European telecommunications regulation has developed in an era when networks were in place, demand was stable and there was limited network competition. None of these conditions hold during the transition from copper to fibre.

During the transition investment to rebuild networks is required, whilst demand will be much less certain as copper, fibre, cable and advanced wireless networks compete for customers. This has three key implications:

1. To support customer migration to fibre the price of copper should reflect replacement cost.

2. Competition will intensify as regulated copper competes with fibre (in addition to other platforms) – competition should be reappraised and the costs and benefits of price controls on fibre assessed.

3. If ex ante price controls are applied to fibre a long-term approach to costing is required which addresses the need for commitment to support investment and which reflects demand uncertainty and anticipated demand growth.

The Plum report “Costing methodology and the transition to next generation access” published today addresses these issues.