In many parts of the world, the shared economy is always present for individuals, allowing them to use their personal assets — such as houses and cars — at their maximum potential. If you are going to be away for a while, why not rent your space for some extra money?
Such a phenomenon exists in the infrastructure economy where the level of use of assets counts for the final cost. As more consumers use the same infrastructure more frequently, the unitary cost for all consumers decreases. Recent projects that combine expertise from the World Bank’s digital development and energy teams demonstrate this.
Digital and electricity networks connect consumers in similar ways. Both require large distribution networks, but the costs of building or expanding these networks are significant.
While end-users see the digital connectivity that is heading to wireless models, it is worth highlighting that there is a strong cable infrastructure behind all wireless connections. High-quality wireless services require light speeds, accessible only through fiber optic cables behind Wi-Fi transmitters. Incidentally, current electricity networks use fiber optic cables for system surveillance, grounding, control and monitoring. It is a standard practice for these fiber-optic cables to run alongside the power transmission infrastructure
However, these cables often come with a capacity greater than that required for energy companies, which typically occupy about 10%. This means that they have spare capacities to divide (or rather sell) through commercial agreements to Internet Service Providers (ISPs). It is a good company to get a new source of income for the same asset base, and ISPs can expand their coverage at cheap prices. It also allows new and smaller ISPs to enter the market, improving the overall competitiveness of the sector.
This concept is not new. It has gone through developed countries since the emergence of telecommunications. In low-income countries, the distribution of towers, pipes and concrete pillars, such as passive equipment, took place due to the obligations imposed by regulatory authorities in the field of electronic communications to promote the development of the telecommunications sector. However, the exchange of active equipment such as the optical fiber spare capacity of energy companies remains under development.
The energy and telecommunications sectors that seek to involve the sharing of active equipment infrastructure come from regulatory factors and lack of capacity and /
Regulatory barriers prevent energy companies, especially electricity carriers, from selling their telecoms assets. On the other hand, insufficient regulatory incentives can limit actions in this direction
Energy companies do not know and know how to handle the telecoms sector and do not have a full appreciation of the commercial and social profits of infrastructure sharing.
With more than five years of working on the theme in the Western Balkans, I learned what it takes to encourage this match. In honor of the «World Telecommunications and Information Society Day», we share three basic games:
- ISPs are natural allies; communicate with them often. ISPs benefit from infrastructure sharing activities by accessing more fiber optics. Transmission system operators (TSOs) wishing to develop an infrastructure sharing practice should understand the ISP market by analyzing their demand for optical assets to determine the magnitude of the opportunity potential. In parallel, ISPs should be constantly informed about the infrastructure sharing process: relevant changes to policies and / or regulations that may be triggered, or possible changes (eg a new business unit) in OST to manage this new service.
Stay focused on a larger image. It has to be surprising that the TSO, who is facing daily electric power supply problems, does not rush to get involved in infrastructure sharing. For them, energy is their main business and they are reluctant to move away from their comfort zone through adventures in telecom business. Any revenue from infrastructure sharing activities is likely to be limited in the early stages compared to electricity supply.
It is better to show than to describe yourself a hundred times. Between 2014 and 2016, supported by a grant from the Public-Private Infrastructure Advisory Facility (PPIAF), the World Bank advised OSO KOSTT J.S.C. to operationalize an infrastructure sharing approach. Technical assistance has reached its goal: in 2017 KOSTT signed the first contract and the second followed in half a year. In total, nearly 10% of its fiber optic network, around 100 kilometers, was marketed by four operators. As we now reflect on this success, the key has made a visit to two Dutch companies (Relined B.V. and Novec B.V.) to learn from their experience. Kosovo executives have been impressed with how these companies have engaged in sharing infrastructure as part of their social mission. Shortly, the KOSTT Board took a strategic decision to turn the company into the first public utility in Kosovo to provide fiber optic services on the telecommunications market.
Energy companies improve their overall financial performance by opening a new business line using existing assets. This fresh cash flow can be used to subsidize access to energy for new customers or to improve the services of existing ones. Telecom operators benefit from significantly reduced network deployment costs, allowing them to advance cost prohibitive areas. Finally, citizens benefit from better broadband connection and, in some cases, lower energy tariffsFor more information on sharing cross-sectoral infrastructures, see these resources: