INTERNATIONAL TELECOMMUNICATION UNION
AD HOC GROUP ON COST RECOVERY
FOR SATELLITE NETWORK FILINGS
GENEVA, 24-26 February, 2004
Document 5-E
18 February 2004
English only
USA-2
United States of America
CONSIDERATIONS FOR A NEW CHARGING METHODOLOGY
Introduction
The current methodology, adopted by Council 02 on a provisional basis, has
proven to be flawed and produces invoices for processing that do not reflect actual
work and associated costs. This contribution discusses the advantages and
disadvantages of three possible approaches to developing a new charging formula.
These approaches are:



Actual processing costs invoiced after publication;
Single upfront flat fee
Formula with fixed and variable components
Actual cost
The actual cost model is based on the assumption that the largest single cost element
is the direct labor and associated staff infrastructure costs involved in processing and
publishing the filing. Rather than attempting to identify a surrogate way to measure
the amount of work done on each filing, the BR staff could keep time and
subsequently charge the filer accordingly. Other costs would either be accumulated
directly (such as telecommunications charges) or added on top of labor cost as some
percentage of the hourly rate. This methodology may be accurate, but it is less
satisfactory in terms of simplicity or predictability, and it imposes an on-going time
keeping burden on BR staff. The operating agency or company that pays the charges
would have no idea what the ultimate invoice amount would be until it is received.
Although there might be an up-front payment with this methodology, it is obvious that
the final amount could not be calculated until all labor charges are incurred and
identified.
Fixed up-front charge
It is clear that virtually all filings of the same type go through some of the same
processes, and that such processes incur relatively the same cost regardless of the
particular filing. For example, receipt, data preparation, initial examination,
validation, database updating, cost recovery invoicing and publishing in the IFIC
should be similar for each filing within type of filing. It should be possible to
calculate those costs one time and then apply then to each filing. Similarly, overhead
costs, such as housing, could be apportioned on a direct per filing basis. With regard
to more variable costs, such as those labor costs associated with the coordination
function, the BR staff should be able to build on its prior work to identify the costs per
type of filing. If, as some prior BR reports suggest, the amount of such effort does not
vary significantly by filing, then a single charge can be associated with each type of
filing. In such case, the cost can be added to the fixed costs and a single, up-front fee
established for a group of that type of filing. Such a fee structure based on type of
filings could be simple and predictable, and if validated, accurate. This type of fee
schedule might, however, disadvantage some submitters of small filings with a larger
fee and create a lesser fee for larger filings.
Fixed plus variable charge
If the empirical accounting exercise suggests, however, that the labor costs are not
consistent on a type-of-filing basis, then one could construct a charging formula
consisting of a standard charge based on the fixed costs and an additional charge
based on the variable costs. The fixed portion would consist of the direct and indirect
costs common to a general type of filing (e.g., coordination requests) while the
variable portion would be more directly dependent upon the type of filing and
additional work it may generate. This model is more predictable than the actual cost
approach and potentially more accurate than a fixed fee schedule. Annex A describes
an example of this approach in more detail.
Conclusions
The determination and billing of actual costs associated with each individual filing is
fraught with a number of difficult procedural and application problems, not the least
of which are time studies, timekeeping, transparency, among others.
A single one-time flat fee would be the simplest approach with a known fee schedule;
however, it may not be an equitable schedule for smaller filings.
The fairest and most equitable approach would seem to be a formula based on the
fixed costs of the process and a variable component based on the type of filing with
account taken of any additional work generated by the type, or in some cases, the size
of the filing.
One key factor in making any fee schedule acceptable to this Administration is the
capability of knowing the fees in advance or that the fees can be calculated easily
(e.g., by SpacePub software). This is a primary requirement from our operating
agencies and companies – that the charges be a known value with no surprises when
an invoice is received.
Another preference is that there be no so-called flat fee component as currently
applied. Such flat fees create inequitably large fees for those entities that submit small
filings.
Annex A
Example of a
Fixed + Variable Charging Formula
SNCR fee = ffixed + fvariable
Where ffixed = recovered costs common to all filings (overhead + direct + indirect)
And fvariable = filing-dependent costs (actual SSD staff work + computer assistance)
For ffixed:
- the overhead costs include the allocated proportional percentage
appropriate for the level of staff and resources directly related to
processing satellite network filings (offices, supplies, computers,
telephones, etc.).
-
the direct costs involve all the steps associated with publishing the network
frequency assignments, other than actual SSD work on the details of the
filing (receipt, data preparation, initial examination, validation, database
updating, cost recovery invoicing and publishing in the IFIC, web site and
SNL).
