Background
A public-private partnership (PPP) is a legal arrangement between two or more private-sector and public-sector parties to deliver a service via mutual investment. PPPs are common in infrastructure sectors such as telecoms where upfront investments are high and payback periods long.
PPPs can be an interesting mechanism to facilitate investment from different stakeholders and support the extension of network coverage in areas that would otherwise be risky investments with limited commercial potential. Governments view PPPs as a way to drive investment in areas without coverage and leverage the expertise of the private sector. In turn, private companies benefit from the certainty of a viable business model thanks to the investment and guarantees provided by the public partner. Large-scale
PPPs often attract the interest of multilateral organisations, which recognise the potential economy-wide benefits of such projects and are willing to support private companies and governments that lack the financial means to get these projects off the ground on their own.
In the telecoms sector, PPPs are found across all network segments:
- First mile: submarine cables, satellite hubs,internet exchange points (IXPs).
- Medium mile: fibre backbone and backhaul
- Last mile: radio access networks and wired local loops.
Debate
Are PPPs an effective way to accelerate the deployment of infrastructure and drive digital inclusion?
What alternatives do governments have to use their resources to catalyse investment?
What are the characteristics of a PPP that maximises positive impacts while minimising negative consequences?
Industry position
PPPs can be an effective way to deploy and operate network infrastructure in areas that do not have the economic potential to attract private investment. Public and private resources may support network deployment to deliver communications services directly to customers or provide the infrastructure to deploy commercially viable networks.
Governments should only consider PPPs in the most remote areas. Engaging with mobile operators and considering their roll-out plans is an essential part of the scoping phase because it prevents public investment from being wasted in areas where operators could have deployed networks on their own. Service delivery and customer engagement should be left to the private sector, which can provide the full suite of products and services to support digital inclusion.
Governments should only consider PPPs after exhausting all other policy and regulatory measures to maximise coverage through market- driven mechanisms. Creating an investment- friendly policy framework should be the first step in a coverage expansion strategy GSMA (2016), Unlocking Rural Coverage: Enablers for Commercially Sustainable Mobile Network Expansion. As second step, governments should consider giving mobile operators the same preferential conditions that PPPs often enjoy, such as subsidies, no-cost access to public infrastructure or less stringent quality-of-service obligations. This may be sufficient to create a favourable business case in remote areas.
When implementing a PPP, governments should avoid the single wholesale network (SWN) approach. SWNs are PPPs that do not observe the best practices outlined above. SWNs have a geographic scope that overlaps with commercial networks and monopolises important resources, such as spectrum. They create an uneven playing field, use valuable public resources inefficiently and have multiple implementation challenges (see the ‘Single Wholesale Networks’ section for more details).
Resources
Guidelines on State Aid for Broadband Networks, European Commission, 2023