Business School

Research projects

Research activities conducted by the Pricing In Next-Generation Research Group.

Evaluating FTTH in New Zealand and Europe

The investment by the government in the Fibre-to-the-Home (FTTH) network deployment, as well as the open access obligation in New Zealand contrast sharply with the European condition of next-generation access deployments. It is therefore interesting to compare the Ultra-Fast Broadband network (UFB) in New Zealand with specific European cases, on three domains: technology, policy, and market.

A common aspect of both types of deployment is the alignment of public and private partners’ goals when working together under a partnership, also known as Public-Private-Partnership (PPP). Whereas the public partners (local governments, Crown Fibre Holdings) focus on getting as much from e-services as possible to the public institutions and end-customers, and so reducing the digital divide and increasing economic attractiveness of the high-speed network, private companies want to satisfy their stakeholders by increasing profits through competitive offers. Within this project, two main private partners will be examined: the Local Fibre Companies (LFCs) and the Retail Service Providers (RSPs).

By comparing New Zealand and European deployments, the factors that impact on FTTH deployment and uptake can be identified. For each chosen deployment, those factors combine to result in measurable criteria (such as deployment and speed of uptake), which can be used to indicate the success of the case.

This project is a collaboration between the Techno-Economic Research Unit at the University of Ghent, Belgium and the ISOM Department at the University of Auckland Business School, New Zealand, during a period of four months (November 2013 till February 2014). The goal of this collaboration is to perform a comparative analysis of the development of FTTH deployments both in New Zealand and a selected group of local European initiatives from which good practices, guidelines and evaluative measurements can be inferred.


The economics of spectrum management

The conventional way of allocating spectrum for mobile communications is the simultaneous ascending auction (SAA), a mechanism that has been used and perfected over the last twenty years. Key recent insights into the weaknesses of the SAA have led researchers to propose and governments to adopt a new format which is known as the combinatorial clock auction (CCA). The auction is being popularised throughout its application in Europe, Australia and New Zealand.

As critical as the capacity of an auction to raise revenue for the government may be, its design and particular rules should respond – whenever feasible - to the broader goals set by governments, the history and current state of the mobile markets, the regulator’s goals for competition in the new or affected markets, the evolution and potential of new technologies to modify spectrum utilisation efficiency and new spectrum exploitation forms allowed by authorities and sponsored by non-traditional market players.

The future of the digital dividend and the search for new spectrum, on the one hand, and the increasing adoption of mobile devices everywhere, on the other, demand a serious rethinking of the processes involved in deciding how much spectrum, what frequency bands, when to allocate it and the mechanisms for allocation and assignment.

Our current research builds a framework for the analysis of the mobile broadband spectrum allocation and assignment process. The framework is used to understand the role of the spectrum agency in promoting the efficient use of the spectrum while allowing new technology (hard and soft) approaches to spectrum use (ultra wideband, software defined radio, cognitive radio, spectrum sharing, licensed spectrum parks)


Competition in Next-Generation Networks

We develop a dynamic model of competition between two NGN platforms, while discussing several technological elements and economic aspects that have emerged from the literature concerned with NGN.

First, a NGN serves multiple types of consumers, so we consider end-users and content providers who both require connection to a network platform.

Second, we make some assumptions about traffic flows (ie, who originates a transmission and whether a consumer or content provider gets charged or not).

Third, different interconnection agreements are considered, that range from regulated access charges through zero-charge agreements.

Our model is distinguished by four main components:

  1. We model utility functions for both end-users and content providers; such utility functions then determine the demand functions for two services: voice and data
  2. Market shares are determined as a function of a switching parameter that determines the inflow of customers to one platform from the other as they compete over prices
  3. On-net and off-net traffic patterns are then determined as a function of market shares
  4. Platforms compete non-cooperatively and profits depend on the realisation of each of the above

At each period t, equilibrium prices are obtained; equilibrium prices are a function of market shares and content provision in period t-1 along with prices and traffic patterns in period t.

We first use the model to examine some traditional issues involving access pricing for voice telecommunications services and transit versus peering arrangements for data services. Simulation is then organised around three additional criteria that include whether platforms:

  1. Charge content providers with subscription or usage fees
  2. Discriminate between on-net and off-net data pricing for end-users and content providers
  3. Charge or block off-platform content

The combinations of results from systematically applying these criteria provides a rich variety of scenarios which we use to describe the dynamics of usage prices, subscription fees, market shares, platform profits, content provider profit, consumer surplus, and total social welfare.