Current Cost Financial Statements for 2010
including Openreach Undertakings
Statement by Ofcom
Ofcom Statement on BT’s Current Cost Financial Statements 2010
gain; and
- excluding the duct asset holding gain from the reporting of unit FAC, DLRIC and DSAC
costs against each service (although the mean capital employed used to prepare these
unit costs are unadjusted and reflect the higher duct and copper asset values).
Introduction
1
2
Relevant, reliable and timely regulatory financial information informs many of our
decisions. We require this information in order to monitor and enforce various
obligations that are placed on BT in markets where they are found to have significant
market power (“SMP”) and as a source of data for setting and monitoring charge
controls. It is also an important tool for other communications providers, because
(amongst others) it provides assurance that BT is complying with its cost-orientation and
no undue discrimination obligations.
Under SMP services Condition OA6(c), BT is required to publish with the regulatory
financial statements (RFS) any written statement made by Ofcom and provided to BT
commenting on the data in, the notes to or the presentation of any or all of the RFS
and/or the Accounting Documents. This condition was originally imposed on BT because
Ofcom felt it was important to be able to bring aspects of the RFS to stakeholders’
attention, in particular to highlight issues of concern or interest, but also, for example,
to indicate areas for more detailed review of the RFS following publication.
We believe these changes will be of assistance to users of the RFS in interpreting these
results where the holding gain significantly distorts underlying profitability.
Improvements to BT’s Current Cost Financial Statements 2010
8 BT’s 2010 RFS include a number of improvements vis-à-vis last year including:
a.
Additional disaggregation and disclosure of regulated services in the growing
Alternative Interface Symmetric Broadband Origination (AISBO) market and
leased line markets;
b.
The introduction of a new methodology to identify which TISBO circuits fall within
or outside of the new geographic market definition that excludes the central and
east London area (CELA);
c.
An updated method for the attribution of new 21CN core network costs reflecting
BT’s announcement in April 2010 that it has decided to halt further voice lines
migration to the 21CN voice platform.
3 Ofcom believes that there are important aspects of BT’s 2010 RFS where we believe our
comments will be helpful to users.
Current cost accounting - valuation of assets
4
BT’s 2010 RFS show a significant increase in the net replacement cost of duct and
copper access network assets vis-à-vis 2009. In Section 4 – Basis of preparation, BT
describes how these values were derived and in particular the assumptions and
estimates used to calculate duct asset values. They show a holding gain (increase in
value) of £1,880m.
5 Establishment of an appropriate value of BT’s asset base is critical to the reliable
Maintaining the current reporting obligations
9
We believe it is important that the current reporting requirements remain fit for purpose
and therefore continue to discuss with BT how the RFS need to change to secure that. As
in previous years, we will identify and work with BT to improve the 2010/11RFS, for
example to reflect our market review decisions and technological developments.
measurement of returns on mean capital employed (‘ROCE’), monitoring compliance
with BT’s cost orientation obligations and setting regulated charges.
6
7
Later this year we plan to publish a consultation setting out charge control proposals for
wholesale line rental and unbundled local loops. BT’s 2010 valuation of duct assets
could have implications for these and other charge controls. We therefore intend to
undertake an assessment of the methodology, methods and calculations adopted by BT
that is expected to feed into this consultation.
In order to ensure the RFS remain transparent and meaningful following this
revaluation, and following discussions with us, BT has enhanced the presentation of
market level statements in the RFS by:
- Presenting market returns both including and excluding the duct revaluation holding
Ofcom
28 July 2010
Contents
Current Cost Financial Statements
Contents
Page
Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1 - Introduction to Current Cost Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.1 - Introduction: Regulation in the UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 1.2 - Regulatory Financial Reporting Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Section 1.3 - Regulatory Financial Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 1.4 - Regulatory Financial Review (Annex 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 2 - Statement of Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.1 - Statement of Responsibility (Annex 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3 - Audit Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.1 - Report of the Independent Auditors (Annex 23). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4 - Basis of Preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.1 - Introduction to the Basis of Preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.2 - Other Aspects to the Basis of Preparation (Annex 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5 - Summary of Financial Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.1 - Consolidated Performance Summary (Annex 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6 - Attribution of Wholesale Current Cost and Mean Capital Employed. . . . . . . . . . . . . . . . . . . . 23
Section 6.1 - Attribution of Wholesale Current Costs 2010 (Annex 5A) . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.1.1 - Notes on Wholesale P&L sector costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.2 - Attribution of Wholesale Current Costs 2009 (Annex 5A)(Re-presented). . . . . . . . . . . . .
Section 6.3 - Attribution of Wholesale Current Cost Mean Capital Employed 2010 (Annex 6A) . . . . . .
Section 6.3.1 - Notes on Wholesale MCE sector costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.4 - Attribution of Wholesale Current Cost Mean Capital Employed 2009 (Annex 6A)
(Re-presented). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
25
26
27
28
29
Section 7 - Review of Access Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.1 - Financial Performance in Access Markets (Annex 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.2 - Access Markets Review (Annex 10 & 14). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.2.1 - Access Markets Group Level Review (Annex 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.2.2 - Access Market Level Financial Review (Annex 14) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.3 - Wholesale analogue exchange line services (Annex 11) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.4 - Wholesale ISDN2 exchange line services (Annex 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.5 - Wholesale business ISDN30 exchange line services (Annex 12). . . . . . . . . . . . . . . . . . . . .
Section 7.6 - TISBO (up to and including 8Mbit/s)(Annex 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.7 - TISBO (above 8Mbit/s up to and including 45Mbit/s)(Annex 11) . . . . . . . . . . . . . . . . . . .
Section 7.8 - TISBO (above 45Mbit/s up to and including 155Mbit/s)(Annex 11) . . . . . . . . . . . . . . . . .
31
32
32
33
38
39
40
41
47
49
1
Current Cost Financial Statements
Page
Section 7.9 - AISBO (up to and including 1Gbit/s)(Annex 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Section 7.10 - Wholesale local access (Annex 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
Section 8 - Review of Other Wholesale Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 8.1 - Financial Performance in Other Wholesale Markets (Annex 8) . . . . . . . . . . . . . . . . . . . . . .57
Section 8.2 - Review of Other Wholesale Markets (Annex 10 & 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Section 8.2.1 - Market Group Level Review (Annex 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Section 8.2.2 - Market Level Financial Review of Other Wholesale SMP Markets (Annex 14) . . . . .59
Section 8.3 - Call origination on fixed public narrowband networks (Annex 13) . . . . . . . . . . . . . . . . . . .65
Section 8.4 - Local-tandem conveyance and transit on fixed public narrowband networks (Annex 13) 67
Section 8.5 - Single transit on fixed public narrowband networks (Annex 13) . . . . . . . . . . . . . . . . . . . . .68
Section 8.6 - Technical areas (Interconnect Circuits)(Annex 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 8.7 - Fixed call termination (Annex 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
Section 8.8 - Wholesale trunk segments (Annex 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
Section 8.9 - Technical areas (Point of Handover)(Annex 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
Section 8.10 - Wholesale Broadband Access (Annex 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76
Section 9 - Reconciliation Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 9.1 - BT Reconciliation Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81
Section 9.1.1 - BT Reconciliation Statement 2010 (Annex 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81
Section 9.1.2 - BT Reconciliation Statement 2009 (Restated)(Annex 19). . . . . . . . . . . . . . . . . . . . . 82
Section 9.1.3 - BT Reconciliation Statement MCE (Annex 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83
Section 10 - Openreach Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.1 - Openreach P&L Statement 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
Section 10.2 - Openreach P&L Statement 2009 (Re-presented) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86
Section 10.3 - Openreach MCE Statement 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87
Section 10.4 - Openreach MCE Statement 2009 (Re-presented) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88
Section 10.5 - Reconciliation of Openreach P&L Statement 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
Section 10.6 - Reconciliation of Openreach P&L Statement 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90
Section 10.7 - Openreach Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91
Appendix 1 - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Appendix 1.1 - Network Activity Statements (Annex 15). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93
Appendix 1.1.1 - Network Activity Statement - Consolidated 2010 . . . . . . . . . . . . . . . . . . . . . . . . . .93
Appendix 1.1.2 - Network Activity Statement - Consolidated 2009 . . . . . . . . . . . . . . . . . . . . . . . . . .96
Appendix 1.2 - Calculation of FAC based on component costs and usage factors (Annex 16). . . . . . . . .99
Appendix 1.2.1 - Calculation of FAC based on component costs and usage factors 2010 . . . . . . . . .99
Appendix 1.2.2 - Calculation of FAC based on component costs and usage factors 2009
(Re-presented). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105
Contents
Current Cost Financial Statements
Page
Appendix 1.3 - BT Network Services Reconciliation (Annex 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Appendix 1.3.1 - BT Network Services Reconciliation 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Appendix 1.3.2 - BT Network Services Reconciliation 2009 (Re-presented) . . . . . . . . . . . . . . . . . 114
Appendix 2 - Price Control Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Appendix 2.1 - Price Controls in Wholesale Markets (Annex 24)(Unaudited) . . . . . . . . . . . . . . . . . . . . 119
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
2
Section 1 - Introduction to Current Cost Financial Statements
Section 1 - Introduction to Current Cost Financial Statements
Section 1
Introduction to Current Cost Financial Statements
3
Section 1 - Introduction to Current Cost Financial Statements
Section 1.1
1.1 –- Introduction:
Section
Introduction: Regulation
Regulation in
in the
the UK
UK
Electronic communications regulation in the UK is conducted within a framework set out in various
European Union (EU) directives, regulations and recommendations. The framework is currently under
review and new directives are expected to take effect by 2011.
Ofcom
Ofcom (the Office of Communications) was set up under the Office of Communications Act 2002 to
provide a single, seamless approach to regulating the entire communications market. Its principal
duties are to further the interests of citizens in relation to communications matters and to further the
interests of consumers in relevant markets, where appropriate by promoting competition. Ofcom
regulation takes the form of sets of conditions laid down under the Communications Act 2003
(Communications Act), and directions under these conditions. Some conditions apply to all providers of
electronic communications networks and services; others apply to individual providers, which Ofcom
has designated as universal service providers or having significant market power (SMP) in a particular
market.
Conditions applying to all providers
Although these general conditions are concerned mainly with consumer protection, they also include
requirements relating to general access and interconnection, standards, emergency planning, the
payment of administrative charges, the provision of information to Ofcom and numbering. A separate
condition regulates the provision of premium rate services. The Electronic Communications Code
applies to all communications providers authorised to carry out street works and similar activities for
network provision. It requires electronic communications providers with apparatus on or in the public
highway to make financial provision to cover any damage caused by work they carry out, and for the
removal of their networks in the event of liquidation or bankruptcy.
