1. The European Competitive Telecommunications Association (ECTA) commissioned this study on "The Economics of Next Generation Access" from WIK-Consult on April 29. The main objective of the study is the assessment of the viability of next generation access business models and the analysis how regulation might support viable duplication of infrastructure while ensuring competition in the provision of services to consumers and  businesses. The study also gives an overview of recent studies dealing with NGA in Europe and abroad (Australia, Singapore, Japan and the USA). 

 

2. To meet the objectives of the study, we have developed a generic business model. This model on the one hand enables the assessment of the viability of next generation access business models and the potential national coverage of NGA. On the other hand it provides the opportunity to derive conditions (in particular regulated wholesale services) that allow a maximum degree of viable duplication (replicability) of a first mover’s investment. However, as the term “generic” suggests, the model structure and logic itself is independent from the conditions in a specific country or area. Rather, the model requires to feed in real world data about a country or an area within a country in order to generate actual empirical results (which are then country/area specific). The model for the first time gives particular emphasis on the impact of certain regulatory decisions on access regarding NGA. 

 

3. There are already several studies that focus on various facets of fibre deployment in the access network. Likewise, there are already several models available which are focusing on certain aspects of the viability of deep fibre deployment. The present study covers all relevant aspects in a comprehensive way. We review the relevant literature and models, we analyse actual fibre deployment approaches in several countries in and outside Europe, we present the main features of our model and we apply this model to generate empirical results for altogether six European countries (Germany, France, Italy, Portugal, Spain, Sweden). For all six countries we provide comprehensive empirical evidence on the viability of replication of VDSL/FTTC infrastructure as well as of the deployment of FTTB/H infrastructure. We also show quantitatively and not only qualitatively the impact of regulatory measures like duct and dark fibre access, fibre loop and sub-loop unbundling on the replicability of NGA roll-out and competition. On the basis of our model results we derive recommendations on the necessary regulatory conditions for effective competition in NGA. 

 

4. We have structured the model to calculate fibre deployment for eight coverage areas or “clusters” in each country defined by population density with the expectation that profitability of NGA deployment depends on population density. XVI  The Economics of Next Generation Access 

 

5. We assume an advanced state of network development in which 80% of all subscribers to fixed telecoms receive double or triple play services while the remainder receive telephony alone. This is higher than the take-up of these services today, but is considered a reasonable expectation over the horizon of an investment decision.  

 

6. Market shares listed indicate shares of all households and businesses (potential subscribers), which may include households without fixed connections or with cable services. The results should be read in this context. For example a typical leading entrant serves 10-20% of broadband subscribers in the market today. In a country where 50% households subscribe to broadband, this broadband market share would equate to a market share of between 5-10% of all households (potential customers).