Identifying Best Practices in Financing Next Generation Networks

Abstract

Governments throughout the world have determined that next generation network (“NGN”) development serves the national interest. The strategies used to achieve progress vary greatly as does the extent to which governments perceive the need to get actively involved through direct ownership and subsidization of carriers. At the macro-level such widely different tactics stem from political and philosophical differences over the extent to which governments should augment or replace marketplace forces. At the micro-level national governments differ in the determination of what policies, strategies and tactics will achieve the greatest positive impact taking into consideration the specific characteristics of their individual countries. No government has unlimited funds to invest in new networks, or to subsidize private ventures promising to improve access to essential services at affordable rates. Accordingly nations must determine whether and how to use limited taxpayer funds to expedite the access to inexpensive and ubiquitous wired and wireless broadband networks. Baseline factors such as geography, income, demographics and market penetration of existing networks have a significant impact on what works best. However, nations with similar physical and economic characteristics have pursued significantly different strategies. This paper will identify best practices in NGN development using both case studies and a review of the current literature assessing government strategies. On the supply-side nations have sought to stimulate NGN rollout by direct investment, public private partnerships and subsidization of private ventures. Universal service policies typically use financial stimulus, often poorly calibrated or vulnerable to manipulation and abuse. On the demand-side some nations have identified many ways to stimulate interest in broadband services by promoting digital literacy and the widely shared view that broadband services are essential. The paper concludes that a variety of strategies, policies and tactics qualify as best practices based on current NGN market penetration, network performance and subscribership as well as the impact of a nation’s geography and the education, wealth and interest in broadband of residents. Nations that develop and revise a clear vision and strategy can achieve greater progress than ones content with the pace of private initiatives, or reliant solely on government efforts. Promoting digital literacy constitutes an underappreciated, low cost stimulus tool for generating interest in NGNs and the ability to exploit digital networks. Other successful strategies include creating incentives for private investment, promoting competition, reallocating spectrum, offering electronic government services and establishing safeguards to promote a high level of trust and consumer protection. The paper will provide a toolkit of confirmed best practices.