Wholesale
We support our clients with designing and pricing unregulated wholesale products.
Wholesale telecoms services are an important means of facilitating competition at the retail level, whist offering the opportunity for network operators to open additional revenue streams. We are experts in the field, having assisted both buyers and sellers of wholesale services.
We have hands-on experience of designing and pricing unregulated wholesale products, including MVNO access, national roaming, wholesale messaging, international submarine capacity, IP transit and international voice. Furthermore, we have assisted in the transition from regulated to commercially negotiated conditions; for example, within the context of wholesale next-generation access.
Our work for buyers of wholesale capacity has given us insights into the needs of wholesale customers (including both fixed and mobile broadband operators) and the challenges they face.
Our wholesale services
Commercial product pricing
We combine forward-looking estimates of the costs of technology, intangible assets and other inputs (at both wholesale and retail levels) to advise on the appropriate B2B pricing of telecoms services.
Reseller agreement analysis
In negotiations between wholesalers and retailers, we provide a bridge between technological/market practicalities and contractual agreement, facilitating discussion based on objective, quantitative criteria.
Intra-group pricing and synergies
We help groups with both retail and wholesale operations to analyse business proposals affecting wholesale prices, thus obtaining a holistic view of these proposals, including the potential for revenue cannibalisation.
National broadband plans
We assist our clients in preparing and analysing proposals to construct networks using state-aid (i.e. National Broadband Plans), helping anticipate issues arising from the rules and conditions attached to the state-aid.
Our project experience
Refresh of wholesale product portfolio
We assisted our client, a fixed and mobile operator, to refresh its wholesale service portfolio, updating the product definitions and prices.
As a result of our analysis, some prices were significantly revised (e.g. leased backbone capacity) and others validated (IP transit). We also proposed innovative new products such as active infrastructure sharing. The project produced a major new forward-looking model of submarine cable capacity costs, along with service descriptions and service level agreements for international IP capacity. We also built a pricing tool for use in proposals to potential wholesale customers.
Review of pricing in a reseller agreement
Our client operated a ‘full’ reseller, partly hosted on the network infrastructure of two larger facilities-based competitors. Our project was to assist in negotiations regarding the price of access to this network infrastructure.
Our work drew on international benchmarks, demand forecasts, and forward-looking models of the costs of technology and spectrum. The project was later extended to cover similar support on a separate negotiation with another potential wholesale partner.
Evaluation of the business plan of a fixed reseller
We performed a valuation of a fixed line broadband retailer, whose main business was to resell wholesale broadband access capacity on fibre-to-the-home (FTTH) networks.
The project evaluated the expected synergies from a horizontal merger with a similar reseller, as well as the impacts of such a merger on the upstream (backhaul, voice, and IP transit) wholesale capacity business of the parent company. A cost model of submarine and domestic long-haul switching infrastructure was produced to evaluate the upstream wholesale impacts.
Wholesale broadband access: price model review
To support the pricing of new, commercially negotiated fixed broadband services (e.g. 1Gbps), we recommended an alternative modelling methodology based on international best practices to replace an existing internet access cost model.
We carried out a detailed review of the client’s fixed broadband network strategy, including: demand; network quantities; network unit capex; network opex; cost/capex% by technology category; maintenance payments to technology suppliers; non-technology-maintenance opex items; headcount, salaries and energy; and overhead, WACC, and productivity factors. The client adopted the new method.
Review of proposals for a National Broadband Plan
We produced a series of techno-economic models to compare and contrast the costs of rolling out candidate access technologies to provide varying grades of fast broadband performance and coverage.
The technologies under consideration included fibre-to-the-home (FTTH) and fibre-to-the-node (FTTN) for wireless, among others. The work was done in close coordination with the client’s technical team, to incorporate current (and expected future) capacities and unit costs of technical equipment items. The model accounted for the different technologies’ cost-performance in the different geographic environments. We assisted in planning for the calculation of the state-aid “claw-back”.
Relevant articles & reports
How to price access to utility poles and ducts?
5 October 2023
The EC’s Gigabit Infrastructure Act will pave the way for fibre to be deployed using the ducts and poles of utility companies; but the approach to set the […]
Is this the end for single wholesale networks?
26 May 2023
Championed by some as a route to universal access to mobile services, single wholesale networks (SWN) have failed to deliver. Lee Sanders, Managing Partner at Aetha Consulting, wonders […]
Balancing act – can neutral host networks deliver welcome efficiencies without driving out healthy competition?
31 March 2022
Neutral host networks appear to bring solutions to a set of problems, but do they bring benefits to all? Lee Sanders, Managing Partner at Aetha Consulting, recommends a […]