Significant market power (SMP) designations
Ofcom is also required by EU directives to review relevant markets regularly and determine whether any
communications provider has SMP in those markets.
Where Ofcom finds that a provider has SMP, it must impose appropriate remedies that may include
price controls. At 31 March 2010, as a result of previous market reviews, BT was deemed to have SMP
in a number of markets. These markets are listed in Section 1.2 - Regulatory Financial Reporting
Obligations.
Where a provider has SMP, the Communications Act enables Ofcom to impose one or more obligations
in relation to each market, including:
• Accounting separation - which requires the operator to maintain accounting systems such that
the financial results of each SMP market can be separately presented and that costs relating to
products and markets are allocated in a transparent and appropriate way. Accounting separation
is also used to ensure that there is no undue discrimination.
• Cost accounting – Wholesale cost accounting obligations apply where there is an obligation in
relation to price controls, cost orientation or cost recovery. Wholesale activities include products
and services sold to other communication providers such as the provision of network access, the
4
use of the network and the availability of various facilities. Obligations may include price
controls for specified SMP products, cost-orientation of prices for SMP products and the
recovery of costs for the purpose of demonstrating transparency.
• Publication - The annual Current Cost Financial Statements satisfy the obligation relating to
publication of financial information for SMP markets. The publication of information relating to
SMP markets is intended to provide public assurance that BT has complied with its cost
accounting and accounting separation obligations. Ofcom also imposes certain audit
requirements in respect of the published Financial Statements.
In September 2009, Ofcom published its Fixed Narrowband Retail Services Market Review statement.
The review concluded that BT no longer has Significant Market Power (SMP) in the supply of retail fixed
narrowband analogue access and retail calls markets in either the residential or business sectors. As a
result, BT’s financial reporting obligations in these markets were revoked.
In September 2009, Ofcom also published its Review of the Fixed Narrowband Services Wholesale
Markets statement. The review introduced three main reporting changes in the Regulatory Financial
Statements. Firstly, the wholesale residential and business analogue exchange line markets will be
defined as one wholesale analogue exchange line market. Secondly, the wholesale residential and
business ISDN2 exchange lines will be defined as one wholesale ISDN2 market. Thirdly, BT will no longer
be required to report on the local tandem conveyance and transit market in the Regulatory Financial
Statements for the year ending 31 March 2011.
Significant market power charge controls
As a result of SMP designations, the charges BT can make for a number of wholesale services are subject
to regulatory controls.
The Review of the Fixed Narrowband Services Wholesale Markets concluded that BT retains Significant
Market Power (SMP) in the markets for analogue and ISDN2 exchange lines, wholesale fixed call
origination and geographic call termination.
The Review of BT’s Network Charge Controls in wholesale narrowband markets, published on 15
September 2009, concluded that new network charge controls (NCC) should be applied to call
origination, call termination, interconnection circuits and Project Management, Policy and Planning
(PPP) services, from 1 October 2009 and run for four years until 30 September 2013.
Wholesale geographic call termination charge controls for geographic call termination on BT’s network
will take the form of a three year RPI plus 3.75% formula. Wholesale call origination charge controls for
call origination on BT’s network will take the form of a three year RPI plus 2.75% formula.
Charge controls will also apply to the technical area of interconnection services necessary for the
provision of both wholesale call origination and geographic call termination, and to the component in
the charges for these services to cover Project Management, Policy and Planning (PPP). Interconnect
services charge controls will take the form of a three year RPI plus 3.75% formula. PPP charge controls
will be a three year RPI plus 1.5% formula.
On 2 July 2009, Ofcom published their final statement on the Leased Lines Charge Control (LLCC) with
regard to a new charge control framework for wholesale traditional interface and alternative interface
products and services. The statement covered the Partial Private Circuit (PPC) products provided by BT
Wholesale (referred to as "Traditional Interface/TI" products) and wholesale ethernet access and
Section 1 - Introduction to Current Cost Financial Statements
backhaul services provided by Openreach (referred to as "Alternative Interface/AI" products by Ofcom).
The controls in the LLCC statement apply for the period 1 October 2009 to 30 September 2012.
Partial private circuits (PPC) charge controls apply to certain wholesale leased lines that BT provides to
other network operators. The previous controls were set in 2004, and were to apply from 1 October
2004 to 30 September 2008. These controls were extended to apply until 30 September 2009 due to
delays in the latest consultation. In the LLCC statement for PPCs, the revenue neutral starting charge
adjustments will allow rebalancing between terminating PPCs and trunk PPCs. The baskets allow
flexibility to adjust individual service charges to reflect commercial objectives.
In relation to wholesale ethernet services published by Openreach, the LLCC statement imposed a
control that is a three year RPI minus formula, starting 1 October 2009, covering three separate baskets
as follows:
• RPI-7% for Wholesale low bandwidth AISBO (up to including 1Gbit) with sub caps for
connections and rentals of RPI+5% and RPI for Backhaul Extension Services (BES).
• Accommodation Services - nominal price increase of 3% in 2009/10 followed by RPI+4.5% in
2010/11 within a controlling sub cap +/- 10% on each charge.
• RPI for ancillary services.
In addition to the above controls, Openreach was required to reduce the price of the standard 1Gbit BES
rental service by 17% from 1 August 2009.
On 22 May 2009, Ofcom published their final statement on the Openreach Financial Framework
Review: A New Pricing Framework for Openreach. Ofcom concluded that new price controls were
required for MPF and SMPF rental services and the control would comprise two elements: price ceilings
for 2009/10 and RPI+5.5% and RPI+1% respectively in 2010/11. Ofcom decided not to set the charge
control beyond two years as this would extend the controls beyond the expected requirements of the
Wholesale Local Access Review. In addition, Ofcom have introduced new controls on MPF, SMPF and
Co-mingling services comprised 3% (2009/10) and RPI+4.5% (2010/11).
On 26 October 2009, Ofcom published their final statement on Charge Controls for Wholesale Line
Rental and related services. This concluded that the current controls on Residential and Business
Wholesale Line Rental (WLR) would be replaced by a single control, for a Core WLR Rental service. In
addition, new price controls would be introduced for WLR line transfers and new connections. The new
charge controls will apply until March 2011 and will be phased to allow Openreach an appropriate
amount of time to make the necessary changes to their systems.
Please refer to Appendix 2.1 for details relating to charge controls.
BT’s Undertakings
In response to Ofcom’s 2005 strategic review of telecommunications, BT proposed a number of legally
binding Undertakings under the Enterprise Act 2002 (Enterprise Act). These Undertakings, which
included the creation of Openreach, were accepted by Ofcom and came into force in September 2005.
The Undertakings are intended to deliver clarity and certainty to the UK telecommunications industry
about the way BT will provide ‘upstream’ regulated products to support effective and fair competition
in related ‘downstream’ markets. This, in itself, should lead to a reduction in the need for regulation in
those competitive downstream markets over time.
5
The Undertakings also set up certain financial reporting requirements which BT has to comply with.
These reporting requirements have been described in Section 1.2 - Regulatory Financial Reporting
Obligations, Section 2.1 – Statement of Responsibility and Section 10 - Openreach Information.
Next generation access regulation
In March 2009, following consultation, Ofcom published a policy statement setting out a regulatory
framework for next generation access (NGA). This gave sufficient regulatory certainty for BT to proceed
with the initial phase of super-fast broadband roll out and BT will continue to work with Ofcom as these
plans develop.
In June 2009, the UK Government published its ‘Digital Britain’ report setting out the importance of the
digital economy to the nation’s economic future and how it will drive future industrial capability and
competitiveness. The report contained 78 separate recommendations, with the key areas being:
Universal Service Commitment, Next Generation Access, Peer to Peer/copyright issues, Spectrum and
Ofcom duties. Prior to the May 2010 election, there were plans to create a fund of £200m that would
be available via competitive tender to bidders in order to deliver the Government’s universal service
commitment to provide a 2Mbit/s broadband connection. Whilst the plans for a levy on fixed line rental
to fund the investment have since been scrapped, BT believes alternative sources of funding are under
consideration.
Section 1 - Introduction to Current Cost Financial Statements
Section 1.2
1.2 –- Regulatory
Section
Regulatory Financial
Financial Reporting
Reporting Obligations
Obligations
The prescribed form and content of the published Current Cost Financial Statements is reviewed
regularly by Ofcom, in the light of changes in the regulatory regime and the needs of stakeholders. The
relevant Ofcom documentation is listed below and together forms “the Final Statements and
Notifications” under the requirements of which the Current Cost Financial Statements for 2010 have
been prepared.
• “The Regulatory Financial Reporting Obligations on BT and Kingston Communications” issued
22 July 2004
• “Changes to BT’s Regulatory Financial Reporting Framework” of 31 August 2005
• “Changes to BT’s Regulatory Financial Reporting and Audit Requirements” issued 16 August
2006
• “Changes to BT’s Regulatory Financial Reporting and Audit Requirements” issued 30 May 2007
• “Changes to BT’s 2007/08 Regulatory Financial Statements” issued 26 June 2008
• “Changes to BT and KCOM’s Regulatory Financial Reporting – 2008/09 update” issued 15 June
2009
• “Changes to BT and KCOM’s regulatory and financial reporting 2009/10 update” issued 4 June
2010
In addition to the information in the Current Cost Financial Statements, Ofcom also requires BT to
provide additional detailed information to enable Ofcom to regulate effectively and efficiently. This
additional information is not published by either BT or Ofcom nor is it subject to any independent
examination.
The markets in which BT has SMP and reporting obligations in the period covered by the Current Cost
Financial Statements for 2010 are listed below. These markets have been grouped into groups of
markets as defined by Ofcom.
Wholesale Access markets:
•
•
•
•
•
Wholesale analogue exchange line services*
Wholesale ISDN2 exchange line services*
Wholesale business ISDN30 exchange line services
Traditional interface symmetric broadband origination (up to and including 8Mbit/s)*
Traditional interface symmetric broadband origination (above 8Mbit/s up to and including
45Mbit/s)*
• Traditional interface symmetric broadband origination (above 45Mbit/s up to and including
155Mbit/s)*
• Alternative interface symmetric broadband origination (up to and including 1Gbit)*
• Wholesale local access*
Other Wholesale markets (including technical areas):
• Call origination on fixed public narrowband networks*
• Local-tandem conveyance and transit on fixed public narrowband networks*
6
•
•
•
•
•
•
Single transit on fixed public narrowband networks*
Technical areas (Interconnect Circuits)*
Fixed call termination*
Wholesale trunk segments*
Technical areas (Point of Handover)*
Wholesale broadband access (Market 1 and Market 2). The Financial Statements for the market
include Market 3 with financial information for each sub-market shown by way of note.
