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No.91 - Public-private interplay in the telecom industry

Communications & Strategies - 03/10/2013 No.91 - Public-private interplay in the telecom industry

3rd quarter 2013

Telecom liberalization progressively limited public intervention to the definition of a regulatory framework setting unbalanced market conditions to stimulate investments of new market players. However, a new impulse to public initiative has come from the availability and use of broadband networks with a growing set of services at disposal of public and private users. This new form of public intervention has gained ground because of strict financial constraints faced by some telecom operators and local authorities’ awareness of positive externalities due to the reduction of digital divide (e.g. economic development and social inclusiveness). This special issue aims to set the stage for a broad discussion on public-private interplay.


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Dossier


Public-private interplay

in the telecom industry


Eds: Pierre-Michel ATTALI, Edmond BARANES & Alberto NUCCIARELLI


Introduction

By the Editors


Papers


Public Private Interplay for Next Generation Access Networks:
Lessons and Warnings from Japan’s Broadband Success
Kenji E. KUSHIDA

Effectiveness and efficiency in the build-up of high-speed broadband
platforms in Australia and New Zealand
Fernando BELTRÁN

Structural separation and the role of Public-Private Partnerships
in New Zealand’s UFB Initiative
Bert SADOWSKI, Bronwyn HOWELL & Alberto NUCCIARELLI

The Impact of PPIs in the Development of Broadband
and the Way forward: Ghana’s Case
Idongesit WILLIAMS, Daniel M. O. ADJIN, Kenneth K. TSIVOR


The French Case
Pierre-Michel ATTALI


Interviews


Jussi HÄTÖNEN, European Bank of Investment
Conducted by Alberto NUCCIARELLI

Wilfried SAND ZANTMAN, Toulouse School of Economics, IDEI
Conducted by Edmond BARANES



Extra paper


Broadband Leadership in Emerging Markets

Kas KALBA


Features


Regulation and Competition
Next Gen Access - Regulation and Prospective
Christoph PENNINGS

Firms and Markets
Telcos' Investment Challenges - CAPEX Dynamics
CAROLE MANERO

Book Review
• Ian BROWN & Christopher T. MARSDEN: Regulating Code Good Governance and Better Regulation in the Information Age
By Loretta ANANIA


Author biographies


Service section

- Events
- Publications
- Call for papers


Dossier

Public-private interplay
 
in the telecom industry



Public Private Interplay for Next Generation Access Networks:
Lessons and Warnings from Japan's Broadband Success

Kenji E. KUSHIDA
Key words: broadband, PPI, industry analysis, political economy, Japan.


This paper contributes to the discussion of how Public Private Interplay (PPI) can be used to foster Next Generation Access (NGA) buildouts in Europe by introducing the experience of Japan. Japan, which succeeded in both promoting nationwide network buildouts and fostering competitive dynamics that led to the world's fastest and cheapest broadband services and deploying them nationwide. The process entailed deregulation, which unleashed new entrepreneurial private actors, and re-regulation that protected them from incumbent carriers. The resulting market dynamics lowered Digital Subscriber Line (DSL) prices, influencing the market price for Fiber-To-The-Home (FTTH), for which the government had heavily subsidized carriers. Central government initiatives, combined with local incentives, led to an almost 100% broadband accessibility within a few years. However, Japan quickly discovered that taking advantage of the broadband environment to produce innovation, productivity growth, and economic dynamism, was far more difficult than facilitating its creation. It discovered regulatory barriers for the use of Information and Communications Technology (ICT) in various areas of the economy. Like Europe, Japan was not home to the ICT lead-user enterprises and industries that drove the ICT revolution, producing innovation and productivity gains. Moreover, the advent of US-centered cloud computing services potentially decreases the minimum bandwidth requirement to access global-scale computing power. The development of wireless technologies far cheaper than Japan's nationwide FTTH also merits serious consideration for European policy discussions.


Effectiveness and Efficiency in the Build-Up of High-Speed Broadband
Platforms in Australia and New Zealand

Fernando BELTRÁN
Key words: fibre-to-the-home broadband platform, Australia broadband national initiative, New Zealand broadband national initiative, Public-private partnership, effectiveness, efficiency.

