Subsidising the next generation infrastructures. Consumerside or supplyside

Purpose It is widely accepted that nextgeneration infrastructures will improve economic growth and employment. However, the cost of such a rollout is high and profitability is uncertain. Therefore operators hesitate to invest massively. In such a context, public intervention could help rollout. Several forms of intervention are possible. This paper aims to study, more specifically, subsidy strategies subsidising demand by a contribution to each household's subscription fee for a predetermined time a refund, a tax cut or subsidising infrastructure by means of a contribution to operators' infrastructure costs. Designmethodologyapproach The paper uses a dynamic mathematical model based on industrial organization and numerical examples based on technoeconomic analysis. Findings This paper shows that subsidising demand is more efficient, in welfare terms, than infrastructure subsidies as long as the time required for private operators to cover an area, without subsidies, is shorter than the duration of the subsidies required to cover the same area immediately, thanks to the increase in consumers' willingness to pay. Social implications This paper can help policy makers to optimise public investments in the nextgeneration infrastructure. Originalityvalue This paper highlights the leverage that subsidies can provide to infrastructure rollout in a dynamic point of view.