Can 5G close the rural-urban divide? Biden seems to think so

10th Sep 2021

America’s rural-urban economic divide is significant, and has been growing for years. One in five Americans lives in rural areas,¹ and their options for economic advancement and educational attainment are low. Although there are a number of causes, high-speed internet plays a significant role. 

Up until now, reliable, fast broadband internet has been too expensive, and possibly also low on the list of priorities. But 5G, or 5th-generation connectivity, opens up a new range of connectivity possibilities. Together with the pandemic-fueled awareness that fast internet is now a need, not a luxury, 5G wireless internet could be the bridge that spans the chasm between rural and urban America.

Without high-speed internet, rural Americans are cut off from economic growth

The typical belief that most country-dwellers are involved in agriculture is highly outdated; a 2017 study concluded that under 5% of the rural workforce is employed in agriculture and only around 15% in manufacturing, while the majority work in small local businesses.² In fact, small businesses are a more important economic force in rural areas than in cities. 

Small businesses are hailed as agents of the post-COVID economic recovery,³ but in rural areas they are struggling to survive. There are a number of causes, including insufficient access to working capital, but one of the most significant is a lack of high speed, reliable internet.⁴ In 2019, America’s rural communities were 10 times more likely to be starved for broadband access than urban ones,⁵ and a recent study found that up to 42 million Americans were unserved by broadband, the majority in rural and tribal lands. ⁶

Rural America’s internet poverty handicaps economic growth in a multitude of ways. Enterprises won’t move to rural areas if they can’t get the connectivity they need. Many rural companies who sent employees to work from home at the beginning of the pandemic found it was impossible, because they didn’t have home internet connectivity. “Our ability to diversify our economic base is dependent on modern infrastructure, and that includes broadband,” said Mark Raymie, chairman of Marion county Board of Supervisors. “We can say, ‘Come and work here.’ But if we don’t have modern amenities, modern infrastructure, that sales pitch falls flat.”⁷

The best paying jobs are in the knowledge economy. In theory, remote working should open these positions to anyone, anywhere – as long as they have reliable internet. Freelancing is increasingly popular, but it too requires internet connectivity. Upwork’s Freelancing in America survey found that among freelancers who had to pause their work during the pandemic, only 42% were working remotely, but 82% of those who were able to continue without a major hiccup were remote workers.⁸ New ecommerce businesses bring revenue into rural communities, as long as they have a strong internet network to connect them with global markets. Etsy reports that 28% of the platform’s 1.7 million sellers live in rural communities, although rural residents make up only around 18% of the total population. Similarly, 32 of the 100 counties with the highest eBay sales revenue per capita are rural counties. ⁹

Poor internet is also holding back rural education. Lack of access to the internet for research and an inability to develop internet skills has been a problem for rural youth for years, but it took the pandemic to make it clear that reliable internet is an educational necessity. The last 18 months or so saw most children studying from home most of the time, but in rural areas with scarce coverage, children had zero education for close to a year and a half. 

Community services, from smart lighting systems that save energy and reduce light pollution to telehealth capabilities, rely on internet connectivity. It was a problem in “normal” times, but became critical during the pandemic. One rural community had to update the population about infection rates and health advice through the weekly local paper and terrestrial radio. American’s rural population can’t use video chat, watch informational videos, and or research any topic independently, because the internet is so slow. Rural populations are older and less healthy, and as rural hospitals close, they have even fewer local medical services and an even greater need for telehealth services. But their lack of connectivity means they can’t use telehealth, video chat with medical professionals, health monitoring devices, online health portals, etc.¹⁰

Even agriculture is losing out for lack of connectivity. Advanced agro-tech, like smart sensors that monitor pests, fungal and bacterial infections; weather monitors; and smart irrigation systems rely on Internet of Things (IoT) devices that connect via internet networks. Nancy Post, director of the Intelligent Solutions Group at John Deere, thinks that rural 5G internet could “help feed the world.” “Planting and harvesting is very, very time critical in order to optimize that crop output, so you can envision that would become so much more seamless and predictable [with better connectivity],” she said.¹¹

One FCC analysis found that when the number of broadband connections per rural household doubled, corn yields increased by close to 4%.¹² Speaking to the Senate in 2017, John Lettieri, co-founder and CEO of the Washington, D.C. think-tank Economic Innovation Group (EIG), said “The true fault line is not between rural and urban communities but rather between communities that are highly connected and those that are isolated. Increasing the connectivity of rural communities in terms of access to infrastructure, global markets, capital markets, the Internet, and human capital is essential for their future success.”¹³

5G providers could save the countryside

It’s been years since high speed broadband became something that most urban and suburban Americans could take for granted, but coverage in rural areas remains patchy, at best. It has a lot to do with the cost of rolling out fiber-optic cable which carries broadband internet. While mobile internet coverage has improved over the years, 4G LTE still has a limited range in sparsely-populated areas with few radio towers. However, all that could be changing rapidly as 5G comes of age and law-makers, politicians, and 5G providers themselves realize the crucial importance of reliable high-speed internet in rural areas. 

