We need more progress on delivering digital broadband PPPs to underserved communities

Several initiatives to improve digital infrastructure access so that countries can be competitive economically in a globalizing world have been launched recently, including the Biden Administration’s proposed Infrastructure Plan that calls for major improvements in U.S. digital infrastructure to ensure access to broadband in rural American communities.

There is now a clear consensus among governments as well as development and infrastructure experts that communities that remain unconnected to digital commerce, services, and knowledge sharing will be left behind. 

The Inter-American Development Bank’s Multilateral Investment Fund has pointed out that broadband diffusion to rural areas will increase commercial efficiency and productivity and help transitions into the formal economy, enabling governments to increase revenues and strengthen basic infrastructure. Their report notes that broadband would enhance access to better education, health, and e‐government services, boosting productivity and human capital.

Since the pandemic-driven shutdown of national economies, talk about improving digital infrastructure and broadband access is now getting real. We know that heavy reliance on digital platforms for economic activity is not an option for those disconnected from broadband. While connected employees repurposed home workspaces, this rosy “resilient” picture was far from the truth for many—poor people, minorities, the elderly, the disabled, women with a disproportionate share of family care, and people living in digital deserts.

Until digital infrastructure is extended to rural and peri-urban communities and broadband access is made accessible and affordable, the economically vulnerable will continue to fall behind, even as others recover economically from the pandemic. This need not be so.

Governments can harness the innovation and resources of both the public and private sectors in ways that lead to inclusive and resilient economic communities. Although traditional public-private partnerships (PPPs) are a partial answer, we need to fundamentally refocus the concept of “value for money” to include considerations of “value for people” and “value for the future.”  With these in mind, innovative players focused on providing digital infrastructure PPPs with an eye on long-term sustainability should address project risks in remote areas (such as technological obsolescence and cost) and consumer needs. In turn, these projects will be more bankable to risk-averse venture investors and more accessible to marginalized communities.

A global 2020 survey asked PPP practitioners what sectors they felt offered the biggest potential in a post-pandemic world. Respondents highlighted broadband and digital infrastructure that would give vulnerable communities access to economic reintegration. This consensus recognizes that broadband access is a vital economic lifeline, not a luxury. It must be expanded, quickly, to rural and peri-urban communities that are ignored by large service providers who see limited economic opportunity in these areas. 

Fortunately, innovative broadband PPP initiatives are addressing the concern of economic viability. They deserve more attention as they could be replicated globally by government initiatives to encourage impact investor participation.

In Brazil, the Ceará Digital Beltway (Cinturão Digital do Ceará, “CDC”) project sought to address the issue of access to reliable, affordable digital infrastructure that would contribute to economic development and social inclusion. A study of lessons learned from the project points out that, although this kind of digital infrastructure contributes to economic development and social inclusion, its deployment is limited by spatial and economic realities as well as limited revenue generation from low-income users. But it also showed that the CDC’s innovative PPP model could mitigate these economic challenges. We do note that the CDC model required initial public investment in supporting infrastructure to reduce the capex requirements of the private sector partners.

Globally, broadband projects have struggled because operators lack the resources and capacity to economically manage the network, especially in Sub-Saharan Africa. Yet, this can be mitigated by greater stakeholder participation as this study shows.

Additionally, digital legislation should be reformed so that small service providers are given opportunities to compete against entrenched interests that are not incentivized to serve certain communities.

A report by the Eindhoven Center for Innovation Studies pointed out that, in order to succeed, broadband PPPs have to “(i) properly identify economic and social targets; (ii) effectively match the resources and competencies of the different partners; (iii) design a network in line with the area’s geographical constraints; and (iv) define the expected demand and the services required.”

Funding of comprehensive feasibility studies remains a stumbling block. But without them, project bankability is very difficult to determine. This is an area where traditional philanthropic funding could help determine whether candidate PPP projects are viable and merit consideration. People-focused PPPs would attract this attention from philanthropy; indeed, the role of venture /innovation philanthropy was explored recently by Inside Philanthropy. In particular, the article noted that “philanthropists should adopt a venture capital model of funding high-risk, high-reward projects.”

The International Sustainable Resilience Center (ISRC) launched an initiative to bring broadband access to economically and commercially at-risk communities. In the ongoing study, a Mexican municipality was chosen as the pilot for their IMAGO PPP project that will benefit small and medium enterprises. The planned digital infrastructure will have ancillary benefits for social networks within the municipality such as healthcare facilities, schools, and public spaces.

Ironically, although the initiative has received wide support from public and private sector stakeholders, the Achilles heel of providing broadband to vulnerable projects still needs to be resolved: the need for alternative financing support. 

Our aim here is to highlight replicable initiatives worldwide to spur fast, effective action on this critical part of the infrastructure puzzle.

Disclaimer: The content of this blog does not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, staff or the governments it represents. The World Bank Group does not guarantee the accuracy of the data, findings, or analysis in this post.

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