Unlike the more informal grass root wireless LOAN initiatives discussed above, the other LOAN vanguard, being driven by local governments and municipalities, presents a more varied and less cohesive picture as can be seen from the results of this study.  These make it very clear that there is no uniform manner in which this public sector LOAN activity is taking place, nor is there any simple blue-print or template for municipalities or local

Governments to follow in the event that they are interested in exploring the matter of developing a LOAN for their community.  Indeed, with a multitude of relatively complex facets including technology, regulatory, commercial, legal and a rapidly moving cast of players and market circumstances, the issue can seem an immensely challenging area for a local government to enter.  In exploring and developing a LOAN strategy the authority will need to balance the requirements and objectives of many different stakeholders.  It will also need to create a proposition that is attractive enough to secure private sector involvement but still delivers the maximum amount of public value and good.
 

In considering this “process” – for indeed it is a process – it is not possible to derive pointers to best practice or a roadmap by simply observing the current status quo.   Rather, the Study has relied substantially on the observations and experience of two private sector parties that have substantial knowledge and experience in this emerging arena of LOAN development.  One is Cisco Systems (www.cisco.com) which through its Internet Business Solutions Group has worked with many local authorities around the world who have taken a pioneering role in encouraging true broadband infrastructure and services – whether as LOANs or otherwise.   The insights generated by these pioneers have allowed Cisco to develop an understanding of various stages in the process to help guide local government executives towards the consideration and creation of a true Broadband City – regardless of whether or not that involves a fully pervasive open access local network.

 
The other is OpenPlanet Ltd. (www.open-planet.net) – a private company registered in the UK, which is totally independent of any technology vendor, telecommunications operator, service provider or bank or other financial institution.  It has been formed with the sole and specific goal of working in appropriate joint venture Public-Private Partnership relationships with municipalities, local governments and other ‘communities’ around the world to develop LOANs, which serve the specific interest and needs of the respective communities beyond that of any other party.

 
Both these private sector  corporations share remarkably similar perspectives on the general ‘roadmap’ or ‘milestones’, which are likely to mark the successful journey of any local authority or municipality towards the successful long-term development and operation of a LOAN.  There are four significant and essential elements or stages on the roadmap that a municipality or city needs to take in order to achieve the development of a LOAN.  These stages do not spell-out the many and complex organisational, financial and political issues that local authorities will need to tackle.   But hopefully they do provide a practical tool to help establish whether or not the journey should be embarked upon in the first place and how and what may be involved.  The four elements or stages provide a framework for exploring the key challenges and choices that arise when developing and implementing a LOAN strategy. 

The four essential elements or stages can be summarised as:

 

ESSENTIAL ELEMENT/STAGE ONE

 
Is there a sufficiently defined and comprehensive understanding of the reasons why the city/community might want a LOAN and how it might benefit from such a development?  Is this understanding deeply embedded at the highest political levels in the authority such that it is sufficient to sustain a Vision and lasting Political Commitment that will be essential if the project is to be seen through to reality against challenging hurdles and inevitable opposition.

 

ESSENTIAL ELEMENT/STAGE TWO

 
Determining the right strategic option for pursuing the consideration and development of a LOAN for the community in question and forming an appropriate relationship(s) with experienced co-promoting partners and advisors that either share the same goals, vision and understanding as the authority itself or at least have no conflict of interest – actual or potential in terms of other relationships of business goals.

 

ESSENTIAL ELEMENT/STAGE THREE

 
Creating the appropriate corporate vehicle within the prevailing legal and regulatory environment, to be dedicated to the development and operation of the LOAN and equipping this special-purpose corporate vehicle with a detailed Business Plan focussed on delivering the community/city with what it requires whilst presenting an attractive and viable investment opportunity to the relevant source of private sector funding.

 

ESSENTIAL ELEMENT/STAGE FOUR

 
Starting operations and ensuring that the LOAN owning and operating company is subject to sound corporate governance and is equipped with the relevant management or outsourced resources necessary to manage and develop the physical LOAN over the long-term.

