Rural Broadband Operators Poised to Add Mobile Phone Service
Consumer preference for broadband and wireless bundle prompts rural operators to expand service offerings
DENVER (Sept. 14, 2023)—The latest communications bundle has gained traction with consumers and is forcing broadband and wireless operators to enter new markets. Today’s popular bundle, which includes a smartphone plan and home broadband service, is attracting the growing number of consumers who have eliminated their home phone line and dropped cable TV in favor of streaming services.
According to a new report from CoBank’s Knowledge Exchange, the days of the classic “triple play” bundle—including cable TV, broadband and a home phone line—are ending. Rural broadband operators are responding to market shifts by adding smartphone services to get ahead of what they believe will eventually become a standard offering of broadband and wireless.
“Entering the wireless market is a big decision for rural broadband operators, and it’s not one they are taking lightly because of the associated costs and risks,” said Jeff Johnston, lead communications economist with CoBank. “But they have been watching this evolution play out in urban and suburban markets, and many are deciding now is the time to offer a smartphone and broadband bundle.”
The competition for broadband subscriptions and wireless contracts in urban areas continues to intensify. Wireless operators Verizon and T-Mobile are making impressive gains in the home broadband market by deploying fixed wireless access. Meanwhile, cable operators Charter and Comcast continue to increase their share in the smartphone market by offering wireless plans via the mobile virtual network operator (MVNO) model. Wireless and cable operators are both successfully marketing their home broadband and wireless bundles.
To add wireless service as an offering, rural broadband operators would need to partner directly with wireless network operators, or work with a third-party MVNO that provides turn-key solutions. Historically, conventional wisdom within the industry was that the MVNO model was best suited for the larger cable companies. But that thinking appears to have changed, at least for many operators.
According to the National Content & Technology Cooperative (NCTC), an organization that represents independent broadband providers, dozens of rural operators have expressed interest in using its MVNO white-label service. NCTC has partnered with AT&T to offer fully customizable solutions that includes billing, service provisioning, customer self-service and more. The NCTC has an initial batch of nearly 50 members signed up to offer service, with a secondary group of between 60-80 members exploring the option.
“The decision to enter the wireless business largely boils down to two factors, reducing churn and increasing market share,” said Johnston. “For some rural operators, their churn is so low and their competition so minimal that it doesn’t make sense for them. But for others who offer service in more competitive markets, the strategic rationale is different.”
The potential for increasing competition for home broadband service in rural areas is another motivating factor for some rural operators. T-Mobile has aggressive plans to expand its reach within rural America. Johnston expects the company will begin expanding its 5G home internet service to additional rural areas in 2024.
Watch a video synopsis and read the report, Rural Broadband Operators Poised to Enter the MVNO Market.
About CoBank
CoBank is a cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 76,000 farmers, ranchers and other rural borrowers in 23 states around the country.
CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.