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Regulating broadband: The importance of geographical modelling

There are several challenges that regulators must overcome when regulating fixed broadband markets. One of these challenges is related to the necessary granularity of the models used to assess the cost of providing broadband services.

Tecno-economic, bottom-up models aim to estimate the cost of providing telco service from a set of inputs and engineering algorithms. In the case of fixed models, the inputs and algorithms have a critical geographical component. The importance of the geographical assessment arises from the fact that a significant proportion of the necessary investment in fixed networks lies in the access network – especially in the so-called, last-mile. The relevance of the expenditures associated with access networks raises the need to develop a thoughtful analysis of the geography (e.g. in terms of the distance of the local loop). This analysis is critical for an accurate assessment of the costs incurred by operators.

The geographical algorithms implemented in each country for this assessment differ significantly depending on several aspects. In our experience, three elements stand out:

  • The availability of data
  • The relevance of multiple operators
  • The existence of new network deployments

In this report we explore the relevance of these aspects in greater depth, diving into how regulators can leverage new technologies to overcome them.