 
It is important to stress that although presented as four discrete and sequential elements or stages, these are not clear-cut individual steps that follow neatly in strict order. Indeed, STAGE ONE and STAGE TWO can readily be seen as being two aspects of a single phase.  For example, a visionary Mayor or political leader finds that his/her appetite and commitment to develop a LOAN in his/her community is triggered by an early encounter with one or more private sector parties who are advocating the LOAN concept and can act as a catalyst.  Forming an initial development public-private partnership with such a private sector party may be the very first step towards developing and articulating the vision and formulating the LOAN business plan. It is important to stress that this issue of identifying and working with the appropriate private sector party as a JV partner is critical.  The very principle of LOANs is sufficiently radical and disruptive that many of the leading independent consultancies and international advisory firms do not even themselves yet have a full and developed knowledge and understanding of the LOAN business model.  Indeed, many of the immediately obvious international firms of consultants, have deeply embedded relationships with, and commitments to, mainstream telecommunications and cable operators and their conventional vertically integrated business models

 

ESSENTIAL ELEMENT/STAGE ONE 

 

The most vital and utterly essential pre-requisite for the development of LOAN is unequivocal political commitment.   “Does our city/community need a LOAN?”   If “yes”, then, “Are we determined to achieve it come what may?”    A ‘yes-yes’ response to these questions is an essential starting point for any city or community.   This is not to suggest that any community political leader that answers ‘no’ to one or both of these questions is somehow failing or flawed.  There may be very good reasons for such an answer, but embarking upon the consideration of the development of a LOAN, no local authority or municipality is likely to succeed at this very early stage of their deployment if fad or fashion is the primary motivation.

 
Most communities start by exploring the potential impact of widespread broadband LOAN connectivity on the city’s existing objectives and priorities. Which of the likely benefits of a LOAN are most relevant to the key concerns of citizens and to the declared political aims of the city?   Could a LOAN potentially allow the local government to respond in a totally new way to problems it currently faces?  If so, what sort of outcomes might these deliver?   Exploring these questions will help the local government ensure that any LOAN vision fits into the wider picture of what the city is trying to achieve. It also provides a good opportunity for building a broad coalition of support for this LOAN initiative from within the local constituency of residential, businesses and private sector interests.

 
But this must be underpinned by a deep and detailed understanding of the major technological, strategic and political driving forces that underpin the LOAN concept.   (These have been developed in the Appendix).  It is this understanding that will underpin and assist, (in the absence at this early stage of LOAN development of quantifiable market economic data) a rationale and reasonable broadband LOAN vision for the city. This might also translate into the identification of some of the specific and realistic long-term public sector benefits of a LOAN for that particular locality. What will success really mean for the citizens of the area?   What metrics will be used to assess progress towards the long-term vision?

 
Such long-term benefits or public sector goals might include such things as:

• increasing the number of businesses locating in the area
• increasing the number of hi-tech companies locating in the area
• increasing the rate at which small and medium-sized businesses are set up in the area
• decreasing the number of unemployed and for long-term unemployed
• increasing the number of people moving into the area

·        increasing pupil attainment at 16 and the percentage of school children in the area that continue in education post-18

• increasing the number of adults who return to education and gain qualifications
• decreasing the average time it takes for a citizen to see an appropriate medical expert
• decreasing the number and average length of hospital stays and increasing the percentage of patients treated at home
• decreasing the percentage of transactions between the citizen and the local government that require the citizen to physically go to a government office
• decreasing the crime rate in the area
• decreasing traffic congestion in the area
• increasing citizen satisfaction with the area as a place to live
• increasing citizen satisfaction with the effectiveness of public services
• delivering measurable efficiency improvements within the public administration

 
But again, we stress that it is not sufficient that a belief in and vision of, the potential long term benefits to the community of a LOAN resides in the minds of officials or is simply well documented in reports.  It really should reside as a deep conviction within the hearts and minds of local political leaders – not necessarily articulated in great technical detail but none the less firmly held to.

Two such examples are the City of Amsterdam in the Netherlands and the Municipality of Amarrousion in Athens, Greece – both of which are well along the path towards the long-term development and deployment of a LOAN to serve their respective communities.

