Investment and competition in next generation access networks

There is a strong interest among policy makers and regulators about how to create the appropriate incentives for telecommunications operators to invest in next generation access technologies whilst maintaining the benefits from competition. Much of the focus is on providing optical fibre connections closer to the home - either to street cabinets or directly to customers' premises. These fibre networks will allow operators to provide much higher broadband speeds. However, the business case for large scale roll out of next generation access networks is not yet proven.

In the face of this uncertainty there have been two main approaches to date. Firstly, in the EU the approach has been to encourage private sector investment by providing certainty over the regulatory environment - but within the context of the open-access principles applied to bottleneck assets under the EC's regulatory framework. Secondly, public-private partnership for financing network build with the imposition of third-party access conditions on the network operator. This has been the preferred approach in countries including New Zealand, Australia and Singapore. It is yet to be seen which scheme will be most successful. Indeed other schemes are possible and a hybrid approach may be required with private sector driven investment (with access obligations) in some areas and with government intervention in other areas.

Matt Hunt, Manager in the Telecommunications Practice of Frontier (Europe), presented an overview of the different approaches to the IIR Telecoms Regulatory Cost Modelling and Accounting conference.