Enabling the Digital Economy

POLICY

New research carried out on behalf of Prysmian by Industry-Insights underlines the importance of competition in developing broadband access - whilst recognizing the limits of the market-driven model.

Dr. M.Sc. Wolter Lemstra

TU DELFT, DEPT. TECHNOLOGY, POLICY AND MANAGEMENT

“The IT revolution offers our society a unique opportunity to significantly enhance productivity, if implemented properly,” explains Wolter Lemstra. “Telecom and communications infrastructure – specifically fibre broadband - play a vital role in this. Infrastructure-based competition is vital to developing broadband access, but we should also recognize the limits of the market-driven model. For this reason, governments have a vital role to play wherever commercial models fail to supply broadband.”

“Research also suggests that the economic benefits of broadband will only materialize if investments in ICT hardware and software are complemented with investment in human capital - skills development - and the reconceptualization of business models and business processes.”

Wolter first encountered FTTH in 1991, during a pilot carried out by telco incumbent KPN in The Netherlands. At the time, the obvious choice was to use existing copper networks and avoid the expense of laying new cables in the ground. The data rates fibre offered seemed excessive. “Today, however, they’re absolutely necessary. Video is one important bandwidth-hungry driver. Not just watching or downloading content, but also applications such as teleconferencing or security surveillance. The Internet of Things may have modest speed requirements, but there are billions of them. Moreover, upcoming applications such as remote surgery, that need extremely low latency and high data speeds, will increase the need for fibre even further. Trying to extend the life of copper networks is not a long-term solution.”

“Of course, the provider makes the final decision regarding the choice of technology, but governments have a duty to inform and educate and stimulate the uptake of the most future-proof solution. If the government finances a network, for example in a rural area, they can decide which technology is most appropriate. Across Europe, we see great diversity in alternative approaches to using fibre, based on initiatives by municipalities, non-telco entrepreneurs, cooperatives and user communities. We advise national, regional and local governments how to leverage and facilitate these initiatives.”

“In several Central and Eastern European countries which had little or no copper networks to start with they went directly to fibre. And once fibre is available, people tend to use more bandwidth. Today, people in Japan and Korea use far higher data rates than Europeans, but interestingly if current trends continue, it looks as if that gap will be closed by 2020.”

Dr. M.Sc. Wolter Lemstra is Senior Research Fellow at the Faculty Technology, Policy & Management of the TUDelft the Netherlands, and Research Fellow at CERRE, the Centre for Regulation in Europe, in Brussels. He studied Electrical Engineering at the Technical University of Delft, where he specialised in Telecoms. He has worked for Philips, AT&T and Lucent and his research interests include telecommunication sector developments in relation to firm strategy and government policy and the role of governance regimes and the institutional environment.

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Enabling the Digital Economy - Research Paper with Policy Recommendations

“The IT revolution offers our society a unique opportunity to significantly enhance productivity, if implemented properly,” explains Wolter Lemstra. “Telecom and communications infrastructure – specifically fibre broadband - play a vital role in this. Infrastructure-based competition is vital to developing broadband access, but we should also recognize the limits of the market-driven model. For this reason, governments have a vital role to play wherever commercial models fail to supply broadband.”

“Research also suggests that the economic benefits of broadband will only materialize if investments in ICT hardware and software are complemented with investment in human capital - skills development - and the reconceptualization of business models and business processes.”

Wolter first encountered FTTH in 1991, during a pilot carried out by telco incumbent KPN in The Netherlands. At the time, the obvious choice was to use existing copper networks and avoid the expense of laying new cables in the ground. The data rates fibre offered seemed excessive. “Today, however, they’re absolutely necessary. Video is one important bandwidth-hungry driver. Not just watching or downloading content, but also applications such as teleconferencing or security surveillance. The Internet of Things may have modest speed requirements, but there are billions of them. Moreover, upcoming applications such as remote surgery, that need extremely low latency and high data speeds, will increase the need for fibre even further. Trying to extend the life of copper networks is not a long-term solution.”

“Of course, the provider makes the final decision regarding the choice of technology, but governments have a duty to inform and educate and stimulate the uptake of the most future-proof solution. If the government finances a network, for example in a rural area, they can decide which technology is most appropriate. Across Europe, we see great diversity in alternative approaches to using fibre, based on initiatives by municipalities, non-telco entrepreneurs, cooperatives and user communities. We advise national, regional and local governments how to leverage and facilitate these initiatives.”

“In several Central and Eastern European countries which had little or no copper networks to start with they went directly to fibre. And once fibre is available, people tend to use more bandwidth. Today, people in Japan and Korea use far higher data rates than Europeans, but interestingly if current trends continue, it looks as if that gap will be closed by 2020.”