Public (Municipal) Initiatives

This Practice Note presents an excerpt from “Chapter 9: Enabling Environment for NGN” in Trends in Telecommunications Reform 2007 (Geneva: International Telecommunications Union, 2007) by Janet Hernandez & Daniel Leza.  For further examples of public initiatives, please see the attached GSR discussion paper prepared for and presented at the  2008 ITU Global Symposium for Regulators on Extending Open Access to National Fibre Backbones in Developing Countries.

 

9.3.11    Public (municipal) initiatives

Another route taken by certain governments, particularly local governments, involves the direct deployment of next generation access and core networks via public-private partnerships.  Municipally sponsored FTTH projects are springing up across Europe and the United States with the goal of providing competing infrastructures that grant open access to competitive broadband service providers.  Even some national regulators, such as Singapore’s IDA with its Next Generation National Infocomm Infrastructure (Next Gen NII) project, are also getting involved in similar initiatives (see Box 9.10).  Such initiatives can be beneficial to competition. In Amsterdam, for example, expected competition from Citynet, a municipal project, has prompted the incumbent KPN’s deployment of FTTH.[1]

 

Box 9.10:  Singapore’s Next Generation National Infocomm Infrastructure (Next Gen NII)

 

Announced by Singapore’s Prime Minister in February 2006, the Next Gen NII, which comprises fixed-line and wireless networks, is intended to be Singapore’s new digital super-highway for super-connectivity. The wired broadband network or Next Generation National Broadband Network (Next Gen NBN) will deliver broadband symmetric speeds of 1Gbps and above to all homes, offices and schools, while the Wireless Broadband Network (WBN) will offer pervasive connectivity around Singapore. 

 

Next Gen NBN

The Next Gen NBN is envisaged as a carrier-neutral, totally-wired network.  IDA has proposed this to be an open platform which supports multiple service providers in delivering multiple services to homes and offices.  IDA expects the private sector to build, own and operate the NBN.  However, IDA´s proposal calls for structural separation of the Operating Company[2] and the retail service providers (RSPs) to ensure that all RSPs are treated on an equitable basis in terms of pricing and contractual arrangements for equivalent services and volumes.  The Government has indicated that it will provide some funding to kick-start the project and to ensure that this ultra high-speed broadband service will be viable, affordable and sustainable in the long-term.  The process of deploying the NBN was initiated with a Request-For-Concept (RFC) in March 2006. By year-end 2007, a private sector partner will be announced. The appointed operator is expected to complete at least 50 per cent of network rollout within 3 years of the award and to complete the project within 5 years.

 

WBN

To complement the Next Gen NBN, the government will first work with the private sector to accelerate the deployment of the WBN in key “catchment” areas, such as places of interests, the central business district and suburban town centres.  On October 10, 2006, IDA selected three operators for the project. These operators have launched initial commercial services in January 2007 and are expected to complete the project by year-end 2008.

 

Sources: IDA, Fact sheet: Next Generation National Infocomm Infrastructure, available at http://www.itu.int/osg/spu/ngn/documents/NGNII-Factsheet-060303-Singapore.pdf; IDA, Summary of Responses of Request-For-Concept for Next Generation National Broadband Network, August 15, 2006, available at http://www.ida.gov.sg/idaweb/doc/download/I3757/Summary_of_RFC_Responses.pdf; IDA, Wireless Broadband Market Development Call for Collaboration (CFC) home page, available at http://www.ida.gov.sg/idaweb/marketing/infopage.jsp?infopagecategory=factsheet:wireless&versionid=1&infopageid=I3764.

 

A key element of this trend involves the creation of an open access network that will allow non-discriminatory access by multiple service providers to next-generation networks.   However, not all municipal projects are open access networks.  In the United States, 32 municipality-led projects have been deployed, either directly or via municipally owned utility companies; however, the majority of these networks were not designed as open networks.[3]  An interesting exception is that of the Utah Telecommunication Open Infrastructure Agency (UTOPIA), a planned FTTH open infrastructure network (see Box 9.11).

