The discussion that is taking place about the trans-sectoral use of broadband is gaining momentum and many countries are now asking themselves serious questions about the future of their telecoms sector.
Until recently governments were convinced that they could separate themselves from the telecoms sector, and the key policies were focused on deregulation and privatisation. During the last few decades, however, this course reduced telecoms to the status of a commercial sector. Governments have accepted the priority placed by telcos on the interest of their shareholders and failed to understand the importance of telecoms as national infrastructure.
The Internet was a major ingredient in changing the direction of telecoms, particularly when broadband was added to the mix. In no time Internet and broadband penetration went through the roof, a clear indication that people were extremely interested in using these new technologies. More and more countries began to recognise the social and economic importance of this infrastructure. Political pressure started to emerge, aimed at governments in countries that were lagging behind in broadband infrastructure.
But many countries are now uncertain about how to proceed. They all understand the importance of telecommunications but are reluctant to resume a connection with this sector. In a new report Global Telecommunications – Industry Transformation – How to move forward? I examine here how the present situation came about, and unravels the various elements involved. It concludes by re-assembling the pieces of the puzzle and exploring ways to move forward.
Key elements that have led to the current situation include:
- Despite deregulation and competition the telecoms infrastructure largely remains a natural monopoly
- Market deregulation has delivered positive results but the dominant players from before that period are as dominant now as they were before.
- Regulation has not deliver the competition governments expected
- Deregulation and privatisation work against each other
- Telco’s income still come for 80-90% from basic (utilities based) services, telcos have failed to move higher up into the value added chain. However, these utilities services are priced at premium rates.
- Technology points towards fibre. Mobile broadband will develop in parallel.
- Awareness is increasing that broadband infrastructure will need to be used for e-health, e-education, smart grids, etc.
Based on the above I would draw the following strategic conclusions:
- Current regulatory regimes have not, or have only partially, delivered what they were intended for. They do not provide the necessary incentives for the changes that are needed.
- Despite decades of trialing other business models the incumbent telcos generally continue to be utilities-based operators, and as such telecoms infrastructure largely remains a utilities-based national monopoly.
- Fixed broadband will be critical economic and social infrastructure backbone for any country.
- Fixed infrastructure technology is pointing towards fibre.
- Some kind of trans-sector development will take place and the economic and social benefits from this will be substantial.
- Competition in itself should not be the only goal of regulation – a combination of competition and regulation can also deliver effective outcomes
We can be skeptical about how we get there; about how soon we need to be there; about how much this is going to cost; about who will pay for what; and so on, but I have not encountered many who fundamentally disagree with these broad conclusions.
What we need is leadership, from both politicians and the industry – an acceptance of the overall longer-term common goals and a willingness to sit down and work out the best way for each country to develop a national plan on how to achieve them. In other words, start with the vision first (where I believe industries and governments share common ground). Don’t start with the details of where, what, when and how. Let’s agree on the vision first and then together sort out the details in relevant implementation plans, using the many financial, economic, technology and business experts to create the right models for this.
It is most encouraging to see the unprecedented level of cooperation (including Telstra) that now exists in Australia in working through the enormous volume of detail that is required for the implementation plan. If we had started talking details first we would never have got to where we are now.
Having a vision first also allows for unexpected developments. It is impossible to look five or ten years into the future, but with a vision in place it is much easier to make any adjustments that might become necessary as a result of future developments. We need to have the flexibility built in to shift goals on an as-needed basis.
There is also no silver bullet available for reaching the broad goals laid out in the vision. Some cultures favour elements such as liberty and freedom from the state; others prefer a collaborative and negotiated approach. However most agree that government leadership is needed – both in situations where private funding is the preferred solution and in those where public funding is pursued. Perhaps the best in-between option is that of Public Private Partnerships.
And so, it is futile to begin working on the details without first establishing a vision. Interestingly, however, due to the universal nature of the broadband trans-sector concept, even countries that lack a well-articulated vision and strategy will eventually end up with roughly similar models, by default. One could ask ‘why bother?’ if it will eventually happen anyway, but I think that a well-defined national strategy is going to make the difference between economies and societies that will be successful in 2050 and those that will have fallen behind by that time.
For more info see: Global Telecommunications – Industry Transformation – How to move forward?
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