Region: Sub-Saharan Africa
Country: Global / Non-Specific
Keywords: About PPP, Knowledge Lab
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Document Summary:
This document explores three models of infrastructure sharing: infrastructure mutualisation, infrastructure cooperation and infrastructure asset sharing. The source also discusses the bargaining power of involved agents.
Document Details:
The appeal of broadband is gaining momentum on the political scene. In developing countries, governments know the importance of broadband for development and promoting broadband as a way to boost knowledge in society has now entered the political agenda.
Infrastructure sharing is one of the main trends in broadband infrastructure deployment. In developing countries, particularly in sub-Saharan Africa, there is a trend for governments to back infrastructure sharing projects as a way to reduce costs in network deployments, expand coverage, reduce the rural-urban digital divide, and accelerate broadband take-up.
Traditional infrastructure sharing models, such as regulated access to the so-called “last-mile” network or site sharing agreements among mobile operators, have given way in recent times to new designs. The mutualisation model, where a common facility is operated by all market participants, and the cooperative model, where the telecommunication infrastructure is housed or jointly constructed with other linear infrastructures, are the two most popular designs.
Mutualisation has become a prominent new telecom infrastructure design in Africa since 2009 when undersea cables were constructed that integrated Africa into the fiber optics international connectivity networks. The requirement to connect national backbone networks to the new undersea cables continued the trend, and currently mutualisation is occurring to deploy mobile access network as well.
These changes pose regulatory challenges and questions. Whether or not the monopoly provision of infrastructure can coexist with competition in the retail markets is still unknown. But if future investments in network quality and new technologies will occur under the mutualised infrastructure paradigm, this question must be answered.
The mutual construction of undersea cables has been driven by market forces and supported by national and international public institutions, with guaranteed competition from the multiple cable systems. For national backbone mutualisation, the most competitive solution is the high participation of all national market agents in the construction and operation of the mutual infrastructure. The most controversial approach is to jointly construct mutualised access mobile networks. This approach poses risks of monopolization of an essential facility, and could discourage investment and innovation in a market where next generation technologies appear quickly.
A regulatory intervention that favors infrastructure sharing can lessen a specific market problem— such as the existence of entry barriers in the access network—but it could create complications to the future market development or distort the functioning of an adjacent one. The consequences of a particular regulatory intervention to encourage or prevent sharing must be analyzed on a case- by-case basis taking into account dynamic aspects such as innovation and future investment incentives.
Updated: April 12, 2022