The WACC for Mobile, Fixed-Line and Cable Termination Rates
Prepared for the Independent Post and Telecommunication Authority in the Netherlands (OPTA)
OPTA, the Independent Post and Telecommunication Authority in the Netherlands, regulates both fixed and mobile voice termination services. As part of the regulatory process, OPTA determines price caps for fixed termination rates (FTRs) and mobile termination rates (MTRs). To set the termination rates, OPTA has constructed a Bottom-Up Long-Run Incremental Cost (BULRIC) model to represent the efficient costs of a hypothetical fixed and mobile operator. To arrive at the final termination rates, OPTA must also allow for the operators’ Weighted Average Cost of Capital (WACC).
In this context, OPTA has commissioned The Brattle Group to calculate the WACC for:
- A copper-based fixed-line incumbent moving to/on Next Generation Networks (NGN)/Next Generation Assets (NGA);
- An Hybrid Fibre-Coaxial (HFC)-based cable company, moving to/on Data Over Cable Service Interface Specification 3 (DOCSIS3);
- A mobile operator (2G/3G and/or 4G), in a competitive market, which for the purposes of this exercise OPTA has defined as a market with three or more mobile operators;