The Deputy-Mayor of Amsterdam, Mark van der Horst, articulated that vision in a Press Release on 3 November 2005, as follows:

 
“…. we make a big step towards the deployment of a citywide fiber-to-the-home network. This enables our city to compete with other European cities. The fiber network delivers to Amsterdam an innovative and freely accessible (open) infrastructure, suitable to support growth in demand for the next 30 years or more. In this way we ensure a wide open marketplace for innovative service-providers and economic growth, as well as a fast track for the smarter and cheaper delivery of care, education and other public services.”

 
Likewise, The Mayor of the Municipality of Amaroussion in Athens, Panayiotis Tzanikos expressed the vision in an interview in late 2005 as follows:
 

“…we feel that we are entering a period when towns and regions will compete with each other and one of the key parameters in the competitiveness of the city is telecommunications.   … I think that the level of what we are getting (from the conventional telecommunications sector) is not enough to equip the city for the next generation which is coming….. we feel that the way they (the telecoms operators)  operate they keep the citizens, the businesses, the social groups, outside of the new era which is arriving so they do not have the motive to use the network to make new things, new creations and services.”
 

Assuming that such a political vision is real, then the next step is to secure as community wide as possible ‘buy-in’ for that vision. Given that the LOAN initiative is a long-term project, it is desirable to secure wide, and if possible cross-party, support for it.   In any event to give the project the right degree of urgency, the political support should be translated into a clear and public commitment, e.g. “By 2010 our City will be recognised as the region’s most innovative digital city with a highly Internet-literate population and thriving small business sector including many successful hi-tech start-up companies.”

Developing and articulating the vision also provides an opportunity to engage citizens and other stakeholders. Engagement can take many different forms - from public meetings to workshops involving the key decision-makers in stakeholder groups. The earlier these discussions are held, the easier it is to involve all stakeholders and give them a real sense of shaping the project.  It is quite clear that engendering a sense that the LOAN is “our network” and a “city/community enhancing initiative”, substantially smooths progress.   The experience of OnsNet in Nuenen (Netherlands) is a fine example of how to engage with the community and all local stakeholders.

Even at this early ‘vision forming’ phase of a LOAN project, it is critical that those involved in driving it (particularly the political leadership) have an awareness and grasp of the wider market context in which it is being conceived.  Beyond being clear about what a LOAN might achieve in the longer term, the local government needs to explore the context for such an initiative and ask such questions as:
 

• what degree of connectivity is currently available to businesses, citizens and public sector organizations within the community/city?   
• how affordable is this connectivity absolutely and relatively? 
• are there areas or communities that have markedly worse access?  
• what sort of content and what range of services are being offered over that connectivity and how competitive is the service/application market?  
• how well do these services meet the existing and foreseeable needs of customers? 

 

Clearly, in the developing world the answer to these questions may be scant and simple. 

In addition to evaluating current provision, the local LOAN promoters should also make some assessment of what is likely to happen if no LOAN project is developed.  This is not always an easy exercise since potential providers typically have an interest in overstating the speed and extent to which they are likely to offer new connectivity and services.   The strategy and stance of the main incumbent telecommunications provider will be an important consideration.   On the one hand, the prospect of a LOAN being developed in what is likely to be a profitable market context, may pose a threat to the revenues the incumbent currently generates from conventional telephony and low-speed internet dial-up access.  On the other hand, a far-sighted incumbent may recognize that the LOAN approach is the strategy of the future and be keen to be involved.
 

Indeed, although in the developing world where telecoms competition is minimal and incumbent operators and governments enjoy a close and dominant position and a relatively secure source of foreign currency revenue through the conventional accounting rate provisions for delivering incoming traffic, there is a strong and soundly based strategic argument why, in the longer term, the encouragement and stimulation of LOAN development, financed independently of the incumbent operator, may open up new markets for broadband services and sources of revenue which the incumbent, by virtue of its longstanding and intimate local market knowledge, could be in prime position to exploit.
 

