Public Private Partnerships as Enabler for Broadband Access in Rural Areas within Europe – Evidence from Cases Studies DRAFT – DO NOT CITE WITHOUT PERMISSION

Broadband access plays a major role for the economic growth, and for the social, and cultural development of urban areas as well as for rural regions. In case of market failure, Public Private Partnerships (PPP), respectively Private Finance Initiatives (so called in the UK), can be a powerful tool to encourage the deployment of information and communication technologies, such as broadband services. The market failure within the broadband sector emerges often in regions with a low density of population and weak economic conditions. A provision of broadband infrastructure and services in such areas is not attractive to private investments because of a low or even negative expected rate on return. Thus, PPPs promise to be an attractive and applicable tool to overcome market failure and to enforce broadband diffusion. Case studies from ‘broadband-PPPs’ from different countries depict that the organizational and financial funding models differ from project to project. The mode of allocation of the financial fundings among the partners determines the framework of risk sharing and the roles of the partners in the PPP. Researches about PPPs in the broadband sector hardly exist until now. Therefore, this contribution aims to encourage the discussion about different modes of funding and organizational models of collaborations among public and private partners in the broadband sector. This contribution focuses on the detection of relationships among organizational models, modes of financial fundings, and environmental conditions. For this reason, four hypotheses about the organizational and financing structures of PPP projects will be validated by the analysis of six PPP case studies from the broadband sector from Sweden, Great Britain, and France. 1 The survey was conducted by the authors and with the special aid by Eric Bohlin, Gerard Pogorel, and Jason Whalley. This paper is an outcome of a study conducted for the Deutsche Telekom in May 2006.