July 21, 2025
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Introduction
With the liberalization of the energy sector and the followed unbundling of the energy system, we have gained a lot as a society: One of the most means to allocate resources and maximize utilization of assets, an accelerated energy transition as well as healthy competition & innovation on everything from electrification, vehicle charging, and renewable power generation. Based on the latest report of the IEA[1], we are finally ahead of our targets when it comes to investing into renewable power assets, enabled by an open energy market and competition.
Looking at the challenges of digital infrastructure today, clear similarities emerge:
There is inefficiency through redundant connectivity because of mostly privately owned (and secret) backbone (“middle mile”) networks[2]
Digital infrastructure is becoming a public good on which economic participation and growth are dependent on, however there is neither data nor transparency on the footprint, assets, and overall state of the infrastructure available[3]
Vertical integration across digital infrastructure is giving rise to a global oligopoly which uses its infrastructure ownership as a competitive moat[4]
It’s clear that these challenges can be addressed using the same strategies that have been utilized to liberalize and unbundle the energy sector.
Applying the energy-sector strategies to digital infrastructure
As a language reference, please refer to the Digital Economy Taxonomy of the SDIA.
Fiber connectivity is the new power grid
Unbundling connectivity using the energy sector strategy would lead to a revised ownership structure which is state- and municipality-driven, which value-added services delivered by private companies. Capital can come from infrastructure investors (public-private partnerships) or from state-funding.
The Transmission System Operators (TSO, high-voltage power lines) of the connectivity sector are the backbone network operators, such as Telecommunications Companies or some Colocation & Data Center operators. Many Big Tech companies are also investing here. The backbone networks would acquired by the nation states (see TenneT as a comparable energy TSO) and provide the fiber highways between the internet exchanges (which are NGOs already) and the municipalities (DSO)
The Distribution System Operators (DSO, low-voltage power lines) in the energy sector provide the electrical connectivity to homes and businesses. Most of them are owned by the municipalities in which they provide their services, thus are community-owned. In the fiber business, there are already many fiber companies who are owned by the local energy company[5] and thus are owned by the municipality.Still, the majority of regions are dependent on privately owned networks, such as those offered by telecom and FTTH (fiber-to-the-home) operators. All fiber networks in the municipality would be acquired by the local governments and transferred into a local DSO for fiber networks[6].
An example of a value-added service in the energy sector is a fridge. A fridge manufacturer benefits from the fact that most households have electricity available, and that this electricity can freely be used to power the fridge. They benefit from an open market, created by the availability of the public utility of electrical power, and can build their business because every household has access to it.The same applies for value-added service providers in the digital economy such as Netflix, Spotify, or gaming and video-on-demand providers such as telecom operators themselves. The addressable market expands through better connectivity and more people connected to broadband internet.
Turning fiber connectivity into a public utility has many advantages
The structure exemplified above as numerous benefits, of which a few are highlighted below.
Lower total costs: The more people are connected to the network, the lower the cost for the individual connection.
Better connectivity: As national & municipal owners do not pursue profit motive but rather maximize total availability and quality of the connection.
Access for everyone: Closing the digital divide is simplified as connectivity can be provided for free to people who cannot afford it.
Bigger market: The total addressable market for value-added service providers increases as well as the quality of the delivery for their customers
Better cost/quality: The overall quality of the network increases, while costs are decreasing
Neutrality made simple: As the networks open to any market actor who wants to provide value added services, governing net-neutrality becomes possible
Access to information & opportunity: By connecting the majority of society to the digital economy, they have access to more economic opportunities as well as access to the information channels, such as public media
The Chattanooga Model: Evidence for Public Fiber Network Ownership
Hamilton County, Tennessee, demonstrates the transformative potential of publicly owned fiber infrastructure[7]. When EPB, the municipal electric utility, deployed fiber-to-the-home across its 600-square-mile service area beginning in 2009, it created a compelling case study for state acquisition of fiber networks.
Economic Returns Justify Public Investment The $396.1 million fiber infrastructure investment has generated $2.69 billion in economic value through 2020—a 4.42x return. This includes $963 million in business investments, $244 million in startup funding, and $142 million in real estate development directly attributable to the fiber network. The infrastructure created 9,516 jobs, representing 40% of all jobs created in the county during the study period.
Superior Service Delivery and Pricing EPB provides symmetrical gigabit service at $67.99/month—significantly below private competitors. The municipal utility achieved 100% coverage, including rural areas typically ignored by private providers. During COVID-19, when private networks struggled with congestion, EPB's infrastructure maintained consistent performance with minimal outages, operating at only 30-50% capacity even during peak usage.
Community-Wide Benefits The public ownership model enabled critical social infrastructure:
Education: Free high-speed connections for 28,500 economically disadvantaged students
Healthcare: Telehealth services, saving patients $4.69 million in travel expenses and time
Smart Grid: $750 million in benefits from reduced outages, saving 585,643 workdays
Competitive Advantages of Public Ownership Unlike profit-driven providers, EPB reinvested $318 million in fiber division profits back into the community through lower electric rates and service expansion. The utility's AA+ credit rating and self-sustaining operations demonstrate fiscal responsibility while delivering what private markets failed to provide—universal, affordable, high-speed connectivity that treats broadband as essential infrastructure rather than a luxury commodity.
This evidence strongly supports state acquisition of fiber networks to ensure equitable access, economic development, and community resilience.
Conclusion: A recommendation on how to unbundle and nationalize
This strategy can be implemented in two steps. The first is to realize the unbundling of the transport network within digital infrastructure. The second step is to decide into which entity the transport network should be unbundled to.
The entity chosen 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 the availability and accessibility, which is more important than economic returns.
Acquiring the transport networks is one of the first steps where governments need to take action. When doing so, they must ensure no windfall profits result from the acquisition process. It is therefore recommended that governments make their own assessments of the net present value (NPV) of the network to be acquired, rather than relying on the numbers provided by the existing owners, especially when these focus on their future earnings potential.
References
[2] McKinsey Research Report, 2020
[3] Bridging the Digital Divide, European Parliament Briefing, 2015
[4] “What Google Fiber is teaching us about vertical integration”, American Enterprise Institute on Vertical Integration, 2015
Business moats of Amazon Web Services, CB Insights, 2021
[5] Examples:
Gelsenkirchen - Gelsen-Net
Norderstedt, Hamburg -tel
Köln - NetCologne
Additional Reference: Arthur D. Little Report, 2017
[6] Building Community Network Policies: A Collaborative Governance towards Enabling Frameworks - https://www.intgovforum.org/en/filedepot_download/4391/1901
[7] https://assets.epb.com/media/Lobo%20-%20Ten%20Years%20of%20Fiber%20Infrastructure%20in%20Hamilton%20County%20TN_Published.pdf
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Photo by Sander Weeteling on Unsplash
