[go: up one dir, main page]

IDEAS home Printed from https://ideas.repec.org/p/zbw/itsb14/106872.html
   My bibliography  Save this paper

Anatomy of a Public-Private Partnership: Hold-up and regulatory risk in an NGN PPP

Author

Listed:
  • Howell, Bronwyn
  • Sadowski, Bert
Abstract
In recent years, the preference for purely private funding and ownership of telecommunications networks has given way to a 'new wisdom' that some form of public funding is now necessary if faster and more capacious Next Generation Networks (NGNs) are to be constructed in a timely fashion. The relevant question for policymakers is how that public investment will take place. The preferred approach in most cases appears to be to by way of Public-Private Partnerships (PPPs) where public and private actors collaborate in NGN investment, construction and operation. However, the body of analysis of NGN PPPs to guide policy-makers is scant. This paper addresses the gap by applying the learnings from classic, more mature PPPs (e.g. roading) and applying them to the NGN context. We use a case study of New Zealand's Ultrafast Broadband Initiative PPPs - one of the first nationwide partnerships undertaken - to illustrate the relevance of the insights. We find that NGN PPPs reverse the typical direction of financing and ownership observed in roading PPPs. The bundling of design, financing construction and operation of classic PPPs is 'undone' in NGN PPPs, as financing and asset ownership are separated, increasing the potential for misalignment of incentives and the likelihood that the public party can hold up the private party once existing network assets are sunk in the partnership by altering regulatory settings. Whilst the government instigating the PPP may not be inclined to act opportunistically, a successive government facing different political priorities does not face the same incentives. To the extent that the private party can anticipate this risk, it should endeavour to include terms in the initial agreement ensuring that the public party is penalised if such an event occurs (i.e. an automatic right to favourable renegotiation or payment of compensation) so that such opportunism is discouraged and the project benefits from time-consistent alignment of incentives and objectives. Had such provisions been in place in the New Zealand PPPs, costly consequences of regulatory change threatening the completion of the NGN would have been avoided.

