Examples from around the world demonstrate
that letting the market work can go a long way toward achieving widespread broadband
access. Most countries rely primarily on private sector initiatives and investment
to achieve broadband access and use throughout their territories. Yet even in well-working
market environments, some gaps typically remain, between and within countries. Despite
declining costs, some locations will not be commercially viable in the foreseeable
future. In places with broadband service, some users will not be able to afford
it. Persons with disabilities may have difficulty using standard equipment. These
are some of the situations where market forces alone are not likely to ensure access
to broadband. When government steps in to fill these gaps, it goes ahead of or beyond
the market. Achieving broadband access ahead of or beyond the market can be understood
as achieving “universal broadband access.”
An important question
for the achievement of universal broadband access relates to the role of governments
when market mechanisms alone do not meet the goals set for broadband access and
use. Some degree of government intervention may be required to complement the market
and overcome impediments to universal broadband. However, a distinction should be
made between enabling, facilitating, and complementing market developments versus
substituting government decisions for market forces and public sector investment
for private investment. There is also the question of whether and to what extent
scarce public sector resources, for which there are many competing demands from
other sectors, should be used to extend broadband ahead of or beyond the market.
Governments have a range
of instruments at their disposal to narrow gaps or accelerate rollout of broadband
(see chapters 1 and 3). The choice of instrument depends on the specific obstacles
that the government is trying to overcome. These obstacles may involve the following:
A proposed investment may not be commercially viable.
The cost of doing business in the country may be too high.
Laws and regulations may not be well suited to facilitate the adoption of new technologies
and business models.
There may be a lack or shortage of long-term financing (especially in local currency)
commensurate with long economic lives and payback times of the investments.
Regulatory and political risk may undermine what otherwise would be an attractive
Uncertain prospects for market development may pose excessive commercial risk.
This chapter seeks to
provide an overview of what policy makers can do to address perceived shortfalls,
to define a broadband development strategy capable of addressing market failures,
and to work toward achieving universal broadband service. It discusses the different
levels of access that a government strategy may pursue, the role of private-led
competitive markets in achieving these objectives, the role of the government in
narrowing or eliminating any gaps between markets and the country’s development
needs, and the design of effective government strategies to meet this challenge.
This chapter then examines the use of fiscal resources to support private supply
of broadband, including choice of instruments, use of subsidies, and mechanisms
to collect and disburse funds for subsidy.