Should infrastructure be shared?
The importance of national infrastructure in our economy has taken a front seat in current debates. One of the underlying issues in the electricity crisis is a question of network investment – a concern that cuts across all network industries. Telecoms is no exception.
Key questions for regulators and policy makers include how best to ensure efficient use of scarce resources, manage limited availability to critical infrastructure, ensure fair access to existing infrastructure (particularly where monopolies have previously existed) and at the same time, encourage further investment in the sector?
The telecoms sector has been subject to various reforms over the last decade and regulation has changed to mirror those developments. This reflects a move from regulating monopoly and duopoly players to recognising a dynamic, innovative and rapidly changing market.
The law was amended in July 2006 to give effect to technological and market convergence. Central to this is a licensing framework that is ‘service- and technology-neutral’. Where the previous regulatory regime was based on a vertical structure of networks and services linked to the underlying technology, the new framework recognises the need for a flat, horizontal licensing regime, independent of the technology used for the provision of service.
And the market is awash with new and exciting technologies and services that will offer fixed and wireless broadband access – critical to the development of any economy – including fibre to the ‘x’, power line communications, WCDMA, HSDPA and WiMAX.
Yet, promoting wider broadband use means that national fibre infrastructure must be affordable. This requires the right incentives and conditions for competition. Increasingly, around the world, the sharing of infrastructure (fixed and mobile) by telecoms operators based on a model of open access is one such option.
Others include the possibility of telcos leveraging use of existing non-telecoms infrastructure (rail, power, etc.) for communication purposes. While there are different models of infrastructure-sharing, such as co-location, national roaming and local loop unbundling (LLU) – other forms of sharing are also starting to emerge.
These involve sharing the passive (the non-electrical or civil engineering elements, e.g. trenches, pylons, ducts, masts) and active network elements (e.g. lit fibre, access node switches and broadband remote access servers). Infrastructure sharing can be considered in the mobile space, spectrum, international gateways, national fibre and even end-user devices.
Studies already suggest that infrastructure sharing can reduce cost and capital expenditure components by as much as 40%. In the MENA region for example, (Bahrain, Egypt, Morocco and Saudi Arabia), growth and success rely extensively on sharing the incumbent's local loop, given the difficulty of rolling-out competing access networks. Market reports indicate that since LLU was enforced in Morocco in 2007, the broadband market grew 19% in six months.
Interesting national backbone sharing initiatives have already emerged in Ireland, Sweden and Virginia in the USA. Once incumbent operators perceive their core infrastructure as a revenue-generating opportunity, these innovative arrangements will also facilitate the development of new entrants and service providers. When ready, SA has a significant amount of ‘global best practice’ to draw on.
However, effective and enabling policy and regulation remain critical to facilitate such arrangements. The sector as a whole requires a paradigm shift towards competitive strategy and thinking, not based on legacy rights and obligations but on value for consumer and shareholder. This means that all stakeholders need to reconsider the market, better understand the sector as it becomes more competitive and ensure that market players, policy makers and regulators adjust their approaches and assumptions accordingly.
There are interesting times ahead.
This is written in Dr. Cohen's private capacity and does not necessarily reflect the opinions of ICASA
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