5G: Challenges for Rural and Developing Regions

DR HEATHER E. HUDSON

Professor Emerita at the University of San Francisco and Af liate Professor and former Director of the Institute of Social and Economic Research (ISER), University of Alaska Anchorage

THE PROMISE OF 5G

Fifth generation (5G) mobile wireless is being touted not only as the next stage of mobile communications but as a technological paradigm shift. Mobile operators and equipment vendors point to fiber-like connectivity as well as new flexible and dynamic techniques for managing spectrum that will offer enormous potential. Qualcomm states that 5G is not just a network, but that it “will become the underlying fabric of an entire ecosystem of fully connected intelligent sensors and devices, capable of overhauling economic and business policies, and further blurring geographical and cultural borders. It will be capable of delivering at every rung of the ecosystem’s ladder, and will provide seamless, continuous connectivity for business applications.”¹ Ericsson predicts enormous demand in terms of both users and data traffic: “5G will kick off with enhanced mobile broadband as its first use case. By the end of 2023, there will be 1 billion 5G subscriptions, accounting for around 20 percent of mobile data traffic.”²

Such forecasts have prodded policy makers to propose plans for 5G introduction and spectrum policies to allocate the necessary bandwidth in order to gain early advantage as well as early benefits. The EC has adopted a Digital Agenda for Europe (DAE) and a specific 5GActionPlan.³TheU.S.Federal Communications Commission (FCC) justified acting quickly in its September 2018 Declaratory Ruling on 5G: “These new services can unleash a new wave of entrepreneurship, innovation, and economic opportunity for communities across the country …. Moving quickly to enable this transition is important, as a new report forecasts that speeding 5G infrastructure deployment by even one year would unleash an additional $100 billion to the U.S. economy.” ⁴

Implementation of 5G, like other wireless services, depends on availability of suitable spectrum. The history of spectrum regulation has been marked repeatedly by the need to accommodate various new requirements for spectrum, and to balance the trade-offs, with efforts to share spectrum for various uses, and to move new applicants to as-yet unused parts of the spectrum ranging from “white spaces” between TV channels to extremely high frequencies (EHF) or millimeter waves (mmW). For 5G services, lower frequencies such as 700 MHz can cover significant distances, but their bandwidth capacity is limited. Higher frequencies, such as 3500 MHz and higher, have much greater capacity but much shorter range.

Key issues include ensuring access to 5G technology and services and affordable connectivity for rural users. Spectrum plays several roles in addressing these issues. Some spectrum suitable for network densification and higher data rates needed for 5G may already be in use. Will frequencies currently used for satellite services and fixed wireless (such as 3500 MHz and above) be appropriated for 5G terrestrial mobile services? Will the rural market be sufficient to entice providers? Will the characteristics of these bands (high bandwidth, limited range) render them uneconomical for rural regions, and/or enable local entrants to serve their communities?

RURAL CHALLENGES

A recent UK study highlights the financial challenges of universal 5G coverage. Using a business-as-usual scenario, the study estimates that 90 percent of the population is covered with 5G by 2027, but coverage is unlikely to reach the final 10 percent due to exponentially increasing costs “making this proportion unlikely to be served by the market.” The authors point out that this coverage is unlikely to occur as “…“as investing an additional £12 billion to cover the final 10%, while the first 90% only required £6 billion, may not be an attractive prospect for industry or government.” The authors note that integrating spectrum including 700, 800, 2600 and 3500 MHz into existing sites could lower costs to achieve 10 Mbps in rural areas, but would still leave a major rural divide, as data rates would be much lower than in urban areas.⁵

In the U.S., the FCC’s proposals to cap costs outside major urban markets by setting maximum fees for locating antennas and towers have been criticized by some state and local officials who argue that lower fees will make little difference in bridging the digital divide unless there is adequate market demand. They also note that the FCC’s ruling lacks any requirements for telecommunication companies to provide service to unserved and underserved areas.⁶

A recent (and continuing) Canadian government consultation on 5G spectrum policy study highlights many of the challenges – and potential contradictions – facing policy makers who want to extend the benefits of 5G throughout rural regions.

