An Order issued by the Telecommunications Regulatory ... Order issued by the Telecommunications...
Transcript of An Order issued by the Telecommunications Regulatory ... Order issued by the Telecommunications...
An Order issued by the Telecommunications Regulatory
Authority on the Reference Offer of the Bahrain
Telecommunications Company B.S.C
Reference Offer Order
14 May 2012
Ref: MCD/05/12/072
Public Version (Confidential information has been replaced by [])
Purpose: To set the fair, reasonable and non-discriminatory charges of Bahrain
Telecommunications Company B.S.C’s Reference Offer (‘RO’).
Reference Offer Order
REFERENCE OFFER ORDER
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REFERENCE OFFER ORDER
Pursuant to: 1.
a. The exercise of its powers under article 3(c)(1), 57(b) and 57(e) of Legislative
Decree No. 48 for the year 2002 promulgating the Telecommunications Law (‘the
Law’), and articles 2,3,4,5 and 6 of the Access Regulation issued on 30 April 2005
(the ’Access Regulation’).
b. The Dominance in Interconnection Markets Determination issued 9 August 2003;
the Dominance Determination in Wholesale Markets by Batelco issued 22 January
2006; the Dominance Determination in Wholesale Broadband Markets issued 14
September 2009; and the Dominance Designation for Termination Services on
Individual Mobile Networks issued 1 February 2010.
c. The legal basis and reasoning set out in Annex A to this Order. Annex A forms an
integral part of the Order.
The Telecommunications Regulatory Authority (‘the Authority’) hereby orders the charges 2.
as detailed in the following table to be implemented by Bahrain Telecommunications
Company B.S.C (‘Batelco‘). The Authority’s decisions must be reflected in Batelco’s
Reference Offer (‘RO‘) within 10 working days following the date of issuance of this Order.
Batelco shall inform all its wholesale customers and the Authority by email of the new
charges and their associated implementation date within 2 working days following the date
of issuance of this Order.
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Table 1: Final Order charges
Chargeable activity
Approved/ ordered in
January 2011 (or currently
implemented)
Batelco's submitted charges in April 2011
TRA FRND draft charges
TRA FRND final Order
charges
Evolution of Order FRND as compared to previously
approved/ ordered
ISI and CSI Link Services
ISI Link services ( 1-1 )
in BD
1-1.5A - ISI Link - Port and E1 line rental for unilateral traffic routes - 1-21 links
60.000 114.000 removed removed
1-1.5B - ISI Link -Port and E1 line rental for unilateral traffic routes - 22-42 links
42.000 47.000 removed removed
1-1.5A - ISI Link - Port and E1 line rental for unilateral traffic routes - 1-14 links
21.612 48.599
1-1.5B - ISI Link -Port and E1 line rental for unilateral traffic routes - 15-28 links
15.101 30.181
1-1.5C - ISI Link -Port and E1 line rental for unilateral traffic routes - 29-42 links
13.624 26.002
1-1.5D - ISI Link -Port and E1 line rental for unilateral traffic routes - 43-63 links
39.000 33.000 12.917 24.003 -38.5%
1-1.12 - ISI Link -Signalling Link rental 50.000 138.000 14.192 25.366 -49.3%
CSI Link services ( 1-2 )
in BD
1-2.2A - CSI Link Rent (Basic) - 1-21 Links 154.000 267.000 removed removed
1-2.2B - CSI Link Rent (Basic)- 22-42 Links 75.000 91.000 removed removed
1-2.2A - CSI Link Rent (Basic) - 1-14 Links 121.790 169.039
1-2.2B - CSI Link Rent (Basic) - 15-28 Links 54.916 73.195
1-2.2C - CSI Link Rent (Basic) - 29-42 Links 39.741 51.447
1-2.2D - CSI Link Rent (Basic) - 43-63 Links 58.000 55.000 32.484 41.046 -29.2%
1-2.11 - CSI Link -Signalling Link rental 50.000 138.000 21.827 25.366 -49.3%
Interconnection services in fils
1-3.1 - Fixed terminating access from OLO GMSC 3.040 3.040 replaced replaced
1-3.2 - Fixed terminating access from OLO Transit 2.382 2.382 removed removed
1-3.1 - Fixed terminating access 2.711 2.711
1-3.3 - Delivery to tone or announcement 2.000 2.000 2.000 2.000 0.0%
1-4.1 - Mobile terminating access from OLO GMSC 6.203 4.680 replaced replaced
1-4.2 - Mobile terminating access from OLO Transit 6.553 4.530 removed removed
1-4.1 - Mobile terminating access 4.736 6.378
1-4.3 - Delivery to tone or announcement 2.000 2.000 2.000 2.000 0.0%
1-6.1 - SMS terminating access 0.443 1.480 0.288 0.443 0.0%
1-7.1 - Conveyance of emergency call to 999 1.045 1.100 1.233 1.233 18.0%
1-7.2 - Conveyance of emergency call to 990 2.382 2.382 same as 1-3.1 same as 1-3.1 13.8%
1-7.3 - Conveyance of emergency call to 992 2.382 2.382 same as 1-3.1 same as 1-3.1 13.8%
1-7.4 - Conveyance of emergency call to 994 2.382 2.382 same as 1-3.1 same as 1-3.1 13.8%
1-7.5 - Conveyance of emergency call to 998 2.382 2.382 same as 1-3.1 same as 1-3.1 13.8%
1-8.1 - Freephone from mobile 8.060 6.020 6.150 7.578 -6.0%
1-8.2 - Freephone from fixed 2.710 2.710 2.710 2.710 0.0%
1-11.1 - MMS delivery service 124.495 90.500 89.747 124.495 0.0%
2-2.1 - Directory assistance service for call to 181 121.402 111.010 112.684 112.684 -7.2%
2-2.2 - Directory assistance service for call to 188 123.884 112.540 112.800 112.800 -8.9%
2-7.1 - International Inbound calls to fixed 2.43 30.160 same as 1-3.1 same as 1-3.1 11.6%
2-8.1 - International inbound calls to Batelco mobile from OLO GMSC
6.122 37.800 replaced replaced
2-8.2 - International inbound calls to Batelco mobile from OLO Transit
6.556 37.800 removed removed
2-8.1 - International inbound calls to mobile same as 1-4.1 same as 1-4.1
2-9.1 - Inter-Operator Transit Access Service (from
OLO GMSC/Transit to OLO Transit/GMSC) 1.724 1.724 replaced replaced
2-9.2 - Inter-Operator Transit Access Service (from
OLO Transit to Transit) 1.490 1.100 removed removed
2-9.1 - Inter-Operator Transit Access Service: Per Transit Call
1.380 1.723
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Chargeable activity
Approved/ ordered in
January 2011 (or currently
implemented)
Batelco's submitted charges in April 2011
TRA FRND draft charges
TRA FRND final Order
charges
Evolution of Order FRND as compared to previously
approved/ ordered
Duct access ( 2-3.9 ) in BD
2-3.2 Site Survey if required 300.000 300.000
Time and materials basis as set out in Annex 1. For duct access, the field study total charge should not exceed BD 0.600 per metre of the straight-line distance separating the two physical locations between which duct access is requested.
Time and materials basis as set out in Annex 1.
For duct access, the field study total charge should not exceed BD 0.430 per metre of the duct route
provided to the OLOs. Upon request, Batelco should provide a detailed map of the duct route to the OLO at no additional cost.
n/a
2-3.9 – Duct Rental charge 0.189 0.213 0.155 0.189 0.0%
CAT/LLCO ( 2-5, 2-6 )
in BD
Low-speed CAT/LLCO in BD (Charges apply for open period)
64 kbit/s 58.000 97.000 49.405 58.508 0.9%
128 kbit/s 61.000 99.000 50.955 60.963 -0.1%
256 kbit/s 68.000 102.000 54.056 65.872 -3.1%
512 kbit/s 81.000 108.000 60.257 75.692 -6.6%
1.024 Mbit/s 119.000 122.000 74.471 97.143 -18.4%
1.536 Mbit/s 145.000 135.000 86.873 116.781 -19.5%
2.048 Mbit/s 171.000 150.000 101.734 138.879 -18.8%
High-speed CAT/LLCO
maximum price in BD * (price ceiling)
DS3 (44.736 Mbit/s) 4,686.310 * 5,678.000 * 2,583.542 * 2,512.235 * -46.4%
STM-1 (155.52 Mbit/s) 6,630.690 * 9,204.000 * 3,956.858 * 3,552.331 * -46.4%
STM-4 (622.08 Mbit/s) 15,211.840 * 14,698.000 * 9,224.239 * 8,185.213 * -46.2%
IPLC ( 2-10 )
IPLC - Zone 1 – Low-speed IPLC
in BD
64 kbit/s 137.000 89.000 77.944 77.944 -43.1%
128 kbit/s 167.000 114.000 100.276 100.276 -40.0%
256 kbit/s 227.000 165.000 144.939 144.939 -36.2%
512 kbit/s 348.000 267.000 234.264 234.264 -32.7%
768 kbit/s 468.000 396.000 323.590 323.590 -30.9%
1.024 Mbit/s 595.000 475.000 416.542 416.542 -30.0%
1,536 Mbit/s 835.000 679.000 595.193 595.193 -28.7%
2.048 Mbit/s 1076.000 882.000 773.845 773.845 -28.1%
IPLC - Zone 1 – High-speed IPLC maximum price in BD ** (price ceiling)
DS3 (44.736 Mbit/s) 6,800.000 ** 4,998.000 ** 3,242.769 ** 2,204.551 ** -67.6%
STM-1 (155.52 Mbit/s) 11,495.000 ** 7,504.000 ** 5,719.290 ** 4,272.430 ** -62.8%
STM-4 (622.08 Mbit/s) 26,779.000 ** 16,232.000 ** 14,221.281 ** 10,921.226 ** -59.2%
** The price ceiling applies when the IPLC uses the following international cable and landing partner:
Destination International
Cable Landing Partner
UAE FOG Etisalat
Kuwait FOG Ministry of Communications (MOC)
Oman FALCON OmanTel
Reference Offer Order
REFERENCE OFFER ORDER
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Chargeable activity
Approved/ ordered in
January 2011 (or currently
implemented)
Batelco's submitted charges in April 2011
TRA FRND draft charges
TRA FRND final Order
charges
Evolution of Order FRND as compared to previously
approved/ ordered
Qatar FOG QTel
Saudi Arabia SFO STC Saudi
Prices may differ from the above prices ceilings if another international cable and landing partner are requested by the ordering party.
IPLC - Zone 2
in BD
64 kbit/s 165.000 144.000 126.406 126.406 -23.4%
128 kbit/s 223.000 225.000 197.199 197.199 -11.6%
256 kbit/s 339.000 386.000 338.785 338.785 -0.1%
512 kbit/s 571.000 709.000 621.958 621.958 8.9%
768 kbit/s 803.000 1,032.000 905.130 905.130 12.7%
1.024 Mbit/s 1041.000 1,359.000 1,191.928 1,191.928 14.5%
1,536 Mbit/s 1,505.000 2,004.000 1,758.273 1,758.273 16.8%
2.048 Mbit/s 1,969.000 2,650.000 2,324.618 2,324.618 18.1%
IPLC - Zone 3 in BD
64 kbit/s 172.000 107.000 94.069 94.069 -45.3%
128 kbit/s 236.000 151.000 132.525 132.525 -43.8%
256 kbit/s 366.000 239.000 209.437 209.437 -42.8%
512 kbit/s 625.000 414.000 363.262 363.262 -41.9%
768 kbit/s 883.000 586.000 517.086 517.086 -41.4%
1.024 Mbit/s 1148.000 769.000 674.537 674.537 -41.2%
1,536 Mbit/s 1666.000 1,120.000 982.186 982.186 -41.0%
2.048 Mbit/s 2,183.000 1,470.000 1,289.835 1,289.835 -40.9%
Wholesale DSL (2-11)
Wholesale DSL- Residential
in BD
Contention Ratio of 15:1
up to 256 kbit/s (2 GB) 6.210 6.070 6.107 6.108 -1.6%
up to 512 kbit/s (8 GB) 10.310 8.980 9.023 9.025 -12.5%
up to 640 kbit/s (2 GB) 6.450 6.260 6.294 6.296 -2.4%
up to 640 kbit/s (5 GB) 8.420 7.650 7.690 7.692 -8.6%
up to 1.024 Mbit/s (4 GB) 8.010 7.370 7.411 7.415 -7.4%
up to 1.024 Mbit/s (8 GB) 9.100 9.230 9.273 9.277 1.9%
up to 1.024 Mbit/s (15 GB) 15.230 12.490 12.530 12.534 -17.7%
up to 2.048 Mbit/s (15 GB) 13.010 12.990 13.029 13.037 0.2%
up to 2.048 Mbit/s (20 GB) 19.160 15.230 15.355 15.363 -19.8%
up to 3.072 Mbit/s (8 GB) 10.410 10.270 10.282 -1.2%
up to 4.096 Mbit/s (25 GB) 18.960 18.640 18.679 18.695 -1.4%
up to 6.144 Mbit/s (15 GB) 15.630 15.023 15.047 -3.7%
up to 8.192 Mbit/s (25 GB) 21.590 20.674 20.706 -4.1%
up to 8.192 Mbit/s (40 GB) 36.200 27.620 27.654 27.686 -23.5%
up to 8.192 Mbit/s (60 GB) 37.850 36.920 36.960 36.992 -2.3%
up to 8.192 Mbit/s (90 GB) 51.840 50.920 50.952 -1.7%
up to 10.240 Mbit/s (50 GB) 44.060 33.270 33.304 33.345 -24.3%
up to 10.240 Mbit/s (80 GB) 48.460 47.230 47.264 47.304 -2.4%
up to 10.240 Mbit/s (120 GB) 67.100 65.877 65.917 -1.8%
up to 16.384 Mbit/s (80 GB) 67.660 50.220 50.256 50.320 -25.6%
up to 16.384 Mbit/s (100 GB) 61.660 59.520 59.563 59.627 -3.3%
up to 16.384 Mbit/s (150 GB) 84.980 82.829 82.893 -2.5%
Notes: The packages and charges written in blue colour were introduced after the RO Order of 25 January 2011 (‘2011 RO Order’).
Wholesale DSL- Business Threshold - Cost with CPE in BD
Contention ratio of 8:1 (except 256 kbit/s with 15:1)
up to 256 kbit/s without CPE (2.5 GB) 6.540 5.530 6.065 5.957 -8.9%
up to 256 kbit/s (5 GB) 12.320 18.280 11.229 11.120 -9.7%
up to 512 kbit/s (10 GB) 15.900 20.840 13.789 13.793 -13.3%
Reference Offer Order
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Chargeable activity
Approved/ ordered in
January 2011 (or currently
implemented)
Batelco's submitted charges in April 2011
TRA FRND draft charges
TRA FRND final Order
charges
Evolution of Order FRND as compared to previously
approved/ ordered
up to 1.024 Mbit/s (15 GB) 19.800 23.640 16.583 16.591 -16.2%
up to 2.048 Mbit/s (20 GB) 24.300 26.900 19.845 19.860 -18.3%
up to 4.096 Mbit/s (130 GB) removed 79.960 removed removed -
up to 6.144 Mbit/s (160 GB) removed 95.790 removed removed -
up to 8.192 Mbit/s (200 GB) removed 116.270 removed removed -
up to 10.240 Mbit/s (250 GB) removed 141.400 removed removed -
up to 16.384 Mbit/s (350 GB) removed 193.550 removed removed -
Wholesale DSL- Business Flat rate - Cost with CPE in BD
Contention ratio of 8:1 (except 256 kbit/s with 15:1)
up to 256kbit/s (Flat) 12.560 17.620 13.555 13.447 7.1%
up to 512 kbit/s without CPE (Flat) 14.660 14.442 14.446 -1.4%
up to 512 kbit/s (Flat) 18.650 21.020 18.442 18.446 -1.1%
up to 1.024 Mbit/s (Flat) 23.920 23.690 23.563 23.570 -1.5%
up to 2.048 Mbit/s (Flat) 48.410 39.790 47.764 47.779 -1.3%
up to 4.096 Mbit/s (Flat) 97.390 96.166 96.197 -1.2%
up to 6.144 Mbit/s (Flat) 118.450 116.649 116.695 -1.5%
up to 8.192 Mbit/s (Flat) 139.510 137.132 137.193 -1.7%
up to 10.240 Mbit/s (Flat) 155.920 152.962 153.037 -1.8%
up to 16.384 Mbit/s (Flat) 191.190 186.491 186.612 -2.4%
Over the threshold charge per incremental GB (Usage tariffs DSL.8)
0.465 0.465 0.465 0.465 0.0%
Notes: The packages and charges written in blue colour were introduced after the 2011 RO Order.
Bitstream (2-12)
Bitstream- Residential
in BD
Contention ratio of 15:1
up to 256 kbit/s 3.640 3.070 3.064 3.065 -15.8%
up to 512 kbit/s 3.800 3.190 3.189 3.191 -16.0%
up to 640 kbit/s 3.880 3.250 3.251 3.254 -16.1%
up to 1,024 Mbit/s 4.130 3.440 3.438 3.442 -16.7%
up to 2.048 Mbit/s 4.780 3.940 3.937 3.945 -17.5%
up to 3.072 Mbit/s 5.430 4.435 4.447 -18.1%
up to 4.096 Mbit/s 6.090 4.940 4.934 4.950 -18.7%
up to 6.144 Mbit/s 7.390 5.931 5.956 -19.4%
up to 8.192 Mbit/s 8.700 6.930 6.929 6.961 -20.0%
up to 10.240 Mbit/s 10.010 7.930 7.926 7.966 -20.4%
up to 16.384 Mbit/s 13.920 10.920 10.918 10.982 -21.1%
Bitstream- Business in BD
Contention ratio of 8:1 (except 256 kbit/s with 15:1)
up to 256 kbit/s 3.780 2.680 3.173 3.065 -18.9%
up to 512 kbit/s 4.090 2.910 3.407 3.411 -16.6%
up to 640 kbit/s 4.240 3.030 3.524 3.529 -16.8%
up to 1.024 Mbit/s 4.700 3.380 3.874 3.882 -17.4%
up to 2.048 Mbit/s 5.920 4.310 4.809 4.824 -18.5%
up to 4.096 Mbit/s 8.370 6.180 6.679 6.710 -19.8%
up to 6.144 Mbit/s 10.820 8.050 8.549 8.595 -20.6%
up to 8.192 Mbit/s 13.270 9.920 10.419 10.480 -21.0%
up to 10.240 Mbit/s 15.720 11.790 12.289 12.365 -21.3%
up to 16.384 Mbit/s 23.070 17.400 17.899 18.020 -21.9%
One-off charges applicable to Bitstream
Bitstream
in BD
BS.3 - Maintaining relationship charge 1,552.000 4,029.000 872.917 872.917 -43.8%
BS.12 INET Helpdesk premium rate call (per 0.250 removed removed
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Chargeable activity
Approved/ ordered in
January 2011 (or currently
implemented)
Batelco's submitted charges in April 2011
TRA FRND draft charges
TRA FRND final Order
charges
Evolution of Order FRND as compared to previously
approved/ ordered
minute)
International Falcon Connection Service (IFC Service) (2-14)
2-14.3 Co-location space 350 350 Refer to Schedule 3 2-15.2.2
Refer to Schedule 3 2-15.2.2
-
2-14.4 Riser room and riser access 0.712 0.712
Monthly duct rental charge Schedule 3 2-3.9 + 300% premium (per metre for a maximum of 100 metres)
Monthly duct rental charge Schedule 3 2-3.9 + 300% premium (per metre for a maximum of 100 metres)
0.0%
Note: The final Order charges are written in red. When the final Order charges are different from the draft Order charges, they are also highlighted in light yellow.
Source: The Authority
Reference Offer Order
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The Authority hereby orders Batelco to reflect the following changes in its RO: 3.
a. Batelco shall amend the cancellation charge formula in its RO Schedule 4 clause
8 as follows:
with:
P: Amount to be paid (cancellation charge);
WC: Relevant wholesale charge (i.e. ISI/CSI) applied to the average number of E1s at
which the link has operated since its first operation (i.e. between the Ready for Test
(“RFT”) Date and the removal order date) or the current number of E1s at the removal
order date whichever of the two is higher, based on the current link rate applied to the
band in which that number of E1s falls.
M: Number of months between the Ready for Test (“RFT”) Date and the removal order
date rounded-up to the next full month.
The above formula shall apply to both existing and new services.
b. Batelco shall amend the names of interconnection, transit and access services in
its RO in accordance with the above Table 1. This applies to services 1-3.1, 1-4.1,
1-8.1, 1-8.2, 2-7.1, 2-8.1 and 2-9.1.
c. When relevant, Batelco shall amend the data transfer and data usage units of
regulated services (such as WDSL, Bitstream, CAT/LLCO, IPLC…) in accordance
with the International System of Units (‘SI’) detailed in Table 77 and Table 78 of
the Annex (page 142).
d. Batelco shall provide accurate maps of the duct route provided to OLOs upon
request. This should be provided to OLOs at no additional costs and at any time
after the completion of the field study. Batelco shall amend its RO accordingly.
e. Batelco shall remove the chargeable activity BS.12 (related to INET Helpdesk
premium rate call) from the RO.
Compliance
Batelco shall comply with the terms of this Order. Failure to comply with the terms of this 4.
Order may constitute a material breach of the Telecommunications Law and may
consequently be subject to enforcement action pursuant to the relevant provisions of the
Telecommunications Law.
Entry into force
This Order is effective on the date of its issuance. The charges shall apply from 1 June 5.
2012 (the first calendar day of the month following the issuance of this Order) with the
exception of Wholesale DSL charges which shall apply from the start of the next billing
cycle following the date of issuance of this Order. Batelco shall inform all its wholesale
P = WC × ( 36 - M )
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customers and the Authority by email of the new charges and their associated effective
dates within 2 working days following the date of issuance of this Order.
This Order is without prejudice to any further orders, regulations and determinations that 6.
the Authority may consider necessary pursuant to its powers and duties under the
Telecommunications Law.
Signed on 14 May 2012
Mohammed Bubashait
General Director
Telecommunications Regulatory Authority
Manama, Kingdom of Bahrain
Reference Offer Order
Annex– Order legal basis and reasoning
Page 10 of 167
Annex– Order’s legal basis and reasoning
Table of contents
Table of contents ........................................................................................................................ 10
List of acronyms and definitions ................................................................................................. 12
1 Introduction ......................................................................................................................... 13
2 Legal basis ......................................................................................................................... 13
3 2011 RO review process and chronology .......................................................................... 15
4 Premise of fair, reasonable and non-discriminatory tariffs ................................................. 18
Summary of the responses received by the Authority on Sections 1, 2, 3 and 4 of the draft
Order ....................................................................................................................................... 18
The Authority’s analysis and conclusion ................................................................................ 20
5 Context of this year’s RO review ........................................................................................ 21
Draft Order Text ...................................................................................................................... 21
Summary of responses received by the Authority .................................................................. 21
The Authority’s analysis and conclusion ................................................................................ 22
6 Wholesale costs ................................................................................................................. 23
Draft Order Text ...................................................................................................................... 23
Summary of responses received by the Authority .................................................................. 37
The Authority’s analysis and conclusion ................................................................................ 38
7 ISI and CSI link services (1-1 and 1-2) .............................................................................. 40
Draft Order Text ...................................................................................................................... 40
Summary of responses received by the Authority .................................................................. 52
The Authority’s analysis and conclusion ................................................................................ 55
8 Interconnection and transit services................................................................................... 61
Draft Order Text ...................................................................................................................... 61
8.1 Information provided by Batelco ................................................................................ 61
8.2 Review of the submitted charges for interconnection and transit services ............... 82
8.3 Draft Order fair, reasonable and non-discriminatory charges for interconnection and
transit services ........................................................................................................................ 90
Summary of responses received by the Authority .................................................................. 91
The Authority’s analysis and conclusion ................................................................................ 94
8.4 Order fair, reasonable and non-discriminatory charges for interconnection and transit
services ................................................................................................................................... 97
Reference Offer Order
Annex– Order legal basis and reasoning
Page 11 of 167
9 Duct access service (2-3.9) ................................................................................................ 98
Draft Order Text ...................................................................................................................... 98
Summary of responses received by the Authority ................................................................ 107
The Authority’s analysis and conclusion .............................................................................. 110
10 CAT/LLCO services (2-5 and 2-6) .................................................................................... 114
Draft Order Text .................................................................................................................... 114
Summary of responses received by the Authority ................................................................ 119
The Authority’s analysis and conclusion .............................................................................. 121
11 International Private Leased Circuit service (‘IPLC’) (2-10) ............................................. 128
Draft Order Text .................................................................................................................... 128
Summary of responses received by the Authority ................................................................ 133
The Authority’s analysis and conclusion .............................................................................. 134
12 Wholesale DSL service (2-11) and Bitstream service (2-12) ........................................... 137
Draft Order Text .................................................................................................................... 137
12.1 Wholesale DSL service (2-11) ................................................................................. 137
12.2 Bitstream service (2-12) .......................................................................................... 151
Summary of responses received by the Authority ................................................................ 158
The Authority’s analysis and conclusion .............................................................................. 159
13 International Falcon Connection (‘IFC’) service (2-14) .................................................... 164
Draft Order Text .................................................................................................................... 164
Summary of responses received by the Authority ................................................................ 165
The Authority’s analysis and conclusion .............................................................................. 166
14 Other matters raised by operators ................................................................................... 167
Summary of responses received by the Authority ................................................................ 167
The Authority’s analysis and conclusion .............................................................................. 167
Reference Offer Order
Annex– Order legal basis and reasoning
Page 12 of 167
List of acronyms and definitions
APM Accounting Procedures Manual
Batelco Bahrain Telecommunications Company B.S.C
BB Broadband
BD Bahraini Dinar
CAPEX CAPital EXpenditure
CAT Customer Access Tail
CSI Customer Sited Interconnect
FAC Fully Allocated Cost
FRND Fair, reasonable and non-discriminatory
G1 Grade 1
GCC countries Gulf Cooperation Council countries
ISC Interconnect Specific Charge
ISI In-Span Interconnect
kbit/s Kilobits per second
LLCO Local Leased Circuit for OLO
LLU Local Loop Unbundling
LRAIC Long Run Average Incremental Cost
LRIC Long Run Incremental Cost
MB Megabytes
Mbit/s Megabits per second
MPLS Multiprotocol Label Switching
MSAN Multi-Service Access Node
MTR Mobile Termination Rate
NA Network Activity
NB Narrowband
NGN Next Generation Network
NRA National Regulator Agency
OLO Other Licensed Operator
POP Point Of Presence
RAN Radio Access Network
RAO Reference Access Offer
RIO Reference Interconnection Offer
RO Reference Offer
S&M Support and Maintenance
SHDSL Symmetrical High-speed Digital Subscriber Line
SLA Service Level Agreement
SMP Significant Market Power
SNFM Service Node Facilities Management Service
TRA Telecommunications Regulatory Authority of the Kingdom of Bahrain
UC Un-attributable Costs
WACC Weighted Average Cost of Capital
WDSL Wholesale Digital Subscriber Line
Reference Offer Order
Annex– Order legal basis and reasoning
Page 13 of 167
1 Introduction
Batelco’s Reference Offer (‘RO’) is a key regulatory instrument that drives competition in 7.
the telecommunications market in the Kingdom of Bahrain. It affects Batelco and other
operators. Accordingly, the Authority has decided to consult with the wider industry and
stakeholders on this Order.
This Annex contains the legal basis on which the decisions of the Authority have been 8.
made and detailed reasoning for the ordered charges. It also sets out the premise of fair,
reasonable and non-discriminatory tariffs as well as the context of this review of Batelco’s
2011 RO submission and the chronology of this review.
The final Order follows the same structure as the draft Order issued for consultation on 3 9.
November 2011. It includes the original text of the draft Order with minor amendments. A
summary of the points raised in submissions is provided along with the Authority’s analysis
and conclusions.
By the end of the consultation period, the Authority had received 7 submissions as 10.
detailed in Table 2 page 16. The present Order concludes a lengthy and comprehensive
process whose various steps are documented in Section 3.
2 Legal basis
Article 57 (b), 57 (c) and 57 (e) of Legislative Decree No. 48 of 2002 promulgating the 11.
Telecommunications Law (the ’Telecommunications Law‘) and article 4 of the Access
Regulation issued 30 April 2005 require operators determined by the Telecommunications
Regulatory Authority (the ‘Authority’) to have a dominant position in a particular
telecommunications market to publish a RO after obtaining the Authority’s approval of the
offer.
Pursuant to article 57 of the Telecommunications Law and articles 5 and 6 of the Access 12.
Regulation, in reviewing the proposed offer, the Authority must assess whether the terms
and conditions and tariffs are fair, reasonable, non-discriminatory and based on forward-
looking costs or benchmarked against tariffs in comparable telecommunications markets.
When doing so, the Authority shall:
a. pursuant to its obligations under article 3(a) of the Telecommunications Law,
exercise its powers inter alia reasonably, in a non-discriminatory and transparent
manner.
b. pursuant to its obligations under article 3(b) of the Telecommunications Law,
ensure that when assessing such terms or tariffs it will carry out its duties in a
manner best calculated to:
i. protect the interests of Subscribers or Users as set out in article 3(b)1;
and
ii. promote effective and fair competition as set out in article 3(b)2.
In accordance with article 57 of the Telecommunications Law, should the Authority 13.
consider that the proposed tariffs are not fair, not reasonable or are discriminatory, then
the Authority may issue an order specifying the terms and conditions and tariffs.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 14 of 167
Bahrain Telecommunications Company B.S.C. (‘Batelco‘), having been found dominant in 14.
certain markets pursuant to the Dominance in Interconnection Markets Determination
issued 9 August 2003, the Dominance Determination in Wholesale Markets by Batelco
issued 22 January 2006, the Dominance Determination in Wholesale Broadband Markets
issued 14 September 2009, and the Dominance Designation for Termination Services on
Individual Mobile Networks issued 1 February 2010, submitted its latest RO for review and
approval on 11 April 2011.
Other than as detailed in this Order, the Authority has used costs as set out in the 2009 15.
Fully Allocated Cost (‘FAC‘) and Long Run Incremental Cost (‘LRIC‘) regulatory accounts
to set tariffs. Those costs have been adjusted where appropriate. The regulatory accounts
are prepared in accordance with Batelco’s Accounting Procedures Manual (‘APM’)
approved by the Authority. The APM sets the principles and methods according to which
Batelco’s regulatory accounts must be prepared. It provides some details on the
accounting treatment of costs and their allocation.
After having conducted a review of the tariffs contained in the initial RO submission, 16.
requested, received and reviewed additional information considered necessary by the
Authority to complete its analysis, the Authority considers that certain tariffs listed in the
initial RO submission are not fair, reasonable and non-discriminatory.
Consequently the Authority has decided to exercise its power in accordance with articles 17.
3(c)(1) and 57 of the Telecommunications Law and article 5.3 of the Access Regulation to
issue this Order to Batelco with respect to its RO submitted on 11 April 2011.
The effective dates for the final charges are the first calendar day of the month following 18.
the issuance date of the order for wholesale services billed with Batelco’s wholesale billing
platform and on the next billing cycle date in all other cases (e.g. Wholesale DSL).
Reference Offer Order
Annex– Order legal basis and reasoning
Page 15 of 167
3 2011 RO review process and chronology
In its letter dated 9 November 2010 (MCD/11/10/100), the Authority set out a number of 19.
requirements consistent with the Telecommunications Law to facilitate the RO review:
a. Justify the proposed charges in light of the relevant legal provisions, including
article 57 of the Telecommunications Law;
b. Provide at the time of submission all supporting documents and in particular fully
functioning and documented spreadsheets to enable TRA to follow the
calculations as well as to ensure consistency and accuracy of the figures and data
provided;
c. Explain and justify in writing at the time of the submission changes to previously
agreed/ordered positions, if any, so that the review can be more focused and
rapid;
d. Provide 2008 and 2009 comparison of cost stacks in order to facilitate the
understanding of costs as well as explain wide movement in costs; and
e. Meet with the Authority to present all submitted documents.
Where Batelco has not provided any justifications or new arguments to depart from the 20.
positions set in the 2011 RO Order, the Authority has reverted to the position set in the
2011 RO Order. Where the Authority has departed from the 2011 RO Order, the reasons
for doing so are set in this Order.
The following table summarizes the chronology of the 2011 RO submission review up to 21.
the publication of the final RO Order.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 16 of 167
Table 2: 2011 RO submission review chronology
Date Event description Reference File(s) name(s)
07/04/2011 Batelco submits the calculation spreadsheets of its 2011 RO based on 2009 regulatory accounts.
BTC RO submission GCL/126/11
20110407 BTC RO 2011 submission spreadsheets.zip
11/04/2011 Batelco submits the complete soft copy set of its 2011 RO.
RE: BTC RO submission GCL/126/11
20110407 BTC RO 2011 submission spreadsheets.zip
11/04/2011
Batelco re-submits the complete soft copy set of its 2011 RO as ITAS costs were not correct in the previous submission.
RE: BTC RO submission GCL/126/12
20110411 BTC RO 2011 submission spreadsheets.zip
15/06/2011
The Authority issues a request for information under article 53 of the Telecommunications Law. Batelco is required to provide its response by 28 July 2011 4pm.
MCD06/11/091 MCD 06 11 091 Article 53 related to Batelco 2011 RO submission vF
28/07/2011
Batelco provides a partial response to the article 53 request for information of 15 June 2011. As the response is incomplete, Batelco indicates that it will send the outstanding elements the following week.
GCL/264/11
RO artc 53 costing attachments.zip 20110728 response to Article 53 related to Batelco 2011 RO submission - final.docx 20110728 response to Article 53 - 2011 RO review.xlsx
02/08/2011
As part of the 2010 APM review, the Authority issues a request for information under Article 53 of the Telecommunications Law. The questionnaire includes a set of questions on wholesale activities cost allocation (Questions - Wholesale cost allocation.xlsx)
MCD/08/11/113
MCD0811113 Request for information for 2010 APM.pdf Questions - Wholesale cost allocation.xlsx
08/08/2011
Batelco sends additional elements to complete its response to the article 53 request for information sent on 15 June 2011.
GCL/282/11 20110808 Updated response to Article 53 related to Batelco 2011 RO submission - final.docx
23/08/2011
Batelco provides a response to the wholesale activities cost allocation question of the article 53 request for information sent on 2 August 2011.
GCL/299/11 Questions - Wholesale cost allocation.xlsx
03/11/2011
Following a presentation to the industry held in its premises, the Authority issues Batelco’s 2011 RO draft Order for public consultation.
Operators are invited to submit a response by 8 December 2011 at 4pm
MCD11/11/150
20111103ROdraftOrder-Presentationtotheindustry.pdf
MCD11111502011ROdraftOrderPV.pdf
21/11/2011 Batelco requests an extension of the consultation period to 28 December 2011.
GCL/402/11 20111121 - GCL 402 11 - Reference Offer Draft Order_RFE(2).pdf
29/11/2011 The Authority extends the consultation period to 28 December 2011.
The Authority’s website announcement and email to all licensees
N/A
04/12/2011 Batelco requests clarifications from the Authority on the 2011 RO draft Order.
GCL/415/11 20111204 - GCL 415 11 - RODO clarification request.pdf
04/12/2011 The Authority provides the clarifications that were requested by Batelco the same day.
Email 20111204 Tables 14 - 39 - 62.xlsx
Reference Offer Order
Annex– Order legal basis and reasoning
Page 17 of 167
28/12/2011 The Authority receives seven responses before the end of the consultation period.
Soft and hard copies
Responses of Batelco,1 Etisalcom,
2
Lightspeed,3 Menatelecom,
4 Viacloud,
5
Viva6 and Zain.
7
After the closing date for submission (28/12/2012)
After 28/12/2012
The Authority receives two responses after the end of the consultation period. Those submissions have been disregarded as they were submitted after the extended submission date.
Emails Reponses of 2Connect received on 12 January 2012 and Kalaam received on 15 January 2012
01/02/2012
The Authority issues a request for information under article 53 of the Telecommunications Law. The information requested relates to Batelco’s international traffic in 2009 and 2010 for which the Authority has identified a large discrepancy.
MCD/02/12/012 MCD 02 12 012 Request for information under Article 53 Batelco International Minutes 2009 and 2010.pdf
06/02/2012 Batelco requests an opportunity to meet the Authority to discuss the RO Order prior to its publication.
CEB 001/2/12 batelco reference offer 2011.pdf
14/02/2012 The Authority provides a response to the above letter sent by Batelco.
MCD/02/12/019 MCD 02 12 019 Batelco Reference Offer 2011.pdf
16/02/2012 Batelco submits its response to the request for information sent by the Authority on 1 February 2012.
GCL/57/12 20120216 International traffic minutes article 53 response.pdf 20120216 Traffic 2010 article 53.xlsx
01/04/2012
The Authority issues a request for information under article 53 of the Telecommunications Law in relation to Batelco’s costing of SDH-based products.
MCD04/12/050 MCD 04 12 050 Request for clarification and A53 request for information on the costing of SDH-based products.pdf
09/04//2012 Batelco submits its response to the request for information sent by the Authority on 1 April 2012.
GCL142/12
20120409 Article 53 response - SDH costing.pdf 20120409 SDH allocations 2010 - annex.xlsx
25/04/2012
The Authority issues a request for clarification on the Wholesale Duct Access Service and more specifically on the limitation of the service to physical addresses.
MCD04/12/064 MCD 04 12 064 Request for clarification on the Wholesale Duct Access Service in the context of the 2011 RO review.pdf
06/05/2012 Batelco submits its response to the request for clarification sent by the Authority on 25 April 2012.
GCL/189/12 20120506 Batelco letter - Wholesale Duct Access Service.pdf
06/05/2012
Batelco submits further information in response to the request for clarification sent by the Authority on 25 April 2012.
GCL/200/12 GCL 200 12 Wholesale Duct Access.pdf
Source: The Authority
1 Batelco, “RESPONSE TO THE TELECOMMUNICATIONS REGULATORY AUTHORITY OF BAHRAIN (TRA)
REFERENCE OFFER DRAFT ORDER (REF MCD/11/11/150) BY BAHRAIN TELECOMMUNCATIONS COMPANY (BATELCO) BSC ON 28 DECEMBER 2011 (Our Ref GCL/434/11)”, 28 December 2011. 2 Etisalcom, “Consultation on the draft order issued on Batelco’s Reference Offer”, 7 December 2011.
3 Lightspeed, “Lightspeed Submission in Response to the Draft Order On The Reference Offer of the Bahrain
Telecommunications Company B.S.C (Reference Offer Draft Order) Issued by the Telecommunications Regulatory Authority (TRA)”, 26 December 2011. 4 Menatelecom, “Response to TRA Consultation Document on A Draft Order issued by the Telecommunications
Regulatory Authority on the Reference Offer of the Bahrain Telecommunications Company B.S.C – Ref: MCD/11/11/150”, 28 December 2011. 5 Viacloud, “Viacloud comments on Bahrain Telecommunications Company B.S.C?s Reference Offer (RO) –
Confidential”, 26 December 2011. 6 Viva, “VIVA's Response to the draft Order issued on Batelco's Reference Offer”, 28 December 2011. Viva’s
submission only said “VIVA has No comments on Batelco’s drafted Reference Offer.” Viva’s “submission” is therefore not considered further. 7 Zain, “Zain Bahrain’s Reply Comments to the TRA consults on a draft Order issued on Batelco’s Reference
Offer” (Ref: RI/1112/042), 28 December 2011.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 18 of 167
4 Premise of fair, reasonable and non-discriminatory tariffs
The Authority considers tariffs to be fair and reasonable if such tariffs are based on 22.
relevant, efficiently incurred economic costs calculated on a forward-looking incremental
basis, including the regulated rate of return on capital employed.
In assessing whether charges are fair and reasonable and non-discriminatory, the 23.
Authority also considers the relative relationship between the prices of wholesale services
and the equivalent retail services. To this end the Authority has consistently applied the
same competition-based analytical framework to analyse wholesale and retail tariffs in
order to ensure that there is consistency between the charges applicable at various levels
of the value chain. This framework looks at whether retail services can be replicated by
OLOs which rely on wholesale regulated products and remain profitable, thereby ensuring
that tariffs are compatible with the development of sustainable competition. The objective
of introducing wholesale products which give access to bottlenecks controlled by dominant
operators is to enable competitors that do not control such bottlenecks to compete at the
downstream level. This is a core premise of the wholesale regulation of dominant
operators.
In setting charges which are fair and reasonable, the Authority must also take into account 24.
the principle of non-discrimination referred to in article 57(b) of the Telecommunications
Law and article 6 of the Access Regulation.
Summary of the responses received by the Authority on Sections 1, 2, 3 and 4 of
the draft Order
Batelco
In relation to the implementation and entry into force of the RO Order, Batelco considers 25.
that it is appropriate for changes to be implemented within 10 working days of the date of
the final Order except when changes require material redrafting of legal terms and
conditions. Batelco also considers reasonable that changes to the charges are notified
within 2 working days of the date of the final Order.
In relation to the ordered changes listed in paragraph 3 of the Order, Batelco makes the 26.
following comments:
a. paragraph 3.a: Batelco refers the Authority to the comments included in its
submission (summarized by the Authority in paragraphs 124 to 129);
b. paragraph 3.b: Batelco accepts the changes with respect to 1-3.1, 1-4.1, 1-8.1, 1-
8.2, and 2-9.1 but is concerned with any changes being made with respect to 2-
7.1 and 2-8.1 (regarding international inbound services) pending the proposed
consultation;
c. paragraphs 3.c and 3.e: Batelco accepts the ordered changes; and
d. IFC backhaul restriction: Batelco refers the Authority to the comments included in
its submission (summarized by the Authority in paragraphs 453 and 454).
Reference Offer Order
Annex– Order legal basis and reasoning
Page 19 of 167
In relation to paragraph 5, Batelco agrees that, “with the exception of wholesale DSL, 27.
charges should commence with effect from the first calendar of the month following the
final order, although Batelco submits that if the final order is made in the last few days of a
calendar month it may appropriate for those changes to roll over at the commencement of
the subsequent calendar month.”8
In relation to paragraphs 11 to 18, Batelco highlights that article 57(b) of the 28.
Telecommunications Law requires an operator to publish a RO within 3 months of being
found dominant and establishes the power of the Authority to issue an order should it not
approve the terms and conditions and the tariffs of such offer. Batelco notes that the
Authority has found Zain dominant in respect of the wholesale market for termination
services on Zain’s mobile network in 2010. Batelco submits that Zain’s RO should also be
subject to public consultation and suggests that the Authority synchronize both the reviews
of Zain’s and Batelco’s ROs.
Batelco’s submission contained several comments in relation to the Authority’s view on 29.
fair, reasonable, and non-discriminatory tariffs as well as on replicability. At paragraph 10
of its submission, “Batelco urges the TRA not to adopt this inflexible pricing policy
position”. Batelco also calls the Authority “not to allow an over-aggressive doctrine of
replicability to effectively “lock down” all flexibility in the development and offering of
Batelco products” (Batelco’s response, paragraph 26).
Lightspeed
Lightspeed concurs with the Authority on the pricing principles of regulated charges. 30.
Lightspeed also questions the use of Batelco’s FAC regulatory accounts as a basis to
calculate regulated charges. Lightspeed considers instead that it would be more
appropriate to use the LRIC bottom-up cost models which are currently being developed. If
the Authority continues to use the FAC accounts, Lightspeed considers that the Authority
should determine the charges in the draft RO order as indicative and inform that they will
be retroactively replaced by the charges calculated by the bottom-up cost LRIC models
when available.
Lightspeed is of the view that “the basis for considering whether a price is fair and 31.
reasonable should always be international benchmarks and the ability for competitors to
pay such a price and simultaneously provide their services to their customers with a
reasonable return” (Lightspeed’ response, paragraph 1.3).
