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Pricing for Abundance

https://deridder.com.au/wp-content/uploads/2020/10/Pricing-for-Abundance-Preprint.pdf

Small island nations that have relied on satellites for international connectivity are now being connected by submarine cables that have infinitely more capacity. The hope is that these cables will lift the social and economic development of the economies connected. This hope is more likely to be realized with the adoption of wholesale traffic pricing based on the capacity abundance brought by the cable system rather than historical wholesale bandwidth pricing, which assumes capacity scarcity.

Reductions in the wholesale cost of international connectivity are more likely to be passed on to end users if there is retail competition. The proposed wholesale pricing model facilitates increased retail competition.

These ideas are explored in a case study of the Cook Islands, which is a member of the Manatua Cable Project.

This a preprint. The final paper appears in the AJTDE Volume 8, Issue 3, Paper 344 at http://telsoc.org

Who will blink first on NBN pricing?

The showdown on NBN CVC pricing has been a long time coming. The NBN bestowed an extra 40% of CVC capacity to make lockdown due to COVID-19 more bearable. But it is only temporary. The ending of the 40% uplift inserts a decisive event into what was previously a slow boil. At a time when retail margins are becoming exhausted, something has to give.

Co-authored with Bob James and publishedin Comms Day. read it here Who will blink first on NBN pricing

Asset valuation for access pricing

The valuation of assets is probably the most important decision regulators will face for a network business dominated by fixed costs because depreciation and the return to capital derived from this valuation will account for well over half of total costs.

In some recent work for Fiji, there was some debate about whether assets should be based on ‘actual’ or ‘replacement’ costs. As the following report shows, my view is that both theory and practice support the use of replacement costs. Asset valuation-revised-1

Pricing in Abundance

There Is not much more that I can say about Australian National Broadband Network (NBN) pricing. But recently I had the good fortune to apply the principles of traffic pricing – which I have been urging for the NBN since 2009 – to the new submarine cable for the Solomon Islands. It provides an example of why pricing for abundance is better than pricing to reflect, or worse, to create scarcity. Economuse 2020-02-12

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