Suggested Citation

  • Howell, Bronwyn & Sadowski, Bert, 2014. "Anatomy of a Public-Private Partnership: Hold-up and regulatory risk in an NGN PPP," 20th ITS Biennial Conference, Rio de Janeiro 2014: The Net and the Internet - Emerging Markets and Policies 106872, International Telecommunications Society (ITS).
  • Handle: RePEc:zbw:itsb14:106872
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/106872/1/816647402.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Andrei Shleifer, 1998. "State versus Private Ownership," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 133-150, Fall.
    2. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2013. "The Basic Public Finance Of Public–Private Partnerships," Journal of the European Economic Association, European Economic Association, vol. 11(1), pages 83-111, February.
    3. Gillett, Sharon E. & Lehr, William H. & Osorio, Carlos, 0. "Local government broadband initiatives," Telecommunications Policy, Elsevier, vol. 28(7-8), pages 537-558, August.
    4. Howell, Bronwyn, 2012. "Competition and Regulation Policy in Antipodean Government-Funded UltraFast Fibre Broadband Markets," Working Paper Series 2787, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    5. Martimort, David & Pouyet, Jerome, 2008. "To build or not to build: Normative and positive theories of public-private partnerships," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 393-411, March.
    6. Given, Jock, 2010. "Take your partners: Public private interplay in Australian and New Zealand plans for next generation broadband," Telecommunications Policy, Elsevier, vol. 34(9), pages 540-549, October.
    7. Oliver Hart, 2003. "Incomplete Contracts and Public Ownership: Remarks, and an Application to Public-Private Partnerships," Economic Journal, Royal Economic Society, vol. 113(486), pages 69-76, March.
    8. Carlo Cambini & Laura Rondi, 2012. "Capital structure and investment in regulated network utilities: evidence from EU telecoms," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 21(1), pages 31-71, February.
    9. Bernardo Bortolotti & Carlo Cambini & Laura Rondi & Yossi Spiegel, 2011. "Capital Structure and Regulation: Do Ownership and Regulatory Independence Matter?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(2), pages 517-564, June.
    10. Heatley, David & Howell, Bronwyn, 2010. "Structural Separation and Prospects for Welfare-Enhancing Price Discrimination in a New 'Natural Monopoly' Network: comparing fibre broadband proposals in Australia and New Zealand," Working Paper Series 4056, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    11. J. Luis Guasch, 2004. "Granting and Renegotiating Infrastructure Concessions : Doing it Right," World Bank Publications - Books, The World Bank Group, number 15024.
    12. Martin Cave & Keiko Hatta, 2009. "Transforming telecommunications technologies--policy and regulation," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 25(3), pages 488-505, Autumn.
    13. Bert SADOWSKI & Bronwyn HOWELL & Alberto NUCCIARELLI, 2013. "Structural Separation and the Role of Public-Private Partnerships in New Zealand's UFB Initiative," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(91), pages 57-80, 3rd quart.
    14. Cave, Martin & Martin, Ian, 2010. "Motives and means for public investment in nationwide next generation networks," Telecommunications Policy, Elsevier, vol. 34(9), pages 505-512, October.
    15. Howell, Bronwyn, 2012. "Competition and Regulation Policy in Antipodean Government-Funded UltraFast Fibre Broadband Markets," Working Paper Series 4133, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    16. Oliver E. Williamson, 1976. "Franchise Bidding for Natural Monopolies -- in General and with Respect to CATV," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 73-104, Spring.
    17. Howell, Bronwyn, 2013. "Broadband Regulation & Government Investment in Ultrafast Fibre Broadband Networks: Evidence from New Zealand," Working Paper Series 4348, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    18. Howell, Bronwyn, 2013. "Broadband regulation and government investment in nationwide ultra fast fribre broadband networks: Evidence from New Zealand," 24th European Regional ITS Conference, Florence 2013 88469, International Telecommunications Society (ITS).
    19. Ragoobar, Tricia & Whalley, Jason & Harle, David, 2011. "Public and private intervention for next-generation access deployment: Possibilities for three European countries," Telecommunications Policy, Elsevier, vol. 35(9), pages 827-841.
    20. Nucciarelli, Alberto & Sadowski, Bert M. & Achard, Paola O., 2010. "Emerging models of public-private interplay for European broadband access: Evidence from the Netherlands and Italy," Telecommunications Policy, Elsevier, vol. 34(9), pages 513-527, October.
    21. Howell, Bronwyn, 2012. "Competition and Regulation Policy in Antipodean Government-Funded UltraFast Fibre Broadband Markets," Working Paper Series 18774, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    22. Sadowski, Bert M. & Nucciarelli, Alberto & de Rooij, Marc, 0. "Providing incentives for private investment in municipal broadband networks: Evidence from the Netherlands," Telecommunications Policy, Elsevier, vol. 33(10-11), pages 582-595, November.
