The unbundling of fiber infrastructure can improve connectivity by transitioning to community-owned models — similar to the energy sector. This approach would reduce costs, improve access, and ensure equitable provision, as demonstrated by the successful public fiber network in Hamilton County, Tennessee. Governments should acquire transport networks to maximize availability and quality — focusing on social benefits rather than profit.

Lessons from Energy Market Liberalization

With the liberalization of the energy sector and the subsequent unbundling of the energy system, society has gained much: one of the most effective means of resource allocation and asset utilization maximization, an accelerated energy transition, as well as healthy competition and innovation — from electrification to vehicle charging and renewable power generation. According to the latest IEA report (IEA 2024), we are finally on track with investments in renewable energy facilities, enabled by an open energy market and competition.

When looking at today's challenges in digital infrastructure, clear parallels emerge:

• There are inefficiencies due to redundant connectivity because of mostly private (and non-transparent) backbone networks (“Middle Mile”) (McKinsey 2020)

• Digital infrastructure is becoming a public good upon which economic participation and growth depend — yet there is neither data nor transparency about the scope, assets, and overall state of the infrastructure (European Parliament 2015)

• The vertical integration in the digital infrastructure sector favors a global oligopoly that uses its infrastructure supremacy as a competitive moat (AEI 2015)

It is evident that these challenges can be addressed with the same strategies that were used for liberalizing and unbundling the energy sector.

Transferring Energy Sector Strategies to Digital Infrastructure

Fiber Connectivity as the New Power Grid

Unbundling connectivity according to the energy sector model would lead to a state and municipally influenced ownership structure, where value-added services are provided by private companies. Capital can come from infrastructure investors (public-private partnerships) or state funds.

• The Transmission System Operators (TSOs) in the connectivity area correspond to backbone network operators — such as telecommunications companies or colocation and data center operators. Many tech companies also invest in this area. The backbone networks would be acquired by nation-states (comparable to TenneT as an energy TSO) and provide fiber highways between internet nodes (already organized as NGOs) and municipalities (DSOs).

• The Distribution System Operators (DSOs) in the energy sector ensure the electrical connection of households and businesses. Most are owned by the municipalities where they provide their services — hence they are community-owned. In the fiber sector, there are already many companies owned by the local energy provider (Examples: Gelsen-Net Gelsenkirchen, wilhelm.tel Norderstedt, NetCologne Cologne) and thus are municipal. Nonetheless, the majority of regions rely on private networks. All fiber networks of a municipality would be acquired by the municipalities and transferred into a local DSO for fiber networks.

• An example of a value-added service in the energy sector is a refrigerator. A refrigerator manufacturer benefits from the fact that electricity is available in most households. Similarly, this applies to value-added service providers in the digital economy — like Netflix, Spotify, or gaming and video-on-demand providers. The addressable market grows with better connectivity and more broadband connections.

Fiber Connectivity as Public Service — Benefits

• Lower Total Costs: The more people are connected to the network, the lower the cost per individual connection.

• Better Connectivity: National and municipal owners do not pursue profit maximization but maximize availability and connection quality.

• Access for All: Overcoming the digital divide is simplified, as connectivity can be provided free of charge to people without financial means.

• Larger Market: The total addressable market for value-added service providers grows, as does the quality of services for their customers.

• Better Value for Money: The overall quality of the network increases while costs decrease.

• Net Neutrality Simplified: Since networks are open to any market participant who wants to offer value-added services, enforcing net neutrality becomes feasible.

• Access to Information and Opportunities: By enabling the majority of society to access the digital economy, they gain access to more economic opportunities and information channels like public media.

The Chattanooga Model: Evidence of Public Fiber Network Ownership

Hamilton County, Tennessee demonstrates the transformative potential of publicly owned fiber infrastructure (EPB Study). When EPB, the municipal electricity provider, expanded fiber-to-the-home in its 1,550 km² service area starting in 2009, it created a compelling case study for state acquisition of fiber networks.

Economic Returns Justify Public Investments: The fiber infrastructure investment of 396.1 million USD generated an economic value of 2.69 billion USD by 2020 — a 4.42-fold return. This includes 963 million USD in corporate investments, 244 million USD in startup funding, and 142 million USD in real estate developments directly attributable to the fiber network. The infrastructure created 9,516 jobs — 40% of all jobs created in the county during the study period.

Superior Services and Prices: EPB offers symmetrical gigabit internet for 67.99 USD/month — significantly below private competitors. The municipal company achieved 100% coverage, including rural areas typically ignored by private providers. During COVID-19, while private networks struggled with overload, EPB’s infrastructure maintained consistent performance with minimal outages and operated at just 30–50% capacity even at peak times.

Community-Wide Benefits: The public ownership model enabled critical social infrastructure — free high-speed connections for 28,500 economically disadvantaged students, telemedicine services saving 4.69 million USD in travel costs and time for patients, and a smart grid providing 750 million USD in benefits through reduced outages.

Unlike profit-driven providers, EPB reinvested 318 million USD in fiber division profits back into the community through lower electricity prices and service expansions. The AA+ credit rating and self-sustaining operation demonstrate fiscal responsibility while providing what private markets could not: universal, affordable high-speed connectivity, treating broadband as essential infrastructure rather than a luxury.

These insights strongly support the state acquisition of fiber networks to ensure equal access, economic development, and municipal resilience.

Recommendation: Unbundling and Nationalization

This strategy can be implemented in two steps. The first is to achieve the unbundling of the transport network within digital infrastructure. The second step is to determine which entity the transport network should be transferred to.

The chosen entity should serve the long-term interests of society. The key performance indicators are availability, accessibility, and quality — connecting as many people as possible with high-quality broadband connectivity. By socializing the costs of connectivity, we maximize availability and accessibility — which is more important than economic returns.

Acquiring transport networks is one of the first actions governments must take. Care must be taken to ensure no unjustified profits arise from the acquisition process. Therefore, it is recommended that governments conduct their own assessments of the net present value (NPV) of the network to be acquired, rather than relying on the figures of existing owners — especially if these focus on their future earnings potential.