-
The indirect costs are defined as support services such as software
development and publishing assistance from outside the SSD. (Software
development costs ought to be spread out over the expected useful lifetime
of the software not just a regular amortization period of 3-5 years.)
For fvariable:
- the actual SSD staff effort is dependent on the type of filing (geostationary
or non-geostationary network) and its complexity (number of beams,
number of frequency bands and type of coordination or plan).
-
The staff effort is supplemented with computer tools defined as the
associated use of computer resources based on the type of filing and the
complexity.
Using the above, a relatively simple formula can be developed into a software module
that would encompass these concepts and interact with the electronic filing database
so as to produce an exact total fee prior to the filing being submitted to the BR. The
SpaceQry software produces a set of unique frequency bands, and it is not difficult to
identify the type of coordination or plan related to each individual frequency (e.g., see
the attached table). If such formula software module was available, the operator
could know the exact fee before submitting the filing. This would also make a total
upfront fee payment on receipt possible.
Using the formula option the U.S. suggested in its submission to the last meeting
(Document 6), one can fully develop the above formula as follows. The variable
portion of the cost recovery includes factors related to whether the filing is for a
geostationary network or a non-geostationary one and what type of coordination is
involved (coordination with other space networks or with terrestrial systems).
Fvariable (GSO) = F9.7
+ Fngso + Fterr
where F9.7 is the fee factor representing costs associated with the coordination
process related to other GSO networks that may be affected (RR 9.7);
Fngso is the fee factor for costs associated with the coordination between the
GSO network and affected NGSO networks (RR 9.11A, 9.13 and 9.21); and,
Fterr is the fee associated with determining terrestrial administrations affected
(RR 9.11, 9.11A, 9.14 and 9.21).
Fvariable (NGSO) = FNGSO
+ Fgso + Fterr
where FNGSO is the fee factor for costs associated with the coordination process
between NGSO networks (RR 9.11A, 9.12 and 9.21);
Fgso is the fee factor for coordination between the NGSO network and affected
GSO networks (RR 9.11A, 9.12A and 9.21); and,
Fterr is the fee associated with determining terrestrial administrations affected
(RR 9.11A, 9.14 and 9.21).
The fees Fngso and Fgso should be equal for an equal number of frequency bands.
Breaking down the formulas further, one can postulate that:
F9.7 = the per band charge times the number of unique frequency bands
involving the RR 9.7 coordination procedure;
Fngso = the per band charge times the number of unique frequency bands
involving RR 9.11A, 9.13 and 9.21 procedures;
Fterr = the per band charge times the number of unique frequency bands
involving RR 9.11, 9.11A, 9.14 and 9.21 procedures;
FNGSO = the per band charge times the number of unique frequency bands
involving coordination between NGSO networks under RR 9.11A, 9.12 and 9.21;
Fgso = the per band charge times the number of unique frequency bands
involving coordination of the NGSO network with GSO networks under RR 9.11A,
9.12A and 9.21.
To place some bounds on this example, it is estimated that the fixed portion of the
above formula should be no greater than 5,000 CHFs and that the per band charges be
no greater than the following estimates:
F9.7 per band charge = 50 CHFs
Fngso per band = Fgso per band = 100 CHFs
FNGSO per band = 100 CHFs
Fterr per band = 100 CHFs
Therefore, the GSO network cost recovery formula becomes:
SNCR Fee (GSO) = 5,000 + 50N9.7 + 100NNG bands + 100Nterr bands
We analyzed three published GSO networks to see the effects of this formula in
comparison to fees invoiced in application of Decision 482 (modified 2002). The
number of bands is defined as the unique frequency ranges produced by SpaceQry per
beam. The results are as follows:
Network
Invoiced Amount
Calculated fee (new formula)
3GSAT-G15 21,000 (flat fee)
7,800 (see Attachment 1 for details)
B-SAT-3G
226,344
114,400 (see Attachment 2)
GIBSAT-8
148,105
43,300 (see Attachment 3)
Attachment 1
EXAMPLE CALCULATION FOR UNIQUE FREQUENCY BAND OPTION
(3GSAT-G15)
Category 3 network under Decision 482
SNCR fee = Fixed fee + GSO factor + NGSO factor + terrestrial factor [+ AP30 factor + AP30A factor]1
where
Fixed fee = 5,000 CHFs
GSO factor = charge per band x no. of 9.7 bands = 50 x 12 = 600 CHFs
NGSO factor = charge per band x no. of 9.13 bands = 100 x 10 = 1,000 CHFs
Terrestrial factor = charge per band x no. 9.14/9.21 bands = 100 x 10 = 1,000 CHFs
[AP30/AP30A factors = charge per band x no. of bands = (100 x 1) + (100 x 1) = 200 CHFs]
SNCR fee = 5,000 + 600 + 1,000 + 1,000 [+ 100 + 100] = 7,800 CHFs
_________________
1 Factors for addressing the application of Article 7 of Appendices 30 and 30A were not analyzed so the 100 CHFs per band
amount was used for the two bands involved in this Special Section (12.5-12.75 GHz and 17.7-20.2 GHz).
