Following on from the previous post, “Public or Private“, which looked at the different models of public intervention in markets generally, this post begins to explore the different models for intervention in broadband markets. This is not a practical critique of any particular approach – more a quick look at the theory.
The basis of this is the same scale of intervention used in the previous post, ranging from light touch loan guarantees through to a state utility model. It begins with the assumption that the market will invest up to a natural limit; this limit may vary from company to company but will be based on some measure of digital isolation.
A key complexity for public bodies is how to determine the market’s limit for investment. Broadband markets, as distinct from traditional telecommunications markets, increasingly contain a broader range of companies and capabilities; some of these are emergent trends while some are established niche operators. This trend creates a complexity and often a degree of risk that administrations considering a broadband intervention need to assess.
Its clear from even a cursory review of international interventions that there is no universal view of this, with some administrations favouring a more traditional telecommunications play, leveraging a small number of larger, established operators, where other administrations are looking to include a wider spectrum of alternative, new and niche operators. Ultimately this will depend on national culture, the appetite for risk within the administration, and the level of stability within the niche and emerging sectors.