Single Wholesale Network for 5G: Quantitative Assessment of Market Impact

This article is devoted to quantitative analysis of the costs and benefits of 5G network infrastructure creation using two alternative forms, namely a single wholesale network or competing mobile networks. Calculations based on the discounting principle allowed us to establish whether savings are possible in the single wholesale network model. The limit of investment savings due to the use of a single wholesale network is estimated at 160–220 billion rubles covering a five-year period, given 360–480 billion rubles of investments required by four mobile operators. This estimation is optimistic and based on the assumption that a single wholesale network creates infrastructure none the worse than each of the four competing mobile networks, the expenditures of infrastructure development being not higher than those of the active mobile networks. We show that an infrastructure sharing agreements between mobile operators on a voluntary basis makes it possible to achieve a comparable amount of savings of 148–197 billion rubles for a five-year period. Taking into account the estimates of additional costs in the single wholesale network model caused by delay in implementation, an increase of market power, and regulatory costs, we conclude that the model of single wholesale network is economically inefficient.