5G SPECTRUM POLICY:

CONSIDERATIONS FOR NORTHERN CANADA

The Canadian North encompasses an enormous land area with a very small population, typically clustered in communities with a few hundred to a few thousand residents. Most have no road access, except, in some cases, winter roads that traverse frozen lakes and rivers for a few months a year. The total population of the three northern territories (Yukon, Northwest Territories and Nunavut) is less than 115,000 scattered over 3.5 million square kilometers. The majority of the population in much of this region is indigenous. Conditions are similar in the northern parts of the provinces.

While small in absolute numbers, these populations are also young and growing rapidly; in Nunavut, 51 percent of residents are under the age of 25. Household incomes in these regions are typically lower than the Canadian average, and often seasonal, while the cost of living is considerably higher. Mobile wireless coverage in the North is lower than in any of the provinces, and the penetration rate is also lower (subscribers as a percentage of the covered population). The number of subscribers with a data plan in the North in 2016 was less than 1 percent of the Canadian total, and the growth from the previous year was only 5.6 percent, the lowest of any Canadian region.⁷ Canadian Northerners are clearly not able to participate fully in the digital economy.

THE CANADIAN POLICY CONTEXT

One of the objectives cited in Canada’s Telecommunications Act is “to promote the availability of reliable and affordable services to all regions of Canada.”⁸ (italics added) In a recent decision, the Canadian Radio-television and Telecommunications Commission (CRTC) determined that broadband is to be considered a basic service available to all Canadians, and established targets of 50 Mbps download and 10 Mbps upload.⁹

Like the U.S. and European countries that want to facilitate rollout of 5G, the Canadian government has concluded that it “needs to repurpose the spectrum to quickly and efficiently support the introduction of the 5G ecosystem.”¹⁰ In 2018, it initiated a consultation on “Revisions to the 3500 MHz Band to accommodate flexible use and preliminary consultation on changes to the 3800 MHz Band” primarily to make these bands available for 5G services. Its stated objectives are to:

• “foster innovation, investment and the evolution of wireless networks by enabling the development and adoption of 5G technologies;
• support sustained competition, so that consumers and businesses bene t from greater choice; and
• facilitate the deployment and timely availability of services across the country, including rural areas.” ¹¹ (italics added)

The government’s general spectrum policy framework established in 2007 enumerates several policy guidelines, including:

1. Market forces should be relied upon to the maximum extent feasible.
2. Notwithstanding (a), spectrum should be made available for a range of services that are in the public interest.¹²

These two guidelines which specify both market forces and the public interest, plus the objectives for the 5G spectrum consultation, highlight the policy challenges facing 5G implementation in rural and remote areas of Canada.

SPECTRUM USE IN NORTHERN REGIONS

The government consultation document noted: “… given Canada’s geography and widely dispersed population, it can be difficult to make a business case for the deployment of new innovative services in some rural and remote areas of the country. Consequently, some rural areas may continue to rely on fixed wireless access in the 3500 MHz band over a longer period of time than urban areas….”¹³ Northern and remote communities rely of some of these frequencies (3700 to 4200 MHz) for telephony and Internet services provided by the Fixed Satellite Service (FSS) and in some regions by fixed terrestrial wireless systems. These frequencies are also used in remote regions to transmit television signals for local over-the-air and cable distribution. There are currently 927 licenses issued to 281 licensees for services in this band.

The Canadian government proposes to accommodate 5G and existing services using these frequencies through a transition plan “that will allow for the timely deployment of mobile services in urban areas while providing rural providers of fixed services with more time to transition to [a] new flexible use system.” Incumbent licensees that would interfere with planned deployment of new licensees in urban areas would be protected for six months, in surrounding regions for two years, while those in rural areas (population less than 30,000) would be protected for three years. Yet such protection does not guarantee that broadband services meeting the CRTC’s speed targets of 50 Mbps down and 10 Mbps up would be available in these rural regions.

CHALLENGES TO GOVERNMENT PROPOSALS

Small ISPs, satellite providers and representatives of rural areas challenged various elements of the government’s proposals. Small providers emphasized their need for spectrum and role in rural connectivity: “The single most effective measure that the Government of Canada can take to promote rural broadband connectivity is to make spectrum available to small, regional, and rural service providers…. Making spectrum accessible to small companies in rural Canada will promote investment, innovation, employment, and economic pointed to the need for rural broadband, but also the challenges of small markets and high costs of extending 5G: “…demand exists for the 5G potential, but it is market failure that may delay its rollout to rural areas.”

