build their expensive networks in regions with the most customers. In many places, the lack of economic incentives leaves the nation's small rural carriers to scrape together partnerships for spectrum and service.

Chris Nicoll, an analyst at Analysys Mason, argues that the nation's wireless networks are suffering from entrenched historical problems that are difficult to fix. "The gaps in wireless coverage and the inertia in filling them comes from the way the licenses were originally awarded decades ago, which was done market by market, " Nicoll notes.

In Europe, by comparison, an entire country was put up for a wireless license at the same time. "I'm not saying we ever should have gone to a national license, since the way it was done allowed smaller companies to bid," Nicoll says. "But as a result, our wireless coverage is so fragmented that it's impossible to have a comprehensive strategy."

At the same time, Nicoll says, the U.S. has created a wireless market duopoly dominated by AT&T and Verizon, which are each twice the size of either Sprint or T-Mobile and which control most of the wired infrastructure. "There's a lot of wireless competition in the U.S., but not ... at the top four where you have Verizon and AT&T and then much smaller Sprint and T-Mobile. When you step back and look at the bigger picture, there's no ability to acquire spectrum other than by acquiring other operators."

Adding to the problem is that fact that, for many communities around the country, building more cell towers can be controversial -- especially after the FCC, in 2010, approved rules designed to speed up the review process of towers in towns and counties, a measure supported by wireless carriers and tower construction companies.

 

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