Incremental costs model impact analysis
By the end of the 1990s the Spanish telecommunication services regulator, the Comisión del Mercado de las Telecomunicaciones (C.M.T.), was considering the adoption of incremental cost models to calculate the cost of regulated services. These models posed a significant change from the models used up to then, based on top-down costing methodologies.
To analyse the possible impact of these models on its business, our customer decided to perform a detailed analysis of existing incremental cost models (almost all of them were defined for the US market) that would allow to assess potential economic impacts on its business and available alternatives to mitigate these impacts. The main activities performed in the project were:
- Detailed identification of the scope of the analysis (in terms of services covered, calculation models, etc.)
- Analysis of existing incremental cost models; simulations using the HAI (Hatfield), BCPM and HCPM models were carried out
- Identification of parameters in these models that had the greatest influence on the obtained results, via a sensitivity analysis on these results
- Identification and analysis of impact scenarios after the introduction of incremental cost models
- Analysis of existing regulation and recommendations to minimise the impact of the introduction of the new models