Wholesale markets which have both cost accounting and accounting separation requirements have
been marked with * in the list above. For these wholesale markets, the Current Cost Financial
Statements also include details of costs and charges for individual services within each market. The
remaining wholesale markets have accounting separation requirements only.
In Ofcom’s statement “Changes to BT and KCOM’s regulatory and financial reporting 2009/10 update”
issued 4 June 2010, Ofcom removed BT’s reporting obligation for all Retail markets.
Openreach
The Current Cost Financial Statements for 2010 also include financial information to meet the
requirements set out in the Undertakings (section 5.31); specifically the need to disclose the results of
Openreach separately and to reconcile the results to the Openreach segmental information shown in BT
Group’s Annual Report effective from the 2007 financial year.
Section 1 - Introduction to Current Cost Financial Statements
Section 1.3
1.3 -- Regulatory
Regulatory Financial
Financial Overview
Overview
Section
This Section provides an overview summarising this year’s underlying returns on Mean Capital
Employed (MCE) derived from the Current Cost Financial Statements. BT is required to revalue its assets
each year under the Financial Capital Maintenance (FCM) concept of Current Cost Accounting (CCA).
Any significant changes in the CCA valuation significantly impact the published returns on mean capital
employed (MCE) making it difficult to understand the underlying returns in the Markets. In 2009/10
there has been a significant change in the valuation of duct (fully explained in Section 4 - Basis of
Preparation) and continued volatility in copper prices.
The key results below exclude all CCA holding gain/losses (duct, copper, etc.) and other adjustments
while including supplementary depreciation. The reason for making these changes is to put underlying
returns for 2008/09 and 2009/10 on a comparable basis. The numbers below are not published
elsewhere in these Statements. Shown below are the returns on this comparable basis:
• Overall Access market returns on MCE excluding the one off impacts of current cost adjustments
have declined from 11% in the year 2008/09 to 9% in the year 2009/10. Returns on MCE on
copper products have declined year on year from 9% to 8%. These copper product returns are
not separately shown in these Statements. Price reductions on Ethernet services have seen the
returns on MCE decline from 34% last year to approximately 14% in 2009/10.
• Overall Other Wholesale market returns on MCE excluding the current cost adjustments
(explained in Section 4 Basis of Preparation) have declined year on year to 16% (23% 2008/09).
Returns on MCE on broadband have fallen significantly from 35% to 13% year on year for the
market as a whole. Returns on MCE on Wholesale Trunk have fallen from above 68% to about
45% year on year, reflecting price cuts that occurred half way through the year. Returns on MCE
in the combined Wholesale Trunk and TISBO markets have remained constant year on year at
16%. This group of products known and regulated as Partial Private Circuits is not shown as a
combined market in these Statements. Returns on the combined market are expected to fall
once the full year impact of the Trunk price reductions take effect.
Further detail on these results is provided in the Regulatory Financial Review (see Section 1.4).
7
Section 1 - Introduction to Current Cost Financial Statements
Section 1.4
1.4 -- Regulatory
Regulatory Financial
Financial Review
Review (Annex
Section
(Annex 4)
4)
The Regulatory Financial Review is intended to assist the user’s understanding of the Current Cost
Financial Statements, and focuses on those matters that are relevant to the users of the information,
including accounting policies that are key to understanding performance.
The review explains the main factors that underlie each market or groups of markets; in particular those
that have changed or are expected to change in the future. The review includes explanations of new
products and services. This is to assist a user of the Financial Statements in understanding the dynamics
of the products and services in each market, the main influences on financial performance and how
these interrelate.
These regulatory financial reviews have been provided at the level of groupings of markets and then by
individual markets in Sections 7 to 8.
8
Section 2 - Statement of Responsibility
Section 2 - Statement of Responsibility
Section 2
Statement of Responsibility
9
Section 2 - Statement of Responsibility
Section 2.1
2.1 -- Statement
Statement of
Responsibility (Annex
Section
of Responsibility
(Annex 2)
2)
The Undertakings require BT to present the financial results of Openreach, including the following:
British Telecommunications plc (“BT” or the “Group”) is required to prepare Current Cost Financial
Statements in accordance with the Final Statements and Notifications as described in Section 1.2.
Under the Financial Capital Maintenance (FCM) concept of Current Cost Accounting BT has revalued its
assets in 2010. The approach taken in the Current Cost Financial Statements has been described in
Section 4.1.
The Current Cost Financial Statements include comparative information for the year ended 31 March
2009 first published on 13 August 2009 subject to certain restatements and re-presentations detailed
in Section 4.1.
The Current Cost Financial Statements are prepared in accordance with the Primary Accounting
Documents and Secondary Accounting Documents (namely the Detailed Attribution Methods, the
Detailed Valuation Methodology and the Long Run Incremental Cost Model: Relationships and
Parameters). In so far as there is any inconsistency in the Primary and Secondary Accounting
Documents, BT ensures that the Current Cost Financial Statements are prepared in accordance with the
Primary Accounting Documents in the following order of priority:
•
•
•
•
•
the Regulatory Accounting Principles;
the Attribution Methods;
the Transfer Charging System;
the Accounting Policies; and
the Long Run Incremental Cost Methodology.
The Current Cost Financial Statements are reconciled to the BT Group’s Annual Report and that
reconciliation is demonstrated and explained.
BT confirms that the Current Cost Financial Statements for the year ended 31 March 2010 which are
prepared in accordance with the requirements of the Final Statements and Notifications have been
prepared in accordance with the Primary and Secondary Accounting Documents dated 28 July 2010.
BT confirms that the Current Cost Financial Statements for the year ended 31 March 2009 which are
prepared in accordance with the requirements of the Final Statements and Notifications have been
prepared in accordance with the Primary and Secondary Accounting Documents dated 13 August 2009
subject to certain restatements and re-presentations as detailed in Section 4.1.
BT confirms that the Detailed Attribution Methods, the Detailed Valuation Methodology and the Long
Run Incremental Cost Model: Relationships and Parameters all dated 28 July 2010 are appropriate to
implement the principles contained in the Primary Accounting Documents dated 28 July 2010,
including the Transparency Principle.
Openreach
BT is also required in accordance with the Undertakings to separately present the financial results of
Openreach within BT’s Current Cost Financial Statements as explained in Sections 1.1 and 1.2. The
Undertakings are attached at Annex A of Part 2 of Ofcom’s “Final Statements on the Strategic Review
of Telecommunications, and undertakings in lieu of a reference under the Enterprise Act 2002”, issued
on the 22 September 2005.
10
• Openreach financial information such as headline revenue, cost of sales (or gross margin),
SG&A, EBITDA, depreciation, operating profit and capital expenditure, revenues broken down
into the broad product groups that Openreach provides and further split between internal and
external sales, separately identified payments to other parts of BT for products that form inputs
to Openreach products (e.g. electronics); and
• Reconciliation of Openreach’s revenue and operating profit (and other such items as may be
agreed between BT and Ofcom) with information about Openreach shown in BT Group’s Annual
Report.
The Openreach Financial Statements have been presented in Section 10. These Statements include
comparative information for the year ended 31 March 2009.
The form, content and basis of preparation of the financial results of Openreach follow those used in
the preparation of the Current Cost Financial Statements of BT as described above, except where
differences are agreed with Ofcom.
BT confirms that the Openreach Financial Statements for the year ended 31 March 2010 which have
been prepared in accordance with the Primary Accounting Documents dated 28 July 2010, comply with
the requirements of the Undertakings dated 22 September 2005.
Phil Moses
CFO Openreach and Regulatory Finance
28 July 2010
Section 3 - Audit Report
Section 3 - Audit Report
Section 3
Audit Report
11
Section 3 - Audit Report
Section 3.1 - Report of the Independent Auditors (Annex 23)
Report of the Independent Auditors to British Telecommunications plc and Ofcom issued in accordance with the Final Statement and Notification entitled
“The regulatory financial reporting obligations on BT and Kingston Communications” issued by Ofcom on 22 July 2004 as amended by the annual
“Notifications” of changes to regulatory financial reporting issued by Ofcom following consultation as set out below.
1. We have examined the Current Cost Financial Statements for 2010 (the "Financial Statements")
which include information in respect of economic markets (the "Market Financial Statements") and
Openreach (the "Openreach Information").
2. The Market Financial Statements are prepared by British Telecommunications plc (the "Company")
under the current cost convention in accordance with:
• the Final Statement and Notification entitled "The regulatory financial reporting obligations on
BT and Kingston Communications" issued by Ofcom on 22 July 2004 as amended by the Final
Statement and Notification entitled "Changes to BT's regulatory financial reporting framework"
issued by Ofcom on 31 August 2005, and the Explanatory Statements and Notifications entitled
"Changes to BT's regulatory financial reporting and audit requirements" issued by Ofcom on 16
August 2006, "Changes to BT's regulatory financial reporting and audit requirements" issued by
Ofcom on 30 May 2007, "Changes to BT's 2007/08 regulatory financial statements" issued by
Ofcom on 26 June 2008, "Changes to BT and KCOM's regulatory financial reporting 2008/09
update" issued by Ofcom on 15 June 2009 and "Changes to BT and KCOM's regulatory and
financial reporting 2009/10 update" issued by Ofcom on 4 June 2010 (together the "Final
Statements and Notifications");
• the Primary Accounting Documents;
• the Secondary Accounting Documents, namely the Detailed Attribution Methods and the
Detailed Valuation Methodology; and
• The treatment of holding gains and associated backlog depreciation on duct and associated
structures as described in section 4.1 on page 17 and 18.
3. The Openreach Information is prepared by the Company under the current cost convention in
accordance with:
• the undertakings given to Ofcom by the Company pursuant to the Enterprise Act 2002 on 22
September 2005 (the "Undertakings");
• the Explanatory Statement and Notification entitled "Changes to BT's regulatory financial
reporting obligations" issued by Ofcom on 30 May 2007 , "Changes to BT's 2007/08 regulatory
financial statements" issued by Ofcom on 26 June 2008, "Changes to BT and KCOM's regulatory
financial reporting 2008/9 update" issued by Ofcom on 15 June 2009 and "Changes to BT and
KCOM's regulatory and financial reporting 2009/10 update" issued by Ofcom on 4 June 2010
(together the "Explanatory Statement and Notifications"); and
• the Primary Accounting Documents.
4. The Market Financial Statements comprise the following statements for the year ended 31 March
2010 for the Markets and Technical Areas listed on page 6:
• The consolidated performance summary on page 22;
12
• The statements of Attribution of Wholesale Current Costs and Mean Capital Employed on pages
24, 26, 27 and 29;
• The statement of financial performance in Access Markets on page 31;
• The Market Summary statements for Access Markets on pages 38 to 55;
• The statement of financial performance in Other Wholesale Markets on pages 57;
• The Market Summary statements for Other Wholesale Markets on pages 65 to 79; and
• the related notes set out in Sections 4, 7, 8 and 9 on pages 32 to 37, 58 to 64 and 81 to 83, and
Appendix 1 on pages 93 to 117, other than the LRIC Floors and LRIC ceilings.
