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Regional ISPs Are Narrowing the Digital Divide—But Challenges Remain

Federal and private funding, new market entrants, and creative problem-solving have made it possible to extend broadband connectivity to more U.S. households than ever. But as regional and rural broadband providers, electric utilities and co-ops, satellite operators, and others push to fully close the digital divide, a remaining challenge looms: ensuring enough IP address space to support this growing subscriber base. In a recent survey, A10 Networks and Gatepoint Research explored the state of rural broadband today and what’s needed to fully capitalize on the final frontier of high-speed connectivity.

Fueled by Funding, the Rural Broadband Opportunity Attracts New Entrants

Across the globe, unserved or underserved communities represent a key growth market for internet service providers (ISPs), with more than two-thirds of ISPs worldwide currently expanding their networks to reach these customers. Within North America, the A10 Networks-Gatepoint survey found one-third of regional ISPs naming successful broadband buildout to new communities as a top business objective, and a similar number already growing by more than 10 percent annually.

In this effort, regional ISPs are benefitting from a broad spectrum of federal funding programs, from the $42.5 billion in Broadband Equity, Access, and Deployment (BEAD) funds provided through the Infrastructure and Jobs Act to the $20.4 billion Rural Digital Opportunity Fund (RDOF) and the $1.44 billion awarded to date through the USDA ReConnect Program. In addition, private equity funding is turning out billions for construction of broadband fiber optic networks.

It’s no surprise that the combination of ripe markets, government subsidies and private funding has motivated a diverse group of ISPs into these growth initiatives, including utilities and electric co-ops, municipal broadband operations, public-private partnerships, and tribal communities, as well as more than 1,200 wireline ISPs and 2,800 wireless ISPs (WISPs). While profitability is always a priority—nearly one-third of surveyed ISPs name sustaining business growth as a top priority—many of these groups are also motivated by the desire to help their communities advance by improving individual quality of life and attracting business investment.

Multiple Technologies for Connectivity—But an Impending Shortage of IP Addresses

There’s no single way to upgrade broadband access or extend access to previously unreached subscribers. Almost half (44 percent) still maintain wireline/ DSL technology. In addition, most regional ISPs also have deployed a mix of more advanced access technologies, including 66 percent currently using fiber to the home (FTTH), 42 percent using fixed wireless, and 24 percent using mobile/cellular. This flexibility is helping providers overcome a variety of obstacles related to geography, topography, and infrastructure, but a different type of hurdle remains largely unaddressed: the shrinking availability of IPv4 address space.

While the large share of the Ipv4 address pool initially allocated to the U.S. allowed domestic providers to delay dealing with the inevitable exhaustion of this supply, the urgency of doing so is increasing quickly. This is especially true for regional ISPs for whom sustainable business growth and cost control are both key objectives.

With “free” Ipv4 addresses having been near fully allocated by the American Registry for Internet Numbers (ARIN) with only small quantities available through a wait list, any significant quantities of address space can generally be acquired only by leasing it on the open market through a broker or leasing from another ISP. The uncertain availability, generally high price and price volatility of these addresses—as much as $600,000 per 10,000 subscribers in recent years – makes further investment in IP address space very risky. The key question: how can regional ISPs provide enough IPv4 addresses to support newly acquired subscribers without incurring this level of uncertainty and risk?

CGNAT Adoption Lags, Threatening Long-Term Profitability

Elsewhere in the world, most communications service providers (CSPs) have moved to adopt CGNAT as a solution to their shortages of IPv4 addresses. By mapping multiple internal addresses to a single global public address and vice versa, CGNAT makes it possible to share each existing IPv4 address across 64 or more subscribers. Providers can even release and monetize the excess pools of IPv4 rendered unnecessary through address sharing. In the U.S., though, 26 percent of U.S. providers have yet to make use of CGNAT, and nearly half are focusing on acquiring more IPv4 blocks through another service provider or on the common market, a costly solution to a growing problem.

A similarly slow pace can be seen in the transition to IPv6, the next-generation standard offering vastly expanded and virtually unlimited address space. Over the course of this long and complex migration across websites, networks, and endpoint devices, the lack of interoperability between IPv4 and IPv6 will require ISPs to support both standards in their networks. However, 39 percent of U.S. providers have made no plans for further transition to IPv6, while barely one in four plans to transition within the coming two years.

Asked about their concerns regarding IPv6 migration, regional ISPs most commonly named a lack of resources or expertise, costly equipment replacements, or potential service disruptions to subscribers. While the use of non-carrier-grade transition approaches can indeed pose considerable risks, a safer course is available. A10 Thunder® CGN provides both a CGNAT solution and IPv4-IPv6 transition capabilities to allow more gradual and seamless IPv6 adoption alongside with continued support for IPv4. Deployment of this technology is essential for growing, cost-conscious regional ISPs.

While rural broadband offers an inviting avenue for growth for smaller ISPs of all kinds, these businesses can’t afford to overlook the constraints and risks associated with IPv4 exhaustion and IPv6 adoption. The viability of CGNAT to both extend the value and limit the cost of IPv4 connectivity, and to ease the migration to IPv6, makes it a core technology to help close the digital divide—and build sustainable businesses in doing so.

To learn more about the work currently underway to close the digital divide, the challenges ahead, and the resources and funding available to regional ISPs, download the full report here.

For more information on the A10 portfolio for regional ISP, download this brief.