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The need for more efficient public funding of new communications infrastructure in EU member states

Author

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  • Briglauer, Wolfgang
  • Holzleitner, Christian
  • Vogelsang, Ingo
Abstract
Ubiquitous coverage of new high-speed broadband networks, as foreseen by the European Commission, still appears to be a rather unrealistic objective in most European Union member states without government intervention in terms of funding network deployment in unprofitable areas. We contend, however, that the current contract practice of fixing ex ante targets for network expansion is inefficient given the uncertainty about future returns on high-speed broadband services and the public authorities’ incomplete information about the costs of the network provider. This paper suggests delegating the choice of the network expansion to the typically much better informed network operator. Furthermore, we show that such contracts can be implemented based on existing accounting data and that it is not necessary to undertake any additional ex post verification of cost or demand data as is currently the case under claw-back rules.

Suggested Citation

  • Briglauer, Wolfgang & Holzleitner, Christian & Vogelsang, Ingo, 2016. "The need for more efficient public funding of new communications infrastructure in EU member states," Information Economics and Policy, Elsevier, vol. 36(C), pages 26-35.
    • Handle: RePEc:eee:iepoli:v:36:y:2016:i:c:p:26-35
    DOI: 10.1016/j.infoecopol.2016.07.002
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    Cited by:

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    2. Briglauer, Wolfgang & Stocker, Volker & Whalley, Jason, 2018. "Public Policy Targets in EU Broadband Markets: The Role of Technological Neutrality," 29th European Regional ITS Conference, Trento 2018 184936, International Telecommunications Society (ITS).
    3. Jochen Homann & Torsten J. Gerpott & Wolfgang Briglauer & Ingo Vogelsang & Jan Krämer & Iris Henseler-Unger & Lukas Wiewiorra, 2018. "Ausbau der digitalen Infrastruktur bis 2025: Welche Wege führen in die ›Gigabit-Gesellschaft‹?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(07), pages 03-21, April.
    4. Agénor, Pierre-Richard & Lim, King Yoong, 2018. "Unemployment, growth and welfare effects of labor market reforms," Journal of Macroeconomics, Elsevier, vol. 58(C), pages 19-38.
    5. Briglauer, Wolfgang & Schwarzbauer, Wolfgang & Thomas, Tobias, 2018. "Breitbandziele effizient erreichen!," Policy Notes 27, EcoAustria – Institute for Economic Research.
    6. Briglauer, Wolfgang & Stocker, Volker & Whalley, Jason, 2020. "Public policy targets in EU broadband markets: The role of technological neutrality," Telecommunications Policy, Elsevier, vol. 44(5).
    7. Abrardi, Laura & Cambini, Carlo, 2019. "Ultra-fast broadband investment and adoption: A survey," Telecommunications Policy, Elsevier, vol. 43(3), pages 183-198.

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    More about this item

    Keywords

    Contract theory; Public utilities; Next generation telecommunications networks; Subsidies;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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