Universal high-speed broadband provision: A simple auction approach

Abstract

Millions of citizens and firms lack access to high speed internet, even though governments pledged to spend huge sums of money to subsidize internet networks. In this paper we review some systematic flaws of present policies and outline a promising alternative. We propose that governments should treat the broadband infrastructure as a public responsibility and set up public-private partnerships that deploy, fund, and temporarily operate the broadband in exchange for collecting service fees and, if necessary, subsidies. Least-present-value-of-revenue auctions can be used to award all concessions, not only those that are expected to require subsidies, and concessions should revert to public ownership and be re-auctioned if the promised present value of revenue has been reached through collection of service fees. This procurement method is easy to implement, efficient, and immune to strategic manipulations and renegotiations.