5. The Openreach Information comprises the following information for the year ended 31 March
2009 on pages 85 to 90:
• The Openreach P&L Statement;
• The Openreach MCE Statement; and
• The Reconciliation of Openreach P&L.
6. The Market Financial Statements and The Openreach Information include comparative information
for the year ended 31 March 2009 first published on 13 August 2009 which have been represented as described in "Comparability of current and prior year results" on page 17. All
comparative information for the year ended 31 March 2009 is prepared by the Company to comply
with the Final Statements and Notifications, and in accordance with the Primary Accounting
Documents and the Secondary Documents dated 13 August 2009 as amended, where applicable,
in accordance with "Comparability of current and prior year results" on page 17.
Respective responsibilities of the Company and auditors
7. The Company is responsible for preparing and approving, as described on page 10 of the Financial
Statements. Our responsibilities, as independent auditors, are established in the United Kingdom
by the Final Statements and Notifications, the Undertakings, the Auditing Practices Board and our
profession's ethical guidance.
8. Our responsibility is to audit the Financial Statements in accordance with relevant legal and
regulatory requirements and International Standards on Auditing (UK and Ireland) issued by the
Auditing Practices Board. This report, including the opinion, has been prepared for and only for the
Company and Ofcom and for no other purpose. We do not, in giving this opinion, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in writing.
9. We report our opinions as to whether:
• the Market Financial Statements as a whole;
Section 3 - Audit Report
11. We report our opinions as to whether the Re-presented Market Financial Statements as a whole for
the year ended 31 March 2009 are fairly presented in accordance with the Primary Accounting
Documents dated 13 August 2009 subject to the re-presentation changes described in
"Comparability of current and prior year results" on page 17, and comply with the requirements of
the Final Statements and Notifications.
• each of the market group statements comprising the statement of financial performance in
Access Markets on page 31 and the statement of financial performance in Other Wholesale
Markets on page 57 (the "Market Group Statements");
• each of the Market Summary Statements for the markets and technical areas listed below(the
"FPIA Markets")
o Wholesale analogue exchange line services on page 38;
12. In addition, we report if, in our opinion, the "Introduction to accounts", setting out the basis upon
which the Financial Statements have been prepared, is not consistent with the Financial
Statements, if the Company has not kept proper accounting records, if we have not received all the
information and explanations we require for our examination, or if information specified by the
Final Statements and Notifications is not disclosed.
o Wholesale business ISDN30 exchange line services on page 40;
o Traditional interface symmetric broadband origination (up to and including 8Mbit/s) on
page 41;
o Traditional interface symmetric broadband origination (above 8mbit/s up to and inc.
45Mbit/s) on page 47;
o Alternative interface symmetric broadband origination on page 51;
13. We read the other information presented with the Financial Statements and consider the
implications for our report if we become aware of any apparent misstatements or material
inconsistencies with the Financial Statements. The other information comprises the Regulatory
Financial Overview on page 7, the Access Markets Review on pages 32 to 37, the Review of Other
Wholesale Markets on pages 58 to 64, the Price Control Statements on pages 119 to 121, the
Openreach Notes on page 91 and the Glossary and Additional Information on pages 123 to 127.
o Wholesale local access on page 55;
Basis of audit opinion
o Traditional interface symmetric broadband origination (above 45mbit/s up to and inc.
155Mbit/s) on page 49;
o Wholesale trunk segments on page 72;
o Wholesale broadband access on page 76; and
• the Openreach Information on pages 85 to 90.
are fairly presented in accordance with the Primary Accounting Documents and comply with the
requirements of the Final Statements and Notifications and the Undertakings. In respect of the
Market Financial Statements as a whole, each of the Market Group Statements and each of the FPIA
Markets, we also report whether, in forming that opinion, having reviewed the Primary and
Secondary Accounting Documents, the Secondary Accounting Documents are appropriate to
implement the principles contained in the Primary Accounting Documents.
10. We also report our opinion as to whether each of the Market Summary Statements for the selected
markets listed below (the "PPIA Markets ")
o Call origination on fixed public narrowband networks on page 65;
o Local-tandem conveyance & transit on fixed public narrowband networks on page 67;
o Single transit on fixed public narrowband networks on page 68;
o Technical areas (interconnect circuits) on page 69; and
o Fixed call termination on page 71.
are properly prepared in accordance with the relevant procedures, defined in the Primary and
Secondary Accounting Documents, and comply with the requirements of the Final Statements and
Notifications. We also report whether, in forming that opinion, having reviewed the Primary and
Secondary Accounting Documents, anything has come to our attention that would lead us to
conclude that the principles and procedures contained in the Primary and Secondary Accounting
Documents have not been properly applied in the preparation of the PPIA Markets.
13
14. As explained in "Basis of preparation" on pages 16 to 20, the Company has, by agreement with BT
Group plc, its ultimate parent company, prepared the Financial Statements by disaggregating
balances recorded in the general ledgers and other accounting records of BT Group plc and its
subsidiaries ("the Group") maintained in accordance with the Companies Act 2006 and used, in
accordance with that Act, for the preparation of the Company's statutory consolidated financial
statements for the years ended 31 March 2010 and 31 March 2009 ("the Statutory Financial
Statements").
15. PricewaterhouseCoopers LLP audited the Statutory Financial Statements on which they expressed
unqualified audit opinions. In conducting our subsequent examination of the Financial
Statements, and in providing the opinions in paragraph 19 below, we have not performed any
additional tests of the transactions and balances which are recorded in the general ledgers and
other accounting records beyond those already performed for the purpose of the audits of the
Statutory Financial Statements.
16. Having regard to the above:
(i) we conducted our examination of the Financial Statements in accordance with International
Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. Our work
included examination on a test basis, of evidence relevant to the amounts and disclosures in
the Financial Statements. In respect of the Market Financial Statements as a whole, each of
the Market Group Statements, each of the FPIA Markets and the Openreach Information it also
included an assessment of the significant estimates and judgements made by the Company in
their preparation;
(ii) we planned and performed our examination of the Financial Statements so as to obtain all the
information and explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the Market Financial Statements as a
whole, each of the Market Group Statements, each of the FPIA Markets and the Openreach
Section 3 - Audit Report
Information are fairly presented in accordance with the relevant Primary Accounting
Documents and, on that basis, are free from material misstatement, whether caused by fraud
or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of
the presentation of information in the Financial Statements;
[c] each of the FPIA Markets for the year ended 31 March 2010, fairly presents in accordance with
the Primary Accounting Documents dated 28 July 2010 the results, mean capital employed and
costs incurred by each of the markets and complies with the requirements of the Final Statements and Notifications;
(iii) we planned and performed our examination of the PPIA Markets so as to obtain all the
information and explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that each of the PPIA Markets are properly
prepared in accordance with the procedures, defined in the relevant Primary and Secondary
Accounting Documents. However, as explained in the introduction to the Primary Accounting
Documents, the Primary Accounting Documents contain only the high level principles of
attribution. The Secondary Accounting Documents contain only the procedures describing
how these high level principles are applied. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the PPIA Market Statements.
[d] except in respect of the Single transit on fixed public narrowband networks market as described
in paragraph 18 above, each of the PPIA Markets for the year ended 31 March 2010 have been
properly prepared in accordance with the procedures, if any, defined in the Primary and Secondary Accounting Documents all dated 28 July 2010 and complies with the requirements of
the Final Statements and Notifications;
17. In forming our opinions on the Market Financial Statements as a whole, each of the Market Group
Statements and each of the FPIA Markets we also reviewed the Company's Secondary Accounting
Documents which describe how the principles contained in the Primary Accounting Documents are
implemented. Our review consisted of reading the Secondary Accounting Documents and
considering whether each of the significant attribution and valuation methodologies described in
these documents are consistent with the principles described on pages 18 to 19 of the Primary
Accounting Documents.
18. Consistent with the basis of preparation of the Statutory Financial Statements, the Market
Financial Statements are presented in figures rounded to the nearest whole million pounds. Where
the total costs, revenues, assets or liabilities of a market are very small relative to the overall size of
the Group we are unable to form an opinion as to whether those Market Statements are properly
prepared in accordance with the principles set out on pages 1 to 3 of the Primary Accounting
Documents. As agreed with the Company and Ofcom, the Market Summary Statement for Single
transit on fixed public narrowband networks on page 68 is unaudited and we do not express an
opinion on this market.
Opinion
19. In our opinion:
[a] the Market Financial Statements as a whole for the year ended 31 March 2010, which have
been prepared in accordance with the Primary Accounting Documents dated 28 July 2010,
fairly present in accordance with the Primary Accounting Documents dated 28 July 2010 the
results, mean capital employed and costs incurred by the Company and comply with the requirements of the Final Statements and Notifications;
[b] each of the Market Group Statements for the year ended 31 March 2010, fairly presents in accordance with the Primary Accounting Documents dated 28 July 2010 the results, mean capital
employed and costs incurred by the Company and complies with the requirements of the Final
Statements and Notifications;
14
[e] the Re-presented Market Financial Statements as a whole for the year ended 31 March 2009
are fairly presented in accordance with the Primary Accounting Documents dated 13 August
2009, and comply with the requirements of the Final Statements and Notifications as amended, where applicable, in accordance with "Comparability of current and prior year results" on
page 17;
[f] the Openreach Information for the year ended 31 March 2010, which has been prepared in accordance with the Primary Accounting Documents dated 28 July 2010, fairly presents in accordance with the Primary Accounting Documents dated 28 July 2010 the results, mean capital
employed and costs incurred by the Company and complies with the requirements of the Undertakings and the Final Statement and Notifications; and
[g] In the context of (a) and (b) and (c) above, the Secondary Accounting Documents all dated 28
July 2010 are appropriate to implement the principles contained in the Primary Accounting
Documents dated 28 July 2010.