Lightspeed considers that the contractual period of a dominant operator providing 32.
interconnection service to a non-dominant operator should be limited to one year.
According to Lightspeed, imposing a minimum contractual period of three year is unfair
and represents a barrier to market entry for new and non-dominant OLOs.
8 Batelco’s submission, paragraph 10.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 20 of 167
The Authority’s analysis and conclusion
The Authority concurs with Batelco’s suggestion to synchronize the review of some 33.
elements of Zain’s and Batelco’s ROs, and more specifically for mobile termination
services, which are regulated services for Batelco and Zain. The rest of Batelco’s RO
could be reviewed separately (to avoid delays) and any overlapping issues would be dealt
with in the most appropriate way. The Authority intends to follow this approach going
forward. This would be facilitated by the use of mobile bottom-up models which should be
readily available for the next RO review. While specific cost models are being developed
for each of the three mobile operators, a generic model will also be available. This would
enable the Authority to understand the differences in the cost structures of all three mobile
operators and thus take better informed decision regarding the setting of interconnection
charges.
Batelco’s submission contained several comments in relation to the Authority’s view on 34.
fair, reasonable, and non-discriminatory tariffs as well as on replicability. The Authority
notes that most of Batelco’s comments have already been raised by Batelco in previous
submissions.9 The Authority also notes that Batelco has not articulated the relevance of its
comments on the decisions made by the Authority in relation to the charges ordered for
individual services. These generic comments do not appear to call for any specific actions
in relation to this Order.
With regards to Lightspeed’s comments regarding the use of bottom-up cost models to set 35.
regulated charges, the Authority highlights that, while the additional source information
provided by bottom-up cost models will be useful in the context of reviewing and setting
regulated charges, this does not however mean that Batelco’s top down information (i.e.
FAC and LRIC regulated accounts) would not be considered nor that the regulated
charges will necessarily be set equal to cost models outputs.
The Authority considers that Lightspeed’s suggestion (final Order to include ‘indicative 36.
charges’ which will be retroactively adjusted based on the results of the bottom-up model)
is neither appropriate nor legally sound; it would leave the market exposed to undesirable
uncertainty.
9 See e.g. paragraphs 17-29 of Batelco’s response to the Authority’s RO draft Order, 7 November 2010 (ref
GCL/425/10).
Reference Offer Order
Annex– Order legal basis and reasoning
Page 21 of 167
5 Context of this year’s RO review
Draft Order Text
In accordance with article 57 of the Telecommunications Law, the Authority’s overreaching 37.
objective of the review of Batelco’s RO submission is to ensure that the final charges
approved are fair, reasonable and non-discriminatory and reflect forward-looking costs.
The charges should be sustainable and consistent with the promotion of competition. This
is to the long term benefit of both Batelco and the telecommunications market in the
Kingdom of Bahrain.
The 2011 review of Batelco’s 2011 RO submission is the last review which is based on a 38.
single source of costing information, i.e. Batelco’s regulatory FAC and LRIC accounts for
2009. For the review of next year’s RO submission (based on 2010 regulatory accounts),
the Authority will use the bottom-up LRIC cost models that are currently being developed
by the Authority.
The bottom-up LRIC cost model project was kicked-off in January 2011. Since then, the 39.
Authority has undertaken a consultation with all operators on the proposed approach for
the development, implementation and use of the future bottom-up fixed and mobile
network cost models. The final Position paper was released on 19 October 2011. The data
collection phase and model development phase are expected to take place during Q4
2011. The validation of the model is expected to be completed during Q1 2012. Thus, the
model’s results will be available during Q2 2012, which is when Batelco has been
submitting its RO in the last couple of years.
Summary of responses received by the Authority
Viacloud
Viacloud notes that the 2011 review of Batelco’s 2011 RO submission is based on 40.
Batelco’s 2009 FAC and LRIC regulatory accounts. Viacloud considers that the draft
charges set in the draft RO Order do not reflect the steep reduction in equipment and
services cost due to technological advancements and increased efficiencies achieved.
Consequently, it considers that the draft charges are outdated and overstated by at least
two years.
Viacloud calls for the retroactive application of the draft ordered charges from at least 41.
January 2010, as according to Viacloud, OLOs have been overpaying Batelco for the last
2 years. For the year 2010, Viacloud estimates that it has overpaid Batelco by USD [],
an amount which Viacloud considers should be refunded by Batelco if the Order was to
apply retroactively from January 2010.
Viacloud further insists that large operators enjoy advantages due to their size which, 42.
contrarily to smaller OLOs, enable them to benefit from: a) economies of scale and scope;
b) greater marketing visibility (branding); c) possibility to cross subsidise due to large
service portfolio; and d) financial strength allowing greater budget for customer acquisition.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 22 of 167
Viacloud considers that small OLOs are completely marginalised and have to offer
important discounts to compete with large operators.
Finally, Viacloud is of the view that “sustained and deep access price reduction will create 43.
cost pressures and force incumbents to adopt these cost reduction methods [sic] more
aggressively benefiting consumers at large.” (Viacloud’ response, paragraph 5).
The Authority’s analysis and conclusion
Pursuant to article 57 (b) of the Telecommunications Law, “[the] Authority may issue an 44.
order specifying the terms and conditions and the tariffs if it does not approve the contents
of such offer in this respect, which order shall be effective from the date of issue, unless
the Authority specifies another date”. On 25 January 2011, the Authority has approved or
ordered the charges which have been applicable since and which will be applicable up to
the date stipulated in this Order in paragraph 5. More generally, the Authority considers
that ordered/approved charges rates should not apply retroactively unless special
circumstances expressly justify it.
While the Authority accepts that most of the cost information used to set charges in this 45.
Order relate to 2009 and may be perceived as ‘dated’, this was the latest information
available when the draft RO Order was issued. It should also be noted that the Authority
has made considerable efforts in the past few years to improve the quality and reliability of
the cost information supplied by Batelco while shortening the duration between the time at
which costs are incurred and the time at which regulatory accounts are available. In the
context of annual declines in cost, the gap between the time at which costs are incurred
and the time at which this cost information is used to set prices means that Batelco
effective return is higher than its regulated cost of capital. Therefore decisions based on
past cost information are favourable to Batelco.
For the next RO review, bottom-up cost models should be readily available. They will 46.
provide an additional source of information enabling the Authority to appreciate the
expected evolution of network services costs. As services costs will be modelled for the
next three to four years, the bottom-up cost models will enable the Authority to take
decisions of a more forward-looking nature.
Viacloud’s comments on the advantages of larger operators are noted. The Authority 47.
notes that in so far as the wholesale regulated charges are cost-based, economies of
scale and scope are reflected in the regulated charges and as such are passed on to
OLOs.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 23 of 167
6 Wholesale costs
Draft Order Text
This section examines in some detail the non-network costs which Batelco incurs in the 48.
provision of wholesale services. The purpose of this section is to provide a description of
wholesale costs, how they are derived and allocated based on the top-down approach of
Batelco. In doing so this section highlights a number of issues and concerns associated
with the current approach which the Authority intends to address as part of the next RO
review through the use of a bottom-up approach to the analysis of wholesale costs.
Notwithstanding the issues and concerns identified, the Authority has accepted for all
access products, except low speed CAT/LLCO, the wholesale cost as submitted by
Batelco.
This section complements the description and analysis of the wholesale department costs 49.
included in section 13 (page 138 and following) of the RO Order dated 25 January 2011
(‘2011 RO Order’).
Total cost incurred in the provision of wholesale interconnection and access services
The costs related to the provision of wholesale services fall into 4 broad categories: 50.
a. Interconnect specific costs are coded under the core network activity ‘CN90’ in
Batelco’s costing system. They are recovered by Batelco through the ISC
(‘Interconnect Specific Charge’) which is a cost component of interconnection
services charges (item A in the following table);
b. Wholesale activities costs (WS01 to WS05) are specific to the provision of
wholesale products. The relevant portion of these costs is recovered through the
wholesale access product charges (item B in the following table);
c. Shared activities costs which are common to both retail and wholesale products
(e.g. Revenue Assurance & Fraud Management activity, Customer Assistance
Centre activity, Billing activity.). The relevant portion of these costs is recovered
through the wholesale access product charges (item C in the following table);
d. Network specific costs incurred in the provision of wholesale products and
services. In the regulatory accounts, these costs are equal to the transfer charges
of network business units to the wholesale department (excluding CN90 which is
included in the transfer charge of the core network business unit).
The table below provides a summary of the cost of each category for the years 2007, 2008 51.
and 2009. It provides a general description of the cost incurred by the wholesale
department in the provision of interconnection and wholesale services to OLOs as
presented by Batelco. It is based on information provided by Batelco and the regulatory
accounts. In some instances the figures do not reconcile back with the Wholesale
Reference Offer Order
Annex– Order legal basis and reasoning
Page 24 of 167
Business Unit of the regulatory accounts because the way certain costs are recorded
differs.10
Table 3: Wholesale cost breakdown for the year 2007-2009 (based on FAC)
Item Item 2007 2008 2009
21050 [IT - Fixed Billing] [] []
30400 [Commercial Lawyer] [] []
30500 [Wholesale & Carrier] [] []
36552 [Market Comm] [] []
62110 [Commercial Operation] [] []
62400 [Costing & Regulatory Accounting] [] []
64670 [Billing Systems] [] []
UA01 [Corporate Management Services] [] []
UA03 [Security & Safety] [] []
UA04 [Corporate Planning And Accounting] [] []
A_56c [Interconnect Reconciliation and Suspense] [] []
A Interconnect specific costs (CN90) [] [] []
evolution [] []
Interconnect specific costs allocated to the wholesale
business unit through the transfer charges mechanism [] [] []
WS01 Wholesale & Carrier Relations - Access Product Management
[] [] []
WS02 Commercial Operation- Access [] [] []
WS03 Finance Support Services - Reg & WS Support Access
[] [] []
WS04 Legal & Regulatory Affairs - Access Support [] [] []
WS05 Fixed Billing - IAA Access [] [] []
B Wholesale support activities costs (sum of WS01
to WS05) [] [] []
evolution [] []
C = D-B Portion of shared activities cost allocated to
wholesale (deducted) * [] [] []
evolution [] []
D Own OPEX, depreciation and cost of capital of
wholesale business unit [] [] []
evolution [] []
E = A+B+C = A+ D
Total wholesale costs [] [] []
evolution [] []
F Wholesale business unit network specific costs
(excluding CN90) [] [] []
evolution [] []
G = E + F Total wholesale business unit costs including
network specific cost [] [] []
evolution [] []
* For 2007 and 2008, Line D does not include the return on capital of the wholesale business unit. As a result, the 2007 and 2008 figures in lines C to G are not directly comparable. Note: The cost of wholesale support activities (WS01to WS05) already include the cost of un-attributable
10 For example CN90 is recorded as a network element in the regulatory accounts.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 25 of 167
activities (UA01, UA03 and UA04) Source: The Authority from Batelco’s regulatory accounts and RO submissions
In the remainder of this section, ‘wholesale costs’ refer to the non-network costs incurred 52.
by Batelco in the provision of wholesale products and services to OLOs, i.e. item E in the
above table. They include:
a. interconnect specific costs (CN90);
b. wholesale activities costs (WS01 to WS05); and
c. a portion of shared activities costs.
From the above table, it can be seen that wholesale costs have increased by 16% 53.
between 2007 and 2008 and by 8% between 2008 and 2009. They amounted to BD []
in 2007 and reached BD [] in 2009.
The main cost centres which feed into wholesale support activities and CN90 are:11
54.
a. 21050 IT- Fixed Billing
b. 30400 Legal Counsel (called 30400 Commercial Lawyer in 2009)
c. 30500 Wholesale and Carrier Relations
d. 62110 Commercial Operation
e. 62400 Costing & Regulatory Accounting
f. 64670 Billing Systems which are only allocated to CN90
The next two tables provide more details on each cost centre, the allocation destinations, 55.
allocation bases and resulting cost allocations in 2009 (in BD and in %).
11 Un-attributable activities are allocated to the different activities according to their share in the total OPEX and
depreciation costs (EPMU allocation).
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Figure 1: Cost centres’ and assets’ downstream allocation to wholesale support activities and CN90
Source: AS Appendices Comparison btwn 2009 and 2010_final.xlsx Interconnect specific costs
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Table 4: Description and 2009 cost allocation breakdown of the cost centres and assets which are allocated to the wholesale support activities and CN90
CC Code
Cost Centre Name
Cost Centre Description Allocation to Activities
Amount of the
total cost of the CC allocated
to the activity
Allocation percentag
e
Allocation Method
Allocation Description
30500 Wholesale & Carrier Relations
Responsible for managing Wholesale customers, products and Carrier relations
WS01- Wholesale & Carrier Relations - Access Product Management
[] []
[] []
CN90 - Interconnect Specific [] []
UB01 - Joint ventures [] []
IN01 - International Switches [] []
NA01 - Manage international network capacity
[] []
62110 Commercial Operation
Responsible for end-to-end processing, accuracy and reconciliation of Wholesale Accounting (both International and Local Carriers), billing wholesale customers, controlling receivables and payables and managing cash flow.
WS02- Commercial Operation- Access
[] []
[] []
WS06- Commercial Operation - Roaming
[] []
CN90 - Interconnect Specific [] []
IN01 - International Switches [] []
62400 Costing & Regulatory Accounting
Responsible for supporting wholesale and retail business, providing costing information and working on costing exercises to satisfy product managers and top management needs and meeting regulatory requirements.
WS03- Costing & Regulatory Accounting - Reg & WS Support Access
[] []
[] [] CN90 - Interconnect Specific [] []
SA16 - Finance support services [] []
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CC Code
Cost Centre Name
Cost Centre Description Allocation to Activities
Amount of the
total cost of the CC allocated
to the activity
Allocation percentag
e
Allocation Method
Allocation Description
30400 Legal Counsel
This is the cost centre that provides legal and regulatory support for Bahraini businesses, such as interaction with TRA (and other government departments, regulators and agencies) and legal matters predominantly but not solely of a corporate and commercial nature.
FR36 - Legal Counsel - NCT support (Fixed)
[] []
[] []
MR36 - Legal Counsel - NCT support (Mobile)
[] []
OR36 - Legal Counsel - NCT support (Others)
[] []
WS04 - Legal Counsel - Access Support
[] []
UB01 - Joint ventures [] []
SA85 - Legal admin & litigation services
[] []
IN01 - International Switches [] []
CN90 - Interconnect Specific [] []
21050 IT - Fixed Billing
This is the cost of the billing system asset.
CN90 Interconnect Specific [] []
[] [] WS05 Fixed Billing - IAA Access [] []
FR27 Billing (Fixed) [] []
64670 Billing System
This is the cost centre responsible for the support and maintenance of following systems: 1. Billing systems, such as Fixed Wire Billing, Mobile Billing , Route Optimization, Mediation and IAA. 2. Network systems, such as LPAM/ GIS-SWAT, UIM.
FR27 [Billing (fixed)] [] []
[] [] MR27 [Billing (mobile)] [] []
OR27 [Billing (Others)] [] []
CN90 [Interconnect Specific] [] []
Source: The Authority from Batelco (APM 2010 submission: Additional TRA Information_02052011.xlsx, response to Article 53 request: Questions - Wholesale cost allocation.xlsx)
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Interconnect specific costs (CN90)
The total cost of CN90 decreased by 30% from BD [] in 2008 to BD [] in 2009. 56.
Between 2008 and 2009, there have been significant variations in the cost of each
category allocated to CN90. For example, these variations ranged from [] for ‘62400
[Costing & Regulatory Accounting]’ to [] for ‘62110 [Commercial Operation]’ (while the
total cost of these cost centres prior to any cost allocation varied respectively by [] and
[]). These opposing variations reveal the limitations inherent to the top-down accounting
based cost allocation approach which is discussed further at paragraph 73 below.
Table 5: CN90 cost breakdown in 2008 and 2009 by category (as submitted by Batelco)
[]
[]
[]
[]
[]
[]
[]
[]
[]
[]
[]
[]
[]
[]
Note: UA01, UA03, UA04 are un-attributable costs allocated based on EPMU Source: the Authority from Batelco’s submissions
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Table 6: Evolution of CN90 cost breakdown by category between 2008 and 2009 (as submitted by Batelco)
CN90 ISC: Breakdown
2008 2009 Evolution 2009/2008
Allocation Basis 2008 total
2008 amount
allocated to CN90
CN90 / Total 2009 total
Amount allocated to
CN90 CN90 / Total
Total (unallocated)
Amount allocated to
CN90
21050 [IT - Fixed Billing] [] [] [] [] [] [] [] [] Bill Systems Analysis
30400 [Legal & Regulatory] [] [] [] [] [] [] [] [] Number of staff, Time Analysis and number of NCTs.
30500 [Wholesale & Carrier] [] [] [] [] [] [] [] [] Number of staff & time management
36552 [Market Comm] [] [] [] [] [] [] [] []
Combination of number of staff, number of services and actual marketing expenditure analysis
62100 [Commercial Operation] [] [] [] [] [] [] [] [] Staff Time Analysis
62400 [Costing & Regulatory] [] [] [] [] [] [] [] [] Number of Staff
64670 [Billing Systems] [] [] [] [] [] [] [] [] Number of Staff Employed and Time Estimates
UA01 [Corporate Management Services]
[] [] []
[]
[]
[] []
[] EPMU
UA03 [Information Security] [] [] [] [] [] EPMU
UA04 [Corporate Planning And Accounting]
[] [] [] [] [] EPMU
Other Reconciliation & capital projects items
[] [] [] [] [] [] [] [] Direct allocation
Total cost CN90 [] [] []
Source: the Authority from Batelco’s submissions
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Interconnect specific charge (‘ISC’)
In the file ‘20110407 Annex B ISC and ASC 2009.xlsx’, Batelco calculates that the 2009 57.
ISC is equal to [] fils per equivalent minute. This charge is derived from [] equivalent
minutes of traffic. This traffic includes interconnected minutes and messages as well as
Batelco’s mobile to fixed and fixed to mobile minutes.
The Authority notes that the total traffic and the submitted ISC charge of [] are 58.
inconsistent with the cost-based ISC included in the 2009 regulatory accounts. In the
regulatory accounts, the cost-based ISC is equal to [] fils per equivalent minute for a
total traffic of [] billion of equivalent minutes. The traffic used for the calculation of the
ISC in the regulatory accounts should include all minutes as per the 2009 APM approval
dated 9 November 2011.
In accordance with the 2011 RO Order, which set the current ISC at 0.7 fils per equivalent 59.
minute, the Authority does not intend to review the ISC as part of this review of the RO. In
this context it is worth mentioning that Batelco informed the Authority on 14 and 20 July
2011 of its decision to unilaterally withdraw from the arbitration of the 2011 RO Order (and
more specifically in relation to the Authority’s decision on the ISC) that Batelco initiated on
23 February 2011.
Wholesale support activities costs
Wholesale support activities costs are composed of: 60.
a. WS01 [Wholesale & Carrier Relations - Access Product Management]
b. WS02 [Commercial Operation- Access]
c. WS03 [Finance Support Services - Reg & WS Support Access]
d. WS04 [Legal & Regulatory Affairs - Access Support]
e. WS05 [Fixed Billing - IAA Access]
Table 7: Description of wholesale support activities
WS01 Wholesale & Carrier Relations - Access Product Management
This is the wholesale department cost of Managing the access products and services.
WS02 Commercial Operation- Access
Portion of Commercial Operation department's cost(62100) which mainly consists of handling the OLO accounts, preparing invoices, adjusting the rating on a monthly basis, configuring new scenarios for new WS products, etc.
WS03 Finance Support Services - Reg & WS Support Access
The cost of the Regulatory Costing Team providing the support and meeting the wholesale regulatory requirements.
WS04 Legal & Regulatory Affairs - Access Support The regulatory and legal team's cost of supporting wholesale access services and products.
WS05 Fixed Billing - IAA Access The cost of billing systems related to Interadmin (including the Int'l and OLO accounts).
Source: Batelco's responses to 17 May 2010 article 53 information request on RO, 20100614 RO assessment article 53 response phase one excel.
The following table summarizes the wholesale support activities costs evolution between 61.
2007 and 2009.
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Table 8: Wholesale support activities cost in 2007, 2008 and 2009.
Wholesale support activities
Total cost
in 2007
(in BD)
Total cost
in 2008
(in BD)
Total cost
in 2009
(in BD)
Evolution
2009/2008
WS01 [Wholesale & Carrier Relations - Access Product
Management] [] [] [] []
WS02 [Commercial Operation- Access] [] [] [] []
WS03 [Finance Support Services - Reg & WS Support
Access] [] [] [] []
WS04 [Legal & Regulatory Affairs - Access Support] [] [] [] []
WS05 [Fixed Billing - IAA Access] [] [] [] []
Total cost [] [] [] []
Source: Batelco’s ROs submissions
As observed in the case of CN90, the Authority notes that wholesale support activities 62.
costs are subject to important variations between 2007 and 2009. These variations do not
appear to be correlated with the increase in the volume of sales of wholesale access
products. To the contrary, the two support activities for which costs would, from a logical
stand-point, be expected to increase in similar proportion as volume of sales, namely
‘WS01 [Wholesale & Carrier Relations - Access Product Management]’ and ‘WS02
[Commercial Operation- Access]’, have experienced cost increases two to three times
greater (with the volume of sales increase ranging from []% to []% as opposed to an
increase in costs of []% and []%).
Table 9: Wholesale access products sales volume in 2008 and 2009.
Code Access products Unit EOY 2007
volume EOY 2008
volume EOY 2009
volume Evolution 2009/2008
950l Duct wholesale ducts length in m [] [] [] []
951a WSDSL number of WDSL lines [] [] [] []
951b Bitstream number of Bitstream lines [] [] [] []
950y CAT/LLCO number of circuits [] [] [] []
950z IPLC number of circuits [] [] [] []
Source: Batelco’s ROs submissions
The following table summarizes the total cost of wholesale support activities allocated to 63.
each access product. Contrary to 2008, no costs from WS01, WS02, and WS03 are
allocated to WDSL, only costs from WS04 and WS05 are allocated to WSDL. This mainly
explains the sharp decrease in the wholesale support cost allocated to WDSL.
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Table 10: Total cost of wholesale support activities (WS01-WS05) allocated to each access product
Access products 2008 total wholesale
support activities cost allocation destination
2009 total wholesale support activities cost allocation destination
Evolution 2009/2008
Duct [] [] [] [] []
WSDSL [] [] [] [] []
Bitstream [] [] [] [] []
CAT/LLCO [] [] [] [] []
IPLC [] [] [] [] []
Total cost [] 100.0% [] 100.0%
Source: Batelco’s ROs submissions
The costs of wholesale support activities are allocated to access products based on time 64.
analysis produced for WS01. As can be seen from the table below, the time estimates
have fluctuated between 2008 and 2009 resulting in a clear transfer of allocated cost from
duct access, WDSL and Bitstream services to leased lines services (domestic and
international). Further, Batelco’s practice to apply the time estimates for WS01 to other
wholesale support activities is unlikely to reflect the cost of each wholesale support
activity.
Table 11: Cost allocation of each of the wholesale support activities to wholesale products
Wholesale Activity cost allocation by product 2008
Total Duct WDSL Bitstrea
m CAT/LL
CO IPLC
WS01 [Wholesale & Carrier Relations - Access Product Management]
[] [] [] [] [] []
WS02 [Commercial Operation- Access] [] [] [] [] [] []
WS03 [Finance Support Services - Reg & WS Support Access]
[] [] [] [] [] []
WS04 [Legal & Regulatory Affairs - Access Support]
[] [] [] [] [] []
WS05 [Fixed Billing - IAA Access] [] [] [] [] [] []
Total [] [] [] [] [] []
Wholesale Activity cost allocation by product 2009
Total Duct WSDSL Bitstrea
m CAT/LL
CO IPLC
WS01 [Wholesale & Carrier Relations - Access Product Management]
[] [] [] [] [] []
WS02 [Commercial Operation- Access] [] [] [] [] [] []
WS03 [Finance Support Services - Reg & WS Support Access]
[] [] [] [] [] []
WS04 [Legal & Regulatory Affairs - Access Support]
[] [] [] [] [] []
WS05 [Fixed Billing - IAA Access] [] [] [] [] [] []
Total [] [] [] [] [] []
Wholesale Activity cost allocation by
product 2008 % Total Duct WDSL
Bitstream
CAT/LLCO
IPLC
WS01 [Wholesale & Carrier Relations - Access Product Management]
[] [] [] [] [] []
WS02 [Commercial Operation- Access] [] [] [] [] [] []
WS03 [Finance Support Services - Reg & WS Support Access]
[] [] [] [] [] []
WS04 [Legal & Regulatory Affairs - Access Support]
[] [] [] [] [] []
WS05 [Fixed Billing - IAA Access] [] [] [] [] [] []
Total [] [] [] [] [] []
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Wholesale Activity cost allocation by product 2009 %
Total Duct WSDSL Bitstrea
m CAT/LL
CO IPLC
WS01 [Wholesale & Carrier Relations - Access Product Management]
[] [] [] [] [] []
WS02 [Commercial Operation- Access] [] [] [] [] [] []
WS03 [Finance Support Services - Reg & WS Support Access]
[] [] [] [] [] []
WS04 [Legal & Regulatory Affairs - Access Support]
[] [] [] [] [] []
WS05 [Fixed Billing - IAA Access] [] [] [] [] [] []
Total [] [] [] [] [] []
Source: Batelco’s ROs submissions
To further illustrate that Batelco’s top-down cost allocations are problematic, the Authority 65.
has calculated the monthly unit cost of wholesale support activities per unit of access
product. The results are presented in the following table.
Table 12: Wholesale support activities cost per unit of access product sold in 2008 and 2009
Access products
Unit
Wholesale support
activities cost per unit in
2008 (in BD per
month)
Wholesale support
activities cost per unit
in 2009 (in BD per
month)
Evolution 2009/2008
2009 cost expressed in
monthly time of G1 grade staff (based on 2009 G1 hourly rate)
Duct access per km [] [] [] []
WSDSL per line [] [] [] []
Bitstream per line [] [] [] []
WS CAT/LLCO per circuit [] [] [] []
WS IPLC per circuit [] [] [] []
Source: The Authority from Batelco’s submission
The above results seem completely unrealistic especially when the monthly wholesale 66.
support activities cost per unit of wholesale product is converted into equivalent staff time.
For instance, the average unit cost per CAT/LLCO circuit is equivalent to almost []
hours of working time of a Grade 1 technician. The same conversion for an IPLC circuit
produces an even less realistic result of [] hours.
While the allocation of cost centres to wholesale support activities WS01-WS05 is 67.
undertaken with the use of documented allocation methods (see above Table 4 page 27),
the same allocation approach does not appear to be rigorously observed in the allocation
of the costs of each wholesale support activity to each access product.
For instance, the table below compares both the cost and the time allocation breakdown of 68.
the “Wholesale and Carrier Services Department” (cost centre 30500 or WS01) by access
products. While the cost allocation driver is clearly defined by Batelco as being “Number of
staff & time management”, the Authority observes that the resulting cost allocation is not
proportional to the time spent by the ‘Wholesale and Carrier Services Department’ staff on
each access product. This is a significant discrepancy.
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Table 13: 2009 ‘Wholesale and Carrier Services Department’ (WS01) cost and time allocation breakdown to
access products
[]
[]
[]
[]
[]
[]
[]
[]
[]
[]
Note: the ‘Wholesale and Carrier Services Department’ is not fully dedicated to the provision of the above services (for ease of comparison it has been normalized to 100%).
Source: the Authority from Batelco’s 2011 RO submission and Batelco’s response to 2010 APM questions dated 23 August 2011 (Questions - Wholesale cost allocation.xlsx)
Shared activities costs allocated to wholesale products
There are 18 activities whose costs are allocated to both retail and wholesale services. For 69.
each of these activities, the 2009 cost allocation to the wholesale business unit is listed in
the following table.
Table 14: Portion of 2009 shared activities costs allocated to the wholesale business unit (as submitted by
Batelco)
Shared activity name Total cost
allocated in 2009
Percentage of total
OR05a [Residential & Inet Helpdesk - Residential (881188) Others] [] []
OR05b [Residential & Inet Helpdesk - Business (881177) Others] [] []
OR05c [Residential & Inet Helpdesk - Technical Support(90000100) Others] [] []
OR27 [Billing (Others)] [] []
OR28 [Operations & Helpdesk - Bill printing & dispatch (others)] [] []
OR29 [Customer Services - (Other)] [] []
MR02 [Customer Assistance Centre - (181 & 188) Mobile] [] []
OR72 [Revenue Assurance & Fraud Management- (other)] [] []
FR72 [Revenue Assurance & Fraud Management - (fixed)] [] []
MR72 [Revenue Assurance & Fraud Management - (mobile)] [] []
FR28 [Operations & Helpdesk - Bill printing & dispatch (Fixed)] [] []
FR27 [Billing (fixed)] [] []
FR05 [Residential & Inet Helpdesk - (881111&196) Fixed] [] []
FR29 [Customer Services - (Fixed)] [] []
FR12 [Retail Sales Operation and Development - Collections (Fixed)] [] []
FR26 [Fixed Services Management (fixed)] [] []
FR26 [Fixed Services Management (fixed)] [] []
FR71 [Bad debt and Dispute charges - (fixed)] [] []
Total [] 100.0%
Source: Batelco (Questions - Wholesale cost allocation.xlsx)
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The Authority notes that the total cost of the shared activities (BD [] in 2009) accounts 70.
for []% of the non-network cost of the wholesale business unit. The remaining []%
(BD 1,883,514) is the sum of all wholesale support activities (WS01 to WS05) and CN90,
each representing []% and []% respectively.
More than []% of the shared activities is MR02 [Customer Assistance Centre - (181 & 71.
188) Mobile] which is the call centre cost of the Directory Assistance regulated service
(DQ).
Batelco seeks to recover these costs from the charges of regulated services such as 72.
WDSL and Bitstream (e.g. Helpdesk, Billing and Customer service: OR05a,
OR05b,OR05c, OR27, OR28, OR29), DQ services charge (e.g. Customer assistance
centre: MR02) and interconnection services (e.g. Revenue Assurance & Fraud
Management: FR72, MR72).
Weaknesses inherent to a top-down cost allocation approach
As illustrated by several examples above, the top-down cost allocation approach currently 73.
used by Batelco is subject to several weaknesses and limitations:
a. Cost causation principle: while a top-down approach may document how costs
are allocated, it does not guarantee that only relevant costs are included.
Further, the various stages of the top-down cost allocation process may lead to a
de-coupling of the allocated cost from the actual cost incurred. With a top-down
approach, there is a high risk of not properly allocating costs, a risk which is
increased when:
i. allocation drivers are not properly identified;
ii. operational data sources which provide the basis for allocation drivers are
not sufficiently robust;
iii. operational data sources do not provide a sufficient level of granularity for
cost to be allocated to individual products; and
iv. the allocation drivers are based on ‘management estimates’ which due to
their subjective dimension could lead to a mis-allocation of cost while
giving the impression of precision.
b. Cost minimisation principle: contrary to a bottom-up approach, the top-down
allocation approach does not best satisfy the cost minimisation principle. A top-
down approach does not give any guarantee that the cost recorded represents
efficiently incurred cost. Since all costs are allocated to products and services
regardless of whether these costs have been efficiently incurred, the top-down
allocation approach does not give sufficient incentives to:
i. adapt the wholesale department workforce to the volume of wholesale
sales;
ii. develop efficient, reactive and customer-friendly processes; and
iii. rationalise and automate processes in order to reduce faults, errors and
inefficiencies.
c. Cost stability: the top down allocation approach allocates costs regardless of
whether a portion of these costs corresponds to one-time projects which are not
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repeated in the following years. As a consequence the cost of regulated charges
may show significant ups and downs year on year without fundamental changes to
the underlying economic costs. This issue is more acute for smaller countries such
as Bahrain compared to larger countries/companies for whom one-off costs are
likely to represent a much smaller proportion of costs or may be incurred over
several years.
d. Vertical integration and strategic allocation of cost: Batelco, as a vertically
integrated company operating at the wholesale and retail levels, is likely to be
incentivised to over-allocate cost at the wholesale level to the benefit of the retail
division as in so doing it hinders competition at the downstream level between
OLOs and Batelco. This is especially likely to occur when the incentive structure
and KPIs (e.g. commercial targets, bonus schemes) of the wholesale department
are not ‘localised’ and are instead aligned with the targets of the overall company
(e.g. company profits). At present the incentive structure and KPIs of the
wholesale department are not known to the Authority.
To address the above issues, the Authority intends, as part of the next RO review, to carry 74.
out an extensive review of the costs incurred by Batelco in the provision of wholesale
services using a bottom-up approach. Such review will involve the mapping of all
wholesale processes and an organisational review of the wholesale department.
By combining a bottom-up approach with top-down inputs, the Authority will be able to 75.
identify and address potential inefficiencies and issues and thereby ensure that regulated
charges are fair and reasonable.
The question of wholesale department costs and their recovery has been an issue 76.
between the Authority and Batelco for some time. The Authority considers that a review of
wholesale costs at the same time as bottom-up cost models are introduced in the review
of the RO is timely.
Notwithstanding the issues with Batelco’s current top-down approach, the Authority has for 77.
the purposes of this RO review accepted the wholesale costs as submitted by Batelco for
all access products with the exception of low-speed CAT-LLCO circuits.
Summary of responses received by the Authority
Batelco
Batelco acknowledges that the treatment of wholesale costs is an important issue which 78.
has been punctuated with several agreements and disagreements between the Authority
and Batelco since 2003. While Batelco considers that it is still under-recovering its
wholesale costs, it appreciates the outcome of this year’s review in so far as Batelco’s RO
submission as it relates to wholesale costs has, by and large, been accepted by the
Authority (although Batelco expresses concerns over the Authority’s treatment of
wholesale costs for CAT/LLCO services). In its submission, Batelco provides detailed and
lengthy comments on the analysis of the Authority included in the draft RO Order, some of
which are summarised below. With the exception of Batelco’s comments regarding
wholesale costs of CAT/LLCO and Bitstream, none of the comments made by Batelco
needs addressing for the purpose of the Order.
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More generally Batelco expresses two concerns: 79.
a. Batelco is concerned by the level of uncertainty associated with the Authority’s
future conclusions with regards to the wholesale activity costs and the ISC in a
context where bottom-up cost models may be used for assessing wholesale costs
and where RO prices may be set for a multi-year period. Batelco notes that any
under-recovery of wholesale costs from wholesale activities would result in
Batelco’s retail services and other non-regulated services subsidizing Batelco’s
competitors which rely on wholesale services. Batelco adds that it would
jeopardize the establishment of sustainable pricing. If wholesale costs remain
under the Authority’s strict control, Batelco argues that it would not be incentivised
to increase its wholesale staff and thus improve the reactiveness and timeliness of
its wholesale processes, contrarily to what OLOs have been expecting.
b. Batelco is also concerned by the Authority’s revision of wholesale activity costs
that flows in the calculation of low-speed CAT/LLCO. This change which only
impact one product may have “a distorting effect on access options for its
wholesale customers” (Batelco’s response paragraph 28).
Batelco has no specific comments in relation to the ISC. However, Batelco highlights that 80.
its unilateral withdrawal in July 2012 of the arbitration proceedings it commended in
February 2010 does not imply that it concurs with the Authority’s findings on this issue in
the RO Order of 25 January 2011. Batelco reserves its legal position in relation to the
calculation of the ISC and the notion of headroom resulting from the difference between
the calculated ISC and the approved ISC.
Lightspeed
Lightspeed considers that the billing system is not a wholesale cost but a network element 81.
cost that should be allocated by the use of routing factors in the costing model. As a result,
Lightspeed does not agree with the Authority’s criteria to allocate wholesale costs.
Lightspeed also submits that wholesale cost should be allocated on the basis of EPMU.
The Authority’s analysis and conclusion
The Authority notes the various comments raised by Batelco. It remains of the view that it 82.
would be essential as part of the next RO review to carry out an extensive review of the
costs incurred by Batelco in the provision of wholesale services using a bottom-up
approach. Batelco’s submission does not assuage the concerns raised by the Authority.
The Authority acknowledges Batelco’s overall acceptance of the treatment of wholesale 83.
costs in this RO review with the exception of low-speed CAT/LLCO services. For this
specific service, the Authority refers Batelco to its final position detailed in paragraphs 360-
363 of the Order.
With regards to Lightspeed comment regarding the cost allocation of the billing system, it 84.
should be noted that the cost of the billing department is shared by all services provided
by Batelco (voice, data and access services) and as such, its cost allocation is not
straightforward and requires several steps. The Authority refers here Lightspeed to Figure
1 page 26 (see cost centre 64670 and asset 21050).
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Lightspeed also suggests that wholesale cost should be allocated on the basis of EPMU. 85.
The Authority considers that such an approach can be an appropriate method to allocate
shared or common costs when no other alternative allocation drivers can be identified.
This is not the case for certain cost categories of wholesale costs.
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7 ISI and CSI link services (1-1 and 1-2)
Draft Order Text
Services definition
According to Batelco’s RO, “[t]he In-Span Interconnect (‘ISI’) Link Service is used, at the 86.
Licensed Operator's request, by the parties to jointly establish the facility for delivery of
agreed traffic types between the parties' Networks. The In-span Interconnect Link Service
is one option to establish interconnection between a Batelco Switch Connection and a
Licensed Operator Switch Connection.”12
According to Batelco’s RO, “[t]he Customer Sited Interconnect (‘CSI’) Link Service is 87.
provided by Batelco, at the Licensed Operator's Seeker’s request, to establish the facility
for delivery of traffic between the parties' Networks. The CSI Link Service is an alternative
to use of the In-Span Interconnect Link Service to establish interconnection between a
Batelco Switch Connection and a Licensed Operator Switch Connection.”13
The following figures were adapted from the Batelco Joint Working Manual in Batelco’s 88.
RO (see page 7, Figure 1a The Carrier System, ISI and Figure 1b The Carrier System,
CSI).
12 Batelco, SERVICE DESCRIPTION 1-1: IN-SPAN INTERCONNECT LINK SERVICE.
13 Batelco, SERVICE DESCRIPTION 1-2: CUSTOMER SITED INTERCONNECTION SERVICE.
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Table 15: ISI and CSI link services diagrams
Source: The Authority from Batelco Joint Working Manual, page 7
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Information provided by Batelco
As part of its 11 April 2011 RO submission, Batelco included one Excel file called 89.
“20110407 Annex D CSI ISI 2009.xlsx” in which calculation details of ISI and CSI Link
services charges were provided.
Further clarifications were sought by the Authority to assess whether the proposed 90.
charges were fair, reasonable and non-discriminatory. Batelco subsequently sent
additional information as part of its response to the Authority’s article 53 request for
information dated 15 June 2011.
The calculations of Batelco’s 2011 proposed charges and cost stacks for the ISI and CSI 91.
link services are detailed in the following tables.
Table 16: ISI submission charges proposed by Batelco
ISI Link Service
Yr 2009 Cost (LRIC)
SDH Transmission 1 to 21 22 to 42 43 to 63 Signalling
SDH Transmission cost 2009 [] [] []
E1 total capacity [] [] []
Total cost per E1*3 [] [] [] []
Additional Network Elements
Core Huawei port per OLO [] [] []
Joining Box [] [] []
Average no. of E1 per OLO [] [] []
Cost per Port [] [] [] []
Fibre Cost
Access Fibre Cost [] [] []
Total Fibre Km [] [] []
Cost per 2 Km per E1 [] [] [] []
Total cost per E1 pa [] [] [] []
Total cost per E1 pm [] [] [] []
Total cost per Port pa [] [] []
Total cost per Port pm [] [] []
Total per mth 114 47 33 138
Source: Batelco, 20110407 Annex D CSI ISI 2009.xlsx
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Page 43 of 167
Table 17: CSI submission charges proposed by Batelco
CSI Link Service
Yr 2009 Cost (LRIC)
SDH Transmission 1 to 21 22 to 42 43 to 63 Signalling
SDH Transmission cost 2009 [] [] []
E1 total capacity [] [] []
Total cost per E1 [] [] [] []
Additional Network Elements
DDF Cost [] [] []
ODF Cost [] [] []
Core Huawei port per OLO [] [] []
OSN 3500 per OLO [] [] []
Average no. of E1 per OLO [] [] []
Average no. of ports per OLO [] [] []
Cost per E1 [] [] [] []
Cost per Port [] [] []
Access Fibre Cost
Access Fibre Cost [] [] []
Total Fibre Km [] [] []
Cost of 2 fiber per E1 [] [] [] []
Total cost per E1 pa [] [] [] []
Total cost per E1 pm [] [] [] []
Total cost per Port pa [] [] []
Total cost per Port pm [] [] []
Total per mth 267 91 55 138
Source: Batelco, 20110407 Annex D CSI ISI 2009.xlsx
The following table summarizes the proposed charges with their prior year comparators. 92.
Table 18: Summary of proposed charges for the ISI/CSI link services
TRA’s FRND charges
approved in January 2011
Batelco's submitted charges in April 2011
Evolution* as compared to TRA’s FRND
charges approved in
January 2011
1-1.5A - ISI Link - Port and E1 line rental for unilateral traffic routes - 1-21 links
60.000 114.000 +90%
1-1.5B - ISI Link -Port and E1 line rental for unilateral traffic routes - 22-42 links
42.000 47.000 +12%
1-1.5C - ISI Link -Port and E1 line rental for unilateral traffic routes - 43-63 links
39.000 33.000 -15%
1-1.12 - ISI Link -Signalling Link rental 50.000 138.000 +176%
1-2.2A - CSI Link Rent (Basic) - 1-21 links 154.000 267.000 +73%
1-2.2B - CSI Link Rent (Basic)- 22-42 Links 75.000 91.000 +21%
1-2.2C - CSI Link Rent (Basic) - 43-63 Links 58.000 55.000 -5%
1-2.11 - CSI Link -Signalling Link rental 50.000 138.000 +176%
* Evolution is to be interpreted with careful consideration as Batelco’s average links per band change in the 2011 submission
Source: Batelco, 20110407 Annex D CSI ISI 2009.xlsx
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Page 44 of 167
Review of the submitted charges for ISI/CSI link services
SDH transmission costs
During last year’s RO submission review, Batelco mentioned that it was expecting SDH 93.
LRIC unit costs to increase in 2009. It appears that this has not eventuated. In 2009, the
total cost of SDH transmission has decreased by []% while the total capacity expressed
in E1 equivalent has increased by []%. These evolutions resulted in a []% reduction
in SDH unit cost per E1.
Table 19: SDH transmission cost evolution
2008 2009 Change
SDH transmission cost (LRIC) [] [] []
Total SDH capacity in E1 equivalent [] [] []
Monthly unit cost of SDH transmission per E1 [] [] []
Source: the Authority from Batelco’s submission
While Batelco was not able to provide a detailed breakdown of the SDH cost allocation as 94.
requested in the article 53 request for information dated 16 June 2011, the Authority
accepts the SDH unit cost per E1 of BD [] per month as submitted by Batelco for the
purposes of this Order.
Network equipment costs
In the 2011 RO Order, the Authority set out its approach to calculating network equipment 95.
costs (paragraphs 114 to 119). In its RO submission, Batelco has not explained why the
Authority should depart from that approach. Accordingly the Authority has modified
network equipment costs submitted by Batelco following the 2011 RO Order approach.
Network equipment cost calculations are detailed in the following table:
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Table 20: Cost of equipment used in the delivery of ISI/CSI link services
Item Asset price
Average # of optic
ports used per
equipment
Asset lives
Proposed annual cost by Batelco
TRA FRND
Depreciation
S&M Un-
attributable cost
Return on
capital
Total annual FRND cost
DDF Cost [] [] [] [] [] [] [] []
ODF Cost [] [] [] [] [] [] [] []
Core [] port per OLO
[] [] [] [] [] [] [] [] []
[] per OLO [] [] [] [] [] [] [] [] []
Joining Box [] [] [] [] [] [] [] []
Signalling Port []* [] [] [] [] [] [] []
Item Value Assumption/Description
Regulated WACC 9.50%
NBV/GBV 60% The Authority assumes that equipment is on average [] years old.