The government of Australia is investing close to AUD $37.4 billion into the deployment of a nationwide broadband network, the National Broadband Network (NBN). Likewise, the New Zealand national broadband initiative, whereby the government is currently building a nation-wide fibre-optics network known as the Ultra-Fast Broadband (UFB) network, is investing NZD $1.5 billion with a similar amount expected from private partners. This paper analyses key elements in the plans developed by Australia and New Zealand while inquiring about the pros and cons of the approach followed by each country, specifically referring to the effectiveness and efficiency with which their fibre-based access networks are being built. The paper summarises results from recent literature on the reasons for public intervention in broadband expansion and builds an analytical framework that inquires on the extent to which each broadband initiative has been an effective vehicle of fibre-based, broadband expansion and their efficiency in the transition towards fibre-based broadband.


Structural Separation and the Role of Public-Private Partnerships
in New Zealand’s UFB Initiative

Bert SADOWSKI, Bronwyn HOWELL & Alberto NUCCIARELLI
Key words: Public Private Partnerships, Ultrafast Broadband (UFB), New Zealand.

The political perception of New Zealand's broadband market performance as 'poor' has underpinned many significant changes to the telecommunications policy and regulatory environments since 2001. Most recently, this has been manifested in substantial government subsidies by way of public-private partnerships (PPPs) for an ultra-fast broadband (UFB) network that promises to deliver fibre connections with upload/download speeds of 100Mbps/50Mbps to 75% of New Zealanders by 2019. In this context, the paper examines the different PPPs with respect to allocation of task and risks between private and public parties. We conclude that problems with the UFB initiative might emerge as demand risks are not sufficiently specified which might slow broadband adoption in New Zealand.


The Impact of PPIs In The Development of Broadband
and The Way Forward: Ghana's Case
Idongesit WILLIAMS, Daniel M. O. ADJIN, Kenneth K. TSIVOR

Key words: Public private interplay, broadband, Ghana, Africa, developing countries.

Telecom infrastructure development has been enabled greatly by different forms of collaborations or synergies between the public and the private sector. These synergies in most cases are exigent measures employed to enable the diffusion of telecom infrastructure into underserved and un-served areas. This paper examines the role of different public-private interplay that exists in Africa that were aimed at developing telecom infrastructure and why this public-private interplay could help in extending broadband connectivity to rural areas. Ghana is identified as a country with almost 80% penetration of mobile telephony. This has been made possible by the public-private collaborations fostered towards telecom infrastructure development. Ghana is used as a case to examine the strategies and identify possibilities for more of these collaborations. Data was gathered qualitatively. The significance of the paper is to narrate the possibility of using PPP to develop broadband infrastructure in Africa.



Extra paper

Broadband Leadership in Emerging Markets
Kas KALBA

Key words: broadband, innovation adoption, emerging markets.

Extensive broadband use has largely occurred to date in developed economies.  However, there are a growing number of emerging markets, including Bulgaria, China, Malaysia, Mexico, Romania and South Africa as well as a number of Caribbean island nations, where mobile or fixed broadband or both have achieved moderately high penetration levels. The paper addresses the prospects of broadband development in emerging markets, defined as countries with GDP per capita between $2500 and $10,000.  In the process it focuses on the following issues: (1) what factors best explain the leadership position of emerging markets with the highest fixed and mobile broadband penetration levels; and (2) how do we better understand the relationships between supply- and demand-side  drivers of broadband adoption and use in emerging markets?  The paper finds that emerging markets with broadband leadership positions do not reflect the highest GDP per capita levels (within the $2500 - $10,000 range), which suggests that income plays less of a role in its adoption than is the case with mobile phones.  At the same time, other factors appear to play an important role in determining why some emerging countries have been able to achieve high rates of broadband adoption and use.  These factors include demand - side endowments (education, household size), geography (size of territory, population density, proximity to earlier - stage broadband leaders), housing stock, legacy infrastructure, income distribution, the presence - or absence - of cable TV operators, and regulatory and licensing policies. The paper also identifies three different models of broadband development  - namely, dual-mode leadership (fixed and mobile), single-mode mobile leadership, and single-mode fixed leadership.  To date these models have generally been associated with different subsets of the above - mentioned factors and have largely prevailed in different regions of the world.  The main examples of the dual-mode model stem from Eastern Europe and parts of Latin America, the mobile-only or mobile-dominated model is common to the African and Asian leaders, and the fixed-only model is represented by several Caribbean nations.



