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impacts

VIEWS: 9 PAGES: 60

  • pg 1
									Contents
Information
Project or case title              Application of spectrum liberalisation and trading to the mobile sector - Further
                                   consultation
Workbook title                     Welfare effects

Date workbook last saved           12/20/2011 4:55
Workbook status                    Approved for release

Workbook author                    Ofcom


Confidentiality: parties to whom   Public
access can be given

Contents
Workbook objective                 To calculate the effect on welfare of a change in the number of players in the UK
                                   mobile market (ie a change in the level of competition).

Sheet                              Description
Contents                           This Contents sheet.
Style Guidelines                   A guide to the styles used in this workbook
Model Structure                    A flow chart showing the structure of calculations in this model
Control                            Key variables which are likely to be changed when running scenarios. Also
                                   contains the results for the current scenario.
Lists                              A list of used name ranges.
Forecasts                          Base data on UK mobile market revenue growth, subscribers & prices.

Linear Demand                      Calculations for the multi-period model for the affected market segment using a
                                   linear demand model, showing the factual and the counterfactual cases, and the
                                   NPV of losses in consumer & producer surplus under different scenarios.
Negative Exponential Demand        Calculations for the multi-period model for the affected market segment using a
                                   negative exponential demand model, showing the factual and the counterfactual
                                   cases, and the NPV of losses in consumer & producer surplus under different
                                   scenarios.
OUT                                A summary of outputs from the four calculation sheets.
Notes
Control
Variable inputs

   Proportion of consumers sensitive to changes in quality                     50% subscriber_proportion


   Proportion of mobile revenues affected                                      25% mobile_revenue_proportion


   Number of players in factual                                                   3 N_f_nat_exit

   Number of players in counterfactual                                            2 N_cf_nat_exit

   Length of interim period                                                       3 interim_period

   First year of full competition effects                                      2012 Year_of_exit_nat_exit

   Final year of full competition effects                                      2014 Year_of_re_entry_nat_exit

   Diminution Period                                                              0 Dim_period

   Elasticity                                                                   -1.0 Elasticity_nat_exit

   Exogenous cost trend                                                   Disabled Exog_cost_trend_nat

   Price change of substitutes                                             Enabled Price_change

   Revenue scenario to use                                                        2 Revenue_Growth


   Long run 3G coverage level                                2G/3G coverage          chosen.coverage.level

   Threat of entry constraint                                                  10% Entry_threat_const

   Discount Rate                                             Social

   Inflation                                                                  0.00% Inflation_rate
   Discount rate (real)                                                       3.50% real_social_discount_rate
   Discount rate (nominal)                                                    3.50% nom_social_discount_rate

        Linked Outputs - Linear Demand, Relevant Market
                                                   2008
        NPV, 2008 values, £millions           Consumer surplusProducer surplus      Total Welfare
                                                1,047,219,536          -616,011,491    431,208,044

        Linked Outputs - Linear Demand, Relevant Market
                                                   2008
        NPV, 2008 values, £millions           Consumer surplusProducer surplus      Total Welfare
                                                1,784,790,283        -1,045,257,213    739,533,071
subscriber_proportion


mobile_revenue_proportion




                  The first year in which the number of players = N_cf_nat_exit

                  The final year in which the number of players = N_cf_nat_exit




Elasticity_nat_exit

                  This should normally be disabled.

                  This should normally be enabled.

                  Unhide for details



                  Unhide for details

                  Unhide for details




                  If this value is zero then ensure that all inputs are in real terms and at 2008 prices
                  Source: Treasury Green Book
nom_social_discount_rate
Style Guidelines
 Styles
    Input assumption            100                           An input to the model that it is expected the user will change (change at will)

    Input data                  100                           A piece of real data (only change if you have better data)

    Output                     100                            A key result from this part of the model (in particular one that will be used elsewhere in the model)

    Highlight                  100                            A cell that is highlighted for one of a number of possible reasons, such as uncertainty about the reliability of the figure or the calculation

    Note or source             Note                           A note commenting on any aspect of the contents of a cell, or recording the source of data and assumptions (NB smaller than standard font size)

    Un-format                  100                            Going back to default Excel formatting

    Checksum                   0.00                           A side calculation intended solely to cross check a result (and which therefore should not be referenced anywhere else in the model)

    Named range              Name                             An Excel Name applying to one or more adjacent cells (use Insert Name Create to actually create the Excel Names)

 An example
    Company X subscriber numbers
    Service                Units                    Notes          2000              2001             2002            2003
    Dial-up            Subscribers     Linear interpolation        1,000,000        1,000,000        1,000,000        1,000,000 Source: Company X Financial Statements
    ADSL               Subscribers     Linear interpolation          100,000          133,333          166,667          200,000
    Cable modem        Subscribers     Linear interpolation          50,000           100,000          150,000          200,000 Note: Data for 2000 need to be checked with Company X
    Total              Subscribers                                1,150,000         1,233,333        1,316,667       1,400,000

 Headings
                                                              Heading level 1, Arial 18 point
    H1                     Title
                                                              Heading level 2, Arial 14 point
    H2                       Title

    H3                        Title                           Heading level 3, Arial 12 point


    H4                         Title                          Heading level 4, Arial 9 point

    H5                         Title                          Heading level 4, Arial 9 point, bold italic

    H6                         Title                          Heading level 4, Arial 9 point, regular italic
Model Structure Competition
  Objective:       To calculate the effect on welfare of a change in the number of players in the UK mobile
                   market (ie a change in the level of competition).

  Overview of
  methodology:




                                                                                                                   Key
        Control
       variables                                                                                                   Input
                                       Linear demand model

                                                                                               Total welfare
                                                                                               impact of exit
                                        Negative exponential                                                    Calculation
                                          demand model
     Subscribers
     and revenue
      forecasts                                                                                                   Output
Forecasts of Subscribers, Revenues & Prices
Mobile subscriber forecasts
     Mobile Subscribers
       Subscribers (Q)                         Analysys Mason Western European mobile market: trends and forecasts Data Annex
       Growth Rate



       Subscribers sensitive to changes in quality
       Subscribers (Q)
       Growth Rate

Revenue Forecasts
                                                                                                                    2001        2002   2003    2004    2005
       Inflation
                                                http://www.statistics.gov.uk/downloads/theme_economy/FocusonCPI_June_2007.pdf
       Inflation (CPI) - annual average, Base Year = 2005                                                     94.2          95.4        96.7    98.0   100.0
       Rebasing factor to 2008 Prices                                                                        1.14          1.13        1.11    1.10    1.08



       UK Mobile Market Revenue
       Retail Revenue (£bn) - in 2008 Prices   Analysys Mason Western European mobile market: trends and forecasts Data Annex
       Real Growth Rate                        Converted from Euros using Analysys Mason supplied exchange Rate €1.46 to £1



       Relevant Market Revenue
       Retail Revenue (£bn) - in 2008 Prices   Analysys Mason Western European mobile market: trends and forecasts Data Annex
       Real Growth Rate

Scenarios - UK retail revenue, £bn, 2008 prices


       Relevant Market

   1   Real growth                                                                        GBP
   2   Real growth                                                                        GBP
   3   Real growth                                                                        GBP
   4   Real growth                                                                        GBP
   5   Real growth                                                                        GBP
Scenarios - Prices, £ per sub per year, 2008 prices


       Relevant Market

   1   Real growth                                    GBP
   2   Real growth                                    GBP
   3   Real growth                                    GBP
   4   Real growth                                    GBP
   5   Real growth                                    GBP
        72,793,000   76,302,000   78,344,000   80,077,000   81,609,000   82,964,000   84,146,000   85,344,840   86,560,760   87,794,004
                          4.8%         2.7%         2.2%         1.9%         1.7%         1.4%         1.4%         1.4%         1.4%




        36,396,500   38,151,000   39,172,000   40,038,500   40,804,500   41,482,000   42,073,000   42,672,420   43,280,380   43,897,002
                          4.8%         2.7%         2.2%         1.9%         1.7%         1.4%         1.4%         1.4%         1.4%




2006         2007         2008

102.3       104.7        107.6
1.05        1.03         1.00




            18.33        19.21         20.25       20.90        21.37        21.57        21.66
                         4.8%          5.4%        3.2%         2.3%         0.9%         0.4%




              4.58         4.80         5.06         5.22         5.34         5.39         5.41
                          4.8%         5.4%         3.2%         2.3%         0.9%         0.4%




                0            1            2            3            4            5            6            7            8            9
             2007         2008         2009         2010         2011         2012         2013         2014         2015         2016

              4.58         4.80         5.06         5.22         5.34         5.39         5.41         5.41         5.41         5.41
              4.58         4.80         5.06         5.22         5.34         5.39         5.41         5.52         5.63         5.75
              4.58         4.80         5.06         5.22         5.34         5.39         5.41         5.63         5.86         6.09
              4.58         4.80         5.06         5.22         5.34         5.39         5.41         5.68         5.97         6.27
              4.58         4.80         5.06         5.22         5.34         5.39         5.41         5.96         6.55         7.21
2007      2008      2009      2010      2011      2012      2013      2014      2015      2016

 125.90    125.86    129.24    130.49    130.94    129.98    128.68    126.87    125.09    123.33
 125.90    125.86    129.24    130.49    130.94    129.98    128.68    129.41    130.14    130.88
 125.90    125.86    129.24    130.49    130.94    129.98    128.68    131.94    135.29    138.73
 125.90    125.86    129.24    130.49    130.94    129.98    128.68    133.21    137.91    142.77
 125.90    125.86    129.24    130.49    130.94    129.98    128.68    139.55    151.35    164.15
89,044,818   90,313,452   91,600,161   92,905,201   94,228,835   95,571,327   96,932,945   98,313,963   99,714,656   101,135,305   102,576,194
     1.4%         1.4%         1.4%         1.4%         1.4%         1.4%         1.4%         1.4%         1.4%          1.4%          1.4%




44,522,409   45,156,726   45,800,080   46,452,601   47,114,417   47,785,663   48,466,473   49,156,981   49,857,328    50,567,652    51,288,097
     1.4%         1.4%         1.4%         1.4%         1.4%         1.4%         1.4%         1.4%         1.4%          1.4%          1.4%




       10           11           12           13           14           15           16           17           18            19            20
     2017         2018         2019         2020         2021         2022         2023         2024         2025          2026          2027

      5.41         5.41         5.41         5.41        5.41         5.41         5.41         5.41         5.41           5.41          5.41
      5.86         5.98         6.10         6.22        6.34         6.47         6.60         6.73         6.87           7.00          7.14
      6.33         6.59         6.85         7.12        7.41         7.71         8.01         8.33         8.67           9.01          9.37
      6.58         6.91         7.25         7.62        8.00         8.40         8.82         9.26         9.72          10.21         10.72
      7.93         8.72         9.59        10.55       11.60        12.77        14.04        15.45        16.99          18.69         20.56
2017      2018      2019      2020      2021      2022      2023      2024      2025      2026      2027

 121.60    119.89    118.20    116.54    114.91    113.29    111.70    110.13    108.59    107.06    105.56
 131.62    132.37    133.12    133.87    134.63    135.40    136.16    136.94    137.71    138.49    139.28
 142.25    145.86    149.57    153.36    157.26    161.25    165.35    169.54    173.85    178.26    182.79
 147.80    153.01    158.41    163.99    169.77    175.75    181.95    188.36    195.00    201.88    208.99
 178.03    193.08    209.41    227.11    246.31    267.14    289.72    314.22    340.79    369.60    400.85
21.66
29.14
39.00
45.02
90.46
mobile_price_per_sub_per_month
Lists of used name ranges
  Years
                   2007
                   2008
                   2009
                   2010
                   2011
                   2012
                   2013
                   2014
                   2015
                   2016
                   2017
                   2018
                   2019
                   2020
                   2021
                   2022
                   2023
                   2024
                   2025
                   2026
                   2027
  years

  NPV components
  NPV consumer surplus
  NPV producer surplus
  NPV total welfare
  NPV.options

  Constants and labels
                  1000    thousand
              1000000     million
           1000000000     billion
  OK                      ok
  Error                   error

  Coverage options
  90% coverage
  95% coverage
  99% coverage
  2G/3G coverage
  coverage.options

  Scenario index
                     1
                     2
                     3
                     4
                     5
  scenario.count
Multi-period model with linear demand
  Road map
                                                        Number of
                                                         years for
                                                      calculating NPV



  Demand curve                   Price and quantity,
                                                                                 NPV
                                     with no exit



  Cost function                   Price and quantity,
                                                                                 NPV
                                       with exit



  No. of players                 Price and quantity,
                                                                                 NPV                        with threat of entry
    with and                        with exit and
   without exit                    threat of entry




                                                        Discount rate




  Calendar year
  Year index


  Key drivers
         Discount factor
         Assumes year end cash flows

         Total mobile subscribers (Q forecast)subscribers
         Assumed to be continue growing at a rate equal to the rate of growth 2012-2013 from 2013 onwards

         Baseline Q                               subscribers
         Total mobile subscribers x 3G coverage

