The Price of Copper and the Transition to Fibre

Martin Cave, Antoine Fournier and Natalia Shutova
Additional contact information
Antoine Fournier: TERA Consultants, Paris
Natalia Shutova: Sorbonne University and TERA Consultants, Paris

Communications & Strategies, 2012, vol. 1, issue 85, 147-168

Abstract: The question of how to price access to the copper network during the period of transition to fibre has attracted much attention, both from regulators and in reports prepared by consultants (notably Plum Consulting and WIK Consult) acting for different groups of operators. Our paper considers three regulatory objectives - the two familiar ones of efficient cost recovery and efficient entry, and an additional one of efficient migration to fibre. It examines a range of possible pricing principles including the LRIC, HCA and CCA approaches, and mixed HCA/CCA approaches observed in France and the UK. These are simulated using a data set for the copper local loop in France, prepared by the regulator, ARCEP. Recognising that the number of instruments available to the regulator is less than the number of objectives, the paper proposes an approach which ensures nearly exact cost recovery, and which takes separate account of the obsolescent copper and of the continuing value of the trenches and ducts which contain it. Where full cost recovery allows it, the price of access to the physical works should be lowered to encourage the transition to fibre. The simulations show that the access prices associated with the proposed approach are lower than those derived from CCA and LRIC methods for pricing copper.

Keywords: access regulation; asset valuation; NGA networks. (search for similar items in EconPapers)
JEL-codes: L51 L96 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://repec.idate.org/RePEc/idt/journl/CS8507/CS85_CAVE_FOURNIER_SHUTOVA.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idt:journl:cs8507

Access Statistics for this article

More articles in Communications & Strategies from IDATE, Com&Strat dept. Contact information at EDIRC.
Bibliographic data for series maintained by BLAVIER Thomas ( this e-mail address is bad, please contact ).