Ronnie Vasishta, senior VP at Telecom NVIDIA, notes the advantages that 5G could bring to rural communities. “That’s going to be closing a lot of the digital divide that exists today, and that’s a big impact on whether it be farming, or education, or growth of small towns and industries and within small towns,” says Vasishta” ¹⁴

John Saw, T-Mobile’s executive vice president of advanced and emerging technologies, said “Modern farms are highly connected farms, and it is vital that small farms not get left behind,”  adding that “few industries have been as limited by data connectivity [as agriculture]. With 5G, that is changing. All around the world, farmers are embracing wireless technology, finding better ways to feed and sustain the planet.”¹⁵

How 5G can succeed where 4G fails

5G can help rural communities gain internet coverage because it uses more of the radio spectrum than previous generations. At the highest end of the spectrum – high-band connections – 5G enables whiplash-inducing download speeds of at least 1 gigabit per second (Gbps), but it’s only currently an option for users in densely populated cities where radio masts are no more than 1 mile away. But rural areas can immediately take advantage of low-band and mid-band 5G, which can connect to towers hundreds of miles away, extend coverage to millions who couldn’t tap in to 4G networks, and still move data several times faster than 4G. ¹⁶

5G providers are still extending the range of 5G connections across the spectrum. In May, Ericsson and Qualcomm sent data 7km away using a 5G mmWave Fixed Wireless Access (FWA) connection, achieving average downlink speeds of 1 Gbps, uplink speeds of 55 Mbps, and instantaneous peak downlink speeds recorded at greater than 2 Gbps. Although this was a one-off, it proves what’s possible not just for Ericsson, but for all 5G providers. ¹⁷

One of the main elements in the 5G rollout is that low-band and mid-band networks use the same radio frequency (RF) spectrum as current 4G bands, so there’s no need to build new towers or install expensive fiber-optic or cable to individual homes and businesses.¹⁸ Home wireless broadband can be run off a 5G connection, using next-generation modems like Netgear’s upcoming MR5200 sub-6GHz 5G modem.¹⁹ 5G internet is quick and low-cost to deploy, but it can be the salvation for hundreds of rural communities. Writing in Ars Technica, tech expert Jim Salter sums 5G networks up as “simple, immediately useful drop-in replacements—and they’ll offer higher throughput, lower latency, and more predictable service quality than the 4G systems they replace.”²⁰

5G is coming to the rescue

5G plays a prominent role in the Biden infrastructure plan, which recently met with agreement by Republican senators,²¹ benefiting from much of the $100 billion earmarked for expanding broadband coverage to the entire country.²² “Millions of Americans lack access to reliable high-speed internet, including more than 35% of rural America,” Biden said in a March 31 speech on the infrastructure plan. “It’s a disparity even more pronounced during this pandemic. American Jobs will make sure … every single American has access to high quality, affordable, high-speed internet for businesses, for schools.”²³

5G is getting a boost from all sides of the political map, as a rare issue championed by both Republicans and Democrats. The FCC created the 5G Fund for Rural America, with a budget of up to $9 billion to distribute to carriers and providers bringing mobile voice and 5G broadband service to rural areas.²⁴ Senators Shelley Moore Capito, R-WV, and Maggie Hassan, D-NH, recently introduced the Rural Broadband Financing Flexibility Act which would allow state and local governments to issue tax-exempt bonds to fund broadband projects, in partnership with the private sector.²⁵ Canada’s federal government is also currently taking bids for its national 5G carrier service.²⁶

5G providers and carriers are rising to the occasion. T-Mobile announced that within the next 6 years, 90% of rural Americans and 99% of the entire population will be covered by its 5G network.²⁷ It’s also offering attractive 5G internet packages for rural small businesses,²⁸ and over $25 million in total over the next 5 years to revitalize rural main streets and community services, through its Hometown Grant program.²⁹ Cisco just opened a Rural Broadband Innovation Center in North Carolina, to serve as a showroom for its rural internet possibilities, including 5G.³⁰