Mobile equipment vendors participating in the consultation pointed to the advantages of these frequencies for 5G and to comments in U.S. FCC proceedings alleging decline of C-band utilization and demand in the U.S., concluding that “… this decline in use, and the availability of alternative transmission options for FSS systems, make the band a great candidate for re-allocation for terrestrial 5G use” and that “the entire 3700-4200 MHz cleared for licensed flexible mobile 5G service as early as possible.” Bell Canada, one of the country’s largest mobile operators, which also leases C-band satellite capacity to serve the North, recommended: “Ultimately … the Department should plan to require FSS systems to relocate and be compressed into a smaller portion of the band with the objective of eventually vacating the band altogether.”

However, the importance of C-band satellite facilities for remote and northern regions was noted by several satellite service providers as well as the Canadian Broadcasting Corporation (CBC) which distributes radio and television programming via satellite in the North. Telesat noted that “demand for C-band satellite services is strong and growing, driven by the explosion in broadband demand and the characteristics of the spectrum, and is supported by a huge investment in space and ground infrastructure.” Another satellite-based operator in the North stated that “for the foreseeable future any sharing [the government] could consider in this frequency band must make certain to protect existing FSS users.”

Several participants endorsed flexible use of 3500 MHz spectrum including innovative strategies to make efficient use of spectrum such as a dynamic spectrum allocation model that would allow multiple operators to share spectrum on an ‘as needed’ or ‘spectrum as a service’ basis. Several small providers¹⁴ First Mile Connectivity Consortium (FMCC). (2018) Reply Comments in ISED Consultation on Revisions to the 3500 MHz Band to Accommodate Flexible Use and Preliminary development in rural Canada.” ¹⁵ Others pointed to the need for rural broadband, but also the challenges of small markets and high costs of extending 5G: “…demand exists for the 5G potential, but it is market failure that may delay its rollout to rural areas.”

Mobile equipment vendors participating in the consultation pointed to the advantages of these frequencies for 5G and to comments in U.S. FCC proceedings alleging decline of C-band utilization and demand in the U.S., concluding that “… this decline in use, and the availability of alternative transmission options for FSS systems, make the band a great candidate for re-allocation for terrestrial 5G use” and that “the entire 3700-4200 MHz cleared for licensed flexible mobile 5G service as early as possible.” Bell Canada, one of the country’s largest mobile operators, which also leases C-band satellite capacity to serve the North, recommended: “Ultimately … the Department should plan to require FSS systems to relocate and be compressed into a smaller portion of the band with the objective of eventually vacating the band altogether.”

However, the importance of C-band satellite facilities for remote and northern regions was noted by several satellite service providers as well as the Canadian Broadcasting Corporation (CBC) which distributes radio and television programming via satellite in the North. Telesat noted that “demand for C-band satellite services is strong and growing, driven by the explosion in broadband demand and the characteristics of the spectrum, and is supported by a huge investment in space and ground infrastructure.” Another satellite-based operator in the North stated that “for the foreseeable future any sharing [the government] could consider in this frequency band must make certain to protect existing FSS users.”

Several participants endorsed flexible use of 3500 MHz spectrum including innovative strategies to make efficient use of spectrum such as a dynamic spectrum allocation model that would allow multiple operators to share spectrum on an ‘as needed’ or ‘spectrum as a service’ basis. Several small providers noted that in many small rural markets, spectrum held by incumbent national providers is underutilized or unused, and that policies should not reward “spectrum warehousing.” Spectrum should be assigned to persons willing and able to use it; spectrum should then be used or, failing that, reclaimed and reassigned. Large Canadian operators endorsed auctions as a means of awarding spectrum for 5G networks. While the U.S. has chosen to auction spectrum, small providers argued that this model does not appear appropriate for Canada. Small and community providers may not be able to compete in auctions for 5G spectrum or to provide 5G services in the timeframe proposed by large operators. As one association of small providers noted: “By discouraging competitors in small regional markets, auctions have served urban Canadians at the expense of rural communities.”

The First Mile Connectivity Consortium (FMCC), whose members are indigenous internet service providers, stated that the issue is not timelines, but available and affordable alternatives to provide high quality broadband service in these regions and communities. “Therefore, services and frequencies for internet and broadband in the 3500 MHz band using xed wireless and satellites should not be withdrawn in rural, remote and Indigenous regions and communities until reliable and affordable wireless broadband of at least 50 Mbps download and 10 Mbps upload [as mandated by the CRTC] is available using alternative technologies.”

