Competition in next-gen broadband could be undermined by heavy government intervention, a telecoms lawyer warned Thursday.
Peter Waters, partner at Gilbert + Tobin, told the Next-Generation Broadband Forum that while facilities-based competition had become unrealistic in most markets, some carriers and government officials were seeing NGN as the next natural monopoly.
"The idea has already been voiced, mainly from competitive telcos, that governments can build the NGN to replace the PSTN because there\'s no sense in duplicating infrastructure, and that the competition will happen at the service layer," Waters said. "But not everyone accepts the idea that NGN is a natural monopoly."
The European Commission, for instance, has already expressing concerns that state funding of broadband could be done cheaply and priced low, but will crowd out private investment and hurt efforts to build a competitive market, he said.
Waters said that government investment in NGN to some extent was inevitable, as are infrastructure monopolies, but that how the networks are designed to ensure private competition is not inevitable, and it needs to be discussed now.
"NGN is the new PSTN, and the decisions made now will impact competition in the next 20 years," he said.
One possible solution is a "Swiss cheese" approach where the private sector builds out NGN coverage for around 60% of the population (after which buildout costs escalate dramatically) while the government builds out the rest of the network in the rural areas (or subsidizes someone else to do it) and lower the barriers to entry for competing players.
A more promising approach is to tackle the investment question by layer. "If we separate the network into four layers ¨C the infrastructure, the network services, the value added services and the applications ¨C the question is where and how far up the chain does the government intervene‾"
Waters said the question is critical because whatever the government looks after determines where the private sector gets to compete.
"If the government takes over too much of that value chain, the only people competing at the service layer will be Google and Yahoo, and the rest of you can go home," he said.