By the end of this critical initial stage of the process the local promoter(s) of the LOAN (presumably a political leader) should:

• understand how a LOAN relates to and supports long-term city/community goals and priorities
• have a clear vision of what a LOAN could deliver for the area over the long-term
• have secured political and popular buy-in across the city/community
  

 

STAGE 2: SELECTING THE RIGHT STRATEGIC OPTION

 
Given the birth and early development of an LOAN vision, it must be ‘locally owned’ within the political leadership and assuming that this has resulted in a local LOAN champion identifying and forming an initial relationship with a suitably equipped and experienced private sector partner/ advisor that share a similar commitment to the LOAN concept but has considerable expertise in the matter and relationships with other independent professional advisors in related areas, there then needs to be a systematic consideration of key strategic issues.  

First there must be a common understanding of the scale and timescale of the LOAN project.  Is it to be a “quick fix” for delivering universal broadband open access to the Internet via a number of competing ISPs, or at the other extreme, is this to be a long-term (5-10 year) plan for deploying fibre throughout the community in an open access manner such that it can support all forms of new video, data and voice services that can enhance local socio-economic life AND provide open access to external service providers offering access to the internet and other services AND capable of providing seamless local mobility by means of a wireless network sitting on top of the underlying fibre infrastructure?

The two examples provided above are not a simple ‘either/or’ option and there is a virtually limitless number of variations and combinations of strategic options that a city or community might adopt in order to embark upon implementing a legitimate LOAN vision.  As yet there are no ‘right’ and ‘wrong’ answers although it would seem that, given the scale and potential cost of a LOAN project and the effective operational life of some of the core assets and underpinning technologies (e.g. fibre, ducting), that this merits a long term strategic perspective.

Early issues that need to be addressed relating to the passive infrastructure include:

• how much fibre is there already in the ground?
• who owns this fibre and is it currently being used?
• are the owners of the fibre likely to be disposed towards participating in a LOAN Public-Private Partnership?
• where no fibre is currently available, are there civil infrastructures (ducts etc) through which fibre could easily be run?
  

Once there is a reasonable idea of whether the passive infrastructure will need to be built from scratch or can leverage existing assets, it is important to determine which strategic option is the most appropriate for the specific local circumstances.   The LOAN model has great benefits from a public value point of view, but it is a difficult model for the first years of rollout. This is because revenue from customers deciding to connect to the LOAN in the early years may be insufficient to sustain the financing of an ubiquitous rollout of LOAN infrastructure let alone a number of competing service providers.   One option is to adopt an wireless deployment (which is much cheaper) which, although has restricted bandwidth, provides huge improved service benefits for internet connectivity over dial-up, and as citizens subscribe to this new access network in sufficient numbers, use this assured revenue to replace the wireless with fibre at a later date.

Another common solution to this problem is to allow the private sector LOAN company,   a time-limited monopoly over provision of services to customers. This mitigates the problem of initial low revenue flows because there are cost savings in having one company both operating the network and delivering services and because a lower level of profit is sufficient to sustain one company rather than many.   A further attraction of this model is that it gives the single company a very strong incentive to make the undertaking successful. A local authority might therefore favour this model for the first few years of the LOAN and then gradually move to the full ‘open access’ model.

There is of course, the potential option for the local government to assume full public control of the LOAN project until there is sufficient revenue to sustain the open access model.   This may seem the simplest solution, but it has its risks, not least the political risk of being seen to drag telecommunications infrastructure back into public ownership against the general trend of privatisation.  Another major problem is that the local government is likely to lack appropriate cutting edge IP/telecoms expertise, and recruiting this expertise is likely to be both expensive and time-consuming.  More generally, the culture and skill set of the local government is unlikely to be well adapted to this kind of highly entrepreneurial and quick-response project where speed of decision-making and commercial judgement are at a premium.   So while initial co-ordination and governance may be simplified, the LOAN initiative may move forward more slowly, costs may be higher and the chances of success may be reduced.  Furthermore, in some circumstances local legislation may prohibit this type of solution. 

