Herbert Merz

With more than 25 years’ experience in information and communications technology (ICT), I have had the privilege to work with diverse stakeholders in the public and private sectors during the research, planning and deployment phases of a number of national broadband initiatives, including the German federal government’s National Broadband Strategy and Australia’s National Broadband Network.

While national plans to increase broadband coverage and adoption vary widely, the common thread running through all of them is the fundamental belief in the power of broadband technology to spur economic development and transform delivery of social services such as education, health care and e-government.

There are more than 100 countries striving to boost their economies and improve quality of life for their citizens by bridging the digital divide. They are doing this with government-sponsored broadband initiatives. In addition to the expected economic benefits of these initiatives (such as growth in gross domestic product per capita, job creation, increased tax revenue and so on), enabling universal access to a fast and reliable broadband infrastructure will lay the 21st-century foundation for a nation’s competitiveness and innovation.

To realise the socio-economic benefits of national broadband strategies, however, there are a wide variety of challenges and dependencies that governments or regional authorities face, regardless of the implementation model they choose.

Building a reliable broadband infrastructure with universal access designed to serve diverse end-users across multiple geographic regions is complex and costly.

Key success factors for national broadband strategies include:

- Political will and vision.

- A clear and comprehensive plan with realistic return on investment and roll-out milestones.

- Strong co-operation and co-ordination between government agencies and regulatory bodies.

- Solid procurement and funding plans.

- Strategic partnerships with private sector companies, including telecom operators and technology suppliers with proven experience and expertise in deploying broadband infrastructure.

Regardless of the scope, scale or technology composite of the broadband strategy, financing has been and will continue to be one of the most formidable challenges.

Nationwide broadband projects are, by nature, capital intensive and costly to implement and operate. To accelerate broadband deployment and adoption, it is incumbent on governments to explore the full breadth of practical financing options available to them and applicable to their respective situation. It is also important to take a long-term view toward return on investment, similar to the funding of traditional utility infrastructure projects, such as gas, electricity or transportation.

Financing options for national broadband initiatives have included government grants, device subsidies to stimulate end-user demand, operator incentives and subsidies, equity-based participation, tax breaks and discounts, stimulus plans, general taxation, and “in kind” support via government policies, rules and regulations. Preferential regulatory and policy approaches can play a significant role in lowering the capital and operational costs associated with broadband deployment.

These approaches include tax breaks and discounts, the sharing of infrastructure (for example, utility networks), facilitation of access to rights of way, and the timely assignment of spectrum to enhance last-mile access in rural areas.

Germany, for instance, has addressed the challenge of financing its comprehensive broadband strategy in part by creating a highly supportive regulatory framework (including preferential frequency policies) and by capitalising on synergies in infrastructure across the country.

The initial phase of Germany’s broadband plan is expected to be completed this year, and will be followed by a subsequent phase of “ultra-broadband” evolution planned for 2015 to 2020. An industry research report has estimated that Germany’s broadband initiative could generate some 968 000 jobs over the 10-year period to 2020.

Germany is one of many countries that adopted a public-private partnership (PPP) implementation model as part of its national broadband strategy. This widely-utilised model is defined by the close co-operation between public and private stakeholders, and is largely founded on the mutual understanding that successful deployment of nationwide broadband projects requires a broad range of skills, expertise and resources.

Kenya, Tanzania, France, Malaysia, Thailand and the UK are examples of other countries that have undertaken this co-operative model to accelerate implementation of their broadband strategies.

While there are varying degrees of private sector participation in the PPP model, this approach typically involves a contractual service agreement between a public agency (for instance, at the federal, state or municipal level) and a private sector enterprise, such as a fixed-line or cellular operator with existing telecoms infrastructure.

In many cases, governments have used the PPP model to cost-effectively expand broadband coverage via access to existing backhaul networks, international points of presence (POPs), and submarine cables.

Australia’s national broadband strategy is an example of a government-ownership financing model. A wholly owned commonwealth company, NBN Co, was established on April 9, 2009, to design, build and operate the National Broadband Network.

As an Australian government business enterprise, it is represented by shareholder ministers – the ministers for communications and finance. It is one of the most advanced, aggressive and closely-watched national broadband initiatives in the world.

With the goal of delivering the first national wholesale-only, open access broadband network to all Australians, NBN Co has embraced a range of technologies including dense wavelength division multiplexing transport, fibre to the node and hybrid fibre-coaxial (that is, the cable broadband network), alongside fibre to the premises, fixed wireless, satellite and future advances in telecoms technology.

In terms of advanced technologies, NBN Co recently completed a one terabit a second super-channel transmission field trial over a 1 066km fibre-optic ring in its high-capacity optical transmission backbone network.

This successful demonstration, conducted over existing transmission hardware, highlighted how NBN Co can easily and cost-effectively upgrade its optical backbone network to provide extra capacity as it expands coverage with services that provide access to voice and broadband services faster, cheaper and more efficiently to Australian homes and businesses no matter their location across the country.

There is no “one size fits all” when it comes to the selection and implementation of the technology required to build a nationwide broadband infrastructure.

Each country has its own set of challenges. These challenges include affordability, maturity and/or availability of existing infrastructure (telecoms but also power infrastructure), ICT knowledge within the government, private sector technology expertise, and the size and geographic distribution of the targeted subscriber base. For many national broadband plans, wireless access via mobile broadband technologies (for example, wi-fi, 3G, 4G and so on) has become an increasingly important tool to help governments cost-effectively extend coverage to underserved and unserved segments of the population.

In addition to extending the reach of the physical infrastructure, national plans must include strategies and programmes designed to stimulate demand and serve as a catalyst for broadband service uptake.

Taking a “build it, and they will come” approach is a recipe for disaster. Many government plans already factor in strategies for expanding broadband usage and increasing digital literacy, especially among students and low-income populations. In Argentina, for instance, the government initiated a programme in 2010 to fund the distribution of netbooks to students and teachers at public secondary schools. More than 1.8 million netbooks have been distributed to children across the country.

The more homes, schools, businesses and government agencies we connect to the broadband internet, the more powerful and beneficial our information society and knowledge economy will become – locally, nationally, and globally.

* Based in Munich, Herbert Merz is a board member of Bitkom, a federal association representing the ICT industry in Germany that was instrumental in the implementation of the country’s national broadband strategy. He is also the president of Coriant, a global supplier of end-to-end optical transport networking solutions deployed in tier 1 service provider networks around the world.