Within consortiums, network operators might still compete with one another, but they will work together in a consortium for a specific backbone or other initiative of common interest. The consortium has limited functions—typically to serve the aggregated demand of the network operators—so it does not inhibit competition.
The consortium is formed and funded privately by certain network operators, with government as a potential partner, and network capabilities being managed by the consortium might be open only to participating network operators, resulting in the risk of restricted market access and market dominance. This scenario differs from having a specially constituted network operator as outlined in
Section 3.4.4. If there is to be open access to the network facilities, which is preferable, other operators must be able to join the consortium on fair terms. These terms would include admitting all network operators on payment of fees related mainly to the resources that they require or contribute.
An Internet eXchange Point (IXP) is an example of several investments already managed by a consortium. There is an introduction to the practicalities of setting up such an IXP in the Reference Document Via Africa: Creating local and regional IXPs to save money and bandwidth. The consortium might have a less formal structure. A good description of the structural choices that need to be made is at
www.euro-ix.net/ixp/startingixp/ and a fairly formal management structure (for an IXP in the UK) is described in the documents at
www.linx.net/govern/.
An IXP might also act as a trade association representing Internet service providers to the government and the public (as KIXP in Kenya), or to the providers of international bandwidth in order to secure buying power and economy of scale. The consortium does not necessarily pose a barrier to market entry and success of non-members, as there can be alternatives to joining the consortium (such as bilateral peering and transit arrangements).
Long distance transmission cables: A network operators’ consortium is also a way of funding the construction of national or regional long distance cables, both overland and undersea. The members of the consortium may have major shareholders in common, as in Russia for example [
1]. Sometimes though the consortium mandate is not to provide open access and subsequently enjoys a monopoly or duopoly position, effectively preventing other network operators from entering the market.
END NOTES
- See Golden Telecom FOCL Builds a Link to Broadband Access (Golden Telecom, March 2006)