Other matter – Ofcom Statement on BT's Current Cost Financial Statements 2010
20. Our opinions on the Financial Statements are based on the available information up to the date of
our report. In Section 4.1 of the Financial Statements BT describes the basis of valuation of duct
and its associated structures and how the CCA adjustments arising from this valuation are treated
in the Financial Statements. We are aware that, as described in their "Statement on BT's Current
Cost Financial Statements 2010", Ofcom are planning to undertake an assessment of the
methodology and calculations adopted by BT in the valuation of duct and copper access network
assets which will feed into their next consultation on the charges for Wholesale Line rental and
Unbundled Local Loop services. This assessment and consultation may potentially give rise to
changes in methodologies used for preparing the Regulatory Financial Statements in the future.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
London, 28 July 2010
Section 4 - Basis of Preparation
Section 4 - Basis of Preparation
Section 4
Basis of Preparation
15
Section 4 - Basis of Preparation
Section 4.1
4.1 –- Introduction
Section
Introduction to
to the
the Basis
Basis of
of Preparation
Preparation
Insofar as there is any inconsistency between any or all of the Primary Accounting Documents, the
Primary Accounting Documents shall have the order of priority as listed above.
The ultimate holding company of the BT Group is BT Group plc (referred to together with its subsidiary
and associated undertakings and joint ventures as the “Group” or “BT”). Substantially all the businesses
and activities of the Group are carried out by British Telecommunications plc (the “Company”), its
subsidiaries, associated undertakings and joint ventures.
The economic Markets defined by Ofcom’s Final Statements and Notifications do not correspond to the
way in which the Group is organised for management and accounting purposes. The Current Cost
Financial Statements are therefore produced by overlaying the requirements of the regulatory
reporting framework on the management and accounting structure of the Group.
BT’s Current Cost Financial Statements are not statutory accounts within the meaning of the Companies
Act 1985. The Company has, by agreement with BT Group plc, prepared the Current Cost Financial
Statements in accordance with the Accounting Documents, by disaggregating balances recorded in the
general ledgers and other accounting records of the Group.
As far as possible, revenues, costs, assets and liabilities are directly associated with a product group or
component using information held within the Group’s accounting records and are directly attributed to
that item. Where no such direct association is possible, the remaining revenues, costs, assets and
liabilities are apportioned between two or more markets, services or components using a fully allocated
accounting system and employing apportionment bases that reflect as far as possible the causality of
the revenue, cost, asset or liability.
The basis of preparation and accounting policies adopted by the Group is detailed in BT Group’s Annual
Report dated 12 May 2010. BT’s Annual Report for the year ended 31 March 2010 on which the
auditors made an unqualified report, did not contain a statement under Section 237(2) or (3) of the
Companies Act 2006 and has been delivered to the Registrar of Companies.
The Accounting Documents means together the Primary Accounting Documents, the Secondary
Accounting Documents and the Wholesale Catalogue. The Primary Accounting Documents set out the
framework under which the Statements are to be prepared. The Secondary Accounting Documents
(namely the Detailed Attribution methods (DAM), the Detailed Valuation Methodology (DVM) and the
Long Run Incremental Costs: Relationships and Parameters (R&P) set out more detailed descriptions of
the policies, methodologies, systems, processes and procedures for deriving and calculating the costs,
revenues, assets and liabilities underlying the Current Cost Financial Statements.
The Primary Accounting Documents set out the:
1. Regulatory Accounting Principles - which means the principles applied or used by BT in the
preparation of the Current Cost Financial Statements, for example, that all costs should be fully
allocated.
2. Attribution Methods - which means a high level summary of the practices used by BT to attribute
revenue (including appropriate Transfer Charges), costs (including appropriate Transfer Charges)
assets and liabilities to activities or, insofar as those activities have been aggregated to wholesale
segments in a given Market or Technical Area (as applicable), to each wholesale segment.
3. Transfer Charge System Methodology - which means the methodology of the system employed by
BT that enables an activity to use a service from another activity and to account for it as though it
had purchased that service from an unrelated party (including accounting for it at an appropriate
amount).
4. Accounting Policies - which means the manner in which the requirements of the Companies Act
2006 and Article 4 of the IAS Regulation and BT’s accounting policies whenever not superseded by
the Regulatory Accounting Principles, are applied by BT in each of the Current Cost Financial
Statements. This document details the accounting policies adopted in preparing the underlying
financial information.
5. Long Run Incremental Cost (“LRIC”) Methodology - means the long run incremental cost
principles, procedures and processes which form the framework under which long run incremental
costs are determined by BT. This document sets out the principles followed to derive the long run
incremental network costs.
16
The amounts of revenue, cost and capital employed attributed to markets, services and components
depend critically on the methods of attribution adopted. Typically, in a fully allocated accounting
system, a range of attribution methods is available. In selecting appropriate attribution methods and
appropriate non-financial data for use within the attribution models employed in the production of
these Current Cost Financial Statements, BT has had to make certain estimates and exercise its
judgement, having regard to the regulatory accounting principles, including cost causality and
objectivity, in order to comply with the requirements of the Primary Accounting Documents.
BT seeks to review and update non-financial data used within the attribution models at least annually.
Certain non-financial data employed for the purposes of the Current Cost Financial Statements has
been determined by sampling techniques appropriate to that data. BT reviews and updates attribution
methods and non-financial data sources on an ongoing basis and, where deemed appropriate, will
make improvements. Depending on the nature of the change, this may require Ofcom’s prior consent.
The Final Statements and Notifications continue to require significant granularity in the Current Cost
Financial Statements. When preparing financial statements at a very granular level it is not always
possible to develop a directly cost causal and objective method of cost apportionment and these
Financial Statements have been prepared on the basis of the methodologies BT considers to be the most
appropriate. However, in respect of the very small wholesale services within certain of the wholesale
markets, BT is aware that, in following the generic methodologies for attribution of common costs set
out in the Detailed Attribution Methods, anomalies may exist in the year on year cost trends in certain
services. However, costing methodologies and non-financial data sources will be subject to ongoing
review, and where deemed appropriate, improvements made.
BT’s costing systems used in the preparation of the Current Cost Financial Statements to attribute
revenues, costs, assets and liabilities to SMP Markets take as their starting point the general ledgers of
the Group which are maintained to the nearest penny. This level of granularity is maintained
throughout the costing process. However, to be consistent with the presentation of the results of the
Group in the Statutory Financial Statements, the results for each SMP Market are presented in figures
rounded to the nearest whole million pounds. Due to the level of granularity of reporting (such as the
disaggregation of costs by sector within each profit and loss account) and in order to present the most
appropriate view of individual sector costs and the appropriate return for each market it has been
necessary to introduce separate “rounding” figures in the profit and loss accounts. The same principle
has been adopted in all statements in order to achieve internal consistency.
Section 4 - Basis of Preparation
Charges from Wholesale Markets to Retail Residual
CCA adjustments
The Mean Capital Employed statements for the Wholesale Markets include balances relating to the
charges from the Wholesale Markets to Retail Residual. Retail Residual is deemed to settle these
charges in the same 43-day period as other operators, as agreed with Ofcom.
(a) The Current Cost Financial Statements for the Group are prepared under the Financial Capital
Maintenance convention in accordance with the principles set out in the handbook “Accounting for the
effects of changing prices”, published in 1986 by the Accounting Standards Committee.
The Network Statements of Costs on a current cost basis show component unit costs on a 24-hour basis.
However, charges to Retail Residual and other Communications Providers (CPs) for call conveyance
services vary by the time period, e.g. day or evening, during which the service was purchased. The
charges for other Wholesale Services to Retail Residual and other CPs do not require adjustment for the
time of day at which they are purchased.
Set out below is a summary of the treatment of the CCA adjustments within the Current Cost Financial
Statements:
Comparability of current and prior year results
There have been a number of changes in the year that impact on the comparability of the current and
prior year results. These are due to:
(a) Changes to BT’s financial reporting obligations as set out in the Final Statements and Notifications
and listed below and explained in Section 4.2:
•
•
•
•
•
•
•
The Fixed Narrowband Retail Services Market Review Statement;
Review of the Fixed Narrowband Services Wholesale Markets Statement;
Full Implementation of the Business Connectivity Market Review (BCMR) Statement;
Improvements to Leased Line Reporting;
Improvements to Openreach Reporting;
Improved disclosure of AISBO services;
Changes to the attribution of Twenty-First Century Network (21CN) costs following a change in
network roll-out strategy; and
• Other minor changes to the presentation of the Current Cost Financial Statements.
(b) Changes to the presentation of the CCA revaluation adjustment in respect of duct as explained
below.
• Changes in fixed asset values are referred to as holding gains or losses arising during the year
and are attributed between all SMP Markets, Technical Areas, Components and Wholesale
Services on the same basis as the associated assets. The one-off exception to this for 2010 is the
treatment of the holding gain arising on duct described in the CCA Revaluation Adjustment
section below, which is attributed between SMP Markets and Technical Areas, but is excluded
from Components and Wholesale Services (see below).
• A supplementary depreciation adjustment on fixed assets arising from differences between
historic cost account (HCA) and current cost account (CCA) valuations is also attributed between
the various Markets, Technical Areas, Components and Wholesale Services.
• Other CCA adjustments (e.g. once-off changes in valuations due to a revised methodology) are
included in the current cost valuations and are also attributed between all Markets, Technical
Areas, Components and Wholesale Services on the same basis as the associated assets. The
exception to this is the treatment of the other CCA adjustments arising on duct, which is
attributed between SMP Markets and Technical Areas, but is excluded from Components and
Wholesale Services.
• The inflation adjustment to ordinary shareholders’ funds is not relevant to the SMP Markets,
Technical Areas and Wholesale Services for which Current Cost Financial Statements are
prepared. In addition, no CCA adjustment has been made to the valuation of goodwill as this is
also not relevant to the SMP Markets, Technical Areas and Wholesale Services.
(b) The CCA valuation of assets is affected by external factors such as changes in market prices and
changes to BT’s CCA policies and practices. For the year ended 31 March 2010, this resulted in a net
decrease in the operating costs in SMP Markets and Technical Areas in these Financial Statements of
about £2,400m, which is mainly attributed to:
• The valuation of the duct assets has increased due to a change in the unit cost assumed for
building duct as part of a programme to build the network.
• The valuation of the copper access network assets has been increased significantly by the rise
during the year of the price of copper, which is a key element of the cost of copper cable.
(c) Improvements to the presentation of the Technical Areas (Interconnect Circuits) market.
(d) The prior year BT Reconciliation Statement 2009 (Annex 19) has been restated to reflect the
changes in BT’s Annual Report for Share Based Payments.
(e) The prior year comparatives have been re-presented to reflect the following:
• The removal of reporting obligations for certain SMP markets as explained in Section 4.2; and • The removal of reporting obligations for Retail Markets as explained in Section 4.2.
There were no other restatements or re-presentations.
The presentation of the CCA revaluation adjustment has been described below. All other changes which
impact the comparability of the current and prior year results in these Current Cost Financial Statements
have been described in Section 4.2.
17
CCA Revaluation Adjustment
In the Regulatory Financial Statements, BT revalues its assets under the Financial Capital Maintenance
(FCM) concept of Current Cost Accounting. The approach to the valuation is set out in detail in the
Detailed Valuation Methodologies.
