Broadband has been the engine of progress for the past decade, profoundly changing our daily lives. According to the latest statistics, digital infrastructure, represented by the broadband Internet, has surpassed railways in economic importance, contributing over 35% to global economic output. A World Bank study concludes that a 10% increase in fixed broadband penetration would increase GDP growth by 1.21% in developed economies and 1.38% in developing ones.  Take China as an example, Alibaba, a Chinese e-commerce company, has created 10 million jobs directly and 3.52 million jobs indirectly. Didi Chuxing, a ride-sharing company, generates over 1 million jobs directly with every additional 1% penetration. Therefore, governments shall rightly see broadband as an important enabler of competitiveness, economic growth, employment, and social cohesion.

Unfortunately, over 50% of the world still has no broadband access. It’s because there are a variety of difficulties and challenges when we develop the broadband networks. To develop broadband networks, it requires specific investment model, government policy to promote broadband rollout and collaboration across industries and sectors.

Encouraging Investment

The high up-front costs and slow ROI lead to one of the main challenges: the investment model. 

Public-private partnership (PPP), which governments first consider using public funding to mobilize private investment, has been proven the most efficient and effective national broadband rollout model. PPP combines the efforts of both governments and private sectors for broadband rollout. As operators with their own strengths are motivated and attracted to take the lead in building broadband networks, investments and subsidies from governments in turn bring broadband to areas and regions where the commercial investment case alone falls short. 

PPPs have been adopted in both developed and emerging countries such as Malaysia, Singapore, United Kingdom and New Zealand. For example, in Malaysia, the government launched the National Broadband Initiative (NBI) in 2010. And the domain operator established the HSBB project to carry out the initiative. Among the total of 13 billion MYR investment of the HSBB project, the government of Malaysia injected a total of 2.4 billion MYR over three years and the remaining was invested by the operator. The PPP construction model, where the government provided capital allowance and operators carried out network construction, was very successful. As the result of this project, the number of users reached 680,000 in just one year, and the overall profit margin of TM was above 10%. 

Encouraging Collaboration

As another challenge lies in costs and collaboration across the value chain, governments play an important role in coordinating the passive infrastructure that can be shared between different utilities. Around 70% of the cost of broadband deployment, particularly fixed broadband, is spent on civil works. These costs can be minimized if trenching and other forms of passive infrastructure can be shared between telecommunications, power and other utility providers. Infrastructure sharing greatly lowers the costs of fiber users and carriers. 

Cost minimization strategies are typically implemented in planning or building codes to support fixed broadband and to ensure that synergy and cost-sharing of infrastructure is applied in new and old neighborhoods. Fiber-to-the-home (FTTH) can be incorporated into the building of conventional infrastructure, such as power supply, water and drainage systems. These assets could be readily accessible and shared by all industries. In 2012, the Ministry of Industry & Information Technology (MIIT) and the Ministry of Housing and Urban-Rural Development (MOHURD) of China jointly released the Code of Construction and Acceptance of Communication Engineering for FTTH in Residential Districts and Residential Buildings. The Code has definite regulations on fiber pipes, telecom shafts, manholes, fiber connections, and device installation in newly-constructed residential districts. In addition, the Code provides detailed acceptance standards. All these initiatives can effectively reduce overall broadband deployment costs.

The physical world has gone digital and the digital world is taking shape. In the next two decades, the physical and digital worlds will integrate further and ubiquitous broadband networks will emerge, but we still have a long way to go.