S&M (‘Support and Maintenance’) 9.0% Expressed as a percentage of asset price
Average annual price trend of electronic equipment
-5.0%
To take into account the downward price trend of electronic equipment. * 2009 asset price derived from 2007 price by multiplying it by (1-5%)
2
Un-attributable costs []% Expressed as a percentage of total cost (Depreciation + Opex)
Source: the Authority following the 2011 RO Order approach
Tariffs bands and number of Ports/E1 per OLO used in the calculation of the charges
In its 2010 RO submission, Batelco proposed to change the 3 tariff bands to 1-15 links, 16-96.
25 links and 26-63 links. In its response to the 2010 draft RO Order, Batelco also asked
the Authority to use the 2008 market averages of the number of E1s per OLO for the
calculation of the ISI/CSI charges. The Authority explained that such approach could
potentially lead to price volatility as market averages vary from one year to the other.14
Despite the conclusion of the 2011 RO Order Batelco has again calculated in its 2011 RO 97.
submission ISI/CSI charges based on the 2009 market averages of the number of E1s per
OLO without providing any supporting justification. In 2009, the market averages are [],
[]and [] for the bands 1-21, 22-42 and 43-63 which represent significant variations
compared to the 2008 market averages (respectively [], [] and []). These
fluctuations further support the Authority’s position to use the bands’ arithmetic averages
instead of market averages.
The Authority remains of the view that arithmetic averages should be used. However, the 98.
Authority proposes to introduce a fourth additional tariff band for the ISI/CSI. With a
greater granularity of entry level tariffs bands, the monthly charges paid by OLOs which
have a limited number of E1 circuits better reflect the cost incurred by Batelco. The 4 new
bands will be as follows:
14 2011 RO Order, paragraph 104 and 137.
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Page 46 of 167
Table 21: New ISI/CSI tariff bands as compared to existing bands
Existing tariff bands (in number of E1s)
Average number of E1s used to allocate network and access
fibre costs
New tariff bands (in number of E1s)
Average number of E1s used to allocate network and access
fibre costs
1 to 21 11 1 to 14 7.5
15 to 28 21.0
22 to 42 32 29 to 42 35.5
43 to 63 53 43 to 63 53.0
Source: the Authority
Access fibre network cost
Access fibre network cost amounts to BD [] in 2009. This amount does not reflect the 99.
change of duct asset lives as detailed in the duct section of this document. The Authority
has decided in this instance to not apply any cost decrease adjustment in the ISI/CSI
charge calculation.
The Authority has decided to modify the approach used in the 2001 RO order to calculate 100.
fibre cost. Compared to the existing approach, the proposed approach as set out in the
table below better reflects costs (including the mutualisation of links) and is more
transparent. While the calculated fibre access costs per E1 of the table below differ
between ISI and CSI links, the Authority considers that it is appropriate to take the average
of the two in so far as: (a) the fibre access is intrinsically the same and hence its cost
should not be different; and (b) it ensures that all fibre costs are taken into account and
allocated to ISI and CSI links.
Table 22: Calculation of the average fibre access cost per ISI/CSI link
Services
Number of fibre pairs
used in 2009
Portion of AN08 cost
allocated to the service in
2009
Number of links in 2009
(in E1 equivalent, including signalling
links)
2009 annual fibre access
cost per E1/signalling
link
2009 monthly fibre access
cost per E1/signalling
link
A b
(proportional to a)
c d = b / c e = d /12
950a In-Span Interconnect
[] [] [] [] []
950b Customer sited interconnect
[] [] [] [] []
Average [] []
Source: the Authority from Batelco’s submission
While the calculated average cost of BD [] per E1 link for CSI, per fibre access and per 101.
year allows Batelco to fully recover its access cost, the Authority still considers that the
OLO interconnecting Batelco with the CSI link service should pay an additional charge for
a distance greater than one kilometre. Therefore, the Authority maintains the existing
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charge of BD 1 per 2Mbit/s/per month/per additional km (cf. item 1-2.3 of Batelco’s RO
schedule 3). The 1 km limitation encourages OLOs to build a point of presence at a
location closer to one of Batelco’s switch connection sites.
The monthly regulated charge of CSI covers the access fibre installation cost (which is 102.
annualised) and maintenance and repairs (OPEX).
However, in the case of the ISI link service, the installation of the first 100 metres of fibre 103.
access that connect Batelco’s POP to the footway box (where the OLO’s fibre is spliced
with Batelco’s fibre) is provided free of charge by Batelco to the OLO (cf. item 1-1.2 of
Batelco’s RO schedule 3) and the cost of the remaining distance is split equally between
Batelco and the access seeker. To reflect this specificity, the monthly access fibre cost to
be paid by the OLO to Batelco needs to be adjusted. As explained in the next paragraph,
only []% of fibre cost should be taken into account in the calculation of the charge for
ISI.
Since half the access fibre installation cost is charged to the OLO on a time and materials 104.
basis, the relevant cost of fibre access used in the monthly charge calculation of ISI link
services should not be equal to the total fibre access cost. Instead it should be equal to:
a. For the first 100m: all cost should be included;
b. For the remainder:
i. All maintenance cost should be included as Batelco provides maintenance
for the fibre access;
ii. Half the depreciation cost and half the return on capital employed as the
OLO has already paid in full the installation costs, including CAPEX.
In 2009, there were [] km of fibre access cable for [] fibre pairs which makes
an average cable length per fibre pairs of [] metres15
. This means that there are
on average [] metres of fibre access cable (i.e. [] - []) for which the
installation cost is equally shared between Batelco and the interconnected OLO
(cf. item 1-1.3 of Batelco’s RO schedule 3)
As a result the relevant portion of fibre access cost for ISI is []% of the total cost and is 105.
formally calculated as follows:
15 The actual average length of the access fibre should be greater in practice as there must be portions of fibre
pairs in the same fibre cables.
=100m
[ ]m×100%+
([ ]-100)m
[ ]m×
OPEX
Total of op. & capital costs +
1
2× Depreciation+Returm on capital
Total of op. & capital costs
=100m
[ ]m×100% +
([ ]-100)m
[ ]m ×
BD [ ]
BD [ ]+
1
2× BD [ ]+BD [ ]
BD [ ]
=[ ]%
Percentage of access fibre cost relevant to ISI=
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Page 48 of 167
Protection lines
In this year’s RO submission, Batelco has again multiplied by two the cost of access fibre. 106.
However it has not provided any explanation or justification for the use of a factor 2. The
Authority assumes that it is supposed to cover the cost of protection lines.
As per the 2011 RO Order (paragraphs 111 to 113), the Authority has removed the factor 107.
2 from the calculation.
Further to the 2011 RO Order, the Authority considers that the costs of protection lines are 108.
in any case recovered by Batelco as the monthly charge is calculated from a top-down
approach where the total cost of fibre access (including protection lines if any) is divided
by the number of fibre accesses (excluding protection lines). Therefore the unit cost per
fibre access still includes a contribution for protection lines.
Wholesale cost
While the 2011 RO Order charges included wholesale costs, the Authority has not 109.
included any wholesale cost charges this year on the basis of Batelco’s explanation that
wholesale costs related to ISI-CSI links are recovered from the ISC.
Sharing of the cost of ISI and CSI links between OLOs and Batelco
The Authority is of the view that the cost of providing ISI/CSI link services should not be 110.
solely supported by the OLO interconnecting with Batelco. Under a strict causation
principle, Batelco should support half of the cost of the interconnection links as it also
injects its own traffic into the link and therefore benefits from the link. It could therefore be
argued that the fair and reasonable charges for the ISI link should be zero as the other half
of the link is paid for by the OLO and it should be 50% of the CSI estimated cost as in the
case of CSI Batelco provides the full link. However, in order to preserve Batelco’s
incentive to operate and maintain its network, the Authority considers that a reasonable
compromise is to base the ISI and CSI charges on respectively 50% and 75% of the
estimated cost.
Cancellation charge formula
Paragraph 3 of the 2011 RO Order changed the period for which cancellation charges 111.
apply to ISI/CSI Link services (1-1 and 1-2) from 10 years to 3 years. Notwithstanding the
change, the Authority expressed the view that the ISI-CSI cancellation framework (i.e.
current cancellation charge formula and associated conditions) were not fair and
reasonable. In paragraph 136 of the 2011 RO Order, the Authority identified several
deficiencies, including:
a. unnecessary complexity of the framework (e.g. formula calculates the present
value of expected cash flows);
b. unreasonableness as it implies a possible re-utilisation of equipment and
infrastructure in only 10% of cases, 6 months after cancellation;
c. inappropriate reference as the formula takes into account the retail charge and not
the wholesale charge (although there is clearly no retail equivalent for ISI/CSI
links);
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Page 49 of 167
d. lack of limitations. The Authority is of the view that in specific circumstances the
early cancellation charge should not apply, including for partial removal of capacity
or migrations (hot migrations, as well as cold migrations, i.e. cease and re-
provide).
For the above reasons, the Authority orders Batelco to reflect the following changes in the 112.
service description of both ISI and CSI link services, Schedule 4 of the RO and the Joint
Working Manual:
a. Cancellation charges shall apply during the first 36 months of service only,
measured from the Ready For Test (“RFT”) date of the service. Any cancellation is
subject to a 6-month notice period irrespective of whether or not the cancellation
occurs before or after the 36-month cut off for cancellation charges. For the
avoidance of doubt no cancelation charges shall apply to circuits cancelled after
the elapse of the first 36 months of service operation provided the 6-month notice
has been given.
b. For the cancellation charge to apply, each of the following conditions shall be met:
i. the entire interconnection link (STM-1 bearer circuit) is cancelled or
capacity is cancelled and this capacity cancellation leads to the physical
removal of the active equipment (e.g. a wholesale client which decreases
its number of active links capacity on the bearer circuit after the first year
of tenure will not be subject to the payment of a cancellation charge if the
bearer circuit is kept live with one or more active E1 connections); and
ii. the cancellation is not due to a like for like service migration (including
both hot and cold migrations) or cease and reprovide.
c. The cancellation charge formula shall be amended to:
with:
P: Amount to be paid (cancellation charge);
WC: Relevant monthly wholesale charge (i.e. ISI/CSI); and
M: Number of months between Ready for Test (“RFT”) Date and removal order date
rounded-up to the next full month.
d. The above changes shall apply to both existing and new services.
P = WC × ( 36 - M )
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Page 50 of 167
Draft Order fair, reasonable and non-discriminatory charges for ISI/CSI link services
The following table summarizes the draft Order fair, reasonable and non-discriminatory 113.
(‘FRND’) charges of ISI and CSI link services as calculated by the Authority:
Table 23: Draft Order FRND charges of ISI and CSI link services as compared to Batelco’s submitted charges
and currently approved charges
Chargeable activity
Approved/
Ordered in January
2011 (or
currently implement
ed)
Batelco's submitted charges in April 2011
TRA's Draft Order
FRND charges
Evolution of Draft Order
FRND as compared
to Approved/ Ordered
ISI and CSI Link Services
ISI Link services ( 1-1 ) in BD
1-1.5A - ISI Link - Port and E1 line rental for unilateral traffic routes - 1-21 links
60.000 114.000 removed -
1-1.5B - ISI Link -Port and E1 line rental for unilateral traffic routes - 22-42 links
42.000 47.000 removed -
1-1.5A - ISI Link - Port and E1 line rental for unilateral traffic routes - 1-14 links
- - 21.612 -
1-1.5B - ISI Link -Port and E1 line rental for unilateral traffic routes - 15-28 links
- - 15.101 -
1-1.5C - ISI Link -Port and E1 line rental for unilateral traffic routes - 29-42 links
- - 13.624 -
1-1.5D - ISI Link -Port and E1 line rental for unilateral traffic routes - 43-63 links
39.000 33.000 12.917 -67%
1-1.12 - ISI Link -Signalling Link rental 50.000 138.000 14.192 -72%
CSI Link services ( 1-2 ) in BD
1-2.2A - CSI Link Rent (Basic) - 1-21 Links 154.000 267.000 removed -
1-2.2B - CSI Link Rent (Basic)- 22-42 Links 75.000 91.000 removed -
1-2.2A - CSI Link Rent (Basic) - 1-14 Links - - 121.790 -
1-2.2B - CSI Link Rent (Basic) - 15-28 Links - - 54.916 -
1-2.2C - CSI Link Rent (Basic) - 29-42 Links - - 39.741 -
1-2.2D - CSI Link Rent (Basic) - 43-63 Links 58.000 55.000 32.484 -63%
1-2.11 - CSI Link -Signalling Link rental 50.000 138.000 21.827 -71%
Note: Text highlighted in yellow is used to highlight elements in the RO that are either new or modified while text in italics is used for elements that are removed.
Source: the Authority from Batelco submission
The above FRND charges of ISI and CSI link services are derived from the following cost 114.
stacks:
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Page 51 of 167
Table 24: Cost stacks of draft Order FRND charges of ISI and CSI link services
ISI Link Service
Yr 2009 Cost (LRIC)
SDH Transmission 1 to 14 15 to 28 29 to 42 43 to 63 Signalling
SDH Transmission cost 2009 [] [] [] [] E1 total capacity [] [] [] []
Total cost per E1*3 [] [] [] [] []
Additional Network Elements
Core [] port per OLO [] [] [] [] Joining Box [] [] [] [] [] [] [] [] Minimum [] [] [] [] Maximum [] [] [] [] Average no. of E1 per OLO [] [] [] []
Cost per Port [] [] [] [] []
Fibre Cost
Annual access fibre cost per E1/signalling link
[] [] [] [] []
Percentage of access fibre cost relevant to ISI
[] [] [] [] []
Relevant annual access fibre cost per E1/signalling link
[] [] [] [] []
Total cost per E1 pa [] [] [] [] [] Total cost per E1 pm [] [] [] [] []
Total cost per Port pa [] [] [] [] Total cost per Port pm [] [] [] []
Total cost to be shared per month [] [] [] [] []
Charges per month (taking into account cost sharing)
21.612 15.101 13.624 12.917 14.192
CSI Link Service
Yr 2009 Cost (LRIC)
SDH Transmission 1 to 14 15 to 28 29 to 42 43 to 63 Signalling
SDH Transmission cost 2009 [] [] [] [] E1 total capacity [] [] [] []
Total cost per E1 [] [] [] [] []
Additional Network Elements
DDF Cost [] [] [] [] ODF Cost [] [] [] [] Core [] port per OLO [] [] [] [] [] per OLO [] [] [] [] Minimum [] [] [] [] Maximum [] [] [] [] Average no. of E1 per OLO [] [] [] []
Average no. of ports per OLO [] [] [] []
Cost per E1 [] [] [] [] []
Annual cost per port [] [] [] []
Access Fibre Cost
Annual access fibre cost per E1/signalling link [] [] [] [] []
Total cost per E1 pa [] [] [] [] []
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Page 52 of 167
Total cost per E1 pm [] [] [] [] []
Total cost per Port pa [] [] [] [] Total cost per Port pm [] [] [] []
Total cost to be shared per month [] [] [] [] []
Charges per month (taking into account cost sharing)
121.790 54.916 39.741 32.484 21.827
Source: the Authority from Batelco submission
Summary of responses received by the Authority
Batelco
SDH transmission costs
In relation to the SDH transmission costs (paragraphs 93 to 94), Batelco acknowledges 115.
that it incorrectly forecasted that its SDH LRIC unit cost would increase in 2009 (they
actually decreased by -40%). Batelco submits that “[the incorrect prediction of SDH cost
increase] should not in itself eliminate the concern that unsustainably low access prices
may result from an aggressive approach to reducing, for example, wholesale activity costs,
where subsequent cost calculation may be expected to increase, pending further
assessment of costs.” (Batelco’s response, paragraph 46).
Network equipment cost
In relation to the network equipment costs (paragraph 95), Batelco expresses concerns 116.
over the Authority’s estimation of the annual S&M costs set at 9% of the total asset price.
Based on the primary cable asset and following the same approach as the Authority (i.e.
removing indirect costs), Batelco submits that the S&M ratio is equal to 13%. According to
Batelco, this is materially higher than the Authority’s estimate.
Tariffs bands
With regards to the tariffs bands (paragraphs 96 to 98), Batelco notes that it has not 117.
proposed to change them in the past. Batelco instead argues that the calculation of the
charges should be based on actual usage in each band (market average of the number of
links actually ordered by OLO in each band) rather than based on an arithmetic average.
Batelco claims that the approach based on actual usage was agreed with the Authority in
2009. Batelco also notes that the new proposed structure of tariffs bands has the effect of
further reducing the prices of interconnection links and hopes that such change will be
implemented with a sensible outcome in respect of the termination charges applicable to
link cancellation.
Access fibre network cost
In relation to the access fibre network cost (paragraphs 99 to 105), Batelco notes that the 118.
Authority has introduced a new approach to calculate the cost of fibre which is based on
the actual number of fibre pairs rather than the access fibre length. While it agrees that the
new approach is reasonable and should be adopted, Batelco is nonetheless concerned by
the resulting lower unit cost per fibre access which may call for a revision of the duct cost
allocation process. It asks for the change in the calculation results to be spread over two
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Page 53 of 167
review periods to smooth out the sudden effect of the change. Batelco also notes that the
bottom-up cost model and the change of audit standard will provide greater clarity on this
topic and asks the Authority to smooth the effect of this change over two RO reviews.
Batelco also asks the Authority to reconsider its approach to calculate an average fibre 119.
cost of per E1 link that apply equally to both ISI and CSI services. According to Batelco,
this approach leads to a cross subsidisation of ISI links by operators interconnecting via
CSI links. Batelco is also concerned that this approach will not enable the full recovery of
incurred costs, especially for ISI interconnection links of less than 20 E1s.
Batelco finally submits that the Authority should not adjust the average fibre cost per ISI 120.
link by removing the one-off charges paid by OLOs at the installation stage. Batelco
explains that it has not separately charged OLOs for recent ISI installation and is ready to
remove any mention of ISI installation charge in the Schedule 3 if the Authority does not
proceed with the adjustment.
Sharing of the cost of ISI and CSI links between OLOs and Batelco
In relation to the sharing of the cost of ISI and CSI links between OLOs and Batelco 121.
(paragraph 110), Batelco argues that this change should not be introduced as it relies on
the incorrect assumption that Batelco is ‘responsible’ for half of the traffic transiting
through ISI and CSI links. To demonstrate that this assumption is incorrect in the great
majority of cases, Batelco submits ISI and CSI traffic statistics for the month of October
2011 which show that, on average, OLOs are responsible for 98% of traffic passing
through the point of interconnection.
Batelco also submits that the change should not be made as it would overturn 122.
longstanding interconnect and billing practice and it would also affect other services.
Batelco gave one example of such service, the ITAS (transit service)16
which was,
according to Batelco, priced on the basis that interconnection links, for which OLOs bear
the financial responsibility, are already in place to support the service. According to
Batelco, the change introduced by the Authority in the draft RO Order would not allow
Batelco to recover the cost of providing the transit service.
Finally, Batelco highlights that the current RO already includes “a mechanism by which an 123.
OLO could have variable rate charges apply to bilateral traffic on ISI Links” (based on the
proportion of interconnected traffic for which the OLO has responsibility) (Batelco’s
submission, paragraph 62). Batelco submits that so far no OLO has sought to take
advantage of this pricing adjustment mechanism.
Cancellation charge formula
With regards to the cancellation charge formula (paragraphs 111 and 112), Batelco argues 124.
that the formula included in the draft RO Order has the effect of transferring risk from
OLOs to Batelco: “[t]the effect of the cancellation formula is that the reliability of cost
recovery only extends to 36 months, despite the fact that the asset life for the SDH
equipment is 5 years and for the fibre is currently 20 years and the duct life is extending to
40 years” (Batelco’s submission, paragraph 63). Batelco also notes that the nature of the
16 In its response to the RO draft Order dated 28 December 2011 (ref: GCL/434/11), Batelco explains that “the ITAS
service provides OLOs with the benefit that they are not required to implement and manage direct interconnection with each other operator in order to provide an any-to-any service.’
Reference Offer Order
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Page 54 of 167
risk of non-recovery of costs may vary depending in the type and location of
interconnection links and other services.
Batelco is further concerned with the set of rules applicable to the cancellation charge 125.
formula and potential gaming. According to Batelco an OLO could reduce all its capacity to
a single E1 and wait until the capacity has been reduced by Batelco to cancel the link (and
thus lower the applicable cancellation charge).
Batelco also submits that the existing security arrangements are inadequate to protect 126.
Batelco against commercial risks arising from the non-payment of services charges and
“urges that the terms of regulated services should not unduly add to the risk profile of
service implementation for Batelco.” (Batelco’s submission, paragraph 65).
Batelco proposes several amendments to the conditions to which cancellation charge 127.
apply:
a. Hot or cold migration of link: Migrations should be charged to OLOs on a time
and material basis and should cover network installation and migration assistance.
In the case of a CSI hot migration for single POI operators, the one-off charge
should also cover the cost of the CPE.
b. Relocation of E1s: A one-off charge covering migration assistance (on a time and
material basis) should be charged to OLOs.
c. Cancellation of E1s: Cancellation of E1s should not be permitted in the first 12
months. A cancellation charge equal to 3 monthly rental charges should apply
thereafter.
Batelco submits that the following formula would better reflect the risks faced by Batelco 128.
and the OLOs:
with
P: Amount to be paid (cancellation charge)
BWC: Relevant wholesale charge (i.e. ISI/CSI) applied to the highest number of E1s at
which the link has operated in the 18 months prior to notice of link cancellation, based on
the link rate applied to the band in which that number of E1s falls.
M: Number of months between RFT Date and removal order date rounded-up to the next
full month
CC: The total of E1 cancellation charges levied in respect of that link in the 18 months prior
to notice of link cancellation.
Batelco considers that the changes to the cancellation formula should not apply to existing 129.
services. If they were to apply to any existing services, it should be on fairly long notice to
the industry. Batelco also submits that “this change should be differed in its entirely at
least until after all avenues have been exhausted in relation to any existing dispute over
cancellation charges” and that “the issue of applicability to existing services might usefully
remain unchanged until next year’s reference offer review process so that the situation can
be clarified”(Batelco’s submission, paragraph 69).
P = (BWC × ( 60 - M )) - CC
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Page 55 of 167
Lightspeed
In accordance with its general comment summarised in paragraph 32, Lightspeed 130.
considers that the cancellation charge should be amended to apply only in the first 12
months of contract instead of the first 36 months.
Lightspeed considers that the price differentiation in the different price bands is 131.
unjustifiable. According to Lightspeed, such price differentiation prevents smaller operators
to compete with bigger operators which benefit from a lower price per E1. Lightspeed calls
for a fixed price per E1 regardless of the capacity required by the buying operator.
Lightspeed also considers that the cost of a link should be shared by each operator
according to the proportion of traffic that each originates on the link.
Zain
Zain welcomes the lower draft ordered prices of BD 32.484 per E1 as it represents a 44% 132.
decrease compared to current price.
The Authority’s analysis and conclusion
SDH transmission costs
With regards to Batelco’s incorrect prediction of SDH transmission costs, the development 133.
of a bottom-up cost model for Batelco’s fixed core network will enable both Batelco and
the Authority to better understand the relationship between SDH network costs and traffic
variations. This would enable Batelco to make better informed business decision and the
Authority to set regulated prices considering forward-looking information.
Network equipment cost
The Authority considers that the 13% of S&M costs calculated by Batelco is not relevant in 134.
the context of calculating S&M costs for active equipment. Batelco’s calculation is based
on ‘primary cable’, an asset which is very different from active equipment (CPE) both in
terms of investment and maintenance requirements. For the same reasons detailed in the
RO Order dated 25 January 2011 at paragraph 331, the Authority remains of the view that
S&M costs set to 9% of the total asset price is reasonable.
Tariffs bands
The Authority notes that Batelco does not have any material objection with regards to the 135.
new tariff bands proposed by the Authority. With regards to Lightspeed’s comment
regarding the ‘unjustifiable’ price differentiation of ISI/CSI links according to tariff bands,
the Authority notes that the Telecommunications Law requires regulated tariffs to be based
on forward looking incremental cost. As the costs of the fibre access and the CPE are
shared among all E1s that form part of the link, the addition of E1s to the capacity of the
link will translate into a lower average cost per E1. If the Authority were to remove the
differential pricing according to tariff bands, large OLOs requiring higher capacity would be
subsidising the ISI/CSI link service used by smaller OLOs.
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Page 56 of 167
Access fibre network cost
The Authority notes Batelco’s acceptance of the Authority’s approach to calculate access 136.
fibre cost. The Authority acknowledges Batelco’s intention to review the duct cost
allocation process and, in that matter, kindly asks Batelco to keep the Authority’s informed
of such review.
With regards to Batelco’s request to reflect the fibre cost based on the new approach over 137.
two reviews, the Authority considers that this is not justified as: (a) the new approach
corrects the over-recovery allowed by the current approach;17
(b) the fibre cost represents
for most charges less than 15% of the charges; and (c) the fibre cost has not been
adjusted by the Authority to reflect the change of duct asset lives, de facto allowing a
smoother transition to a lower fibre access cost.
With regards to the averaging of the monthly access fibre cost per E1 between the ISI and 138.
CSI service, the Authority understands Batelco’s concerns regarding its potential under-
recovery of the fibre access cost for lower capacity links (less than 14 E1s). Accordingly,
the Authority has reconsidered the approach of the draft Order. In the final Order, the
Authority allocates the average cost of fibre access to the link. The cost of fibre access per
E1 is no longer averaged. The cost of fibre access per E1 in each band is equal to the cost
per fibre divided by the arithmetic average of E1s of the band. As the cost of fibre is
recovered through the E1 voice channels, no fibre cost is allocated to the signalling link.
While this approach does not take into account the actual number of fibre pairs used by
the ISI/CSI link services ([] fibre pairs in 2009) and thus may overlook potential cost
sharing, it has the merit of being simpler and it guarantees that both ISI and CSI link
services get allocated the same amount of fibre access cost. It also gives the right price
signal to the market whereby the average unit cost per E1 decreases when the capacity of
the link increases.
On the adjustment of ISI installation charge, the Authority considers that, based on the 139.
definition of the ISI service, it remains pertinent to charge OLOs on a time and material
basis for half of the cost incurred in laying the fibre cable between the two operators’ point
of presence and half of the cost incurred in constructing the footway box. It also prevents
Batelco from bearing an excessive amount of installation cost in situations where the
footway box is distant from Batelco’s service node. The Authority therefore considers that
the adjustment is still justified.18
Sharing of the cost of ISI and CSI links between OLOs and Batelco
The Authority acknowledges Batelco’s position against the sharing of ISI/CSI cost between 140.
Batelco and OLOs. In its submission, Batelco introduces the notion of traffic ‘responsibility’
instead of traffic ‘directionality’ as used in the draft Order (see paragraph 110). From
Batelco’s response, the Authority understands that an operator is considered ‘responsible’
of a given portion of traffic when, from the end user’s perspective, the operator is
responsible for the end-to-end delivery of the calls associated with such interconnected
traffic. For instance, an OLO offering prepaid calling card services to international
17 Whereas the current method is based on a 1km of fibre pair access length the operational data provided by
Batelco would suggest that the average fibre pair access length is closer to [] which is [] times lower than Batelco’s estimate ([] metres of total fibre access cable length divided by [] fibre pairs used). The Authority also refers to the justification for the new approach at paragraph 100 above. 18
Further, while it would arguably be appropriate to make further adjustments to the monthly regulated charges to account for the various one-off charges applicable to the ISI and CSI services (e.g. items 1-1.4; 1-1.9; 1-1.10; 1-1.11; 1-1.13; 1-2.1; 1-2.10; 1-2.12; 1-2.13; and 1-2-14), the Authority has not done so.
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Page 57 of 167
destinations will use Batelco’s freephone origination service. When a Batelco’s subscriber
makes a call with the OLO’s prepaid card, this generates interconnection traffic in the
direction going from Batelco to the OLO (i.e. Batelco injecting traffic in the ISC/CSI link)
but it is the OLO which is responsible for the correct switching and conveying of the call up
to the international called party (i.e. the OLO is responsible for the end-to end service).
While the notion of ‘responsibility’ is more vague than the notion of ‘directionality’ (e.g.
transit traffic, international inbound traffic), the Authority agrees that it is more relevant
when assessing whether the cost of the ISI/CSI links should be shared between two
interconnected operators.
The Authority expects Batelco’s interconnection traffic with mobile operators to be 141.
relatively symmetric and, in this regards, notes Batelco’s deliberate choice not to include
mobile operators in the table where Batelco reports interconnection traffic with OLOs.
Nonetheless, the Authority notes from the table submitted by Batelco that, in the great
majority of cases, Batelco is only ‘responsible’ for a small portion of traffic (10 to 15% of
traffic). As a result, the Authority has decided to reconsider its draft Order position to share
the cost of the ISI/CSI links between operators. The final ordered charges do not include
any sharing of the cost of the ISI/CSI links; their cost are fully recovered by the OLOs.
As part of the next RO review, the Authority intends to assess whether it may be 142.
appropriate to introduce a certain level of cost sharing for ISI and CSI links when traffic is
relatively balanced and to review the pricing mechanism adjustment detailed in Annex 2 of
Batelco’s RO schedule 3. 19
Cancellation charge formula
With regards to the cancellation charge formula, the Authority considers that Lightspeed’s 143.
proposal to reduce the applicability period of the cancellation charge to 12 months would
be unfair in light of the initial investment made by Batelco. In the same manner, extending
such period to 30 months (5 years) as advocated by Batelco would be excessive. In this
regard, the Authority kindly refers Batelco to the justification set in paragraph 134 of the
RO Order dated 25 January 2011 (ref: MCD/01/11/006). The Authority also disagrees with
Batelco’s proposal to prevent an OLO to decrease the capacity of its ISI/CSI link in the first
12 months as such decrease would not involve the removal of any asset. For the same
reason, the Authority disagrees with Batelco’s proposal to introduce a cancellation charge
equal to 3 monthly rental charges for every E1 cancelled after 12 months of service.
The Authority agrees that OLOs should be charged for the migrations and/or relocation of 144.
the link on a time and material basis. The corresponding one-off charge should cover
network installation and migration assistance (but not the cost of CPE in the case of CSI
hot migration as Batelco will recuperate the CPE located in the original location).
The Authority also agrees to modify the cancellation formula to avoid potential gaming by 145.
OLOs which could unduly minimize the cancellation charge by reducing the capacity of the
link before cancelling it. The Authority therefore orders Batelco to amend the cancellation
charge formula to:
19 Batelco’s RO, SCHEDULE 3 – ANNEX 2, CALCULATION OF TRAFFIC BASED REASSESSMENT OF E1
CHARGES
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Page 58 of 167
with:
P: Amount to be paid (cancellation charge);
WC: Relevant wholesale charge (i.e. ISI/CSI) applied to the average number of E1s at
which the link has operated since its first operation (i.e. between the Ready for Test
(“RFT”) Date and the removal order date) or the current number of E1s at the removal
order date whichever of the two is higher, based on the current link rate applied to the
band in which that number of E1s falls.
M: Number of months between the Ready for Test (“RFT”) Date and the removal order
date rounded-up to the next full month.
Finally, the Authority remains of the view that the cancellation formula should apply to both 146.
existing and new services. For existing circuits, the cancellation formula should only apply
to circuits which have been cancelled after the issuance of this RO Order (see paragraph
5). The Authority orders Batelco to amend its RO accordingly.
P = WC × ( 36 - M )
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Page 59 of 167
Final Order FRND charges for ISI/CSI link services
The following table summarizes the FRND charges of ISI and CSI link services ordered by 147.
the Authority:20
Table 25: Order FRND charges of ISI and CSI link services as compared to Batelco’s submitted charges and
currently approved charges
Chargeable activity
Approved/
ordered in
January
2011
(or
currently
implemen
ted
Batelco's
submitted
charges
in April
2011
TRA
FRND
draft
charges
TRA
FRND
final
Order
charges
Evolution
of Order
FRND as
compared
to
previousl
y
approved/
ordered
ISI and CSI Link Services
ISI Link services ( 1-1 ) in BD
1-1.5A - ISI Link - Port and E1 line rental for unilateral traffic routes - 1-21 links
60.000 114.000 removed removed -
1-1.5B - ISI Link -Port and E1 line rental for unilateral traffic routes - 22-42 links
42.000 47.000 removed removed -
1-1.5A - ISI Link - Port and E1 line rental for unilateral traffic routes - 1-14 links
- - 21.612 48.599 -
1-1.5B - ISI Link -Port and E1 line rental for unilateral traffic routes - 15-28 links
- - 15.101 30.181 -
1-1.5C - ISI Link -Port and E1 line rental for unilateral traffic routes - 29-42 links
- - 13.624 26.002 -
1-1.5D - ISI Link -Port and E1 line rental for unilateral traffic routes - 43-63 links
39.000 33.000 12.917 24.003 -38.5%
1-1.12 - ISI Link -Signalling Link rental 50.000 138.000 14.192 25.366 -49.3%
CSI Link services ( 1-2 ) in BD
1-2.2A - CSI Link Rent (Basic) - 1-21 Links 154.000 267.000 removed removed -
1-2.2B - CSI Link Rent (Basic)- 22-42 Links 75.000 91.000 removed removed -
1-2.2A - CSI Link Rent (Basic) - 1-14 Links - - 121.790 169.039 -
1-2.2B - CSI Link Rent (Basic) - 15-28 Links - - 54.916 73.195 -
1-2.2C - CSI Link Rent (Basic) - 29-42 Links - - 39.741 51.447 -
1-2.2D - CSI Link Rent (Basic) - 43-63 Links 58.000 55.000 32.484 41.046 -29.2%
1-2.11 - CSI Link -Signalling Link rental 50.000 138.000 21.827 25.366 -49.3%
Note: Text highlighted in yellow is used to highlight elements in the RO that are either new or modified while text in italics is used for elements that are removed.
Source: the Authority from Batelco submission
The above FRND charges of ISI and CSI link services are derived from the following cost 148.
stacks:
20 Compared to the draft Order charges, the main changes made relate to: (a) the cost of the fibre access which is
no longer averaged between ISI and CSI but recovered on a per link basis; and (b) the removal of the sharing of ISI and CSI costs between Batelco and OLOs.
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Page 60 of 167
Table 26: Cost stacks of Order FRND charges for ISI and CSI link services
ISI Link Service
Yr 2009 Cost (LRIC)
SDH Transmission 1 to 14 15 to 28 29 to 42 43 to 63 Signalling
SDH Transmission cost 2009 [] [] [] [] E1 total capacity [] [] [] []
Total annual cost per E1 [] [] [] [] []
Additional Network Elements
Core Huawei port per OLO [] [] [] [] Joining Box [] [] [] [] Minimum [] [] [] [] Maximum [] [] [] [] Average no. of E1 per OLO [] [] [] []
Total annual cost per E1 [] [] [] [] []
Access Fibre Cost
Annual access fibre cost per link [] [] [] [] [] Annual access fibre cost per E1 [] [] [] [] []
Percentage of access fibre cost relevant to ISI
[] [] [] [] []
Relevant annual access fibre cost per E1/signalling link
[] [] [] [] []
Total annual cost per E1 583.193 362.173 312.020 288.037 304.392 Total monthly cost per E1 48.599 30.181 26.002 24.003 25.366
CSI Link Service
Yr 2009 Cost (LRIC)
SDH Transmission 1 to 14 15 to 28 29 to 42 43 to 63 Signalling
SDH Transmission cost 2009 [] [] [] [] E1 total capacity [] [] [] []
Total annual cost per E1 [] [] [] [] []
Additional Network Elements
DDF Cost [] [] [] [] ODF Cost [] [] [] [] Core Huawei port per OLO [] [] [] [] OSN 3500 per OLO [] [] [] [] Minimum [] [] [] [] Maximum [] [] [] [] Average no. of E1 per OLO [] [] [] []
Total annual cost per E1 [] [] [] [] []
Access Fibre Cost
Annual access fibre cost per link [] [] [] [] []
Annual access fibre cost per E1 [] [] [] [] []
Total annual cost per E1 2,028.466 878.342 617.360 492.557 304.392 Total monthly cost per E1 169.039 73.195 51.447 41.046 25.366
Source: the Authority from Batelco submission
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Page 61 of 167
8 Interconnection and transit services
Draft Order Text
This section reviews Batelco’s proposed charges and associated cost stacks for the 149.
interconnection and transit services.
8.1 Information provided by Batelco
In its 2011 RO submission, Batelco included three files specifically related to 150.
interconnection and transit services, one word document and two excel files in annex
detailing the calculations of the charges:
a. the first, “20110411 Sch 3 09 RO Charges_RO Submission.doc”, is a tracked
change version of Batelco’s RO Schedule 3 which contains all submitted charges
included in the RO;
b. the second, “20110407 Annex A RIO costs 2009.xlsx”, relates to the network
costs for interconnection services; and
c. the third, “20110407 Annex B ISC and ASC 2009.xlsx”, relates to the wholesale
activities costs for interconnection services, called ISC charge.
On 15 June 2011, further clarifications were sought by the Authority through an article 53 151.
request for information to assess whether charges are fair and reasonable. Additional
information was consequently sent by Batelco.
In the following section, a quote of the definition of each interconnection service included 152.
in Batelco’s RO is provided. Under each service definition, the corresponding costing and
charging information submitted by Batelco in its 2011 RO submission is reproduced.
PSTN terminating access (1-3.1 and 1-3.2)
Service definition
In its RO, Batelco defines the PSTN terminating access service as follows: 153.
“The PSTN Terminating Access Service is a service for the carriage
of a Telephone Call from an agreed Point of Interconnection to a
PSTN Number within the Access Provider's Network.
Available To: Public telecommunications operators with an
individual NFL or MNO licence and one or more interconnection
links with Batelco.
Traffic: Traffic which both originates and terminates in Bahrain only.
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Page 62 of 167
Reciprocal Service: A traffic delivery service must be offered by
any operator capable of delivering traffic to that operator’s directly
connected customers.” 21
Information submitted by Batelco
Batelco has included the following cost stacks in the file “20110407 Annex A RIO costs 154.
2009.xlsx”.
Table 27: Cost stack submitted by Batelco for the PSTN terminating access service (see note below)
Item Ref Code Network Element
AS cost per
minute LRIC
Routing Factor %
2009 Cost
950c PSTN Terminating Access from OLO GMSC
CN03 CN03 [Transit switches] [] [] []
CN04 CN04 [Soft Switch (inc MRS)] [] [] []
CN05 CN05 [MSAN Traffic Sensitive] [] [] []
CN06 CN06 [Universal Media Gateway (UMG)] [] [] []
CN15 CN15 [Transit switch - GMSC] [] [] []
CN20 CN20 [Distribution - Core Link (Voice )] [] [] []
CN22 CN22 [Aggregation - Distribution Link ( Voice)] [] [] []
CN24 CN24 [MSAN - Aggregation Link (Voice)] [] [] []
CN25 CN25 [UMG - Transit Switches] [] [] []
CN39 CN39 [MPLS Core Voice] [] [] []
CN41 CN41 [MPLS Aggregation ( Voice)] [] [] []
CN57 CN57 [MPLS - Distribution Routers ( Voice )] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
SUBTOTAL
[]
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL 2.625 2.625
951c PSTN Terminating Access from OLO Transit
CN03 CN03 [Transit switches] [] [] []
CN04 CN04 [Soft Switch (inc MRS)] [] [] []
CN05 CN05 [MSAN Traffic Sensitive] [] [] []
CN06 CN06 [Universal Media Gateway (UMG)] [] [] []
CN20 CN20 [Distribution - Core Link (Voice )] [] [] []
CN22 CN22 [Aggregation - Distribution Link ( Voice)] [] [] []
CN24 CN24 [MSAN - Aggregation Link (Voice)] [] [] []
new added CN25 CN25 [UMG - Transit Switches] [] [] []
CN39 CN39 [MPLS Core Voice] [] [] []
CN41 CN41 [MPLS Aggregation ( Voice)] [] [] []
CN57 CN57 [MPLS - Distribution Routers ( Voice )] [] [] []
SUBTOTAL
[]
CN90 CN90 [Interconnect Specific]
1.000 0.565
TOTAL
2.254
Note: The Authority has added the ISC used by Batelco to calculate its proposed charges (0.565 fils per equivalent minute).
Source: Batelco’s 2011 RO submission
In the Schedule 3 of the 2011 RO submission, the wholesale charges corresponding to the 155.
two PSTN terminating access service remain unchanged at:
21 Batelco’s RO, Schedule 1 1-3 (PSTN TERMINATING ACCESS SERVICE)
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a. 3.040 fils per minute for PSTN Terminating Access transiting through the GMSC;
and
b. 2.382 fils per minute for PSTN Terminating Access using either double tandem or
single tandem.
The proposed charges in the Schedule 3 (3.040 fils per minute and 2.382 fils per minute) 156.
are identical to the current approved charges and do not correspond to the calculated
charges in the cost stacks (2.626 fils and 2.254 fils per minute). This is in line with the RO
approval letter dated 17 September 2009 (GDO/0909/031) in which it was decided to hold
constant the fixed interconnection charges’ rates pending a thorough review of NGN
costing.
Mobile terminating access (1-4.1 and 1-4.2)
Service definition
In its RO, Batelco defines the Mobile terminating access service as follows: 157.
“The Mobile Terminating Access Service is a service for the
carriage of a Telephone Call from an agreed Point of
Interconnection to a Called Mobile Party on the Access Provider’s
Mobile Network.
Available to: A public telecommunications operator with an
individual NFL or MNO licence and having one or more
interconnection links with Batelco.
Traffic: Traffic which both originates and terminates in Bahrain only.
Reciprocal Service: A traffic delivery service must be offered by
any operator capable of delivering traffic to that operator’s directly
connected customers.” 22
22 Batelco’s RO, Schedule 1 1-4 (MOBILE TERMINATING ACCESS SERVICE)
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Page 64 of 167
Information submitted by Batelco
Table 28: Cost stack submitted by Batelco for the Mobile terminating access service (see note below)
Item Ref Code Network Element
AS cost per
minute LRIC
Routing Factor %
2009 Cost
950d Mobile Terminating Access from OLO GMSC
MN01 MN01 [Mobile Switching Centre Server ( MSCS )] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
MN03 MN03 [Home Location Registers (HLR )] [] [] []
MN04 MN04 [Mobile Packet Backbone Network - MPBN] [] [] []
MN05 MN05 [Media Gateway ( MGW )] [] [] []
MN11 MN11 [Base Station Controller (BSC)] [] [] []
MN12 MN12 [Base Transceiver Station (BTS)] [] [] []
MN13 MN13 [GSM 3G Radio N/W Controller-RNC] [] [] []
MN14 MN14 [GSM 3G HSDPA Radio Base Stations-Node B] [] [] []
MN18 MN18 [RNC - MGW] [] [] []
MN19 MN19 [Node B - RNC] [] [] []
MN20 MN20 [Mobile BTS - BSC] [] [] []
MN21 MN21 [Mobile BSC - MGW] [] [] []
MN23 MN23 [Mobile MGW - GMSC] [] [] []
SUBTOTAL
[]
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL
4.681
Item Ref Code Network Element
AS cost per
minute LRIC
Routing Factor %
2009 Cost
951e Mobile Terminating Access from OLO Transit
CN03 CN03 [Transit switches] [] [] []
CN14 CN14 [Transit switch - MGW] [] [] []
MN01 MN01 [Mobile Switching Centre Server ( MSCS )] [] [] []
MN03 MN03 [Home Location Registers (HLR )] [] [] []
MN04 MN04 [Mobile Packet Backbone Network - MPBN] [] [] []
MN05 MN05 [Media Gateway ( MGW )] [] [] []
MN11 MN11 [Base Station Controller (BSC)] [] [] []
MN12 MN12 [Base Transceiver Station (BTS)] [] [] []
MN13 MN13 [GSM 3G Radio N/W Controller-RNC] [] [] []
MN14 MN14 [GSM 3G HSDPA Radio Base Stations-Node B] [] [] []
MN18 MN18 [RNC - MGW] [] [] []
MN19 MN19 [Node B - RNC] [] [] []
MN20 MN20 [Mobile BTS - BSC] [] [] []
MN21 MN21 [Mobile BSC - MGW] [] [] []
SUBTOTAL
[]
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL
4.530
Note: The Authority has added the ISC used by Batelco to calculate its proposed charges (0.565 fils per equivalent minute).