         Baseline P                               GBP
         Based on revenue code


  Calibration
         Calibration inputs
         Calibration Q                                                                         36,396,500
         Calibration P                            GBP                                              125.90
         No. MNOs                                                                                       5

         Calibration workings and results
         Elasticity
                                              %
         Change in P used to derive calibration
         Q1 (calibration)
    P1 (calibration)                           GBP
    a (choke price)                            GBP
    b (slope)
    Avg. marginal cost                         GBP


Base line market development
    Calibration check:

    Equilibrium Q
    Equilibrium P                              GBP
    Implied real market value                  GBP bn
    Number of MNOs
    a and b are calibrated in the first year. From next year a is a function of inflation and price of substitutes. B is a function of a, base p and base q.
    Elasticity
    a (choke price)                            GBP
    b (slope)
    Avg. marginal cost                         GBP
    Change in marginal cost                    %

    Elasticity
    a (choke price)                            GBP
    b (slope)
    Avg. marginal cost                         GBP
    Change in marginal cost                    %

    Elasticity
    a (choke price)                            GBP
    b (slope)
    Avg. marginal cost                         GBP
    Change in marginal cost                    %

    Elasticity
    a (choke price)                            GBP
    b (slope)
    Avg. marginal cost                         GBP
    Change in marginal cost                    %

    Consumer surplus                           GBP
    Producer surplus                           GBP
    Total welfare                              GBP



Factual market development
    Elasticity to use                                                                                       -1.0

    a                                          GBP
    b

    Equilibrium Q
    Equilibrium P
    Number of MNOs

    Average marginal cost                      GBP
    Fixed costs                                GBP
    Elasticity

    Consumer surplus                           GBP
    Producer surplus                           GBP
    Total welfare                              GBP

    Discounted consumer surplus                GBP
    Discounted producer surplus               GBP
    Discounted total welfare                  GBP

    Start point of NPV:
    NPV consumer surplus                      GBP
    NPV producer surplus                      GBP
    NPV total welfare                         GBP
    Discounted back to start of 2008 prices


Counterfactual market development
    Elasticity to use                                           -1.0

    a                                         GBP
    b

    Equilibrium Q
    Equilibrium P                             GBP
    Number of MNOs

    Average marginal cost                     GBP
    Fixed costs                               GBP
    Elasticity

    Consumer surplus                          GBP
    Producer surplus                          GBP
    Total welfare                             GBP

    Discounted consumer surplus               GBP
    Discounted producer surplus               GBP
    Discounted total welfare                  GBP

    Start point of NPV:
    NPV consumer surplus                      GBP
    NPV producer surplus                      GBP
    NPV total welfare                         GBP



Affected market segment - but only the years selected below (5 year, 10 year or 20 y
    Factual                                               2008
    NPV consumer surplus                      GBP     27,015,178,271
    NPV producer surplus                      GBP     18,010,118,848
    NPV total welfare                         GBP     45,025,297,119

    Counterfactual                                        2008
    NPV consumer surplus                      GBP     25,967,958,736
    NPV producer surplus                      GBP     18,626,130,339
    NPV total welfare                         GBP     44,594,089,075

    Difference                                           2008
    NPV consumer surplus                      GBP     1,047,219,536
    NPV producer surplus                      GBP      (616,011,491)
    NPV total welfare                         GBP       431,208,044
                                                    NPV_diff_linear
                                           Key
    Total welfare
   impact of exit                         Input



    Total welfare
                                        Calculation
   impact of exit
with threat of entry


                                          Output




       2007              2008                2009           2010               2011
                 0                 1                   2              3                     4



              1.00              0.97                0.93           0.90               0.87


       36,396,500        38,151,000          39,172,000     40,038,500         40,804,500


       36,396,500        38,151,000          39,172,000     40,038,500         40,804,500


            125.90           125.86               129.24        130.49             130.94




Calibration_Q_nat_exit
Calibration_P_nat_exit
Calibration_N_nat_exit


               -0.5              -1.0                -1.5           -2.0 Source: DotEcon
            0.10%             0.10%               0.10%          0.10% Source: Assumption
       36,378,302        36,360,104          36,341,905     36,323,707
                                         126.03                  126.03              126.03              126.03
                                         377.71                  251.80              209.84              188.85
                                   0.000006918             0.000003459         0.000002306         0.000001730
                                          75.54                  100.72              109.12              113.31
                                                                                                                    Calibration_nat_exit
                                            50.49
                            OK
                                    2007                     2008                2009                2010                  2011
                                     36,396,500               38,151,000          39,172,000          40,038,500            40,804,500
                                         125.90                   125.86              129.24              130.49                130.94
                                            4.6                      4.8                 5.1                 5.2                   5.3
                                              5                         5                   5                   5                     5
on and price of substitutes. B is a function of a, base p and base q.
                                              -0.5
                                             378                     378                 378                 378                   378
                                        0.000007                0.000007            0.000006            0.000006              0.000006
                                            75.54                   75.49               79.55               81.05                 81.59
                                                                  -0.07%               5.38%               1.88%                 0.67%

                                              -1.0
                                             252                     252                 252                 252                   252
                                        0.000003                0.000003            0.000003            0.000003              0.000003
                                           100.72                  100.67              104.73              106.23                106.77
                                                                  -0.05%               4.03%               1.43%                 0.51%

                                              -1.5
                                             210                     210                 210                 210                   210
                                        0.000002                0.000002            0.000002            0.000002              0.000002
                                           109.12                  109.06              113.12              114.62                115.16
                                                                  -0.05%               3.72%               1.32%                 0.48%

                                              -2.0
                                             189                     189                 189                 189                   189
                                        0.000002                0.000002            0.000002            0.000001              0.000001
                                           113.31                  113.26              117.32              118.82                119.36
                                                                  -0.05%               3.59%               1.28%                 0.46%
                                    2007
                                  2,291,198,630
                                  1,832,958,904
                                  4,124,157,534




                            Elasticity check:    OK
                                                  4,753,840,949.54          4,988,439,176.45    5,139,285,037.43     5,252,610,006.76
                                            252                252                       252                 252                  252
                                       0.0000035         0.0000033                 0.0000031           0.0000030            0.0000030

                                     32,756,850              34,335,900          35,254,800          36,034,650             36,724,050
                                          138.49                  138.45              141.50              142.62                 143.03
                                               3                       3                   3                   3                      3

                                           100.72                  100.67             104.73              106.23                 106.77
                                               -                       -                  -                   -                      -
                                            -1.22                   -1.22              -1.28               -1.31                  -1.31

                                 1,855,870,890            1,946,042,835       1,944,435,198       1,967,197,052          1,997,331,503
                                 1,237,247,260            1,297,361,890       1,296,290,132       1,311,464,701          1,331,554,335
                                 3,093,118,151            3,243,404,724       3,240,725,330       3,278,661,753          3,328,885,838

                                 1,855,870,890            1,880,234,623       1,815,151,064       1,774,299,032          1,740,559,014
                    1,237,247,260          1,253,489,749    1,210,100,709    1,182,866,021    1,160,372,676
                    3,093,118,151          3,133,724,371    3,025,251,773    2,957,165,053    2,900,931,691

                      2007                    2008             2009             2010             2011
                   28,064,234,794          26,208,363,904   24,328,129,281   22,512,978,217   20,738,679,185
                   18,709,489,863          17,472,242,602   16,218,752,854   15,008,652,145   13,825,786,124
                   46,773,724,657          43,680,606,506   40,546,882,135   37,521,630,362   34,564,465,309




               Elasticity check:      OK

                              252                   252              252              252              252
                         0.0000035             0.0000033        0.0000031        0.0000030        0.0000030

                        32,756,850            34,335,900       35,254,800       36,034,650       36,724,050
                            138.49                138.45           141.50           142.62           143.03
                                 3                     3                3                3                3

                             100.72               100.67           104.73           106.23           106.77
                                 -                    -                -                -                -
                              -1.22                -1.22            -1.28            -1.31            -1.31

                    1,855,870,890          1,946,042,835    1,944,435,198    1,967,197,052    1,997,331,503
                    1,237,247,260          1,297,361,890    1,296,290,132    1,311,464,701    1,331,554,335
                    3,093,118,151          3,243,404,724    3,240,725,330    3,278,661,753    3,328,885,838
                                                        0
                    1,855,870,890          1,880,234,623    1,815,151,064    1,774,299,032    1,740,559,014
                    1,237,247,260          1,253,489,749    1,210,100,709    1,182,866,021    1,160,372,676
                    3,093,118,151          3,133,724,371    3,025,251,773    2,957,165,053    2,900,931,691

                      2007                    2008             2009             2010             2011
                   27,017,015,258          25,161,144,368   23,280,909,745   21,465,758,682   19,691,459,650
                   19,325,501,354          18,088,254,094   16,834,764,345   15,624,663,636   14,441,797,615
                   46,342,516,613          43,249,398,462   40,115,674,091   37,090,422,318   34,133,257,265



selected below (5 year, 10 year or 20 year)
2012          2013          2014          2015          2016
          5             6             7             8             9



       0.84          0.81          0.79          0.76          0.73


41,482,000    42,073,000    42,672,420    43,280,380    43,897,002


41,482,000    42,073,000    42,672,420    43,280,380    43,897,002


   129.98        128.68        129.41        130.14        130.88
Calibration_nat_exit



                            2012                2013                2014                2015                2016
                             41,482,000          42,073,000          42,672,420          43,280,380          43,897,002
                                 129.98              128.68              129.41              130.14              130.88
                                    5.4                 5.4                 5.5                 5.6                 5.7
                                       5                   5                   5                   5                   5


                                    378                 374                 370                 366                 363
                               0.000006            0.000006            0.000006            0.000005            0.000005
                                   80.43               79.62               81.25               82.87               84.49
                                 -1.42%              -1.01%               2.04%               2.00%               1.95%


                                    252                 249                 247                 244                 242
                               0.000003            0.000003            0.000003            0.000003            0.000003
                                  105.61              104.55              105.93              107.30              108.68
                                 -1.08%              -1.00%               1.31%               1.30%               1.28%


                                    210                 208                 206                 204                 202
                               0.000002            0.000002            0.000002            0.000002            0.000002
                                  114.01              112.86              114.15              115.45              116.74
                                 -1.00%              -1.00%               1.14%               1.13%               1.12%


                                    189                 187                 185                 183                 181
                               0.000001            0.000001            0.000001            0.000001            0.000001
                                  118.20              117.02              118.27              119.52              120.77
                                 -0.97%              -1.00%               1.07%               1.06%               1.05%




                       5,307,437,402.95    5,329,091,161.54    5,420,668,752.08    5,514,016,306.98    5,609,168,972.73
                                    252                 249                 247                 244                 242
                              0.0000029           0.0000029           0.0000028           0.0000026           0.0000025

                            37,333,800          37,865,700          38,405,178          38,952,342          39,507,302
                                 142.16              140.74              141.14              141.56              141.98
                                      3                   3                   3                   3                   3

                                 105.61              104.55              105.93              107.30              108.68
                                     -                   -                   -                   -                   -
                                  -1.30               -1.30               -1.34               -1.38               -1.42

                         2,046,686,635       2,055,153,378       2,028,737,398       2,001,515,955       1,973,471,803
                         1,364,457,757       1,370,102,252       1,352,491,599       1,334,343,970       1,315,647,868
                         3,411,144,392       3,425,255,629       3,381,228,997       3,335,859,926       3,289,119,671

                         1,723,255,228       1,671,868,597       1,594,569,256       1,519,974,346       1,447,997,384
1,148,836,819    1,114,579,065   1,063,046,171   1,013,316,231     965,331,590
2,872,092,046    2,786,447,661   2,657,615,427   2,533,290,577   2,413,328,974

   2012
18,998,120,171
12,665,413,447
31,663,533,618




         252              249             247             244             242
    0.0000029        0.0000029       0.0000028       0.0000026       0.0000025

   33,185,600       33,658,400      34,137,936      38,952,342      39,507,302
       154.34           152.80          152.88          141.56          141.98
            2                2               2               3               3

       105.61           104.55          105.93          107.30          108.68
           -                -               -               -               -
        -1.58            -1.58           -1.63           -1.38           -1.42

1,617,135,119    1,623,824,891   1,602,953,006   2,001,515,955   1,973,471,803
1,617,135,119    1,623,824,891   1,602,953,006   1,334,343,970   1,315,647,868
3,234,270,238    3,247,649,782   3,205,906,012   3,335,859,926   3,289,119,671

1,361,584,378    1,320,982,595   1,259,906,573   1,519,974,346   1,447,997,384
1,361,584,378    1,320,982,595   1,259,906,573   1,013,316,231     965,331,590
2,723,168,755    2,641,965,190   2,519,813,146   2,533,290,577   2,413,328,974

   2012
17,950,900,635
13,281,424,939
31,232,325,574
2017          2018          2019          2020          2021
         10            11            12            13            14



