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are only a limited number of local players with the entrants is key to promoting network coverage
knowledge and resources to invest in broadband expansion.
infrastructure. Even those few potential players
may have been deterred from investing by a fear
of assisting their competitors. 1.5.3 New financiers

In November 2013, Google Fiber announced Investment in broadband infrastructure may also
the deployment of a fibre backbone network in come from more unlikely institutions such as
Kampala, enabling local mobile operators and ISPs hedge funds or corporate organizations that do not
to increase their data speeds up to 100 times faster traditionally invest in broadband infrastructure.
than elsewhere in the city. The amount invested These organizations normally are driven by the
by Google Fiber has not been disclosed. However, opportunity to recoup their investment through
as an indication, in 2006 the Ugandan government public listing, when a company is sold, or through
tried to implement a similar broadband downstream revenues (that is, developing the
infrastructure project at a cost of USD 100 million. broadband capacity allows other products and
services to be sold).
Google Fiber emphasizes the importance of local
governments in creating the right environment The investments that can deliver the high levels
to attract new entrants. According to Google, "[l] of return sought by hedge funds normally carry
ocal government can actually play a large role a reasonable level of risk, often due to the sheer
in reducing the complexity of fibre networks scale of the project or the uncertainty around the
just by giving new entrants access to maps of deployment of a new technology. As a result, these
infrastructure, including maps of gas and water investments tend to involve multiple investors to
mains and things like expedited construction spread the investment risk.
permits". Making infrastructure available to new
83

Box 1.8: Key lessons: Google Fiber (USA)
• Having easy access to economic infrastructure and utility ducts was a key reason for
Google to select Kansas City, as it reduced the need for street digs. This, in turn, reduced
investment costs and the time taken to offer services to the market. Governments and
regulators should consider how they can increase the attractiveness of the investment
environment to make the business case for new entrant investment commercially viable.
This can be achieved through undertaking consulting services to understand investors’
concerns.

• Government capital investment needs may be reduced by creating the correct investment
conditions for private-sector investment and by working closely with operators. The
favourable investment environment in Kansas City, which attracted Google, also benefited
the local government, as it was not required to make an investment that it would
otherwise have been unable to source. According to the Mayor of Kansas City, they would
not have been able pass a bond issue for the investment required.

• The Federal Communications Commission (FCC) played no role in the network roll-out
of Google Fiber in Kansas City. The main facilitator was the local government, which
expedited the permit process, giving rights of way for little or no cost and allowing Google
Fiber to build in desired areas.

• Heavy regulation can create a barrier to new entrants. One of the lessons Google Fiber
took from deploying in Kansas City was that investment often flows into areas that are
less affected by regulation.

24 Trends in Telecommunication Reform 2016