Source: Batelco’s 2011 RO submission
In the Schedule 3 of the 2011 RO submission, the proposed charges are: 158.
a. 4.680 fils per minute for the mobile terminating access service from OLO GMSC
which is a -24.6% decrease compared to the charge of 6.203 fils per minute set in
the 2001 RO Order; and
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Page 65 of 167
b. 4.530 fils per minute for the mobile terminating access service from OLO Transit
which is a -30.9% decrease compared to the charge of 6.553 fils per minute set in
the 2001 RO Order.
By a rounding unit, the charge for the mobile terminating access service from OLO GMSC 159.
in the submitted Schedule 3 (4.680 fils per minute) matches the charge calculated in the
cost stack (4.681 fils per minute). The proposed charge for mobile terminating access
service via OLO transit (4.530 fils per minute) matches the charge calculated from the cost
stack.
SMS terminating access (1-6)
Service definition
In its RO, Batelco defines the SMS terminating access service as follows: 160.
“The SMS Terminating Access Service is a service for the carriage
of SMS Messages from a Point of Interconnection to a mobile
device associated with a Mobile Number on the Access Provider’s
Mobile Network, as further defined by the terms of this Service
Description.
Available to: Public telecommunications operator with an individual
MNO licence and one or more interconnection links with Batelco.
Traffic: SMS Messages which both originate and terminate in
Bahrain only.
Reciprocal Service: A reciprocal service must be offered by any
operator with a Mobile Network.” 23
23 Batelco’s RO, Schedule 1 1-6 (SMS TERMINATING ACCESS SERVICE)
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Page 66 of 167
Information submitted by Batelco
Table 29: Cost stack submitted by Batelco for the SMS terminating access service (see note below)
Item Ref Code Network Element AS cost per
minute LRIC
Routing Factor %
2009 Cost
950f SMS Terminating Access
MN01 MN01 [Mobile Switching Centre Server ( MSCS )] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
MN03 MN03 [Home Location Registers (HLR )] [] [] []
MN04 MN04 [Mobile Packet Backbone Network - MPBN] [] [] []
MN05 MN05 [Media Gateway ( MGW )] [] [] []
MN11 MN11 [Base Station Controller (BSC)] [] [] []
MN12 MN12 [Base Transceiver Station (BTS)] [] [] []
MN13 MN13 [GSM 3G Radio N/W Controller-RNC] [] [] []
MN14 MN14 [GSM 3G HSDPA Radio Base Stations-Node B]
[] [] []
MN18 MN18 [RNC - MGW] [] [] []
MN19 MN19 [Node B - RNC] [] [] []
MN20 MN20 [Mobile BTS - BSC] [] [] []
MN21 MN21 [Mobile BSC - MGW] [] [] []
MN23 MN23 [Mobile MGW - GMSC] [] [] []
SUBTOTAL
[]
CN90 CN90 [Interconnect Specific] 0.565 0.025 0.014
TOTAL
0.924
Note: The Authority has added the ISC used by Batelco to calculate its proposed charges (0.565 fils per equivalent minute).
Source: Batelco’s 2011 RO submission
In the Schedule 3 of the 2011 RO submission, Batelco’s proposed charge is 1.480 fils per 161.
SMS which is a +234.1% increase compared to the charge of 0.443 fils per SMS set in the
2011 RO Order.
Batelco’s proposed charge for the SMS terminating access service in the submitted 162.
Schedule 3 (1.480 fils) does not match the charge calculated in the cost stack (0.924 fils).
The cost difference lies in Batelco’s use of an incorrect value for the routing factor of
CN90. As per the 2011 RO Order (paragraph 191), a conversion factor of 0.025 should be
used to allocate the per minute equivalent ISC to the SMS termination service.
Emergency call access service (1-7)
Service definition
In its RO, Batelco defines the Emergency call access service as follows: 163.
“The Emergency Call Access Service is a service provided by
Batelco to convey Emergency Calls from an agreed Point of
Interconnection to the call centre of the Emergency Service, as
further defined by the terms of this Service Description.
Available to: Public telecommunications operators with an
individual licence and one or more interconnection links with
Batelco.
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Page 67 of 167
Traffic: Emergency Calls which both originate and terminate in
Bahrain only.
Reciprocal service: Not required.” 24
Information submitted by Batelco for the conveyance of emergency call to 999 (1-7.1)
Table 30: Cost stack submitted by Batelco for the Emergency call access service (see note below)
Item Ref Code Network Element
AS cost per
minute LRIC
Routing Factor %
2009 Cost
951h Emergency Call Access Service from OLO Transit
CN03 CN03 [Transit switches] [] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL []
950g Emergency Access 999
CN03 CN03 [Transit switches] [] [] []
CN15 CN15 [Transit switch - GMSC] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL []
2009 Traffic
Total unit cost
Weighted total unit cost
(based on traffic)
951h Emergency Call Access Service from OLO Transit [] [] 1.098
950g Emergency Access 999 [] []
Note: The Authority has added the ISC used by Batelco to calculate its proposed charges (0.565 fils per equivalent minute). The Authority also added the calculation of the weighted charge which was omitted by Batelco.
Source: Batelco’s 2011 RO submission
In the Schedule 3 of the 2011 RO submission, the proposed charge for this service is 164.
1.100 fils per minute which is a +5.3% increase compared to the charge of 1.045 fils set in
the 2011 RO Order.
It is noted that the charge in the submitted Schedule 3 does not exactly match the 165.
weighted average of the calculated charges included in the cost stacks (1.100 fils as
opposed to 1.098 fils). Based on the 2009 traffic weight (1.96% using the transit switch
and 98.04% using the GMSC), the Authority calculates that the cost-based charge should
be equal to 1.098 fils per minutes.
Information submitted by Batelco for the conveyance of emergency call to 990, 992, 994
and 998 (1-7.2 to 1-7.5)
In the Schedule 3 of the 2011 RO submission, the proposed charges for these 166.
conveyance services remain unchanged at 2.382 per minute. Batelco did not provide any
cost stacks for these services.
24 Batelco’s RO, Schedule 1 1-7 (EMERGENCY CALL ACCESS SERVICE)
Reference Offer Order
Annex– Order legal basis and reasoning
Page 68 of 167
Freephone call originating access service (1-8)
Service definition
In its RO, Batelco defines the freephone call originating access service as follows: 167.
“The Freephone Originating Access Service is a service for the
delivery of Freephone Calls from a Calling Party to an agreed Point
of Interconnection, as further defined by the terms of this Service
Description.
Available to: Public telecommunications operators with an
individual ISL, NFL or MNO licence and one or more
interconnection links with Batelco.
Traffic: Telephone Calls which both originate and terminate in
Bahrain or which originate in Bahrain and are delivered to a network
outside Bahrain.
Reciprocal Service: A reciprocal service must be offered by any
operator which provides an equivalent service to any directly
connected customers.” 25
Information submitted by Batelco for the freephone call originating access service from
a mobile telephone (1-8.1)
Table 31: Cost stack submitted by Batelco for the Freephone call originating access service from mobile (see
note below)
Item Ref Code Network Element
AS cost per
minute LRIC
Routing Factor
%
2009 Cost
951j Free phone Call originating access (using Postpaid to OLO GMSC)
MN01 MN01 [Mobile Switching Centre Server ( MSCS )] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
MN03 MN03 [Home Location Registers (HLR )] [] [] []
MN04 MN04 [Mobile Packet Backbone Network - MPBN] [] [] []
MN05 MN05 [Media Gateway ( MGW )] [] [] []
MN11 MN11 [Base Station Controller (BSC)] [] [] []
MN12 MN12 [Base Transceiver Station (BTS)] [] [] []
MN13 MN13 [GSM 3G Radio N/W Controller-RNC] [] [] []
MN14 MN14 [GSM 3G HSDPA Radio Base Stations-Node B] [] [] []
MN18 MN18 [RNC - MGW] [] [] []
MN19 MN19 [Node B - RNC] [] [] []
MN20 MN20 [Mobile BTS - BSC] [] [] []
MN21 MN21 [Mobile BSC - MGW] [] [] []
MN23 MN23 [Mobile MGW - GMSC] [] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL []
25 Batelco’s RO, Schedule 1 1-8 (FREEPHONE ORIGINATING ACCESS SERVICE)
Reference Offer Order
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951l Free phone Call originating access (using Prepaid to OLO GMSC)
MN01 MN01 [Mobile Switching Centre Server ( MSCS )] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
MN03 MN03 [Home Location Registers (HLR )] [] [] []
MN04 MN04 [Mobile Packet Backbone Network - MPBN] [] [] []
MN05 MN05 [Media Gateway ( MGW )] [] [] []
MN11 MN11 [Base Station Controller (BSC)] [] [] []
MN12 MN12 [Base Transceiver Station (BTS)] [] [] []
MN13 MN13 [GSM 3G Radio N/W Controller-RNC] [] [] []
MN14 MN14 [GSM 3G HSDPA Radio Base Stations-Node B] [] [] []
MN18 MN18 [RNC - MGW] [] [] []
MN19 MN19 [Node B - RNC] [] [] []
MN20 MN20 [Mobile BTS - BSC] [] [] []
MN21 MN21 [Mobile BSC - MGW] [] [] []
MN23 MN23 [Mobile MGW - GMSC] [] [] []
MN41 MN41 [Mobile prepaid platform] [] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL []
951k Free phone Call originating access (using Postpaid to OLO Transit)
CN03 CN03 [Transit switches] [] [] []
CN14 CN14 [Transit switch - MGW] [] [] []
MN01 MN01 [Mobile Switching Centre Server ( MSCS )] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
MN03 MN03 [Home Location Registers (HLR )] [] [] []
MN04 MN04 [Mobile Packet Backbone Network - MPBN] [] [] []
MN05 MN05 [Media Gateway ( MGW )] [] [] []
MN11 MN11 [Base Station Controller (BSC)] [] [] []
MN12 MN12 [Base Transceiver Station (BTS)] [] [] []
MN13 MN13 [GSM 3G Radio N/W Controller-RNC] [] [] []
MN14 MN14 [GSM 3G HSDPA Radio Base Stations-Node B] [] [] []
MN18 MN18 [RNC - MGW] [] [] []
MN19 MN19 [Node B - RNC] [] [] []
MN20 MN20 [Mobile BTS - BSC] [] [] []
MN21 MN21 [Mobile BSC - MGW] [] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL []
951m Free phone Call originating access (using Prepaid to OLO Transit)
CN03 CN03 [Transit switches] [] [] []
CN14 CN14 [Transit switch - MGW] [] [] []
MN01 MN01 [Mobile Switching Centre Server ( MSCS )] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
MN03 MN03 [Home Location Registers (HLR )] [] [] []
MN04 MN04 [Mobile Packet Backbone Network - MPBN] [] [] []
MN05 MN05 [Media Gateway ( MGW )] [] [] []
MN11 MN11 [Base Station Controller (BSC)] [] [] []
MN12 MN12 [Base Transceiver Station (BTS)] [] [] []
MN13 MN13 [GSM 3G Radio N/W Controller-RNC] [] [] []
MN14 MN14 [GSM 3G HSDPA Radio Base Stations-Node B] [] [] []
MN18 MN18 [RNC - MGW] [] [] []
MN19 MN19 [Node B - RNC] [] [] []
MN20 MN20 [Mobile BTS - BSC] [] [] []
MN21 MN21 [Mobile BSC - MGW] [] [] []
MN41 MN41 [Mobile prepaid platform] [] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
Reference Offer Order
Annex– Order legal basis and reasoning
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TOTAL []
2009 Traffic
Total unit cost
Weighted total unit
cost (based
on traffic)
951j Free phone Call originating access (using Postpaid to OLO GMSC) [] []
6.020 951l Free phone Call originating access (using Prepaid to OLO GMSC) [] []
951k Free phone Call originating access (using Postpaid to OLO Transit) [] []
951m Free phone Call originating access (using Prepaid to OLO Transit) [] []
Note: The Authority has added the ISC used by Batelco to calculate its proposed charges (0.565 fils per equivalent minute). The Authority also added the calculation of the weighted charge which was omitted by Batelco.
Source: Batelco’s 2011 RO submission
In the Schedule 3 of the 2011 RO submission, the proposed charge is 6.020 fils per 168.
minute which is a -25.3% decrease compared to the charge of 8.060 fils set in the 2011
RO Order. This charge corresponds to the calculated charge of the service cost stack.
Information submitted by Batelco for the freephone call originating access service from
a fixed PSTN telephone (1-8.2)
Table 32: Cost stack submitted by Batelco for the Freephone call originating access service from fixed PSTN
(see note below)
Item Ref Code Network Element AS cost per
minute LRIC
Routing Factor
% 2009 Cost
950h Free phone Call originating access (using PSTN to OLO GMSC)
CN03 CN03 [Transit switches] [] [] []
CN04 CN04 [Soft Switch (inc MRS)] [] [] []
CN05 CN05 [MSAN Traffic Sensitive] [] [] []
CN06 CN06 [Universal Media Gateway (UMG)] [] [] []
CN15 CN15 [Transit switch - GMSC] [] [] []
CN20 CN20 [Distribution - Core Link (Voice )] [] [] []
CN22 CN22 [Aggregation - Distribution Link ( Voice)]
[] [] []
CN24 CN24 [MSAN - Aggregation Link (Voice)] [] [] []
new added CN25 CN25 [UMG - Transit Switches] [] [] []
CN39 CN39 [MPLS Core Voice] [] [] []
CN41 CN41 [MPLS Aggregation ( Voice)] [] [] []
CN57 CN57 [MPLS - Distribution Routers ( Voice )] [] [] []
new added CN64 CN64 [Public Payphones] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL []
951i Free phone Call originating access (using PSTN to OLO Transit)
CN03 CN03 [Transit switches] [] [] []
CN04 CN04 [Soft Switch (inc MRS)] [] [] []
CN05 CN05 [MSAN Traffic Sensitive] [] [] []
CN06 CN06 [Universal Media Gateway (UMG)] [] [] []
CN20 CN20 [Distribution - Core Link (Voice )] [] [] []
CN22 CN22 [Aggregation - Distribution Link ( Voice)]
[] [] []
CN24 CN24 [MSAN - Aggregation Link (Voice)] [] [] []
new added CN25 CN25 [UMG - Transit Switches] [] [] []
CN39 CN39 [MPLS Core Voice] [] [] []
CN41 CN41 [MPLS Aggregation ( Voice)] [] [] []
CN57 CN57 [MPLS - Distribution Routers ( Voice )] [] [] []
Reference Offer Order
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new added CN64 CN64 [Public Payphones] [] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL []
2009 Traffic Total unit cost
Weighted total unit
cost (based on traffic)
950h Free phone Call originating access (using PSTN to OLO GMSC) [] [] 2.783
951i Free phone Call originating access (using PSTN to OLO Transit) [] []
Note: The Authority has added the ISC used by Batelco to calculate its proposed charges (0.565 fils per equivalent minute). The Authority also added the calculation of the weighted charge which was omitted by Batelco.
Source: Batelco’s 2011 RO submission
In the Schedule 3 of the 2011 RO submission, Batelco’s proposed wholesale charges 169.
corresponding to the freephone from PSTN service remain unchanged at 2.710 fils per
minute. This charge does not correspond to the calculated charge in the service cost stack
which equals 2.783 fils. This is in line with the RO approval letter dated 17 September
2009 (GDO/0909/031) in which it was decided to hold constant the fixed interconnection
charges’ rates pending a thorough review of NGN costing.
MMS delivery service (1-11)
Service definition
In its RO, Batelco defines the MMS delivery service as follows: 170.
“The MMS Delivery Service is a service for the carriage of MMS
Messages via a TCP/IP connection to the MMSC of the Access
Provider, as further defined by the terms of this Service Description
and by 3GPP TS 22.140 and 3GPP TS 23.140 specifications.
Available to: Public telecommunications operator with an individual
MNO licence.
Traffic: MMS Messages originating from and terminating to users in
Bahrain only.
Reciprocal Service: A reciprocal delivery service is required.” 26
26 Batelco’s RO, Schedule 1 1-11 (MMS DELIVERY SERVICE)
Reference Offer Order
Annex– Order legal basis and reasoning
Page 72 of 167
Information submitted by Batelco
Table 33: Cost stack submitted by Batelco for the MMS delivery service (see note below)
Note: The Authority has added the ISC used by Batelco to calculate its proposed charges (0.565 fils per equivalent minute).
Source: Batelco’s 2011 RO submission
In the Schedule 3 of the 2011 RO submission, the proposed charge is 90.500 fils per MMS 171.
which is a -27.3% decrease compared to the charge of 124.495 fils set in the 2011 RO
Order.
Batelco’s proposed charge for the MMS terminating access service in the submitted 172.
Schedule 3 (90.500 fils) does not exactly match the charge calculated in the cost stack
(90.125 fils). The difference essentially lies in Batelco’s use of an incorrect value for the
routing factor of CN90. As per the 2011 RO Order (paragraph 191), a conversion factor of
0.333 should be used for the per minute equivalent ISC applicable to the MMS termination
service.
Item Ref Code Network Element
AS cost per
minute LRIC
Routing Factor
%
2009 Cost
950i MMS Terminating Access
MN01 MN01 [Mobile Switching Centre Server ( MSCS )] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
MN03 MN03 [Home Location Registers (HLR )] [] [] []
MN04 MN04 [Mobile Packet Backbone Network - MPBN] [] [] []
MN05 MN05 [Media Gateway ( MGW )] [] [] []
MN11 MN11 [Base Station Controller (BSC)] [] [] []
MN12 MN12 [Base Transceiver Station (BTS)] [] [] []
MN13 MN13 [GSM 3G Radio N/W Controller-RNC] [] [] []
MN14 MN14 [GSM 3G HSDPA Radio Base Stations-Node B] [] [] []
MN18 MN18 [RNC - MGW] [] [] []
MN19 MN19 [Node B - RNC] [] [] []
MN20 MN20 [Mobile BTS - BSC] [] [] []
MN21 MN21 [Mobile BSC - MGW] [] [] []
MN23 MN23 [Mobile MGW - GMSC] [] [] []
MN25 MN25 [Mobile MGW - SMS platform] [] [] []
MN26 MN26 [Mobile BSC - GPRS platform] [] [] []
MN40 MN40 [SMS Platform] [] [] []
MN43 MN43 [GPRS Platform] [] [] []
MN44 MN44 [MMS Platform] [] [] []
MN45 MN45 [WAP Platform] [] [] []
SUBTOTAL
[]
CN90 CN90 [Interconnect Specific] 0.565 0.333 0.188
TOTAL
90.125
Reference Offer Order
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PSTN transit service (2-1)
Service definition
In its RO, Batelco defines the PSTN transit service as follows: 173.
“The PSTN Transit Service is a service provided by Batelco for the
carriage of Transit Calls between two Access Seeker Network
Facilities of the same Access Seeker.
Available to: Public telecommunications operator with an NFL or
MNO licence and two or more interconnection links with Batelco.
Traffic: Telephone Calls which originate and terminate on the
Access Seeker’s network only.
Reciprocal Service: Not required.
(…)
Access Seeker Network Facility means the following facilities
operated by the Access Seeker and forming part of its PSTN or
Mobile Network:
(a) switch, but excluding a remote concentrator or multiplexer;
(b) a mobile switching centre;
(c) base station;
(d) satellite earth station; or
(e) cable landing station,
but, for clarification, excludes Access Seeker Customer premises.” 27
Information submitted by Batelco
Batelco did not propose to modify the charges of these services which remain at: 174.
a. 1.724 fils per Transit call – Fixed; and
b. 1.988 fils per Transit call – Mobile.
Moreover, Batelco did not provide any cost stacks for these services. 175.
27 Batelco’s RO, Schedule 1 2-1 (PSTN TRANSIT SERVICE)
Reference Offer Order
Annex– Order legal basis and reasoning
Page 74 of 167
DQ assistance service [for call to 181 (2-2.1) and for call to 188 (2-2.1)]
Service definition
In its RO, Batelco defines the DQ assistance service as follows: 176.
“The Directory Assistance Service is a service provided by Batelco
to Access Seeker Customers to provide them with access to a
Batelco operator to obtain information about Listed Numbers.
Available to: Public telecommunications operator with an individual
NFL or MNO licence and one or more interconnection links with
Batelco.
Traffic: Telephone Calls which originate on the Access Seeker’s
network and are made to the Batelco directory operators.
Reciprocal Service: Not required.” 28
Information submitted by Batelco
Table 34: Cost stack submitted by Batelco for the DQ assistance service (see note below)
Item Ref Code Network Element AS cost per
minute LRIC
Routing Factor
% 2009 Cost
950k Directory Assistance Service from OLO GMSC (181)
CN03 CN03 [Transit switches] [] [] []
CN15 CN15 [Transit switch - GMSC] [] [] []
CN18 CN18 [Transit switch - DQ Services] [] [] []
CN63 CN63 [Directory Services ( DQ )] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
new added MN25 MN25 [Mobile MGW - SMS platform] [] [] []
new added MN40 MN40 [SMS Platform] [] [] []
Weighted average operating costs per call (181 and 188 calls)
[] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL []
951n Directory Assistance Service from OLO Transit (181)
CN03 CN03 [Transit switches] [] [] []
CN18 CN18 [Transit switch - DQ Services] [] [] []
CN63 CN63 [Directory Services ( DQ )] [] [] []
Weighted average operating costs per call (181 and 188 calls)
[] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL []
2009 Traffic Total unit cost
Weighted total unit
cost (based on
traffic) 950k Directory Assistance Service from OLO GMSC (181) [] []
112.549 951n Directory Assistance Service from OLO Transit (181) [] []
951y Directory Assistance Service from OLO GMSC (188)
28 Batelco’s RO, Schedule 1 2-2 (DIRECTORY ASSISTANCE SERVICE)
Reference Offer Order
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CN03 CN03 [Transit switches] [] [] []
CN15 CN15 [Transit switch - GMSC] [] [] []
CN18 CN18 [Transit switch - DQ Services] [] [] []
CN63 CN63 [Directory Services ( DQ )] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
MN25 MN25 [Mobile MGW - SMS platform] [] [] []
MN40 MN40 [SMS Platform] [] [] []
Weighted average operating costs per call (181 and 188 calls)
[] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL 112.665
Note: The Authority has added the ISC used by Batelco to calculate its proposed charges (0.565 fils per equivalent minute).
The Authority has also added the “Weighted average operating costs per call (181 and 188 calls)” which was omitted by Batelco in the cost stacks (20110407 Annex C DQ 2009 181188.xlsx).
Finally, the Authority has added the calculation of the weighted charge of call to 181 which was also omitted by Batelco.
Source: Batelco’s 2011 RO submission
In the Schedule 3 of the 2011 RO submission, Batelco’s proposed charges are 111.010 177.
fils per call to 181 and 112.540 fils per call to 188 which is respectively a -8.6% decrease
and a -9.2% decrease compared to the charges of 121.402 fils and 123.884 fils set in the
2011 RO Order.
It should be noted that Batelco’s proposed charges for the directory assistance service in 178.
the submitted Schedule 3 (111.010 and 112.549 fils per call) do not match the charges
calculated in the cost stacks (112.549 and 112.665 fils per call).
Reference Offer Order
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International inbound calls to Batelco fixed telephones (2-7)
Service definition
In its RO, Batelco defines the International inbound calls to Batelco fixed telephones 179.
service as follows:
“The Fixed Network Access Service for International Inbound Calls
to Batelco Fixed Telephones is a service for the access to a fixed
network for the delivery of International Inbound Telephone Calls
from a Calling International Party to a Called Local Fixed Party as
further described in this Service Description.
Available to: Public telecommunications operators with an
individual international services licence and one or more
interconnection links with Batelco.
Traffic: Voice traffic which originates outside Bahrain and
terminates on a Batelco fixed telephone network number.
Reciprocal Service: Not required.” []Information submitted by Batelco
Table 35: Cost stack submitted by Batelco for International inbound calls to Batelco fixed telephones service
(see note below)
Item Ref Code Network Element
AS cost
per
minute
LRIC
Routing
Factor % 2009 Cost
950m Int'l Inbound Calls to fixed from OLO GMSC
CN03 CN03 [Transit switches] [] [] []
CN04 CN04 [Soft Switch (inc MRS)] [] [] []
CN05 CN05 [MSAN Traffic Sensitive] [] [] []
CN06 CN06 [Universal Media Gateway (UMG)] [] [] []
CN15 CN15 [Transit switch - GMSC] [] [] []
CN20 CN20 [Distribution - Core Link (Voice )] [] [] []
CN22 CN22 [Aggregation - Distribution Link ( Voice)] [] [] []
CN24 CN24 [MSAN - Aggregation Link (Voice)] [] [] []
new added CN25 CN25 [UMG - Transit Switches] [] [] []
CN39 CN39 [MPLS Core Voice] [] [] []
CN41 CN41 [MPLS Aggregation ( Voice)] [] [] []
CN57 CN57 [MPLS - Distribution Routers ( Voice )] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL 2.625
951o Int'l Inbound Calls to fixed from OLO Transit
CN03 CN03 [Transit switches] [] [] []
CN04 CN04 [Soft Switch (inc MRS)] [] [] []
CN05 CN05 [MSAN Traffic Sensitive] [] [] []
CN06 CN06 [Universal Media Gateway (UMG)] [] [] []
CN20 CN20 [Distribution - Core Link (Voice )] [] [] []
CN22 CN22 [Aggregation - Distribution Link ( Voice)] [] [] []
CN24 CN24 [MSAN - Aggregation Link (Voice)] [] [] []
Reference Offer Order
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Page 77 of 167
new added CN25 CN25 [UMG - Transit Switches] [] [] []
CN39 CN39 [MPLS Core Voice] [] [] []
CN41 CN41 [MPLS Aggregation ( Voice)] [] [] []
CN57 CN57 [MPLS - Distribution Routers ( Voice )] [] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL 2.254
Note: The Authority has added the ISC used by Batelco to calculate its proposed charges (0.565 fils per equivalent minute).
Source: Batelco’s 2011 RO submission
In the Schedule 3 of the 2011 RO submission, the proposed charge is 30.160 fils per 180.
minute which is a +1,141% increase compared to the previous charge of 2.430 fils.
Batelco’s proposed charge in the Schedule 3 (30.160 fils per minute) is significantly above 181.
the cost-based charges as calculated in the cost stack (2.625 fils per minute from OLO
GMSC and 2.254 fils per minute from OLO Transit).
The Authority notes that there are two call scenarios (from GMSC and from Transit) while 182.
there is only one charge proposed by Batelco in the Schedule 3.
Batelco refers the Authority to the Annex G 2010 of the RO submission dated 1 April 2010 183.
(GCL/425/10) and to its response dated 7 November 2010, pages 52-55, to the RO draft
order for written justifications of the proposed above-cost buffer.
Reference Offer Order
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Page 78 of 167
International inbound calls to Batelco mobile telephones (2-8)
Service definition
In its RO, Batelco defines the International inbound calls to Batelco mobile telephones 184.
service as follows:
“The Mobile Network Access Service for International Inbound Calls
to Batelco Mobile Telephones is a service for the access to a mobile
network for the delivery of International Inbound Telephone Calls
from a Calling International Party to a Called Local Mobile Party as
further described in this Service Description.
Available to: Public telecommunications operators with an
individual international services licence and one or more
interconnection links with Batelco.
Traffic: Voice traffic which originates outside Bahrain and
terminates on a Batelco mobile telephone number range.
Reciprocal Service: Not required.” []Information submitted by Batelco
Table 36: Cost stack submitted by Batelco for International inbound calls to Batelco mobile telephones (see
note below)
Item Ref Code Network Element
AS cost per
minute LRIC
Routing Factor %
2009 Cost
950n Int'l Inbound Calls to Mobile from OLO GMSC
MN01 MN01 [Mobile Switching Centre Server ( MSCS )] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
MN03 MN03 [Home Location Registers (HLR )] [] [] []
MN04 MN04 [Mobile Packet Backbone Network - MPBN] [] [] []
MN05 MN05 [Media Gateway ( MGW )] [] [] []
MN11 MN11 [Base Station Controller (BSC)] [] [] []
MN12 MN12 [Base Transceiver Station (BTS)] [] [] []
MN13 MN13 [GSM 3G Radio N/W Controller-RNC] [] [] []
MN14 MN14 [GSM 3G HSDPA Radio Base Stations-Node B] [] [] []
MN18 MN18 [RNC - MGW] [] [] []
MN19 MN19 [Node B - RNC] [] [] []
MN20 MN20 [Mobile BTS - BSC] [] [] []
MN21 MN21 [Mobile BSC - MGW] [] [] []
MN23 MN23 [Mobile MGW - GMSC] [] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL 4.681
951q Int'l Inbound Calls to Mobile from OLO Transit
CN03 CN03 [Transit switches] [] [] []
CN15 CN15 [Transit switch - GMSC] [] [] []
MN01 MN01 [Mobile Switching Centre Server ( MSCS )] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
MN03 MN03 [Home Location Registers (HLR )] [] [] []
MN04 MN04 [Mobile Packet Backbone Network - MPBN] [] [] []
MN05 MN05 [Media Gateway ( MGW )] [] [] []
MN11 MN11 [Base Station Controller (BSC)] [] [] []
Reference Offer Order
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MN12 MN12 [Base Transceiver Station (BTS)] [] [] []
MN13 MN13 [GSM 3G Radio N/W Controller-RNC] [] [] []
MN14 MN14 [GSM 3G HSDPA Radio Base Stations-Node B] [] [] []
MN18 MN18 [RNC - MGW] [] [] []
MN19 MN19 [Node B - RNC] [] [] []
MN20 MN20 [Mobile BTS - BSC] [] [] []
MN21 MN21 [Mobile BSC - MGW] [] [] []
MN23 MN23 [Mobile MGW - GMSC] [] [] []
SUBTOTAL []
CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565
TOTAL 4.929
Note: The Authority has added the ISC used by Batelco to calculate its proposed charges (0.565 fils per equivalent minute).
Source: Batelco’s 2011 RO submission
In the Schedule 3 of the 2011 RO submission, Batelco’s proposed charges are 37.800 fils 185.
per minute for the two different call scenarios. For the International inbound calls to
Batelco mobile using GMSC, this represents a +517% increase compared to the current
charge of 6.122 fils. For the second call scenario using the transit switch, the charges’
increase is equal to +477%.
The charges proposed by Batelco in the Schedule 3 (37.800 fils per minute) are 186.
significantly above the cost-based charges as calculated in the cost stack (4.681 fils per
minute from OLO GMSC and 4.929 fils per minute from OLO Transit).
Batelco refers the Authority to the Annex G 2010 of the RO submission dated 1 April 2010 187.
(GCL/425/10) and to its response dated 7 November 2010, pages 52-55, to the RO draft
order for written justifications of the proposed above-cost buffer.
Reference Offer Order
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Page 80 of 167
Inter-Operator Transit Access Service (2-9)
Service definition
In its RO, Batelco defines the inter-operator transit access service as follows: 188.
“The Inter-Operator Transit Access Service (ITAS) is a service
provided by Batelco to Licensed Operators for the carriage (in
transit) of Transit Calls between one Licensed Operator’s Network
and another Licensed Operator’s Network.
Available to: Licensed Operator with the right to interconnect its
network to the Batelco Network.
Traffic: Only calls which
(i) originate outside Bahrain and are
for termination in Bahrain;
(ii) originate inside Bahrain and are for
termination outside Bahrain; or
(iii) both originate and terminate in
Bahrain and do not cross a
network which lies outside Bahrain
and for the avoidance of doubt,
may not both originate and
terminate on the network of the
Access Seeker (see the PSTN
Transit Service Description).
Reciprocal Service: Reciprocal Transit is not required.” 29
Information submitted by Batelco
Table 37: Cost stack submitted by Batelco for Inter-Operator Transit Access Service (see note below)
Item Ref Code Network Element AS cost per
minute LRIC
Routing Factor
% 2009 Cost
950o Inter-Operator Transit Service ITAS (OLO GMSC/Transit to OLO Transit/GMSC)
CN03 CN03 [Transit switches] [] [] []
CN15 CN15 [Transit switch - GMSC] [] [] []
MN02 MN02 [Gateway MSC (GMSC)] [] [] []
SUBTOTAL 0.540
CN90 CN90 [Interconnect Specific] [] [] []
TOTAL []
951v Inter-Operator Transit Service ITAS (OLO Transit to Transit)
CN03 CN03 [Transit switches] [] [] []
SUBTOTAL 0.337
CN90 CN90 [Interconnect Specific] [] [] []
29 Batelco’s RO, Schedule 1 2-9 (INTER-OPERATOR TRANSIT ACCESS SERVICE )
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TOTAL []
2009 Traffic Total unit cost
Weighted total unit cost
(based on traffic)
950o Inter-Operator Transit Service ITAS (OLO GMSC/Transit to OLO Transit/GMSC)
[] [] 1.104
951v Inter-Operator Transit Service ITAS (OLO Transit to Transit) [] []
Note: The Authority has added the ISC used by Batelco to calculate its proposed charges (0.565 fils per equivalent minute).
The Authority also added the calculation of the weighted charge which was omitted by Batelco. Source: Batelco’s 2011 RO submission
In the Schedule 3 of the 2011 RO submission, Batelco’s proposed charge for the transit of 189.
fixed voice traffic remains unchanged at 1.724 fils per minute. For the transit of mobile
voice traffic, Batelco’s proposed charge is 1.100 fils per minute which is a -26.2%%
decrease compared to the previously ordered charge of 1.49 fils. Batelco’s proposed
charge is sensibly equal to the above calculated charge of 1.104 fils per minute.
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8.2 Review of the submitted charges for interconnection and transit services
Proposed interconnection charges in the 2011 RO submission
Interconnection charges are composed of: 190.
a. network costs which are based on the 2009 LRIC regulatory accounts and are
allocated to services on the basis of their relative usage of network elements. The
cost allocation is undertaken via a routing factor table which is a double-entry
table with, horizontally, the list of network elements and, vertically, the list of
services. Each intersection in the table is populated with a factor which is the
product of:
i. a conversion factor used to convert service traffic into a unit common to all
services. In the case of interconnection and transit services, this common
unit is called equivalent minute (or routing factor minute); and
ii. a routing factor representing the relative usage required by each network
element in the provision (i.e. routing) of an equivalent minute of service.
b. wholesale activities costs which are grouped under a charge called ISC
(“Interconnection Specific Charge”). This charge allocates interconnect specific
costs to all the minutes conveyed and transited on Batelco’s fixed and mobile
networks.
The following table summarizes the interconnection and transit services charges proposed 191.
by Batelco along with the current charges.
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Table 38: Current and proposed interconnection and transit charges
Chargeable activity
Previously approved/ordered in
2008
Previously approved/ordered in
2009
Approved/ordered in January
2011
(or currently
implemented)
Batelco submitted charges in April 2011
Evolution of
submitted as
compared to
Approved/ Ordered
Interconnection services in fils
1-3.1 - GMSC PTSN terminating calls 3.040 3.040 3.040 3.040 0.0%
1-3.2 - PSTN terminating access using either double or single tandem
2.382 2.382 2.382 2.382 0.0%
1-3.3 - Delivery to tone or announcement 2.000 2.000 2.000 2.000 0.0%
1-4.1 - Mobile call conveyance GMSC 6.626 6.124 6.203 4.680 -24.6%
1-4.2 - Mobile call conveyance Transit switch 7.332 6.556 6.553 4.530 -30.9%
1-4.3 - Delivery to tone or announcement 2.000 2.000 2.000 2.000 0.0%
1-6.1 - SMS Terminating access 0.456 0.437 0.443 1.480 +234.1%
1-7.1 - Conveyance of emergency call to 999 1.429 1.591 1.045 1.100 +5.3%
1-7.2 - Conveyance of emergency call to 990 2.711 2.382 2.382 0.0%
1-7.3 - Conveyance of emergency call to 992 2.711 2.382 2.382 0.0%
1-7.4 - Conveyance of emergency call to 994 2.711 2.382 2.382 0.0%
1-7.5 - Conveyance of emergency call to 998 2.382 2.382 0.0%
1-8.1 - Freephone from Mobile 7.830 8.060 8.060 6.020 -25.3%
1-8.2 - Freephone from PSTN 2.710 2.710 2.710 2.710 0.0%
1-11.1 - MMS delivery service 150.851 84.109 124.495 90.500 -27.3%
2-2.1 - Directory assistance service for call to 181
115.750 121.402 111.010 -8.6%
2-2.2 - Directory assistance service for call to 188
118.820 123.884 112.540 -9.2%
2-7.1 - International Inbound calls to Batelco Fixed Telephones
2.430 * 30.160 +1141.2%
2-8.1 - International inbound calls to Batelco mobile using GMSCs
6.122 * 37.800 +517.4%
2-8.2 - International inbound calls to Batelco mobile using either single tandem or double tandem
6.556 * 37.800 +476.6%
2-9.1 - Inter-Operator Transit Access Service Fixed
1.7240 1.7240 1.7240 0.0%
2-9.2 - Inter-Operator Transit Access Service Mobile
1.9880 1.4900 1.1000 -26.2%
* in place since 1 July 2010 Source: The Authority
General comments related to Batelco’s submission
Following the review of Batelco’s submitted cost stacks and Schedule 3, the Authority 192.
makes the following comments:
a. Some of Batelco’s proposed interconnection and transit services charges in the
submitted Schedule 3 (“20110411 Sch 3 09 RO Charges_RO Submission.doc”)
are inconsistent with the charges calculated in the submitted cost stacks
(“20110407 Annex A RIO costs 2009.xlsx”);
b. The ISC is not included in any of the submitted cost stacks;
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c. Although absent from the cost stack, the Authority has inferred that Batelco has
used an ISC of 0.565 fils to calculate the charges submitted in its Schedule 3.
Batelco’s use of an ISC of 0.565 fils per minute is inconsistent with the Authority’s
decision taken in the 2011 RO Order, where the ISC charge was set at 0.700 fils
per equivalent minute and the Authority explained that it did not intend to review
the ISC in the new RO review, i.e. not before the RO submission due in December
2011;
d. Routing factors presented in the cost stacks have changed between 2008 and
2009 without being fully documented. Ideally, Batelco should provide routing
diagrams for each call scenario. Such diagrams should be amended whenever
new network routing/new network equipment is introduced.
e. When several call scenarios are possible for the same service charge, Batelco did
not provide the calculation that was used to derive the weighted average charge.
f. Cost stacks are not fully consistent with the Routing Factor (‘RF’) table submitted
along with the 2009 regulatory accounts. As the unit cost per RF minute is
calculated using the RF table, any allocation of these unit costs to services based
on routing factors which differ from the RF table would result in an incorrect cost
allocation.
Appropriate names for interconnection services
Replacement of ‘PSTN’ by ‘fixed’
In light of recent network technology evolution, the Authority questions the 193.
appropriateness of the naming of certain interconnection services. For instance, in a pure
NGN environment it would be more appropriate to replace ‘PSTN terminating access’ with
the more generic and technology-neutral terminology ‘Fixed terminating access’. This
comment also applies to the ‘Freephone from a fixed PSTN Telephone’ which simply
becomes ‘Freephone from fixed’. The Authority has therefore made a number of naming
changes (see below Table 39 page 85)
Replacement of the Gateway Mobile Switching Center (‘GMSC’) and Transit switch by
the ICG Soft Switch
As per section 7.2 Appendix B of Batelco’s submitted 2010 APM30
(page 60), the network 194.
element ‘GMSC’ coded under the reference ‘MN02’ is no longer required for
interconnection services in 2010 and has therefore been removed by Batelco from these
services. The function of this network element is now undertaken by the network element
‘ICG Soft Switch’. The ‘ICG Soft Switch’ coded under ‘CN07’ is used as the single point of
interconnection for all OLOs (both fixed and mobile) since 2010.
While the Authority understands that, for information purposes, Batelco submitted two cost 195.
stacks corresponding to the two different interconnection scenarios operational in 2009
(‘Transit switch’ or ‘GMSC’), it is not clear why Batelco also included two different
interconnection charges in its submitted Schedule 3.
30 AS Methodology 2010_final_April 2011 without track changes revised.doc, submitted by Batelco on 5 May 2011.
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The Authority considers that this differentiation of charges should no longer exist in 2011 196.
when all interconnection traffic transits through a single point of interconnection called
‘ICG Soft Switch’.
For these reasons, the Authority orders Batelco to implement the changes defined in Table 197.
39 in its RO.
Table 39: Changes to be reflected in the list of interconnection services
Current list of services New list of services to be reflected in the RO
1-3.1 - GMSC PSTN Terminating Access
1-3.1 - Fixed terminating access 1-3.2 - PSTN Terminating Access using either
double tandem or single tandem
1-3.3 - Delivery to tone or announcement 1-3.3 - Delivery to tone or announcement
1-4.1 - Mobile call conveyance GMSC 1-4.1 - Mobile terminating access
1-4.2 - Mobile call conveyance Transit switch
1-4.3 - Delivery to tone or announcement 1-4.3 - Delivery to tone or announcement
1-6.1 - SMS terminating access 1-6.1 - SMS terminating access
1-7.1 - Conveyance of emergency call to 999 1-7.1 - Conveyance of emergency call to 999
1-7.2 - Conveyance of emergency call to 990 1-7.2 - Conveyance of emergency call to 990
1-7.3 - Conveyance of emergency call to 992 1-7.3 - Conveyance of emergency call to 992
1-7.4 - Conveyance of emergency call to 994 1-7.4 - Conveyance of emergency call to 994
1-7.5 - Conveyance of emergency call to 998 1-7.5 - Conveyance of emergency call to 998
1-8.1 - Freephone from a Mobile Telephone 1-8.1 - Freephone from mobile
1-8.2 - Freephone from a fixed PSTN Telephone 1-8.2 - Freephone from fixed
1-11.1 - MMS delivery service 1-11.1 - MMS delivery service
2-2.1 - Directory assistance service for call to 181 2-2.1 - Directory assistance service for call to 181
2-2.2 - Directory assistance service for call to 188 2-2.2 - Directory assistance service for call to 188
2-7.1 - International Inbound calls to Batelco
Fixed Telephones 2-7.1 - International Inbound calls to fixed
2-8.1 - International inbound calls to Batelco
mobile using GMSCs
2-8.1 - International inbound calls to mobile 2-8.2 - International inbound calls to Batelco
mobile using either single tandem or double
tandem
2-9.1 - Inter-Operator Transit Access Service
Fixed: Per Transit Call 2-9.1 - Inter-Operator Transit Access Service: Per
Transit Call 2-9.2 - Inter-Operator Transit Access Service
Mobile: Per Transit Call
Source: the Authority
As the Authority does not have any costing information on the ICG Soft Switch network 198.
equipment (such information will be provided by Batelco as part of its 2010 regulatory
accounts), it has decided to calculate the ‘unified’ interconnection charges by averaging
both the GMSC- and Transit switch-based charges.
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Charge basis error
There is a typographical error in the “Charge Basis” column of item 1-3.1 of Batelco’s 199.
Schedule 3. The “Charge Basis” should read “Per minute, calculated per second” instead
of “Per fils, calculated per second”.
The Authority orders Batelco to rectify this error. 200.
