Regulatory framework for fiber-optic broadband

Mon 18 Dec 2017

Since high-speed broadband impacts a country’s entire economic ecosystem, a welldefined regulatory framework plays a determinant role. It must encourage optical fiber deployment and wireless networks while serving the objectives of telecoms regulation. In practice, this means creating "appropriate" competition conditions that allows infrastructure investments to be amortized.

Spur investment by guaranteeing the neutrality of technological choices

To encourage competition, the regulator must allow operators to consult each other on the architectures to deploy and to remain as neutral as possible in their technico-economic choices. Indeed, this kind of approach speeds investment and innovation, and incites operators to invest in several different technologies (fiber, 4G, LTE, etc.), all of which helps to achieve nationwide coverage.
In theory, free market conditions lead to use of the most efficient technologies as operators opt in a rational manner for technically or economically optimal solutions. Market regulation should obviously not obstruct this free selection, and it should acknowledge the reality that fast broadband access today can be wireline or wireless.

Maintain a faire level of competition

Nevertheless, today it is widely accepted that in some countries "open" competition at all levels of the network is not a good idea; the notion of "fair" competition is increasingly applied, particularly in the wholesale market. Unbundling is viable only in zones of high landline density, and the multiplicity of transport networks in many countries is tending to disappear in favor of a single network managed on the basis of network/services separation.

Define realistic deployment ambitions

In a free-competition market, VHSB networks must be capable of carrying digital services within a reasonable timeframe and according to predefined criteria
(technologies, coverage, competition,...). The challenge is to meet the service expectations of citizens and businesses while guaranteeing that operators will get a return on their investments.
The regulator must therefore define realistic deployment goals in three areas:

Technologies: the objective, which must take into account the exploding demand for bandwidth, is formulated in the most neutral way, for instance stating a minimum data rate for all subscribers. Farther downstream, it defines symmetry
levels enabling the transition to fourth-generation telecoms services.

Coverage: which parts of the territory are to be covered? The goal must also state a coverage target such that all homes and businesses in a served zone are ultimately connected to a network and able to enjoy very high speed services.

Calendar: networks are intended to attenuate the "digital divide" perceived by populations in zones where they arrive late. Yet the deployment plan must take account of operators’ budgetary and economic constraints, which is why it is usual to define a nationwide "minimum capacity per user" which of course may be exceeded in the more quickly profitable districts.

Private operators must respect their commitments

Since fiber is costly, operators may hesitate to deploy it outside densely populated zones, and even in fiber-equipped districts they do not always find it useful to connect all dwellings and enterprises. There is a high risk that operators will cream off the most profitable parts of their service areas and that some people will never get connectivity, except perhaps at prohibitive prices when additional network construction proves necessary. In short, operators will not spontaneously cover the entire territory, even if they are sharing a network, unless the regulatory framework gives them reasons to do so or if they receive public financial aid.

The regulator will therefore oblige private operators to confirm their deployment commitments and make contracts clearly stating the rollout schedule and annual investments.

Build a legitimate framework for public intervention

In the absence of contractualization, the regulator must create a framework that provides for the combined intervention of local authorities (when they are concerned) and the State to ensure that the principle of universal
telecommunications service is respected even in sparsely populated areas. For this purpose:
• The State and the regulator must closely monitor progress and homogeneity in all zones preempted by operators.
• Public Initiative Networks (PIN) should be used when necessary, with government financial support.

As the World Bank has underlined, superfast broadband impacts the entire economic ecosystem, so its implications are broader than those of information and communication technologies alone. A number of strong trends are emerging, in particular the organization of wholesale. For the rest – technological choices, investment types, and network governance and regulation – each country is adapting its regulations to its own context.


Maria Gabriela Macra

Governemental Projects Director