Wire or wireless?

Posted on July 31, 2011  /  0 Comments

One of the principal rationales for the creation of LIRNE.NET in 2000, and then LIRNEasia in 2004, was to counter the tendency to transplant policy and regulatory thinking unchanged from the developed market economies into the developing world. But that never meant that we should ignore theoretical developments and policy/regulatory innovations just because they emerged in the developed market economies. It is my firm belief that theory is universal. But the application of abstract theory to concrete circumstances must always involve deep interrogation of local context and will almost always requires adaptation and innovation.

Since the Australians started throwing money at broadband, the issue of governments subsidizing broadband access has come to the fore. Beyond that, the debate has tended to focus also on download speed (one dimension of broadband performance) and on fiber. Robert and Charles Kenny have entered the fray with a well-argued case against massive subsidies for FTTH.

What I found interesting in what is essentially a “foreign” debate was the following:

Unlike previous investments to enable internet access (dial-up and DSL) it involves a major rebuild, not simply an upgrade at the edges. And the benefits in terms of new applications provided by superfast over standard broadband look limited on close examination. In particular, the argument for a market failure based around network effects or the need to provide access to vital services is weak when applied to superfast broadband. All of this suggests that governments should think very hard before spending billions of taxpayer dollars in a race to the top of the superfast broadband league table.

What a lot of people do not appreciate is that wireguided broadband necessarily requires nationwide rebuild in developing countries. When the developed world got into broadband, they had wireguides (copper pair put in for voice telephony and coax put in for cable TV) in place; all that was required was an incremental investment. But in most developing countries, the wireguides are not in place. Broadband over wire means that a complete rebuild is required. This then makes Kenny and Kenny required reading for those who still dream of FTTH in Bhutan and Mongolia.

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