Why Do Mobile Providers Skip Small Towns in Favor of Urban Areas?

Living in Northern New Mexico, I have experienced firsthand the challenges of rural connectivity. Verizon is the only service that works in my hometown, while companies like ATT are focused on upgrading big cities to 5G. This article will explore the reasons behind this disparity and discuss the implications for small towns.

Basic Economics and ROI

The primary reason behind the lack of 3G or 4G expansion in small towns is the basic economics of mobile network deployment. Building a tower can cost around $150,000, with an additional $15,000 annually for rent or leasing space in existing towers. There are also ongoing expenses such as power, maintenance, and operating costs.

For-profit companies must ensure that the investment in a new tower provides a return on investment (ROI) that covers these costs. In rural areas, this can be a significant challenge due to the lower number of subscribers. As a result, companies often prioritize urban areas where they can capture a larger number of customers and generate higher revenues.

Germany’s Experience with Mobile Network White Spots

Germany also faces similar challenges with white spots in rural areas while the network is being upgraded in and around big cities. The issue is that mobile companies are driven by the need to maximize profits. They are not a government or social service, and therefore, they target areas where the investment will yield the highest return.

Building a new tower can be a costly proposition, and it is not financially viable unless there is a sufficiently large customer base to justify the investment. This is why urban areas, with their higher population density and larger customer base, are prioritized over smaller towns and rural areas.

5G Capabilities and Real Market Deployment

It is also worth noting that while many carriers advertise 5G capabilities, they do not always deliver. In my experience, major carriers are often faking their 5G capabilities. Real 5G service is not yet available in many small towns. As of now, they offer what is essentially 4G speeds, albeit under the guise of 5G speeds.

There have been efforts in the past to stake claims on frequencies and spectrum, and many small companies played a role in this. However, over time, the big players have consolidated their control over these resources. Large cities benefit from this arrangement, as it gives the illusion of competition, with companies running special promotions and services to attract customers.

Small prepaid companies have emerged, using the towers of the big players. They pay fees to lease the space, and the networks operate in a collaborative, albeit competitive, environment. This system ensures that the larger companies maintain their market control while smaller players have a limited market share.

Conclusion and Future Prospects

The lack of 3G and 4G expansion in small towns is a classic example of the imbalance between urban and rural needs. While the rural population faces connectivity challenges, the urban population continues to experience upgrades and improvements. This disparity highlights the need for policymakers and mobile companies to consider the broader implications of their deployment strategies.

In the short term, small towns and rural areas may continue to face connectivity limitations as urban areas are prioritized. However, as the industry evolves and the demand for higher-speed internet increases, there may be a shift in focus towards rural regions. Innovations such as millimeter wave technology and the adoption of 5G capabilities in rural areas could provide long-term solutions to the connectivity gap.

For now, it is essential for those living in small towns to advocate for better connectivity and to work with local policymakers to drive change. The future of rural connectivity is crucial for balancing urban and rural development, and ensuring that everyone has equal access to modern communication infrastructure.