With telecoms networks largely being natural monopolies, access and interconnect will in most situations require regulation; but, from a telecoms perspective, content (internet) is an unregulated market.
Once we have split the two it becomes much easier to start looking at how to improve the market for the telecoms operators.
Financial institutions (eg superfunds) have great problems investing in the current vertically integrated models as within such a structure there are different business models and risk profiles. The same would apply for anybody else (eg OTT) wanting to invest in such intertwined telecoms business, this is one of the key reasons why they prefer to invest in infrastructure that allows them to bypass as much as possible those vertically integrated telcos.
Once we separated these issues we can look at different models and structures which can be used to better address that investment issue. OTT players and others have argued on many occasions that they are unwilling to ‘fund’ inefficient vertically-integrated infrastructure and other telco inefficiencies. Google has put its money where its mouth is by building networks to show that this can be done in a more cost-effective way than fixed operators are currently achieving. Already there is evidence in the USA that this is having a positive effect on other fibre roll outs in this country.
This argument against vertically-integrated business models is a valid one and obviously if the telcos don’t transform themselves in order to better align with the digital economy in which the OTT players operate the issue will remain conflicted.
At an infrastructure level, the position of the telcos should be something along the following lines …..
They need to be able to create an affordable general-purpose networking environment. This should be made available on a non-discriminatory basis to both end-users and application developers. Whilst we must work within technical, legal and historical constraints this approach is essential in order to provide social and economic benefits.
On the other hand the sole purpose of the internet is to serve its users and society, not the organisational needs of network operators, their suppliers, or government bodies. These issues need to be separated.