Infrastructure owners typically face several disincentives and impediments which deter or prevent them from actively pursuing or entering into sharing arrangements with telecommunications network operators.
This module identifies and discusses five common disincentives and impediments that infrastructure owners might face:
- Suppression of financial incentives by utility ratemaking. Infrastructure owner’s core business regulators often seek to offset sharing revenues by reducing the allowed revenue from the core business.
- Suppression of financial incentives by infrastructure access regulation. Cross-sector infrastructure sharing provisions of telecommunications laws often deter sharing and investment through a combination of imposing ex ante price regulation absent market dominance, mandating market entry and requiring non-discrimination.
- Institutional silos for infrastructure investment. This issue presents additional barriers to engaging in cross-sector planning and construction activities.
- Restrictions on activities of state actors and state-owned enterprises. Establishing infrastructure sharing arrangements with state actors and state-owned enterprises requires the parties to deal with a variety of contracting restrictions, including regulation of public procurement, disposition of public assets, public-private partnerships and public concessions.
- Lack of resources to pursue infrastructure sharing. Tight financial constraints and inflexible governance structures often deprive management of rate-regulated public utilities, particularly state-owned enterprises, of sufficient financial and human resources to pursue infrastructure sharing opportunities.
Reference and Resources:
1. McDermott, Karl, “Cost of Service Regulation in the Investor-Owned Electric Utility Industry: A History of Adaptation”. Edison Electric Institute, June, 2012. http://www.eei.org/issuesandpolicy/stateregulation/documents/cosr_history_final.pdf (last visited 10 Feb 2017).
2. Wall Communications Inc., “A Study of Wholesale Costing Methodologies in Selected Countries prepared for the Canadian Radio-Television and Telecommunications Commission.” Canadian Radio-television and Telecommunications Commission, October, 201 http://www.crtc.gc.ca/eng/publications/reports/rp12100htm#t31 (last visited 11 Feb 2017).
3. Ghana Electronic Communications Act of 2008, §21(2). http://www.moc.gov.gh/sites/default/files/downloads/Electronic%20Communications%20Act-775.pdf (last visited 11 Feb 2017).
4. European Parliament and the Council of the European Union. “Directive 2014/61/EU of the Parliament and of the Council of 15 May 2014 on Measures to Reduce the Cost of Deploying High-Speed Electronic Communications Networks”. Directive, Art. 3, 2014. http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32014L0061 (last visited 11 Feb 2017).