For assets valued on an absolute valuation basis the volumes of assets in use are multiplied by the
current replacement cost. In the case of duct and its associated structures (manholes, joint boxes and
cabinets) the current replacement cost is based on the current contractual price which BT pays for the
construction of these assets. The contractual price is reduced by the application of a discount factor to
Section 4 - Basis of Preparation
reflect the efficiencies, including economies of scale, revisions in working practices and the effects of
competitive tendering. These efficiencies could be achieved if the duct network were being replaced as
a whole over a reasonable period of time in order to reflect the scenario which would apply to a new
market entrant.
As disclosed in the Detailed Valuation Methodology dated 13 August 2009, in 2008/09 and prior years
the degree of discount applied was 45%. The size of the discount is necessarily a matter of judgement
and was supported by the views of a number of senior managers within BT based on indirect evidence
from tenders for work in related areas.
During 2009/10 BT moved to a single national supplier for civil engineering. The civil engineering
supplier provides services to BT in a way that supports analysis of the effects of increasing the size of the
contract. This new data has facilitated a more detailed assessment of the benefits which would be
available to BT from a planned, geographically focused, national construction process compared to the
current pattern of smaller, more scattered jobs.
This analysis demonstrated that the reduction in contract prices which could be achieved is limited to
14.5% against the new civil engineering services contract prices. Part of the difference between this
and the discount factor applied in 2008/09 is accounted for by the reduction in prices negotiated
during the tender for the new contract.
The application of this revised management estimate to the valuation of assets at 31 March 2010
results in a holding gain, net of backlog depreciation, on BT’s duct assets of £1,880m. The FCM
approach to current cost accounting requires that the holding gain is included in the profit and loss
account with the result that CCA costs are reduced in the year the gain occurs and returns
correspondingly increase. Whilst this large holding gain has been recognised in 2009/10 it does not
represent a genuine periodic change in the valuation of the duct assets. BT believes that it results in an
artificial upwards distortion of returns in the year.
In accordance with the FCM concept these CCA adjustments are included in the Consolidated
Performance Summary, the Market Summary for each SMP market and the reconciliation statements.
These adjustments are shown in the last two columns and include the words “excl. reval. adj.” e.g.
Section 7.1 – Financial Performance in Access Markets (Annex 7) where the last two columns read
“Return excl. reval. adj. (h)” and “ROCE excl. reval. adj. (h)”. However, BT has agreed with Ofcom that:
• alternative information will also be supplied – the Consolidated Performance Summary,
Attribution of Wholesale Current Costs and the Market Summary for each SMP market also show
a calculation of the return excluding the duct holding gain and related backlog depreciation to
provide a more meaningful view of the underlying rate of return.
• all service and component unit cost information shown in the notes to each Market Summary
and Appendices 1.1 to 1.3 for 2010 exclude this holding gain and related backlog depreciation.
Regulatory Valuation of Copper-Based Local Access Network Assets
In August 2005, Ofcom introduced an alternative methodology for determining its view of the current
cost regulatory asset value of the copper-based local access network. This methodology, which results
in a lower valuation, is used only by Ofcom for regulatory purposes and is not reflected in the
methodologies employed by BT in producing the Current Cost Financial Statements or required within
the asset values of BT Group’s Annual Report.
18
However, as agreed with Ofcom, the Current Cost Financial Statements for 2010 have not implemented
the Ofcom methodologies and therefore have not adjusted the value of copper assets to Ofcom’s
assessed Regulatory Asset Valuation.
Section 4 - Basis of Preparation
Section 4.2
4.2 –- Other
the Basis
of Preparation
(Annex
Section
Other Aspects
Aspects to
of Basis
of Preparation
(Annex
22) 22)
1. Key changes as a result of certain regulatory decisions
The notes below refer to key changes as a result of Ofcom’s statement “Changes to BT and KCOM’s
regulatory and financial reporting 2009/10 update” issued 4 June 2010 that impact the Current Cost
Financial Statements for the year ended 31 March 2010.
(a) Fixed Narrowband Retail Services Market Review Statement
In September 2009, Ofcom published its Fixed Narrowband Retail Services Market Review statement.
The review concluded that BT no longer has Significant Market Power (SMP) in the supply of retail fixed
narrowband analogue access and retail calls markets in either the residential or business sectors. As a
result, BT’s financial reporting obligations in these markets were revoked and BT is no longer required
to report the financial results of any retail market.
The Retail Residual results for the prior year have been re-presented in the BT Reconciliation
Statements to reflect these changes in 2010.
(b) Review of the Fixed Narrowband Services Wholesale Markets Statement
In September 2009, Ofcom published its Review of the Fixed Narrowband Services Wholesale Markets
statement. The review introduced three main reporting changes in the Regulatory Financial
Statements:
• The wholesale residential and business analogue exchange line markets will be defined as one
wholesale analogue exchange line market.
• The wholesale residential and business ISDN2 exchange lines will be defined as one wholesale
ISDN2 market.
• BT will no longer be required to report on the local tandem conveyance and transit market in the
Regulatory Financial Statements for the year ended 31 March 2011.
The corresponding results for the prior year in the wholesale analogue and ISDN2 exchange line
markets have been re-presented in 2010.
(c) Full Implementation of the Business Connectivity Market Review (BCMR) Statement
In December 2008, Ofcom published its BCMR statement removing regulation on markets for low and
high bandwidth TI terminating segments in the Central and East London Area (CELA). However, due to
the timing of the BCMR statement and the complexities involved in geographic reporting, the results
relating to the CELA continued to be reported within the relevant SMP markets in 2009. These changes
have now been fully implemented in the 2010 Current Cost Financial Statements.
• Removed the estimated costs of other single payments, resilience and third party equipment
and infrastructure charges (“support costs”) from the costs of unrelated services in the TISBO,
AISBO and Wholesale Trunk Segments markets.
• Separately reported the trunk and distribution sub 2Mbit/s revenues in the TISBO (up to and
including 8Mbit/s) market.
• Separately reported enhanced maintenance revenues and costs in the Wholesale Trunk
Segments market.
Following Ofcom’s Leased Lines Charge Control Statement, published in July 2009, BT is reporting five
“Points of Handover” services in the Technical Areas (Point of Handover) market. The prior year has not
been restated.
(e) Improvements to Openreach Reporting
BT has reviewed the allocation of costs between Openreach regulated and non regulated services in the
Current Cost Financial Statements for 2010. BT has identified the following cost categories as
being wholly allocated to non regulated services:
• Time Related Charges (TRC) are used to price work that is outside the normal scope of Openreach
Services. This includes work carried out on new Housing Estates where an agreement is
made with the Builders/Councils/Housing Associations to install dropwire while the building
work is in progress as opposed to waiting for the first occupier to order a line. It also includes any
repair work that is out of Openreach area of responsibility e.g. a fault that is caused by
something beyond the Network Terminating Equipment. In 2009/10 BT was able to identify
costs that were specifically associated with this work and point the costs to the TRC service that
is included in Other Openreach Markets & Activities (with no SMP reporting obligations).
• Special Fault Investigations relates to faults on LLU lines that are reported at the request of a
Communications Provider and where no fault is discovered on the Openreach Network.
Openreach offers this service to locate where the fault has occurred and charges the CP. The
costs associated with this work are booked to the normal repair account codes and could not be
separately identified in 2008/09. In 2009/10 a man hour analysis has been used to work out
what proportion of repair costs is proper to the SFI service and the appropriate costs have been
moved to reflect this.
• Openreach have identified volumes of fibre circuits plus CCTV specific costs and pointed them to
the Redcare service that is in the Other Openreach Markets & Activities (with no SMP reporting
obligations).
The prior year has not been restated for any of the above.
(f) Improved disclosure of AISBO services
In the BCMR statement, Ofcom also set out its view over the reporting for Netstream. Although it was
not possible to reflect the changes to Netstream reporting in 2009 these changes have been
implemented in the Current Cost Financial Statements for 2010.
In the Current Cost Financial Statements for 2010, BT will be reporting on Wholesale Extension (WES)
2, Ethernet Backhaul Direct (EBD) and Ethernet Access Direct (EAD) services in the AISBO Market. As a
result, some AISBO services will have revenues and costs significantly below the £10m guidance
threshold for reporting. The prior year has not been restated.
(d) Improvements to Leased Line Reporting
(g) Other minor changes to the presentation of the Current Cost Financial Statements
To improve the transparency of the 2010 Current Cost Financial Statements, BT has:
The presentation of the Financial Statements has been simplified by two changes:
• Deletion of Return on Turnover information.
19
Section 4 - Basis of Preparation
• The column for “Internal sales – services only provided internally” has been combined with the
column for “Internal sales – services also provided externally” to provide one “Internal sales”
column.
(h) Presentation of Technical Areas (Interconnect Circuits) market
In addition to the above changes, detailed in the “Changes to BT and KCOM’s regulatory and financial
reporting 2009/10 update” issued 4 June 2010, it was agreed with Ofcom to improve the presentation
of the Technical Areas (Interconnect Circuits) market to better reflect the services sold to
Communications Providers. The prior year has not been restated.
2. Twenty-First Century Network (21CN)
BT has now completed the new 21CN core network which is a unified software driven platform. It helps
in meeting our customers’ needs faster and more efficiently whether they are delivered over copper or
fibre. It also reduces the time it takes to get new services to market, eliminating duplication and
reducing costs.
To date, BT has enabled ADSL2+ broadband services for over 10 million UK homes and businesses and
has so far migrated or provided new broadband services to over 1.25 million end users as at the end of
March 2010 on the new service. It is also providing new Ethernet services to fixed and mobile operators
and business customers across the widest Ethernet footprint in the UK market. BT announced on 21
April 2010 that it has decided to halt further voice lines migrations to the 21CN voice platform. This has
been reflected in the cost methodologies for this year’s Current Cost Financial Statements. The 21CN
voice platform and the end users connected to it will be fully maintained.
In 2008, BT introduced components to capture 21CN related costs in the Current Cost Financial
Statements. This is aimed at providing transparency to the costs and where they are being attributed to
ensure an effective reporting regime as the new network comes into use. BT has developed parallel
legacy and 21CN costing methodologies such that the 21CN costs are exhausted to legacy services
based on the relative usage of legacy assets. The change in migrating further voice lines announced by
BT on 21 April 2010 means that there is a corresponding alteration in the allocation of costs to voice for
the relevant 21CN assets compared to prior years.
As 21CN evolves it is likely that changes to the design and architecture and usage of the network will
necessitate updates to the cost allocations in order to properly reflect these and any future changes.
