Page 33 - Trends in Telecommunication Reform 2016

Box 1.4: Key lessons: Johannesburg Broadband Network Project (JBNP) Chapter 1
• Governments should carry out an extensive market assessment before undertaking
a broadband intervention to ensure there is a clear market failure that justifies the
intervention. In this case a number of alternative fibre networks are already available in
Johannesburg, which has called into question the need for the project.

• Contractual obligations upon the public and private sectors should be clear at the outset
to ensure there is no dispute if either party defaults or reneges on the contractual
agreements.

• Public DBOs should be limited to offering wholesale services on a non-discriminatory and
open-access basis to ensure competition is not adversely affected.

for the design, building and operation of the Table 1.5: Selected examples of JVs
infrastructure, which is typically made available to
other service providers and ISPs on a wholesale, Name of private DBO Description
open-access basis. The infrastructure remains Metroweb (Italy) Ownership of the network
53
part-owned by the network operator and the is split between the public
government. and private sectors by
setting up an SPV. (See
case study below)
Public-sector funding is required for a JV, but
funding is shared with private-sector partners. Banda Ultralarga in A JV approach enables
Much of the initial financial contribution typically Lombardia (Italy) 54 the government to secure
expertise and financing
comes from the government, to make it attractive while maintaining public
to the private sector. The costs of deploying the control over the scope of
network, associated systems and processes and the project.
the ongoing administration of the JV are shared. 55 The Ghana Ministry of
The exact amount of private and public sector Eastern Corridor (Ghana) Communications, in
capital investment has to be agreed beforehand, partnership with Alcatel-
based on how rewards and risks are to be shared. Lucent, has planned a 800
km fibre-optic network in
the Eastern Corridor.
With this approach, the government takes on
greater financial risk, but it is able to control Kenya LTE 56 This PPP has been
the initial stages of the network design and proposed to deliver a
construction. Meanwhile the private sector takes national broadband LTE
network in Kenya.
on greater responsibility once the project becomes
self-financing. Depending on the terms agreed for Source: Analysys Mason, 2015
the JV, the government may retain its ownership
in the venture or it may divest its shareholding in An example of a JV is described in greater detail in
order to recoup some of its early investment. In the following case study.
fact, JVs can vary widely, since they need to take
account of local tax considerations and the extent
to which the government wants to hold shares Case study: Metroweb, Italy
and voting rights. Examples of JVs are very limited,
possibly because they are complicated to set up. This case study has been detailed in previous ITU
reports; nevertheless, it was selected because it
represented an instance in which an infrastructure
fund manager acquired a controlling stake in a
project. Metroweb also has become the subject
of a takeover battle between leading operators in
Italy, attracting significant private-sector interest.

Trends in Telecommunication Reform 2016 15