CONCLUSIONS AND RELEVANCE FOR OTHER RURAL AND REMOTE REGIONS

Economic benefits, social benefits, market forces, public interest, global competitiveness, universal access to reliable and affordable services – these are challenges facing regulators and policy makers not only in Canada but in other countries as well. The following conclusions from the above experience suggest how these challenges may be addressed for 5G, in order to further the goal of universal access to broadband:

1. Licenses for services and frequencies used for fixed wireless and satellite services should not be withdrawn in rural, remote and indigenous regions and communities until reliable and affordable broadband is available using alternative technologies.

2. The allocation of spectrum for new services such as 5G should be governed by a framework that enables small, rural, and regional operators to invest in networks that support broadband in rural communities.

3. New entrants and small providers should be eligible to use spectrum for 5G services through spectrum sharing, micro licenses, or other means.

4. Any policy to allocate additional spectrum for mobile wireless should require that the spectrum be used within a speci ed period or forfeited.

5. Techniques for flexible use of spectrum may be appropriate as long as there is recognition of, and accommodation for, conditions in remote and indigenous regions including technologies currently deployed that are likely to remain in use for broadband services in these regions.

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Heather E. Hudson is Professor Emerita at the University of San Francisco and Af liate Professor and former Director of the Institute of Social and Economic Research (ISER), University of Alaska Anchorage. Her research focuses on applications of information and communication technologies for socio-economic development, regulatory issues, and policies and strategies to extend affordable access to communications, particularly in rural and developing regions. She has planned and evaluated communication projects in Alaska and northern Canada and more than 50 developing countries and emerging economies, and has consulted for the ITU, the World Bank, UNDP, IDRC, and other international organizations. Dr. Hudson is the author of numerous articles and several books. She is a member of the Board of Governors of the Paci c Telecommunications Council and the International Board of the GTWN. She has held a Fulbright Policy Research Chair in Canada and Fulbright Distinguished Lectureship in the Asia-Pacific. She has been a Sloan Foundation Industry Fellow at Columbia University Business School and Sproul Fellow at the University of California, Berkeley, and Senior Fellow at the East-West Center in Hawaii and the University of Hong Kong. She is a dual Canadian and U.S. citizen, and received her PhD from Stanford University and JD from the University of Texas at Austin.

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2. Ericsson Mobility Report.”( 2018) June. https://www.ericsson.com/assets/local/mobility-report/documents/2018/ericsson-mobili- ty-report-june-2018.pdf.
3. (EC 2010 and 2016). European Commis- sion. (2010 Digital Agenda for Europe (DAE). Brussels; European Commission. (2016) 5G for Europe: An Action Plan. Brussels, September.
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6. Maciag, Mike. (2018) “FCC Sets Rules for 5G Infrastructure, Limiting State and Local Con- trol.” http://www.governing.com/topics/trans- portation-infrastructure/gov-fcc-5g-telecom- smartphone-states-cities.html. September 28.
7. CRTC. (2017) Communications Monitoring Report 2017. Ottawa, CRTC, 2017.
   
8. Canada. Telecommunications Act. (1993) S.C. 1993, c. 38, 1993.
9. Telecom Regulatory Policy CRTC 2016-496, Ottawa, December 21.
10. The CRTC regulates telecommunications, but is not responsible for spectrum, which is managed by a government department — In- novation, Science and Economic Development Canada (ISED), formerly Industry Canada.
11. ISED (Innovation, Science and Economic Development Canada). (2018) Consultation on Revisions to the 3500 MHz Band to Accommodate Flexible Use and Preliminary Consultation on Changes to the 3800 MHz Band, June.
12. Industry Canada. (2007) Spectrum Policy Framework for Canada. Ottawa, June. 14 Quotations in this section are from Comments and Reply Comments in ISED, Consultation on Revisions to the 3500 MHz Band, 2018.
13. ISED, 2018.
    
14. First Mile Connectivity Consortium (FMCC). (2018) Reply Comments in ISED Consultation on Revisions to the 3500 MHz Band to Accommodate Flexible Use and Preliminary
15. Quotations in this section are from Comments and Reply Comments in ISED, Consultation on Revisions to the 3500 MHz