20
Section 5 - Summary of Financial Performance
Section 5 - Summary of Financial Performance
Section 5
Summary of Financial Performance
21
Section 5 - Summary of Financial Performance
Section 5.1 - Consolidated Performance Summary (Annex 3)
For the year ended 31 March 2010
Markets
Access Markets
Other Wholesale Markets
Residual Activities
Wholesale residual activities
Retail residual activities
Adjustments
Total Markets & Activities
Re-presented for the year ended 31 March 2009
Markets
Access Markets
Other Wholesale Markets
Residual Activities
Wholesale residual activities
Retail residual activities
Adjustments
Total Markets & Activities
Turnover
£m
CCA
operating
costs
£m
CCA return
before
taxation
£m
MCE
£m
Return
on MCE
%
CCA return
before
taxation
excl.
reval. adj.
(h)
£m
Return
on MCE
excl.
reval.
adj. (h)
%
4,618
1,671
6,289
1,193
1,110
2,303
3,425
561
3,986
12,080
2,560
14,640
28.4 %
21.9 %
27.2 %
1,812
376
2,188
15.0 %
14.7 %
14.9 %
2,799
17,291
20,090
2,572
17,217
19,789
227
74
301
1,135
3,416
4,551
20.0 %
2.2 %
6.6 %
146
74
220
12.8 %
2.2 %
4.8 %
0
0
0
0
26,379
22,092
4,287
19,191
Turnover
£m
CCA
operating
costs
£m
CCA return
before
taxation
£m
923
648
1,571
12.5 %
11,121
2,705
13,826
8.3 %
24.0 %
11.4 %
Section 7
Section 8
736
2,585
3,321
42.0 %
(30.2)%
(14.2)%
3,255
17,706
20,961
2,946
18,486
21,432
4
3
1
0
27,533
26,432
1,101
17,147
22
2,408
n/a
Supporting
information
3,773
1,224
4,997
(h) See Section 4 - Basis of Preparation for the CCA Revaluation Adjustment.
22.3 %
0
Section 7
Section 8
Return
on MCE
%
MCE
£m
4,696
1,872
6,568
309
(780)
(471)
n/a
Supporting
information
n/a
6.4 %
Section 6 - Attribution of Wholesale Current Cost and Mean Capital Employed
Section 6 - Attribution of Wholesale Current Cost and Mean Capital Employed
Section 6
Attribution of Wholesale Current Cost and Mean Capital Employed
23
Section 6 - Attribution of Wholesale Current Cost and Mean Capital Employed
326
16
24
114
-
5
2
-
2
47
62
470
13
3
-
6
75
66
636
37
5
1
11
5
4
9
6
Total Markets
General Management
3
5
Wholesale Residual
64
16
305
20
Total Other Wholesale & SMP Markets
18
306
31
8
1
Sub-total Other Wholesale & SMP
Geographic Markets
11
65
2
Wholesale broadband access market 3 (4
or more principle operators) and non
geographic
259
£m
Wholesale broadband access market 2 2 to 3 principal operators
General Support
£m
Wholesale broadband access market 1 BT only operator
2
£m
£m
£m
£m
£m
£m
£m
£m
17
15
81
113
149
112
567
n/a
n/a
22
22
37
18
360
-
n/a
92
92
126
74
670
79
-
-
119
119
198
194
1,028
Sub-total Other Wholesale & SMP
National Markets
2
27
£m
Technical areas (Point of Handover)
44
7
£m
£m
Wholesale trunk segments
9
6
£m
£m
Fixed call termination
6
211
Technical areas (Interconnect Circuits)
170
Network Support
Single transit on fixed public
narrowband networks
Provision/Maintenance
Local-tandem conveyance and transit on
fixed public narrowband networks
£m
Call origination on fixed public
narrowband networks
TISBO (above 8Mbit/s up to and
including 45Mbit/s)
£m
Total Access Markets
TISBO (up to and including 8Mbit/s)
£m
Wholesale local access
Wholesale business ISDN30 exchange
line services
£m
AISBO (up to and including 1Gbit/s)
Wholesale ISDN2 exchange line services
£m
TISBO (above 45Mbit/s up to and
including 155Mbit/s)
Wholesale analogue exchange line
services
Section 6.1 - Attribution of Wholesale Current Costs 2010 (Annex 5A)
£m
£m
£m
£m
9
2
1
36
4
2
-
15
8
3
1
34
15
8
2
Operating Costs of Wholesale Services:
Finance and Billing
Accommodation
Bad Debts
Other Costs
Depreciation - Land & Buildings
- Access
- Switch and Transmission
- Other related
Sub Total Depreciation
Sub total HCA Operating Costs
CCA Adjustments:
Holding (gain)/loss
16
1
1
9
1
-
3
3
34
3
-
-
1
1
1
-
6
n/a
n/a
6
6
12
7
53
192
14
21
90
6
6
21
43
393
46
16
1
8
45
8
1
125
33
13
67
113
238
80
711
2
-
-
-
-
-
-
-
2
(1)
-
-
-
-
-
-
(1)
n/a
n/a
-
0
(1)
-
1
(48)
(1)
0
2
-
-
2
(3)
(48)
1
-
-
-
1
-
-
2
n/a
n/a
4
4
6
1,872
1,830
18
2
2
10
1
1
1
13
48
7
2
-
1
7
1
-
18
-
-
22
22
40
10
98
465
15
14
47
5
2
53
50
651
2
1
n/a
1
3
3
1
11
33
9
31
73
84
17
752
72
6
27
100
15
17
49
6
292
33
10
1
8
34
23
4
113
9
2
71
82
195
124
611
115
7
9
41
5
6
42
28
253
16
3
1
4
12
4
2
42
-
-
159
159
201
159
613
670
30
52
198
26
26
145
97
1,244
58
16
2
14
56
31
7
184
42
11
283
336
520
310
1,798
83
132
548
51
45
321
364
3,342
178
45
4
47
139
55
12
480
92
39
674
805
1,285
2,667
7,294
(2,357)
(65)
(40)
(218)
(20)
(16)
(217)
(236)
(3,169)
(52)
(32)
-
(10)
(55)
(63)
(2)
(214)
n/a
n/a
(65)
(65)
(279)
(143)
(3,591)
(8)
(2)
(3)
6
23
205
(3)
-
-
(1)
(4)
(3)
(1)
(12)
n/a
n/a
(2)
(2)
(14)
1
192
89
9
8
95
48
815
27
13
-
4
28
26
1
99
-
-
19
19
118
47
980
Supplementary Depreciation
185
4
-
Other Adjustments
532
16
18
Roundings
Total CCA Operating Costs
2,074
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
158
38
110
411
38
34
205
199
1,193
150
26
4
40
108
15
10
353
92
39
626
757
1,110
2,572
4,875
(552)
(14)
(4)
(8)
0
1
(10)
(64)
(651)
4
1
0
1
5
2
0
(655)
186
5
0
(8)
(2)
(3)
5
23
206
(3)
0
0
(1)
(4)
(3)
(1)
(117)
(2)
5
14
1
1
21
(14)
(91)
6
1
0
1
7
2
0
CCA Adjustments excl. reval. adj. (h):
Holding (gain)/loss
Supplementary Depreciation
Other Adjustments
Roundings
CCA Operating Costs excl. reval. adj.
13
0
0
(2)
(2)
11
(15)
(12)
0
0
(2)
(2)
(14)
1
193
17
0
0
(4)
(4)
13
0
(78)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,315
72
133
546
50
44
337
309
2,806
185
47
4
48
147
56
11
498
92
39
666
797
1,295
2,653
6,754
(h) See Section 4 - Basis of Preparation for the CCA Revaluation Adjustment.
24
Section 6 - Attribution of Wholesale Current Cost and Mean Capital Employed
Section 6.1.1 - Notes on Wholesale P&L sector costs
Section 6.1.1 - Notes on Wholesale P&L sector costs
Other Costs
The notes below are intended to provide a brief description of the sectors reported in the Attribution of
Wholesale Current Cost statement and the key drivers of these sectors to aid the user of the Current Cost
Financial Statements 2010. Further details of these sectors can be found in the Detailed Attributions
Methods (DAM) which outlines in detail the key bases, descriptions and drivers of the network
components.
Other Costs are dominated by payments to other UK communications providers, but also include
payments to overseas administrations and internal product transfer charge costs. The key drivers
include the pence per minute charging of the other operators for BT traffic on their network.
Provision/Maintenance
Depreciation is analysed between land and buildings, access, switch and transmission and other
(including network power, computers and software). The key drivers are the surveys of BT’s asset base
that allocate the depreciation charge through classes of work on the basis of surveys and engineering
models and direct mapping of BT classes of work (COW) to network components and then onto the
appropriate service based on usage factors and actual service volumes.
Provision/Maintenance includes costs of network provision, installation and maintenance. The most
material cost relates to D side copper which is allocated on the basis of the number of lines.
Network Support
Network Support contains costs of activities necessary to support the running of BT’s network (plant
support costs such as group property). The key drivers for the apportionment of network support costs
include pay, the relative floor space occupied by fixed assets and the current cost replacement value of
assets.
General Support
Wholesale General Support includes planning, development, supplies, transport, computing, customer
service, personnel & administration, customer support and other general support costs. The key drivers
for the apportionment of general support include pay costs and various activity surveys.
General Management
General Management includes operator services, costs of general management activities and other
general expenses. The key drivers for the apportionment of general management include analysis of call
minutes (for operator services), various activity surveys and pay costs.
Finance and Billing
Finance and Billing includes costs associated with activities of a financial nature, such as budget
building, management reporting, and billing and collection costs. The key drivers for the
apportionment of finance and billing include various activity surveys and pay costs.
Accommodation
The wholesale accommodation sector includes exchange and office building costs. Wholesale
accommodation costs are mainly apportioned based on the usage of floor space and different utilities.
Bad Debts
Bad debts include costs associated with writing off amounts that cannot be collected from customers.
The key driver is revenue.
