As Taylor Reynolds, an OECD analyst, puts it, innovation usually comes in steps: newcomers first rent space on an existing network, to build up customers and income. Then they create new and better infrastructure, as and when they need it.
In France, for example, the regulator forced France Télécom to rent out its lines. One small start-up firm benefited from this opportunity and then installed technology that was much faster than any of its rivals’. It won so many customers that other operators had to follow suit. In Canada, too, the regulator mandated line-sharing, and provinces subsidised trunk lines from which smaller operators could lease capacity to provide service.
In South Korea, where half the population lives in flats, each block owns its own internal cabling and allows rival operators to put their equipment in the basement; each tenant then chooses which to use. In Japan, politicians put pressure on the dominant operator, NTT, to connect people’s homes by high-speed fibre lines. And this week the communications ministry indicated that it will make NTT open those fibre connections to rivals.
As broadband grows more popular, the political mood may change in many countries. At present, consumers are often misled by the speeds that operators promise to deliver. Soon regulators can expect to face pressure to ensure truth in advertising, as well as to promote easier access.
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