It’s not just talk, either; a recent study by Opensignal, an independent mobile connectivity analysis company, reported that in December 2020, rural T-Mobile users were already seeing download speeds of up to 53.4 Mbps.³¹ In rural Virginia, the isolated area of Spotsylvania just got internet connectivity for the first time thanks to Data Stream Broadband and Ericsson’s 5G solutions.³²

As wireless thought leader Jeff Kagan notes, competition for the rural 5G market can only be good for rural America. Verizon Wireless, AT&T Mobility and T-Mobile are all jostling to be the first to connect the small towns and backroads of the country, even while they roll out their 5G urban solutions. Unlike the 4G rollout, 5G is going to hit cities and the countryside at more or less the same time.³³

A 5G ETF offers both cutting-edge tech, and a chance to help rural communities

  With the federal and local government eager to invest in 5G for the sake of the rural economy, and rural consumers welcoming the opportunity to finally adopt high-speed, reliable internet service, it looks like the 5G market could be in for some serious growth over the next few years. As 5G rolls out first low-band and mid-band support in rural areas, high-band networks in urban areas, and finally finds ways to open up high-band, hyper-fast connectivity to rural areas too, the sector is an attractive option both for investors who like to be on the cutting edge of technology, and for socially-minded investors who want to help rural communities to level up and improve their prospects. 

With so many companies competing for the market, it’s hard to choose just one or two 5G stocks. Instead, investors may prefer to mitigate some of their exposure to risk by investing in a 5G ETF like Defiance FIVG, which spreads their investment across a number of what we believe are the most promising stocks involved in the development and deployment of 5G and 5G-friendly devices. Those looking to invest in 5G but unsure which 5G stocks to buy, might consider an ETF that includes a range of 5G companies stock.

¹“Redefining Rural America” July 17, 2019 https://www.americanprogress.org/issues/economy/reports/2019/07/17/471877/redefining-rural-america/ 

²“Rural America at a Glance, 2017 Edition” November 2017 https://www.ers.usda.gov/publications/pub-details/?pubid=85739 

³“Boosting small business is crucial to a smart recovery” May 5, 2021 https://www.atlanticcouncil.org/blogs/new-atlanticist/boosting-small-business-is-crucial-to-a-smart-recovery/ 

⁴“Rural small businesses need local solutions to survive” December 1, 2020 https://www.brookings.edu/research/rural-small-businesses-need-local-solutions-to-survive/

⁵“Broadband Loan and Grant Programs in the USDA’s Rural Utilities Service” March 22, 2019  https://fas.org/sgp/crs/misc/RL33816.pdf 

⁶“FCC Reports Broadband Unavailable to 21.3 Million Americans, BroadbandNow Study Indicates 42 Million Do Not Have Access” May 11, 2020  https://broadbandnow.com/research/fcc-underestimates-unserved-by-50-percent 

⁷“Rural Areas Are Looking for Workers. They Need Broadband to Get Them” May 17, 2021 https://www.nytimes.com/2021/05/17/business/infrastructure-rural-broadband.html 

⁸“Freelance Forward 2020” September 2020 https://www.upwork.com/documents/freelance-forward-2020 

⁹“U.S. Senate Committee on Small Business and Entrepreneurship Hearing on The Challenges and Opportunities of Running a Small Business in Rural America” April 26, 2017 https://eig.org/news/u-s-senate-committee-small-business-entrepreneurship-hearing-challenges-opportunities-running-small-business-rural-america-2 

¹⁰“How The COVID-19 Coronavirus Pandemic Is Impacting Rural America” March 17, 2020 https://www.forbes.com/sites/claryestes/2020/03/17/coronavirus-and-rural-america/?sh=7e23d583e108 

¹¹“John Deere thinks rural 5G could help feed the world” June 25, 2021 https://www.fiercewireless.com/5g/john-deere-thinks-rural-5g-could-help-feed-world  

¹²OFFICE OF ECONOMICS AND ANALYTICS RELEASES WORKING PAPER SHOWING POSITIVE IMPACT OF RURAL BROADBAND ON FARM PRODUCTIVITY” December 15, 2020 https://www.fcc.gov/document/paper-shows-positive-impacts-rural-broadband-farm-productivity

¹³“U.S. Senate Committee on Small Business and Entrepreneurship Hearing on The Challenges and Opportunities of Running a Small Business in Rural America” April 26, 2017 https://eig.org/news/u-s-senate-committee-small-business-entrepreneurship-hearing-challenges-opportunities-running-small-business-rural-america-2  

