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A national broadband plan is as much a social
contract as a plan of action to develop the industry
base. It can be understood as bringing
about a stronger foundation for effective governance,
private investment and more active
citizenship, leading to a desirable social and
economic future.* This article examines the
many considerations which go into the formulation
of a national broadband plan.
A broadband plan needs to be forward looking with
a detailed outlook of say, five years, which is not too
long that technology solutions might have radically
changed, but which covers a longer time frame than
A national broadband plan should become a permanent
fixture of economic development and the embodiment
of a shared vision. The plan should be resilient to
the checks and balances brought about by politics. It
needs to be endorsed by all policy-makers at the time
of conception. The respective roles of public and private
sector participation, and the potential for partnerships,
are all important.
Generally, the private sector should assume primary
responsibility for investing in the development of broadband.
But this may not always be the best solution, and
a central role for the public sector may be needed, at
least for a temporary period. Addressing market failure
and the need for intervention with universal service objectives
will remain an important role for government.
As an aggregating anchor tenant, governments can
contribute to demand through e-services for health,
education, public administration, public safety, and the
establishment of expertise centres to spread broadband
expertise and knowledge. Demand aggregation
through the offering of government services online and
capacity building, or training through community centres,
are particularly important for developing countries,
as can be gleaned from the Dominican Republic.
Addressing goals and targets
Governments need to itemize the different goals
which can be achieved through a national broadband
plan. Such goals may include: universal access and associated
guarantees; incentivizing competition and innovation
through policies and regulation; and the creation
of new industries, exports and jobs.
The plan also needs to identify realistic targets.
Broadband targets should be transparent and amenable
to market and social analysis, economically justified by
a cost-benefit analysis, and unrelated to political cycles.
Broadband infrastructure should be seen as a long-term
Targets should be sound, realistic and reasonable,
taking into account a country’s national circumstances.
Targets can be based on percentage penetration levels,
as in many developed and developing countries,
or on speeds representing the boundaries of technologies
which can be reasonably afforded, a combination
of both these objectives, or — most likely — a tiered
approach which takes into account geographic factors
and market supply responses.
Studies are required to estimate the level of demand
at determined prices that are attractive to the population.
Following this, an estimate of the minimum level
of investment to satisfy this demand can be made, together
with estimates of the potential rates of return for
investors and operators.
In the case of developing countries, and especially
in rural areas, there are barriers to obtaining reliable demand
estimates. The difficulties and costs of obtaining
primary service data, and the scarcity of historic traffic
data can make this problematic.
To overcome these obstacles, some regulators,
for example in Peru and the Dominican Republic, use
a practical approach which involves superimposing a
known working example of rural telecommunications
and Internet usage onto the demographic distribution
of all rural communities throughout the country. Also of
great value to developing countries are the case studies
of other developing countries, which may have already
moved ahead in developing broadband. Both of these
tools can make up for a lack of historical traffic and service
data for econometric analysis.
Industry structure and regulatory
measures to stimulate the market
The structure of the telecommunications industry
is still generally asymmetric, with a strong incumbent
matched up against new entrants to the business. The
essence of the regulatory challenge is to introduce competitive
dynamics into the market, because the instinct
of competitors in a healthy market is to grow the business,
to increase vertical integration in order not to
limit diversity, to continuously innovate, and to maintain
investment as technologies and network solutions
mature. A strong competitive environment ensures that
market forces work to achieve these outcomes, and
the benefits which accrue to consumers are a genuine
choice in price, quality and range of service.
|Photo credit: AFP/HTU
In many countries, the tools for regulation of access,
interconnection and market behaviour have been
introduced, and given to an independent regulator to
administer, often through schemes of negotiation or
arbitration and lighter regulatory requirements such as
codes and standards.
However, given the legacy of services being provided
as a natural monopoly, many preliminary efforts
to regulate for a competitive market have foundered,
resulting in market failure or otherwise disappointing
achievements. A number of incumbents have applied
their creative talents to the protection of their historic
position and purposely avoided significant new investment,
which in itself might benefit new entrants.
As a result, some countries have resorted to operational
or structural separation of the incumbent in order
to reset the industry framework. This has occurred notably
in the United Kingdom, New Zealand, Singapore and
Australia, where there has been a determined policy
choice to augment the regulatory structure. The stick
has replaced the carrot — with potential denial of spectrum
access, or a threat to future partnership participation
in broadband network developments.
A recent lesson is that the regulation of access, interconnection
and market behaviour in itself needs to
have incentives built in to encourage movement up the
value chain by new entrants. And entrants need to acquire
capital assets progressively as they achieve customers
and revenue growth.
