Telecommunications infrastructure: why the private sector isn’t always the most liberal option

An article in British daily The Guardian, “Mobile phone companies have failed – it’s time to nationalize them”, puts forward similar arguments to those I made in 2010 (pdf in Spanish) when the Australian government proposed creating a National Broadband Network: communication networks are a natural monopoly and that the genuinely liberal option that would best serve users’ interests would not be operators competing with each other, but a publicly managed system. In fact, I’ve been advocating this approach since early 2005 (link in Spanish).

Telecommunications networks are a vital part of a nation’s competitiveness: a well-designed, efficient system provides equal opportunities and encourages initiative and entrepreneurialism. And while publicly managed infrastructure has not always been as efficient as it might be, it is clear that at least in this case, the private sector has largely failed, and we now have a sector where there are fewer and fewer initiatives for investing. At the same time, the regulator’s job has become a losing game: try to control the incumbent to maintain competition runs the risk of discouraging it from investing.

Meanwhile, investment in infrastructure is hugely inefficient, with multiple overlaps; while trying to impose universal access is extremely complex.

To further complicate matters, private management threatens one of the defining characteristics of the internet: its neutrality. This is the acid test when it comes to managing infrastructure: if the telecoms companies say that they are not able to make a profit from neutral networks, then it is clear they should not be managing them and that the time has come to change the model. It’s clear from the zillions of comments received by the US FCC after the appointment of former industry lobbyist Tom Wheeler’s made it clear that the only people who back a non-neutral net are the major telecoms players themselves.

The other argument for the state taking over our telecommunications networks is that customers the world over complain about the poor service and high prices that their telecoms companies provide. With few exceptions, telecoms companies are hardly a setting the pace when it comes to customer relations.

Many people would be concerned about our governments’ control over what moves through state-owned telecommunications networks. And it must be said that Australia’s move toward nationalization raises concerns: among the countries of the West, it has been a pioneer in developing content filters “to protect” its citizens, filters that have been shown not only to be utterly inefficient, but in many cases arbitrary. The biggest threat from a state-controlled telecommunications infrastructure is obviously its capacity to become a propaganda and indoctrination tool.

The biggest problem with a nationalized telecommunications model would obviously be the danger that the government of the day would try to control traffic. To prevent this happening would mean creating checks and balances to defend neutrality, a process that could be perhaps best be carried out within the context of the European Union.

What advantages are there to putting our telecommunications infrastructure under the management of a public body aimed at creating a genuinely global, neutral network open to all operators? For one thing, it would make for a more level playing field, where the factors that drive progress would be subject to real competition. At the same time, it could ensure that communication is not subject to the rules of business, but rather that it works for the public good. It would also reduce inefficiencies and guarantee universal access, something that private players seem unwilling to commit to providing. Needless to say, going public wouldn’t necessarily be all sweetness and light, but any potential problems could be reasonably avoided by creating the appropriate oversight bodies.

Our experiences with managing telecommunications infrastructure seems to have led us to a paradox: the most liberal option is not necessarily the one that at first sight seems the most liberal.

(En español, aquí)