NGNs Funded by Regulators: Taxpayers Had Better Pray Hard
Posted Thu, 16 Apr 2009 23:49:42 EDT by Serene Fong
Not too long ago three countries within Asia (New Zealand, Singapore and Australia) pledged their commitment to fiber access by pressing ahead with plans on building national FTTH networks. The aim is to have a wholesale model operated by a single operator for the dark fiber access network.
On the onset, it may appear that a government-backed NGN project is a good aid in creating the right foundation for faster growth and users can be assured of greater reliability in the networks. At the same time, end-user service packages are expected to be more affordable given that competing ISPs are placed on the same footing with the same price charged for dark fiber. Fiber has also long been promoted to be the elixir for being able to help with economic growth as well as satisfying the consumers’ lust for high-bandwidth activities. While there have been success cases such as Japan, Hong Kong and even South Korea, nobody seems to ever notice that not all markets operate the same way. We all know that the cost of laying fiber in the ground is extensive and there is no such thing as a sure-win business case… not even in the most technologically developed environment. And a government investment does not automatically indemnify itself from commercial and technological risks. Especially so when fiber needs to contend with existing DSL and cable technologies before it can even start hoping to gain some footing in a market. Moreover, it is clearly not cost efficient to even think about laying it in dispersed markets. This is also a key reason why telcos and other private investors have been holding on to their purses on fiber investments. At the end of the day, it is no doubt politically appealing to be in the forefront of the bandwidth race but it will not be an easy feat to attempt at least for the next few years until some innovative services (in addition to video) show up to justify the costly investment. For now, taxpayers in regulator-funded NGN countries will have to pray hard that their ‘investments’ will reap returns.