Peter Gerrand, La Trobe University

Published in the Telecommunications Journal of Australia Vol. 56 Nos. 3 & 4, Spring/Summer 2006, pp. 84-92.

Abstract

This paper draws attention to some useful initiatives taken by regional governments in northern Spain in solving ‘market failure’ in modern telecommunications. Recognizing that the major carriers will not invest in broadband infrastructure in the less populated rural and remote regions, four regional governments have each invested in PPPs (public-private partnerships) that have been rolling out optical fibre and WiMax radio network infrastructure that is made available as a wholesale service to all interested broadband retailers. The intention is generally to sell the government equity once the rollout task is completed. One of the consequences has been to stimulate aggressive marketing by the incumbent Telefónica, which has increased its broadband access speed offerings four-fold since 2004 for basically the same retail price – while raising its wholesale pricing.

The term ‘two zones’ approach is coined to characterise the glaring dichotomy in Australian telecommunications regulation since 1991 for the city versus ‘the bush’, the latter known more formally in the legislation as RRURA: Regional, Rural and Remote Australia. Large amounts of money, totalling A$3.1 billion, were set aside in the 2005 telecommunications to subsidise infrastructure initiatives to compensate for broadband ‘market failure’. The Spanish examples offer a relevant model by which the Australian Government could invest revenues from its Communications Fund.

tja56_2-eye-cartoon-rough-the-phoney-zone.pdf
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