TOOLKIT ON CROSS-SECTOR INFRASTRUCTURE SHARING M A C M I L L A N K ECK A T T O R N E Y S & S OLICITORS Jerome Greene Hall 1120 Avenue of the Americas, 4th Floor 435 West 116th Street New York, NY 10036 USA New York, NY 10027 Tel: +1 212 626-6666 Phone: (212) 854-1830 Fax: +1 646 349-4989 Fax: (212) 854-7946 www.macmillankeck.pro ccsi.columbia.edu February 2017 Table of Contents Foreword ........................................................................................................................................................ iii Acknowledgements ........................................................................................................................................ iii About the authors and contributors ............................................................................................................... v About the World Bank team ........................................................................................................................... vi CROSS-SECTOR INFRASTRUCTURE SHARING ................................................................................ 1 Introduction ....................................................................................................................... 2 Executive summary ............................................................................................................ 5 1 The origins and development of cross-sector infrastructure sharing ................................... 13 1.1 The telegraph and railroads paved the way ................................................................ 13 1.2 The telephone followed by sharing road corridors and then utility poles .................. 17 1.3 Wireless ended telephone monopoly and reduced infrastructure sharing need ......... 24 1.4 Fiber renews need for infrastructure sharing in a competitive landscape .................. 28 2 Financial and other motivations ........................................................................................ 36 2.1 Motivations of broadband network operators ............................................................ 36 2.2 Motivations of infrastructure owners ......................................................................... 39 2.3 Motivations of lawmakers, policymakers and regulators ........................................... 41 3 Common business models ................................................................................................ 44 3.1 Joint planning and construction of infrastructure ....................................................... 44 3.2 Hosting third-party telecommunications facilities ..................................................... 45 3.3 Commercializing excess utility dark fiber.................................................................. 46 3.4 Utility joint venture with a third-party telecommunications operator ........................ 50 3.5 Utility provision of wholesale telecommunications services ..................................... 51 3.6 Providing co-location space, tower sites and ancillary services ................................ 52 4 Owner disincentives and impediments ............................................................................. 54 4.1 Suppression of financial incentives by utility ratemaking ......................................... 54 4.2 Suppression of financial incentives by infrastructure access regulation .................... 59 4.3 Institutional silos for infrastructure investment in developing countries ................... 63 4.4 Restrictions on activities of state actors and state-owned enterprises ........................ 65 4.5 Lack of resources to pursue infrastructure sharing .................................................... 70 5 Operator disincentives and impediments .......................................................................... 72 5.1 No clear path of engagement with infrastructure owners........................................... 72 5.2 Limitations on infrastructure owner’s land use rights ................................................ 73 5.3 Reliability of the operation and maintenance of the infrastructure ............................ 78 6 How policymakers, lawmakers and regulators can help ..................................................... 79 6.1 Remove financial disincentives via infrastructure owner’s sector regulator ............. 80 6.2 Ensure open, equal and efficient telecommunications access to corridors ................ 82 6.3 Tread carefully in regulating cross-sector joint use of facilities ................................ 87 6.4 Apply competition law principles to assess need for ex ante regulation ................... 91 6.5 Address regulatory restrictions that impede sharing by state utilities ........................ 93 6.6 Facilitate information exchange and dialogue ........................................................... 94 6.7 Tailor intervention to local conditions ....................................................................... 98 7 How international economic development institutions can help ...................................... 100 7.1 Encourage neutral and decentralized passive infrastructure ownership ................... 100 Cross-Sector Infrastructure Sharing Toolkit February 2017 Page i 7.2 Provide technical assistance to public sector stakeholders ...................................... 101 7.3 Plan for cross-sector sharing in all new infrastructure projects ............................... 105 8 Business and project case studies ................................................................................... 107 8.1 Lesotho Electricity Company ................................................................................... 107 8.2 RailTel (India) .......................................................................................................... 117 8.3 CEC Liquid Telecom (Zambia) ................................................................................ 123 8.4 Baltic Optical Network (Estonia) ............................................................................. 130 8.5 Kennedy Interchange (United States) ...................................................................... 133 8.6 Bombay Gas (India) ................................................................................................. 136 8.7 Electricity Supply Corporation of Malawi ............................................................... 138 8.8 Adif (Spain) .............................................................................................................. 140 8.9 Tokyo Metropolitan Government (Japan) ................................................................ 143 8.10 Ghana’s Electricity Transmission Line Fiber ........................................................... 145 8.11 Tunisian Railways .................................................................................................... 151 8.12 SOGEM (Mali, Mauritania, Senegal) ...................................................................... 154 8.13 Information Broadband Infrastructure System (Poland) .......................................... 158 8.14 KOSTT (Kosovo) ..................................................................................................... 160 8.15 Portugal’s Rapid Increase in Fiber Access ............................................................... 165 9 Country case studies ....................................................................................................... 169 9.1 Lithuania ................................................................................................................... 169 9.2 South Africa ............................................................................................................. 173 9.3 United States ............................................................................................................ 182 10 Glossary ......................................................................................................................... 220 Cross-Sector Infrastructure Sharing Toolkit February 2017 Page ii Foreword The World Bank’s ICT Sector Unit initiated and sponsored the development of this web-based Cross-Sector Infrastructure Sharing Toolkit which complement the existing Broadband Strategies Toolkit. It will serve as a neutral and comprehensive resource for all stakeholders in the joint use of passive infrastructure by telecommunications operators and public utilities and provide both a reference point and learning tool. It can be used to educate and assist a range of stakeholders in the telecommunications and other sectors in identifying and evaluating opportunities for cross- sector infrastructure sharing and addressing common challenges. The overall objective of this toolkit is to mainstream cross-sector infrastructure sharing to capitalize on synergies that will reduce costs, enhance competition and increase access to connectivity in the telecommunications sectors of developed and developing countries. The toolkit includes a comprehensive analysis of common opportunities and challenges faced by utilities, telecommunications network operators, policymakers and regulators and offers solutions which have been successfully employed to pursue these opportunities and address these challenges. This core analysis is supplemented and enriched with 18 case studies that demonstrate cross-sector infrastructure sharing, highlighting successes, failures and lessons learned. Acknowledgements The Broadband Strategies