Generally, I am very leery of public investment. Again, generally, they are not efficient and almost invariably leads to corruption, inefficiency and various other political issues. Still, while saying that, there is a case for a role of the government and public investments in certain areas.
This differs from place to place, country to country, time to time. For example, somebody might complain that the government has to have a military at least. To which, I would say why? We have countries who have successfully outsourced their wholesale militaries, such as the Vatican or huge chunks of their military edifice such as the UK and USA. But while governments do have a role in public investment.
For example, when a situation arises that there is public good, or the private sector cannot afford/coordinate very large enterprises. Also a place for public ownership is when the creative destruction process of capitalism would seriously harm the state itself. For example, see the current mess around the railways, London underground, etc. It is a fine line to walk. Finally, there is a place for seed capital, or basic investment required that will spur private investment.
So when i hear that the UK government is considering some form of public intervention to spur private sector investment in ultra-fast broadband networks, I am a bit curious about the level of investment required. We do not have full details yet, but what I would look for is a strong regulatory framework, some non-financial benefits (like joint marketing), some guarantees of universal provision of some kind, very time limited subsidies/financial help (not more than 12-18 months, any more and technology will be obsolete).
We should also read about the experiences of public private partnership between municipal corporations and wireless network providers. That was not a very big success, I am afraid. Interesting days ahead.
All this to be taken with a grain of piquant salt!!!
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