The germ of today’s prediction comes from my post a little while ago about usage-based billing myths, wherein I said there is a tangible trend emerging toward shared internet networks. Ten years from now, how internet access is bought and sold will be tremendously different from how it is today, at least in most parts of the world and especially in North America.
Until recently, conventional wisdom thought the best way to get better internet speeds and cheaper prices was to have different networks compete against each other. The more the merrier. In many cases, this meant a phone company’s network versus a cable company’s network. Well, that worked for a while but eventually, corporate interests trump national interests. The network-owning companies have to eventually make some money off those networks, so they go into periods where they don’t invest as much and raise prices.
That, of course, runs counter to national interests. Most right-thinking countries have realized that they need to continually foster their internet infrastructure if they are to be globally competitive in a digital economy. So what happens if the infrastructure owners you were counting on to make that happen decide that it’s time to count their pennies instead?
The idea of infrastructure-based competition doesn’t make sense for a host of other reasons – building competing networks is expensive and inefficient, for example, and sometimes results in roads being dug up, etc.
All of these factors have led a few countries – the UK, Australia and New Zealand – to take a different way forward. UK regulators started the ball rolling a few years ago when they demanded that the incumbent phone company, BT, split off its network assets into a separate company called Openreach. That company would then sell internet access to any other service provider who wanted it – including its own parent BT – at equal terms and prices. This put all ISPs on a level playing field as far as the network was concerned; it was then up to them to compete for customers by coming up with their own different packages and speeds.
It’s a great idea because in theory it’s an efficient way to build and upgrade networks, it encourages market forces and competition, and it requires very little regulatory oversight.
Have there been problems with the Openreach model? Sure, but that’s what happens when you’re a pioneer. The project has worked well enough for Australia and New Zealand to follow suit, with a number of European countries considering it too.
The concept seems alien in North America, but as I mentioned in that UBB post, even our telecom companies are showing signs of seeing the logic. In 2009, Bell and Telus jointly built a new wireless network for many of the same reasons – it’s efficient and cheaper to share.
Ten years from now, the majority of people in the world will likely have wireless as their only internet connection. Still, wired connections aren’t going anywhere – they will always be capable of heavier transmission than wireless and will therefore continue to be absolutely vital. The majority of countries in the world are thus likely to opt for the logic of shared infrastructure, which may also include wireless networks. I suspect North America will eventually be dragged into the light, but it wouldn’t surprise me if we’re the last ones to the party.