    23. Falch, Morten & Henten, Anders, 2010. "Public private partnerships as a tool for stimulating investments in broadband," Telecommunications Policy, Elsevier, vol. 34(9), pages 496-504, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Howell, Bronwyn E. & Potgieter, Petrus H. & Sofe, Ronald, 2018. "Regulating for Telecommunications Competition in Developing Countries: the case of Papua New Guinea," 22nd ITS Biennial Conference, Seoul 2018. Beyond the boundaries: Challenges for business, policy and society 190371, International Telecommunications Society (ITS).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Howell, Bronwyn & Sadowski, Bert, 2018. "Anatomy of a public-private partnership: Hold-up and regulatory commitment in Ultrafast Broadband," Telecommunications Policy, Elsevier, vol. 42(7), pages 552-565.
    2. 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.
    3. Fisher, Matthew & Freeman, Toby & Schram, Ashley & Baum, Fran & Friel, Sharon, 2020. "Implementing policy on next-generation broadband networks and implications for equity of access to high speed broadband: A case study of Australia's NBN," Telecommunications Policy, Elsevier, vol. 44(7).
    4. Gerli, Paolo & Wainwright, David & Whalley, Jason, 2017. "Infrastructure investment on the margins of the market: The role of niche infrastructure providers in the UK," Telecommunications Policy, Elsevier, vol. 41(9), pages 743-756.
    5. Ganuza, Juan José & Viecens, María Fernanda, 2011. "Deployment of high-speed broadband infrastructures during the economic crisis. The case of Xarxa Oberta," Telecommunications Policy, Elsevier, vol. 35(9), pages 857-870.
    6. Winkler, Kay, 2014. "Potential Effects of New Zealand's Policy on Next Generation High-Speed Access Networks," Working Paper Series 4347, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    7. Beltrán, Fernando, 2014. "Fibre-to-the-home, high-speed and national broadband plans: Tales from Down Under," Telecommunications Policy, Elsevier, vol. 38(8), pages 715-729.
    8. repec:bla:annpce:v:89:y:2018:i:1:p:25-48 is not listed on IDEAS
    9. Daniel Danau & Annalisa Vinella, 2017. "From fixed to state‐dependent duration in public‐private partnerships," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(3), pages 636-660, September.
    10. Briglauer, Wolfgang & Holzleitner, Christian, 2014. "Efficient contracts for government intervention in promoting next generation communications networks," ZEW Discussion Papers 14-022, ZEW - Leibniz Centre for European Economic Research.
    11. Howell, Bronwyn, 2014. "Structural Separation and Technological Diffusion," Working Paper Series 4353, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    12. Ragoobar, Tricia & Whalley, Jason & Harle, David, 2011. "Public and private intervention for next-generation access deployment: Possibilities for three European countries," Telecommunications Policy, Elsevier, vol. 35(9), pages 827-841.
    13. Howell, Bronwyn, 2014. "Separation anxieties: Structural separation and technological diffusion in nascent fibre networks," 20th ITS Biennial Conference, Rio de Janeiro 2014: The Net and the Internet - Emerging Markets and Policies 106840, International Telecommunications Society (ITS).
    14. Gerli, Paolo & Van der Wee, Marlies & Verbrugge, Sofie & Whalley, Jason, 2018. "The involvement of utilities in the development of broadband infrastructure: A comparison of EU case studies," Telecommunications Policy, Elsevier, vol. 42(9), pages 726-743.
    15. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2013. "The Basic Public Finance Of Public–Private Partnerships," Journal of the European Economic Association, European Economic Association, vol. 11(1), pages 83-111, February.
    16. Auriol, Emmanuelle & Picard, Pierre M., 2013. "A theory of BOT concession contracts," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 187-209.
    17. David Martimort & Flavio Menezes & Myrna Wooders & DANIEL DANAU & ANNALISA VINELLA, 2015. "Public-Private Contracting under Limited Commitment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(1), pages 78-110, February.
    18. Howell, Bronwyn E. & Potgieter, Petrus H., 2020. "Politics, policy and fixed-line telecommunications provision: Insights from Australia," Telecommunications Policy, Elsevier, vol. 44(7).
    19. Nucciarelli, Alberto & Castaldo, Angelo & Conte, Elisabetta & Sadowski, Bert, 2013. "Unlocking the potential of Italian broadband: Case studies and policy lessons," Telecommunications Policy, Elsevier, vol. 37(10), pages 955-969.
    20. Bert SADOWSKI & Bronwyn HOWELL & Alberto NUCCIARELLI, 2013. "Structural Separation and the Role of Public-Private Partnerships in New Zealand's UFB Initiative," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(91), pages 57-80, 3rd quart.
    21. Nucciarelli, Alberto & Sadowski, Bert M. & Achard, Paola O., 2010. "Emerging models of public-private interplay for European broadband access: Evidence from the Netherlands and Italy," Telecommunications Policy, Elsevier, vol. 34(9), pages 513-527, October.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:itsb14:106872. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: http://www.itsworld.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.