       0.71          0.68          0.66          0.64          0.62


44,522,409    45,156,726    45,800,080    46,452,601    47,114,417


44,522,409    45,156,726    45,800,080    46,452,601    47,114,417


   131.62        132.37        133.12        133.87        134.63
     2017                2018                2019                2020                2021
      44,522,409          45,156,726          45,800,080          46,452,601          47,114,417
          131.62              132.37              133.12              133.87              134.63
             5.9                 6.0                 6.1                 6.2                 6.3
                5                   5                   5                   5                   5


             359                 356                 352                 349                 345
        0.000005            0.000005            0.000005            0.000005            0.000004
            86.10               87.72               89.33               90.94               92.55
           1.91%               1.87%               1.84%               1.80%               1.77%


             239                 237                 235                 232                 230
        0.000002            0.000002            0.000002            0.000002            0.000002
           110.05              111.43              112.80              114.18              115.55
           1.26%               1.25%               1.23%               1.22%               1.21%


             200                 198                 196                 194                 192
        0.000002            0.000001            0.000001            0.000001            0.000001
           118.03              119.33              120.62              121.92              123.22
           1.11%               1.10%               1.09%               1.08%               1.06%


             180                 178                 176                 174                 173
        0.000001            0.000001            0.000001            0.000001            0.000001
           122.02              123.28              124.54              125.79              127.05
           1.04%               1.03%               1.02%               1.01%               1.00%




5,706,162,597.71    5,805,033,746.23    5,905,819,712.85    6,008,558,536.94    6,113,289,017.63
             239                 237                 235                 232                 230
       0.0000024           0.0000023           0.0000022           0.0000021           0.0000020

     40,070,168          40,641,053          41,220,072          41,807,341          42,402,976
          142.40              142.84              143.28              143.72              144.17
               3                   3                   3                   3                   3

          110.05              111.43              112.80              114.18              115.55
              -                   -                   -                   -                   -
           -1.47               -1.52               -1.57               -1.62               -1.68

  1,944,587,344       1,914,844,625       1,884,225,330       1,852,710,771       1,820,281,881
  1,296,391,562       1,276,563,083       1,256,150,220       1,235,140,514       1,213,521,254
  3,240,978,906       3,191,407,708       3,140,375,550       3,087,851,285       3,033,803,135

  1,378,554,553       1,311,564,618       1,246,948,854       1,184,630,961       1,124,536,999
  919,036,369     874,376,412                         831,299,236     789,753,974     749,691,333
2,297,590,921   2,185,941,031                       2,078,248,090   1,974,384,935   1,874,228,332




         239             237                                 235             232             230
    0.0000024       0.0000023                           0.0000022       0.0000021       0.0000020

   40,070,168      40,641,053                          41,220,072      41,807,341      42,402,976
       142.40          142.84                              143.28          143.72          144.17
            3               3                                   3               3               3

       110.05              111.43                          112.80          114.18          115.55
           -                   -                               -               -               -
        -1.47               -1.52                           -1.57           -1.62           -1.68

1,944,587,344   1,914,844,625                       1,884,225,330   1,852,710,771   1,820,281,881
1,296,391,562   1,276,563,083                       1,256,150,220   1,235,140,514   1,213,521,254
3,240,978,906   3,191,407,708                       3,140,375,550   3,087,851,285   3,033,803,135

1,378,554,553   1,311,564,618                       1,246,948,854   1,184,630,961   1,124,536,999
  919,036,369     874,376,412                         831,299,236     789,753,974     749,691,333
2,297,590,921   2,185,941,031                       2,078,248,090   1,974,384,935   1,874,228,332




                      Change in number of players
2022          2023          2024          2025          2026
         15            16            17            18            19



       0.60          0.58          0.56          0.54          0.52


47,785,663    48,466,473    49,156,981    49,857,328    50,567,652


47,785,663    48,466,473    49,156,981    49,857,328    50,567,652


   135.40        136.16        136.94        137.71        138.49
     2022                2023                2024                2025                2026
      47,785,663          48,466,473          49,156,981          49,857,328          50,567,652
          135.40              136.16              136.94              137.71              138.49
             6.5                 6.6                 6.7                 6.9                 7.0
                5                   5                   5                   5                   5


             342                 338                 335                 331                 328
        0.000004            0.000004            0.000004            0.000004            0.000004
            94.16               95.76               97.36               98.97              100.57
           1.74%               1.70%               1.67%               1.64%               1.62%


             228                 225                 223                 221                 219
        0.000002            0.000002            0.000002            0.000002            0.000002
           116.93              118.31              119.68              121.06              122.44
           1.19%               1.18%               1.16%               1.15%               1.14%


             190                 188                 186                 184                 182
        0.000001            0.000001            0.000001            0.000001            0.000001
           124.52              125.82              127.12              128.43              129.73
           1.05%               1.04%               1.04%               1.03%               1.02%


             171                 169                 167                 166                 164
        0.000001            0.000001            0.000001            0.000001            0.000001
           128.32              129.58              130.84              132.11              133.38
           0.99%               0.98%               0.98%               0.97%               0.96%




6,220,050,728.97    6,328,884,035.42    6,439,830,107.67    6,552,930,938.73    6,668,229,360.43
             228                 225                 223                 221                 219
       0.0000019           0.0000018           0.0000018           0.0000017           0.0000016

     43,007,097          43,619,825          44,241,283          44,871,595          45,510,887
          144.63              145.09              145.56              146.04              146.52
               3                   3                   3                   3                   3

          116.93              118.31              119.68              121.06              122.44
              -                   -                   -                   -                   -
           -1.74               -1.81               -1.87               -1.95               -2.03

  1,786,919,208       1,752,602,906       1,717,312,726       1,681,028,011       1,643,727,684
  1,191,279,472       1,168,401,937       1,144,875,151       1,120,685,340       1,095,818,456
  2,978,198,681       2,921,004,843       2,862,187,877       2,801,713,351       2,739,546,140

  1,066,595,312       1,010,736,457         956,893,141         905,000,155         854,994,308
  711,063,541     673,824,304     637,928,761     603,333,437     569,996,205
1,777,658,853   1,684,560,761   1,594,821,902   1,508,333,592   1,424,990,514




         228             225             223             221             219
    0.0000019       0.0000018       0.0000018       0.0000017       0.0000016

   43,007,097      43,619,825      44,241,283      44,871,595      45,510,887
       144.63          145.09          145.56          146.04          146.52
            3               3               3               3               3

       116.93          118.31          119.68          121.06          122.44
           -               -               -               -               -
        -1.74           -1.81           -1.87           -1.95           -2.03

1,786,919,208   1,752,602,906   1,717,312,726   1,681,028,011   1,643,727,684
1,191,279,472   1,168,401,937   1,144,875,151   1,120,685,340   1,095,818,456
2,978,198,681   2,921,004,843   2,862,187,877   2,801,713,351   2,739,546,140

1,066,595,312   1,010,736,457     956,893,141     905,000,155     854,994,308
  711,063,541     673,824,304     637,928,761     603,333,437     569,996,205
1,777,658,853   1,684,560,761   1,594,821,902   1,508,333,592   1,424,990,514
2027
         20



       0.50


51,288,097


51,288,097


   139.28
     2027
      51,288,097
          139.28
             7.1
                5


             325
        0.000004
           102.16
           1.59%


             217
        0.000002
           123.82
           1.13%


             180
        0.000001
           131.04
           1.01%


             162
        0.000000
           134.65
           0.95%




6,785,769,060.12
             217
       0.0000015

     46,159,287
          147.01
               3

          123.82
              - Source: Assumption of no fixed costs
           -2.11

  1,605,390,244
  1,070,260,163
  2,675,650,406

    806,814,368
  537,876,245
1,344,690,613




         217
    0.0000015

   46,159,287
       147.01
            3

       123.82
           - Source: Assumption of no fixed costs
        -2.11

1,605,390,244
1,070,260,163
2,675,650,406

  806,814,368
  537,876,245
1,344,690,613
Multi-period model with negative exponential demand
  Road map
                                                     Number of
                                                      years for
                                                   calculating NPV




     Demand
                               Price and quantity,
      curve                                                                    NPV
                                   with no exit

                                                                                                                 Total welfare
  Cost function
                                                                                                                impact of exit

                               Price and quantity,
                                                                               NPV
                                    with exit
      No. of
     players
     with and




                                                     Discount rate




 Calendar year
 Year index


  Key drivers
          Discount factor
          Assumes year end cash flows

          Total mobile subscribers (Q forecast)       subscribers
          Assumed to be continue growing at a rate equal to the rate of growth 2012-2013 from 2013 onwards

          Baseline Q                                  subscribers
          Total mobile subscribers x 3G coverage

          Baseline P                                  GBP
          Based on revenue code


  Calibration
          Calibration inputs
          Calibration Q                                                                            36,396,500
          Calibration P                               GBP                                              125.90
          No. MNOs                                                                                          5

          Calibration workings and results
          Elasticity
          Change in P used to derive calibration      %
          Q1 (calibration)
          P1 (calibration)                            GBP
     a (choke price)                                  GBP
     b (slope)
     Average marginal cost                            GBP


Base line market development
     Calibration check:                                                                         OK

     Equilibrium Q
     Equilibrium P                                    GBP
     Implied real market value                        GBP bn
     Number of MNOs
     a and b are calibrated in the first year. From next year a is a function of inflation and price of substitutes. B is a function of a, base p and base q.
     Elasticity
     a (choke price)                                  GBP
     b (slope)
     Average marginal cost                            GBP
     Change in marginal cost                          %

     Elasticity
     a (choke price)                                  GBP
     b (slope)
     Average marginal cost                            GBP
     Change in marginal cost                          %

     Elasticity
     a (choke price)                                  GBP
     b (slope)
     Average marginal cost                            GBP
     Change in marginal cost                          %

     Elasticity
     a (choke price)                                  GBP
     b (slope)
     Average marginal cost                            GBP
     Change in marginal cost                          %


Factual market development
     Elasticity to use                                                                                          -1.0

     a                                                GBP
     b

     Equilibrium Q
     Equilibrium P
     Number of MNOs

     Average marginal cost                            GBP
     Fixed costs                                      GBP
     Elasticity

     Consumer surplus                                 GBP
     Producer surplus                                 GBP
     Total welfare                                    GBP

     Discounted consumer surplus                      GBP
     Discounted producer surplus                      GBP
     Discounted total welfare                         GBP

     Start point of NPV:
     NPV consumer surplus                             GBP
     NPV producer surplus                             GBP
      NPV total welfare                            GBP
      Discounted back to start of 2007/08 prices


Counterfactual market development
      Elasticity to use                                              -1.0

      a                                            GBP
      b

      Equilibrium Q
      Equilibrium P                                GBP
      Number of MNOs

      Average marginal cost                        GBP
      Fixed costs                                  GBP
      Elasticity

      Consumer surplus                             GBP
      Producer surplus                             GBP
      Total welfare                                GBP

      Discounted consumer surplus                  GBP
      Discounted producer surplus                  GBP
      Discounted total welfare                     GBP

      Start point of NPV:
      NPV consumer surplus                         GBP
      NPV producer surplus                         GBP
      NPV total welfare                            GBP


Difference
      NPV loss in consumer surplus                 GBP
      NPV loss in producer surplus                 GBP
      NPV loss in total welfare                    GBP


Affected market segment- but only the years selected below (5 year, 10 year or 20 ye
      Factual                                                 2008
      NPV consumer surplus                         GBP    72,671,046,947
      NPV producer surplus                         GBP    24,223,682,316
      NPV total welfare                            GBP    96,894,729,263

      Counterfactual                                          2008
      NPV consumer surplus                         GBP    70,886,256,664
      NPV producer surplus                         GBP    25,268,939,528
      NPV total welfare                            GBP    96,155,196,192

      Difference                                               2008
      NPV consumer surplus                         GBP     1,784,790,283
      NPV producer surplus                         GBP    (1,045,257,213)
      NPV total welfare                            GBP       739,533,071
                                                         NPV_diff_NegExp
exponential demand



                                           Key

                                        Input



         Total welfare
        impact of exit              Calculation




                                        Output




               2007              2008             2009           2010               2011
                         0                 1                2              3                     4



                      1.00              0.97             0.93           0.90               0.87


               36,396,500        38,151,000       39,172,000     40,038,500         40,804,500


               36,396,500        38,151,000       39,172,000     40,038,500         40,804,500


                    125.90           125.86           129.24         130.49             130.94




        Calibration_Q_nat_exit
        Calibration_P_nat_exit
        Calibration_N_nat_exit


                       -0.5              -1.0             -1.5           -2.0 Source: DotEcon
                    0.10%             0.10%            0.10%          0.10% Source: Assumption
               36,378,302        36,360,104       36,341,905     36,323,707
                   126.03            126.03           126.03         126.03
                                     60,007,684              98,935,945         163,117,796      268,935,780
                                   0.003971338             0.007942677         0.011914015      0.015885353
                                          75.54                  100.72              109.12           113.31
                                                                                                                Calibration_nat_exit



