Ofcom has published a report prepared by DotEcon assessing the relationship between costs and the distance over which traffic is carried (the distance gradient) in Next Generation Networks (NGNs), and the potential consequences for the structure of regulated interconnection charges. The report concludes that the distance gradient in NGNs is likely to change as a result of reductions in unit costs being greater at the periphery than in the core. Although the costs of conveying traffic are expected to fall in general, NGNs do not bring about the ‘death of distance’. Costs continue to be related to distance, and failure to reflect the cost impact of distance in interconnection charging would not provide the appropriate incentives for efficient alternative infrastructure build-out. The report can be accessed here or downloaded from Ofcom’s website.