The Editors

Pierre-Michel ATTALI is Director of Studies, Head of Networks and Local Authorities Practice at IDATE. Pierre-Michel assists local authorities (regions, cities and metropolitan areas) in their strategic decision-making process when planning IT deployments in their area, helping to draft broadband and ultra-broadband development plans. Before coming to IDATE, Pierre-Michel worked as an Information and Communication Technologies engineer, and in the creation and financing of innovative start-ups for the Languedoc-Roussillon's Regional Department of Industry and its Research and Environment Department (DRIRE). He has also worked as an engineer for national energy company, EDF, in charge of overseeing the Vidéopole cable network's construction and maintenance in the Hérault region, after having been responsible for the technical-economic feasibility study for cable in the region, on behalf of operator Vidéopole (since taken over by UPC). Mr. Attali holds a Telecommunications Engineer degree from the Ecole Nationale Supérieure des Télécommunications de Bretagne (ENST-B).
pm.attali@idate.org

Edmond BARANES is Professor of Economic Sciences at the University of Montpellier. He holds a Ph.D. in Economic Sciences and a Master of Economics (University of Paris I Panthéon-Sorbonne, 1991). He received a Post graduate diploma (DEA) in Mathematical Economy and Econometrics (1991) and a Master of Econometrics I (1990) from University of Paris.
edmond.baranes@univ-montp1.fr

Alberto NUCCIARELLI, Ph.D., works as senior researcher at Philips Research, Eindhoven, The Netherlands. He had previous appointments with the Eindhoven University of Technology. His multi-disciplinary background matching economics, management science and financial quantitative tools leads his research efforts towards the analysis of techno-economic aspects of broadband initiatives. He is author of different scientific works dealing with policy and competition strategies at both European Union and Member States level. He has also published works on different aspects dealing with the telecommunications and the aviation sector.


The interviewees

Jussi HÄTÖNEN works as a Sector Economist (ICT) in the Projects Directorate of the European Investment Bank (EIB). His main responsibilities include assessing EIB's lending operations in the telecommunications and the ICT sector. Before joining the EIB in 2009 he worked as a management consultant at Capgemini Consulting in Finland, providing advice on technology transformation in large corporations.  Prior to this he worked as a project manager of a project financed by the Finnish Funding Agency for Technology and Innovation aiming to support small and mid-size ICT firms in their growth and internationalization. Jussi holds Masters and Doctorate degrees of economics and business administration from Turku School of Economics (Finland).  He has published several articles in academic and industrial reviews and has presented in various international conferences on financing technology, innovation and recently broadband infrastructures in Europe.

Wilfried SAND-ZANTMAN is professor at the Toulouse School of Economics and research director at the IDEI. He received his Master from the ENSAE (Paris) and his Ph.D. from the University of Toulouse 1. Mr. Sand-Zantman's research focuses on industrial organization and regulation, with a special emphasis on the telecommunications sector.


The contributors

Daniel M. O. ADJIN holds a Masters Degree in Telecommunications Engineering. He is currently a Ph.D. Fellow in Telecommunications Engineering at Aalborg University Copenhagen, Denmark.  He is a Telecommunications Engineer by profession and currently a Lecturer at Ghana Technology University College (GTUC), Accra, and a supervisor to many Undergraduate and Postgraduate Students at GTUC, and periodically, an adjunct Lecturer at Legon University of Ghana.

Loretta ANANIA joined the European Commission after receiving her Ph.D. from MIT and BA from Sussex University.  As scientific officer in the RACE programme, she was responsible for techno-economic aspects of broadband applications, including access. She subsequently funded R&D on search engines prior to moving to the new 'Net Innovation' unit of DG Communications Networks Content and Technology.  She was twice elected chairman of the Board of the International Telecommunication Society.

Fernando BELTRÁN is a Senior Lecturer with the Department of Information Systems and Operations Management of The University of Auckland Business School. He received a B.S. in Electrical Engineering from Universidad de Los Andes in Bogotá, Colombia, and a Ph.D. in Applied Mathematics from State University of New York at Stony Brook, USA. His research interests include the use of agent-based computational methods to simulate and analyse new conditions of competition and regulation in Next-Generation networks, and incentive mechanisms and auctions for spectrum allocation. He has published in leading journals such as Telecommunications Policy, IEEE Communications Magazine, and Telecommuni-cations Systems, among others. An academic visitor to the US FCC, CITI Columbia University Business School, EECS Department of UC Berkeley, INRIA Rennes, France, and UPC Barcelona, Spain, he has consulted for various government agencies and telecommunications operators in New Zealand, Colombia, Uruguay and the United States.
f.beltran@auckland.ac.nz

Bronwyn HOWELL
is General Manager of the New Zealand Institute for the Study of Competition and Regulation and a faculty member of Victoria Management School, Victoria University of Wellington. In 2007, she was Visiting Research Scientist at the Networking Laboratory, Helsinki University of Technology. Bronwyn has a background as both an academic researching telecommunications, ICT and health markets, and as a practitioner, holding managerial positions in the ICT and health sectors in both New Zealand and multinational firms. Her research interests relate to the ownership, governance and management of firms operating in regulated industries.