Once the LOAN project development team has broadly determined which strategic option is the most appropriate for the local situation, it needs to embark upon an implementation study.   This will almost certainly require the input of external technical and specialist consultants.  The local government itself is highly unlikely to have experience of analysing and preparing for this kind of project or indeed to have relationships with these very specialised consultancies, many of which may be small and located internationally.  This is why an early relationship with a key development Public-Private LOAN Partner who has knowledge of and relationships with such specialist advisors, is so important and valuable.
 

• The implementation study will necessitate addressing such issues as:
• likely costs of the physical infrastructure
• likely costs of service delivery (i.e. providing an ‘open active’ layer)
• potential service offerings to different customer segments
• likely demand for those service offerings and hence potential revenue flows
• a roll-out plan indicating how the project might be phased and relating the cost and revenue estimates to the different phases

 
An essential building block when considering the physical infrastructure is an accurate map of the entire city/community.  Ideally this should be a fully digitised map – and indeed, the LOAN project may provide a good opportunity for the local authority to invest in the development of this invaluable public asset.  Plotted onto this map must be the existing public infrastructure and assets and those of any other stakeholders (private and public) that could be leveraged for the LOAN project.   Identifying all public buildings in the community/city is important as these may well provide the route for an initial fibre core-ring or be suitable locations at which to site low powered license exempt wireless access points.   The map should also indicate where the city (or associated public bodies) has ducts or rights of way that might contribute to the building of any new physical LOAN infrastructure or other opportunities that might play a role here, e.g. new roads being built or major regeneration projects.   This information should allow the project team to assess the extent of new passive infrastructure that will be required and to estimate the cost of achieving its desired range of broadband penetration to homes and businesses. 

The implementation study needs to take a rigorous approach to assessing what services different customers might want and the potential revenue streams this demand might generate. It also needs to consider the service model for the public sector - will services and connectivity be offered on a commercial basis in the same way as to private sector organizations?   Or will public sector organizations receive connectivity for free in return for some form of initial or ongoing support for the project?
 

In relation to the commercial service offerings, the LOAN development project team will need to consider the potential market and how it might be segmented, since different types of end users may want different types of services or put a different value on them.   Then there is the critical question of who will offer these services?   Ideally, it should not be the company owning the LOAN infrastructure since that will, in the eyes of third party service providers, potentially violate the neutrality of the network and raise questions as to whether it truly is ‘open’. 

This important point is reinforced by former FCC Chairman, Michael Powell states[i]

 
“I think sometime companies have an impulse to be predatory, but as time goes by they begin to see that there is actually a better proposition in “openness” … I happen to believe passionately that a cable system, if it were thoughtful and thought about its future would actually conclude that it is actually better in the long run as a pipe-provider, to be an open platform and to allow that to happen as opposed to close it off but I am not naive enough not to believe that someone won’t try!”
 

However, each potential service being individually offered with a separate tariff is unlikely to be the most attractive option to end users and  it is likely to make more sense to devise some form of bundled service offering targeted at different parts of the market.  The local municipality may need to engage with other local entrepreneurial enterprises or ISPs in order to facilitate this initial service bundle offering.   For example, one bundled service offering to a sophisticated residential market might consist of:

• flat fee to cover all telephone calls (provided as VoIP)

• security web-cam video communication
• true broadband access to Internet (l0 Mbps symmetrical upload/down load)
• power gaming (the ability to play interactive games with other users round the world)
• Video on Demand
• time shift TV where the user can view programmes at the time of their choosing
• local email server

 
Larger businesses (particularly multi-nationals) in the area will probably simply require access to the passive fibre layer of the LOAN in order to connect to their existing global telecoms service provider.  In rural and less developed markets, where wireless is the predominantly deployed technology, there may even be no ‘service’ differentiation between residential user and business users.   Although the local government authority will usually not be providing commercial services itself,  it still needs to understand these issues in order to understand the commercial basis of the LOAN project and to be in a position to play an informed role into the governance of the LOAN owning company. 

Determining the appropriate form and structure of the corporate vehicle which will be used for the development and ownership of the LOAN network is a vital strategic decision.  This will be influenced by potential investors and consortium partners but will be primarily driven by the goals and objectives of the community at large and its public admininistration. 