                                    2007                     2008               2009             2010                  2011
                                     36,396,500               38,151,000         39,172,000       40,038,500            40,804,500
                                         125.90                   125.86             129.24           130.49                130.94
                                            4.6                      4.8                5.1              5.2                   5.3
                                               5                        5                  5                5                     5
and price of substitutes. B is a function of a, base p and base q.
                                             -0.5
                                     60,007,684               62,900,365         64,583,710       66,012,327            67,275,247
                                       0.003971                 0.003973           0.003869         0.003832              0.003818
                                           75.54                    75.51              77.54            78.29                 78.57
                                                                  -0.04%              2.69%            0.97%                 0.35%

                                             -1.0
                                     98,935,945             103,705,170         106,480,536      108,835,927          110,918,131
                                       0.007943                0.007946            0.007738         0.007663             0.007637
                                          100.72                  100.68              103.39           104.39               104.75
                                                                 -0.04%               2.69%            0.97%                0.35%

                                             -1.5
                                    163,117,796             170,980,920         175,556,724      179,440,108          182,873,082
                                       0.011914                0.011918            0.011606         0.011495             0.011455
                                          109.12                  109.08              112.01           113.09               113.48
                                                                 -0.04%               2.69%            0.97%                0.35%

                                             -2.0
                                    268,935,780             281,899,879         289,444,106      295,846,723          301,506,740
                                       0.015885                0.015891            0.015475         0.015327             0.015274
                                          113.31                  113.27              116.32           117.44               117.85
                                                                 -0.04%               2.69%            0.97%                0.35%



                            Elasticity check:       OK

                                     98,935,945             103,705,170         106,480,536      108,835,927          110,918,131
                                      0.0079427               0.0079456           0.0077375        0.0076635            0.0076369

                                     31,853,246               33,388,737         34,282,289       35,040,627            35,711,010
                                          142.69                   142.64             146.47           147.89                148.40
                                               3                        3                  3                3                     3

                                           100.72                    100.68          103.39           104.39                 104.75
                                               -                         -               -                -                      -
                                            0.00                      0.00            0.00             0.00                   0.00

                                 4,010,391,819            4,202,180,657       4,430,654,843    4,572,420,932         4,676,107,990
                                 1,336,797,273            1,400,726,886       1,476,884,948    1,524,140,311         1,558,702,663
                                 5,347,189,093            5,602,907,543       5,907,539,790    6,096,561,242         6,234,810,653

                                 4,010,391,819            4,060,077,930       4,136,063,705    4,124,061,707         4,074,957,964
                                 1,336,797,273            1,353,359,310       1,378,687,902    1,374,687,236         1,358,319,321
                                 5,347,189,093            5,413,437,240       5,514,751,607    5,498,748,942         5,433,277,285

                                    2007                    2008                 2009             2010                 2011
                                 73,539,562,712          69,529,170,893       65,469,092,963   61,333,029,258       57,208,967,551
                                 24,513,187,571          23,176,390,298       21,823,030,988   20,444,343,086       19,069,655,850
                         98,052,750,283          92,705,561,191    87,292,123,951    81,777,372,344    76,278,623,401




                     Elasticity check:      OK

                             98,935,945            103,705,170       106,480,536       108,835,927       110,918,131
                              0.0079427              0.0079456         0.0077375         0.0076635         0.0076369

                             31,853,246             33,388,737        34,282,289        35,040,627        35,711,010
                                  142.69                 142.64            146.47            147.89            148.40
                                       3                      3                 3                 3                 3

                                   100.72                100.68            103.39            104.39            104.75
                                       -                     -                 -                 -                 -
                                    0.00                  0.00              0.00              0.00              0.00

                          4,010,391,819           4,202,180,657     4,430,654,843     4,572,420,932     4,676,107,990
                          1,336,797,273           1,400,726,886     1,476,884,948     1,524,140,311     1,558,702,663
                          5,347,189,093           5,602,907,543     5,907,539,790     6,096,561,242     6,234,810,653

                          4,010,391,819           4,060,077,930     4,136,063,705     4,124,061,707     4,074,957,964
                          1,336,797,273           1,353,359,310     1,378,687,902     1,374,687,236     1,358,319,321
                          5,347,189,093           5,413,437,240     5,514,751,607     5,498,748,942     5,433,277,285

                            2007                     2008              2009              2010              2011
                        71,754,772,429           67,744,380,610    63,684,302,680    59,548,238,974    55,424,177,268
                        25,558,444,784           24,221,647,510    22,868,288,200    21,489,600,299    20,114,913,063
                        97,313,217,213           91,966,028,120    86,552,590,880    81,037,839,273    75,539,090,331



                             2007                    2008              2009              2010              2011
                          1,784,790,283           1,784,790,283     1,784,790,283     1,784,790,283     1,784,790,283
                         (1,045,257,213)         (1,045,257,213)   (1,045,257,213)   (1,045,257,213)   (1,045,257,213)
                            739,533,071             739,533,071       739,533,071       739,533,071       739,533,071


cted below (5 year, 10 year or 20 year)




   NPV_diff_NegExp
2012          2013          2014          2015          2016
          5             6             7             8             9



       0.84          0.81          0.79          0.76          0.73


41,482,000    42,073,000    42,672,420    43,280,380    43,897,002


41,482,000    42,073,000    42,672,420    43,280,380    43,897,002


   129.98        128.68        129.41        130.14        130.88
Calibration_nat_exit



                         2012             2013             2014             2015             2016
                          41,482,000       42,073,000       42,672,420       43,280,380       43,897,002
                              129.98           128.68           129.41           130.14           130.88
                                 5.4              5.4              5.5              5.6              5.7
                                    5                5                5                5                5


                          68,392,256      69,366,650       70,354,927       71,357,283       72,373,921
                            0.003847        0.003886         0.003864         0.003842         0.003820
                                77.99           77.21            77.64            78.08            78.53
                              -0.74%          -1.00%            0.57%            0.57%            0.57%


                         112,759,767     114,366,271      115,995,664      117,648,271      119,324,423
                            0.007694        0.007771         0.007728         0.007684         0.007641
                               103.98          102.94           103.52           104.11           104.70
                              -0.74%          -1.00%            0.57%            0.57%            0.57%


                         185,909,426     188,558,104      191,244,519      193,969,207      196,732,714
                            0.011540        0.011657         0.011591         0.011526         0.011461
                               112.65          111.52           112.15           112.79           113.43
                              -0.74%          -1.00%            0.57%            0.57%            0.57%


                         306,512,825     310,879,757      315,308,906      319,801,157      324,357,410
                            0.015387        0.015543         0.015455         0.015368         0.015281
                               116.98          115.81           116.46           117.13           117.79
                              -0.74%          -1.00%            0.57%            0.57%            0.57%




                         112,759,767     114,366,271      115,995,664      117,648,271      119,324,423
                           0.0076935       0.0077715        0.0077277        0.0076841        0.0076407

                          36,303,940      36,821,167       37,345,763       37,877,834       38,417,485
                               147.31          145.83           146.66           147.49           148.33
                                    3               3                3                3                3

                              103.98           102.94           103.52           104.11           104.70
                                  -                -                -                -                -
                               0.00             0.00             0.00             0.00             0.00

                       4,718,757,703    4,737,984,542    4,832,744,233    4,929,399,117    5,027,987,100
                       1,572,919,234    1,579,328,181    1,610,914,744    1,643,133,039    1,675,995,700
                       6,291,676,938    6,317,312,722    6,443,658,977    6,572,532,156    6,703,982,800

                       3,973,067,367    3,854,353,477    3,798,493,282    3,743,442,655    3,689,189,863
                       1,324,355,789    1,284,784,492    1,266,164,427    1,247,814,218    1,229,729,954
                       5,297,423,156    5,139,137,970    5,064,657,710    4,991,256,873    4,918,919,817

                          2012
                       53,134,009,587
                       17,711,336,529
70,845,346,117




  112,759,767      114,366,271     115,995,664     117,648,271     119,324,423
    0.0076935        0.0077715       0.0077277       0.0076841       0.0076407

   30,730,621       31,168,445      31,612,506      37,877,834      38,417,485
        168.97           167.28          168.23          147.49          148.33
             2                2               2               3               3

        103.98           102.94          103.52          104.11          104.70
            -                -               -               -               -
         0.00             0.00            0.00            0.00            0.00

 3,994,342,160    4,010,617,327   4,090,829,674   4,929,399,117   5,027,987,100
 1,997,171,080    2,005,308,664   2,045,414,837   1,643,133,039   1,675,995,700
 5,991,513,240    6,015,925,991   6,136,244,511   6,572,532,156   6,703,982,800

 3,363,128,918    3,262,639,780   3,215,355,145   3,743,442,655   3,689,189,863
 1,681,564,459    1,631,319,890   1,607,677,573   1,247,814,218   1,229,729,954
 5,044,693,377    4,893,959,670   4,823,032,718   4,991,256,873   4,918,919,817

    2012
51,349,219,304
18,756,593,742
70,105,813,046



    2012
 1,784,790,283
(1,045,257,213)
   739,533,071
2017          2018          2019          2020          2021
         10            11            12            13            14



       0.71          0.68          0.66          0.64          0.62


44,522,409    45,156,726    45,800,080    46,452,601    47,114,417


44,522,409    45,156,726    45,800,080    46,452,601    47,114,417


   131.62        132.37        133.12        133.87        134.63
  2017             2018             2019             2020             2021
   44,522,409       45,156,726       45,800,080       46,452,601       47,114,417
       131.62           132.37           133.12           133.87           134.63
          5.9              6.0              6.1              6.2              6.3
             5                5                5                5                5


  73,405,042       74,450,855       75,511,567       76,587,391       77,678,542
    0.003799         0.003777         0.003756         0.003735         0.003714
        78.97            79.42            79.87            80.32            80.78
       0.57%            0.57%            0.57%            0.57%            0.57%


 121,024,455      122,748,708      124,497,526      126,271,260      128,070,265
    0.007598         0.007555         0.007512         0.007470         0.007428
       105.30           105.89           106.49           107.10           107.71
       0.57%            0.57%            0.57%            0.57%            0.57%


 199,535,593      202,378,405      205,261,719      208,186,112      211,152,170
    0.011396         0.011332         0.011268         0.011205         0.011142
       114.07           114.72           115.37           116.02           116.68
       0.57%            0.57%            0.57%            0.57%            0.57%


 328,978,576      333,665,581      338,419,363      343,240,872      348,131,074
    0.015195         0.015110         0.015024         0.014940         0.014855
       118.46           119.13           119.81           120.49           121.17
       0.57%            0.57%            0.57%            0.57%            0.57%




 121,024,455      122,748,708      124,497,526      126,271,260      128,070,265
   0.0075976        0.0075548        0.0075122        0.0074698        0.0074277

  38,964,824       39,519,962       40,083,008       40,654,077       41,233,281
       149.17           150.02           150.87           151.72           152.58
            3                3                3                3                3

       105.30           105.89           106.49           107.10           107.71
           -                -                -                -                -
        0.00             0.00             0.00             0.00             0.00

5,128,546,842    5,231,117,778    5,335,740,134    5,442,454,937    5,551,304,035
1,709,515,614    1,743,705,926    1,778,580,045    1,814,151,646    1,850,434,678
6,838,062,456    6,974,823,705    7,114,320,179    7,256,606,582    7,401,738,714

3,635,723,343    3,583,031,700    3,531,103,705    3,479,928,289    3,429,494,545
1,211,907,781    1,194,343,900    1,177,034,568    1,159,976,096    1,143,164,848
4,847,631,124    4,777,375,601    4,708,138,273    4,639,904,385    4,572,659,394
 121,024,455     122,748,708     124,497,526     126,271,260     128,070,265
   0.0075976       0.0075548       0.0075122       0.0074698       0.0074277

  38,964,824      39,519,962      40,083,008      40,654,077      41,233,281
       149.17          150.02          150.87          151.72          152.58
            3               3               3               3               3

       105.30          105.89          106.49          107.10          107.71
           -               -               -               -               -
        0.00            0.00            0.00            0.00            0.00

5,128,546,842   5,231,117,778   5,335,740,134   5,442,454,937   5,551,304,035
1,709,515,614   1,743,705,926   1,778,580,045   1,814,151,646   1,850,434,678
6,838,062,456   6,974,823,705   7,114,320,179   7,256,606,582   7,401,738,714

3,635,723,343   3,583,031,700   3,531,103,705   3,479,928,289   3,429,494,545
1,211,907,781   1,194,343,900   1,177,034,568   1,159,976,096   1,143,164,848
4,847,631,124   4,777,375,601   4,708,138,273   4,639,904,385   4,572,659,394
2022          2023          2024          2025          2026
         15            16            17            18            19



       0.60          0.58          0.56          0.54          0.52


47,785,663    48,466,473    49,156,981    49,857,328    50,567,652


47,785,663    48,466,473    49,156,981    49,857,328    50,567,652


   135.40        136.16        136.94        137.71        138.49
  2022             2023             2024             2025             2026
   47,785,663       48,466,473       49,156,981       49,857,328       50,567,652
       135.40           136.16           136.94           137.71           138.49
          6.5              6.6              6.7              6.9              7.0
             5                5                5                5                5