¹⁴“5G Things – CTO focus sessions: next generation networks” July 2, 2021 https://www.ericsson.com/en/news/2021/7/cto-focus-session-next-generation-networks 

¹⁵“How 5G Will Bring High-Speed Internet To Underserved Communities” April 9, 2021 https://www.forbes.com/sites/tmobile/2021/04/09/how-5g-will-bring-high-speed-internet-to-underserved-communities/?sh=3204dad61ac7 

¹⁶“How 5G Will Bring High-Speed Internet To Underserved Communities” April 9, 2021 https://www.forbes.com/sites/tmobile/2021/04/09/how-5g-will-bring-high-speed-internet-to-underserved-communities/?sh=3204dad61ac7 

¹⁷“UScellular, Qualcomm, Ericsson, and Inseego Address Digital Divide with Multi-Gigabit Extended-Range 5G Milestone Over mmWave” May 6, 2021 https://www.ericsson.com/en/press-releases/6/2021/5/uscellular-qualcomm-ericsson-and-inseego-address-digital-divide-with-multi-gigabit-extended-range-5g-milestone-over-mmwave 

¹⁸“How 5G Will Bring High-Speed Internet To Underserved Communities” April 9, 2021 https://www.forbes.com/sites/tmobile/2021/04/09/how-5g-will-bring-high-speed-internet-to-underserved-communities/?sh=3204dad61ac7 

¹⁹Nighthawk M5 5G WiFi 6 Mobile Router https://www.netgear.com/home/products/mobile-broadband/mobilerouters/mr5200.aspx 

²⁰“5G in rural areas bridges a gap that 4G doesn’t, especially low- and mid-band” September 14, 2021 https://arstechnica.com/features/2020/09/5g-03-rural/ 

²¹“‘We have a deal,’ Biden says after meeting with Senate infrastructure group” June 24, 2021 https://www.cnbc.com/2021/06/24/infrastructure-deal-talks-biden-invites-bipartisan-senators-to-white-house.html 

²²“FACT SHEET: The American Jobs Plan” March 31, 2021 https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/03/31/remarks-by-president-biden-on-the-american-jobs-plan/ 

²³Quoted in “Rural Areas Are Looking for Workers. They Need Broadband to Get Them” May 17, 2021 https://www.nytimes.com/2021/05/17/business/infrastructure-rural-broadband.html

²⁴“What is the 5G Fund for Rural America” October 9, 2020 https://www.benton.org/blog/what-5g-fund-rural-america 

²⁵The Rural Broadband Financing Flexibility Act https://www.hassan.senate.gov/imo/media/doc/Hassan-Capito%20Rural%20Bband%20Fin%20Flex%20-%20Section%20by%20Section%20-%20051721.pdf 

²⁶“All this talk about the Big Three, the spectrum auction and 5G — what does it all mean?” June 19, 2021 https://financialpost.com/news/spectrum-auction-5g-explainer 

²⁷“How 5G Will Bring High-Speed Internet To Underserved Communities” April 9, 2021 https://www.forbes.com/sites/tmobile/2021/04/09/how-5g-will-bring-high-speed-internet-to-underserved-communities/?sh=3204dad61ac7 

²⁸Rural 4G and 5G coverage https://www.t-mobile.com/coverage/expanded-rural-wireless-4g-5g-coverage 

²⁹Hometown Grants https://www.t-mobile.com/brand/hometown-grants 

³⁰“Cisco targets rural broadband expansion with North Carolina center” June 16, 2021  https://statescoop.com/cisco-targets-rural-expansion-with-north-carolina-broadband-center/

³¹“Understanding the mobile experience on T-Mobile’s standalone 5G network” February 18, 2021 https://www.opensignal.com/2021/02/18/understanding-the-mobile-experience-on-t-mobiles-standalone-5g-network  

³²“Rural Virginia’s first 5G internet comes to rural Spotsylvania” April 3, 2021 https://starexponent.com/news/local/rural-virginias-first-5g-internet-comes-to-rural-spotsylvania/article_6c5241ce-3c77-52e9-a256-206265423f68.html 

³³“Kagan: Rural wireless next focus of Verizon, AT&T, T-Mobile US” June 21, 2021 https://www.rcrwireless.com/20210621/analyst-angle/kagan-rural-wireless-next-focus-of-verizon-att-t-mobile-us