Omission of legacy network elements in the cost stack of fixed interconnection services
While Batelco did not submit any change for fixed interconnection charges in accordance 201.
with the RO approval letter dated 17 September 2009, it remains that interconnection
costs should be correctly calculated, even though it may be justified to depart from the
calculated costs stacks. This is to ensure the accuracy of the calculations of the model
which uses routing factors.31
The Authority has reviewed the cost stack for fixed interconnection services submitted by 202.
Batelco and notes that although a mixture of NGN and legacy switching equipment was
apparently used until the full NGN migration in Q4 2009, the cost stacks submitted did not
include any of the cost of legacy equipment32
thereby ignoring a significant proportion of
cost (~14% of fixed switching and transmission costs).
The cost stacks present another error: Batelco applied a routing factor of 1 for the NGN 203.
switching equipment whereas it should have used a route factor of 98.3%33
which
represents the percentage of NGN traffic in 2009 (the rest, 1.7%, represents the
percentage of legacy traffic in 2009) used to derive the per minute equivalent unit cost.
Incorrect cost allocation of NP11 and NP29 to CN38 and CN39
During the review of Batelco’s 2009 regulatory accounts, the Authority has identified an 204.
error (which has later been acknowledged by Batelco) in the downstream cost allocation of
the network plants NP11 [Core Network Duct & Infrastructure] and NP29 [MPLS
Reallocation] to the core network elements CN38 [MPLS Core Data] and CN39 [MPLS
Core Voice]. This cost misallocation results in a [] increase of the CN38 FAC cost and a
[] decrease of the CN39 FAC cost.
31 If the per minute equivalent unit cost of a network element has been derived based on 80% of traffic, then a
routing factor of 0.8 should be used to allocate this cost to product. 32
More specifically they did not include the following network elements: CN01 [Remote line units]; CN02 [Local switches]; CN11 [Remote line unit – Local switch]; and CN12 [Local switch – Transit switch]. 33
20110618 RF table 2009 with further explanations.xlsx
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Table 40: Correction of the misallocation of NP11 and NP29 costs to CN38 and CN39
Core network element
2009 FAC cost
- Wrong
allocation
Voice/data
ratio
Corrected
allocation
Corrected
voice/data
ratio
Change
(%)
CN38 MPLS Core Data [] [] [] [] []
CN39 MPLS Core Voice [] [] [] [] []
Total [] [] [] []
Source: The Authority based on Batelco’s responses to article 53 information request dated 24 April 2011 and 9 June 2011 (Batelco ref: GCL/173/11, Response to Article 53 information request_20110512.xls; GCL/213/11, 20110609
Response to Article 53 information request dated 30 May 2011_2009 reg accts - supporting excel sheets.xlsx)
In the calculation of the FRND transit and interconnection charges, the Authority has 205.
assumed that the impact of the cost misallocation was similar in both FAC and D-
LRIC+MU accounts. Therefore, the LRIC unit cost of CN39 per equivalent minute has
been adjusted in similar proportion i.e. a decrease of []%.
Incorrect unit cost of network elements
While Batelco has used the routing factors that were ordered for the cost stacks of 206.
interconnection and transit services by the Authority in the 2011 RO Order, Batelco did not
apply the same routing factors to calculate the unit cost per equivalent minute of network
elements. Therefore, all the charges in the submitted cost stacks are incorrect since they
rely on unit costs which are incorrect.
In other words, Batelco did apply routing factors to network element unit costs which were 207.
calculated with another set of routing factors. This is, for example, the case with network
elements MN01 and MN02.
To set the FRND charges detailed in Table 41 page 90, the Authority has corrected unit 208.
costs.
Incorrect RAN routing factors for SMS and MMS termination services
Compared to on-net messaging services, terminating services should use only half the 209.
RAN network elements. As such, the routing factor of SMS termination applicable to the
RAN should be 0.0125 and not 0.025 while for MMS it should be 0.179 instead of 0.358.
To set the FRND charges detailed in Table 41 page 90, the Authority has corrected these 210.
routing factors.
Incorrect CN90 routing factors for SMS and MMS termination services
It appears that Batelco has used a routing factor of 1 to allocate the per minute equivalent 211.
ISC. As per the 2011 RO Order (paragraph 191), a conversion factor of respectively 0.025
and 0.333 should be used to allocate CN90 unit cost to the SMS and MMS termination
services.
To set the FRND charges detailed in Table 41 page 90, the Authority has corrected these 212.
routing factors.
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Incorrect routing factors for ‘MN01 Mobile Switching Centre Server (MSCS)’
Since the allocation driver of ‘MN01 Mobile Switching Centre Server (MSCS)’ detailed in 213.
Batelco’s RF table is the ‘capacity traffic’, the routing factors associated with this network
element should reflect the conversion factors applied to mobile data and mobile
messaging: respectively 4 for mobile data (0.25 MB=1 equivalent minute); 0.025 for SMS
(40 SMS=1 equivalent minute); and 0.333 for MMS (3 MMS=1 equivalent minute).
On this point, the Authority refers to paragraph 180 of the 2011 RO Order where the 214.
Authority had expressly requested Batelco to amend its RF table to be consistent with
these conversion factors.
To set the FRND charges detailed in Table 41 page 90, the Authority has corrected these 215.
routing factors.
Constant fixed interconnection charges
While the calculated unit cost of fixed interconnection services appears to be lower than 216.
the current charges, the Authority remains of the view that fixed interconnection rates
should remain at their current level in accordance with the RO approval letter of 17
September 2009 (ref: GDO/09/09/031). That letter said:
“The costing of NGN assets: The agreed approach for this review
has been to hold PSTN-based termination rates constant based on
the July 2008 Reference Offer pending a thorough review on the
most appropriate form of costing for NGN-based charges and if
necessary a glidepath to transition between the legacy and NGN
worlds. Existing PSTN charges are seen as the ceiling or starting
point for the glide path whilst NGN form the floor.”
The Authority intends to review NGN costing and fixed interconnection rates as part of the 217.
next RO submission (based on 2010 accounts). The bottom-up LRIC core network model
will provide a sound basis for the review of NGN costing. It will notably enable the
Authority to undertake sensitivity analyses of fixed interconnection costs to key parameters
(e.g. conversion factors, effective bandwidth calculation, traffic evolution…) and thus help
define a robust and optimal NGN cost allocation approach.
International inbound calls to fixed and mobile
Batelco submits charges for the international inbound calls to fixed and mobile lines which 218.
include a significant above-cost buffer (approximately 27 to 33 fils per minute). To support
such change, Batelco refers the Authority to the Annex G 2010 of the RO submission
dated 1 April 2010 (GCL/425/10) and to its response dated 7 November 2010, pages 52-
55, to the RO draft order.
The Authority notes Batelco’s position. However, from a network usage perspective, the 219.
two termination services (the inbound call termination service and the local call termination
service) are identical: the origination of the call (either offshore or domestic) has no
bearing on the network elements used to terminate the call.
The Authority also highlights that it intends to look at this issue under a separate industry-220.
wide consultative process. As per the Authority’s letter to Licensed Operators dated 27
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July 2011, the Authority intends to conduct a public consultation with the industry during
Q4 2011. Pending completion of this review, the termination rates for international inbound
calls remain identical to termination rates for domestically originated calls. The regulatory
treatment of international inbound calls will then be adjusted, if necessary, in accordance
with the conclusion of this consultation.
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8.3 Draft Order fair, reasonable and non-discriminatory charges for
interconnection and transit services
Based on the above comments, the Authority has corrected the cost stacks submitted. The 221.
resulting draft Order FRND charges are presented in the following table:
Table 41: Draft Order FRND charges for interconnection and transit services
Chargeable activity
Approved/ Ordered in
January 2011 (or currently
implemented)
TRA's Draft Order FRND
charges
Evolution of
Draft Order
FRND as
compared to
Approved/
Ordered
Interconnection services in fils
1-3.1 - Fixed terminating access from OLO GMSC 3.040 replaced
1-3.2 - Fixed terminating access from OLO Transit 2.382 replaced
1-3.1 - Fixed terminating access 2.711
1-4.1 - Mobile terminating access from OLO GMSC 6.203 replaced
1-4.2 - Mobile terminating access from OLO Transit 6.553 replaced
1-4.1 - Mobile terminating access 4.736
1-6.1 - SMS terminating access 0.443 0.288 -35.0%
1-7.1 - Conveyance of emergency call to 999 1.045 0.868 -16.9%
1-7.2 - Conveyance of emergency call to 990 2.382 same as 1-3.1 13.8%
1-7.3 - Conveyance of emergency call to 992 2.382 same as 1-3.1 13.8%
1-7.4 - Conveyance of emergency call to 994 2.382 same as 1-3.1 13.8%
1-7.5 - Conveyance of emergency call to 998 2.382 same as 1-3.1 13.8%
1-8.1 - Freephone from mobile 8.060 6.150 -23.7%
1-8.2 - Freephone from fixed 2.710 2.710 0.0%
1-11.1 - MMS delivery service 124.495 89.747 -27.9%
2-2.1 - Directory assistance service for call to 181 121.402 112.684 -7.2%
2-2.2 - Directory assistance service for call to 188 123.884 112.800 -8.9%
2-7.1 - International Inbound calls to fixed 2.43 same as 1-3.1 11.6%
2-8.1 - International inbound calls to Batelco mobile from OLO GMSC
6.122 replaced
2-8.2 - International inbound calls to Batelco mobile from OLO Transit
6.556 replaced
2-8.1 - International inbound calls to mobile same as 1-4.1
2-9.1 - Inter-Operator Transit Access Service (from OLO GMSC/Transit to OLO Transit/GMSC)
1.724 replaced
2-9.2 - Inter-Operator Transit Access Service (from OLO Transit to Transit)
1.490 replaced
2-9.1 - Inter-Operator Transit Access Service: Per Transit Call
1.380
Note: Rows in grey include interconnection services which have been replaced by the Authority by a unified service. The unified services appear in light yellow rows.
Source: The Authority
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Summary of responses received by the Authority
Batelco
Fixed terminating access
Batelco says that there is in place an understanding between Batelco and the Authority in 222.
relation to the freezing of fixed termination and origination rates. Batelco is however
concerned that, as the RO review is now a public consultation, OLOs may expect a
significant drop in fixed termination rates as soon as NGN costs are reviewed.
Mobile terminating access
Batelco has no comment regarding the mobile terminating access service provided that 223.
the policy on symmetrical termination rates remains.
SMS terminating access
Batelco acknowledges its errors in the submitted schedule prices of the SMS terminating 224.
access service. Batelco confirms that the submitted cost stacks and their assessment by
the Authority are both correct.
Emergency call access service
Batelco has no objection to the price of emergency call access service being set at 1.098 225.
fils.
Freephone call originating access service
With regards to the freephone originating access service, Batelco refers the Authority to its 226.
comments on the fixed terminating access service (see summary above in paragraph
222).
MMS delivery access service
Batelco acknowledges its error in the submitted schedule price of the MMS delivery 227.
access service and confirms that Batelco’s cost stack and the Authority’s assessment of
the cost stack are both correct.
PSTN transit service
With respect to the fixed transit service, Batelco appears to reiterate its request to 228.
withdraw the service from the RO as the service has neither been implemented nor used.
Further, in Batelco’s opinion, it is unlikely to be requested in the future. Batelco suggests
that the cost stack of the service should be reviewed only if an operator expresses an
interest in the service.
DQ assistance service
Batelco agrees with the weighted average charge approach followed by the Authority for 229.
the calculation of the DQ assistance service charge.
International inbound calls
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With regards to the international inbound to fixed and mobile phones, Batelco explains that 230.
differential rates for these services are in the interests of Bahrain’s consumers and
network operators. Batelco indicates that it will submit its detailed view when the Authority
issues a consultation on this matter.
Inter-Operator Transit Access Service
With regards to Inter-Operator Access Service (‘ITAS’), Batelco considers that given the 231.
agreement to maintain the price of fixed network services, the blended ITAS rate should
continue to be priced at the higher rate of 1.724 fils/min.34
Cost allocation issues raised by the Authority
In relation to paragraph 192.f above, Batelco explains that the differences in routing 232.
factors between the APM and the RO submission are due to the fact that the RO
submission is based on the LRIC accounts which assume a forward-looking approach
where all legacy network elements are phased out while the APM routing factors reflect
the actual status of the network’s structure at the time of the regulatory accounts
production.
With regards to paragraphs 202 and 203, Batelco submits that it has removed legacy 233.
network elements from the cost stack of interconnection services consistent with a
forward-looking LRIC approach, which assumes a full NGN network structure.35
With regards to the routing factor applicable to the network element MN01 [Mobile 234.
Switching Centre Server ( MSCS)], Batelco explains that it should be set to 1 for all
applicable services because the MSCS is a transaction-based network element (i.e. used
by the controlling layer) as opposed to a traffic-based network element. As a result, the
cost of the MSC should be allocated based on the number of transactions (number of
calls, messages or mobile data session) and not based on traffic.
Etisalcom
As Etisalcom terminates a large number of minutes to Batelco’s fixed numbers via the 235.
International Inbound calls to fixed service, Etisalcom is concerned about the +11.6%
increase of the service charge which it considers will affect the volume of minutes
terminating into Etisalcom.
Menatelecom
In relation to the cost stack submitted by Batelco for the freephone origination from fixed 236.
lines (see Table 32 page 70), Menatelecom questions the inclusion of the network element
GMSC (MN02) in the cost stack and requests that the Authority re-examine the
corresponding call scenario to ensure that the GMSC cost is a relevant cost for this
scenario.
Viacloud
34 The Authority has proposed to blend the ITAS rate based on the average of the GMSC and Transit switch based
rates to reflect the fact that all interconnection traffic goes through the ICG soft Switch. 35
The Authority notes in passing that the D-LRIC+EPMU regulatory accounts still include legacy elements and that Batelco has not justified its approach. Batelco’s approach to MEA is arguably questionable.
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Viacloud submits that the retail prices in the “IP IDD” market have dropped significantly 237.
while in the meantime, competitors offering this service have increased fivefold. As a
result, small OLOs suffered huge losses and had to recapitalise or shut up operations.
Viacloud thus urges the Authority to reduce wholesale access cost from the current
proposed level for the survival of smaller OLOs.
Viacloud states that the freephone origination charge is currently the greater cost 238.
component in delivering an international call and that it represents more than 50% of the
total cost for certain top traffic destination. Viacloud considers unfortunate that the
freephone origination charge has not decreased in line with retail prices. Viacloud submits,
without providing specific example or evidence, that the charge of the freephone services
in other countries have dropped significantly which has helped sustaining healthy
competition and bringing retail price down. As a result, Viacloud urges the Authority to
quickly reduce freephone origination charges and to help sustain smaller operators such
as Viacloud.
Zain
Mobile termination rate
Zain strongly disagrees with a further reduction of Batelco’s mobile termination rate (MTR) 239.
by 25% from 6.203 fils to 4.736 fils. Zain considers that the current MTR charge of 6.203
fils should not be further reduced but instead remain unchanged. Zain provides the
following arguments to support its views:
a. Symmetrical MTR agreement between Batelco and Zain: Zain highlights that
any reduction in Batelco’s MTR will also apply to Zain pursuant to the symmetrical
interconnection agreement that Zain signed with Batelco. Zain submits that it is
already providing the termination service below cost to Batelco and a further rate
reduction would further adversely impact Zain. Since the launch of Viva in 2010,
Zain highlights that the market dynamics have changed and thus have “triggered
the need of conducting an early market review” (Zain’s submission, paragraph
B.1.i). In this respect, Zain submits that the Authority should take into account the
proposed MTR in Zain’s RO in setting Batelco’s MTR.
b. Zain termination service provided is sold below cost: Zain submits that it is
currently incurring a loss in providing its termination service to Batelco as its
calculated 2010 MTR based on its LRIC+ bottom-up cost model is 6.4 fils per
minute which is greater than the approved MTR of 6.203 fils per minutes. With the
proposed draft ordered MTR of 4.736 fils, the loss incurred by Zain in providing its
termination service to Batelco would significantly increase. With the loss of market
share consequent to Viva’s commercial launch, Zain submits that it is
experiencing a decrease in its total interconnection traffic. Zain also explained that
as it continues to invest in its network the MTR should go up or at least remain
unchanged.
c. The current MTR is one of the lowest in the world: Zain provides a benchmark
of countries with MTR below 38 fils (about 40 countries from Europe, the Middle
East, and Africa). In the benchmark, Bahrain is the country with the lowest MTR.
Zain also notes that, 2 years after commercial launch, Viva has become the first
operator in terms of market share. According to Zain, this demonstrates that the
current MTR is giving the right economic signal to investors and as such, there is
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Page 94 of 167
no need for further MTR reductions. Zain further claims that any reduction in MTR
will have a disruptive effect on investment and revenue. As an illustration, Zain
mentions the case of Kenya where the 50% MTR cut in 2010 “sparked of a price
war among mobile operators with detrimental effects on quality of service,
reorientation of investments towards profitable high-density urban areas as well as
a drop in revenues and taxes for the government”, (Zain’s submission, paragraph
B.1.iii).
d. Low mobile off-net rate: According to Zain, the argument that a low MTR drives
competition in off-net retail prices is no longer relevant for Bahrain. Mobile
customers in Bahrain already benefit from some of the lowest on-net and off-net
retail tariffs in Arab countries as highlighted by the report from the Arab Advisor
Group issued in November 2011 titled “Cellular Rates in the Arab World: A
Regional Comparison”.
Zain also considers that the Authority should wait for the outcome of the LRIC bottom-up 240.
cost model project before reviewing Batelco’s current MTR.
International inbound calls
Zain disagrees with the Authority’s draft position regarding the setting of international 241.
inbound calls at the same level as domestic termination rates. While Zain acknowledges
that the Authority intends to undertake a consultation on this particular issue,36
Zain
strongly recommends the Authority not to change the prices until a final position is
reached.
The Authority’s analysis and conclusion
Mobile termination rate
For the reasons set out in paragraphs 33 above and following Zain’s request to review the 242.
MTR once the bottom-up models are in place, the Authority has decided to freeze the
charge of the mobile terminating access service (item 1-4.1). The Authority considers this
decision to be appropriate pending the completion of the bottom-up mobile cost models.
As previously explained, specific cost models are being developed for each of the three
mobile operators in Bahrain. An additional cost model is also being developed to represent
a generic operator providing mobile services in Bahrain. These cost models will enable the
Authority to understand the differences in the cost structures of all three mobile operators
and set mobile termination rates for regulated operators in an appropriate manner
consistent with the Authority’s Policy on the Regulation of Mobile Termination Services,
issued on 1 February 2010. The Authority’s approach to seek to synchronise the review of
MTRs is consistent with Batelco’s suggestion. The Authority also intends to consult on the
next review of MTRs.
The Authority considers that it would not be appropriate to order a further reduction of the 243.
mobile termination service at this point in time when the bottom-up models are soon due to
be available.
36 The “Draft Regulation for Wholesale Inbound Services” was issued by the Authority for consultation on 26
January 2012 (ref: MCD/01/12/006).
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As the mobile terminating access service was previously composed of two distinct charges 244.
(1-4.1 - Mobile call conveyance GMSC and 1-4.2 - Mobile call conveyance Transit switch)
and since all interconnection traffic now transits through a single point of interconnection
called ‘ICG Soft Switch’ (see above paragraphs 194 to 198), the Authority has applied a
simple arithmetic average to the two current charges to derive a ‘frozen’ charge applicable
to the Mobile terminating access service (item 1-4.) of 6.378 fils per minute.
Freephone call originating access service from mobile
The Authority has decided to set the charge for the Freephone from mobile service (item 245.
1-8.1) at 7.578 fils per minute. This charge has been derived by the Authority by adding a
portion of the unit cost of MN41 [Mobile prepaid platform] to the Mobile terminating access
service (i.e. + 1.200 fils).37
The Authority considers that it is appropriate to account for the
additional cost of the mobile prepaid platform in the freephone origination charge as the
great majority of Batelco’s freephone origination traffic is originated from prepaid customer
lines (and thus requires the prepaid platform). Moreover, the Authority notes that it would
not be appropriate for the freephone charge to be set at a lower level than the termination
charge as the freephone service ‘uses’ an additional network element.
While the Authority acknowledges Viacloud’s comment in relation to the freephone 246.
origination service charge, it also highlights that the mobile termination charge in Bahrain
(from which the freephone charge is derived) compares very well with the MTRs in other
countries (see Zain’s benchmark included at page 4 of Zain’s response).
SMS and MMS terminating service
The Authority notes Batelco’s explanation regarding the routing factor applicable to MN01 247.
[Mobile Switching Centre Server (MSCS)]. The Authority considers that while the use of
this network element by mobile services may be transactional-based, it does not
necessary follow that the routing factor for SMS and MMS should be equal to 1 in so far as
voice is the primary network dimensioning parameter of this element and that SMS and
MMS are not prioritized over voice in case of network congestion.
Regardless of the above and consistent with the treatment of the mobile voice termination 248.
charge, the Authority considers it is appropriate to freeze the SMS and MMS terminating
access charges.
37 This figure represents []% of the unit cost of MN41. The []% represents the proportion of prepaid traffic over
the total freephone origination traffic.
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Inter-Operator Transit Access Service
Following Batelco’s comments, the Authority has set the final ITAS rate equal to the traffic 249.
weighted average of the current two ITAS services rates (2-9.1 and 2-9.2). The final ITAS
is set at 1.723 fils/min.38
Other comments
The Authority disagrees with Batelco’s request to remove PSTN transit from the RO. 250.
In relation to international inbound, the Authority refers the industry to the on-going 251.
consultation on this matter.
In response to Menatelecom’s comment, the Authority confirms that the GMS-C is a 252.
relevant network element for the purpose of provisioning the fixed origination service.
The other comments made are noted. 253.
38 The Authority has proposed to blend the ITAS rate based on the average of the GMSC and Transit switch based
rates to reflect the fact that all interconnection traffic goes through the ICG soft Switch.
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8.4 Order fair, reasonable and non-discriminatory charges for interconnection
and transit services
The final ordered FRND charges are detailed in the following table:39
254.
Table 42: Order FRND charges for interconnection and transit services
Chargeable activity
Approved/ ordered in January
2011 (or
currently implemente
d
Batelco's submitted charges in April 2011
TRA FRND draft charges
TRA FRND final Order
charges
Evolution of
Order FRND
as compared
to previously
approved/
ordered
Interconnection services in fils
1-3.1 - Fixed terminating access from OLO GMSC
3.040 3.040 replaced replaced
1-3.2 - Fixed terminating access from OLO Transit
2.382 2.382 removed removed
1-3.1 - Fixed terminating access 2.711 2.711
1-4.1 - Mobile terminating access from OLO GMSC
6.203 4.680 replaced replaced
1-4.2 - Mobile terminating access from OLO Transit
6.553 4.530 removed removed
1-4.1 - Mobile terminating access 4.736 6.378
1-6.1 - SMS terminating access 0.443 1.480 0.288 0.443 0.0%
1-7.1 - Conveyance of emergency call to 999
1.045 1.100 1.233 1.233 -16.9%
1-7.2 - Conveyance of emergency call to 990
2.382 2.382 same as 1-3.1 same as 1-3.1 +13.8%
1-7.3 - Conveyance of emergency call to 992
2.382 2.382 same as 1-3.1 same as 1-3.1 +13.8%
1-7.4 - Conveyance of emergency call to 994
2.382 2.382 same as 1-3.1 same as 1-3.1 +13.8%
1-7.5 - Conveyance of emergency call to 998
2.382 2.382 same as 1-3.1 same as 1-3.1 +13.8%
1-8.1 - Freephone from mobile 8.060 6.020 6.150 7.578 -6.0%
1-8.2 - Freephone from fixed 2.710 2.710 2.710 2.710 0.0%
1-11.1 - MMS delivery service 124.495 90.500 89.747 124.495 0.0%
2-2.1 - Directory assistance service for call to 181
121.402 111.010 112.684 112.684 -7.2%
2-2.2 - Directory assistance service for call to 188
123.884 112.540 112.800 112.800 -8.9%
2-7.1 - International Inbound calls to fixed 2.43 30.160 same as 1-3.1 same as 1-3.1 11.6%
2-8.1 - International inbound calls to Batelco mobile from OLO GMSC
6.122 37.800 replaced replaced
2-8.2 - International inbound calls to Batelco mobile from OLO Transit
6.556 37.800 removed removed
2-8.1 - International inbound calls to mobile same as 1-4.1 same as 1-4.1
2-9.1 - Inter-Operator Transit Access Service (from OLO GMSC/Transit to OLO Transit/GMSC)
1.724 1.724 replaced replaced
2-9.2 - Inter-Operator Transit Access Service (from OLO Transit to Transit)
1.490 1.100 replaced replaced
2-9.1 - Inter-Operator Transit Access Service: Per Transit Call
1.380 1.723
Note: Rows in grey include interconnection services which have been replaced by the Authority by a unified service. The unified services appear in light yellow rows.
Source: The Authority
39 Compared to the draft ordered charges, the main changes are: (a) the freezing of the mobile terminating access
services charges; and (b) the setting of the mobile freephone origination service charge based on the frozen mobile termination charge.
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9 Duct access service (2-3.9)
Draft Order Text
Services definition
Access to duct falls under Schedule 7 - FACILITIES ACCESS SERVICE of Batelco’s RO. 255.
Information provided by Batelco
In its RO submission, Batelco submits the following cost stack for the duct access service: 256.
Table 43: Cost stack submitted by Batelco for the duct access service
Access ducts infrastructure
Total Costs
Access ducts infrastructure cost []
Total duct meters (unadjusted length) []
Cost per mtr (BHD/mtr) []
Wholesale activities []
Total WS duct meters []
WS activities Cost per mtr (BHD/mtr) []
Total Cost per mtr per month 0.213
Source: Batelco’s 2011 RO submission
The proposed monthly charge for duct rental in the submitted RO is 213 fils/metre/per duct 257.
bore/month which represents an increase of +12.7% compared to the current charge set in
the 2011 RO Order.
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Table 44: Duct access proposed charge for 2011 compared to current charge and charges
Source: The Authority
Review of the submitted charge for the duct access service
Duct and joint chamber asset lives adjustment
As per the 2011 RO Order and the Authority’s letter approving the 2009 APM,40
the 258.
regulated asset lives of ducts and manholes have been increased from 20 years to 40
years to better reflect their true economic lives. The reasons for this change have been
further detailed in the Authority’s letter dated 10 March 2011.41
Batelco was required to
implement the change of asset lives no later than for the 2010 regulatory accounts.
As the change was not implemented by Batelco in the 2009 regulatory accounts, manual 259.
adjustments to the depreciation charges of both duct and joint boxes are needed to take
into account their extended lives. The depreciation charge adjustments are detailed in the
following table:
Table 45: Adjustments to the depreciation charge of AS-12010 [Duct] and AS-12080 [Joint Chamber] to reflect
the change of asset lives
Asset
2009 depreciation charge allocated to NP10 (in BD)
Asset life: 20 years
(as per the 2009 regulatory accounts)
2009 depreciation charge allocated to NP10 (in BD)
Asset life: 40 years
2009 depreciation charge adjustment to be made
(in BD)
a b = a / 2 (to reflect the
doubling of asset lives) c = - a + b
AS-12010 [Duct] [] [] []
AS-12080 [Joint Chamber]
[] [] []
Total [] [] []
Source: The Authority from Batelco response to the Article 53 request for information (20110728 response to Article 53 - 2011 RO review.xlsx)
On this occasion, the Authority has decided not to adjust the amount of un-attributable 260.
cost allocated to NP10 following the adjustment made to the depreciation charge.
40 2009 Accounting Procedure Manual Approval, Instructions for the Preparation of the 2009 FAC and LRIC
Regulatory Accounts and Reference Offer Submission Date (Ref. MCD/11/10/100), 9 November 2010. 41
Asset lives used in Batelco’s regulatory accounts (Ref. MCD/03/11/031), 10 March 2011.
0.246
0.178 0.189 0.213
0.000
0.050
0.100
0.150
0.200
0.250
0.300
Duct access monthly rental charge
set in 2008
set in 2009
current (set in Januray 2011)
proposed for 2011
+ 12.7 %
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Page 100 of 167
One-off wholesale activities and duct infrastructure cost adjustment
As explained in the 2011 RO order,42
it is important to remove one-off wholesale revenues 261.
from the duct infrastructure cost. These one-off revenues cover non-recurring costs that
are incurred by Batelco in providing access to ducts. Not deducting these revenues from
the cost base would lead to cost over-recovery. The cost adjustments made by the
Authority which are detailed in the table below are based on the same approach with
updated parameters used in the 2011 RO Order:
Table 46: 2009 Draft Order adjustments applied to duct infrastructure cost and wholesale activities cost
# Item Value Unit Source
a New wholesale ducts in 2009 [] metres Batelco submitted information under Article 53
b Average estimated duct route length 1,500 metres
In absence of information, the Authority estimates an average duct route length of 1,500 metres. This is broadly consistent with the local loop length
c Quantity of new duct route in 2009 [] duct routes = a / b
d Processing Access Application Fee 100 BD/ application
Batelco's RO item 2-3.1
e Total cost of access application handling [] BD = c x d
f Total revenues to be removed from Wholesale activities cost
[] BD = e
g Total cost of desk study 0 BD
Included in general processing fee (20100614 RO assessment article 53 question 49 annex 2007 Duct Process.docx)
h Average distance between each site to be surveyed
100 metres
Based on different quotes which were sent by Batelco to OLOs, the Authority estimates an average length of 100 metres between each manhole
i Proportion of site survey of route which is unavailable at field study stage
33% The Authority estimates that one third of sites are not available for cabling
j Quantity of site survey per duct route 21 site surveys per duct route
= ( b / h + 1 ) x ( 1 + i )
k Total quantity of site surveys [] site surveys = c x j
l Site Survey cost 300 BD per visit Batelco' RO item 2-3.2
m Total cost of site surveys stage 1 to 3 [] BD = k x l
n Cost of installation per metre 1.50 BD The Authority estimates based on international benchmarks
o Total cost of installation [] BD = a x n
p Total revenues to be removed from duct infrastructure cost
[] BD = g + m + o
Source: The Authority
Wholesale activities costs
Batelco intends to recover BD [] of wholesale activities costs for the duct access 262.
service. The 2009 amount represents a []% reduction compared to the BD [] of
wholesale activities cost allocated to the duct access service in 2008.
Draft Order fair, reasonable and non-discriminatory charge for the duct access service
42 January 25 2011 RO Order, paragraphs 267-269.
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The Authority’s draft Order charge is BD 0.155 and is based on the calculation detailed in 263.
the table below. The draft Order charge represents a decrease of - 17.8% compared to the
2011 RO Order of BD 0.189.
Table 47: Calculation of the Draft Order FRND monthly rental charge for the duct access service
NP10 [Access Network Duct & Infrastructure] []
Adjustment for charge in asset depreciation (40 years) []
Adjustment to discount one-off charges (desk/field study, installation) []
Adjusted ducts infrastructure cost []
Total unadjusted duct length in 2009 (in meters) []
Cost per metre (BD/metre/month) []
Wholesale activities []
Adjustment to discount one-off charges (Processing Access Application Fee) []
Adjusted Wholesale activities cost []
Total WS duct meters in 2009 []
WS activities Cost per metre (BD/metre/month) []
Total cost per metre and per month 0.155
Source: The Authority
Review of the charge related to field study
Context of the review
When an OLO requests access to ducts to lay a cable and connect two distinct locations, 264.
Batelco carries out a survey of the requested duct route to check to which ducts access
can be granted and to determine the optimal duct route. This phase of the duct access
process is called the field or feasibility study.
The field study is carried out by Batelco’s personnel or a Batelco contractor who survey 265.
manhole sites along the potential duct route to determine whether the ducts are available
and free from potential problems (congested ducts, crushed ducts, etc.). To recover the
cost of field study, Batelco charges BD 300 per manhole.
Following concerns raised by OLOs who contend that the site survey charge is unfair and 266.
unreasonable, the Authority has decided to review the charge as part of this RO review.
From diverse quotes and invoices sent by Batelco and OLOs, the Authority has calculated 267.
that, on average, Batelco charges BD 300 every 60-100 metres of duct route. The site
survey therefore represents a one-off payment that ranges between BD 3 and BD 5 per
metre of duct surveyed. As shown below this is about 10 times more than a benchmark of
European countries. To review the BD 300 site survey charge, the Authority has therefore
required Batelco under an article 53 information request dated 16 June 2011 to provide
the following information:
a. final invoices sent to OLOs for the one-off charges related to wholesale duct
access (to represent at least 90% of the new wholesale duct routes in 2010);
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b. wholesale revenue collected for duct access, broken down between recurring and
non-recurring revenues for the year 2009 and 2010;
c. detailed explanations of the operations that are performed by Batelco staff when
surveying a site; and
d. average time spent by Batelco staff per site survey.
Batelco failed to provide all the information requested by the Authority. For instance, 268.
Batelco only provided one invoice sent to an OLO (instead of the above requirement of
90%). Batelco also explained that it was not able to provide its wholesale revenues broken
down between recurring and non-recurring revenues as it was reported under a common
GSL account.
Batelco also argued that it was not able to provide an average time spent per site survey 269.
but maintained that the BD 300 charge was related to the time spent on the activity:
“Batelco does not currently record at either the network or
wholesale level the exact or average time spent on each site survey
as it varies from site to site and will also depend on whether Batelco
has carried out the survey or has outsourced this to a contractor.
We maintain though that this charge is related to the time spent on
such an activity. We refer you to our previously submitted duct
sharing process chart which breaks down the components and
actions required for duct access. The site survey corresponds to
Field Study Stage 1.”43
It is also important to note that it is not the first time that the Authority has given Batelco an 270.
opportunity to justify the current level of the BD300 charge. The Authority refers here for
example to the 2011 RO order and more specifically to paragraphs 263-266.
Finally, the Authority is of the view that OLOs should not have to pay for Batelco’s lack of 271.
detailed and updated GIS information. An updated database would allow Batelco to survey
a much more limited volume of duct. Such database would include information (such as
duct/manhole occupancy, configuration and technical map) and would not only speed up
the delivery date but would also greatly limit the cost associated with the feasibility/field
study.
Benchmark of feasibility/field study charges
In the absence of robust and reliable costing and operational information from Batelco, the 272.
Authority has compiled a benchmark of one-off charges covering feasibility/field study for
duct access in order to assess whether the current site survey charge is fair and
reasonable. The benchmark is presented in the following table:
43 20110808 Updated response to Article 53 related to Batelco 2011 RO submission - final.docx , 8 August 2011.
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Page 103 of 167
Table 48: Benchmark of one-off charges for site survey/feasibility study of duct access
Country Operator and
type of offer One-off charges for feasibility/field study
One-off charges
for
feasibility/field
study (converted
to BD)
Average
distance for one-
off charge
calculation (in
metres)
Where such
information is
not available,
the Authority
assumes a
distance of
1,000m
Average cost of
feasibility/field
study per metre
(converted to
BD)
Source
Austria
A1 Telekom
Austria
Regulated offer
EUR 72 for requesting a plan
EUR 288 for requesting an offer
EUR 432 for order and delivery
422.96 1,000m 0.423 http://cdn1.a1.net/final/de/media/pdf/RUO2011.pdf
Bulgaria Vivacom
Duct survey charge:
BGN 33 for length up to 1 km
Access & control charge, when laying cables:
BGN 25 for length of up to 1 km
9.01 1,000m 0.009 http://www.crc.bg/files/_bg/Prilojenie1_ukazanie811.pdf
Finland
Elisa
Commercial
offer
One-off charge for the delivery of lease of cable
placement right: EUR 420 per 500 metres 224.29 500m 0.449
http://www.elisa.com/en/docimages/attachment/Lease_
of_Cable_Placement_Right_v1_0%5B1%5D.pdf
Germany
Telekom
Deutschland
Regulated offer
EUR 100.59 for administration of the offer
EUR 0.60 per m for checking available capacity
EUR 88.55 for administration of the realisation
Project management and technical documentation on
time and materials basis
0.32 1m 0.320
http://www.bundesnetzagentur.de/DE/DieBundesnetza
gentur/Beschlusskammern/1BK-Geschaeftszeichen-
Datenbank/BK3-GZ/2011/2011_001bis100/BK3-11-
009_BKV/BK3-11-
009_Konsultation_Abstimmungsentwurf_download.pdf?
__blob=publicationFile
Greece OTE
Regulated offer
EUR 943.39 for feasibility study
Charges for supervision of works: Standard full-time
working day EUR 292.78
EUR 32.75 for each additional hour outside regular
working hours days
503.80 1,000m 0.504 http://www.eett.gr/opencms/opencms/admin/downloads
/Announcments/CA_OTE_2011.pdf
Italy Telecom Italia EUR 465 per “area” (as defined in TI‟s civil infrastructure 496.65 1000m (crossing 0.497 http://www.wholesale-
Reference Offer Order
Annex– Order legal basis and reasoning
Page 104 of 167
(TI) maps) for administrative costs incurred by TI 2 areas) telecomitalia.it/wsintranet/swn/1075060379/OFFERTA
%20INFRASTRUTTURE%20LOCALI%20ESISTENTI.
Lithuania
TEO LT
Commercial
price list
LTL 560 for ducts up to 1 km for technical feasibility study
and information
LTL 0.560 x length in metres for ducts in excess of 1 km
(excl. VAT)
86.85 1,000m 0.087
http://www.teo.lt/sites/default/files/VERSLAS/Paslaugu_
teikejams/Infrastruktura/Vieta_RKKS_2%20priedas%20
ir%20jo%203%20priedelis.pdf
Norway
Telenor
Regulated
reference offer
NOK 6,000 per placement 416.97 1,000m 0.417 http://www.jara.no/Images/Ovrige_Telelosji_Bilag_3_Pri
ser_og_prisforutsetninger_110101_tcm55-128702.pdf
Spain
Telefónica
Regulated
reference offer
EUR 52.50 one-off for validating an access request.
EUR 154 one-off for the joint feasibility visit, plus a
variable cost depending on the number of manholes,
cabinets and poles visited.
(EUR 44.00 per manhole, EUR 15.41 per cabinet and
EUR 5.49 per pole)
EUR 31.50 one-off per activation of an access request in
Telefónica´s information systems.
368.75
1000m (with
manholes every
100m)
0.369
http://www.cmt.es/en/documentacion_de_referencia/ofe
rtas_mayoristas_reguladas/anexos/100625_Oferta_MA
RCo.zip
Switzerland Swisscom
Regulated offer
The feasibility study including the provision of a cost
estimate is priced at two hours flat fee.
Based on effective costs: CHF 160.40 /hour.
76.64 1,000m 0.077
http://www.swisscom.com/FxRes/NR/rdonlyres/DED04
FFC-240C-4B20-88CC-
3EB4409E23DE/0/DUPRM_contr_KabelkanalisationFM
G_V16.pdf
Average 0.315
Note: Foreign currency rates provided by Citibank N.A. as of 11 September 2011 (1 EUR = 0.534034572 BHD, 1 NOK = 0.0694949952 BHD, 1 LTL = 0.155084167 BHD, 1 CHF = 0.477833701 BHD, 1 BGN = 0.273056985 BHD)
Source: The Authority’s analysis based on Cullen International
Reference Offer Order
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Page 105 of 167
Based on this benchmark, the unit cost per metre of duct of the site survey/feasibility study 273.
ranges between BD 0.010 and BD 0.600 with an average of BD 0.315 per metre. This is
far below (about 10 times less than) the current level of Batelco’s charge which ranges
from BD 3 to BD 5 per metre.
There are a number of reasons to suggest that the average benchmarked cost of BD 274.
0.315 per metre will overstate the actual costs of conducting the site survey/feasibility
study in Bahrain:
a. the Authority has assumed a distance of 1,000m to calculate an average charge
per metre when the one-off charge is fixed (i.e. not distance-related) in the
benchmarked country. The Authority considers this assumption to be quite
conservative since it is likely that the length of duct routes in Bahrain is on
average greater than the 1,000 metres assumed in the above table (this would be
particularly the case where duct access is requested by access seekers for
backhaul links);
b. the above benchmark countries are European countries where the average hourly
wage of a technician tends to be greater than in Bahrain;
c. contrary to the relatively recent infrastructure in Bahrain, urban layouts in the
benchmarked countries have been constantly adapted/modified over long periods
of time. This is likely to result in more costly field studies as the duct networks are
more likely to present singularities with more complex access to underground
infrastructure and reduced accessibility.
Draft Order fair, reasonable and non-discriminatory charge related to field study
For the reasons mentioned above the Authority considers that the site survey charge 275.
represents a significant artificial cost barrier for OLOs wishing to deploy fibre in Bahrain
and hence an impediment to competition.
As a principle, the Authority considers that OLOs should be charged the efficiently incurred 276.
costs for field study. This is more appropriate than the current approach of charging a flat
fee per site of BD 300 as the accessibility of the site and the survey time duration may
greatly vary from one site to the other. Therefore the Authority orders Batelco to set the
site survey charge on a time and materials basis subject to the cap set below.
While the Authority considers that site survey and more generally field study for duct 277.
access should be charged on a time and materials basis, the Authority considers that a
cap should be introduced to prevent over-charging and incentivise Batelco to minimise
costs.
This cap can be expressed as a factor of the straight-line distance (i.e. flying distance) 278.
between the two physical locations between which an OLO requests duct access. There
are several advantages to basing the cap of the total field study charge on the straight-line
distance rather than the duct route distance, including:
a. increased transparency and predictability: in the absence of an accurate and
up to date GIS database, neither Batelco nor the OLO know in advance the exact
distance of the future duct path and the quantity of sites that need to be surveyed
before the actual physical field survey takes place;
Reference Offer Order
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Page 106 of 167
b. increased visibility: OLOs would be able to make better-informed business
decisions regarding the choice of technology which they will favour to connect two
different sites (e.g. wire link vs. wireless link);
c. efficient use of infrastructure: as the cap is expressed as a function of a
straight-line distance, Batelco would be incentivised to find the shortest available
path.
For the purposes of setting the cap, the Authority considers the average of the 279.
benchmarked countries above with the exception of three countries which appear to be
outliers (Bulgaria, Lithuania and Switzerland) to be a fair and reasonable maximum for
efficiently incurred costs associated with field study work. However as this average
benchmark rate of BD0.426 is expressed as a factor of the duct route distance and not as
a factor of the straight-line distance, an adjustment is required. Given that duct routes
follow streets’ and roads’ layouts, the Authority considers that multiplying the average
benchmark rate by √2 is an appropriate adjustment. This adjustment is derived from the
Pythagorean Theorem. Apart from the case where the two sites to be connected are
located in the same road axis, the duct route distance is always greater than the straight-
line distance. This concept is illustrated by the following figure:
Table 49: Maximum duct route distance expressed as the straight line distance
Source: the Authority
Multiplied by √2 , the adjusted average benchmarked rate is BD 0.602 per metre, which 280.
rounded to BD 0.600 per metre gives the cap set by the Authority.
For the above reasons, the Authority orders Batelco to introduce a cap on all charges 281.
related to field study for duct access. The total charge paid by OLOs for field study should
not exceed BD 0.600 per metre of the straight-line distance separating the two physical
locations for which duct access is requested. For the avoidance of doubt, the charge ‘2-3.1
Processing Access Application Fee’ remains unchanged at BD 100 per application.
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Table 50: Draft Order FRND charges for duct access and site survey
Chargeable activity
Approved/Ordered
in January 2011
(or currently
implemented)
TRA's Draft Order FRND charges
Evolution
of Draft
Order
FRND as
compared
to
Approved/
Ordered
Duct access ( 2-3.9 ) in BD
2-3.2 Site Survey if required 300.000
Time and materials basis as set out in Annex 1.