Kas KALBA is President of Kalba International, Inc., an ICT sector advisory firm.  He has had a longstanding interest in the adoption and diffusion of broadband and mobile technologies and services and has consulted on related issues in more than 40 countries, most recently in Sub Saharan Africa and the South Caucasus.  Dr. Kalba has taught courses on ICT development at Harvard, Yale and MIT.

Kenji KUSHIDA is the Takahashi Research Associate in Japanese Studies at the Walter H. Shorenstein Asia-Pacific Research Center at Stanford University and a research affiliate at the Berkeley Roundtable on the International Economy. Kushida's research interests are in the fields of comparative politics, political economy, and information technology. He has published on Cloud Computing, comparisons between Japan and South Korea's broadband industries and mobile markets, and politics and policies of information and communications more generally. His other streams of research include organizational analysis of Japan's Fukushima nuclear accident, and the political strategies of foreign multinational corporations in Japan, and Japanese politics more broadly.  He holds a Ph.D. in political science from the University of California, Berkeley, with an MA in East Asian studies and BAs in economics and East Asian studies, all from Stanford University.

Carole MANERO is a Project leader at IDATE. Carole is in charge of monitoring the globe's mobile markets, operator (networks, MVNO) and mobile services development. She has also become an expert in spectrum management issues. Before coming to IDATE, Carole worked for the COGEMA's North American corporate strategy department, where she was involved in several acquisition operations in the nuclear sector. Ms. Manero is a graduate of the Ecole des Hautes Etudes Commerciales du Nord business school (1991), with a major in Marketing, and holds a Masters in Human Resources and Corporate Management from Paris's Ecole Supérieure de Commerce (1992).
c.manero@idate.org

Christoph PENNINGS joined IDATE in 2008 as senior consultant and is in charge of IDATE's Regulation Practice since 2010. Christoph has extensive expertise in analysing regulatory matters related to broadband and NGA. His projects involve benchmarks of NGA regulation and bitstream pricing and assessment of the impact of regulation. Christoph is currently accompanying an African regulator through the process of defining and analyzing relevant markets. He also contributed to IDATE's study on the cost of reaching the targets of the Digital Agenda for Europe. Christoph formerly worked as telecoms analyst for McKinsey & Company. He holds a Master's degree in Economics from Maastricht University, the Netherlands
c.pennings@idate.org

Bert M. SADOWSKI works as an Associate Professor of the Economics of Innovation and Technological Change at the Eindhoven University of Technology. In the past fifteen years, his research interest has been in the areas of the economics of technological change and innovation, regulatory economics and real options analysis. He has carried out a number of projects for different governmental and non-governmental organizations as well as for a variety of private companies. He has been special adviser to the European Commission, the Dutch Ministry of Economic Affairs as well as to different local and provincial governmental organizations in the Netherlands and abroad. He has served as a boardroom consultant to a number of private companies.

Kenneth K. TSIVOR is currently an Instructor/Lecturer at Ghana Technology University College Accra. He is also a Ph.D. Fellow at Aalborg University, Copenhagen. Previously, he served as Senior Manager/Head Energy Systems, Ghana Telecom Training Centre and also as Project Counterpart, Vodafone Ghana (Ghana Telecom-Projects Department). He holds a Master Degree in Energy Engineering from South Bank University London. He holds a Post Graduate Certificate in Telecom Power Engineering from Nippon Telegraph and Telegraph Institute Osaka. He also holds a degree in Electrical Engineering from Kumasi Polytechnic, Ghana.

Idongesit WILLIAMS is a Ph.D. Fellow and a Guest Lecturer with the Centre for Communications Media and Information Technology (CMI), Department of Electronic Systems, Aalborg University Copenhagen. He obtained a Master in ICT from Aalborg University Copenhagen in 2010. He also obtained a Bachelor of Science Degree from The University of Uyo, Nigeria in 2005. His area of research revolves around Governance of ICT, ICT business models, ICT standard and application of ICT. At the moment he is researching into how Public Private Initiatives can be used to facilitate the development of broadband internet infrastructure in rural areas. He has written published academic papers and presented his research at conferences as well. Aside his work in the academia, he had previously worked as a Web Developer in an IT company in Nigeria and Project officer of an NGO in Ghana.



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