Brattle experts prepared a report for the European Commission’s Directorate-General (DG) for Communications Networks, Content & Technology that offers guidelines for EU-based National Regulatory Authorities (NRAs) to use when calculating an allowed rate of return—typically the weighted average cost of capital (WACC)—for electronic telecommunications operators with significant market power (SMP). The report outlines a common set of procedures for NRAs to use when estimating WACCs in the EU telecommunications sector that ensures that price differences reflect economic fundamentals, and is more reliable than the methods that were previously used and thus the new method is unlikely to be challenged by the European Commission.

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