Economic Issues

Telecommunications networks always give rise to issues when it comes to sharing their costs. They are typically "large ticket" items with significant up-front costs and relatively coarse granularity for the cost of incrementing capacity. They are characterised by "costing money", whether they are used or not. The way pan-European research networks have been priced since TEN-34 is by sharing the costs incurred among project partners, i.e. the research network organisations involved. Over the last twelve years the cost-sharing approach to pan-European networks has developed and evolved in such a way that, in general, national research and education network organisations have felt that the results have been reasonably fair.

The liberalisation of both national and international markets for telecommunications in Europe has been a major change that has taken place during this period. The progress has not been uniform, and consequently the cost of providing service to some countries, where the market is less effective, has been much higher than in the more competitive parts of Europe. In order to accommodate this, the international cost of connectivity to a country has been factored into the pan-European approach to cost sharing.

Looking ahead, there are two major future changes that are apparent today and that will affect the economics of research networking. One is the investment in dark fibre in Europe, both nationally and on a pan-European basis. The second is the development of a more elaborate portfolio of services. Each of these has, potentially, a significant effect on the costs of networks and on the way those costs are shared.

These two trends are examined in the study area on economic issues. EARNEST will make recommendations about how these economic trends are likely to develop and will analyse their influence on the development of research networking policy in Europe.

As a separate part of the sub-study on economic issues, a report has been prepared on relevant regulatory issues and development in the regulatory system.