  78,785,240       79,907,704       81,046,161       82,200,837       83,371,964
    0.003693         0.003672         0.003651         0.003631         0.003610
        81.24            81.70            82.16            82.63            83.10
       0.57%            0.57%            0.57%            0.57%            0.57%


 129,894,900      131,745,532      133,622,529      135,526,268      137,457,130
    0.007386         0.007344         0.007303         0.007262         0.007221
       108.32           108.93           109.55           110.17           110.79
       0.57%            0.57%            0.57%            0.57%            0.57%


 214,160,485      217,211,660      220,306,306      223,445,041      226,628,495
    0.011079         0.011016         0.010954         0.010892         0.010831
       117.34           118.01           118.68           119.35           120.03
       0.57%            0.57%            0.57%            0.57%            0.57%


 353,090,947      358,121,484      363,223,692      368,398,592      373,647,220
    0.014772         0.014688         0.014605         0.014523         0.014441
       121.86           122.55           123.24           123.94           124.64
       0.57%            0.57%            0.57%            0.57%            0.57%




 129,894,900      131,745,532      133,622,529      135,526,268      137,457,130
   0.0073858        0.0073441        0.0073027        0.0072615        0.0072206

  41,820,738       42,416,564       43,020,878       43,633,803       44,255,460
       153.45           154.32           155.19           156.07           156.96
            3                3                3                3                3

       108.32           108.93           109.55           110.17           110.79
           -                -                -                -                -
        0.00             0.00             0.00             0.00             0.00

5,662,330,116    5,775,576,718    5,891,088,253    6,008,910,018    6,129,088,218
1,887,443,372    1,925,192,239    1,963,696,084    2,002,970,006    2,043,029,406
7,549,773,488    7,700,768,958    7,854,784,337    8,011,880,024    8,172,117,624

3,379,791,726    3,330,809,237    3,282,536,639    3,234,963,645    3,188,080,114
1,126,597,242    1,110,269,746    1,094,178,880    1,078,321,215    1,062,693,371
4,506,388,968    4,441,078,983    4,376,715,519    4,313,284,860    4,250,773,485
 129,894,900     131,745,532     133,622,529     135,526,268     137,457,130
   0.0073858       0.0073441       0.0073027       0.0072615       0.0072206

  41,820,738      42,416,564      43,020,878      43,633,803      44,255,460
       153.45          154.32          155.19          156.07          156.96
            3               3               3               3               3

       108.32          108.93          109.55          110.17          110.79
           -               -               -               -               -
        0.00            0.00            0.00            0.00            0.00

5,662,330,116   5,775,576,718   5,891,088,253   6,008,910,018   6,129,088,218
1,887,443,372   1,925,192,239   1,963,696,084   2,002,970,006   2,043,029,406
7,549,773,488   7,700,768,958   7,854,784,337   8,011,880,024   8,172,117,624

3,379,791,726   3,330,809,237   3,282,536,639   3,234,963,645   3,188,080,114
1,126,597,242   1,110,269,746   1,094,178,880   1,078,321,215   1,062,693,371
4,506,388,968   4,441,078,983   4,376,715,519   4,313,284,860   4,250,773,485
2027
         20



       0.50


51,288,097


51,288,097


   139.28
  2027
   51,288,097
       139.28
          7.1
             5


  84,559,776
    0.003590
        83.57
       0.57%


 139,415,502
    0.007180
       111.42
       0.57%


 229,857,304
    0.010770
       120.71
       0.57%


 378,970,626
    0.014360
       125.35
       0.57%




 139,415,502
   0.0071798

  44,885,974
       157.85
            3

       111.42
           - Source: Assumption of no fixed costs
        0.00

6,251,669,983
2,083,889,994
8,335,559,977

3,141,876,054
1,047,292,018
4,189,168,072
 139,415,502
   0.0071798

  44,885,974
       157.85
            3

       111.42
           - Source: Assumption of no fixed costs
        0.00

6,251,669,983
2,083,889,994
8,335,559,977

3,141,876,054
1,047,292,018
4,189,168,072
Linked outputs
  NPV loss in welfare
                            Consumer     Producer surplus     Total welfare
     Linear Demand          ##########       (616,011,491)       431,208,044
     Negative Exponential
                            ##########      (1,045,257,213)     739,533,071
     Demand
Model Structure Delay
      Objective:   Calculate the welfare effect of reductions in innovation from reductions in
                   competition resulting from liberalising the 2G spectrum.
      High Level   The model assumes that delays in the launch of major enhancements to cellular
      Assumptions: mobile services ("4G") are a good proxy for delays in the pace of innovation, and
                   that delays in the pace of innovation are indicative of the type of dynamic efficiency
                   loss whi
      Methodology: We model the flow of economic benefits over 20 years from 2007/08 - with and
                   without a one-year delay in the introduction of new innovations. The base case
                   shows a delay in the launch of "4G" services from 2014/15 to 2015/16.
      Overview of
      Methodology:




                      Figure 53 (A10.34)
Control
Input Variables
    Base Case Speed of 3G Migration                             Medium          Migration_3G

    4G Migration Delay Period                                   1 years         Migration_Delay_4G         This should not be changed unless considering a delay longer than one year.

    Economic value of GSM                                                 £12.99 Ec_Value_2G

    Consumer surplus as % of total surplus                        50%

    Increase in Economic Benefits from Innovation                 25%           Innovation_Uplift
                                                                                                                    Year 1                  Year 2               Year 3         Year 4     Year 5     Year 6     Year 7     Year 8     Year 9     Year 10    Year 11    Year 12    Year 13    Year 14    Year 15    Year 16
    No. of Years before fast 900MHz Catchup                     5 years         Catchup_Delay_4G                             35%                     50%               65%         80%        90%       100%       100%       100%       100%       100%       100%       100%       100%       100%       100%       100%              Reflects no. of years after 4G innovation begins, ie no. of years AFTER the delay

    Real Discount Rate                                           3.5%           Disc_Rate

Linked Outputs
                                                                                1 year delay               6 month delay           3 month delay
    NPV Impact of Delayed Migration                                                    £344,426,649           £91,105,601              £45,552,800
    of which consumer surplus                                                          £172,213,325           £45,552,800              £22,776,400
    of which producer surplus                                                          £172,213,325           £45,552,800              £22,776,400




    Migration profile                                                                                      Year 1                  Year 2                   Year 3            Year 4      Year 5     Year 6     Year 7     Year 8     Year 9     Year 10    Year 11    Year 12    Year 13    Year 14    Year 15    Year 16    Year 17   Year 18     Year 19      Year 20      Year 21      Year 22      Year 23      Year 24

 1 Profile 1                                            Rapid migration                                                      1%
                                                                                Migration profile from GSM to moderate 2100MHz                         5%                6%         20%        44%        64%        76%        85%        90%       93%        96%        97%        98%        99%        99%        99%       100%       100%         100%         100%         100%         100%         100%           100%
 2 Profile 2                                            Med migration                                                        1%
                                                                                Migration profile from GSM to moderate 2100MHz                         5%                6%         14%        25%        44%        62%        75%        84%       90%        93%        96%        97%        98%        99%        99%        99%       100%         100%         100%         100%         100%         100%           100%
 3 Profile 3                                            Slow migration                                                       1%
                                                                                Migration profile from GSM to moderate 2100MHz                         5%                6%         10%        17%        30%        48%        65%        77%       85%        90%        94%        96%        97%        98%        99%        99%       100%         100%         100%         100%         100%         100%           100%


    Selected profile
                                                    2                                                                        1%                        5%                6%         14%        25%        44%        62%        75%        84%       90%        93%        96%        97%        98%        99%        99%        99%       100%         100%         100%         100%         100%         100%           100%
Mobile Market Input Data
  Quarterly Subscribers               From Analy sy s CTM model, updated by SCB Q2
                                                             2007/08 Q1 2007/08            2007/08 Q3 2007/08 Q4                   2008/09 Q1     2008/09 Q2     2008/09 Q3     2008/09 Q4     2009/10 Q1     2009/10 Q2     2009/10 Q3     2009/10 Q4     2010/11 Q1     2010/11 Q2     2010/11 Q3     2010/11 Q4     2011/12 Q1     2011/12 Q2     2011/12 Q3     2011/12 Q4     2012/13 Q1     2012/13 Q2   2012/13 Q3   2012/13 Q4   2013/14 Q1   2013/14 Q2   2013/14 Q3   2013/14 Q4   2014/15 Q1   2014/15 Q2   2014/15 Q3   2014/15 Q4   2015/16 Q1   2015/16 Q2   2015/16 Q3   2015/16 Q4   2016/17 Q1   2016/17 Q2   2016/17 Q3   2016/17 Q4   2017/18 Q1   2017/18 Q2   2017/18 Q3   2017/18 Q4   2018/19 Q1   2018/19 Q2   2018/19 Q3   2018/19 Q4   2019/20 Q1   2019/20 Q2   2019/20 Q3   2019/20 Q4   2020/21 Q1   2020/21 Q2   2020/21 Q3   2020/21 Q4
  Total market subscribers                                    65,085,182       65,295,768
                                      CTM traf f ic module: inv ariant of scenario          65,506,637       65,717,788            65,870,751     66,021,171     66,171,754     66,322,501     66,438,667     66,559,307     66,680,056     66,800,913     66,900,922     67,000,762     67,100,671     67,200,648     67,287,844     67,375,962     67,464,125     67,552,331     67,632,572     67,713,607   67,794,670   67,875,763   67,951,808   68,028,561   68,105,332   68,182,124   68,255,666   68,329,834   68,404,015   68,478,209   68,550,280   68,622,796   68,695,320   68,767,854   68,838,980   68,910,246   68,981,518   69,052,796   69,123,129   69,193,224   69,263,324   69,333,429   69,402,890   69,471,720   69,540,552   69,609,387   69,677,780   69,745,164   69,812,550   69,879,939   69,947,019   70,012,744   70,078,471   70,144,199
                                                               2,824,783         2,996,648    3,169,575       3,376,324
  UMTS customers per 3G only operator CTM traf f ic module: medium demand, middle migration f or 3G only operator                   3,684,585      4,069,359      4,455,859      4,919,704      5,351,394      5,890,913      6,432,364      7,082,093      7,767,646      8,342,536      8,919,114      9,384,386      9,833,420     10,210,822     10,589,185     10,895,413     11,191,371     11,440,909   11,691,017   11,894,357   12,091,126   12,257,826   12,424,875   12,561,595   12,694,086   12,807,105   12,920,343   13,013,910   13,104,735   13,182,940   13,261,282   13,326,867   13,382,320   13,437,887   13,493,541   13,549,282   13,590,075   13,630,876   13,671,733   13,712,645   13,743,837   13,774,939   13,806,076   13,837,248   13,862,091   13,886,756   13,911,443   13,936,152   13,956,735   13,977,062   13,997,402   14,017,756
                                          These f orecasts are used to produce the data on the proportion of subscribers on UMTS
  UMTS customers per 2G/3G operator
  Rapid                                                     3,476,601      4,383,350         5,356,843       6,382,339               7,264,877      8,035,391      8,722,508      9,315,636      9,840,806    10,279,695     10,663,716     10,971,729     11,221,437     11,459,129     11,660,743     11,858,099     12,027,406     12,188,859     12,326,690     12,461,514     12,577,959     12,689,159   12,784,883   12,878,499   12,960,066   13,038,147   13,106,083   13,172,550   13,231,111   13,287,362   13,336,963   13,385,544   13,428,934   13,470,780   13,508,265   13,545,045   13,580,500   13,612,806   13,642,252   13,669,122   13,697,193   13,723,133   13,747,198   13,769,573   13,792,710   13,814,353   13,834,767   13,854,073   13,873,860   13,892,550   13,910,434   13,927,591   13,945,053   13,961,657   13,977,733   13,993,332
  Medium                            CTM traf f ic module: medium demand, middle migration f or 2G/3G operator3,306,021
                                                            2,036,432      2,420,727         2,806,056                               3,887,942      4,547,184      5,285,203      6,002,495      6,713,520     7,394,235      8,067,072      8,634,992      9,118,548      9,566,685      9,957,685     10,325,474     10,648,144     10,947,614     11,209,652     11,456,253     11,673,284     11,875,007   12,052,195   12,219,124   12,366,666   12,504,120   12,625,489   12,740,043   12,841,878   12,937,074   13,021,722   13,101,845   13,173,620   13,241,011   13,301,485   13,358,954   13,413,027   13,462,089   13,506,615   13,547,056   13,587,340   13,624,271   13,658,227   13,689,504   13,720,651   13,749,504   13,776,405   13,801,550   13,826,593   13,850,012   13,872,151   13,893,138   13,914,048   13,933,754   13,952,621   13,970,732
  Slow                              CTM traf f ic module: medium demand, slow migration f or 2G/3G operator 2,012,687
                                                            1,215,581      1,446,787         1,694,245                               2,381,751      2,798,604      3,264,210      3,780,579      4,349,603     4,946,556      5,581,799      6,192,171      6,785,422      7,399,012      8,006,941      8,569,949      9,068,286      9,525,847      9,930,155     10,304,791     10,637,037     10,942,447   11,212,947   11,463,851   11,686,963   11,892,427   12,075,000   12,244,634   12,396,037   12,535,841   12,660,635   12,776,886   12,881,174   12,977,825   13,064,631   13,145,798   13,221,198   13,289,453   13,351,251   13,407,237   13,461,510   13,511,030   13,556,316   13,597,789   13,638,112   13,675,223   13,709,556   13,741,390   13,772,451   13,801,287   13,828,301   13,853,675   13,878,533   13,901,792   13,923,856   13,944,846

