UNION INTERNATIONALE DES TÉLÉCOMMUNICATIONS
Bureau de développement
des télécommunications
Choosing Costing Method
Characteristics
Top Down
Bottom Up
Positives
•Based on Actual
Costs.
•Reconcilable.
•Reflects actual
situation.
•Requires
Confidential info.
•Efficiency
problems.
•Higher unit costs.
•Less issues of
confidentiality.
•Efficiency &
transparent.
•Lower unit cost.
May underestimate/omit
costs.
Non -realistic
OPEX modeling.
Negatives
Issues of Reconciliation
• Treatment of depreciation: difference in
network concepts.
• Network Structure & Efficiency: difference
in network evolution.
• Fundamental Difference in Treatment of
OPEX.
• Variance in treatment of common costs.
ABC & COSITU
Total Network
Costs
Cost of Network
Elements
Operating Costs
Depreciation
Expenses
Capital Cost
Operating &
Maintenance costs
(OPEX)
Text
Network
TextAsset Valuation
Technology Text
(Adjusted)
Cost
relationship
Interconnect
Service Costs
T eText
xt
Cost
Drivers
Depreciation
Profile
(time, method etc)
T e xText
t
Other Operating
Costs
Contribution to
Interest rate:
Text Text
Service
T e xT
t ext
equity & debt
prooduction
Routing:
:Compon
ent
Usage
Disaggregated
Component
Costs
Production
Efficiency
Text
Human Resource Complement
•
•
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•
Cost Accountant
Financial Accountant
Network Engineer
Information System Technician
Economist/Statistician
Management Support.
Economic Criteria
•
•
•
•
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•
Fully Distributed
Incremental
Long term, Short term, Medium term.
Computation of Weighted Averages
Defining Efficiency criteria
Measuring the constituents of depreciation
& Capital costs, etc.
Service Definition &
Classification Blue Print
Definition &
Classification of
Service On the Basis
of: Revenue
Categories & Volume
Basic Services
Transit Services
Local
Traffic
(LT)
Inter Urban
(IUT)
International International
(Int-Int)
Outgoing
Internation
al
(OIT)
Incoming
Internation
al
(IIT)
Sub Regional
International
(Sub-Int)
Outgoing
Sub regional
(OST)
Incoming
Sub regional
(IST)
Interconnect Services
International Sub regional
(int-Sub)
Sub Regional Sub regional
(sub- Sub)
Single Transit
(ST)
Double
Transit
(DT)
Outgoing
National
(ON)
National
Transit
(NatT)
Incoming
International
(InInt)
Outgoing
International
(OInt)
Define & Record Current Traffic
Total International & Sub
Regional Traffic
(TIST)
Incoming
International
(Volume)
International ->
Sub Regional
(Volume)
Out Going
International
(Volume)
Incoming Sub
Regional
(Volume)
Outgoing Sub
Regional
(Volume)
Sub Region ->>
Sub Region
(Volume)
Outgoing
International
Transit
(Volume)
Incoming
International
(Transit)
(Volume)
Total Domestic Traffic
Urban
(Volume)
Incoming National
Single Transit
(Volume)
Inter Urban
(Volume)
Incoming National
Double Transit
(Volume)
National Transit
(Volume)
Sub Region ->
International
(Volume)
Current Demand
Service
Type:
Urban
Int Urban
In Int
Out Int
ISub
OSub
Int-Int
Int-Sub
Sub-Int
Sub-Sub
Successful Failed
Attempts Attempts
Total
Attempts
Total
Minutes
Current Demand
• Current demand for calls over network, Dc is
equal to total number of call attempts that
engages the switches. Total call attempts is
the sum of successful, (Sc) and unsuccessful,
(Uc) attempts. Data on current Demand can
easily be extracted from the switching
network in the disaggregated format:
• 1. Dc = Sc + Uc
Current Demand
Service
Type
INST
INDT
ON
NT
INI
OGI
NT
Total
Successful Failed
Attempts
Attempts
Total
Attempts
Total
Minutes
Total Demand
• Expected Demand EDcis current throughput
of traffic adjusted by a factor η, to account
for net growth in traffic.
