Cost modeling


Industry regulators and competition agencies rely on cost models to determine the economic cost of services subject to ex ante price regulation or the object of ex post antitrust cases. Bates White professionals combine their knowledge of regulatory and competition economics with their industry experience to build and audit cost models that calculate forward-looking total and incremental economic costs of providing both individual services and platforms consisting of several network services. Our experts apply cutting-edge empirical techniques and advanced economic theory to address the issues of forecasting input prices and introduction of new technology, defining and implementing economic depreciation methodology, allocating common costs, and estimating the cost of capital. Our clients have included public agencies, incumbent companies, and new entrants. Our work has covered mobile and fixed networks, traditional and next-generation networks, and data and voice network services.

  • Audited a Long-Run Incremental Cost (LRIC) model of a fixed transport network developed by an Italian telecommunications operator based on a combination of traditional Public Switched Telephone Network (PSTN) technology and innovative Internet Protocol (IP) platforms.
  • Conducted a benchmark study of mobile wholesale termination rates for voice calls in Western Europe on behalf of a group of German mobile operators. 
  • Advised the Malaysian regulator regarding the revision of interconnection rates for regulated services using LRIC model.