Let the private sector rule … and fail
14 October 2006 | Published in Internet, Luxembourg | 1 Comment
The Internet gurus tend to be convinced that only the private sector is able to run the Internet. You hear it on every occasion. ICANN should be transferred to the private sector. Internet connectivity in less developed countries will become cheap once the state-owned monopolies will disappear. We could go on for hours.The facts are not that simple. Here’s a real life example.
For years, Luxembourg has tried to attract foreign e-commerce companies. The government has done a lot in terms of lower taxes, highly skilled and multilingual work force, good salaries and living conditions, etc. The only thing that is missing is Internet bandwidth. There is enough for everyday use, but hosting Amazon, Google or You Tube would put the country’s international connectivity to its knees. For years, tier-1 operators said there is no market for large pipes over here. For years, there have been lost business opportunities.
Given the failure of the allmighty private sector to match the demand, the government has decided to pour 30 million Euros in a government agency called Luxconnect, whose task will be to dig and/or rent fiber connections between Luxembourg and the main European Internet exchanges. The two first targets are AMS-IX and DE-CIX. In addition, the agency will build a local fiber ring servicing the main zones hosting IT companies.
It is not yet clear if the agency will provide layer 1 (raw fiber), layer 2 (Ethernet) or Layer 3 (IP) connectivity to the local ISPs. I guess there will be several offers.
In any case, those who think it is fashionable to display any public sector involvement in the Internet as unnecessary interference should ask themselves if the private sector is always able to match the demand.
A few references:
Official press release(French)
Press article from Paperjam (English)
Draft law (French)
No web site yet at www.luxconnect.lu
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16 October 2006 at 0:57 (#)
Surely it’s all about the enlightened individuals that see why something is worth investing in when the returns are not immediately obvious.
Whether you’re in government or business, there are obstacles to overcome when it comes to putting money into something. Usually it’s the private sector that is more willing to take the risk first though.
I’d say a government often ends up as a useful backstop where business fails. I’d love the UK government to subsidise my Net connection but since there’s a market already there, they’ll find something else to spent their money on.
Kieren