The actual legal structure and form of the vehicle which will develop the LOAN will largely be dictated by local (company) law and the aims and objectives of the various parties who will participate in that vehicle.  An important decision is whether or not the corporate vehicle will be a “for profit” company, or a “not-for-profit vehicle”.    If the former, then are there to be any pre-determined corporate governance rules about restricting the financial return to shareholders in relation to the end user charges?   Since the LOAN will, by definition, be an ‘open access’ network which, ideally (see above) will not be competing with any party that uses it, there will be a natural tendency for it to achieve a ‘market solus’ position within the community it serves.  Attention must be given to whether this quasi-monopoly status will be prevented from ‘rent-seeking’ by way of corporate governance provisions within the LOAN vehicle itself with the added safeguard of ongoing public and democratic oversight through its board of directors or whether national competition policy provides sufficient protection or, whether this requires the framing of appropriate sector specific regulatory policy at a national level. 

On the basis of these strategy discussions, it should be possible to draft an initial plan. This will address anticipated timescales for each phase of the development, an indication of the likely revenues, and an assessment of likely costs including a detailed estimate of the level of investment the LOAN will require.   By the end of this stage of the process the local government should:

• have identified a key qualified private partner to help develop the LOAN strategy
• have an initial plan for how the project might be phased
• know what level of public investment/support will be required for each phase
• have an initial business plan including how the LOAN vehicle night be structured

 

STAGE 3: CREATING THE CONSORTIUM AND DETAILED BUSINESS PLAN

Having determined the appropriate strategic option, work needs to start on detailed preparations for realizing the LOAN vision.   If the right private sector co-promoting partner has been identified, then this party should be capable of undertaking the main burden of this Stage 3 task.  Clearly, the detailed activities will be strongly influenced by the specific strategic model that has been chosen, however, in all models there is likely to be some further element of private sector involvement and a key issue will be selecting the right partner(s).   These might include telecommunication infrastructure owners; local electricity or other utility companies; property developers;  substantial landowners; other public sector agencies (health, police, transport);  national highway authorities.   

There may well be a large number of organisations that show an interest in the LOAN initiative, but the project team and local government leadership needs to assess clearly what each can offer to the initiative and whether it has other potentially conflicting interests. The aim should be to bring together a group of organisations with a shared vision for the LOAN project and similarly aligned interests and culture.  As has already been discussed, there are many organisations that may well wish to hinder or burden the LOAN development with elements that may compromise its eventual success.  It is important that there is a clear and united understanding of where such opposition may arise, in order that the LOAN plan can be protected and progressed according to the vision.

 Finding the right partner(s) will require a series of discussions and as these progress the details of how the business is likely to function should start to firm up.   At this point, potential partners should be asked to sign non-disclosure agreements, since planned service offerings and other details will start to become commercially sensitive.   It is strongly suggested that wherever possible, no potential supplier of goods or services to the LOAN company – either during the construction phase or the ongoing management phase – should become a core partner in the project at this early stage as to do so might jeopardise the opportunity of the financial benefit to be gained from letting all procurement contracts for goods and services on an arms length competitive tendering basis at open market prices. 

Eventually the LOAN project team and the local government will be able to identify the partners it wants to move forward with and agree with them a detailed business plan.  This should include a framework agreement setting out exactly what role each partner will play in the initiative and what responsibilities each will have.  This may also be accompanied by a shareholders agreement covering the relationship between the partners and the newly formed LOAN corporate vehicle.   It should now be clear what the financial responsibilities of all partners are and the local government needs to ensure that all partners are in a position to meet their responsibilities in line with the envisaged timetable for the project.  Clearly, sound legal advice is required throughout this stage.
 
This iterative stage of completing and finalising plans, budgets and contracts can become unnecessarily protracted unless there is a clearly defined and generally accepted project direction.  This should be one of the key benefits of establishing at a very early stage a Joint Venture partnership with an experienced private sector development company in this emerging LOAN sector.
 

There will come a point when all members of the consortium including the local government need to make a final commitment to the LOAN project.  The local government should be clear about the scale of public commitment/investment required for each phase of the project and on potential exit strategies in relation to each phase. It also needs to do a final check that the project as agreed remains capable of delivering the long-term benefits to the community set out in the original vision developed at the start of the process.

