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Economic implications of a co-investment scheme for FTTH/PON architectures

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  • Rendon Schneir, Juan
  • Xiong, Yupeng

Abstract

Due to the high costs associated with the deployment of the passive infrastructure of FTTH networks, a few alternative operators have pondered the possibility of making co-investments based on a network sharing model. The purpose of this article is to explore economic aspects of a co-investment scheme for present and future FTTH/PON architectures. The article describes the cost reductions that can be achieved when a co-investment scheme is used, as well as the relationship between market shares and the cost per home connected. A cost model was employed to calculate the investment per home passed and the investment per home connected. The investment per home passed for an alternative operator indicates significant cost reductions when a co-investment scheme is used. On the other hand, the results show that when the incumbent's market share is equal or higher than the total market share of all the alternative operators that share the network infrastructure, the investment per home connected for an alternative operator is higher than that for the incumbent operator. Moreover, to be cost competitive with the incumbent operator, the necessary market share that each alternative operator should achieve is much lower than that of the incumbent operator.

Suggested Citation

  • Rendon Schneir, Juan & Xiong, Yupeng, 2013. "Economic implications of a co-investment scheme for FTTH/PON architectures," Telecommunications Policy, Elsevier, vol. 37(10), pages 849-860.
    • Handle: RePEc:eee:telpol:v:37:y:2013:i:10:p:849-860
    DOI: 10.1016/j.telpol.2013.06.002
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    References listed on IDEAS

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    1. Marc BOURREAU & Carlo CAMBINI & Steffen HOERNIG, 2010. "National FTTH plans in France, Italy and Portugal," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(78), pages 107-126, 2nd quart.
    2. Marc LEBOURGES, 2010. "Competition via investment,an efficient model for FTTH roll-out," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(78), pages 45-66, 2nd quart.
    3. Neumann, Karl-Heinz, 2010. "Structural models for NBN deployment," WIK Discussion Papers 342, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    4. Bourreau, Marc & Cambini, Carlo & Hoernig, Steffen, 2012. "Ex ante regulation and co-investment in the transition to next generation access," Telecommunications Policy, Elsevier, vol. 36(5), pages 399-406.
    5. Hoernig, Steffen & Jay, Stephan & Neumann, Karl-Heinz & Peitz, Martin & Plückebaum, Thomas & Vogelsang, Ingo, 2012. "The impact of different fibre access network technologies on cost, competition and welfare," Telecommunications Policy, Elsevier, vol. 36(2), pages 96-112.
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    Cited by:

    1. Rendon Schneir, Juan & Xiong, Yupeng, 2016. "A cost study of fixed broadband access networks for rural areas," Telecommunications Policy, Elsevier, vol. 40(8), pages 755-773.
    2. Briglauer Wolfgang & Frübing Stefan & Vogelsang Ingo, 2014. "The Impact of Alternative Public Policies on the Deployment of New Communications Infrastructure – A Survey," Review of Network Economics, De Gruyter, vol. 13(3), pages 227-270, September.
    3. Rendon Schneir, Juan & Xiong, Yupeng, 2015. "Economic aspects of fibre to the distribution point with G.fast," Telecommunications Policy, Elsevier, vol. 39(6), pages 450-462.

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