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EXPERT LEVEL TRAINING ON TELECOM NETWORK COST MODELLING FOR THE HIPSSA REGIONS Arusha 15-19 July, 2013 David Rogerson , ITU Expert. Session 6: Calculation of call termination using different cost concepts (a practical exercise). Agenda. A ims and objectives for this session.

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Expert level training on telecom network cost modelling for the hipssa regions arusha

EXPERT LEVEL TRAINING ON TELECOM NETWORK COST MODELLING FOR THE HIPSSA REGIONS

Arusha

15-19 July, 2013

David Rogerson, ITU Expert


Session 6 calculation of call termination using different cost concepts a practical exercise

Session 6:Calculation of call termination using different cost concepts (a practical exercise)


Agenda
Agenda

Aims and objectives for this session


Introducing normalia
Introducing Normalia

  • All the practical exercises in this workshop concern the fictitious African country of Normalia.

  • Normalia is a typical (“normal”) country with regulatory challenges similar to those in your country.

  • The details required for each practical exercise are presented in the slides / handouts.


Telecoms in normalia
Telecoms in Normalia

Telecom Sector Regulator

(TRAN)

Mobile Telecoms

40% teledensity

Telecom (70%)

Normcell (30%)

Mobilco (new)

Fixed Telecoms

15% teledensity

Telecom (100%)


Interconnection rates
Interconnection rates

  • TRAN follows international best practice and is inclined towards cost-based rates

  • But following previous practice it has given Telecom and Mobilco 3 months to negotiate interconnection

  • Meantime TRAN has appointed an internal Cost Engineer-Accounting Team (CEAT) to report on different cost standards:

    • Stand alone costs (SAC)

    • Fully allocated costs (FAC)

    • Long run incremental costs (LRIC)


Cost data obtained from telecom

A. 2G Network – Direct On-net Costs

$ 172 M

B. 3G Network – Direct On-net Costs

$ 48 M

C. 2G Network – Direct Interconnect Costs

$ 160 M

D. 3G Network – Direct Interconnect Costs

$ 35 M

$ 180 M

E. Shared Network - Direct Costs

F. Retail– Direct Costs

$ 280 M

G. Network – Indirect OPEX

$ 90 M

H. Common and Overhead Costs

$ 70 M

Cost data obtained from Telecom

These costs are exclusively for the mobile network (all costs shared with fixed services have been allocated in proportion to traffic volumes)


Volume data obtained from telecom
Volume data obtained from Telecom

Mobile Subscribers

2G – 12 million

3G – 3 million

Mobile Traffic (minutes p.a.)

On-net – 4,000m

Termination – 2,000m

Origination – 1,500m

For the purpose of this exercise you may assume that there are no other mobile services – SMS and data are insignificant.


Your task
Your task

GROUP WORK EXERCISE 1

As CEAT, advise the Board of TRAN as follows:

  • Calculate or estimate the approximate SAC, FAC and LRIC (TSLRIC) of mobile termination for 2G, 3G and combined?

  • Which cost standard should apply to the mobile termination rate (MTR)? Why?

  • Should there be a different MTR for 2G and 3G traffic? Why or why not?


  • Reporting format
    Reporting format

    All costs to be shown in $ cents per minute