For duct access, the field study total charge
should not exceed BD 0.600 per metre of the
straight-line distance separating the two physical
locations between which duct access is requested.
n/a
2-3.9 – Duct Rental charge 0.189 0.155 -17.8%
Source: the Authority
Summary of responses received by the Authority
Batelco
Duct and joint chamber asset lives adjustment
Batelco is concerned that a further reduction in the price of duct access may conflict with 282.
future assessment of costs.
In relation to the Authority’s adjustment to decrease by 50% the depreciation charge of 283.
ducts to reflect the change of asset life from 20 to 40 years (see above Table 46 page
100), Batelco submits that the change of asset life was intended to take effect from the
2010 regulatory accounts and considers that a prior adjustment that applies selectively
solely to the duct access product is inconsistent. Batelco considers that such adjustment
creates a distortion in so far as it makes the wholesale duct access more attractive
compared to other downstream product that gets allocated duct cost based on asset life of
20 years. Batelco suggests to apply a smaller reduction (such as 25%) or a glide path
reduction in stages.
One-off wholesale activities and duct infrastructure cost adjustment
Batelco considers that the Authority should not make any adjustment for one-off site 284.
survey charges. If the Authority were to maintain its position regarding this issue, Batelco
submits that such adjustment should be done by taking into consideration the Authority’s
cap set at BD 0.6 per metre.
In the same manner, Batelco considers that the Authority should not deduct the revenues 285.
of one-off installation charges from the total cost of duct which constitute the basis of the
unit cost calculation. Batelco explains that it installs the fibre for OLO on a case-by-case
basis following commercial negotiations. In some cases, the OLO directly contract an
approved contractor and in other, Batelco subcontracts the work to a third party and add a
mark-up for supervision and administration.
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Page 108 of 167
Batelco also notes that the total amount of one-off costs depends on the number of orders 286.
placed by OLOs and thus may vary from one year to the next.
Wholesale activities costs
Batelco also submits that the wholesale duct meters for 2009 ([]) and for 2010 ([]) 287.
previously submitted by Batelco in its 2010 and 2011 RO submissions are incorrect.
According to Batelco, this figure was based on a manual calculation which led to a
material over-estimation of wholesale duct. Batelco claims that the [] metres
corresponds to the number of surveyed ducts at the end of 2009 but not to actual length of
ducts rented by OLOs. Batelco submits that the total wholesale duct length was not
available in 2009, but claims that it was equal to [] metres in 2010. By deduction,
Batelco claims that the wholesale duct metre should be close to [] metres in 2009.
Review of the charge related to field study
With regards to the benchmark used by the Authority to set the cap for the duct survey 288.
charge, Batelco submits that:
a. It is not certain whether the benchmark values compare ‘like for like’ with the
scope of Batelco’s site survey charge (which cover various study stages).
Depending on the quantity and volume of ducts ordered, Batelco also notes that it
has provided discounts on site surveys to better reflect the time involved in the
survey.
b. The Authority’s assumption that the benchmark fee apply to 1,000 metres duct
access may have a distorting effect on the data;
c. The benchmarked countries may not be comparable with Bahrain and may give a
disproportional weight to European countries which tend to follow converging
regulatory approaches.
d. The benchmarking methodology that has been followed does not appear to be
rigorous. For example, while Germany allows charging for project management
and technical documentation on a time and material basis, this has not been
monetised in the benchmark.
e. The comparative simplicity of Batelco’s service model may not be taken into
account by the Authority. Aside from application, administration and actual
installation, Batelco only levies two charges (the site survey charge and the rental
charge). For example, the ‘headline’ charges of BT Openreach Physical
Infrastructure Access for duct access44
may compare favourably to European
countries included in the Authority’s benchmark but, contrary to Batelco, it consists
of several service components, with an abundant list of one-offs and other
charging points together with minimum contract period.
f. The benchmark does not reflect certain factors which are specific to Bahrain. For
instance, the imperative of national security leads to additional requirements for
network security. Water and noxious gas clearance of Bahrain’s reclaimed land
may also be materially higher than those in Europe.
44 See BT Openreach, http://www.openreach.co.uk , Physical Infrastructure Pricing, issued on 21 November 2011
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g. Third party charges for duct surveying (which neither include Batelco’s own cost
nor additional costs for water and gas clearance) are approximately 50% of the
cap which the Authority intends to impose based on a straight line assessment.
Regarding the Authority’s straight line basis to calculate the cap applicable to field study 289.
charge, Batelco submits that such approach does not provide additional visibility to OLOs
to make an informed decision between technologies since it does not identify in advance
the availability of the route to be used. Batelco further submits that it already has an
incentive to provide the shortest route available since duct rental is the lowest wholesale
revenue available with which to occupy available duct space. While Batelco agrees that
the formula based on Pythagoras may provide an appropriate proxy for shorter duct route,
Batelco also provides a sample of wholesale duct rentals for which the straight line
approach would understate the actual duct route provided to OLOs.
Lightspeed
Lightspeed considers that the Site Survey should be provided free of charge by Batelco in 290.
order not to increase the financial burdens on licensed operators “for no reason”.
Lightspeed further submits that all relevant network information should be made available
to all licensees on Batelco’s website and should be free of charge. Lightspeed is also of
the view that the Site Survey should not be a prerequisite of the duct access service.
Lightspeed considers that the duct access service charge is still excessive and that the 291.
service should be offered on a sub-duct level as this would decrease the charge by a
factor three and maximize the utilisation of such a scarce resource.
Menatelecom
Menatelecom expresses certain reserves with regards to the cost basis of the Processing 292.
Access Application Fee set at BD 100 per application (item 2-3.1 of Batelco’s RO schedule
3). Menatelecom considers that all charges associated with the duct access service should
be cost based.
In relation to the Authority’s calculation of the FRND rental charge for the duct access 293.
service (see above Table 46 page 100), Menatelecom is concerned that there seems to be
no adjustment made to account for the proportion of ducts used by Batelco. According to
Menatelecom, it looks as if OLOs are paying for the cost of Batelco’s own duct usage.
Menatelecom advocates for a review of the terms and conditions of RO services and more 294.
especially for the duct access service. Menatelecom explains that it has experienced
problems and delays with the services for which Batelco does not offer SLAs.
Menatelecom also explains that Batelco does not provide accurate maps of ducts 295.
surveyed during the field study stage and that the absence of a defined deliverable can
lead to disputes on the extent of work effectively provided by Batelco.
Zain
Zain welcomes the draft ordered charge of BD 0.155 per meter and the introduction of a 296.
cap for the site survey charge. However Zain submits that the monthly rental charge is still
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relatively high, about two to three times the monthly charge applicable in countries such as
France, Portugal or the USA.45
Zain is also critical of the mandatory requirements attached to the application form 297.
applicable for duct access whereby an OLO is required to provide two postal addresses as
end points of the duct route. For instance, Batelco does not accept an application form
with geographic coordinates. Zain considers that this current limitation does not enable
OLOs to get the full benefit of the duct access service such as the ability to connect any
locations in Bahrain (e.g. a Batelco’s manhole).
The Authority’s analysis and conclusion
Operational data
The Authority is very concerned by the lack of robustness of and severe deficiencies of 298.
Batelco’s operational data underlying the calculation of the duct rental charge, notably:
a. the total length of duct infrastructure available in Batelco’s network;
b. the total length of duct used by copper and fibre cables and the associated level of
duct sharing;
c. the total length of wholesale ducts;
d. the total cost of the duct infrastructure including maintenance, construction and
surveying.;
e. the total wholesale activity cost allocated to the duct rental service;
f. the costs associated with each step of the duct rental process (ordering process,
desk study, field study, installation, support and billing).
On several occasions, Batelco admitted that it was experiencing serious difficulties in 299.
extracting reliable, accurate and updated information from its systems and more especially
from its GIS database.46
This is a long-standing issue which has a significant impact on the
costing of regulated access products. Following the issuance of the final Determination
changing the audit standard applicable to Batelco’s regulatory accounts, Batelco is now
required to address this type of issues going forward.47
From Batelco’s response to the RO draft Order (dated 28 December 2011, ref: 300.
GCL/434/11), it appears that Batelco once again experienced difficulties in providing
accurate information.
Wholesale activities costs
In page 33 of its response, Batelco submits that there were actually [] metres of 301.
wholesale duct at the end of 2010. By an approximated deduction, Batelco claims that the
accurate figure for 2009 would be closer to [] metres. This represents a very large
45 Zain provides benchmark figures from the report “2010 Shared Infrastructure Access” (CSMG report for OFCOM)
46 For example, see paragraph 261 of Reference Offer Order, 25 January 2011, (ref: MCD/01/11/006) and Batelco’s
response to the draft Determination changing the audit standard, 21 April 2011, (ref: GCL/145/11). 47
Changing the audit standard for Batelco’s regulatory accounts from “Properly prepared within the bounds of materiality” to “Fairly presents”, Determination issued by the Authority on 21 July 2011 (ref: MCD/07/11/100)
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difference (by a factor 5) relative to the wholesale ducts length of [] metres as initially
reported by Batelco in its RO submission dated 11 April 2011.
Aside Batelco’s issues regarding the accuracy of its GIS database, the Authority cannot 302.
comprehend that Batelco’s wholesale team does not appear to keep accurate record of
the total duct length rented to OLOs whereas it bills OLOs for the length of duct used and
site survey conducted.
Duct rental charge
With regards to Lightspeed suggestion to offer the duct access service charge on a sub-303.
duct level to decrease the charge by a factor three, it should be noted that the current duct
rental charge already takes into account the sharing of ducts. The total cost of the duct
infrastructure is allocated to all copper and fibre cables running through the ducts (i.e. total
cost of duct infrastructure divided by total cable length). The duct rental charge therefore
takes into account:
a. the cost of ducts used by a single cable (including Batelco’s own usage);
b. the cost of ducts shared by several cables (including Batelco’s own usage); and
c. the cost of empty ducts (allocated to all cables).
The above paragraph also addresses Menatelecom’s concerns regarding the absence of 304.
adjustment to account for the proportion of ducts related to Batelco’s own usage.
The Authority has recalculated the duct rental charged based on Batelco’s corrected 305.
wholesale duct at the end of 2009. The resulting charge would be 3 times higher than the
charge originally calculated by the Authority in the draft Order (2 times higher if the 2010
wholesale duct length is used in the calculation) and significantly higher than the proposed
charges by Batelco. In light of the uncertainties surrounding the duct rental charge
calculation, and in particular the operational data, it would not be appropriate for the
Authority to impose such increase on OLOs before ensuring that it is fully justified and
based on robust operational data. As a result, the Authority orders the freezing of the duct
access monthly rental charge to BD 0.189 per metre.
For the next RO assessment (RO charges based on 2010 regulatory accounts), the 306.
Authority notes that Batelco’s access bottom-up cost model which is currently being
developed should be readily available. The bottom-up information is expected to provide a
clearer view of Batelco’s total duct infrastructure and the allocation of its costs to the
different products offered by Batelco. Batelco is also currently preparing itself to meet the
fairly present audit standard. As part of this process, it is required to remedy any
deficiencies to its operational data. As a consequence, it can be expected that the
uncertainty surrounding the assessment of the FRND duct rental charge will be
significantly reduced.
One-off wholesale activities and duct infrastructure cost adjustment
In the absence of empirical evidence provided by Batelco, the Authority remains of the 307.
view that the adjustments referred to at paragraph 261 are necessary to avoid double
counting.
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Page 112 of 167
Review of the charge related to field study
With regards to the cap for the duct survey charge, the Authority highlights, that, despite 308.
multiple opportunities (including this consultation) Batelco has chosen to not submit any
relevant information (including for example, invoices, quotes, price list of subcontractors)
to support the BD 300 site survey charge. Instead Batelco has concentrated its comments
on the benchmark produced by the Authority.
Benchmarking is seldom a straightforward exercise. There are inherent limitations to 309.
benchmarks. For instance, they often require some assumptions to be made and their
comparability and representativeness may not be perfect. However the Authority considers
that the benchmark presented in Table 48 (see page 103) is robust and well documented,
contrarily to what Batelco is suggesting in its submission. In passing, the Authority notes
that Batelco has questioned the representativeness and methodology of the Authority’s
benchmark but has not provided any additional information to complement the benchmark.
Moreover, while there are a number of reasons to suggest that the average benchmarked 310.
cost of BD 0.315 per metre could overstate the actual costs of conducting the site
survey/feasibility study in Bahrain (see paragraph 274), the Authority has followed a
prudent approach by excluding three countries which presented an average feasibility cost
per metre significantly lower than other countries (Bulgaria, Lithuania and Switzerland).
Therefore in the absence of robust and reliable costing and operational information from
Batelco, the Authority considers that the average benchmark rate of BD 0.426, which
excludes outliers unfavourable to Batelco, is sufficiently robust to serve as a basis for
setting a cap applicable to the duct survey charge.
With regards to the straight line basis to calculate the cap applicable to the field study 311.
charge, the Authority has carefully considered the sample provided by Batelco. Batelco’s
sample suggests that the ‘Pythagoras’ factor of √2 applied to the straight line distance
may be underestimating the actual duct route. While Batelco did not provide any evidence
that the submitted sample is representative, the Authority has decided to abandon any
reference to the straight line distance and has decided instead to set the cap of the field
study charge to a maximum of BD 0.430 per metre of the actual duct route to be provided
to the OLO. The Authority would monitor potential abuse.
The Authority concurs with Menatelecom’s comment regarding the provision of accurate 312.
maps to be valid (see paragraph 295). Consequently the Authority orders Batelco to
provide accurate maps of the duct route provided to OLOs upon request. This should be
provided to OLOs upon request at no additional costs and at any time after the completion
of the field study. The Authority orders Batelco to update its RO accordingly.
Limitations of duct rental to physical addresses
The Authority is also concerned by Batelco’s apparent limitations regarding the geographic 313.
location of the end-points that an OLO can request for a duct route in its application form.
This issue has been raised by Zain (see paragraph 297). At this point in time and based
on the information provided by Batelco, the Authority is of the view that a limitation to
physical addresses is unfair and unreasonable. Therefore, the Authority considers that
Batelco should endeavour to accommodate any reasonable request from OLOs. This
includes the provision of the wholesale duct access service anywhere in Bahrain with no
such limitations. The Authority also notes that Batelco’s “Duct Sharing Policy” refers to
“[t]he availability of duct space for sharing is assessed for each segment of a primary
network route only between identified physical location (sic) nominated by the Access
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Seeker” (emphasis added); it makes no reference to physical addresses. The Authority will
monitor closely the matter.
Final Order FRND charges for duct access and site survey
The following table summarizes the FRND charges of duct access and site survey ordered 314.
to Batelco by the Authority:48
Table 51: Order FRND charges for duct access and site survey
Chargeable activity
Approved/
ordered in
January 2011
(or currently
implemented)
Batelco's
submitted
charges in
April 2011
TRA FRND
draft charges
TRA FRND
final Order
charges
Evolution of
Order FRND
as compared
to previously
approved/
ordered
Duct access ( 2-3.9 ) in BD
2-3.2 Site Survey if required 300.000 300.000
Time and
materials basis
as set out in
Annex 1.
For duct
access, the
field study total
charge should
not exceed
BD 0.600 per
metre of the
straight-line
distance
separating the
two physical
locations
between which
duct access is
requested.
Time and
materials basis
as set out in
Annex 1.
For duct
access, the
field study total
charge should
not exceed
BD 0.430 per
metre of the
duct route
provided to the
OLOs. Upon
request,
Batelco should
provide a
detailed map
of the duct
route to the
OLO at no
additional cost.
n/a
2-3.9 – Duct Rental charge 0.189 0.213 0.155 0.189 0%
Source: the Authority
48 Compared to the draft Order, the final Order has introduced the following main changes: (a) the freezing of the
duct access service rental charge; and (b) the setting of the cap applicable to the field study charge based on the actual duct route distance instead of the straight line distance.
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10 CAT/LLCO services (2-5 and 2-6)
Draft Order Text
Services definition
The CAT and LLCO services are both wholesale dedicated private leased circuit services 315.
which only differ by their end-segments: whereas a CAT is a service between an OLO and
an end-user, the LLCO is a service between two points of presence of an OLO.
Customer Access Tail (‘CAT’) service definition
In its RO, Batelco defines the CAT service as follows: 316.
“The CAT Service is a wholesale dedicated private leased circuit
service for carrying Access Seeker’s traffic within Bahrain between
an End User premises and an Access Seeker’s Point of Presence.
Available To: Public telecommunications operators with an
individual licence.
Traffic: Only traffic (a) agreed between the Access Seeker and the
Access Seeker’s customer and (b) covered by the Access Seeker’s
licence.
Reciprocal Service: Not required.” 49
Local Leased Circuit for OLO (‘LLCO’) service definition
In its RO, Batelco defines the LLCO service as follows: 317.
“The Local Leased Circuit for OLO (LLCO) Service is a wholesale
dedicated private leased circuit service for carrying Access Seeker’s
traffic within Bahrain between two of the Access Seeker’s Points of
Presence.
Available To: Licensed Operators.
Traffic: Only traffic of the Access Seeker.
Reciprocal Service: Not required.” 50
Information provided by Batelco
The calculations of Batelco’s 2011 proposed charges and cost stacks for the CAT /LLCO 318.
services are detailed in the following tables:
49 Batelco’s RO, Schedule 1 2-6 (CUSTOMER ACCESS TAIL SERVICE )
50 Batelco’s RO, Schedule 1 2-5 (LOCAL LEASED CIRCUIT FOR OLO )
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Page 115 of 167
Table 52: Submitted cost stack for low-speed CAT/LLCO services
speed #pair/ speed
WS Factor
Wholesale Activities
Cost
Access Copper pair Cost per one
Circuit (TWO ENDS)*2
MSAN G.SHDSL per circuit
Cost per one circuit
(2 CPEs)
Network Cost
Total cost
9.6k [] [] [] [] [] [] [] 97.41
14.4k [] [] [] [] [] [] [] 97.41
19.2k [] [] [] [] [] [] [] 97.41
64k [] [] [] [] [] [] [] 97.41
128k [] [] [] [] [] [] [] 98.96
256k [] [] [] [] [] [] [] 102.06
384k [] [] [] [] [] [] [] 105.16
512k [] [] [] [] [] [] [] 108.26
768k [] [] [] [] [] [] [] 114.46
1024k [] [] [] [] [] [] [] 122.47
1.5mb [] [] [] [] [] [] [] 134.88
2048k [] [] [] [] [] [] [] 149.74
Source: Batelco’s submission
Table 53: Submitted cost stack for high-speed CAT/LLCO services
speed WS Factor Wholesale Activities
Cost
Access Fibre
Cost for 2 ends
Equipment Cost for two ends
Network Cost
Total cost
DS3 [] [] [] [] [] 5,677.76
STM1 [] [] [] [] [] 9,203.64
STM4 [] [] [] [] [] 14,697.71
Source: Batelco’s submission
The different charges submitted by Batelco are summarized in the following table along 319.
with the currently approved/ordered charges.
Table 54: Current approved/ordered and proposed CAT/LLCO charges
Chargeable activity Approved/Ordered
in 2009
Approved/Ordered in January 2011
(or currently implemented)
Batelco’s submitted charges
in April 2011
Evolution of submitted as compared to Approved/ Ordered
CAT/LLCO ( 2-5, 2-6 ) in BD
Low speed CAT/LLCO in BD (charges apply for open period )
64 kbit/s 58.000 58.000 97.000 +67.2%
128 kbit/s 61.000 61.000 99.000 +62.3%
256 kbit/s 68.000 68.000 102.000 +50.0%
512 kbit/s 81.000 81.000 108.000 +33.3%
1024 kbit/s 119.000 119.000 122.000 +2.5%
1536 kbit/s 145.000 145.000 135.000 -6.9%
2048 kbit/s 171.000 171.000 150.000 -12.3%
High speed CAT/LLCO maximum price in BD * (price ceiling)
DS3 4,686.310 * 5,678.000 * +21.2%
STM-1 6,630.690 * 9,204.000 * +38.8%
STM-4 15,211.840 * 14,698.000 * -3.4%
Source: The Authority
Most of the submitted charges are greater than the current charges. This is especially the 320.
case for lower speeds where, for example, the submitted charge for the speed 256 Kbps is
50% greater than the current charge.
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Page 116 of 167
The Authority also notes that Batelco has calculated the cost-based charges for the 321.
speeds 384 kbit/s and 768 kbit/s but has not included them in the submitted Schedule 3.
For the avoidance of doubt Batelco is required to provide CAT/LLCO at such speeds if
requested by OLOs, in which case the Authority would set the FRND charges for those
speeds prior to their launch.
Review of the submitted charges for CAT/LLCO services
Number of circuits
The Authority notes that there is still a majority of low-speed CAT/LLCO circuits which are 322.
delivered on the SDH network. Ethernet based circuits (NGN circuits) accounted for []%
of the total low-speed CAT/LLCO circuits by end 2009. As Batelco progresses its NGN
migration, the SDH circuits are progressively replaced by NGN based circuits.
Table 55: Number of CAT/LLCO circuits at the end of 2009
Item
Number of legacy circuits (SDH)
Number of NGN circuits (Ethernet)
Total number of circuits
Capacity in 'weighted' E1 equivalent
Low-speed CAT/LLCO [] [] [] []
High-speed CAT/LLCO [] [] [] []
Source: The Authority from Batelco’s submission
To avoid any confusion with other services, the Authority suggests that Batelco use the 323.
terminology ‘low-speed’ and ‘high-speed’ rather than ‘narrowband’ and ‘broadband’ to
differentiate the two types of leased lines.
Transmission costs
The Authority notes that the monthly cost per E1 for legacy low-speed circuits is equal to 324.
BD [] which is more than [] times the comparable NGN based low-speed circuits cost
of BD []. The resulting monthly weighted cost per E1 is BD [] ([]% legacy and
[]% NGN). Legacy circuits are based on a mixture of SDH transmission network, and
the BDDN and ASCOM legacy transmission networks.
For high-speed circuits, the network cost is calculated based on the average monthly cost 325.
per 1024 kbit/s of SDH transmission which is equal to BD [] in 2009. The Authority here
encourages Batelco to use the accurate data transfer speed of DS3 (44.736 Mbit/s), STM-
1 (155.52 Mbit/s) and STM-4 (622.08 Mbit/s).
Fibre costs
Batelco calculates a monthly access fibre cost of BD [] based on an unadjusted length 326.
of 1km of fibre cable (BD [] / [] km × 1 km / 12 months = BD []). The Authority
notes that this approach is based on the incorrect assumption that the high-speed
CAT/LLCO service uses a dedicated fibre cable and that this cable is on average 1km
long. The Authority emphasises that the high-speed service uses only one fibre pair in a
cable that can be shared with other services or for a portion of the distance with other
customers. The Authority prefers the more transparent and cost reflective approach which
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consists in dividing the total cost of fibre access by the total number of fibre pairs (BD []
/ [] access fibre pairs / 12 months = BD []). This approach ensures that the sharing of
passive infrastructure is taken into account in the cost allocation.
It also appears that Batelco is using a factor 2 to account for a purported protection line. 327.
For the reasons set out at paragraphs 106 and 108 above, the Authority rejects this
approach.
Equipment costs
While the Authority considers that the unit cost per CPE should not be derived from the 328.
network element ‘AN 09 CPE –Data Equipment’,51
the Authority has in this instance
accepted the submitted monthly cost of BD [] as no alternative source of information
was available. For future submissions, Batelco is required to calculate the cost of CPE
based on the actual CPE used.
To calculate the cost per core port and per CPE for high-speed CAT/LLCO, the Authority 329.
has followed the same approach as for the ISI/CSI link services (see paragraph 95 above).
Wholesale support activities cost allocated to CAT/LLCO services
Batelco intends to recover BD [] of wholesale support activity costs from low-speed 330.
CAT/LLCO circuits and BD [] for high-speed circuits. This translates into a monthly cost
per ‘weighted equivalent’ circuit of respectively BD [] and BD [].
The Authority notes that Batelco did not correctly convert the total number of high-speed 331.
CAT/LLCO circuits into ‘weighted equivalent’ circuit. The correct calculation is presented in
the following table:
Table 56: Correct conversion of CAT/LLCO high speed circuits into ‘weighted equivalent’ circuits
Circuit speed Total Number of
Circuits Wholesale factor
Total equivalent # of circuits
DS3 [] 8.50 []
STM-1 [] 21.25 []
STM-4 [] 21.25 []
STM-16 [] 74.38 []
Grand Total [] []
Note: the total equivalent # of circuit is equal to the total # of circuits time the wholesale factor Source: the Authority
The above correction reduces the monthly wholesale support activities cost per ‘weighted 332.
equivalent’ circuit from BD [] to BD []. Notwithstanding this correction, it is unclear to
the Authority why the monthly unit cost per ‘weighted equivalent’ circuit differs between
low-speed and high-speed circuits.
While the Authority is inclined to accept the submitted top-down wholesale support 333.
activities cost for high-speed CAT/LLCO (but adjusted to reflect the above correction) as
51 AN09 includes a range of CPEs of different sizes and functions and the calculated average unit cost per CPE
might not be representative of the equipment used for low-speed CAT/LLCO.
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Page 118 of 167
this cost can more easily “blend” into higher charges,52
it cannot however accept the cost
of BD [] per low-speed circuit. The Authority considers the wholesale activities cost of
BD [] per low-speed circuit to be unreasonable and disproportionate as it would
represent approximately 40% to 60% of the wholesale charges.
It has therefore set the wholesale support activities cost per low-speed leased line circuit 334.
based on the same bottom-up estimation approach used in previous RO orders. This
results in a monthly cost of BD [] per low-speed circuit.
Table 57: Update of monthly wholesale activities cost per low-speed CAT/LLCO circuit
Top down average monthly transaction time per low-speed
CAT/LLCO
Average staff time 2009
chargeout rate
Total
30 minutes G1 staff [] [] []
15 minutes G2 staff [] [] []
Total []
Source: the Authority
Draft Order fair, reasonable and non-discriminatory charges for CAT/LLCO services
The amended cost stacks and associated draft Order FRND charges for the CAT/LLCO 335.
services are presented in the following tables:
Table 58: Draft Order FRND cost stack for low-speed CAT/LLCO services
Speed #pair/sp
eed WS
Factor
Wholesale Activities
Cost
Access Copper pair cost per
circuit (for two ends)
MSAN G.SHDSL per circuit
Cost per one circuit
(2 CPEs)
Network Cost
Total cost
64 kbit/s [] [] [] [] [] [] [] 49.405
128 kbit/s [] [] [] [] [] [] [] 50.955
256 kbit/s [] [] [] [] [] [] [] 54.056
512 kbit/s [] [] [] [] [] [] [] 60.257
1.024 Mbit/s [] [] [] [] [] [] [] 74.471
1.536 Mbit/s [] [] [] [] [] [] [] 86.873
2.048 Mbit/s [] [] [] [] [] [] [] 101.734
Source: the Authority
Table 59: Draft Order FRND cost stack for high-speed CAT/LLCO services
Speed Wholesale
factor
Wholesale support activities
Cost
Access fibre cost
for 2 ends
Equipment cost for
two ends
Network Cost
Total cost
DS3 (44.736 Mbit/s) [] [] [] [] [] 2,583.542
STM-1 (155.52 Mbit/s) [] [] [] [] [] 3,956.858
STM-4 (622.08 Mbit/s) [] [] [] [] [] 9,224.239
Source: the Authority
52 Footnote added at the final Order stage: Contrary to what is suggested in paragraph 333 above, the draft ordered
charges for high-speed CAT/LLCO were based on the same bottom-up approach used to calculate wholesale activities costs applicable to low-speed CAT/LLCO services (e.g. for DS3, BD [] × [])
Reference Offer Order
Annex– Order legal basis and reasoning
Page 119 of 167
Table 60: Draft Order FRND charges for CAT/LLCO services
Chargeable activity
Approved in January 2011 (or currently
implemented)
TRA FRND draft charges
Evolution as compared to Approved/
Ordered
CAT/LLCO ( 2-5, 2-6 ) in BD
Low-speed CAT/LLCO in BD (Charges apply for open period)
64 kbit/s 58.000 49.405 -14.8%
128 kbit/s 61.000 50.955 -16.5%
256 kbit/s 68.000 54.056 -20.5%
512 kbit/s 81.000 60.257 -25.6%
1.024 Mbit/s 119.000 74.471 -37.4%
1.536 Mbit/s 145.000 86.873 -40.1%
2.048 Mbit/s 171.000 101.734 -40.5%
High-speed CAT/LLCO maximum price in BD * (price ceiling)
DS3 (44.736 Mbit/s) 4,686.310 * 2,583.542 * -44.9%
STM-1 (155.52 Mbit/s) 6,630.690 * 3,956.858 * -40.3%
STM-4 (622.08 Mbit/s) 15,211.840 * 9,224.239 * -39.4%
Source: the Authority
Summary of responses received by the Authority
Batelco
CAT/LLCO circuit speeds of 384 kbit/s and 768 kbit/s
With regards to paragraph 321, Batelco indicates that while it has submitted cost stacks 336.
for the CAT/LLCO speeds of 384 kbit/s and 768 kbit/s based on 2007, 2008 and 2009
regulatory accounts, it has not included such speeds in the Schedule 3 of its RO. Batelco
however submits that it has provided such speeds in the past when requested by OLOs.
Batelco explains that such speeds are uncommon both at the retail and wholesale level
(Batelco explains that since 2010 there are no CAT/LLCO at such speeds) Accordingly,
Batelco submits that it would be convenient to remove the CAT/LLCO speeds of 384 kbit/s
and 768 kbit/s from the RO.
Batelco also submits that it has identified an issue in connection with CAT/LLCO speeds 337.
lower than 192 kbit/s: “It seems that Batelco’s configuration of G.SHDSL is not effectively
governing speeds lower than 192 kbit/s where the profile, network configuration and
commercial arrangements are set for lower speeds. This issue will be followed up by
Batelco with the TRA prior to the next reference offer submission.” (Batelco’s submission,
paragraph 103).
Number of circuits
With regards to paragraph 322, Batelco explain that it supplies new CAT/LLCO orders on 338.
the NGN and no longer on the SDH network. Batelco also submits that the legacy network
remains in use for existing CAT/LLCO and other products. Batelco also indicates that it
has no current plan to ‘force’ the migration of legacy circuits to NGN but that it would be
worthwhile considering such migration when the WLA service (wholesale MPLS) would be
introduced.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 120 of 167
Fibre cost
Batelco notes that the Authority has followed the same approach as for the ISI/CSI 339.
services to calculate cost of the fibre access. Batelco refers the Authority to the comments
made by Batelco on this specific issue in the ISI/CSI section of its response (such
comments have been summarized by the Authority in paragraph 118 above). As
customers migrate from copper to fibre, Batelco appears concerned that, if the fibre
access is set too low, this may create distortions as Batelco would have to recover the
copper cost from a decreasing number of customers remaining on copper.
Equipment costs
With regards to paragraph 328, Batelco concurs with the Authority’s view that the cost of 340.
CPE should be based on the actual CPE used.
Wholesale support activities cost allocated to CAT/LLCO services
Batelco argues that the Authority has taken a selective approach in addressing wholesale 341.
activity costs in respect of CAT/LLCO. Batelco submits that the wholesale activity cost
includes all the overhead costs from a business perspective (Account management,
Product management, Wholesale technical support, Regulatory, Costing, Finance) and not
only one task (order verification and raising) as suggested by the Authority. Batelco also
submits that the fixed costs (overheads) are not related to the number of circuits and that
the fixed cost per circuit will decrease as volume grows. Batelco’s submission also
includes a pie chart showing the amount of cost which, according to Batelco’s calculation,
would not be recovered with the CAT/LLCO draft ordered charges (approximately 2/3 of
costs in Batelco’s graph).
SDH costing gradients
On 1 April 2012, the Authority sent to Batelco a request for information and clarification to 342.
Batelco regarding the costing of SDH-based products. 53
In that letter, the Authority
explained its concerns with the use of gradients by Batelco to cost high speed CAT/LLCO
and high speed IPLC services which appeared incorrect. In Batelco’s response54
Batelco
did not explicitly indicate whether it agreed with the Authority’s conclusion that Batelco had
incorrectly used gradients. However, it noted that the network gradients used to derive the
number of E1 equivalent circuits in the context of SDH costing are respectively [], []
and [] for DS3, STM-1 and STM-4. Batelco is concerned that the corrected use of
network gradients results in significant decrease in the price ceiling applicable to high-
speed CAT/LLCO and high-speed IPLC for Zone 1. In this context, Batelco concurs with
the Authority that it may be appropriate to use a glide path towards cost-based charges
instead of making a one-off adjustment.
Etisalcom
Etisalcom requests the addition of a wholesale product in the RO that is equivalent to the 343.
local MPLS connectivity offered by Batelco retail. Etisalcom also submits that “the pricing
of local MPLS greatly affects the total cost of any link proposed to any client.” (Etisalcom’s
submission, page 1).
53 Request for clarification and Article 53 request for information on the costing of SDH-based products (ref:
MCD04/12/050), the Authority, 1 April 2012. 54
SDH costing – article 53 response (ref: GCL/142/12), Batelco, 9 April 2012.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 121 of 167
Lightspeed
Lightspeed considers that the CAT/LLCO charges are still very expensive when compared 344.
to international and regional benchmarks. To illustrate its statement, Lightspeed submits
that the draft order charges are more than twice the charges of an equivalent service in
Jordan.
Menatelecom
Menatelecom notes that the CAT/LLCO service is limited to circuit speed up to 2 Mbit/s 345.
and to higher speeds that includes DS3, STM-1 and STM-4. Menatelecom is of the view
that Batelco should also offer circuit speeds between 2 Mbit/s and DS3 (i.e. 44.736 Mbit/s)
as it is currently the case at the retail level where speeds of 4, 8, 10 and 20 Mbit/s are
available. Menatelecom also explains that Batelco has referred Menatelecom to its retail
price of BD 1,790 when Menatelecom has requested a 4 Mbit/s circuit, which according to
Menatelecom, is the speed the most commonly demanded by OLOs.
Menatelecom is concerned that the RO draft Order does not define one-off charges for the 346.
CAT/LLCO service in order to prevent any potential abuse by Batelco.
Menatelecom remains deeply concerned by the absence of SLAs for wholesale services 347.
and in particular for CAT/LLCO. With regards to the CAT/LLCO service, Menatelecom
expects a full review of the service terms and more especially the response time for
service application and service quotation (in case of non-standard products). In that
regard, Menatelecom explains that time needed by Batelco wholesale to provide a
response to the service application of an OLO easily allows Batelco’s retail arm to capture
the potential customer in the meantime.
Zain
Zain agrees with the draft ordered charges for CAT/LLCO. 348.
The Authority’s analysis and conclusion
CAT/LLCO circuit speeds of 384 kbit/s and 768 kbit/s
In relation to CAT/LLCO circuit speeds of 384 kbit/s and 768 kbit/s, the Authority does not 349.
require Batelco to include the service charges in its Schedule 3. However, these speeds
should be made available to OLOs upon request and the charges should be calculated in
accordance with the approach set by the Authority.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 122 of 167
Transmission cost and SDH costing gradients
The issue of SDH costing has been raised by the Authority on several occasions in the 350.
past few years. However, Batelco has not been in a position to clearly and fully explain its
approach.
In one of Batelco’s submission related to the wholesale MPLS service (WLA service),55
351.
Batelco did provide additional details on its SDH network cost allocation approach and
more especially on how Batelco was using gradients to derive a SDH cost per ‘E1
equivalent’ circuits.
Batelco’s use of SDH gradients raises serious concerns as it appears that Batelco does 352.
not use gradients in a consistent manner when costing high-speed CAT/LLCO and high-
speed IPLC services:56
a. Based on SDH gradients (i.e. Batelco used Factors), Batelco calculates that there
are [] E1 equivalent SDH circuits at the end of 2009 (c.f. tab “SDH capacity” of
RO excel file “20110407 Annex D CSI ISI 2009.xlsx”). This ‘weighted’ number of
E1 circuits translates into a ‘weighted’ SDH transmission cost per E1 of BD []
per month.
b. However, when costing the high speed CAT/LLCO services, Batelco does not use
those gradients as it should to derive correct charges, but allocate SDH costs
linearly according to the speed of leased lines.
The Authority considers that Batelco’s approach is mathematically wrong and result in 353.
incorrect costing of the CAT/LLCO services: it over-allocates cost to those services. The
allocation of SDH transmission cost to DS3 and STM-x leased lines should use the same
gradients as those used initially to calculate the cost per ‘E1 equivalent’.
In its response57
to the request for information and clarification sent by the Authority to 354.
Batelco on 1 April 2012,58
Batelco did not explicitly indicate whether it agrees with the
conclusions of the Authority on this point.
As the impact of the SDH network gradients correction on the price ceilings applicable to 355.
high-speed CAT/LLCO services is significant, the Authority has decided on this occasion
to apply a 2-year glide path whereby the SDH network cost allocated to high-speed
CAT/LLCO is calculated as the arithmetic average between the SDH network cost derived
from speed-based factors (no use of gradients) and the SDH network cost derived from
the consistent use of SDH gradients. The SDH network cost applicable to high-speed
CAT/LLCO services is calculated in the following table.
55 Annex 5 of information submitted by Batelco on 7 February 2012 (Ref: GCL/41/12) in relation to the Notified
Controlled Tariff 42 Local MPLS 56
The issue was put to Batelco in the Authority’s letter dated 1 April 2012 (Ref MCD04/12/050). 57
SDH costing – article 53 response (ref: GCL/142/12), Batelco, 9 April 2012. 58
Request for clarification and Article 53 request for information on the costing of SDH-based products (ref: MCD04/12/050), the Authority, 1 April 2012.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 123 of 167
Table 61: Correct use of SHD network gradients and SDH network cost glide path.
Circuit speed
Incorrect speed-based
factors (in E1)
(Batelco’s approach)
SDH network cost allocated to the circuit with incorrect speed-based factors (in BD
per circuit)
(Batelco’s approach)
Correct gradients to
allocate network costs
(in E1 equivalent)
SDH network cost allocated to the circuit with correct gradients (in
BD per circuit)
FRND SDH network cost
allocated to the circuit based on
2-year glide path (average value in BD)
a = ( circuit speed in Mbit/s )
/ 2.048 Mbit/s
b = a × (SDH monthly cost per E1 equivalent) *
c ** d = c × (SDH
monthly cost per E1 equivalent)*
e = (b + d ) / 2
DS3 (44.736 Mbit/s)
[] [] [] [] []
STM-1 (155.52 Mbit/s)
[] [] [] [] []
STM-4 (622.08 Mbit/s)
[] [] [] [] []
Note: *The SDH monthly cost per E1 equivalent is BD [] in 2009. ** These are the gradients used by Batelco to calculate the SDH monthly cost per E1 equivalent. In its Request for clarification and Article 53 request for information on the costing of SDH-based products (ref: MCD04/12/050), the
Authority had applied SDH gradients based on 1.024 Mbit/s when the basis was an E1 equivalent. Source: the Authority from Batelco’s submission
Transmission cost (MPLS network cost for low-speed CAT/LLCO services)
The Authority has identified another error in Batelco’s costing of MPLS network cost 356.
applicable to the low-speed CAT/LLCO services delivered on NGN. Batelco does not
correctly apply the routing factors of the MPLS distribution and aggregation networks
(CN19, CN21, CN23, CN40 and CN56). While Batelco correctly derives the ‘2 Mbit/s unit
cost’ of MPLS distribution and aggregation by taking into account the fact that MPLS-
based leased lines use twice the MPLS aggregation and MPLS distribution networks (for
the two ends of the leased line), it omits to multiply the ‘2 Mbit/s unit cost’ by 2 when
costing the low-speed CAT/LLCO services delivered on NGN.
For the purposes of this Order, the Authority has decided to take as an input the ‘2 Mbit/s 357.
unit cost’ of the MPLS network calculated by the Authority in its Decision relating to
Batelco's Local MPLS services.59
The Authority considers that the MPLS network unit cost
calculated in the Decision is more robust (In the context of that Decision, the Authority
revamped the costing of MPLS network (including MPLS network the routing factors and
MPLS network gradients).60
Fibre cost
Batelco’s comments are addressed at paragraphs 136-139 above. 358.
Equipment cost
In addition to the cost of the CPE at the OLO’s site, the Authority notes that Batelco also 359.
intends to recover the cost of the ODF, the cost of the DDF and the cost of the core SDH
port for high-speed CAT/LLCO services. It is not clear to the Authority whether these costs
are not already captured in the cost of SDH transmission (CN52). In this instance, the
59 see Table 8 page 41, Decision relating to Batelco's Local MPLS services dated 27 March 2012 (ref:
MCD03/12/047) 60
The ‘2 Mbit/s unit cost’ of MPLS network calculated in the MPLS Decision is BD [] while it is BD [] in Batelco’s RO submission dated 11 April 2011.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 124 of 167
Authority has decided not make any adjustment but intends to further investigate the
scope of cost included in CN52 as part of the next RO review.
Wholesale activities costs allocated to CAT/LLCO services
While Batelco’s submission in relation to wholesale activities costs has not assuaged the 360.
Authority’s concerns over wholesale activities costs as set out in Section 6 above and in
paragraphs 330-334, the Authority has decided to amend its approach to the allocation of
wholesale activities costs to CAT/LLCO services for the purposes of this Order. The
change of approach does not mean that the Authority no longer considers that the level of
wholesale activities costs that Batelco seeks to recover from CAT/LLCO services appears
to be excessive. In that respect, the Authority reserves the right to make other bottom-up
adjustments in the future.
The Authority has re-calculated the number of E1 equivalent to allocate wholesale 361.
activities costs based on the same gradients used for SDH network allocation with the
exception of low-speed CAT/LLCO services (below 2.048 Mbit/s) which all use a gradient
equal to 1. The details of the calculation are presented in the below table.
Table 62: Calculation of the number of ‘E1 circuit equivalent’ used to allocate wholesale activities costs to
CAT/LLCO services
Network
Access technology
Speed
Number of CAT/LLCO
circuits (end of 2009)
Wholesale gradients (to
allocate wholesale
activities costs)
Number of E1 equivalent to
allocate wholesale
activities costs
a b c = a × b
Legacy – SDH
Copper
64 kbit/s [] [] []
128 kbit/s [] [] []
256 kbit/s [] [] []
384 kbit/s [] [] []
512 kbit/s [] [] []
1.024 Mbit/s [] [] []
E1 (2.048 Mbit/s) [] [] []
Fibre
DS3 (44.736 Mbit/s) [] [] []
STM-1 (155.52 Mbit/s) [] [] []
STM-4 (622.08 Mbit/s) [] [] []
STM-16 (2488.32 Mbit/s) [] [] []
NGN Copper
64 kbit/s [] [] []
128 kbit/s [] [] []
256 kbit/s [] [] []
512 kbit/s [] [] []
1 Mbit/s [] [] []
2 Mbit/s [] [] []
Total [] []
Source: the Authority from Batelco’s submission
From the calculated total number of E1 equivalent, the Authority has derived the monthly 362.
wholesale activities costs per circuit which allow full recovery of the wholesale activities
costs as submitted by Batelco.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 125 of 167
Table 63: Wholesale activities costs allocated to CAT/LLCO services
Item Description Amount/Quantity
a Wholesale activities costs that Batelco seeks to recover from low-speed CAT/LLCO
[] BD
b Wholesale activity cost that Batelco seeks to recover from high-speed CAT/LLCO
[] BD
c = a + b Total wholesale activities costs that Batelco seeks to recover from CAT/LLCO
[] BD
d Number of E1 equivalent [] circuits
e = c / d / 12 Monthly wholesale activities costs per E1 equivalent [] BD/month
f = e × 1 Monthly wholesale activities costs per Low-speed CAT/LLCO circuit (≤ 2.048 Mbit/s)
[] BD/month
g = e × (gradient DS3) Monthly wholesale activities costs per CAT/LLCO DS3 circuit (44.736 Mbit/s)
[] BD/month
h = e × (gradient STM-1) Monthly wholesale activities costs per CAT/LLCO STM-1 circuit (155.52 Mbit/s)
[] BD/month
i = e × (gradient STM-4) Monthly wholesale activities costs per CAT/LLCO STM-4 circuit (622.08 Mbit/s)
[] BD/month
Source: the Authority from Batelco’s submission
The Authority is of the view that it may be appropriate to reduce the amount of wholesale 363.
activities costs allocated to high-speed CAT/LLCO by reducing the wholesale gradients
applicable to high-speed circuits as it is very unlikely that, for example, the provision of an
STM-4 circuit would require [] times more effort from the wholesale department than the
provision of an E1 circuit. However, while the Authority has decided to apply Batelco’s
gradients in this instance, it intends to work with Batelco on a more realistic wholesale
activities costs allocation among circuits.
