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Investment decisions for backbone capacity expansion and rural broadband deployment under traffic growth
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- Authors
- Seonkoo Jeong, Hangjung Zo, Hyeongjik Lee
- Issue Date
- 2026-10
- Citation
- Telecommunications Policy, v.50, no.9, pp.1-20
- ISSN
- 0308-5961
- Publisher
- Elsevier
- Language
- English
- Type
- Journal Article
- Abstract
- As Internet traffic increases rapidly, network operators face the challenge of simultaneously expanding coverage, deploying next-generation networks, and increasing network capacity to accommodate continued traffic growth. Such factors have triggered a policy debate known as the “fair share debate” between content and application providers (CAPs) and Internet service providers (ISPs), potentially affecting cost conditions that change incentives for deploying broadband in rural areas, which are characterized by a high-cost, low-revenue structure. We quantitatively analyze the impact of traffic growth on network investment cost structures and cost conditions that shape incentives for rural broadband deployment under surging traffic. We find that incumbent operators may perceive network capacity investment as inefficient once traffic exceeds 3.4 times the current level. When traffic ranges between 110% and 415% of the current level, some rural areas may experience marginal traffic costs as network capacity investment falls below the average cost of coverage deployment per building, potentially weakening cost-related incentives for rural broadband investment. Subsidizing broadband deployment can adjust this range, suggesting that such support remains a valid policy instrument, even under conditions of explosive traffic growth. Policymakers should consider an integrated approach to network policy design to enable network operators to sustain rural broadband investment in the face of persistent CAP–ISP conflicts. This study links traffic growth, network investment costs, and rural broadband expansion, providing empirical evidence regarding network operators’ investment decisions and policy insights relevant to cost-sharing discussions among traffic-generating entities and the design of rural broadband expansion policies.
- Keyword
- Fair share, Network investment cost, Rural broadband
- KSP Keywords
- Average cost, Capacity Investment, Capacity expansion, Cost-Sharing, Empirical Evidence, Internet Service Provider(ISP), Internet Traffic, Investment decision, Network Capacity, Next generation networks, Policy design