Although OECD countries have made tremendous progress in recent years fostering the deployment of high-speed broadband networks, many challenges remain in terms of how to enhance and expand these networks in order to meet the growing demands of the digital economy. The availability of broadband networks is not only essential for people to participate in economic and social activities but to create opportunities for future gains in areas such as employment, education, health and improved civic engagement.
All this depends, however, on these networks being in place, connections being available at competitive prices and not limited by capacity constraints. In most places this demand is being met by the market but even in the most advanced countries gaps arise, such as in communities with sparse populations, or where there is insufficient competition due to the substantial cost of infrastructure deployment. In these instances, municipal networks, primarily fibre networks built, operated or financed by local governments, public bodies, utilities or co-operatives, are used in a number of OECD countries to provide service in towns, cities and regions.
A new report from the OECD examines experiences with municipal broadband networks in a number of countries including Australia, Denmark, Japan, Netherlands, New Zealand, the United Kingdom and the United States. Sweden, given its widespread use of municipal networks, is used as an anchor country for the analysis. The models and experience of the municipal networks in these countries have varied from being highly successful to not meeting expectations. In some cases, they have provided welcome competition by offering an alternative infrastructure or increased the geographical availability of advanced telecommunication services where none existed. Sometimes they have enabled retail competition by splitting the provision of infrastructure and services based on an open access approach. Proponents say they have contributed to cities and regions, as there are noticeable effects on social and economic developments in these locations, which the report explores.
Local governments, as well as their service providers and utilities, regard broadband networks as a way to build on their existing infrastructures in other areas such as energy provision, and improve community services in areas such as health and education. They underscore that the public sector can be a lead user of municipal networks, such as in the provision of more cost efficient home care services for the elderly, and say that the market has not moved to sufficiently provide this infrastructure. Others also regard broadband as not only enabling today’s commerce but in attracting new firms, start-ups and retaining young people and opportunities for them in these communities. In addition, they note that mobile providers take advantage of municipal network’s fibre, for the essential backhaul facilities wireless networks require, bringing forward new investment in such networks.
Nonetheless, given that extensive investment is required and that it is complex to deploy and manage high-speed broadband networks, there are substantial risks involved. This requires that the appropriate competence is in place for the organisational and financial capabilities required. Municipal networks can also raise competition issues as public money is involved in direct competition with the private sector or, in some cases, become a virtual monopoly for wholesale or retail capacity.
The report says that broadband speed matters, and that the available evidence indicates that these networks and the broader use of ICTs around them generate positive benefits, contribute to economic growth, and make firms more productive. Broadband networks can also be a substitute for some types of transport for smarter cities and contribute to the creation of new jobs and firms.
Overall, the report notes, municipal networks play a significant role in providing services for many people in OECD countries. As a result they are a viable and sometimes extremely effective way of supporting the objectives of local communities, addressing unmet demand and creating new opportunities for growth and prosperity in those communities, which otherwise would not be there.