Digital Agenda for Europe
A Europe 2020 Initiative

Broadband business models

Coloured menu for broadband business models
This section describes the different business models available to public authorities and other market actors. A business model defines the roles and responsibilities of different actors in the broadband value chain with a specific focus on the public authority.
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Network layers

A broadband network consists of passive infrastructure, active equipment technology and delivery of services. The three layers are characterised by different technical and economical features. These layers are:

  • Layer 1: Building and operating of the passive infrastructure (network set-up)
  • Layer 2: Building and operating of the active infrastructure (network operation)
  • Layer 3: Offer and distribution of services (services)

The three layers depend on each other, meaning that layer 2 can only be realized upon layer 1 completion, and layer 3 requires the infrastructure from layer 2.

Business roles and actors

For the three layers, three main business roles can be identified:

  • The physical infrastructure provider (PIP), which owns and maintains the passive infrastructure.
  • The network provider (NP), which operates (and typically owns) the active equipment such as incumbent operators, new independent operators, broadband companies.
  • The service provider (SP), which delivers the digital services. For example: for e-health, elderly care, TV, Internet, phone, video-conferencing, entertainment, teleworking, smart monitoring and so on.

Besides the three provider groups, end users and wholesale customers complete the list of actors and their roles typically involved in broadband projects.

Basic business models

The actors can take over different roles, thus defining the business model that applies for the respective broadband project. The difference between the two models is that a vertically integrated model has one market actor taking all three roles and for open networks the roles are separated.

Three open network business models can be identified:

  • Passive-layer open model (PLOM), where one entity deploys the passive infrastructure, the other layers are open for other providers
  • Active-layer open model (ALOM), where one entity provides the passive and active infrastructures in layers 1 and 2, the service is provided by other entities
  • Three-layer open model (3LOM), where all three layers are provided by different actors.


Last updated on 06/07/2015