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

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Our project experience

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.

Image: Network interactions and commonalities between portfolio products

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.

Image: Calculation of customer acquisition and retention costs

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.

Image: Staff per 1 000 subscribers

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.

Image: Access network structures for high speed internet

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, in order 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”.

Image: Decision tree underpinning modelling framework

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Our experts

Graham Johnson
Graham JohnsonPartner
Graham Louth
Graham LouthPartner
Jonathan Wall
Jonathan WallManager
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