UPC
Advisory Services
The Situation
Following the upgrade of its cable network, the Dutch cable operator UPC was looking to raise its cable TV prices so as to bring them more closely in line with costs. UPC asked NERA to review its cost allocation model and to help build its case for price increases.
NERA's Role
UPC retained NERA to review its cost allocation model and to assess its defensibility from a regulatory point of view. In particular, NERA provided expert opinion on its reasonableness, examined whether it conformed with regulatory principles on costs allocation in the cable TV/telecommunications services industry, and reviewed the allocation bases and supporting information in the cost model. NERA also calculated an appropriate cost of capital for UPC.
The Result
UPC amended its model in the light of this review and introduced higher prices. NERA presented a submission to the Dutch Competition Authority (NMA) to support UPC's case for raising its prices.