Final Order FRND charges for CAT/LLCO services
The final cost stacks for the low-speed and the high-speed CAT/LLCO services charges 364.
are presented in the following pages.61
61 Compared to the draft RO Order charges, the main changes relate to: (a) transmission cost and the correct use of
SDH gradient with glide path; and (b) a new approach to allocate wholesale activities costs as submitted by Batelco.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 126 of 167
Table 64: Order FRND cost stack for low-speed CAT/LLCO services
Legacy network costing
speed Number of access
copper pairs required at one-end
Wholesale activities Cost
Access Copper pair cost per circuit (for
two ends)
CPE cost per one circuit (2 CPEs)
SDH network cost
BDDN / ASCOM
Total network cost
Total cost
64 kbit/s [] [] [] [] [] [] [] []
128 kbit/s [] [] [] [] [] [] [] []
256 kbit/s [] [] [] [] [] [] [] []
512 kbit/s [] [] [] [] [] [] [] []
1.024 Mbit/s [] [] [] [] [] [] [] []
1.536 Mbit/s [] [] [] [] [] [] [] []
2.048 Mbit/s [] [] [] [] [] [] [] []
NGN network costing
speed Number of access
copper pairs required at one-end
Wholesale Activities Cost
Access Copper pair cost per circuit (for
two ends)
CPE cost per one circuit (2 CPEs)
MSAN G.SHDSL per
circuit
MPLS network cost
*
Total network cost
Total cost
64 kbit/s [] [] [] [] [] [] [] []
128 kbit/s [] [] [] [] [] [] [] []
256 kbit/s [] [] [] [] [] [] [] []
512 kbit/s [] [] [] [] [] [] [] []
1.024 Mbit/s [] [] [] [] [] [] [] []
1.536 Mbit/s [] [] [] [] [] [] [] []
2.048 Mbit/s [] [] [] [] [] [] [] []
Weighted average between legacy and NGN network costing
speed
Number of access copper pairs required at one-end (weighted
average)
Wholesale activities Cost
Access Copper pair cost per circuit (for two ends, weighted
average))
CPE cost per one circuit (2 CPEs)
Average network cost mix ([]% of legacy circuits, []% of NGN circuits)
Total cost (weighted average)
64 kbit/s [] [] [] [] [] 58.508
128 kbit/s [] [] [] [] [] 60.963
256 kbit/s [] [] [] [] [] 65.872
512 kbit/s [] [] [] [] [] 75.692
1.024 Mbit/s [] [] [] [] [] 97.143
1.536 Mbit/s [] [] [] [] [] 116.781
2.048 Mbit/s [] [] [] [] [] 138.879
* The monthly MPLS network cost per 2.048 Mbit/s is based on the Authority’s Decision relating to Batelco's Local MPLS services dated 27 March 2012 (ref: MCD03/12/047), see Table 8 page 41 of the Decision.
Source: the Authority from Batelco’s submission
Reference Offer Order
Annex– Order legal basis and reasoning
Page 127 of 167
The Authority has re-calculated the FRND price ceilings of high-speed CAT/LLCO services 365.
of the draft RO Order issued 3 November 2011 (see below table). The corrected FRND
price ceiling is - 2.3% for DS3 to - 11.3 % for STM-4 lower than the draft RO Order
charges.
Table 65: Order FRND cost stack for high-speed CAT/LLCO services
Speed Wholesale
support activities Cost
Access fibre cost for 2
ends
Equipment cost for two
ends Network Cost
Total cost
DS3 (44.736 Mbit/s) [] [] [] [] 2,512.235
STM-1 (155.52 Mbit/s) [] [] [] [] 3,552.331
STM-4 (622.08 Mbit/s) [] [] [] [] 8,185.213
Source: the Authority from Batelco’s submission
The final ordered FRND charges for CAT/LLCO services are summarized in the following 366.
table. The charges have been set in the context of the expected introduction of wholesale
Ethernet-based leased lines by Batelco following the Authority’s Decision dated 27 March
2012 (MCD03/12/047). It may be appropriate to review the CAT/LLCO charges once the
wholesale Ethernet high-speed leased lines have been introduced.
Table 66: Order FRND charges for CAT/LLCO services
Chargeable activity
Approved/ ordered in
January 2011 (or currently implemented
Batelco's submitted charges in April 2011
TRA FRND draft charges
TRA FRND final Order
charges
Evolution of Order FRND as compared to previously
approved/ ordered
CAT/LLCO ( 2-5, 2-6 )
in BD
Low-speed CAT/LLCO in BD (Charges apply for open period)
64 kbit/s 58.000 97.000 49.405 58.508 0.9%
128 kbit/s 61.000 99.000 50.955 60.963 -0.1%
256 kbit/s 68.000 102.000 54.056 65.872 -3.1%
512 kbit/s 81.000 108.000 60.257 75.692 -6.6%
1.024 Mbit/s 119.000 122.000 74.471 97.143 -18.4%
1.536 Mbit/s 145.000 135.000 86.873 116.781 -19.5%
2.048 Mbit/s 171.000 150.000 101.734 138.879 -18.8%
High-speed CAT/LLCO maximum price in BD * (price ceiling)
DS3 (44.736 Mbit/s) 4,686.310 * 5,678.000 * 2,583.542 * 2,512.235 * -46.4%
STM-1 (155.52 Mbit/s) 6,630.690 * 9,204.000 * 3,956.858 * 3,552.331 * -46.4%
STM-4 (622.08 Mbit/s) 15,211.840 * 14,698.000 * 9,224.239 * 8,185.213 * -46.2%
Source: the Authority from Batelco’s submission
Reference Offer Order
Annex– Order legal basis and reasoning
Page 128 of 167
11 International Private Leased Circuit service (‘IPLC’) (2-10)
Draft Order Text
Service definition
In its RO, Batelco defines the International Private Leased Circuit service (‘IPLC’) service 367.
as follows:
“The International Private Leased Circuit (IPLC) Service is a
wholesale dedicated international private leased circuit service for
carrying Access Seeker’s traffic between an Access Seeker’s Point
of Presence in Bahrain and a location outside Bahrain. The IPLC
Service is provided by Access Provider from the Point of Handover
at a location in Bahrain up to the effective mid-point of the
international segment of the circuit.
Available To: ISL and ISP licence holders.
Traffic: Only traffic (a) agreed between the Access Seeker and the
other relevant operator (if the traffic originates from or passes
through a network other than the Access Seeker’s network) and (b)
covered by the Access Seekers licence.
Reciprocal Service: Not required.” 62
Information provided by Batelco
Batelco first submitted a cost stack for the IPLC service on 11 April 2011. As some of the 368.
formulas included in the cost stack were not functioning, Batelco submitted a second cost
stack for the IPLC service on 28 July 2011 (ref: GCL/246/11).
The calculations of Batelco’s 2011 proposed charges and cost stacks for the IPLC 369.
services are detailed in the following tables:
62 Batelco’s RO, Schedule 1 2-10 (INTERNATIONAL PRIVATE LEASED CIRCUIT)
Reference Offer Order
Annex– Order legal basis and reasoning
Page 129 of 167
Table 67: Cost stack submitted by Batelco for the low-speed IPLC service
Source: Batelco’s submission
speed #pair/speed no of 64K Wholesale
Factor
Wholesale Activities
Cost
Access Copper Cost per
pair
Cost per one CPE
Network Core Cost same as
CAT/LLCO (legacy only)
Total cost of National
Leg and Wholesale Activities
64k [] [] [] [] [] [] [] []
128k [] [] [] [] [] [] [] []
256k [] [] [] [] [] [] [] []
512k [] [] [] [] [] [] [] []
768k [] [] [] [] [] [] [] []
1024k [] [] [] [] [] [] [] []
1536k [] [] [] [] [] [] [] []
2048k [] [] [] [] [] [] [] []
Circuit Speed
Speed Factor
Int'l Leg Network Total Cost Total Cost Plus Risk Factor
Zone 1 Zone 2 Zone 3 Zone 1 Zone 2 Zone 3 Zone 1 Zone 2 Zone 3
64kbps 0.031 [] [] [] [] [] [] 89 144 107
128kbps (2x64kbps) 0.063 [] [] [] [] [] [] 114 225 151
256kbps (4x64kbps) 0.125 [] [] [] [] [] [] 165 386 239
512kbps (8x64kbps) 0.250 [] [] [] [] [] [] 267 709 414
768kbps (12x64kbps) 0.375 [] [] [] [] [] [] 369 1,032 589
1mbps (16x64kbps) 0.500 [] [] [] [] [] [] 475 1,359 769
1,5mbps (24x64kbps) 0.750 [] [] [] [] [] [] 679 2,004 1,120
2mbps (32x64kbps) 1.000 [] [] [] [] [] [] 882 2,650 1,470
Reference Offer Order
Annex– Order legal basis and reasoning
Page 130 of 167
Table 68: Cost stack submitted by Batelco for the high-speed IPLC service
Source: Batelco’s submission
The proposed charges with prior year comparators are summarized in the following table. 370.
Table 69: Approved and proposed IPLC charges
Chargeable activity Approved/ Ordered in
2009
Approved / Ordered in
January 2011 (or currently
implemented)
Batelco’s submitted charges in April 2011
Evolution of submitted charges as
compared to approved/ ordered charges
IPLC ( 2-10 )
IPLC - Zone 1 – Low speed IPLC in BD
64 kbit/s 137.000 89.000 -35.0%
128 kbit/s (2x64 kbit/s) 167.000 114.000 -31.7%
256 kbit/s (4x64 kbit/s) 380.000 227.000 165.000 -27.3%
512 kbit/s (8x64 kbit/s) 576.000 348.000 267.000 -23.3%
768 kbit/s (12x64 kbit/s) 468.000 396.000 -15.4%
1.024 Mbit/s (16x64 kbit/s) 961.000 595.000 475.000 -20.2%
1,536 Mbit/s (24x 64 kbit/s) 835.000 679.000 -18.7%
2.048 Mbit/s (32x64 kbit/s) 1441.000 1076.000 882.000 -18.0%
IPLC - Zone 1 – High speed IPLC maximum price in BD *(price ceiling)
DS3 6,800 * 4,998 * -26.5%
STM-1 11,495 * 7,504 * -34.7%
STM-4 26,779 * 16,232 * -39.4%
IPLC - Zone 2 in BD
64 kbit/s 165.000 144.000 -12.7%
128 kbit/s (2x64 kbit/s) 223.000 225.000 +0.9%
256 kbit/s (4x64 kbit/s) 606.000 339.000 386.000 +13.9%
512 kbit/s (8x64 kbit/s) 940.000 571.000 709.000 +24.2%
768 kbit/s (12x64 kbit/s) 803.000 1032.000 +28.5%
1.024 Mbit/s (16x64 kbit/s) 1510.000 1041.000 1359.000 +30.5%
1,536 Mbit/s (24x 64 kbit/s) 1505.000 2004.000 +33.2%
2.048 Mbit/s (32x64 kbit/s) 2565.000 1969.000 2650.000 +34.6%
IPLC - Zone 3 in BD
64 kbit/s 172.000 107.000 -37.8%
128 kbit/s (2x64 kbit/s) 236.000 151.000 -36.0%
256 kbit/s (4x64 kbit/s) 913.000 366.000 239.000 -34.7%
512 kbit/s (8x64 kbit/s) 1331.000 625.000 414.000 -33.8%
768 kbit/s (12x64 kbit/s) 883.000 586.000 -33.6%
1.024 Mbit/s (16x64 kbit/s) 2050.000 1148.000 769.000 -33.0%
1,536 Mbit/s (24x 64 kbit/s) 1666.000 1120.000 -32.8%
2.048 Mbit/s (32x64 kbit/s) 3383.000 2183.000 1470.000 -32.7%
Source: The Authority
The submitted charges are between -15% to -40% lower than the current approved 371.
charges for Zone 1 and for Zone 3 and between -12% and +33% for Zone 2.
IPLC BB cost on FOG and SFO Factor Factor for
WS activities Int'l Local
WS activity cost*
Total Local + Int'l
DS3 [] [] [] [] [] 4,998
STM1 [] [] [] [] [] 7,504
STM4 [] [] [] [] [] 16,232
Reference Offer Order
Annex– Order legal basis and reasoning
Page 131 of 167
Review of the submitted charges for IPLC services
Network costs (low-speed IPLC)
Batelco was requested in the letter of 16 June 2011 (ref: Ref. MCD/06/11/091) to provide a 372.
fully functioning spreadsheet model for IPLC low-speed circuits. Whilst Batelco supplied
on 28 July 2011 a spreadsheet model with working formulae, several cells remained hard
coded numbers with no explanation of the source or validity of these numbers. These hard
coded numbers are key for the review of the network costs of the ‘international leg’ of the
IPLC services as they represent the average rental and maintenance cost per E1 per zone
of the international leg. As a result, the Authority is not in a position to assess whether the
international leg network costs of the IPLC service are fair and reasonable. However, it
has used the submitted cost for the calculation of the FRND charges.
The network costs of the ‘national leg’ of the low-speed service are identical to the network 373.
cost of the legacy CAT/LLCO service. In deriving the FRND charges, the Authority has
therefore used the cost determined for the CAT/LLCO service.
The Authority approves the 2009 cost per copper pair of BD [] and the 2009 cost per 374.
CPE of BD []. They both reconcile back with the 2009 FAC regulatory accounts.
Network costs (high-speed IPLC)
Batelco states that the cost of the ‘national leg’ of the high-speed service is identical to the 375.
charge for the high-speed CAT/LLCO service from which the wholesale costs have been
deducted. The Authority agrees with Batelco and adds that the cost of one fibre access
should also be deducted from the ‘national leg’ cost as IPLC services are half circuits
which only require one local access.
As for the cost of the ‘international leg’, the Authority notes that Batelco uses gradients (or 376.
network weight factors) to allocate costs in such a way that the price per E1 decreases
when the capacity of the circuit increases. The Authority encourages such an approach as
it leads to a more optimal pricing of wholesale circuits. However, such an approach only
works if it is applied consistently, i.e. not only to allocate network costs but also to
calculate the total number of ‘weighted’ equivalent E1s and its unit cost. It is not clear to
the Authority whether Batelco has applied this approach in a consistent manner when
calculating the 2009 total capacity of the SFO and FOG cables in E1 equivalent ([]
E1s).
Wholesale activities costs
The wholesale activities costs allocated to IPLC services amount to BD [] in 2009. As 377.
the total quantity of ‘weighted’ circuits sums up to [] (see table below), this represents a
monthly unit cost of BD [] per ‘weighted’ circuit.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 132 of 167
Table 70: Total number of ‘weighted’ IPLC circuits in 2009 as submitted by Batelco
Speed NO. of circuits
Copper Pair/circuit
Fibre Pair/circuit
Total Copper
Total Fiber Virtual Weight
No of Virtual Circuits
64 kbit/s [] [] [] [] [] [] []
256 kbit/s [] [] [] [] [] [] []
2.048 Mbit/s [] [] [] [] [] [] []
DS3 [] [] [] [] [] [] []
STM1 [] [] [] [] [] [] []
STM4 [] [] [] [] [] [] []
[] [] []
[]
Source: Batelco’s submission
Risk mark-up (low speed IPLC)
In line with the 2011 RO Order (paragraph 387), the Authority has excluded the risk factor 378.
from the calculation.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 133 of 167
Draft Order fair, reasonable and non-discriminatory charges for IPLC services
The draft FRND charges for the IPLC services are presented in the following table: 379.
Table 71: Draft Order FRND charges for IPLC services
Chargeable activity
Approved/Ordered in January 2011
(or currently implemented)
TRA's Draft Order FRND charges
Evolution of Draft Order FRND as
compared to Approved/ Ordered
IPLC ( 2-10 )
IPLC - Zone 1 – Low speed IPLC in BD
64 kbit/s 137.000 77.944 -43.1%
128 kbit/s 167.000 100.276 -40.0%
256 kbit/s 227.000 144.939 -36.2%
512 kbit/s 348.000 234.264 -32.7%
768 kbit/s 468.000 323.590 -30.9%
1.024 Mbit/s 595.000 416.542 -30.0%
1,536 Mbit/s 835.000 595.193 -28.7%
2.048 Mbit/s 1076.000 773.845 -28.1%
IPLC - Zone 1 – High speed IPLC maximum price in BD * (price ceiling) – same restrictions still apply
DS3 6,800 * 3,241.769 * -52.2%
STM-1 11,495 * 5,719.290 * -49.9%
STM-4 26,779 * 14,221.281 * -46.3%
IPLC - Zone 2 in BD
64 kbit/s 165.000 126.406 -23.4%
128 kbit/s 223.000 197.199 -11.6%
256 kbit/s 339.000 338.785 -0.1%
512 kbit/s 571.000 621.958 8.9%
768 kbit/s 803.000 905.130 12.7%
1.024 Mbit/s 1041.000 1,191.928 14.5%
1,536 Mbit/s 1505.000 1,758.273 16.8%
2.048 Mbit/s 1969.000 2,324.618 18.1%
IPLC - Zone 3 in BD
64 kbit/s 172.000 94.069 -45.3%
128 kbit/s 236.000 132.525 -43.8%
256 kbit/s 366.000 209.437 -42.8%
512 kbit/s 625.000 363.262 -41.9%
768 kbit/s 883.000 517.086 -41.4%
1.024 Mbit/s 1148.000 674.537 -41.2%
1,536 Mbit/s 1666.000 982.186 -41.0%
2.048 Mbit/s 2183.000 1,289.835 -40.9%
Source: The Authority
Summary of responses received by the Authority
Batelco
Batelco submits that the Authority’s proposed prices are expected to have a significant 380.
impact on its business and more especially in respect to Zone 2 circuits. If the Authority is
minded to proceed with its initial findings, Batelco would like to withdraw IPLC charges for
Zone 2 and Zone 3 from the RO for the following reasons:
Reference Offer Order
Annex– Order legal basis and reasoning
Page 134 of 167
a. Batelco only controls the landing stations or international interconnections to the
SFO and FOG cables which only provide connectivity to Zone 1 destinations (i.e.
to GCC countries). Batelco contends that other cable landing stations are “open
access” and therefore any potential “bottleneck control” does not relate to Zone 2
or Zone 3 destinations.
b. Batelco submits that SFO and FLAG are “merely an input to achieving connectivity
to Zone 2 and Zone 3 by transiting Etisalat in the UAE or STC in the Kingdom of
Saudi Arabia to obtain access to the international cables which provide Zone 2
and Zone 3 destinations. Batelco like any other Licensed operator has to seek
prices and quotations from Etisalat and STC (as well as the cable provider in
some cases) and in such circumstances Batelco does not have any additional
market advantage compared with the other operators.” (Batelco’s submission,
paragraph 108).
c. Batelco submits that it has only a very limited number of circuits at the wholesale
level to Zone 2 or Zone 3 destinations.
In the remaining part of its submission on IPLC, Batelco provides several arguments as to 381.
why the Authority should defer any IPLC charges reduction to after the completion of the
competition review of international markets. Batelco also submits that this comprehensive
review is overdue and considers that it is no longer dominant in the wholesale market for
access to international facilities. Batelco further submits that it considers this market to be
“competitive or prospectively competitive”.
Lightspeed
Lightspeed considers that the IPLC charges are still very expensive when compared to 382.
international and regional benchmarks.
Zain
Zain welcomes any decrease in IPLC charges as Zain considers that they are the most 383.
expensive of all the wholesale services.
The Authority’s analysis and conclusion
Dominance of Batelco in international markets
In line with the Telecommunications Law, the removal of the regulation of IPLC services 384.
and any other regulatory remedies imposed on the basis of a finding of SMP (‘Significant
Market Power’) or dominance can only take place once the relevant market has been
reviewed and no SMP or dominance has been found. Pending such a review, regulatory
obligations, including the regulation of IPLC services, stand. The Authority’s position is
consistent with the Telecommunications Law and has been previously explained to
Batelco. Batelco’s arguments regarding “unexpected announcement”, “unexpected
intervention”, “regulatory flip-flop”, and “regulatory inconsistency” to name a few are in that
context not grounded.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 135 of 167
The Authority is currently reviewing the state of competition in international markets and 385.
expects to release a draft for consultation shortly.
In passing Authority also notes a certain degree of contradiction in Batelco’s response. 386.
Batelco submits that the wholesale market for access to international facilities is now
competitive (or becoming competitive). However, at the same time, Batelco deploys a
great amount of arguments against the potential reduction of IPLC charges. If the market
was effectively competitive, prices would be at the competitive level, i.e. in line with
underlying cost, which is precisely what the Authority is seeking to achieve in accordance
with the Telecommunications Law.63
The Authority considers that it remains appropriate to order the IPLC charges reduction. 387.
SDH network cost applicable to high-speed IPLC Zone 1
For consistency purposes, the Authority has decided to apply the network cost of high-388.
speed CAT/LLCO services to the high-speed IPLC applicable to Zone 1 based on a 2-year
glide path (see page 123). Before applying the network cost of high-speed CAT/LLCO
services (i.e. the ‘national leg’ of the IPLC service), the Authority has corrected it to take
into account that the high-speed IPLC services are half circuits and as such require only
one fibre access and one CPE.
Final Order FRND charges for IPLC services
The Authority has not modified the draft ordered charges for low-speed IPLC circuits. The 389.
cost stack of high-speed IPLC services for Zone 1 which reflects the SDH network cost is
reproduced below.
Table 72: Cost stack of high-speed IPLC services for Zone 1
High-speed IPLC services cost on FOG and SFO
Gradients for
international network
cost
Gradients for
wholesale activities
costs
Network cost of
'International leg'
'Network cost of
'national leg'
Wholesale activities
costs
Total price ceiling
applicable to the charge
DS3 (44.736 Mbit/s) [] [] [] [] [] 2,204.551
STM-1 (155.52 Mbit/s) [] [] [] [] [] 4,272.430
STM-4 (622.08 Mbit/s) [] [] [] [] [] 10,921.226
Source: The Authority from Batelco’s submission
The Authority orders Batelco the following FRND charges for the IPLC services. 390.
63 The Authority also notes that rates are based on 2009 costs and they concern a service whose prices are known
to decrease year-on-year.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 136 of 167
Table 73: Order FRND charges for IPLC services
Chargeable activity
Approved/Ordered in
January 2011 (or currently
implemented)
Batelco's submitted charges in April 2011
TRA FRND draft charges
TRA FRND final Order
charges
Evolution of final charges as compared to previously approved/ordered charges
IPLC ( 2-10 )
IPLC - Zone 1 – Low speed IPLC in BD
64 kbit/s 137.000 89.000 77.944 77.944 -43.1%
128 kbit/s 167.000 114.000 100.276 100.276 -40.0%
256 kbit/s 227.000 165.000 144.939 144.939 -36.2%
512 kbit/s 348.000 267.000 234.264 234.264 -32.7%
768 kbit/s 468.000 396.000 323.59 323.59 -30.9%
1.024 Mbit/s 595.000 475.000 416.542 416.542 -30.0%
1,536 Mbit/s 835.000 679.000 595.193 595.193 -28.7%
2.048 Mbit/s 1076.000 882.000 773.845 773.845 -28.1%
IPLC - Zone 1 – High speed IPLC maximum price in BD * (price ceiling) – same restrictions still apply
DS3 6,800.000 * 4,998.000 * 3,241.769 * 2,204.551 * -67.6%
STM-1 11,495.000 * 7,504.000 * 5,719.290 * 4,272.430 * -62.8%
STM-4 26,779.000 * 16,232.000 * 14,221.281 * 10,921.226 * -59.2%
IPLC - Zone 2 in BD
64 kbit/s 165.000 144.000 126.406 126.406 -23.4%
128 kbit/s 223.000 225.000 197.199 197.199 -11.6%
256 kbit/s 339.000 386.000 338.785 338.785 -0.1%
512 kbit/s 571.000 709.000 621.958 621.958 8.9%
768 kbit/s 803.000 1032.000 905.130 905.130 12.7%
1.024 Mbit/s 1041.000 1359.000 1,191.928 1,191.928 14.5%
1,536 Mbit/s 1505.000 2004.000 1,758.273 1,758.273 16.8%
2.048 Mbit/s 1969.000 2650.000 2,324.618 2,324.618 18.1%
IPLC - Zone 3 in BD
64 kbit/s 172.000 107.000 94.069 94.069 -45.3%
128 kbit/s 236.000 151.000 132.525 132.525 -43.8%
256 kbit/s 366.000 239.000 209.437 209.437 -42.8%
512 kbit/s 625.000 414.000 363.262 363.262 -41.9%
768 kbit/s 883.000 586.000 517.086 517.086 -41.4%
1.024 Mbit/s 1148.000 769.000 674.537 674.537 -41.2%
1,536 Mbit/s 1666.000 1120.000 982.186 982.186 -41.0%
2.048 Mbit/s 2183.000 1470.000 1,289.835 1,289.835 -40.9%
Source: The Authority from Batelco’s submission
Reference Offer Order
Annex– Order legal basis and reasoning
Page 137 of 167
12 Wholesale DSL service (2-11) and Bitstream service (2-12)
Draft Order Text
12.1 Wholesale DSL service (2-11)
Wholesale DSL service (‘WDSL’) definition
In its RO, Batelco defines the Wholesale DSL service (‘WDSL’) as follows: 391.
“The Wholesale DSL service is a service which enables the
Access Seeker to resell to End Users the Access Provider’s high
speed internet access services set out in Annex 2 to this Service
Description. Under the Wholesale DSL service the internet access,
network infrastructure platform, billing information, service
provisioning and support are provided to the Access Seeker by
Batelco and the Access Seeker markets and bills the Wholesale
DSL services to the end user.
Available To: ISP class licensees.
Traffic: Permitted internet access traffic only, for the avoidance of
doubt not including basic voice services.
Reciprocal Service: Not required.” 64
Information provided by Batelco
Batelco provided the following cost stacks to support the charges in Schedule 3 of its RO 392.
submission.
64 Batelco’s RO, Schedule 1 2-11 (WHOLESALE DSL SERVICE)
Reference Offer Order
Annex– Order legal basis and reasoning
Page 138 of 167
Table 74: Cost stack submitted by Batelco for the residential WDSL service
Costing Elements - Per Package
Residential
16mb 16 mb
10mb 10mb 8mb 8mb 4mb 2mb 2mb 1mb 1mb 1mb 640k 640k 512K 256k
Usage 80 100 50 80 40 60 25 20 15 15 8 4 5 2 8 2
Capacity 16 16 10 10 8 8 4 2 2 1 1 1 0.625 0.625 0.5 0.25
Network Costs
MSAN [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
Transmission (MPLS) [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
BRAS [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
INET Platform [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
International uplinks [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
CPE- Biz
Copper contribution [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
Totals [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
Wholesale Costs
OR05a Residential & Inet Helpdesk - Residential (881188) Oth
[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
OR05b Residential & Inet Helpdesk - Business (881177) Others
OR27 Billing (Others) [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
OR28 Operations & Helpdesk - Bill printing & dispatch (other
[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
OR29 Customer Services - (Other) [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
OR72 Revenue Assurance & Fraud Management- (other)
[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
WS04 Commercial Lawyer - Access Support
[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
WS05 Fixed Billing - IAA Access [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
Totals [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
Total Package cost 50.22 59.52 33.27 47.23 27.62 36.92 18.64 15.32 12.99 12.49 9.23 7.37 7.65 6.26 8.98 6.07
Source: Batelco’s RO submission
Reference Offer Order
Annex– Order legal basis and reasoning
Page 139 of 167
Table 75: Cost stack submitted by Batelco for the business WDSL service
Costing Elements - Per Package
Business
16M 10M 8M 6M 4M 2M Flat
1M Flat
512 flat MB
256 flat MB
2mb 1mb 512k Edu 256k
256k-single
Usage 350 250 200 160 130 48 [] [] [] 20 15 10 5 2.5
Capacity 16 10 8 6 4 2 1 0.5 0.25 2 1 0.5 0.25 0.25
Network Costs
MSAN [] [] [] [] [] [] [] [] [] [] [] [] [] []
Transmission (MPLS) [] [] [] [] [] [] [] [] [] [] [] [] [] []
BRAS [] [] [] [] [] [] [] [] [] [] [] [] [] []
INET Platform [] [] [] [] [] [] [] [] [] [] [] [] [] []
International uplinks [] [] [] [] [] [] [] [] [] [] [] [] [] []
CPE- Biz [] [] [] [] [] [] [] [] [] [] [] [] [] no CPE
Copper contribution [] [] [] [] [] [] [] [] [] [] [] [] [] []
Totals [] [] [] [] [] [] [] [] [] [] [] [] [] []
Wholesale Costs
OR05a Residential & Inet Helpdesk - Residential (881188) Oth
OR05b Residential & Inet Helpdesk - Business (881177) Others
[] [] [] [] [] [] [] [] [] [] [] [] [] []
OR27 Billing (Others) [] [] [] [] [] [] [] [] [] [] [] [] [] []
OR28 Operations & Helpdesk - Bill printing & dispatch (other
[] [] [] [] [] [] [] [] [] [] [] [] [] []
OR29 Customer Services - (Other) [] [] [] [] [] [] [] [] [] [] [] [] [] []
OR72 Revenue Assurance & Fraud Management- (other)
[] [] [] [] [] [] [] [] [] [] [] [] [] []
WS04 Commercial Lawyer - Access Support
[] [] [] [] [] [] [] [] [] [] [] [] [] []
WS05 Fixed Billing - IAA Access [] [] [] [] [] [] [] [] [] [] [] [] [] []
Totals [] [] [] [] [] [] [] [] [] [] [] [] [] []
Total Package cost 193.55 141.40 116.27 95.79 79.96 39.79 23.69 21.02 17.62 26.90 23.64 20.84 18.28 5.53
Source: Batelco’s RO submission
Reference Offer Order
Annex– Order legal basis and reasoning
Page 140 of 167
The proposed charges with prior year comparators are summarized in the following table. 393.
Table 76: Current and proposed WDSL charges
Chargeable activity Approved/Orde
red in 2009
Approved/Ordered in January
2011 (or currently
implemented)
Batelco's
submitted
charges in April
2011
Evolution of
submitted as
compared to
Approved/
Ordered
Wholesale DSL (2-11)
Wholesale DSL- Residential in BD in BD
Contention Ratio of 15:1
256 kbit/s (2 GB) 7.000 6.210 6.070 -2.3%
512 kbit/s (8 GB) 14.084 10.310 8.980 -12.9%
640 kbit/s (2 GB) 6.450 6.260 -2.9%
640 kbit/s (5 GB) 11.634 8.420 7.650 -9.1%
1.024 Mbit/s (4 GB) 8.010 7.370 -8.0%
1.024 Mbit/s (8 GB) 10.630 9.230 -13.2%
1.024 Mbit/s (15 GB) 20.405 15.230 12.490 -18.0%
2.048 Mbit/s (15 GB) 15.880 12.990 -18.2%
2.048 Mbit/s (20 GB) 25.410 19.160 15.230 -20.5%
3.072 Mbit/s (8 GB) 10.410
4.096 Mbit/s (25 GB) 31.180 23.740 18.640 -21.5%
6.144 Mbit/s (15 GB) 15.630
8.192 Mbit/s (25 GB) 21.590
8.192 Mbit/s (40 GB) 46.960 36.200 27.620 -23.7%
8.192 Mbit/s (60 GB) 49.310 36.920 -25.1%
8.192 Mbit/s (90 GB) 51.840
10.240 Mbit/s (50 GB) 56.971 44.060 33.270 -24.5%
10.240 Mbit/s (80 GB) 63.740 47.230 -25.9%
10.240 Mbit/s (120 GB) 67.100
16.384 Mbit/s (80 GB) 86.970 67.660 50.220 -25.8%
16.384 Mbit/s (100 GB) 80.780 59.520 -26.3%
16.384 Mbit/s (150 GB) 84.980
Wholesale DSL- Business Threshold - Cost with CPE in BD in BD
Contention ratio of 8:1
256 kbit/s without CPE (2.5 GB) 9.230 6.540 5.530 -15.4%
256 kbit/s (5 GB) 19.240 12.320 18.280 +48.4%
512 kbit/s (10 GB) 23.840 15.900 20.840 +31.1%
1.024 Mbit/s (15 GB) 28.800 19.800 23.640 +19.4%
2.048 Mbit/s (20 GB) 34.480 24.300 26.900 +10.7%
4.096 Mbit/s (130 GB) 130.660 removed 79.960
6.144 Mbit/s (160 GB) 158.980 removed 95.790
Reference Offer Order
Annex– Order legal basis and reasoning
Page 141 of 167
8.192 Mbit/s (200 GB) 195.780 removed 116.270
10.240 Mbit/s (250 GB) 241.060 removed 141.400
16.384 Mbit/s (350 GB) 334.460 removed 193.550
Wholesale DSL- Business Flat rate - Cost with CPE in BD in BD
Contention ratio of 8:1
256kbit/s (Flat) 14.230 12.560 17.620 +40.3%
512 kbit/s without CPE (Flat) 14.660
512 kbit/s (Flat) 29.270 18.650 21.020 +12.7%
1.024 Mbit/s (Flat) 41.100 23.920 23.690 -1.0%
2.048 Mbit/s (Flat) 74.770 48.410 39.790 -17.8%
4.096 Mbit/s (Flat) 97.390
6.144 Mbit/s (Flat) 118.450
8.192 Mbit/s (Flat) 139.510
10.240 Mbit/s (Flat) 155.920
16.384 Mbit/s (Flat) 191.190
Over the threshold charge per incremental GB (Usage tariffs DSL.8)
0.848 0.465 0.465 +0.0%
Notes: The packages and charges written in blue colour were introduced after the RO Order of 25 January 2011 (‘2011 RO Order’).
It would appear that the WDSL-Residential 2.048 Mbit/s (15 GB) was mistakenly priced at BD15.230 by Batelco in its Schedule 3 instead of the BD 15.880 of the 2011 RO Order.
Source: The Authority from Batelco’s submission
Review of the submitted charges for the WDSL service
New wholesale packages since the publication of the 2011 RO on 25 January 2011
As Batelco proposed the launch of new retail DSL packages in the first semester of 2011, 394.
it also proposed equivalent wholesale packages in its RO:
a. several new business wholesale DSL packages with unlimited usage were added
to the RO in relation to the introduction of flat plans for retail business users;
b. several new residential wholesale DSL and residential Bitstream packages were
added to the RO in relation to the ‘Value Packages’ launched by Batelco.
Data usage units, data transfer units and appropriate conversion
The Authority notes Batelco’s incorrect use of data transfer units. To avoid confusion, the 395.
unit convention of the International System of Units (‘SI’) should be respected. Batelco is
therefore required to align its RO to the following name and conversion conventions:
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Table 77: Data usage units and conversion in bits
SI unit name SI
symbol conversion in bits Comments (IEC 60027 standard)
Kilobit
kbit
(NB: k
lower
case)
1,000 = 103
Not to be confused with kibibit (symbol: Kibit)
which is equal to 1,024 bits
(NB: K uppercase)
Megabit Mbit 1,000,000 = 106
Not to be confused with mebibit (symbol: Mibit)
which is equal to 1,048,576 bits
Gigabit Gbit 1,000,000,000 = 109 Not to be confused with gibibit (symbol: Gibit)
which is equal to 1,073,741,824 bits
Kilobyte
kb
(NB: k
lower
case)
8,000 = 8 × 103
Not to be confused with kibibyte (symbol: KiB)
which is equal to 8,192 bits
(NB: K uppercase)
Megabyte MB 8,000,000 = 8 × 106
Not to be confused with mebibyte per second
(symbol: MiB) which is equal to 8,388,608 bits
Gigabyte GB 8,000,000,000 = 8 × 109
Not to be confused with gibibyte per second
(symbol: GiB) which is equal to 8,589,934,592 bits
Source: International System of Units, IEC 60027
Table 78: Data transfer units and conversion in bits per second
SI unit name SI
symbol
conversion bits per
second Comments (IEC 60027 standard)
kilobit per second
kbit/s
(NB: k
lower
case)
1,000 = 103
Not to be confused with kibibit per second (symbol:
Kibit/s) which is equal to 1,024 bits per second
(NB: K uppercase)
megabit per second Mbit/s 1,000,000 = 106
Not to be confused with mebibit per second
(symbol: Mibit/s) which is equal to 1,048,576 bits
per second
gigabit per second Gbit/s 1,000,000,000 = 109
Not to be confused with gibibit per second (symbol:
Gibit/s) which is equal to 1,073,741,824 bits per
second
kilobyte per second
kB/s
(NB: k
lower
case)
8,000 = 8 × 103
Not to be confused with kibibyte per second
(symbol: KiB/s) which is equal to 8,192 bits per
second (NB: K uppercase)
megabyte per second MB/s 8,000,000 = 8 × 106
Not to be confused with mebibyte per second
(symbol: MiB/s) which is equal to 8,388,608 bits
per second
gigabyte per second GB/s 8,000,000,000 = 8 × 109
Not to be confused with gibibyte per second
(symbol: GiB/s) which is equal to 8,589,934,592
bits per second
Source: International System of Units, IEC 60027
The Authority further requires Batelco to be more specific in its use of the units in its 396.
submissions. This includes the following examples:
a. An E1 link has a data transfer speed of 2.048 Mbit/s and not of ‘2mb’, ‘2M’ or
‘2MB’;
b. The data transfer speed of WDSL and Bitstream packages should be noted
16.384 Mbit/s, 10.240 Mbit/s, 8.192 Mbit/s, 6.144 Mbit/s, 4.096 Mbit/s, 2.048
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Mbit/s and 1.024 Mbit/s instead of respectively‘16 MB’, 10 MB, ‘8 MB’, ‘6 MB’, ‘4
MB’, ‘2MB’ and ‘1 MB’.
Adherence to these naming and conversion conventions would limit the risk of calculation 397.
errors.
Access Port (MSAN Combo Cost)
In 2009, the monthly cost per access port is equal to BD [] which is derived by dividing 398.
the total FAC cost of MSAN combo data cards (AN17 [MSAN Combo Card - DATA]) of BD
[] by the number of retail and wholesale lines at the end of 2009 ([] customers). The
Authority also notes that legacy DSLAMs (AN04 [Broadband access equipment -
DSLAMs]) are no longer used in 2009; they have been decommissioned.
Table 79: Access port cost for WDSL and Bitstream
Port cost
2009 2008
Total Monthly
unit cost
Implied #
of port Total
Monthly
unit cost
Implied #
of port
AN17 MSAN Combo Card - DATA
(Bitstream, WSDSL and BB ) [] [] [] [] [] []
AN04 [Broadband access equipment -
DSLAMs] - - - [] [] []
Total [] [] [] [] [] []
* Due to the uncertainty regarding the forward-looking level of the unit port cost, the Authority had set it to BD [] per month in the 2011 RO Order (paragraphs 405-409 and 448-449)
Source: The Authority based on Batelco's FAC regulatory accounts and RO submissions
Core transmission
As per the 2011 RO Order (paragraphs 410-413), Batelco allocates the cost of MPLS 399.
transmission to broadband packages based on the number of equivalent subscribers in
each package (equivalent packages with an uncontended speed of 1,024 kbit/s). As seen
in the following table, the unit cost of core MPLS transmission has decreased by []%
between 2008 and 2009.
Table 80: Access port cost for WDSL and Bitstream
2009
2008 as per 25
January RO
Order
Evolution
2009/2008
Transmission costs BB & WSDSL& Bitstream [] [] []
Total number of channels [] [] []
Total Equivalent Customers [] [] []
Cost per 1Mb @ 1:1 [] [] []
Monthly Cost uncontended 1 Mbps [] [] []
Res - Monthly cost for 1 Mbps contended [] [] []
Bus - Monthly cost for 1 Mbps contended [] [] []
Source: The Authority based on Batelco's RO submissions
While the Authority approves the equivalent subscriber approach to allocate core MPLS 400.
costs to broadband, WDSL and Bitstream packages, it is not in a position to assess
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whether the upstream allocation of core MPLS based on effective bandwidth calculation is
fair and reasonable. The Authority intends as part of the next RO to review the effective
bandwidth calculation approach to ensure an appropriate NGN core network cost
allocation.65
MPLS BRAS, INET Platform and International Uplinks
The MPLS BRAS cost of BD []/port/month proposed by Batelco reconciles back to the 401.
regulatory accounts and is accepted by the Authority.
As the 2009 cost of the INET Platform and international uplinks per GB had already been 402.
reviewed by the Authority and introduced in the RO following Batelco’s launch of new
business packages with unlimited usage,66
the cost remains unchanged at BD 0.465 per
GB.
Cost of CPE included in business packages
The Authority notes that Batelco submitted a monthly business CPE cost of BD 11.59 403.
which is derived from the network element “AN 09 CPE –Data Equipment” included in the
2009 regulatory accounts. The Authority refers here to its decision in the 2011 RO Order
(paragraph 451) where it set the monthly cost of CPE at BD 4.
The Authority remains of the view that the cost adjustment is conservative especially in 404.
light of Batelco’s response67
to the article 53 information request dated 16 June 2011
where it provided a list of CPEs included in AN09, their current prices and their average
economic lives.
Copper contribution
In the 2011 RO Order, the Authority set the copper contribution for broadband access 405.
services at 50% of the LLU copper cost. This represents a monthly cost of BD 2.04 per
broadband line. While the Authority’s decision stated that the contribution would remain
50% of the LLU copper cost for the next three years,68
Batelco has included a different
copper contribution in the cost stacks of wholesale DSL packages (BD 2 for residential
packages and BD 1.5 for business packages).
The Authority reasserts its decision that the copper contribution should be equal to 50% of 406.
the LLU copper cost which currently translates to BD 2.04 per broadband line.
Wholesale activities cost
The Authority notes that Batelco intends to recover a total of BD [] for the cost of 407.
wholesale activities which, according to Batelco, was incurred in the provision of WDSL in
2009. This amount translates into a monthly cost of BD [] per residential WDSL
65 The Authority refers here to the Effective Bandwidth calculation section in the Annex of its letter dated 2 August
2011 (Ref: MCD08/11/113 – 2010 APM questions) for example. 66
The Authority refers to its letter “NCT 25 Business broadband Retail Tariff Notification” (ref: MCD 06/11/076), dated 2 June 2011. 67
20110808 Updated response to Article 53 related to Batelco 2011 RO submission - final.docx 68
2011 RO Order, paragraphs 452-467.
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subscriber and BD [] per business WDSL subscriber. The following table presents the
breakdown of cost by wholesale activity:
Table 81: Wholesale activities cost related to WDSL as submitted by Batelco
Wholesale Costs Amount in 2009
(in BD)
OR05a Residential & Inet Helpdesk - Residential (881188) Oth []
OR05b Residential & Inet Helpdesk - Business (881177) Others []
OR27 Billing (Others) []
OR28 Operations & Helpdesk - Bill printing & dispatch (other []
OR29 Customer Services - (Other) []
OR72 Revenue Assurance & Fraud Management- (other) []
WS04 Commercial Lawyer - Access Support []
WS05 Fixed Billing - IAA Access []
Total []
Source: Batelco’s submission
The Authority notes that Batelco has removed WS01, WS02, WS03 and OR06 costs from 408.
the WDSL cost stack following the RO Order dated 24 May 2009. It appears that Batelco
has re-allocated the portion of WS01, WS02 and WS03 costs previously allocated to
WDSL to other access products.
