As the appetite for faster data processing speeds and greater bandwidth increases, the role of the public sector to accelerate initial deployment of fiber-based Next Generation Network (NGN) infrastructures in countries around the world will be imperative to maintain a competitive economic edge, a KPMG International report has found.
The KPMG Infrastructure Spotlight Report, ‘The Roll-out of Next Generation Networks – Investing for 21st Century Connectivity,’ examines how nine countries are applying various approaches to facilitate the deployment of broadband infrastructure so critical to the continued development of knowledge-based economies.
The countries – those with the highest levels of conventional broadband access per capita – are Australia, France, Japan, New Zealand, Singapore, South Korea, Sweden, UK and the US.
Among the key issues addressed is what type of intervention governments should take – regulatory, market or financial – to speed implementation without disrupting the role of the private sector and hurting competition. Of the nine countries spotlighted in the survey, it appears that financial intervention is the approach used most often.
Other important considerations basing decisions for public sector intervention are population density and GDP per capita which determine how cost-effectively broadband networks can be deployed. These factors, together with segmenting the marketing into infrastructure and service layers, can help stimulate investment and competition, and may provide a framework that enables an appropriate form of intervention from government.
The report shows that South Korea, Japan and Singapore have developed highly effective blended models of intervention and market segmentation that support a vibrant competitive market with an advanced infrastructure.
In 2001, South Korea was the first country to make conventional broadband available to its citizens followed by Japan and Sweden. Today, South Korea and Japan lead in terms of both broadband speed and fiber-to-the-home/building. France and Sweden follow close behind.
“What’s most critical to this process is the timing of investments and the extent to which governments should be involved in financing,” said Nick Chism, Global Head of Infrastructure, and a partner in the UK firm.
“A number of governments around the world are pressing ahead with significant investments in NGN. Doing nothing is simply not a viable option for most countries because the risk of being left behind in the race for economic competiveness is too great.”
Despite heavy demand from consumers, the business case for telecoms operators to invest in new fiber networks is not always compelling. High capital costs and long deployment schedules can deter operators. It is in these cases when market structures are failing to deliver the necessary infrastructure that governments tend to step in with financial assistance.
“Government intervention to ensure wide availability of NGN services is warranted because of the wider benefits to society as a whole,” said Sean Collins, Global Chair, Communications and Media, and a partner in the Singapore firm, “even if the direct business case from a private investor’s perspective is unlikely to provide the financial returns.”
The report demonstrates that applying various forms of intervention measured against the factors of GDP, population density and the competitive environment can deliver solutions that can stimulate the market, improve end user benefits and help improve returns on investment. In Japan and South Korea, higher broadband speeds are being offered at lower prices. In countries such as Australia or Sweden where population density or competition are lower, the cost of higher bandwidth is higher.
“The pattern we are observing is that governments are supporting NGN roll-outs,” said Chism. “But there is no clear consistency in which types of policies should serve as best practices due to differences in market structure, economic prosperity and population density. It is clear though that significant NGN infrastructure investment will be necessary to support new products and services for our increasingly knowledge-based economies.”
Broadband internet key to accelerate development
UN Secretary-General Ban Ki-moon recently stressed the need to harness the power of broadband Internet access to accelerate progress towards the achievement of the development goals intended to alleviate poverty and speed up social and economic advancement in poorer countries.
“Experience has shown that greater access to broadband technologies has meant faster progress towards all the MDGs (Millennium Development Goals),” Ban said in a message to the Plenipotentiary Conference of the United Nations International Telecommunications Union (ITU), in Guadalajara, Mexico.
“The internet drives trade, commerce and even education. Telemedicine is improving health care. Earth-monitoring satellites are being used to address climate change issues. And green technologies are promoting cleaner cities.
“Last month the Broadband Commission for Digital Development – a distinguished group of government officials, businesspeople and content developers, brought together under the leadership of ITU and UNESCO (UN Educational Scientific and Cultural Organisation) – offered a blueprint, and I look forward to working with all partners in bringing it to life,” the Secretary-General said.
Ban praised ITU’s central role in the development of the global communications system for 145 years, stressing its invaluable contribution as member of the UN system for the past 60 years.
“From the birth of telegraph to radio, television, satellite communication and the Internet, the ITU has been at the forefront of ‘Connecting the World,’” the Secretary-General said.
He noted that there are currently five billion mobile cellular subscriptions worldwide, and almost two billion people with Internet connections, pointing out that the work of the ITU, its member States, and its “sector members” continues to show how powerful a partnership for development can be when it is based on transparency, openness and cooperation.
“But despite important headway in expanding the benefits of information and communication technology, there is much work ahead. As was emphasised at last month’s Millennium Development Goals Summit in New York, while the digital divide has narrowed, it has far from disappeared,” the Secretary-General said.
“Your work in developing the next generation of communications networks, ensuring cyber-security, and putting the power of ICT (Information and Communication Technologies) networks to good use in disaster relief and mitigation is vitally important to us all,” he added.
Speaking at the opening session of the conference, Hamadoun Touré, ITU Secretary-General, urged delegates to be “bold and visionary” in reaching agreements that will provide a sound platform for the development of information and communication technologies and services for the decade ahead.
The Plenipotentiary is the quadrennial global conference that decides strategy for the ITU, the UN agency for ICTs responsible for allocating global radio spectrum, creating the technical standards that fuel all ICT networks, and developing and implementing strategies to bridge the “digital divide” between people in developed countries and those living in regions with less access to information technology.
“We are here to shape the future. Not just the future of the ITU, but the future of the ICT sector – which now influences every other business sector worldwide, and which now reaches into the lives of almost everyone on the planet. And the future – to quote the great Mahatma Gandhi – depends on what we do in the present,” said Touré.
The event, which will end on 22 October, is hosted by Mexico’s Ministry of Communications and Transport. It will welcome around 2,400 participants from some 190 ITU member States, sector members and observer organisations.