The costs and ROI for broadband networks vary substantially. Geo-economic characteristics are dictating where commercial operators invest in next-generation access, and the patchy coverage that emerges will present significant challenges in terms of ensuring universal access and competition across a market's different regions. As covered in our report the The French approach: an alternative model for broadband deployment, first-generation broadband in France has benefited from a collective effort by authorities and operators to "bridge the divide" by helping to fund and roll out backhaul networks to facilitate local loop unbundling. This was key to stimulating France's broadband market. It is clear that rolling out NGA nationwide will require this approach to continue and evolve.
Through France Numérique 2012 and as a result of the Loi de Modernisation de l'Economie last year, France committed to stimulating competition and investment in fibre deployments to ensure broadband ubiquity. However, when these were announced there was one element missing: how much the government was willing to pay for it. The current sum under discussion is €2–3 billion of public funding in broadband infrastructure, out of a total of up to €4 billion for high-technology projects.
We believe this is likely to be administered as a gradual flow of public subsidy to joint-venture partnerships in different regions over a number of years, rather than the grand schemes unveiled in other markets such as Singapore. This is in keeping with the provisions of France Numérique 2012 for the state and local authorities to act as minor investors in open access networks.
Avicca (the Association of Towns and Communities for Electronic Communications and Audiovisual) estimates that public funding of around €1 billion per year for the next decade could ensure a national FTTx network, a significantly higher sum than currently earmarked, so expect further debate as to how much public funding will be committed in the longer term.
Using public money to fund broadband rollout is not without controversy. Whilst it may be obvious to technophiles, the logic will be less clear to others; therefore it is important that where possible the market provides. Communicating a clear and predictable regulatory framework should be the priority of all regulators so that any potential investments from the private sector are not held back. The European Commission has a responsibility here to finalise and publish its Recommendation on the regulatory approach to NGA. Now that the review of the regulatory framework has been agreed upon, some important provisions for NGA can be unlocked and we expect some significant activity in this area in the first half of 2010.
Competitors are pushing for the creation of shared fibre networks where it is not commercially viable for operators to go it alone. France Telecom favours a system where operators bid for individual local projects and whichever wins receives the subsidy. We don't believe this will occur, as the current approach of joint ventures in constructing open access networks has proven to be successful (particularly in connecting businesses and public buildings). We would also expect infrastructure specialist companies such as Axione and LD Collectivites to continue to feature strongly as suppliers. However, this debate will stimulate further discussion and build pressure for FT to commit, as more and more incumbents are doing, to some form of separation of its access division.