Number of Unique Frequency Bands for 3GSAT-G15
(table exported from SpaceQry supplemented with band total columns)
FREQ BDWDT
_MHZ
H
1995
30000
2185
30000
2491.7
16500
5
2510
20000
2680
20000
3800 800000
5787.5 125000
6287.5 875000
7050
50000
11075 250000
11575 250000
12625 250000
14125 750000
18950 2500000
19950 500000
28750 2500000
FREQ_MIN FREQ_MAX COORDN
1980 2010
2170 2200
2483.5 2500
9.11A
9.11A
9.11A
2500
2670
3400
5725
5850
7025
10950
11450
12500
13750
17700
19700
27500
9.11A/9.21
9.11A/9.21
9.7
9.7
9.7
9.7
9.7
9.7
9.7/AP30.7
9.7
9.7/9.11A/AP30A.7
9.7
9.7/9.11A
2520
2690
4200
5850
6725
7075
11200
11700
12750
14500
20200
20200
30000
STN
_CL
SES
BEAM1
BEAM2
EI
EI
EI
R/RSR
E/TSG
E/TSG
E/TSR
E/TSR
EI
EI
EC
EC
EC
EC
EC
EC
EC
EC
EC
EC
EC
E/TSG
R/RSR
E/TCG
R/RCG1
R/RCG2
R/RCG2
E/TUG
E/TUG
E/TUG
R/RUG
E/TAG
E/TA1G
R/RAG
E/TSR
E/TA1R
TOTALS
PUB
BAND
TOTAL
No. of No. of
9.7
9.13
Bands Bands
No. of 9/14
& 9.21
Bands
1
2
2
1
2
2
1
2
2
2
1
1
1
1
1
1
1
1
1
1
2
1
2
1
2
1
20
1
1
1
1
1
1
1
1
1
2
1
12
vs GSO
No. of No. of AP30A
AP30
Bands
Bands
1
1
1
1
1
10
vs
NGSO
10
vs Terrs.
1
1
1
7
Attachment 2
EXAMPLE CALCULATION FOR UNIQUE FREQUENCY BAND OPTION
(B-SAT-3G)
Category 3 network under Decision 482
SNCR fee = Fixed fee + GSO factor + NGSO factor + terrestrial factor
where
Fixed fee = 5,000 CHFs
GSO factor = charge per band x no. of 9.7 bands = 50 x 461 = 23,050 CHFs1
NGSO factor = charge per band x no. of 9.13 bands = 100 x 457 = 45,700 CHFs2
Terrestrial factor = charge per band x no. 9.14/9.21 bands = 100 x 457 = 45,700 CHFs2
SNCR fee = 5,000 + 23,050 + 45,700 + 45,700 = 114,450 CHFs
_________________
1 This filing had 231 unique frequency ranges – 4 were in one beam, 1 was in 1 beam, 2 were in 4 beams and 224 were in two
beams – producing 461 frequency/beam combinations subject to RR 9.7.
All but four of the 231 frequency ranges were also subject to RR 9.11A – 1 in 1 beam, 2 in 4 beams and 224 in two beams –
giving the 457 frequency/beam combinations.
2
8
Attachment 3
EXAMPLE CALCULATION FOR UNIQUE FREQUENCY BAND OPTION
(GIBSAT-8)
Category 2 network under Decision 482
SNCR fee = Fixed fee + GSO factor + NGSO factor + terrestrial factor
where
Fixed fee = 5,000 CHFs
GSO factor = charge per band x no. of 9.7 bands = 50 x 766 = 38,300 CHFs1
NGSO factor = charge per band x no. of 9.13 bands = 100 x 0 = 0 CHFs1
Terrestrial factor = charge per band x no. 9.14/9.21 bands = 100 x 0 = 0 CHFs1
SNCR fee = 5,000 + 38,300 + 0 + 0 = 43,300 CHFs
_________________
1 This filing had 144 unique frequency ranges in multiple beams (2 to 8 beams) producing 766 frequency/beam combinations
all subject only to RR 9.7.
9