 
By the end of this stage of the process, the following should be achieved:

• all consortium partners identified and confirmed
• an agreed memorandum of understanding/shareholders agreement setting out the relationships describing their roles and responsibilities
• an agreed detailed business plan signed off by professional advisors
• agree a contract framework for LOAN owning company
• assurances  that all partners are in a position to provide the necessary inputs for at least the first phase of the project
• acceptable funding proposals from banks and other institutions
• a formal final decision to go ahead with the project.

 
 

STAGE 4: STARTING OPERATIONS

 

By this stage all the key strategic decisions should have been made and the focus should be on implementation. A key success factor will be finding the right leadership team and, in particular, the person who will, on behalf of the LOAN company, oversee the construction phase and be responsible for the oversight and administration of the various contracts.  In most cases a prime contractor will have been appointed by open tender, but the efficient and orderly management of the relationship with this prime contractor is vital if the LOAN project is to be delivered to specification, on time and budget.   The appointment of a professional firm specialising in project management or an individual with an undoubted track record of successfully project managing similar public IT infrastructure projects is strongly advised.

 

Where a new company is being created to own and operate the LOAN (as is advised), it should appoint a CEO, even if there are few other employees due to most of the ongoing maintenance and management tasks being outsourced to third parties under competitive contract.  Such a CEO is likely to be someone with start-up experience and knowledge and understanding of the IP sector but there may be good reasons for not appointing an individual with a long-term career in the conventional telecoms sector.   It is apparent that the management of LOANs will create new learning and knowledge which should be free to emerge as the market determines.

 

A detailed project plan will undoubtedly be developed as a priority by the project director/CEO.   This plan will include a Gantt chart or other similar device that breaks down the project into key tasks and provides a project timeline with indications of how long each task should take and any dependencies between them.  The project plan needs to cover the following types of activities:

 

• detailed network planning
• finalising specification
• competitive tendering and contract award
• network, including network specification, network roll-out timeline, site preparation, testing etc;
• marketing, including market research, PR, advertising etc;
• sales strategy, commission model, demo material; use of agents
• operational and business support systems such as provisioning, billing, payment systems
• customer care/help desk
• policy for stimulating local content origination and use of the LOAN
• recruitment and training
• financing and financial modelling
• LOAN board meeting and periodic review process

 

As this list indicates, a wide range of activities need to be undertaken at this point. On the technical level fibre rollout plans have to be finalized together with the ultimate design of the active network. The back office functions such as operational support systems for customers and services, as well as the systems to bill customers, have to be specified. Business processes have to be designed and the organisation finalised. This includes job descriptions to hire the remaining start-up staff or if the function is to be out-sourced, detailed contract drafting.

It is essential the LOAN company, working in close collaboration with all the elected members of the local government and other opinion leaders in the community, develop and stay committed to a marketing/PR campaign within the city/community area. The campaign should focus on generating awareness and enthusiasm, leading to expectation and a sense of communal pride in being in the vanguard of LOAN developments.  Wherever possible, this should involve encouraging citizens to pre-sign up to be connected to the LOAN and to subscribe for third party services before the network actually goes live.

Depending on the strategic model the local government has chosen, it may well not be involved in a daily basis in many or all these activities. However, it needs to ensure that appropriate governance arrangements are in place to keep it in touch with how the project is progressing. In particular it needs to be sure that it has real insight into the financial situation of the project (both costs and revenues) and that key milestones are being met. If, as is likely, the project is phased, the local government should have a formal role in the decision to embark on each new phase of activity.  It is critical that all phases of its development and ongoing operation, that the LOAN can transparently demonstrate that the major value and benefit of the investment in its construction and operation, rests with the community or city it serves.

 
Figure 9:1 is a diagram developed by OpenPlanet Ltd that sets out the various relationships and contracts that a LOAN company is likely to become involved in during the process of originating and maintaining a Local Open Access Network.

 

FIGURE 9:1

 

 

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References