  Total Market UMTS Subscribers
  Rapid                                             Rapid       16,731,186      20,530,047      24,596,946       28,905,682        32,744,095     36,210,921     39,345,892     42,182,249     44,714,618     47,009,693     49,087,229     50,969,010     52,653,394     54,179,050     55,562,086     56,816,781     57,943,043     58,966,259     59,895,947      60,741,470    61,503,205     62,197,546   62,830,549   63,408,353   63,931,391   64,410,414   64,849,206   65,251,795   65,618,529   65,956,555   66,268,193   66,556,086   66,820,472   67,066,060   67,294,341   67,507,046   67,704,319   67,889,109   68,062,548   68,225,770   68,378,848   68,523,409   68,660,525   68,790,939   68,914,677   69,032,352   69,145,142   69,253,538   69,357,533   69,456,957   69,553,178   69,646,516   69,736,949   69,823,691   69,908,332   69,991,082
  Medium                                           Medium       10,970,509      12,679,555      14,393,801       16,600,407        19,236,353     22,258,094     25,596,671     28,929,682     32,205,474     35,467,855     38,700,652     41,622,061     44,241,839     46,609,278     48,749,855     50,686,281     52,425,994     54,001,279     55,427,793      56,720,426    57,884,506     58,940,936   59,899,796   60,770,852   61,557,789   62,274,307   62,926,832   63,521,767   64,061,598   64,555,402   65,007,232   65,421,290   65,799,215   66,146,983   66,467,220   66,762,682   67,034,429   67,286,244   67,520,000   67,737,505   67,939,434   68,127,959   68,304,640   68,470,661   68,626,442   68,772,954   68,911,698   69,043,449   69,168,464   69,286,804   69,400,048   69,508,706   69,612,927   69,712,077   69,807,884   69,900,684
  Slow                                               Slow        7,687,107       8,783,795       9,946,557       11,427,071        13,211,591     15,263,775     17,512,698     20,042,019     22,749,806     25,677,136     28,759,559     31,850,776     34,909,334     37,938,585     40,946,878     43,664,183     46,106,566     48,314,211     50,309,807      52,114,576    53,739,517     55,210,696   56,542,805   57,749,762   58,838,979   59,827,533   60,724,874   61,540,130   62,278,232   62,950,470   63,562,882   64,121,453   64,629,431   65,094,239   65,519,807   65,910,060   66,267,114   66,595,700   66,898,546   67,178,229   67,436,114   67,674,996   67,896,996   68,103,802   68,296,287   68,475,832   68,644,302   68,802,806   68,951,896   69,091,904   69,224,647   69,350,854   69,470,867   69,584,230   69,692,828   69,797,138

  % of Subscribers on UMTS
  Rapid                                                              25.7%            31.4%           37.5%           44.0%             49.7%          54.8%          59.5%          63.6%          67.3%          70.6%          73.6%          76.3%          78.7%          80.9%          82.8%          84.5%          86.1%          87.5%          88.8%          89.9%          90.9%          91.9%        92.7%        93.4%        94.1%        94.7%        95.2%        95.7%        96.1%        96.5%        96.9%        97.2%        97.5%        97.7%        98.0%        98.2%        98.4%        98.5%        98.7%        98.8%        98.9%        99.0%        99.1%        99.2%        99.3%        99.4%        99.4%        99.5%        99.5%        99.6%        99.6%        99.7%        99.7%        99.7%        99.8%        99.8%
  Medium                                                             16.9%            19.4%           22.0%           25.3%             29.2%          33.7%          38.7%          43.6%          48.5%          53.3%          58.0%          62.3%          66.1%          69.6%          72.7%          75.4%          77.9%          80.1%          82.2%          84.0%          85.6%          87.0%        88.4%        89.5%        90.6%        91.5%        92.4%        93.2%        93.9%        94.5%        95.0%        95.5%        96.0%        96.4%        96.8%        97.1%        97.4%        97.6%        97.9%        98.1%        98.3%        98.5%        98.6%        98.8%        98.9%        99.0%        99.1%        99.2%        99.3%        99.3%        99.4%        99.5%        99.5%        99.6%        99.6%        99.7%
  Slow                                                               11.8%            13.5%           15.2%           17.4%             20.1%          23.1%          26.5%          30.2%          34.2%          38.6%          43.1%          47.7%          52.2%          56.6%          61.0%          65.0%          68.5%          71.7%          74.6%          77.1%          79.5%          81.5%        83.4%        85.1%        86.6%        87.9%        89.2%        90.3%        91.2%        92.1%        92.9%        93.6%        94.3%        94.9%        95.4%        95.8%        96.3%        96.6%        97.0%        97.3%        97.6%        97.8%        98.0%        98.2%        98.4%        98.6%        98.7%        98.8%        99.0%        99.1%        99.2%        99.2%        99.3%        99.4%        99.4%        99.5%

  Defined Scenario
  Total market UMTS subscribers                                 10,970,509      12,679,555      14,393,801       16,600,407        19,236,353     22,258,094     25,596,671     28,929,682     32,205,474     35,467,855     38,700,652     41,622,061     44,241,839     46,609,278     48,749,855     50,686,281     52,425,994     54,001,279     55,427,793      56,720,426    57,884,506     58,940,936   59,899,796   60,770,852   61,557,789   62,274,307   62,926,832   63,521,767   64,061,598   64,555,402   65,007,232   65,421,290   65,799,215   66,146,983   66,467,220   66,762,682   67,034,429   67,286,244   67,520,000   67,737,505   67,939,434   68,127,959   68,304,640   68,470,661   68,626,442   68,772,954   68,911,698   69,043,449   69,168,464   69,286,804   69,400,048   69,508,706   69,612,927   69,712,077   69,807,884   69,900,684
  % of subscribers on UMTS                                         16.86%          19.42%          21.97%           25.26%            29.20%         33.71%         38.68%         43.62%         48.47%         53.29%         58.04%         62.31%         66.13%         69.57%         72.65%         75.43%         77.91%         80.15%         82.16%          83.97%        85.59%         87.04%       88.35%       89.53%       90.59%       91.54%       92.40%       93.16%       93.86%       94.48%       95.03%       95.54%       95.99%       96.39%       96.76%       97.08%       97.38%       97.64%       97.88%       98.10%       98.29%       98.46%       98.62%       98.76%       98.88%       98.99%       99.10%       99.19%       99.27%       99.34%       99.41%       99.47%       99.52%       99.57%       99.61%       99.65%

                                          Offset                          2                6              10              14                 18             22             26             30             34             38             42             46             50             54             58             62             66             70             74             78             82
  Year End Subscribers                                            2007             2008            2009            2010               2011           2012           2013           2014           2015           2016           2017           2018           2019           2020           2021           2022           2023           2024           2025           2026           2027

  Total Market Subscribers                                   65,506,637       66,171,754
                                          Assumed constant outside of CTM f orecast period      66,680,056      67,100,671         67,464,125     67,794,670     68,105,332     68,404,015     68,695,320     68,981,518     69,263,324     69,540,552     69,812,550     70,078,471     70,078,471     70,078,471     70,078,471     70,078,471     70,078,471      70,078,471    70,078,471

  Total Market UMTS Subscribers
  Rapid                                             Rapid       24,596,946      39,345,892      49,087,229       55,562,086        59,895,947     62,830,549     64,849,206     66,268,193     67,294,341     68,062,548     68,660,525     69,145,142     69,553,178     69,908,332     69,908,332     69,908,332     69,908,332     69,908,332     69,908,332      69,908,332    69,908,332
  Medium                                           Medium       14,393,801      25,596,671      38,700,652       48,749,855        55,427,793     59,899,796     62,926,832     65,007,232     66,467,220     67,520,000     68,304,640     68,911,698     69,400,048     69,807,884     69,807,884     69,807,884     69,807,884     69,807,884     69,807,884      69,807,884    69,807,884
  Slow                                               Slow        9,946,557      17,512,698      28,759,559       40,946,878        50,309,807     56,542,805     60,724,874     63,562,882     65,519,807     66,898,546     67,896,996     68,644,302     69,224,647     69,692,828     69,692,828     69,692,828     69,692,828     69,692,828     69,692,828      69,692,828    69,692,828

  % UMTS Subscribers                      Year                            0                1               2               3                  4              5              6              7              8              9             10             11             12             13             14             15             16             17             18             19             20
  Rapid                                   Rapid migration         37.549%             59.5%           73.6%           82.8%             88.8%          92.7%          95.2%          96.9%          98.0%          98.7%          99.1%          99.4%          99.6%          99.8%          99.8%          99.8%          99.8%          99.8%          99.8%          99.8%          99.8%
  Medium                                  Med migration           21.973%             38.7%           58.0%           72.7%             82.2%          88.4%          92.4%          95.0%          96.8%          97.9%          98.6%          99.1%          99.4%          99.6%          99.6%          99.6%          99.6%          99.6%          99.6%          99.6%          99.6%
  Slow                                    Slow migration          15.184%             26.5%           43.1%           61.0%             74.6%          83.4%          89.2%          92.9%          95.4%          97.0%          98.0%          98.7%          99.2%          99.4%          99.4%          99.4%          99.4%          99.4%          99.4%          99.4%          99.4%

  Defined Scenario                                                   2007
  GSM only                                                     56,798,163      46,786,730       32,873,674      21,899,606          14,559,931      9,661,384      6,398,179      4,238,024      2,807,557      1,860,099      1,232,484        816,703        541,239        358,725        363,836        369,019        374,277        379,609        385,018        390,503     396,067
  UMTS                                                         15,994,837      29,515,270       45,470,326      58,177,394          67,049,069     73,302,616     77,747,821     81,106,816     83,753,204     85,933,904     87,812,334     89,496,749     91,058,921     92,546,476     93,864,999     95,202,307     96,558,668     97,934,353     99,329,638    100,744,802 102,180,127
  Total                                                       72,793,000       76,302,000      78,344,000      80,077,000          81,609,000     82,964,000     84,146,000     85,344,840     86,560,760     87,794,004     89,044,818     90,313,452     91,600,161     92,905,201     94,228,835     95,571,327     96,932,945     98,313,963     99,714,656      ########## ##########
Innovation Delay - Calculation of Economic Impact
                                                    2007          2008              2009             2010             2011             2012             2013             2014           2015          2016          2017          2018          2019          2020          2021          2022          2023          2024          2025           2026           2027

  Economic benefits per user per month (£)
  GSM                                                  £12.99        £12.99            £12.99           £12.99           £12.99           £12.99           £12.99           £12.99         £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99         £12.99         £12.99
  Moderate 2100MHz                                     £16.24        £16.24            £16.24           £16.24           £16.24           £16.24           £16.24           £16.24         £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24         £16.24         £16.24
  Fast 900MHz                                          £20.30        £20.30            £20.30           £20.30           £20.30           £20.30           £20.30           £20.30         £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30         £20.30         £20.30


  Migration to moderate 2100MHz (no migration to fast 900MHz)
  GSM                                              56,798,163    46,786,730       32,873,674       21,899,606       14,559,931        9,661,384        6,398,179        4,238,024       2,807,557     1,860,099     1,232,484       816,703       541,239       358,725       363,836       369,019       374,277       379,609       385,018        390,503        396,067
  Moderate 2100MHz                                 15,994,837    29,515,270       45,470,326       58,177,394       67,049,069       73,302,616       77,747,821       81,106,816      83,753,204    85,933,904    87,812,334    89,496,749    91,058,921    92,546,476    93,864,999    95,202,307    96,558,668    97,934,353    99,329,638    100,744,802    102,180,127
  Fast 900MHz (or equivalent 2100MHz)
  Total                                            72,793,000    76,302,000        78,344,000       80,077,000       81,609,000       82,964,000       84,146,000       85,344,840     86,560,760    87,794,004    89,044,818    90,313,452    91,600,161    92,905,201    94,228,835    95,571,327    96,932,945    98,313,963    99,714,656    101,135,305    102,576,194
  % migrated to moderate 2100MHz                         22%           39%               58%              73%              82%              88%              92%              95%            97%           98%           99%           99%           99%          100%          100%          100%          100%          100%          100%           100%           100%
  % migrated to fast 900MHz                               0%            0%                0%               0%               0%               0%               0%               0%             0%            0%            0%            0%            0%            0%            0%            0%            0%            0%            0%             0%             0%
  Economic Benefits (£m)                               11,975        13,049            13,989           14,755           15,340           15,795           16,152           16,470         16,763        17,040        17,309        17,572        17,834        18,095        18,353        18,614        18,880        19,149        19,421         19,698         19,979
  NPV of Economic Benefits (£m)          233,160


