Framework basics
Old process: new technology. Governments often have facilities that increase the value of a new technology. These can motivate companies to spread usage. In the US for example, cable TV distribution rights are awarded by government through competitive tendering.
How is NEMs created?
The same way countries typically acquire a national lottery. Government issues a tender. It describes the attributes of a NEMs system. Then it specifies benefits the state will uniquely provide to the successful operators. It goes on to list obligations that will be imposed on the operators. Finally it specifies a lifetime for the offer, perhaps 15 years.
Any consortium interested in launching a system with the characteristics described can put in a bid knowing their return would come from a percentage mark-up retained from each transaction. The winner is the one that commits to charging the lowest percentage.
Once the tender is awarded, the clock is ticking on the 15 years. It’s in the consortium’s interest to get everything up and running as quickly as possible. They must be able to do so free of any government interference.
1) The benefits on offer
At very high-level, here’s some facilities the state could offer NEMs’ eventual operators.
2) Obligations to be accepted by operators
The above list amounts to a formidable offer. Huge public sector spending going through the new channel, rock solid identity proofing, the highest authorities in the land on hand in case of disputes between users, policy used to increase take-up. Government should not give this away freely. Their task is to get the best possible deal in return. They might, for example, insist on the following.