• EDc = ηcDc
Total Demand is the sum of Dc , EDc
• TDc = Dc(1+ ηc)
Detailing Network Elements
Local Loop
Poles, Underground Conduit,
Cable, Pillar, Line Cards etc
Switching/Signaling
Line termination and trunk
termination equipment,
signalling and call setup
equipment, etc
Satellite equipment, Micro
Wave equipment, Fibre Optic
equipment and transmission
electronics.
•
Transmission
Posting of Assets Costs & OPEX
Network Technology
• (T) Telephone
• (I) Internet and other IP services
• (C) Mobile
• (O) Other Services
Network Assets By Function &
Jurisdiction Schematic
Network Functionality
Transmission
Equipment:
Central office
Radio Systems
Circuit Equipment &
electronics
Switching Inc
Signaling
Equipment :
Local
Tandem
Remote
Operator Systems
Signaling etc
International
Switching
International
Transmission
National
Switching
National
Transmission
Access Network Equipment
Asset Amortization by Function
& Jurisdiction
Material & Supplies
Cash & Working
Capital
Tangible Assets
Intangible Assets
Tangible Assets:
Telecom Equip
Energy Equip
Buildings
Other
(01A)
Switching
Amortized
(01A1)
National
Switching:
Central Office
Trunk
Operator Syst
Signaling Eqpt
(01A2)
International
Switching:
International
switch
Signaling Eqipt
Etc.
(01B)
Transmission
Amortized
(01B1)
National
Transmission:
Circuit Eqpt
Radio Syst
Central Office
(01B2)
International
Transmission:
Circuit Eqpt
Radio Syst
Central Office
Material & Supplies
Cash & Working
Capital
Intangible Assets
(01C)
Access
Amortized
(01C1)
Copper Wire:
Feeder
Distribution
Customer Eqpt
(01C2)
Wireless:
Base Station
Customer Eqpt
(01C3)
Fibre to Curb
Terminal Eqpt
Customer Eqpt
Fibre Optic
Cable
(01AA)
Switching
Amortized
(01BB)
Transmission
Amortized
(1AA1)
National
Switching
(01AA2)
International
Switching
(01CC)
Access
Amortized
(01BB1)
National
Transmission
(01BB2)
International
Transmission
Opex Annualization By Function
& Jurisdiction
Plant Non
Specific OPEX
(Code 0670617)
Plant Specific OPEX
(Code 061-066)
Switching
(6AA)
Switching
(6A)
Transmission
(6B)
National
Switching
(6A1)
International
Switching
(6A2)
Transmission
(6BB)
Access
(6CC)
Access
(6C)
National
Switching
(6AA1)
National
Transmission
(6BB1)
National
Transmission
(6B1)
International
Transmission
(6B2)
International
Switching
(6AA2)
International
Transmission
(6BB2)
Posting OPEX
Operating Costs
•
•
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•
-
Plant Specific Operations Expense
Plant Non -Specific Operations Expense
Customer Operations Expense
Corporate Expenses
Operating Expenses By Function
& Jurisdiction
•
•
•
•
•
•
•
•
Code
061
062
063
064
065
065
066
Plant Specific OPEX
Network Support OPEX
General Support OPEX
Central Office Switching
Operator Systems OPEX
Central Office Transmission
Info origin/Terminal OPEX
Cable & Wire OPEX
Plant Non Specific
• 067
•
•
•
•
•
•
•
068
069
0610
0611
0612
0613
0614
Other Property, Plant &
Equipment OPEX
Access Non Specific OPEX
Other Network Opex
Dep & Amort OPEX
Customer Operation OPEX
Executive & Planning OPEX
Operating Taxes
General & Administration Opex
Plant Non-Specific
• 0614
• 0617
Marketing
Services
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