Government participation in FTTH: the bad and the good

Here is a worthwile read on government intervention in telecoms. I agree with much of what Tristan Ewins says, but at some point he just completely loses it. What does it mean: re-socialising Telstra?

He juxtaposes competition and the natural 'public' monopoly (NMP). According to his definitions, public means: government-owned (contrary to the usual dichotomy of private versus public, where private means not listed and public means traded at the stock exchange).

Anyway, here are his main points (that is, what I make of it):

1. Competition may lead to duplication, a NMP prevents waste.
2. Competition leads to frustrated incumbents, that are restricted to such a point that they stop functioning like true market participants. A NMP prevents abuse, which a 'private' (non-government owned) monopoly would be inclined to.
3. Competition will only serve the masses. A NMP will serve minorities and rural areas too.
4. Competitors are only accountable to shareholders. A NMP is accountable to the government only, i.e. to all the citizens.

Here is my point by point criticism:

1. There seems to be little consensus on duplication. I think everybody would agree that in-building networks should not be duplicated. Excessive duplication should be avoided, but what does that mean? Fundamentally, I believe in the highway parallal: who needs two highways? This is exactly what IP brings us: all we need is one fiber. However: building separate networks is sure to bring proper competition and would benefit employment and the telecom vendor community.
2. Incumbents are frustrated, that's true. My solution would be to structurally separate them and manage the passive infrastructure much like water and power networks. If they are government owned, they may have fewer incentives to abuse their power. But they will have to be incentivised to create value for their wholesale customers. A 'Government Business Enterprise' soounds great, but please: not as a commercial service provider. Futher: we have regulatory agencies to prevent/punish market abuse.
   
3. Good point.
4. Not a very good point. Bottom line, value needs to be created. Even by non-profits, mind you! So, it remains to be seen who is better suited for oversight: shareholders or citizens.
   

Here is my view on government participation:

One aspect that should be included in planning an FTTH network, is government participation - on several levels:

• Financial: subsidies and tax breaks may apply, esp. under current stimulus packages or funds for rural development. Note that these efforts may not only be aimed at network owners, but at prospective customers as well; by granting the latter subsidies for switching to FTTH, the new networks are guranteed a certain level of business.
  
• Regulatory: builders need clarity, esp. on open access requirements and compulsory sharing of ducts, in-building networks, etc. in order to prevent excessive network duplication.
  
• Legislative: to get speedy (i.e. sans red tape) access to rights of way, such as sewers and sidewalks.
• Strategic: get government agencies, including public schools, to sign up and become anchor tenants.

To achieve this, simply point them to the benefits of taking part:

• Grab the advantages: by allowing consumers and businesses to exploit all the benefits (economic, social, and environmental) of the network.
• Save on ICT expenses: by becoming an anchor tenant.
• Happy citizens: by preventing excessive network duplication.