Models for financing broadband infrastructure
The different models of financing the implementation
of broadband infrastructure are influenced by legacy
infrastructure and this determines the extent of direct
government involvement. Ultimately, the primary funding
for broadband should be privately based, but many
markets are not sufficiently developed to offer sound
financial investment opportunities.
Two routes are available to government — direct
entry as a service provider and later privatization, or
stimulation of the market and taking a share of the risk
through partnership arrangements.
Where competition exists between vertically-integrated
operators that manage their own network infrastructure
and have sufficient stand-alone capacity
for investment and innovation, the role of government
and the regulator is limited to facilitation of fair market
competition and behaviour, and the timely and prudent
access to public resources such as spectrum and property
rights of way. Regulators have a responsibility to
encourage infrastructure sharing among competitors
(for example, backbone and towers). This alleviates cost
pressures, especially where a mix of broadband infrastructure
is not sustainable.
Where private investment is reluctant to enter the
market, the government can step in as risk taker and
enter into public-private partnerships. These can be
contracts with an incumbent or with new entrants, and
in effect operate as a temporary wholesale monopoly
— though based upon open access principles which
differ from the traditional public switched telephone
network (PSTN) monopoly — until competition is better
An inventive partnership contract devised in New
Zealand grants the government an initial 100 per cent
stake, which is then progressively bought out by the
commercial partner as uptake occurs. Capital is returned
to the government through this process, and this can
then be reinvested in ultra-fast broadband networks.
This arrangement essentially operates as a rotating line
Many developing countries now impose a universal
service levy, and this accumulated resource might be applied
in the future to bring broadband to underserved
and unserved areas under contractual partnership with
The need for cross-sectoral considerations
In promoting broadband adoption, demand-side
policies might involve tax incentives, the development
of various e-government services, an enabling environment
for small and medium-sized enterprises, export incentives,
and the development of human capacity and
This calls for an overarching strategy involving the
consideration of cross-sectoral measures, and education
of the broad base of society and industry in order to
enjoy fully the benefits which broadband offers.
In general, it is appropriate for developing countries
to consider mobile and wireless broadband as a way of
addressing the digital divide. There appears to be a continuous
increase in wireless broadband services in developing
countries, with the deployment of 3G-enabled
handsets and devices.
Some developed countries already have strong interplatform
competition between cable-based Data over
Cable Service Interface Specification (DOCSIS) systems,
fibre-optic systems, and wireless systems evolving to the
fourth generation (4G) with Long Term Evolution (LTE)
or WiMAX. This forms a firm foundation for healthy
competition in the marketplace. Another observation is
that while regulatory attempts in those countries have
been biased towards service-based competition, they
have had less impact (in fact a deceleration of investment)
on developing a competitive market than the inherent
facilities-based competition already in existence
in their markets.
In other developed countries, where optical fibre
(for FTTx and backbone needs) is seen as the wholesale
platform for future growth of competition, there is nevertheless
an acknowledgement that wireless, satellite
and cable-based technologies might need to serve at
least part of the market, which market demand should
be left to determine.
This points to the need for policy-makers and regulators
to maintain a neutral stance on the application of
technology. It is better not to pick a single technology
national champion to implement broadband because of
the wide skills required to cover all technologies.
In the long run, the most mature markets, for which
consumers will most benefit, are those that enable
inter-platform competition, and multiple network providers
using separate technologies. In countries where
inter-platform competition has emerged, such as in the
Republic of Korea, the Netherlands, Japan, Germany,
and to a certain extent the United States, there has
been no noticeable market failure with regard to the
development of broadband.
Where to start?
A national broadband plan is as much a social contract
as a plan of action to develop the industry base. It
can be understood as bringing about a stronger foundation
for effective governance, private investment and
more active citizenship, leading to a desirable social and
There is no total blueprint for best practice, but a
systematic approach using a decision tree (see article Drawing up a broadband plan
) will hep to ensure that all relevant factors
are considered. Learning from other experiences at each
level of decision making is possible. This article may assist
with some pointers of where to look when tailoring
the cloth to suit a particular set of national circumstances
— for both developed and developing countries.
A discussion paper entitled “Setting national broadband
policies, strategies and plans: A practical step-by-step
approach” is expected to lead to fruitful exchanges at the
11th ITU Global Symposium for Regulators, to be held in
Armenia City, Colombia, on 21–23 September 2011. The
paper was written by Dr Bob Horton, consultant for the ITU
Telecommunication Development Sector (ITU–D).