Public Private Interplay for Next Generation Access Networks: Lessons and Warnings from Japan’s Broadband Success

This paper contributes to the discussion of how Public Private Interplay (PPI) can be used to foster Next Generation Access (NGA) buildouts in Europe by introducing the experience of Japan. Japan, which succeeded in both promoting nationwide network buildouts and fostering competitive dynamics that led to the world's fastest and cheapest broadband services and deploying them nationwide. The process entailed deregulation, which unleashed new entrepreneurial private actors, and re-regulation that protected them from incumbent carriers. The resulting market dynamics lowered Digital Subscriber Line (DSL) prices, influencing the market price for Fiber-To-The-Home (FTTH), for which the government had heavily subsidized carriers. Central government initiatives, combined with local incentives, led to an almost 100% broadband accessibility within a few years. However, Japan quickly discovered that taking advantage of the broadband environment to produce innovation, productivity growth, and economic dynamism, was far more difficult than facilitating its creation. It discovered regulatory barriers for the use of Information and Communications Technology (ICT) in various areas of the economy. Like Europe, Japan was not home to the ICT lead-user enterprises and industries that drove the ICT revolution, producing innovation and productivity gains. Moreover, the advent of US-centered cloud computing services potentially decreases the minimum bandwidth requirement to access global-scale computing power. The development of wireless technologies far cheaper than Japan's nationwide FTTH also merits serious consideration for European policy discussions.