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The cost to provide a rural household with telecommunication services
has always been higher than for an urban household. For the foreseeable
future, the higher cost will remain a fact of economic life. Population
density is a critical factor in service delivery cost, as costs
are shared among households for telecommunication services. The
economics of rural communication and information delivery is true
whether the "last mile" is by means of traditional phone
service (through copper wire), cable telephony, or wireless services.
The "last mile," or as it is sometimes called the "last
foot" or "last 100 feet," is simply the connection between
the consumer and the telecommunications network that everybody shares.
It has been the most critical cost factor in the delivery of telecommunications
services since the invention of the telegraph.
Wireless and satellite telephony have some promising economic
characteristics that could overcome the economic disadvantages rural
areas have in the use of traditional telephone service, but unfortunately
not quite as good as has been touted by their promoters. First,
wireless services have some cost advantages at covering the "last
mile" from a phone company's switch to the household. The limitations,
though, are in the technology and the terrain in which it is being
used. In order to overcome dead zones (areas with no service) in
low population density areas more towers have to be raised, heights
of towers increased, power boosting increased, or some other method.
These added costs quickly reduce any cost advantages the systems
have for serving a region of low population density.
Satellites have also been touted as a means to serve low population regions
and possibly the only way some rural households will be able to have broadband
Internet service. The quality of the service, however, has not yet lived
up to the promise. There are two primary reasons for this:
- The speed of the service may never match broadband services obtained
through the telephone or cable systems.
- In order to receive a signal, an unobstructed view of the southern
sky is needed.
Satellites will serve a niche, but they may never be fully competitive
with land-based systems.
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