Balancing the Scales: Exploring Cost-Sharing Models for 5G Networks and OTT Traffic

Asma Chiha, Edward Derveaux, Sofie Verbrugge and Didier Colle

33rd European Regional ITS Conference, Edinburgh, 2025: Digital innovation and transformation in uncertain times from International Telecommunications Society (ITS)

Abstract: The European Commission has initiated a consultation on the future of the telecommunications sector, including the contentious question of whether over-the-top content providers (OTTs) should contribute to the costs of network infrastructure investments. Current cost estimates attributing mobile network expenses to OTT traffic rely predominantly on top-down modeling, a method widely criticized for its oversimplification and lack of transparency. This study contributes to the debate by addressing three key questions. First, it challenges prevailing top-down estimates by applying a bottom-up cost assessment based on total cost of ownership (TCO), incorporating both CAPEX and OPEX. This approach follows a detailed network dimensioning phase, which models the required infrastructure according to key performance indicators (KPIs), user demand, and traffic forecasts. Second, it analyzes the traffic sensitivity of 5G cost categories using this bottom-up model. Third, the framework explores two approaches to allocating 5G deployment costs to OTT traffic: one based on proportional allocation of traffic-sensitive costs according to OTT traffic behavior, and another using an incremental cost model that attributes only the additional costs generated by OTT usage. The analysis draws on case studies from a dense urban region (Brussels-Capital Region) and a rural area (Marche-en-Famenne), yielding a Europe-wide weighted average. Results show that the bottom-up estimates (€0.46–€0.84 per subscriber per Mbps) are significantly lower than current top-down figures (€2.15–€2.30), indicating a substantial overestimation of OTT-related costs in prevailing assessments. Moreover, the assumption that non-traffic-sensitive costs are negligible does not hold in rural contexts. However, incremental costs associated with OTT traffic in urban 5G networks are significant enough to merit careful regulatory consideration.

Keywords: bottom-up cost model; 5G network investments; network cost sharing; OTT traffic; traffic-sensitivity; incremental costs; fair share (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-reg
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