Recommendation 1

Infrastructure planners, financers, engineers and other stakeholders need to use a broad, but appropriately specified, definition of infrastructure if they are to identify the full range of opportunities from alternative business models.

Value – economic, social and environmental - can be captured from across the whole infrastructure system. Lessons from other sectors demonstrate how the services and processes are just as important, if not more so, than the tracks, pipes, cables and other physical components. Infrastructure must be considered, and defined, in terms of a ‘whole system’ that comprises (Figure 1):

• physical artefacts – includes the physical links and components of infrastructure systems such as roads, bridges, pipes and cables;

• processes – includes institutions, management, regulation, protocols and procedures that govern the infrastructure over its lifecycle;

• resources – includes people, vehicles, water, electricity and data that are conveyed by the physical artefacts and the materials used in the construction of the artefacts; and,

• services – such as warmth, mobility, sanitation, transportation and communication that benefit a wide range of users.

It is this whole infrastructure system that supports the health, security, economic growth and wellbeing of modern communities.[7*] Moving beyond a narrow or solely economic view and distinct from the world of more conventional goods and services, an infrastructure business model therefore describes how infrastructure systems create, deliver and capture economic, social and environmental values over the whole infrastructure life cycle.[8*]

F‌igure 1. A systems view of infrastructure

The Royal Albert Hall - Not all alternative business models are new

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The history of local infrastructure going back to the 17th century is one of continual innovation. The Royal Albert Hall was built between 1867 and 1871. Prince Albert wanted the hall to fulfil two functions –
a large music hall, and a conference centre – and was determined that it should be funded privately. Henry Cole, secretary of the Science and Art Department, came up with the idea to circulate a prospectus to raise funds by selling sittings in the hall at £100 each.[9]

This was an early implementation of a debentures business model in which a purchaser or investor pays a one-off fee, which goes towards the upkeep of a facility and in return obtains either free tickets, or the opportunity to buy tickets first at face value, to major events held there. The tickets can also be sold on if the purchaser is not going to use them. Most debentures have a short life of 5-10 years, but the Royal Albert Hall is an exception as the debentures are valid for 999 years.