Broadband networks - innovation infrastructure in the era of industry 4.0
Business models related to the broadband infrastructure
We are currently entering the era of AI, also known as the era of industry 4.0. A characteristic feature of this stage of technology development is the use of intelligent software. The level of fiber infrastructure saturation has a growing impact on the innovative economy development. There is an urgent need to develop new business models that will facilitate and boost the development of fiber networks. As our previous experience has proven, dynamic development of universal network infrastructure (the one that provides universal services) is possible only with the strong involvement of the State. That is how transport (road, rail, water and air), utility (waterworks and sewage) and energy (electricity, pipelines) networks were created. The necessity to integrate processes related to creation and maintenance of networks is mainly due to the fact that the access to them is universal. It it imperative that each network node has simultaneous access to all the universal service networks. It is also a general rule that once they become universally accessible, the networks created and owned by private entities become to a large extent controlled by the State. It is possible that the fiber networks will be subject to the same process. Will be accompanied by a change in business models, based on which the networks will be built and maintained.
Losses resulting from the inability to conduct integrated investment in infrastructure lines become a source of an increasing frustration. The inefficiency of the current models is the subject of heated debates. We must, however, take into account that this is a part of our legacy, not a result of incompetence or mismanagement. We must understand that old business models that have been applied in the infrastructure market must be changed. The conclusions coming from the previous discussions are so far-reaching that they discourage any actions to implement reforms. The law governing the planning, funding, implementing, maintaining networks and their modernization has a decisive influence on the pace of economic development and innovation. It is reflected by the currently applied models of economic growth and by how competitiveness and innovativeness are defined. The acceleration of economic growth requires the use of this type of knowledge. Main thesis of the discussion
Development and implementation of new business models, construction and maintenance of fiber networks and integration of processes of creation and maintenance of infrastructure are the most urgent tasks that should be faced in order to develop knowledge-based economy.
Description of the issue A prerequisite for change of the current state of affairs is full and widespread understanding of the role of broadband networks as infrastructure in innovation. There is a growing number of supporters of the thesis that every piece of real estate should be immediately connected to the fiber network. This view is the basis of the model of financing networks applied by Korea and Japan, where more than 70% of access points to broadband are fiber connections. In the US, fiber connections account only for 10% of all access points, but the country has already launched massive projects related to the creation of universal fiber networks. Differences of views on this subject are clearly reflected by the following European ranking.
Along with Poland, the last positions are held by Germany and Switzerland. Sweden and Norway, but also Lithuania, Latvia, Romania, Russia and Bulgaria are in the forefront. As one can see, the thesis that this is a matter of the country’s prosperity is false. In the first place, the ranking reflects views prevailing in a given country and related to the optimal methods to ensure universal broadband access and efficiency of infrastructure development. Further technological breakthroughs in computer science, software and computer technology will additionally increase the demand for bandwidth. Today, no one challenges the need for the construction of universal fiber infrastructure and wireless networking devices. In Poland, the level of investments is determined by economic calculations made telco operators, who are naturally focused on short-term profitability. The calculations do not include educational, social and industry losses related to the increasing backwardness.
The current disputes and misunderstandings arise from the absence of the State’s decision to establish hard priorities for investments in fiber networks. Only the State can launch financial instruments as well as legal and business models, similar to those that during the last century were used to build a common power grid and road network for transport. The breakthrough will only come when the view that the discussion about the viability of a fiber optic connection is just as pointless as a discussion about the profitability of power connections becomes predominant. Only then new legal regulations become available. It is due to legal regulations that no one asks if it is financially rewarding for an operator of electricity distribution networks to supply electricity to a property. It is a matter of concession duties. The same regulations are needed with respect to the fiber connections. The electrification of Poland made it possible to increase the percentage of connected households from 15% to over 80% within 25 years. Electrical connection is much more expensive than fiber connection. The universal electrification of Poland was carried out in the years 1945-70, in the period, where the country was definitely poorer. Given the present economic potential of our country, it can be stated that providing fiber connection to 100% of companies and 80% of residential buildings in the next 10 years will not exceed the capabilities of our economy.
This will be the foundation of universal wireless access to 1Gbps + Internet. Such choice of bandwidth is the result of research illustrated below, listed in the communication of the EU. This is the bandwidth necessary for a person or an autonomous machine to function properly in an open space.
The main goal of the infrastructure digitization policy should be to minimize possibilities of conflicts between operators and to create mechanisms for cooperation between the operators of all types of networks. A legal responsibility of all the (public and commercial) market participants should be to promote the smooth development of fiber infrastructure. Perhaps the change in legislation should aim at establishing a segmentation of the market divided into operator-managed fiber-optic infrastructure and access network.
Other competencies are required for the construction of infrastructure and other for providing services to end customers. Market segmentation could help to create more favorable conditions for the optimal use of the investment potential of private companies, thus helping to build a universal wireless 5G (1Gbps +) network. It is a concept arising from the conviction that the success of the great investment efforts made by commercial ICT requires stronger support of fiber infrastructure, without which the wireless access networks will be unable to provide the necessary bandwidth.