Social efficiency of the investments of local authorities in the access and backhaul networks

The local authorities, in particular via Delegations of Public Utility (DPU), develop telecommunications infrastructures which often duplicate infrastructures of the incumbent operator. Such infrastructures are financed partly by public subsidies which must allow competition to develop, even in the nonprofitable zones, in order to improve consumer choice and the prices. The purpose of this study is to evaluate to what degree these subsidies are passed on to consumers and up to what extent they benefit competing Internet Service Providers (ISPs), thus distorting competition. A model to calculate the profit of the ISPs and consumer´s surplus was assessed, and used on four DPUs to support the following arguments.