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LTE techno-economic assessment: The case of rural areas in Spain

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  • Ovando, Catalina
  • Pérez, Jorge
  • Moral, Antolín

Abstract

This paper evaluates whether it is feasible for an LTE operator to deliver a 30Mbps fixed service in rural areas in Spain and if this is not the case, whether passive network sharing could make it feasible, since this is in fact one of the objectives set out in the Digital Agenda for Europe and a key issue in the national broadband strategy. The research is conducted through a techno-economic assessment in an infrastructure competition scenario. A discounted cash flow method is used to determine the total cost of the deployment for the operator and the minimum average revenue per user (ARPU) which would be required to recover the investment in both approaches: passive network sharing and non-sharing. On the other hand, the three demand scenarios that were considered, depending on the envisaged Spanish broadband penetration by 2020, attempt to calculate what take-up and ARPU are likely in the targeted rural areas. As mobile operators׳ coverage obligation stipulates covering 90% of the municipalities with less than 5000 inhabitants, extreme rural areas, which correspond to the final 0.7% of the population, are excluded from this assessment. The results indicate that, given the socio-economic characteristics of the assessed area, demand is very sensitive to price and that the existence of other broadband products forces the operator to lower the ARPU. As a result, only very high take-up ratios would make the deployment feasible. The research shows that passive network sharing does not constitute a solution; nevertheless, a single network deployment could solve the unfeasibility problem in rural areas.

Suggested Citation

  • Ovando, Catalina & Pérez, Jorge & Moral, Antolín, 2015. "LTE techno-economic assessment: The case of rural areas in Spain," Telecommunications Policy, Elsevier, vol. 39(3), pages 269-283.
    • Handle: RePEc:eee:telpol:v:39:y:2015:i:3:p:269-283
    DOI: 10.1016/j.telpol.2014.11.004
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