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  • 1. Fakultät für BauingenieurwesenFaculty for Civil EngineeringRegulatory Challenges and Opportunities in a Digital WorldGlobal Forum 2011 – Shaping the FutureProf. Dr. Nico GroveAssistent ProfessorInstitute for Infrastructure Economics & ManagementBauhaus-Universität Weimarwww.infrastructure-economics.comBrussels, 7th of November 2011
  • 2. Bauhaus-Universität REGULATORY CHALLENGES INFRASTRUCTURE ECONOMICS & MANAGEMENT Weimar AND OPPORTUNITIES IN A DIGITAL WORLD PROF. DR. NICO GROVEThe 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 1Source: Münchner Kreis e.V. (2011)
  • 3. Bauhaus-Universität REGULATORY CHALLENGES INFRASTRUCTURE ECONOMICS & MANAGEMENT Weimar AND OPPORTUNITIES IN A DIGITAL WORLD PROF. DR. NICO GROVEHowever, 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 22Source: Münchner Kreis e.V. (2011)
  • 4. Bauhaus-Universität REGULATORY CHALLENGES INFRASTRUCTURE ECONOMICS & MANAGEMENT Weimar AND OPPORTUNITIES IN A DIGITAL WORLD PROF. DR. NICO GROVENationwide 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 3Source: Münchner Kreis e.V. (2011)
  • 5. Bauhaus-Universität REGULATORY CHALLENGES INFRASTRUCTURE ECONOMICS & MANAGEMENT Weimar AND OPPORTUNITIES IN A DIGITAL WORLD PROF. DR. NICO GROVERising 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 CityQuelle: 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 GROVENGA with its new scale economies makes application of the Investment Ladderapproach more difficultInvestment 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 investmentsSource: 1) Cave (2004), Vogelsang (2003) 5
  • 7. Bauhaus-Universität REGULATORY CHALLENGES INFRASTRUCTURE ECONOMICS & MANAGEMENTWeimar AND OPPORTUNITIES IN A DIGITAL WORLD PROF. DR. NICO GROVEChallenge How can we roll out entirely new infrastructures nationwide? 6
  • 8. Bauhaus-Universität REGULATORY CHALLENGES INFRASTRUCTURE ECONOMICS & MANAGEMENTWeimar 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 7