Ever since moving to Asia last year I have been looking around for what was happening broadband policy wise and gradually realized how much work needs to be done in this area. Earlier this year I wrote an article for FibreSystems entitled The Many Paths of Asian Fiber. This was the beginning of a thought process that matured in a speech I made at CommunicAsia in June (Telecom Asia did a write up about the speech with a somewhat more spectacular title than I felt my speech was).
To cut a long story short (and I of course encourage you to read the two articles above), there is no model deployment for fixed broadband in Asia, and policy makers are by and large not addressing the core issues that stifle private initiative. There is a prevailing view that no infrastructure investment will happen without public subsidies, and I think that view is just plain wrong.
Earlier this week, I spoke at the FTTH Council Asia Pacific's Gimme Fiber Day in Kuala Lumpur. Telekom Malaysia is (in many ways) rightly held as one of the enlightened incumbents in the region (deploying fiber, embracing open access, etc.) but something struck me while I was there: if you look at the amazing commercial success that HSBB1 (the first phase of their fiber deployment) has been, with low deployment costs and high take-rates, you wonder why it needed public subsidies in the first place. This would have been a perfectly viable infrastructure project, with a breakeven (according to my back of the napkin calculations) well below 10 years. And remember that 10 years for infrastructure is already a very good breakeven.
All this to say that before thinking of publicly financing wireline infrastructure deployment, policy makers should look at the low-hanging broadband policy fruit that would eliminate many of the pain points of deployment and make private initiative viable on its own terms. Here are two of these low-hanging fruit:
- Fibering new properties up front: many countries in Asia are building new accommodation at a very fast rate. The emerging middle-class aspires to live in apartments that have all the modern amenities. Yet few if any of these countries have grasped the connectivity opportunities these new apartment blocks offer: most of them are still connected with copper, even in countries where copper was never much deployed in the first place. I have had a hard time tracking consolidated numbers for new builds in APAC, but I know a number of markets where the growth of new accommodation is a big thing (India, Indonesia, Malaysia). In all of these countries, a law mandating that fiber ducting and/or fiber be deployed when the property is build, with a proper mechanism for patching that fiber to whichever service provider's network decides to serve the property would make a massive difference in wireline broadband adoption very fast. And the cost would be exactly zero since deploying fiber to a new home is no more expensive than deploying copper (in fact, it's likely to be slightly cheaper.) A few years ago, Diffraction Analysis did a study on real-estate benefits of FTTP deployment in Europe. One of the aspects we examined was legal obligations. If you're interested in this topic, you can check the webinar we did at the time or get in touch with us.
- Laying fiber duct alongside all other infrastructure work: digging to lay fiber is the primary cost driver for deployment and therefore the primary challenge. By mandating that fiber ducts be laid alongside all public infrastructure work (water, electricity, roads, etc.) and handing the management of those duct assets to a public entity, governments can drive the cost of deployment down dramatically. A number of attempts have been made in the US to pass just such a law and one is under discussion right now. They call it 'Dig Once'. For emerging markets, this could be a golden opportunity at no or very little cost.
Both of these low hanging fruit have limited cost. And even if they require a little public money to cover the cost differential, the amounts would be an order of magnitude lower than broadband subsidies and no doubt well spent.
Photo: Low-Hanging Fruit (c) Benoit Felten