Page 79 - Trends in Telecommunication Reform 2016

This includes the role of third-party vendors – cost of broadband deployment. Governments can
which vendors will perform which functions (e.g., contribute assets, access to utility infrastructure or Chapter 2
maintenance, repair, field services), etc. Although rights-of-way, among other things.
it will be difficult to exit a network-sharing
agreement, exit provisions also need to be agreed. It is not essential for governments to enter into
ventures with private sector operators, but it is a
key option. An auction could be used to determine
2.4.4 Incumbent resistance private sector participation and the valuation of
government contribution could, for example, be
In the fixed sector, which is devoid of the set at replacement cost using modern equivalent
intense infrastructure-based competition that assets. Alternatively, government assets could be
characterizes the mobile market, incumbents can leased to a co-investment entity, rather than the
be reluctant to depart from the status quo or to government participating at an equity level.
consider novel co-investment options – particularly
options involving any loss of control. Governments can pursue participation by
public utilities in the roll-out of next-generation
access networks. Co-investments are already
2.5 Ways governments can encourage happening between public utilities and private
or incentivise network sharing operators in European countries such as France,
and co-investment Germany and Switzerland. In Switzerland, the
co-investment arrangements reportedly have
increased competition in the market as well as
To date, governments have generally adopted a facilitating deployment of next-generation access
light touch in encouraging network sharing and 13
co-investment. Some countries have mandated networks . Interestingly, in regions of Switzerland
where public utilities have not participated, the
network sharing, but there have been few
examples of governments actively incentivizing incumbent operator hasn’t shown the same level
network sharing or co-investment. This section of investment activity.
addresses what governments can do to actively
promote network sharing and co-investment. Co-investment between a utility and a private-
sector operator avoids some of the obstacles
referred to in the previous section concerning
2.5.1 Government co-venturing negotiating agreements between competitors.
Loss of independence could still be a concern for
private-sector operators, but arrangements with
Governments can play a significant role in fostering utilities may permit operators a greater level of
co-investment by co-venturing with private-sector control over key network decisions than might be
operators. This is one of the most important the case in a pure sharing arrangement between
steps that a government can take to encourage private operators.
broadband deployment, particularly in green-field
network development. Governments have very Moreover, utilities may not be the only public-
valuable assets and infrastructure that, if made sector entities getting involved in such ventures.
available, can speed up and potentially reduce the
Road or railway entities can be key partners

Box 2.4: Utility Participation in a Joint Venture in Ireland
In 2014, the Irish electricity utility ESB entered into a 50/50, incorporated joint venture with
Vodafone to build and operate a wholesale-only, open-access, fibre-to-the-building (FTTB)
network in certain parts of Ireland. The joint venture entity will deploy fibre to homes and
businesses using ESB’s existing overhead and underground infrastructure, in return for a fee
from the joint venture. In turn, the joint venture will provide a wholesale, virtual unbundled
local access (VULA) product to retail operators, as well as a higher quality, point-to-point service
suitable for mobile backhaul and business customers .
14

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