For the last two decades, there have been varying degrees of interest in the concept of an Open Access Network. What is Open Access? Some party, usually a local government, chooses to build a physical broadband network and then leases access to service providers who wish to connect subscribers.
The model is compelling because the municipality builds a physical network that de-risks service providers, who might otherwise not recognize a reasonable return on investment across the community. This promotes competition in services to the benefit of subscribers. Those economics led to the emergence of several successful Open Access Networks around the world. But today, when the COVID19 pandemic has made clear that broadband is an essential service, it’s quite possible Open Access Networks have seen their day.
Limits of the Open Access Model
Municipal governments are all about creating and maintaining local infrastructure and should be well positioned to manage a physical network. Many municipalities, however, are reluctant to develop the basic machinery required to manage a telecom network. For those who do choose to make the investment, they quickly come to realize that a full-service municipal broadband utility – competing directly with other service providers – takes just incrementally more investment than an Open Access Network. The issue of competition also makes it hard to persuade incumbents and other would-be competitors to put their services on the open access platform. That weakens the appeal of open access and encourages local governments to simply forge ahead with direct market entry.
On the other hand, many local governments do not want to be in the telecommunications business or feel unqualified for the job. They instead choose to partner with or support existing service providers through combinations of direct funding or favourable municipal policies. This can be a popular option, because it is not perceived as competing with private industry. It also appears more fiscally responsible to the tax base, and usually involves a public-private structure that can be funded by multiple levels of government. Thus, partnering with existing, well-equipped service providers – those who are open to the idea – can yield excellent results.
The Structure of the Deal
Broadband is a complex, multi-layered service that subscribers perceive as an end-to-end experience: they click a link and get a movie or TV show. Existing service providers often cite the ability to manage the entire experience as critical to competitive success and cost-effective network management.
The Open Access model, however, divides responsibility for the different layers of service, from the physical network to the services that run on top. Operating a successful Open Access Network thus demands that all the organizations involved in service delivery carefully consider governance, interaction, and service level assurance. Without adequate planning and management, a complex adversarial relationship can emerge that ultimately fails subscribers. Moreover, its not uncommon that subsequent administrations, who are trying to maneuver the complexities of an Open Access Network, decide to sell the physical assets to fund other programs and inadvertently increase the risk to participating service providers.
The problem for Open Access Networks is that they occupy an uncomfortable middle ground between a fully competitive business-and-consumer network and a non-competing network built for government use only. While trying to steer clear of concerns about competing with the private sector, they can struggle to attract incumbent service providers and complicate the cost and governance challenges of network operation. Is there still a place for them? Absolutely – but as broadband achieves “essential” status in communities around the world, direct competitive market entry and public-private partnerships are likely to become more favorable options.
Rob McCann is the founder of Clearcable Networks and President of the Hamilton Technology Centre. He has been working with advanced broadband service deployments in mid-market and rural cable and telephone systems since 1998. He is responsible for building and maintaining technical, network, and application intelligence. Rob works closely with several carriers, cable systems, municipalities, and network service providers in Canada, the US, and the Caribbean providing them with the technology, integration, and business practices required to effectively operate voice, video, and data services in the changing broadband service provider industry.
Showing 1 reaction
Be the first to comment
Sign in withFacebook Twitter