1. Fakultät für Bauingenieurwesen
Faculty for Civil Engineering
Regulatory Challenges and Opportunities in a Digital World
Global Forum 2011 – Shaping the Future
Prof. Dr. Nico Grove
Assistent Professor
Institute for Infrastructure Economics & Management
Bauhaus-Universität Weimar
www.infrastructure-economics.com
Brussels, 7th of November 2011

2. Bauhaus-Universität
REGULATORY CHALLENGES INFRASTRUCTURE ECONOMICS & MANAGEMENT
Weimar AND OPPORTUNITIES IN A DIGITAL WORLD PROF. DR. NICO GROVE
The Internet will reach almost the entire population within the next decade.
More than 95% of the adult population in <country> actively and regularly use the internet and its
services.
66%
42%
35%
30%32%
30% 29%
26% 28%
21%
18%
18% 17% 17%
15% 11%15% 10%
10% 12% 12% 12% 12%
8% 8% 8% 9%
3% 6%
6%
2010-2014 2015-2019 2020-2024 2025-2030 Later than 2030 Probably never
GER experts Further int. experts EU experts USA experts DNAdigital
1
Source: Münchner Kreis e.V. (2011)

3. Bauhaus-Universität
REGULATORY CHALLENGES INFRASTRUCTURE ECONOMICS & MANAGEMENT
Weimar AND OPPORTUNITIES IN A DIGITAL WORLD PROF. DR. NICO GROVE
However, the Digital Divide stays persistent.
The digital divide of the population in <country> has virtually disappeared.
54%
44%
19% 23% 29%
10%
5% 11%
7%
2010-2014 2015-2019 2020-2024 2025-2030 Later than 2030 Probably never
GER experts DNAdigital
22
Source: Münchner Kreis e.V. (2011)

4. Bauhaus-Universität
REGULATORY CHALLENGES INFRASTRUCTURE ECONOMICS & MANAGEMENT
Weimar AND OPPORTUNITIES IN A DIGITAL WORLD PROF. DR. NICO GROVE
Nationwide mobile broadband access is available areawide within 10-20 years.
In <country>, 50 MB/s are available nationwide for mobile internet use (i.e., equally for uploads and
downloads).
63%
34%
39% 29%
38% 36%
33%
30% 30%
12%
24%
21%
18% 15%
15% 16% 14% 15% 16%
13% 6%
9% 9%
6% 3%
3% 6%
3% 3% 2%
2010-2014 2015-2019 2020-2024 2025-2030 Later than 2030 Probably never
GER experts Further int. experts EU experts USA experts DNAdigital
3
Source: Münchner Kreis e.V. (2011)

5. Bauhaus-Universität
REGULATORY CHALLENGES INFRASTRUCTURE ECONOMICS & MANAGEMENT
Weimar AND OPPORTUNITIES IN A DIGITAL WORLD PROF. DR. NICO GROVE
Rising cost per household are a major barrier to investments into rural areas.
Cost of LL Deployment
Local Loop Cost Structure
LL Cost
Further complexity:
Pr  Average LL length increases
with decreasing population density
 With higher LL length,
cost for replacement increase exponentially
Pm
Population
Density
Rural City
Quelle: BMWi (2008); Holznagel/Deckers (2009); Picot (2008); 4

6. Bauhaus-Universität
REGULATORY CHALLENGES INFRASTRUCTURE ECONOMICS & MANAGEMENT
Weimar AND OPPORTUNITIES IN A DIGITAL WORLD PROF. DR. NICO GROVE
NGA with its new scale economies makes application of the Investment Ladder
approach more difficult
Investment Ladder
Existing Infrastructure1) Future Infrastructure
Level of Level of Negative Impact
Competition Competition on Business Case
Own
Infrastructure
Subloop
Own Infrastructure
Unbundling
Unbundling
Shared/full
Bitstream
Unbundling
Resale
Bitstream
Resale Positive Impact
on Business Case
time time
 Traditional Investment Ladder approach used to  New investments take regulatory measures into
transfer existing, monopolistic infrastructure account from the beginning
into market competition  Negative outbreak of corridor will have impact
 Possibilities of realizing new economies of on business case, which will be anticipated and
scale and scope are given, albeit limited investment will not be realized
 Application of traditional Investment Ladder Approach will not work on infrastructure not deployed yet
 Setting long term regulatory conditions from the beginning will provide safe environment for investments
Source: 1) Cave (2004), Vogelsang (2003) 5

7. Bauhaus-Universität
REGULATORY CHALLENGES INFRASTRUCTURE ECONOMICS & MANAGEMENT
Weimar AND OPPORTUNITIES IN A DIGITAL WORLD PROF. DR. NICO GROVE
Challenge
How can we roll out entirely new
infrastructures nationwide?
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8. Bauhaus-Universität
REGULATORY CHALLENGES INFRASTRUCTURE ECONOMICS & MANAGEMENT
Weimar AND OPPORTUNITIES IN A DIGITAL WORLD PROF. DR. NICO GROVE
Thank You!
nico@grove.ch
The Müncher Kreis e.V. Delphi Study is available
free of charge via:
http://www.muenchner-kreis.de
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