  Base Case Migration to fast 900MHz
  GSM                                               56,798,163    46,786,730       32,873,674       21,899,606       14,559,931        9,661,384        6,398,179        4,238,024       2,807,557     1,860,099     1,232,484       816,703       541,239       358,725       363,836       369,019       374,277       379,609       385,018        390,503        396,067
  Moderate 2100MHz                                 15,994,837    29,515,270       45,470,326       58,177,394       66,595,131       69,471,291       72,475,264       68,888,173      61,887,832    47,638,415    32,330,626    21,377,569    14,146,695     9,366,148     6,076,855     3,897,356     2,452,148     1,493,036       855,807        431,747        148,863
  Fast 900MHz (or equivalent 2100MHz)                       0             0                0                0          453,938        3,831,325        5,272,556       12,218,644      21,865,372    38,295,489    55,481,708    68,119,180    76,912,226    83,180,328    87,788,144    91,304,951    94,106,520    96,441,317    98,473,831    100,313,055    102,031,264
  Total                                             72,793,000    76,302,000       78,344,000       80,077,000       81,609,000       82,964,000       84,146,000       85,344,840      86,560,760    87,794,004    89,044,818    90,313,452    91,600,161    92,905,201    94,228,835    95,571,327    96,932,945    98,313,963    99,714,656    101,135,305    102,576,194
  % migrated to moderate 2100MHz                          22%           39%              58%              73%              82%              84%              86%              81%             71%           54%           36%           24%           15%           10%            6%            4%            3%            2%            1%             0%             0%
  % migrated to fast 900MHz                                                                                              0.56%            4.62%            6.27%           14.32%          25.26%        43.62%        62.31%        75.43%        83.97%        89.53%        93.16%        95.54%        97.08%        98.10%        98.76%         99.19%         99.47%
  Economic Benefits (£m)                               11,975        13,049            13,989           14,755           15,362           15,981           16,409           17,066          17,828        18,906        20,012        20,892        21,582        22,148        22,631        23,064        23,465        23,848        24,220         24,586         24,951
  NPV of Economic Benefits (£m)          260,196


  Delayed Migration to fast 900MHz (No Catch Up)                                                                            0.28%
                                                                               This row gives the migration profile from moderate 2100MHz to 2.59%           5.44%          10.29%
                                                                                                                                             fast 900MHz assuming a six month delay.       19.79%        34.44%        52.96%        68.87%        79.70%        86.75%        91.35%        94.35%        96.31%        97.59%        98.43%         98.97%         99.33%
  GSM                                               56,798,163    46,786,730       32,873,674       21,899,606       14,559,931        9,661,384        6,398,179        4,238,024       2,807,557     1,860,099     1,232,484       816,703       541,239       358,725       363,836       369,019       374,277       379,609       385,018        390,503        396,067
  Moderate 2100MHz                                 15,994,837    29,515,270       45,470,326       58,177,394       66,708,616       70,313,754       72,821,926       70,605,915      64,255,994    51,668,065    36,490,780    24,339,323    16,102,331    10,659,229     6,932,538     4,463,875     2,827,332     1,741,548     1,020,432        540,810        221,122
  Fast 900MHz (or equivalent 2100MHz)                       0             0                0                0          340,453        2,988,862        4,925,895       10,500,902      19,497,210    34,265,839    51,321,554    65,157,426    74,956,590    81,887,247    86,932,461    90,738,432    93,731,336    96,192,805    98,309,206    100,203,992    101,959,006
  Total                                             72,793,000    76,302,000       78,344,000       80,077,000       81,609,000       82,964,000       84,146,000       85,344,840      86,560,760    87,794,004    89,044,818    90,313,452    91,600,161    92,905,201    94,228,835    95,571,327    96,932,945    98,313,963    99,714,656    101,135,305    102,576,194
  % migrated to moderate 2100MHz                          22%           39%              58%              73%              82%              85%              87%              83%             74%           59%           41%           27%           18%           11%            7%            5%            3%            2%            1%             1%             0%
  % migrated to fast 900MHz                                                                                              0.42%            3.60%            5.85%           12.30%          22.52%        39.03%        57.64%        72.15%        81.83%        88.14%        92.26%        94.94%        96.70%        97.84%        98.59%         99.08%         99.40%
  Economic Benefits (£m)                               11,975        13,049            13,989           14,755           15,356           15,940           16,392           16,982          17,713        18,710        19,809        20,747        21,486        22,085        22,589        23,036        23,447        23,836        24,212         24,581         24,947
  NPV of Economic Benefits (£m)          259,459
                                                                                                                         73,765         421,231          121,332          343,548        236,816              0             0
  Delayed fast 900MHz Migration (With Catch Up)
  GSM                                               56,798,163    46,786,730       32,873,674       21,899,606       14,559,931        9,661,384        6,398,179        4,238,024       2,807,557     1,860,099     1,232,484       816,703       541,239       358,725       363,836       369,019       374,277       379,609       385,018        390,503        396,067
  Moderate 2100MHz                                 15,994,837    29,515,270       45,470,326       58,177,394       66,668,896       69,892,523       72,596,596       69,231,721      62,124,648    47,638,415    32,330,626    21,377,569    14,146,695     9,366,148     6,076,855     3,897,356     2,452,148     1,493,036       855,807        431,747        221,122
  Fast 900MHz (or equivalent 2100MHz)                       0             0                0                0          380,173        3,410,093        5,151,225       11,875,095      21,628,555    38,295,489    55,481,708    68,119,180    76,912,226    83,180,328    87,788,144    91,304,951    94,106,520    96,441,317    98,473,831    100,313,055    101,959,006
  Total                                             72,793,000    76,302,000       78,344,000       80,077,000       81,609,000       82,964,000       84,146,000       85,344,840      86,560,760    87,794,004    89,044,818    90,313,452    91,600,161    92,905,201    94,228,835    95,571,327    96,932,945    98,313,963    99,714,656    101,135,305    102,576,194
  % migrated to moderate 2100MHz                          22%           39%              58%              73%              82%              84%              86%              81%             72%           54%           36%           24%           15%           10%            6%            4%            3%            2%            1%             0%             0%
  % migrated to fast 900MHz                                                                                              0.47%            4.11%            6.12%           13.91%          24.99%        43.62%        62.31%        75.43%        83.97%        89.53%        93.16%        95.54%        97.08%        98.10%        98.76%         99.19%         99.40%
  Economic Benefits (£m)                               11,975        13,049            13,989           14,755           15,358           15,961           16,403           17,049          17,817        18,906        20,012        20,892        21,582        22,148        22,631        23,064        23,465        23,848        24,220         24,586         24,947
  NPV of Economic Benefits (£m)          260,150




  NPV Impacts (£m) relative to Base Case 4G Migration
  Delayed 4G Migration (No Catch Up)        737
  Delayed 4G Migration (With Catch Up)       46
Innovation Delay - Calculation of Economic Impact
                                                    2007          2008              2009             2010             2011            2012             2013             2014           2015          2016          2017          2018          2019          2020          2021          2022          2023          2024          2025           2026           2027

  Economic benefits per user per month (£)
  GSM                                                  £12.99        £12.99            £12.99           £12.99           £12.99           £12.99           £12.99          £12.99         £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99         £12.99         £12.99
  Moderate 2100MHz                                     £16.24        £16.24            £16.24           £16.24           £16.24           £16.24           £16.24          £16.24         £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24         £16.24         £16.24
  Fast 900MHz                                          £20.30        £20.30            £20.30           £20.30           £20.30           £20.30           £20.30          £20.30         £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30         £20.30         £20.30


  Migration to moderate 2100MHz (no migration to fast 900MHz)
  GSM                                              56,798,163    46,786,730       32,873,674       21,899,606       14,559,931       9,661,384        6,398,179        4,238,024       2,807,557     1,860,099     1,232,484       816,703       541,239       358,725       363,836       369,019       374,277       379,609       385,018        390,503        396,067
  Moderate 2100MHz                                 15,994,837    29,515,270       45,470,326       58,177,394       67,049,069      73,302,616       77,747,821       81,106,816      83,753,204    85,933,904    87,812,334    89,496,749    91,058,921    92,546,476    93,864,999    95,202,307    96,558,668    97,934,353    99,329,638    100,744,802    102,180,127
  Fast 900MHz (or equivalent 2100MHz)
  Total                                            72,793,000    76,302,000        78,344,000       80,077,000      81,609,000       82,964,000       84,146,000       85,344,840     86,560,760    87,794,004    89,044,818    90,313,452    91,600,161    92,905,201    94,228,835    95,571,327    96,932,945    98,313,963    99,714,656    101,135,305    102,576,194
  % migrated to moderate 2100MHz                         22%           39%               58%              73%             82%              88%              92%              95%            97%           98%           99%           99%           99%          100%          100%          100%          100%          100%          100%           100%           100%
  % migrated to fast 900MHz                                0             0                 0                0              0%               0%               0%               0%             0%            0%            0%            0%            0%            0%            0%            0%            0%            0%            0%             0%             0%
  Economic Benefits (£m)                               11,975        13,049            13,989           14,755          15,340           15,795           16,152           16,470         16,763        17,040        17,309        17,572        17,834        18,095        18,353        18,614        18,880        19,149        19,421         19,698         19,979
  NPV of Economic Benefits (£m)          233,160


  Base Case Migration to fast 900MHz
  GSM                                               56,798,163    46,786,730       32,873,674       21,899,606       14,559,931       9,661,384        6,398,179        4,238,024       2,807,557     1,860,099     1,232,484       816,703       541,239       358,725       363,836       369,019       374,277       379,609       385,018        390,503        396,067
  Moderate 2100MHz                                 15,994,837    29,515,270       45,470,326       58,177,394       66,595,131      69,471,291       72,475,264       68,888,173      61,887,832    47,638,415    32,330,626    21,377,569    14,146,695     9,366,148     6,076,855     3,897,356     2,452,148     1,493,036       855,807        431,747        148,863
  Fast 900MHz (or equivalent 2100MHz)                       0             0                0                0          453,938       3,831,325        5,272,556       12,218,644      21,865,372    38,295,489    55,481,708    68,119,180    76,912,226    83,180,328    87,788,144    91,304,951    94,106,520    96,441,317    98,473,831    100,313,055    102,031,264
  Total                                             72,793,000    76,302,000       78,344,000       80,077,000       81,609,000      82,964,000       84,146,000       85,344,840      86,560,760    87,794,004    89,044,818    90,313,452    91,600,161    92,905,201    94,228,835    95,571,327    96,932,945    98,313,963    99,714,656    101,135,305    102,576,194
  % migrated to moderate 2100MHz                          22%           39%              58%              73%              82%             84%              86%              81%             71%           54%           36%           24%           15%           10%            6%            4%            3%            2%            1%             0%             0%
  % migrated to fast 900MHz                                                                                              0.56%           4.62%            6.27%           14.32%          25.26%        43.62%        62.31%        75.43%        83.97%        89.53%        93.16%        95.54%        97.08%        98.10%        98.76%         99.19%         99.47%
  Economic Benefits (£m)                               11,975        13,049            13,989           14,755           15,362          15,981           16,409           17,066          17,828        18,906        20,012        20,892        21,582        22,148        22,631        23,064        23,465        23,848        24,220         24,586         24,951
  NPV of Economic Benefits (£m)          260,196