The Authority observes that the unit cost of two non-network activities which Batelco 409.
claims to be common to both retail and wholesale appear to be greater for wholesale than
for retail DSL lines. The combined monthly unit cost of ‘OR28 Operations & Helpdesk - Bill
printing & dispatch (other)’ and ‘OR29 Customer Services - (Other)’ is indeed BD []
greater for WDSL lines than it is for retail broadband lines.69
As the cost allocation driver of
these non-network activities is, according to Batelco, the quantity of customers, the
Authority fails to understand the source of this difference. While the difference is not
significant when the overall cost of WDSL is considered, the Authority requires Batelco to
explain this point.
The Authority notes that the following one-off charges related to provision of the WDSL 410.
service are not taken into account when calculating wholesale activities cost:
a. DSL.4 - Charges for rejects, reversals, and withdrawals associated with DSL
Transfer, Invalid Transfer: BD 5 per event; and
b. DSL.5 - Fee for a change of speed associated with DSL Transfer if applicable: BD
5 per event.
As for any other wholesale services (see duct access section), one-off charges represent 411.
a revenue which should be subtracted from the cost stack of the service to avoid over-
recovery of cost. As the Authority does not have any information on the 2009 revenues
collected from the above charges, it has decided not to make any such adjustments this
time.
While the Authority has concerns over the wholesale activities costs related to WSDL (e.g. 412.
their amount and how they have been derived), it has decided to accept the wholesale
cost as submitted by Batelco for the purpose of the review of the RO. However the
69 Cost comparison with Batelco’s NCT 25 submission dated 25 April 2009 (GCL/147/11 - NCT 25 - Business
Broadband).
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Authority intends to revisit this particular aspect in detail as part of the next RO (see
paragraphs 74-77 above).
Draft Order fair, reasonable and non-discriminatory charges for WDSL service
The reviewed cost stacks and associated draft Order FRND charges for the WDSL service 413.
are presented in the following tables:
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Table 82: Draft Order FRND cost stack for the residential WDSL service
Costing Elements - Per line Residential
Speed (contention ratio of 15:1) 16.384 Mbit/s
16.384 Mbit/s
16.384 Mbit/s
10.240 Mbit/s
10.240 Mbit/s
10.240 Mbit/s
8.192 Mbit/s
8.192 Mbit/s
8.192 Mbit/s
8.192 Mbit/s
6.144 Mbit/s
4.096 Mbit/s
3.072 Mbit/s
2.048 Mbit/s
2.048 Mbit/s
1.024 Mbit/s
1.024 Mbit/s
1.024 Mbit/s
640 kbit/s
640 kbit/s
512 kbit/s
256 kbit/s
Included usage in GB 150 GB 100 GB 80 GB 120 GB 80 GB 50 GB 90 GB 60 GB 40 GB 25 GB 15 GB 25 GB 8 GB 20 GB 15 GB 15 GB 8 GB 4 GB 5 GB 2 GB 8 GB 2 GB
Network Costs
MSAN [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
Transmission (MPLS) [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
BRAS [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
INET Platform [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
International uplinks [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
Copper contribution 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04
Totals [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
Wholesale Costs
OR05a Res. & Inet Helpdesk – Residential.(881188) Other
[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
OR27 Billing (Others) [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
OR28 Op. & Helpdesk - Bill print & dispatch (other
[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
OR29 Customer Services - (Other)
[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
OR72 Revenue Ass. & Fraud Management- (other)
[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
WS04 Legal & Regulatory Affairs - Access Support
[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
WS05 Fixed Billing - IAA Access [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
Totals [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
Total Package cost 82.829 59.563 50.256 65.877 47.264 33.304 50.920 36.960 27.654 20.674 15.023 18.679 10.270 15.355 13.029 12.530 9.273 7.411 7.690 6.294 9.023 6.107
Source: The Authority
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Table 83: Draft Order FRND cost stack for the business WDSL service
Costing Elements - Per line Business
Speed (contention ratio of 8:1) 16.384 Mbit/s
10.240 Mbit/s
8.192 Mbit/s
6.144 Mbit/s
4.096 Mbit/s
2.048 Mbit/s
1.024 Mbit/s
512 kbit/s
512 kbit/s without
CPE
256kbit/s
2.048 Mbit/s
1.024 Mbit/s
512 kbit/s
256 kbit/s
256 kbit/s without
CPE
Included usage in GB FLAT FLAT FLAT FLAT FLAT FLAT FLAT FLAT FLAT FLAT 20 GB 15 GB 10 GB 5 GB 2.5 GB
Usage for calculation in GB [] [] [] [] [] [] [] [] [] []
Network Costs
MSAN [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
Transmission (MPLS) [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
BRAS [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
INET Platform [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
International uplinks [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
CPE- Biz [] [] [] [] [] [] [] [] no CPE [] [] [] [] [] no CPE
Copper contribution 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04
Totals [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
Wholesale Costs
OR05b Res. & Inet Helpdesk - Business (881177) Other
[] [] [] [] [] [] [] [] [] [] [] [] [] [] []
OR27 Billing (Others) [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
OR28 Op. & Helpdesk - Bill print & dispatch (other
[] [] [] [] [] [] [] [] [] [] [] [] [] [] []
OR29 Customer Services - (Other) [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
OR72 Revenue Assurance & Fraud Management- (other)
[] [] [] [] [] [] [] [] [] [] [] [] [] [] []
WS04 Legal & Regulatory Affairs - Access Support
[] [] [] [] [] [] [] [] [] [] [] [] [] [] []
WS05 Fixed Billing - IAA Access [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
Totals [] [] [] [] [] [] [] [] [] [] [] [] [] [] []
Total Package cost 186.491 152.962 137.132 116.649 96.166 47.764 23.563 18.442 14.442 13.555 19.845 16.583 13.789 11.229 6.065
Source: The Authority
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Table 84: Draft Order FRND charges for WDSL service
Chargeable activity
Approved/O
rdered in
January
2011
(or currently
implemente
d)
TRA's Draft
Order FRND
charges
Evolution of
Draft Order
FRND as
compared to
Approved/
Ordered
Wholesale DSL (2-11)
Wholesale DSL- Residential in BD
Contention Ratio of 15:1
256 kbit/s (2 GB) 6.210 6.107 -1.7%
512 kbit/s (8 GB) 10.310 9.023 -12.5%
640 kbit/s (2 GB) 6.450 6.294 -2.4%
640 kbit/s (5 GB) 8.420 7.690 -8.7%
1.024 Mbit/s (4 GB) 8.010 7.411 -7.5%
1.024 Mbit/s (8 GB) 10.630 9.273 -12.8%
1.024 Mbit/s (15 GB) 15.230 12.530 -17.7%
2.048 Mbit/s (15 GB) 15.880 13.029 -18.0%
2.048 Mbit/s (20 GB) 19.160 15.355 -19.9%
3.072 Mbit/s (8 GB) 10.410 10.270 -1.3%
4.096 Mbit/s (25 GB) 23.740 18.679 -21.3%
6.144 Mbit/s (15 GB) 15.630 15.023 -3.9%
8.192 Mbit/s (25 GB) 21.590 20.674 -4.2%
8.192 Mbit/s (40 GB) 36.200 27.654 -23.6%
8.192 Mbit/s (60 GB) 49.310 36.960 -25.0%
8.192 Mbit/s (90 GB) 51.840 50.920 -1.8%
10.240 Mbit/s (50 GB) 44.060 33.304 -24.4%
10.240 Mbit/s (80 GB) 63.740 47.264 -25.8%
10.240 Mbit/s (120 GB) 67.100 65.877 -1.8%
16.384 Mbit/s (80 GB) 67.660 50.256 -25.7%
16.384 Mbit/s (100 GB) 80.780 59.563 -26.3%
16.384 Mbit/s (150 GB) 84.980 82.829 -2.5%
Wholesale DSL- Business Threshold - Cost with CPE in BD
Contention ratio of 8:1
256 kbit/s without CPE (2.5 GB) 6.540 6.065 -7.3%
256 kbit/s (5 GB) 12.320 11.229 -8.9%
512 kbit/s (10 GB) 15.900 13.789 -13.3%
1.024 Mbit/s (15 GB) 19.800 16.583 -16.2%
2.048 Mbit/s (20 GB) 24.300 19.845 -18.3%
4.096 Mbit/s (130 GB) removed removed -
6.144 Mbit/s (160 GB) removed removed -
8.192 Mbit/s (200 GB) removed removed -
10.240 Mbit/s (250 GB) removed removed -
16.384 Mbit/s (350 GB) removed removed -
Wholesale DSL- Business Flat rate - Cost with CPE in BD
Contention ratio of 8:1
256kbit/s (Flat) 12.560 13.555 7.9%
512 kbit/s without CPE (Flat) 14.660 14.442 -1.5%
512 kbit/s (Flat) 18.650 18.442 -1.1%
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1.024 Mbit/s (Flat) 23.920 23.563 -1.5%
2.048 Mbit/s (Flat) 48.410 47.764 -1.3%
4.096 Mbit/s (Flat) 97.390 96.166 -1.3%
6.144 Mbit/s (Flat) 118.450 116.649 -1.5%
8.192 Mbit/s (Flat) 139.510 137.132 -1.7%
10.240 Mbit/s (Flat) 155.920 152.962 -1.9%
16.384 Mbit/s (Flat) 191.190 186.491 -2.5%
Over the threshold charge per incremental GB (Usage tariffs
DSL.8) 0.465 0.465 0.0%
Notes: The packages and charges written in blue colour were introduced after the 2011 RO Order. It would appear that the WDSL-Residential 2.048 Mbit/s (15 GB) was mistakenly priced at BD15.230 by Batelco in its
Schedule 3 instead of the BD 15.880 of the 2011 RO Order. Source: The Authority
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12.2 Bitstream service (2-12)
Bitstream service definition
In its RO, Batelco defines the Bitstream service as follows: 414.
“The Bitstream Service is an access service which enables the
Access Seeker to provide high speed services to its End Users via
a digital pathway across the Access Provider’s network. The digital
pathway consists of one or more ADSL Links between End User
premises and one or more Aggregation Links.
Available To: Holders of an appropriate Individual
Telecommunications or Class License.
Traffic: Traffic permitted by the licenses held by Access Seekers.
Reciprocal Service: Not required.” 70
Table 85: Diagram of Bitstream service
Source: Batelco’s submission, 20110407 Annex K Bitstream 2009.xlsx
Information provided by Batelco
Batelco provided the following cost stacks to support the Bitstream charges in Schedule 3 415.
of its RO submission.
70 Batelco’s RO, Schedule 1 2-12 (BITSTREAM SERVICE)
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Table 86: Cost stack submitted by Batelco for the residential Bitstream service
Network Cost Res -
16MB
Res -
10MB
Res -
8MB
Res -
4MB
Res -
2MB
Res -
1MB
Res -
640
Res -
512
Res -
256
Copper contribution [] [] [] [] [] [] [] [] []
Access Port (MSAN Combo
Cost) [] [] [] [] [] [] [] [] []
Core Trans [] [] [] [] [] [] [] [] []
IP Link (Router) [] [] [] [] [] [] [] [] []
Fibre Cable [] [] [] [] [] [] [] [] []
Total Network Cost 10.92 7.93 6.93 4.94 3.94 3.44 3.25 3.19 3.07
Source: Batelco’s RO submission
Table 87: Cost stack submitted by Batelco for the business Bitstream service
Network Cost Bus -
16MB V
Bus -
10MB V
Bus -
8MB V
Bus -
6MB V
Bus -
4MB V
Bus -
2MB V
Bus -
1MB V
Bus -
640 V
Bus -
512 V
Bus -
256 V
Copper contribution [] [] [] [] [] [] [] [] [] []
Access Port (MSAN
Combo Cost) [] [] [] [] [] [] [] [] [] []
Core Trans [] [] [] [] [] [] [] [] [] []
IP Link (Router) [] [] [] [] [] [] [] [] [] []
Fibre Cable [] [] [] [] [] [] [] [] [] []
Total Network Cost 17.40 11.79 9.92 8.05 6.18 4.31 3.38 3.03 2.91 2.68
Source: Batelco’s RO submission
Table 88: Cost stack submitted by Batelco for the ‘maintaining the relationship’ charge (item BS.3 of Batelco’s
schedule 3)
WS Activities Total cost
OR05b Residential & Inet Helpdesk - Business (881177) Others []
OR05c Residential & Inet Helpdesk - Technical Support(900001 []
WS01 Wholesale & Carrier Relations - Access Product Management []
WS02 Commercial Operation- Access []
WS03 Costing & Regulatory Accounting - Reg & WS Support Access []
WS04 Commercial Lawyer - Access Support []
WS05 Fixed Billing - IAA Access []
Total Cost []
Number of Bitstream OLOs []
maintain relationship fee per month 4,029
Source: Batelco’s RO submission
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The proposed charges with prior year comparators are summarized in the following table. 416.
Table 89: Approved and proposed Bitstream charges
Chargeable activity Approved in
2009
Approved/Ordered in
January 2011
(or currently implemented
)
Batelco submitted charges in April 2011
Evolution of submitted as compared to Approved/ Ordered
Bitstream (2-12)
Bitstream- Residential
in BD
Contention Ratio of 15:1
256 kbit/s 3.7890 3.640 3.0700 -15.7%
512 kbit/s 4.0760 3.800 3.1900 -16.1%
640 kbit/s s 4.2190 3.880 3.2500 -16.2%
1 Mbit/s 4.6480 4.130 3.4400 -16.7%
2 Mbit/s 5.7930 4.780 3.9400 -17.6%
3 Mbit/s 5.430
4 Mbit/s 8.0840 6.090 4.9400 -18.9%
6 Mbit/s 7.390
8 Mbit/s 12.6650 8.700 6.9300 -20.3%
10 Mbit/s 14.9560 10.010 7.9300 -20.8%
16 Mbit/s 15.7200 13.920 10.9200 -21.6%
Bitstream- Business
Contention Ratio of 15:171
in BD
256 kbit/s 3.861 3.780 2.680 -29.1%
512 kbit/s 4.219 4.090 2.910 -28.9%
640 kbit/s 4.398 4.240 3.030 -28.5%
1 Mbit/s 4.934 4.700 3.380 -28.1%
2 Mbit/s 6.366 5.920 4.310 -27.2%
4 Mbit/s 9.229 8.370 6.180 -26.2%
6 Mbit/s 12.090 10.820 8.050 -25.6%
8 Mbit/s 14.956 13.270 9.920 -25.2%
10 Mbit/s 17.819 15.720 11.790 -25.0%
16 Mbit/s 26.390 23.070 17.400 -24.6%
One-off charges applicable to Bitstream in BD
BS.3 - Maintaining relationship charge 1552.000 4029.000 +160%
BS.5 - Charges for rejects, reversals, and withdrawals associated with Bitstream Order
5.000 5.000 5.000 +0%
BS.6 - Charges for a Change of Speed 5.000 5.000 5.000 +0%
BS.7 - External Removal charge 5.000 5.000 5.000 +0%
Notes: The packages and charges written in blue colour were introduced after the 2011 RO Order. Source: The Authority from Batelco’s submission
Review of the submitted charges for the Bitstream service
Network cost
71 Footnote added at the final Order stage: contention ratio should be read as 8:1.
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The costs of access port and MPLS core transmission are common for both WDSL and 417.
Bitstream. The Authority notes that these costs are in line in the cost stacks for both
services.
The copper contribution has been re-adjusted at BD 2.04 per month and per line by the 418.
Authority (see above discussion in relation to WSDL).
The IP Link (Router) and Fibre Cable items represent the cost associated with providing 419.
the physical backhaul link to the OLO. The Authority notes that Batelco has increased the
number of end-users per router (Giga Ethernet) and cable from 500 in the 2010 RO
submission to 1,000 in this submission. As per last year’s RO order, the Authority has
adjusted the asset life of the fibre cable from 10 years to 20 years. The return on capital
employed has been calculated on the basis of a NBV/GBV ratio of 60%.
With the above adjustments, the IP Link (Router) cost and the fibre cable cost have been 420.
determined to be BD []/port/month and BD 0.07/port/month respectively.
‘Maintaining relationship’ charge
Batelco intends to recover BD 48,351 of wholesale activities cost from the Bitstream 421.
service through the ‘maintaining the relationship’ charge (Schedule 3- item BS.3) which
Batelco sets at BD 4,029 per month. This assumes that only one OLO purchases the
Bitstream service. This represents an increase of 160% to the current charge of BD 1,552.
The submitted ‘maintaining relationship’ charge translates into a monthly unit cost of BD 422.
[] per Bitstream line. This wholesale cost is respectively 10% and 35% greater than the
wholesale activity cost of a residential WDSL line (BD []) and of a business WDSL line
(BD[]).
The Authority understands that the OLO’s subscribers are never in direct contact with 423.
Batelco’s ‘Inet Helpdesk’. In so far as the OLO’s customer service representatives call
Batelco’s technical support through a dedicated number (900001) the Authority considers
that the cost of ‘OR05b Residential & Inet Helpdesk - Business (881177) Others’ should
be excluded from the cost stack of the ‘maintaining relationship’ charge. The cost of
‘OR05c Residential & Inet Helpdesk - Technical Support (900001)’ should however
remain.
As the cost of Batelco’s technical support helpdesk is now allocated to the ‘maintaining 424.
relationship’ charge, the charge BS.12 (INET Helpdesk premium rate call) of 250 fils per
minute should be removed from the RO.
The Authority also notes that there are several one-off charges in the RO which cover 425.
wholesale costs incurred by Batelco in the provision of the Bitstream service. This includes
the following chargeable activities:
Reference Offer Order
Annex– Order legal basis and reasoning
Page 155 of 167
Table 90: One-off charges related to the Bitstream service
Item Chargeable Activity Effective Date Charge
(BD) Charge Basis
BS.5 Charges for rejects, reversals, and withdrawals associated with Bitstream Order
1 February 2011 5 Per event
BS.6 Charges for Change of Speed 1 February 2011 5 Per event
BS.7 External Removal charge 1 February 2011 5 Per event
BS.9 Port Cessation Charge 12 July 2006 5 Per event
BS.11 Charges for suspension of Bitstream Service at Access Seeker’s request
12 July 2006 5 Per act of suspension and per act of connection
Source: Batelco’s RO
For the same reasons as discussed in the WDSL section and the duct section of this 426.
document, the Authority considers that the revenues collected by Batelco for one-off
charges should be subtracted from the cost stack of the Bitstream service. However, as
the Authority does not have any information on the 2009 revenues collected from the
above charges, it has decided not to make any such adjustments this time.
While the Authority has concerns over the wholesale activities costs related to Bitstream 427.
(e.g. their amount and how they have been derived), it has decided to accept the
‘maintaining the relationship charge’ proposed by Batelco [save for the cost associated
with ‘OR05b Residential & Inet Helpdesk - Business (881177) which has been removed for
the reasons set out above]. The Authority also orders the removal of the charge BS.12
(INET Helpdesk premium rate call) of 250 fils per minute from the RO.
While only one OLO was using the Bitstream service to provide broadband accesses to its 428.
customers in 2009, the Authority understands that there are now at least 4 OLOs which
are using the Bitstream service. Consistent with the principle of forward-looking cost, the
Authority has divided the ‘maintaining relationship’ charge by 4. The draft Order FRND
‘maintaining relationship’ charge is set at BD 872.917 per month and now includes the
cost of Batelco’s Technical Support Helpdesk.
As for the WDSL service, the Authority intends to review in detail the wholesale costs 429.
related to the Bitstream service as part of the next RO (see paragraphs 74-77 above).
Draft Order fair, reasonable and non-discriminatory charges for the Bitstream service
The reviewed cost stacks and associated draft Order FRND charges for the Bitstream 430.
service are presented in the following tables:
Reference Offer Order
Annex– Order legal basis and reasoning
Page 156 of 167
Table 91: Draft Order FRND charges for the Bitstream service
Chargeable activity
Approved/Ordered in
January 2011 (or currently
implemented)
TRA's Draft Order FRND
charges
Evolution of Draft Order
FRND as compared to Approved/
Ordered
Bitstream (2-12)
Bitstream- Residential in BD
Contention ratio of 15:1
256 kbit/s 3.640 3.0641 -15.8%
512 kbit/s 3.800 3.1888 -16.1%
640 kbit/s 3.880 3.2511 -16.2%
1,024 Mbit/s 4.130 3.4381 -16.8%
2.048 Mbit/s 4.780 3.9368 -17.6%
3.072 Mbit/s 5.430 4.4354 -18.3%
4.096 Mbit/s 6.090 4.9341 -19.0%
6.144 Mbit/s 7.390 5.9314 -19.7%
8.192 Mbit/s 8.700 6.9288 -20.4%
10.240 Mbit/s 10.010 7.9261 -20.8%
16.384 Mbit/s 13.920 10.9181 -21.6%
Bitstream- Business in BD
Contention ratio of 15:172
256 kbit/s 3.780 3.173 -16.1%
512 kbit/s 4.090 3.407 -16.7%
640 kbit/s 4.240 3.524 -16.9%
1.024 Mbit/s 4.700 3.874 -17.6%
2.048 Mbit/s 5.920 4.809 -18.8%
4.096 Mbit/s 8.370 6.679 -20.2%
6.144 Mbit/s 10.820 8.549 -21.0%
8.192 Mbit/s 13.270 10.419 -21.5%
10.240 Mbit/s 15.720 12.289 -21.8%
16.384 Mbit/s 23.070 17.899 -22.4%
One-off charges applicable to Bitstream
Bitstream in BD
BS.3 - Maintaining relationship charge 1552.000 872.917 -43.8%
BS.12 INET Helpdesk premium rate call (per minute) 0.250 removed
Source: the Authority
72 Footnote added at the final Order stage: contention ratio should be read as 8:1.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 157 of 167
Table 92: Draft Order FRND cost stacks for the residential Bitstream service
Costing Elements - Per line Residential
Speed (contention ratio of 15:1) 16.384 Mbit/s
10.240 Mbit/s
8.192 Mbit/s
6.144 Mbit/s
4.096 Mbit/s
3.072 Mbit/s
2.048 Mbit/s
1.024 Mbit/s
640 kbit/s
512 kbit/s
256 kbit/s
Network Cost
Copper contribution 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04
Access Port (MSAN Combo Cost) 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73
Core Trans 7.98 4.99 3.99 2.99 1.99 1.50 1.00 0.50 0.31 0.25 0.12
IP Link (Router) 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15
Fibre Cable 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02
Total Network Cost 10.918 7.926 6.929 5.931 4.934 4.435 3.937 3.438 3.251 3.189 3.064
Source: the Authority
Table 93: Draft Order FRND cost stacks for the business Bitstream service
Costing Elements - Per line Business
Speed (contention ratio of 8:1) 16.384 Mbit/s
10.240 Mbit/s
8.192 Mbit/s
6.144 Mbit/s
4.096 Mbit/s
2.048 Mbit/s
1.024 Mbit/s
640 kbit/s 512 kbit/s 256 kbit/s
Network Cost
Copper contribution 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04
Access Port (MSAN Combo Cost) 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73
Core Trans 14.96 9.35 7.48 5.61 3.74 1.87 0.93 0.58 0.47 0.23
IP Link (Router) 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15
Fibre Cable 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02
Total Network Cost 17.899 12.289 10.419 8.549 6.679 4.809 3.874 3.524 3.407 3.173
Source: the Authority
Reference Offer Order
Annex– Order legal basis and reasoning
Page 158 of 167
Summary of responses received by the Authority
Batelco
Current and proposed WDSL charges table
In relation to the note to Table 76 above (page 140) concerning a potential mistake in the 431.
RO price of the 2.048 Mbit/s WDSL Residential package (15 GB), Batelco notes that the
charge is in accordance with the Authority’s letter dated 16 October 2011 (ref:
MCD/10/11/141) related to the notified control tariff 34 “Consumer broadband subsidy
offer”.
Data usage units, data transfer units and appropriate conversion
Batelco agrees that the adherence to international standard references for units is 432.
appropriate and also notes that, for greater precision and consistency, the mention “up to”
should be used to describe WDSL access speeds as the service does not offer dedicated
capacity.
Core transmission
Batelco indicates that it will be using actual data usage readings to allocate NGN core 433.
network costs in the 2011 regulatory accounts onwards. It also expects the difference with
the current theoretical calculation based on effective bandwidth to be minimal.
Cost of CPE included in the business packages
Batelco indicates that the cost allocation of CPE will be reviewed in 2012 and, as a result, 434.
the CPE unit cost may increase.
Wholesale activity cost
In relation to paragraph 409, Batelco explains that the difference between the wholesale 435.
and retail unit cost of the two non-network activities is due to the use of slightly different
customer base when the retail and the wholesale unit cost were calculated.
In relation to paragraph 423, Batelco points out that the Batelco Inet Helpdesk can be 436.
directly contacted by the end-user of Bitstream accesses as provided by clause 9.6 of the
Bitstream service description. Batelco further says that “The TRA would therefore have
amend clause 9.6 before making any proposed charges here and Batelco would have to
modify its internal process accordingly where bitstream support will be treated as any
standard customer”, (Batelco’s response paragraph 132).
Reference Offer Order
Annex– Order legal basis and reasoning
Page 159 of 167
The Authority’s analysis and conclusion
Current and proposed WDSL charges table
The Authority maintains that Batelco appears to have mistakenly reported the 25 January 437.
2011 RO ordered charge for the 2.048 Mbit/s WDSL Residential package (15 GB) to its
published RO schedule 3. Instead of recognizing a genuine mistake, Batelco seems to
justify such error by making reference to a letter73
in which the Authority reproduced the
WDSL charges as listed in Batelco’s RO schedule 3 at the time. The Authority notes that
the mistake was already present in Batelco’s schedule 3 prior to the aforementioned letter.
Data usage units, data transfer units and appropriate conversion
The Authority welcomes Batelco’s willingness to adhere to international standard 438.
references for units and, as correctly pointed out, expects that Batelco will use the mention
‘up to’ when listing the charges of its WDSL and Bitstream packages in its published RO.
Core transmission
The Authority has realised that there was an error in the contention ratios used by Batelco 439.
in its RO submission to derive the draft ordered WDSL and Bitstream charges. This error
was not picked up by the Authority in the draft RO Order. Both WDSL and Bitstream
business packages at 256 kbit/s were calculated based on a 8:1 contention ratio when it
should have been based on a 15:1 contention ratio. This error has a minimal impact on the
cost of core transmission (+[]%). With the exception of the 256 kbit/s business
packages, the FRND charges calculated in the draft Order remain stable. The corrected
table presenting the final estimates of core transmission costs can be found below.
Table 94: Corrected estimates of core transmission costs (correction of Table 80 page 143)
2009
CORRECTED
2008 as per 25 January RO Order
Evolution 2009/2008
Transmission costs BB & WSDSL& bitstream [] [] []
Total number of channel [] [] []
Total Equivalent Customers [] [] []
Cost per 1Mb @ 1:1 [] [] []
Monthly Cost uncontended 1 Mbps [] [] []
Res - Monthly cost for 1 Mbps contended (+ Business packages at 256 kbit/s)
[] [] []
Bus - Monthly cost for 1 Mbps contended [] [] []
Source: The Authority based on Batelco's RO submissions
The Authority welcomes the use of actual network readings by Batelco for the NGN cost 440.
allocation in future regulatory accounts.
Cost of CPE included in the business packages
73 NCT 34 Consumer Broadband Subsidy Offer, a letter sent by the Authority to Batelco on 16 October 2011 (ref:
MCD 10 11 141)
Reference Offer Order
Annex– Order legal basis and reasoning
Page 160 of 167
The Authority remains of the view that it is appropriate to correct the submitted cost of 441.
CPE.
Wholesale activity cost
In relation to the difference in the non-network activity unit cost between retail and 442.
wholesale DSL packages, the Authority urges Batelco to be consistent in its submissions.
Such consistency could be easily achieved by producing a report centralising all the
operational data used for cost allocation purposes. Such data report would constitute a
reference to both the Authority and Batelco during the review process of the RO
submission.
In relation to the removal of the Inet helpdesk charge, Batelco did not provide any 443.
evidence that end-users based on Bitstream were directly contacting Batelco’s Inet
Helpdesk. Such evidence could have included, for instance, a detailed breakdown of
incoming traffic to OR05b [Residential & Inet Helpdesk – Business (881177) Other]. While
Batelco explains that, as per clause 9.6 of the Bitstream service description, Batelco Inet
Helpdesk can be directly contacted by end-users, this does not appear to be the case in
practice. As a result and in the absence of empirical evidence, it remains appropriate to
exclude the cost of [OR05b Residential & Inet Helpdesk - Business (881177) Others] from
the cost stack of the ‘maintaining relationship’ charge. Contrary to what Batelco suggests
in its response, this exclusion only impacts the recovery of Inet helpdesk costs and does
not have any kind of incidence on Batelco’s operational processes.
However the recovery of the cost of Batelco’s technical support helpdesk [OR05c 444.
Residential & Inet Helpdesk - Technical Support (900001)] is relevant for the Bitstream
service as OLOs can contact Batelco as required. This cost is now allocated to the
‘maintaining relationship’ charge as proposed.
The Authority orders the removal of the chargeable activity BS.12 (INET Helpdesk 445.
premium rate call) of 250 fils per minute from the RO.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 161 of 167
Final Order FRND charges for WDSL service
The only change made to the draft ordered charges is for the 256 kbit/s business 446.
packages to which the correct contention ratio of 15:1 has been applied. The Order FRND
charges for the WDSL service are presented in the following table:
Table 95: Order FRND charges for WDSL service
Chargeable activity
Approve
d/
ordered
in
January
2011
(or
currently
impleme
nted)
Batelco's
submitte
d
charges
in April
2011
TRA
FRND
draft
charges
TRA
FRND
final
Order
charges
Evolution
of Order
FRND as
compare
d to
previousl
y
approved
/
ordered
Wholesale DSL (2-11)
Wholesale DSL- Residential
in BD
Contention Ratio of 15:1
up to 256 kbit/s (2 GB) 6.210 6.070 6.107 6.108 -1.6%
up to 512 kbit/s (8 GB) 10.310 8.980 9.023 9.025 -12.5%
up to 640 kbit/s (2 GB) 6.450 6.260 6.294 6.296 -2.4%
up to 640 kbit/s (5 GB) 8.420 7.650 7.690 7.692 -8.6%
up to 1.024 Mbit/s (4 GB) 8.010 7.370 7.411 7.415 -7.4%
up to 1.024 Mbit/s (8 GB) 9.100 9.230 9.273 9.277 1.9%
up to 1.024 Mbit/s (15 GB) 15.230 12.490 12.530 12.534 -17.7%
up to 2.048 Mbit/s (15 GB) 13.010 12.990 13.029 13.037 0.2%
up to 2.048 Mbit/s (20 GB) 19.160 15.230 15.355 15.363 -19.8%
up to 3.072 Mbit/s (8 GB) 10.410 10.270 10.282 -1.2%
up to 4.096 Mbit/s (25 GB) 18.960 18.640 18.679 18.695 -1.4%
up to 6.144 Mbit/s (15 GB) 15.630 15.023 15.047 -3.7%
up to 8.192 Mbit/s (25 GB) 21.590 20.674 20.706 -4.1%
up to 8.192 Mbit/s (40 GB) 36.200 27.620 27.654 27.686 -23.5%
up to 8.192 Mbit/s (60 GB) 37.850 36.920 36.960 36.992 -2.3%
up to 8.192 Mbit/s (90 GB) 51.840 50.920 50.952 -1.7%
up to 10.240 Mbit/s (50 GB) 44.060 33.270 33.304 33.345 -24.3%
up to 10.240 Mbit/s (80 GB) 48.460 47.230 47.264 47.304 -2.4%
up to 10.240 Mbit/s (120 GB) 67.100 65.877 65.917 -1.8%
up to 16.384 Mbit/s (80 GB) 67.660 50.220 50.256 50.320 -25.6%
up to 16.384 Mbit/s (100 GB) 61.660 59.520 59.563 59.627 -3.3%
up to 16.384 Mbit/s (150 GB) 84.980 82.829 82.893 -2.5%
Wholesale DSL- Business Threshold - Cost with CPE in BD
Contention ratio of 8:1 (except 256 kbit/s with 15:1)
up to 256 kbit/s without CPE (2.5 GB) 6.540 5.530 6.065 5.957 -8.9%
up to 256 kbit/s (5 GB) 12.320 18.280 11.229 11.120 -9.7%
up to 512 kbit/s (10 GB) 15.900 20.840 13.789 13.793 -13.3%
up to 1.024 Mbit/s (15 GB) 19.800 23.640 16.583 16.591 -16.2%
up to 2.048 Mbit/s (20 GB) 24.300 26.900 19.845 19.860 -18.3%
up to 4.096 Mbit/s (130 GB) removed 79.960 removed removed -
up to 6.144 Mbit/s (160 GB) removed 95.790 removed removed -
Reference Offer Order
Annex– Order legal basis and reasoning
Page 162 of 167
up to 8.192 Mbit/s (200 GB) removed 116.270 removed removed -
up to 10.240 Mbit/s (250 GB) removed 141.400 removed removed -
up to 16.384 Mbit/s (350 GB) removed 193.550 removed removed -
Wholesale DSL- Business Flat rate - Cost with CPE in BD
Contention ratio of 8:1 (except 256 kbit/s with 15:1)
up to 256kbit/s (Flat) 12.560 17.620 13.555 13.447 7.1%
up to 512 kbit/s without CPE (Flat) 14.660 14.442 14.446 -1.4%
up to 512 kbit/s (Flat) 18.650 21.020 18.442 18.446 -1.1%
up to 1.024 Mbit/s (Flat) 23.920 23.690 23.563 23.570 -1.5%
up to 2.048 Mbit/s (Flat) 48.410 39.790 47.764 47.779 -1.3%
up to 4.096 Mbit/s (Flat) 97.390 96.166 96.197 -1.2%
up to 6.144 Mbit/s (Flat) 118.450 116.649 116.695 -1.5%
up to 8.192 Mbit/s (Flat) 139.510 137.132 137.193 -1.7%
up to 10.240 Mbit/s (Flat) 155.920 152.962 153.037 -1.8%
up to 16.384 Mbit/s (Flat) 191.190 186.491 186.612 -2.4%
Over the threshold charge per incremental GB
(Usage tariffs DSL.8) 0.465 0.465 0.465 0.465 0.0%
Notes: The packages and charges written in blue colour were introduced after the 2011 RO Order. Source: The Authority
Reference Offer Order
Annex– Order legal basis and reasoning
Page 163 of 167
Final Order FRND charges for Bitstream service
The Order FRND charges for the Bitstream service are presented in the following table: 447.
Table 96: Order FRND charges for the Bitstream service
Chargeable activity
Approved/ ordered in January
2011 (or
currently implement
ed)
Batelco's submitted charges in April 2011
TRA FRND draft
charges
TRA FRND final Order
charges
Evolution of Order FRND as
compared to
previously approved/ ordered
Bitstream- Residential
in BD
Contention ratio of 15:1
up to 256 kbit/s 3.640 3.070 3.064 3.065 -15.8%
up to 512 kbit/s 3.800 3.190 3.189 3.191 -16.0%
up to 640 kbit/s 3.880 3.250 3.251 3.254 -16.1%
up to 1,024 Mbit/s 4.130 3.440 3.438 3.442 -16.7%
up to 2.048 Mbit/s 4.780 3.940 3.937 3.945 -17.5%
up to 3.072 Mbit/s 5.430 4.435 4.447 -18.1%
up to 4.096 Mbit/s 6.090 4.940 4.934 4.950 -18.7%
up to 6.144 Mbit/s 7.390 5.931 5.956 -19.4%
up to 8.192 Mbit/s 8.700 6.930 6.929 6.961 -20.0%
up to 10.240 Mbit/s 10.010 7.930 7.926 7.966 -20.4%
up to 16.384 Mbit/s 13.920 10.920 10.918 10.982 -21.1%
Bitstream- Business in BD
Contention ratio of 8:1 (except 256 kbit/s with 15:1)
up to 256 kbit/s 3.780 2.680 3.173 3.065 -18.9%
up to 512 kbit/s 4.090 2.910 3.407 3.411 -16.6%
up to 640 kbit/s 4.240 3.030 3.524 3.529 -16.8%
up to 1.024 Mbit/s 4.700 3.380 3.874 3.882 -17.4%
up to 2.048 Mbit/s 5.920 4.310 4.809 4.824 -18.5%
up to 4.096 Mbit/s 8.370 6.180 6.679 6.710 -19.8%
up to 6.144 Mbit/s 10.820 8.050 8.549 8.595 -20.6%
up to 8.192 Mbit/s 13.270 9.920 10.419 10.480 -21.0%
up to 10.240 Mbit/s 15.720 11.790 12.289 12.365 -21.3%
up to 16.384 Mbit/s 23.070 17.400 17.899 18.020 -21.9%
One-off charges applicable to Bitstream
Bitstream
in BD
BS.3 - Maintaining relationship charge 1,552.000 4,029.000 872.917 872.917 -43.8%
BS.12 INET Helpdesk premium rate call (per minute)
0.250 removed removed
Source: the Authority
Reference Offer Order
Annex– Order legal basis and reasoning
Page 164 of 167
13 International Falcon Connection (‘IFC’) service (2-14)
Draft Order Text
International Falcon Connection (‘IFC’) service definition
In its RO, Batelco defines the IFC service as follows: 448.
“The IFC Service is a wholesale service for providing access to the
Falcon cable landing station comprising one or more IFC Links,
Licensed International Facilities Management Space and IFC
Support Facilities.
Available To: ISL and ISP licensees.
Permitted Traffic: Traffic covered by the Access Seeker’s licence.
Reciprocal Service: Not required.” 74
Backhaul restrictions
While the IFC service description refers only to a duct access service for the backhauling 449.
of the link from the landing station, the Authority considers that Batelco should not restrict
any other form of backhaul. The Authority therefore orders Batelco to modify the IFC
service description to allow other types of backhauling options such as wireless links.
Amendments to the cost of co-location space (2-14.3) and to the cost of riser room and
riser access (2-14.4)
As per the Determination related to the terms and conditions of Batelco’s International 450.
Falcon Connection Service dated 29 July 2010, the monthly cost of co-location space per
ETSI standard rack should be linked to the corresponding charge in the SNFM service
(item ‘2-15.2.2 License fee – Co-mingling’ in Batelco’s RO).
As per the same Determination, the cost per meter of riser room and riser access (item 2-451.
14.4 of Batelco’s RO) should be 4 times the cost of duct. Batelco is required to link the
charge of riser room and riser access to the duct access charge. The RO should also
make reference to the limitation of the charge to a maximum of 100 metres.
As a result, the following amendments should be made to the Schedule 3 of Batelco’s RO: 452.
74
Batelco’s RO, Schedule 1 2-14 (INTERNATIONAL FALCON CONNECTION SERVICE) (IFC Service)
Reference Offer Order
Annex– Order legal basis and reasoning
Page 165 of 167
Table 97: Amendment to the IFC charges
Chargeable activity Currently
implemented TRA’S FRND draft Order
charges
Evolution as compared to January 2011
International Falcon Connection Service (IFC Service) (2-14)
2-14.3 Co-location space 350.000 Refer to Schedule 3 2-15.2.2 -
2-14.4 Riser room and riser access 0.712
Monthly duct rental charge Schedule 3 2-3.9 + 300% premium (per metre for a maximum of 100 metres)
-12.8%
Source: the Authority
Summary of responses received by the Authority
Batelco
In relation to the removal of backhauling restrictions, Batelco submits that this proposal 453.
should be put on hold, if not reconsidered, for the following reasons:
a. Batelco is not certain whether there is actual demand for other types of backhaul,
and in the case of proven demand, Batelco would prefer the specific needs and
requirements of the OLO to be discussed and assessed;
b. The IFC service results from the Authority’s order to grant access to the IFC cable
at the Telegraph House. The Authority has not suggested that the current IFC
service is non-compliant with that order;
c. Batelco indicates that the support and maintenance of alternative backhaul such
as wireless backhaul would require that Batelco allows access of additional OLO
personnel to the Telegraph House. Batelco claims that there are good security
reasons for not allowing such additional access;
d. Batelco considers that any material change to the current IFC service should only
be proposed once the arbitration procedure on the same matter is closed. Batelco
also suggests that the Authority wait until the market review for international
facilities is conducted.
Batelco agrees that the charge for co-location space required in the context of the IFC 454.
service should be linked with the charge for co-location (2-15.2.2) included in Schedule 3.
Batelco however indicates that the principle may have to be revisited in the future if
relevant differences in the spaces come into play.
Lightspeed
Lightspeed considers that the infrastructure sharing and co-location services are still very 455.
expensive in comparison with regional benchmarks. As an example, it submits that the
monthly price per square metre in Jordan is less than BD 100.
Reference Offer Order
Annex– Order legal basis and reasoning
Page 166 of 167
The Authority’s analysis and conclusion
In relation to the removal of the backhaul restriction, the Authority notes Batelco’s 456.
willingness to accommodate reasonable requests by OLOs for alternative backhaul. In that
context, the Authority has decided not to order the removal of backhaul restrictions for the
time being. The Authority will continue to monitor the issue to ensure that Batelco is
treating any requests by OLOs in a timely and fair manner. For the avoidance of doubt, the
Authority is still of the view that the IFC service should allow other form of backhaul such
as wireless links provided that any risks, such as security risks, can be adequately
mitigated.
As for Lightspeed’s comment on the excessive price of the co-location service in Bahrain, 457.it would appear that there is a large difference (by factor ~3-5) between the regulated charge applicable in Bahrain and the regulated charges applicable in Jordan
75 or in
Oman.76
The Authority intends to look at the co-location charge as part of the next RO review.
75 Jordan Telecom FAC 2007-extended Price List: Applicable from 1/7/2009, SCHEDULE 103 - JT Collocation
Facilities, http://jordantelecomgroup.jo/jtg/group/FAC_2007_extended_price_list_ver.pdf. 76
Omantel Reference Acess Offer of May 2011, Annex M, http://www.omantel.om/wpresources/files/RAO/Annex%20M_Tariffs_V2.3_May%202011.pdf
Reference Offer Order
Annex– Order legal basis and reasoning
Page 167 of 167
14 Other matters raised by operators
Summary of responses received by the Authority
Menatelecom
Menatelecom remains deeply concerned by the absence of SLAs for wholesale services 458.
and in particular for Carrier Preselection Service (‘CPS’), Wholesale International Switched
Service (‘WSIDD’) and CAT/LLCO.
Menatelecom agrees with the Authority’s approach to drive wholesale charges down to 459.
their cost based level and would appreciate that the Authority ensures the timely
introduction of the charge reductions and conduct RO reviews on amore regular basis.
Viacloud
Viacloud is concerned that the “wholesale ILD (International Long distance) was not 460.
included for any review in this Order. With the drop in the costs (WS01 – Wholesale &
Carrier Relations, WS02 Commercial Operation – Access Page 28 of RO), the wholesale
IDD cost has undergone a significant drop, while we continue to pay at higher cost to
Batelco. We request TRA that Batelco is asked to submit a review on the wholesale IDD
cost and in the interim give a discount on wholesale IDD prices based on the reduction in
access costs and carrier costs already included in this RO.”, (Viacloud’s submission,
paragraph 7).
The Authority’s analysis and conclusion
The Authority shares Menatelecom’ concern regarding the absence of SLAs for wholesale 461.
services. This is an area where the Authority has been working on. The Authority will
consider any appropriate legal routes to ensure that sound and fit for purposes SLAs for
wholesale services are put in place in order to ensure a competitive level playing field.
With regards to Viacloud and Menatelecom’s comments regarding WSIDD, the Authority 462.
highlights that WSIDD rates are regularly reviewed by the Authority on a country per
country basis when Batelco submits new retail rates for the Authority’s approval.