Abstract:
Local Fibre Companies (LFCs) and the government of New Zealand are jointly implementing a nation-wide fibreoptics network, a project known as the Ultra-Fast Broadband (UFB) initiative, expected to cover 75% of households by 2019. New opportunities are expected to open up because the UFB network by regulation forbids LFCs to directly provide retail services. Consumers will need to purchase fibre services from Retail Service Providers (RSPs). The UFB represents a scenario of a twosided platform, with consumers and RSPs on each side. Using two-sided platform theory and normative economics this paper presents theoretical model by Beltrán (2012) and extends it to an agent-based simulation. The results assured having a great number of users on one side increases the number of users on the opposite side. The UFB platform currently subsidizes fibre lines for consumers. The industry debates whether subsidization should continue; the results indicate that subsidy can be reduced when a large number of users on either side appear in the market. This case study presents us with a timely unique opportunity to analyze the issues involved as the market evolves and stabilizes.