  Delayed Migration to fast 900MHz (No Catch Up)                                                                            0.00%
                                                                               This row gives the migration profile from moderate 2100MHz to 0.56%           4.62%            6.27%
                                                                                                                                             fast 900MHz assuming a one year delay.       14.32%        25.26%        43.62%        62.31%        75.43%        83.97%        89.53%        93.16%        95.54%        97.08%        98.10%         98.76%         99.19%
  GSM                                               56,798,163    46,786,730       32,873,674       21,899,606       14,559,931       9,661,384        6,398,179        4,238,024       2,807,557     1,860,099     1,232,484       816,703       541,239       358,725       363,836       369,019       374,277       379,609       385,018        390,503        396,067
  Moderate 2100MHz                                 15,994,837    29,515,270       45,470,326       58,177,394       66,822,100      71,156,216       73,168,587       72,323,657      66,624,156    55,697,715    40,650,935    27,301,077    18,057,967    11,952,309     7,788,222     5,030,395     3,202,515     1,990,060     1,185,057        649,873        293,380
  Fast 900MHz (or equivalent 2100MHz)                       0             0                0                0          226,969       2,146,400        4,579,233        8,783,159      17,129,048    30,236,190    47,161,399    62,195,672    73,000,955    80,594,167    86,076,777    90,171,913    93,356,153    95,944,293    98,144,581    100,094,929    101,886,747
  Total                                             72,793,000    76,302,000       78,344,000       80,077,000       81,609,000      82,964,000       84,146,000       85,344,840      86,560,760    87,794,004    89,044,818    90,313,452    91,600,161    92,905,201    94,228,835    95,571,327    96,932,945    98,313,963    99,714,656    101,135,305    102,576,194
  % migrated to moderate 2100MHz                          22%           39%              58%              73%              82%             86%              87%              85%             77%           63%           46%           30%           20%           13%            8%            5%            3%            2%            1%             1%             0%
  % migrated to fast 900MHz                                                                                              0.28%           2.59%            5.44%           10.29%          19.79%        34.44%        52.96%        68.87%        79.70%        86.75%        91.35%        94.35%        96.31%        97.59%        98.43%         98.97%         99.33%
  Economic Benefits (£m)                               11,975        13,049            13,989           14,755           15,351          15,899           16,375           16,898          17,598        18,514        19,607        20,603        21,391        22,022        22,547        23,008        23,429        23,824        24,204         24,576         24,944
  NPV of Economic Benefits (£m)          258,721
                                                                                                                       147,530          842,462         242,663          687,097        473,632              0             0
  Delayed fast 900MHz Migration (With Catch Up)
  GSM                                               56,798,163    46,786,730       32,873,674       21,899,606       14,559,931       9,661,384        6,398,179        4,238,024       2,807,557     1,860,099     1,232,484       816,703       541,239       358,725       363,836       369,019       374,277       379,609       385,018        390,503        396,067
  Moderate 2100MHz                                 15,994,837    29,515,270       45,470,326       58,177,394       66,742,661      70,313,754       72,717,927       69,575,269      62,361,464    47,638,415    32,330,626    21,377,569    14,146,695     9,366,148     6,076,855     3,897,356     2,452,148     1,493,036       855,807        431,747        293,380
  Fast 900MHz (or equivalent 2100MHz)                       0             0                0                0          306,408       2,988,862        5,029,893       11,531,547      21,391,739    38,295,489    55,481,708    68,119,180    76,912,226    83,180,328    87,788,144    91,304,951    94,106,520    96,441,317    98,473,831    100,313,055    101,886,747
  Total                                             72,793,000    76,302,000       78,344,000       80,077,000       81,609,000      82,964,000       84,146,000       85,344,840      86,560,760    87,794,004    89,044,818    90,313,452    91,600,161    92,905,201    94,228,835    95,571,327    96,932,945    98,313,963    99,714,656    101,135,305    102,576,194
  % migrated to moderate 2100MHz                          22%           39%              58%              73%              82%             85%              86%              82%             72%           54%           36%           24%           15%           10%            6%            4%            3%            2%            1%             0%             0%
  % migrated to fast 900MHz                                                                                              0.38%           3.60%            5.98%           13.51%          24.71%        43.62%        62.31%        75.43%        83.97%        89.53%        93.16%        95.54%        97.08%        98.10%        98.76%         99.19%         99.33%
  Economic Benefits (£m)                               11,975        13,049            13,989           14,755           15,355          15,940           16,397           17,032          17,805        18,906        20,012        20,892        21,582        22,148        22,631        23,064        23,465        23,848        24,220         24,586         24,944
  NPV of Economic Benefits (£m)          260,105




  NPV Impacts (£m) relative to Base Case 4G Migration
  Delayed 4G Migration (No Catch Up)      1,475
  Delayed 4G Migration (With Catch Up)       91
Innovation Delay - Calculation of Economic Impact
                                                     2007          2008          2009          2010          2011          2012          2013          2014          2015          2016          2017          2018          2019          2020          2021          2022          2023          2024          2025           2026           2027

  Economic benefits per user per month (£)
  GSM                                                  £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99        £12.99         £12.99         £12.99
  Moderate 2100MHz                                     £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24        £16.24         £16.24         £16.24
  Fast 900MHz                                          £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30        £20.30         £20.30         £20.30


  Migration to moderate 2100MHz (no migration to fast 900MHz)
  GSM                                              56,798,163    46,786,730    32,873,674    21,899,606    14,559,931     9,661,384     6,398,179     4,238,024     2,807,557     1,860,099     1,232,484       816,703       541,239       358,725       363,836       369,019       374,277       379,609       385,018        390,503        396,067
  Moderate 2100MHz                                 15,994,837    29,515,270    45,470,326    58,177,394    67,049,069    73,302,616    77,747,821    81,106,816    83,753,204    85,933,904    87,812,334    89,496,749    91,058,921    92,546,476    93,864,999    95,202,307    96,558,668    97,934,353    99,329,638    100,744,802    102,180,127
  Fast 900MHz (or equivalent 2100MHz)
  Total                                            72,793,000    76,302,000    78,344,000    80,077,000    81,609,000    82,964,000    84,146,000    85,344,840    86,560,760    87,794,004    89,044,818    90,313,452    91,600,161    92,905,201    94,228,835    95,571,327    96,932,945    98,313,963    99,714,656    101,135,305    102,576,194
  % migrated to moderate 2100MHz                         22%           39%           58%           73%           82%           88%           92%           95%           97%           98%           99%           99%           99%          100%          100%          100%          100%          100%          100%           100%           100%
  % migrated to fast 900MHz                               0%            0%            0%            0%            0%            0%            0%            0%            0%            0%            0%            0%            0%            0%            0%            0%            0%            0%            0%             0%             0%
  Economic Benefits (£m)                               11,975        13,049        13,989        14,755        15,340        15,795        16,152        16,470        16,763        17,040        17,309        17,572        17,834        18,095        18,353        18,614        18,880        19,149        19,421         19,698         19,979
  NPV of Economic Benefits (£m)          233,160


  Base Case Migration to fast 900MHz
  GSM                                               56,798,163    46,786,730    32,873,674    21,899,606    14,559,931     9,661,384     6,398,179     4,238,024     2,807,557     1,860,099     1,232,484       816,703       541,239       358,725       363,836       369,019       374,277       379,609       385,018        390,503        396,067
  Moderate 2100MHz                                 15,994,837    29,515,270    45,470,326    58,177,394    66,595,131    69,471,291    72,475,264    68,888,173    61,887,832    47,638,415    32,330,626    21,377,569    14,146,695     9,366,148     6,076,855     3,897,356     2,452,148     1,493,036       855,807        431,747        148,863
  Fast 900MHz (or equivalent 2100MHz)                       0             0             0             0       453,938     3,831,325     5,272,556    12,218,644    21,865,372    38,295,489    55,481,708    68,119,180    76,912,226    83,180,328    87,788,144    91,304,951    94,106,520    96,441,317    98,473,831    100,313,055    102,031,264
  Total                                             72,793,000    76,302,000    78,344,000    80,077,000    81,609,000    82,964,000    84,146,000    85,344,840    86,560,760    87,794,004    89,044,818    90,313,452    91,600,161    92,905,201    94,228,835    95,571,327    96,932,945    98,313,963    99,714,656    101,135,305    102,576,194
  % migrated to moderate 2100MHz                          22%           39%           58%           73%           82%           84%           86%           81%           71%           54%           36%           24%           15%           10%            6%            4%            3%            2%            1%             0%             0%
  % migrated to fast 900MHz                                                                                     0.56%         4.62%         6.27%        14.32%        25.26%        43.62%        62.31%        75.43%        83.97%        89.53%        93.16%        95.54%        97.08%        98.10%        98.76%         99.19%         99.47%
  Economic Benefits (£m)                               11,975        13,049        13,989        14,755         15,362        15,981        16,409        17,066        17,828        18,906        20,012        20,892        21,582        22,148        22,631        23,064        23,465        23,848        24,220         24,586         24,951
  NPV of Economic Benefits (£m)          260,196


  Delayed Migration to fast 900MHz (No Catch Up)
  GSM                                               56,798,163    46,786,730    32,873,674    21,899,606    14,559,931     9,661,384     6,398,179     4,238,024     2,807,557     1,860,099     1,232,484       816,703       541,239       358,725       363,836       369,019       374,277       379,609       385,018       390,503         396,067
  Moderate 2100MHz                                 15,994,837    29,515,270    45,470,326    58,177,394    67,049,069    72,841,141    73,861,911    75,759,141    71,360,479    63,757,014    48,971,244    33,224,585    21,969,238    14,538,471     9,499,589     6,163,433     3,952,883     2,487,084     1,514,307       867,999         437,898
  Fast 900MHz (or equivalent 2100MHz)                       0             0             0             0             0       461,475     3,885,910     5,347,675    12,392,724    22,176,891    38,841,090    56,272,164    69,089,683    78,008,005    84,365,410    89,038,874    92,605,786    95,447,269    97,815,331    99,876,802     101,742,229
  Total                                             72,793,000    76,302,000    78,344,000    80,077,000    81,609,000    82,964,000    84,146,000    85,344,840    86,560,760    87,794,004    89,044,818    90,313,452    91,600,161    92,905,201    94,228,835    95,571,327    96,932,945    98,313,963    99,714,656   101,135,305     102,576,194
  % migrated to moderate 2100MHz                          22%           39%           58%           73%           82%           88%           88%           89%           82%           73%           55%           37%           24%           16%           10%            6%            4%            3%            2%            1%              0%
  % migrated to fast 900MHz                                                                                     0.00%         0.56%         4.62%         6.27%        14.32%        25.26%        43.62%        62.31%        75.43%        83.97%        89.53%        93.16%        95.54%        97.08%        98.10%        98.76%          99.19%
  Economic Benefits (£m)                               11,975        13,049        13,989        14,755         15,340        15,817        16,342        16,731        17,367        18,121        19,201        20,314        21,200        21,896        22,464        22,953        23,392        23,800        24,188        24,565          24,937
  NPV of Economic Benefits (£m)          257,247
                                                                                                             453,938      2,190,402      693,323      2,404,839     1,894,529     1,611,860             0
  Delayed fast 900MHz Migration (With Catch Up)
  GSM                                               56,798,163    46,786,730    32,873,674    21,899,606    14,559,931     9,661,384     6,398,179     4,238,024     2,807,557     1,860,099     1,232,484       816,703       541,239       358,725       363,836       369,019       374,277       379,609       385,018        390,503        396,067
  Moderate 2100MHz                                 15,994,837    29,515,270    45,470,326    58,177,394    67,049,069    71,661,694    73,168,587    71,293,012    63,782,361    49,250,275    32,330,626    21,377,569    14,146,695     9,366,148     6,076,855     3,897,356     2,452,148     1,493,036       855,807        431,747        148,863
  Fast 900MHz (or equivalent 2100MHz)                       0             0             0             0             0     1,640,922     4,579,233     9,813,805    19,970,842    36,683,629    55,481,708    68,119,180    76,912,226    83,180,328    87,788,144    91,304,951    94,106,520    96,441,317    98,473,831    100,313,055    102,031,264
  Total                                             72,793,000    76,302,000    78,344,000    80,077,000    81,609,000    82,964,000    84,146,000    85,344,840    86,560,760    87,794,004    89,044,818    90,313,452    91,600,161    92,905,201    94,228,835    95,571,327    96,932,945    98,313,963    99,714,656    101,135,305    102,576,194
  % migrated to moderate 2100MHz                          22%           39%           58%           73%           82%           86%           87%           84%           74%           56%           36%           24%           15%           10%            6%            4%            3%            2%            1%             0%             0%
  % migrated to fast 900MHz                                                                                     0.00%         1.98%         5.44%        11.50%        23.07%        41.78%        62.31%        75.43%        83.97%        89.53%        93.16%        95.54%        97.08%        98.10%        98.76%         99.19%         99.47%
  Economic Benefits (£m)                               11,975        13,049        13,989        14,755         15,340        15,875        16,375        16,948        17,736        18,828        20,012        20,892        21,582        22,148        22,631        23,064        23,465        23,848        24,220         24,586         24,951
  NPV of Economic Benefits (£m)          259,852


  NPV Impacts (£m) relative to Base Case 4G Migration
  Delayed 4G Migration (No Catch Up)      2,949
  Delayed 4G Migration (With Catch Up)      344
Consumer and Producer Surplus Calculations
                                                Private           Business    Consumer          Producer          Total
  2012 Estimate
  (in 2008 prices)
  Surplus 2012                                                                £6,468,540,477   £6,468,540,477 £12,937,080,953   These consumer and producer surplus inputs were generated using the competition impacts model
                                                                                                                                This is the total surplus generated by a 2 player market in 2012, using the total UK mobile market as the affected market segment.
  Number of Subscribers                                                        82,964,000       82,964,000      82,964,000      To generate these values input the following parameters on the following control sheet. All other parameters should be set as in the base case.
                                                                                                                                It is does not matter what the n_cf_nat_exit is set equal to as this does not enter the welfare calculation.
  Average Surplus per Sub per Month                                               £6.50            £6.50          £12.99        subcriber_proportion = 100%
                                                                                                                                revenue_proportion =100%
  Proportion of total welfare                                                    50.00%           50.00%         100.00%        Discount rate = Social
                                                                                                                                n_f_nat_exit =2
  Surplus is taken from the Cournot model using base assumptions, 2 players                                                     The surplus inputs are reported in 'Linear Demand'!K96:K98

								
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