Independent think tank the New Zealand Institute is proposing the creation of a price-regulated monopoly investor in a national fibre access network, to speed up the roll out of broadband.Its not clear to me how a state guaranteed monopoly would speed up anything. After all as Sir John Hicks put it, the best form of monopoly is a "quiet life" and this doesn't seem compatible with high levels of innovation.
The article goes on to say
Fibre Co would own the passive infrastructure and grant equal and open access to the fibre access network to service providers and others at a regulated price.The price for such access is a big issue. The form of "price regulation" to be used is important. All forms of price regulation have problems in providing the correct incentives to firms especially in rapidly changing and dynamic markets where innovation is important.There are no obvious forms of regulation that provides the correct incentives to firms as far as entry into the market is concerned and the efficient use of the resource. Just think of the problems with the Baumol-Willig rule from a few years back.
The article ends by noting
For now, this country's fibre future remained reliant on investment decisions taken by Telecom, which faced weak incentives to invest significantly in a fibre access network, the institute said.And why would the incentives of a state guaranteed monopoly be any better. Competition gives the best incentives, especially in rapidly changing, innovative markets.
(HT: Not PC)