 

Box 9.11: UTOPIA: Open access municipal FTTH in the United States

 

UTOPIA was originally formed in 2002 by fourteen cities in the State of Utah in the United States.  UTOPIA’s mission is to build and maintain an FTTH open infrastructure network.  The project is funded by the sale of bonds which are guaranteed by 11 of the cities involved in the project.  In 2004, USD 85 million in bonds were sold to fund the first phase of construction which involved the laying down of fibre for six southern cities.  The project is currently in its second phase, which involves rolling-out fibre in the remaining five northern UTOPIA cities.  To repay these bonds, UTOPIA will collect a wholesale fee from service providers.  If such revenues prove to be insufficient, however, the 11 guarantor cities will be required to honour UTOPIA’s bond commitments with monies levied from sales taxes.  Currently, several small service providers such as MSTAR, Veracity Communications and X-Mission Internet, as well as large providers like AT&T, are offering voice, broadband and television services via UTOPIA’S network.

 

Sources: www.utopianet.org; Steve Cherry, A Broadband Utopia Continued, IEEE Spectrum Online, May 2006, available at http://www.spectrum.ieee.org/may06/3434/3

 

Poorly targeted public schemes, however, may potentially result in considerable harm, particularly if such public intervention distorts commercial incentives for efficient investment.[4] In many cases, governments must adopt suitable legislation or regulation which determines the scope of such projects.  For example, in France, the Netherlands, and the United States legislation was necessary for municipal projects to materialize (see Box 9.12).[5]

In addition, public projects may face legal challenges from incumbent providers.  In the United States, for example, incumbent providers have consistently used the courts and state legislatures to block municipal broadband projects, particularly those related to WiFi deployments.[6]  At present, 14 states have enacted some sort of legislation restricting municipalities from offering telecommunication services, half of which apply to broadband. 

 

Box 9.12: Enabling local governments to deploy next generation access networks in France

 

In June 2004, France amended the Territorial Collectivities Code[7] to expand the authority of municipalities to promote and roll-out telecommunication infrastructure within their jurisdictions.  Local governments now are allowed to deploy networks that they may operate themselves, as a carrier’s carrier, or outsource to private operators.  In addition, municipalities are entitled to serve end-users directly under very specific circumstances.[8]

 

Municipalities must publish their projects to roll-out infrastructure in the official journal two months before starting operations and must also inform the regulator, ARCEP, of their projects.  Local governments must adhere to principles of transparency, non-discrimination, and proportionality in their telecommunication activities.  In addition, they must establish account separation for activities involving the telecommunication network.

 

In early 2006, ARCEP reported that French municipalities had shown interest in 1’480 municipal telecommunications networks projects, 380 of which foresaw the deployment of fibre-optic networks.[9]


Endnotes

[2] The Operating Company will be responsible for running the Network, providing bandwidth connectivity on a wholesale basis to RSPs that would compete with each other providing services to end-users.

[3] See Telecommunications Industry Association (TIA) and FTTH Council, U.S. Optical Fibre Communities – 2006, available at http://www.ftthcouncil.org/documents/959055.pdf.  It is worth noting that there has been considerable increase in the number of communities served with FTTH in the United States during the past years. Data from 2005-2006 shows an increase of more than 135% on a year-to-year comparison, as the number of communities served in May of 2005 was 398. See Telecommunications Industry Association (TIA) and FTTH Council, U.S. Optical Fibre Communities – 2005, available at http://ftthcouncil.org/documents/213284.pdf.

[4] Ofcom, supra note 8, at p. 19.

[5] See Randal C. Picker, Who Should Regulate Entry into IPTV and Municipal Wireless? John M. Olin Law & Economics Working Paper No. 308, University of Chicago Law School, September, 2006.  Available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=931495.

[6] For a recent reference to the legal landscape of municipal WiFi in the United States, see Federal trade Commission, Municipal Provision of Wireless Internet, Staff Report, September, 2006. Available at http://www.ftc.gov/os/2006/10/V060021municipalprovwirelessinternet.pdf.

[7] Code General de Collectivités Territoriales.  Article L 1425.1, introduced by the Loi nº 2004-575 du 21 juin 2004 pour la confiance dans l’économie numérique.

[8] Municipalities can only serve end users directly if it is confirmed that private initiatives are insufficient to meet end user demand in their jurisdictions.  To this end, local governments must conduct public offerings to enlist private operators that meet this demand.  Only if this process is unsuccessful (i.e., no private parties come forward to meet demand), and after duly notifying the French regulator, ARCEP, may local governments engage in the provision of end user services.

[9] Equipement des zones d’activité en infrastructures de télécommunications a haut et très haut débit.  Guide pour les aménageurs et pour les collectivités.  ARCEP. p. 14.

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