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Universal high-speed broadband provision: A simple auction approach

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  • Wolfstetter, Elmar G.

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.

Suggested Citation

  • Wolfstetter, Elmar G., 2022. "Universal high-speed broadband provision: A simple auction approach," Information Economics and Policy, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:iepoli:v:60:y:2022:i:c:s0167624522000336
    DOI: 10.1016/j.infoecopol.2022.100994
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    References listed on IDEAS

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    1. Bergemann, Dirk & Brooks, Benjamin & Morris, Stephen, 2020. "Countering the winner's curse: optimal auction design in a common value model," Theoretical Economics, Econometric Society, vol. 15(4), November.
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    3. David Martimort & Flavio Menezes & Myrna Wooders & ELISABETTA IOSSA & DAVID MARTIMORT, 2015. "The Simple Microeconomics of Public-Private Partnerships," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(1), pages 4-48, February.
    4. Eduardo Engel & Ronald D. Fischer & Alexander Galetovic, 2020. "When and How to Use Public-Private Partnerships in Infrastructure: Lessons from the International Experience," NBER Chapters, in: Economic Analysis and Infrastructure Investment, pages 333-364, National Bureau of Economic Research, Inc.
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    6. Hu, Luke & Wolfstetter, Elmar G., 2014. "Spectrum license auctions with exit (and call) options: Alternative remedies for the exposure problem," Information Economics and Policy, Elsevier, vol. 27(C), pages 13-23.
    7. Eva I. Hoppe & Patrick W. Schmitz, 2021. "How (Not) to Foster Innovations in Public Infrastructure Projects," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(1), pages 238-266, January.
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    Cited by:

    1. Rabbani, Maysam, 2024. "Dollars and megabits: A comparative analysis of Telecom and Healthcare Connect Fund," Information Economics and Policy, Elsevier, vol. 67(C).

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    More about this item

    Keywords

    Public-private partnerships; Auctions; Universal service auctions; High-speed broadband provision; Public finance;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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