25
Depreciation
Section 6 - Attribution of Wholesale Current Cost and Mean Capital Employed
Local-tandem conveyance and transit on
fixed public narrowband networks
Single transit on fixed public
narrowband networks
Technical areas (Interconnect Circuits)
Fixed call termination
Wholesale trunk segments
Technical areas (Point of Handover)
Sub-total Other Wholesale & National
Markets
Wholesale Broadband Access Market 1 BT only operator
Wholesale Broadband Access Market 2 2 to 3 principal operators
Wholesale Broadband Access Market 3
(4 or more principal operators) and non
geographic
Sub-total Other Wholesale & Geographic
Markets
Total Other Wholesale Markets
Wholesale Residual
Total Markets
£m
£m
£m
£m
£m
£m
£m
16
5
1
6
16
5
-
49
22
14
56
92
141
126
650
10
5
-
2
9
1
-
27
-
-
20
20
47
25
415
31
5
2
8
22
6
-
74
-
-
92
92
166
111
877
514
44
5
1
9
19
8
-
86
-
-
89
89
175
149
838
39
3
-
-
-
1
1
-
5
n/a
n/a
6
6
11
6
56
347
48
17
1
8
48
9
-
131
29
11
61
101
232
62
641
Total Access Markets
£m
Wholesale local access
£m
AISBO (up to and including 1Gbit/s)
£m
TISBO (above 45Mbit/s up to and
including 155Mbit/s)
£m
TISBO (above 8Mbit/s up to and
including 45Mbit/s)
£m
TISBO (up to and including 8Mbit/s)
£m
Wholesale business ISDN30 exchange
line services
£m
Wholesale ISDN2 exchange line services
£m
Wholesale analogue exchange line
services
Re-presented for the year ended 31 March 2009
Call origination on fixed public
narrowband networks
Section 6.2 - Attribution of Wholesale Current Costs 2009 (Annex 5A)(Re-presented)
£m
£m
£m
£m
£m
£m
£m
£m
£m
Provision/Maintenance
231
10
9
43
4
4
4
78
383
Network Support
230
7
9
37
3
3
24
30
343
General Support
339
12
21
90
11
10
34
83
600
General Management
284
11
19
99
11
11
31
48
19
1
1
11
1
1
1
4
173
12
19
81
6
7
9
40
Operating Costs of Wholesale Services:
Finance and Billing
Accommodation
Bad Debts
Other Costs
Depreciation - Land & Buildings
- Access
- Switch and Transmission
- Other related
Sub Total Depreciation
Sub Total HCA Operating Costs
0
-
-
-
-
-
-
-
0
-
-
-
-
-
-
-
0
n/a
n/a
-
0
0
-
0
(6)
-
-
-
-
-
-
(2)
(8)
3
-
-
-
1
-
-
4
n/a
n/a
2
2
6
2,245
2,243
14
1
1
9
-
-
-
11
36
6
1
-
-
7
1
-
15
-
-
21
21
36
10
82
452
18
16
47
5
1
46
31
616
3
1
n/a
1
3
3
n/a
11
28
10
39
77
88
12
716
66
7
25
106
22
20
38
7
291
40
13
2
13
39
35
2
144
18
5
56
79
223
71
585
102
5
10
52
5
5
10
21
210
20
6
1
8
19
6
-
60
-
-
93
93
153
144
507
634
31
52
214
32
26
94
70
1,153
69
21
3
22
68
45
2
230
46
15
209
270
500
237
1,890
1,904
84
130
575
68
62
197
351
3,371
224
58
8
55
184
75
2
606
97
40
535
672
1,278
2,961
7,610
102
CCA Adjustments:
Holding (gain)/loss
136
3
(3)
(13)
(2)
(1)
(13)
18
125
(6)
(3)
-
-
(5)
(5)
-
(19)
-
n/a
(4)
(4)
(23)
-
Supplementary Depreciation
144
3
-
(13)
(4)
(3)
2
16
145
(4)
(1)
-
(2)
(5)
(7)
-
(19)
-
-
(30)
(30)
(49)
(3)
93
Other Adjustments
139
4
(3)
(10)
(1)
-
(17)
15
127
3
(1)
-
-
3
(3)
-
2
n/a
n/a
1
3
(10)
120
Roundings
Total CCA Operating Costs
1
0
-
-
1
4
-
-
-
5
1
1
-
6
-
4
1
13
-
-
2
2
15
(2)
18
2,323
94
124
540
65
58
169
400
3,773
218
54
8
59
177
64
3
583
97
40
504
641
1,224
2,946
7,943
26
Section 6 - Attribution of Wholesale Current Cost and Mean Capital Employed
Fixed call termination
Wholesale trunk segments
Technical areas (Point of Handover)
Sub-total Other Wholesale & SMP
National Markets
Wholesale broadband access market 1 BT only operator
Wholesale broadband access market 2 2 to 3 principal operators
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
62
103
90
89
56
17
60
18
36
15
1
n/a
n/a
n/a
3
6
1
12
4
20
8
24
13
62
108
93
94
48
13
n/a
117
n/a
92
17
1
8
3
n/a
9
2
168
0
12
411
212
350
152
6
82
n/a
n/a
n/a
39
-
2
22
n/a
n/a
n/a
11
-
199
71
114
11
329
464
207
175
0
114
11
379
464
375
175
12
525
223
729
616
124
97
60
246
99
421
486
956
4,496
846
5,327
569
2,263
1,951
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0
n/a
n/a
n/a
0
0
n/a
0
Total Non-current Assets
7,979
267
297
1,284
146
134
1,139
974
12,220
400
146
11
81
405
239
23
1,305
127
35
1,188
1,350
2,655
1,533
16,408
Current Assets
Stocks
Debtors
- Internal
- External
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Total Markets
Technical areas (Interconnect Circuits)
£m
Wholesale Residual
Single transit on fixed public
narrowband networks
£m
457
4,224
774
4,556
247
1,113
849
Total Other Wholesale & SMP Markets
Local-tandem conveyance and transit on
fixed public narrowband networks
£m
125
405
313
15
18
98
Sub-total Other Wholesale & SMP
Geographic Markets
Call origination on fixed public
narrowband networks
Investments
Wholesale broadband access market 3 (4
or more principle operators) and non
geographic
Total Access Markets
£m
16
378
374
n/a
246
125
Wholesale local access
£m
10
9
31
n/a
65
19
AISBO (up to and including 1Gbit/s)
£m
10
33
35
n/a
52
16
TISBO (above 45Mbit/s up to and
including 155Mbit/s)
£m
110
38
256
380
343
157
TISBO (above 8Mbit/s up to and
including 45Mbit/s)
£m
17
12
95
65
10
70
28
TISBO (up to and including 8Mbit/s)
£m
16
102
92
27
9
21
Wholesale business ISDN30 exchange
line services
£m
153
3,667
3
3,266
195
310
385
Wholesale analogue exchange line
services
Non-current Assets
Land & Buildings
Access - Copper
Access - Fibre
Access - Duct
Switch
Transmission
Other
Wholesale ISDN2 exchange line services
Section 6.3 - Attribution of Wholesale Current Cost Mean Capital Employed 2010 (Annex 6A)
0
-
-
1
1
1
34
35
285
86
18
3
38
1
78
8
5
1
12
-
58
1
52
10
546
110
24
11
10
-
1
-
7
1
20
1
19
1
1
-
82
14
39
n/a
21
n/a
55
6
115
6
197
20
(94)
396
649
526
371
21
39
86
6
12
59
62
656
35
10
1
8
21
20
1
96
218
336
1,210
Liabilities falling due within one year
- Internal
- External
n/a
(382)
n/a
(17)
n/a
(29)
n/a
(118)
n/a
(10)
n/a
(9)
n/a
(75)
n/a
(79)
0
(719)
n/a
(53)
n/a
(10)
n/a
(1)
n/a
(10)
n/a
(28)
n/a
(10)
n/a
(2)
0
(114)
Total Liabilities falling due within one year
(382)
(17)
(29)
(118)
(10)
(9)
(75)
(79)
(719)
(53)
(10)
(1)
(10)
(28)
(10)
(2)
(114)
(11)
4
10
(32)
(4)
3
(16)
(17)
(63)
(18)
0
0
(2)
(7)
10
(1)
(18)
271
307
146
11
79
398
249
22
1,287
166
56
(10)
Total Current Assets
Net Current Assets/Liabilities
Total Assets less Current Liabilities
Provisions for liabilities & charges
Roundings
Mean Capital Employed
7,968
1,252
142
137
1,123
957
12,157
382
21
62
122
n/a
-
n/a
(155)
0
(155)
0
(269)
n/a
(714)
0
(1,702)
0
0
(155)
(155)
(269)
(714)
(1,702)
39
21
(93)
(33)
(51)
(378)
n/a
-
1,095
(44)
1,155
(20)
(492)
15,916
(5)
(1)
(2)
(3)
(7)
(77)
(4)
-
(2)
(2)
-
(28)
-
-
-
-
-
-
-
-
-
0
-
-
-
-
-
-
-
0
-
-
-
0
0
-
0
7,937
268
302
1,227
141
135
1,120
950
12,080
372
142
11
77
388
247
22
1,259
166
56
1,079
1,301
2,560
1,135
15,775
27
(16)
2,604
(3)
(25)
(16)
1,317
-
(31)
(10)
39
(141)
Section 6 - Attribution of Wholesale Current Cost and Mean Capital Employed
Section 6.3.1 - Notes on Wholesale MCE sector costs
Section 6.3.1 - Notes on Wholesale MCE sector costs
Transmission
The notes below are intended to provide a brief description of the Fixed Asset sectors and Working
Capital reported in the Attribution of Wholesale Current Cost Mean Capital Employed statement and the
key drivers of the sector to aid the user of the Financial Statements. Further details of these sectors can
be found in the Detailed Attribution Methods (DAM) which outlines in detail the key bases, descriptions
and drivers of the network components.
This sector contains the asset values for transmission. Transmission includes Core Transmission
Synchronous Digital Hierarchy (SDH), Plesiosynchronous Digital Hierarchy (PDH), Asynchronous
Transfer Mode (ATM), Cables and Repeaters. The Core Transmission is used to link exchanges. The key
drivers are the surveys of BT’s asset base that allocate the depreciation charge through classes of work
on the basis of surveys, engineering models and direct mapping of COW to network components and
then onto the appropriate service based on usage factors and actual service volumes.
Land & Buildings
This sector contains the asset values that are booked to BT Classes of Work (COWs) for land and
buildings, including freehold, long leases and short leases. The sector includes corporate offices, and
network buildings owned by BT. Asset values are mainly apportioned based on the usage of floor space
and the usage of the different utilities.
Access - Copper
This sector contains the asset values for access copper (all the copper cables in the access network and
all other necessary equipment required to carry signals between the user and the exchange.) This is split
into “Main” and “Distribution” Copper. The key drivers are the surveys of BT’s asset base that allocate
the depreciation charge through classes of work on the basis of surveys, engineering models and direct
mapping of COW to network components and then onto the appropriate service based on usage factors
and actual service volumes.
Access - Fibre
This sector contains the asset values for access fibre. The key drivers are the surveys of BT’s asset base
that allocate the depreciation charge through classes of work on the basis of surveys, engineering
models and direct mapping of COW to network components and then onto the appropriate service
based on usage factors and actual service volumes.
Access - Duct
This sector contains the asset values for duct. Duct is a pipe, tube or conduit through which
underground cables are passed. The key drivers are the surveys of BT’s asset base that allocate the
depreciation charge through classes of work on the basis of surveys, engineering models and direct
mapping of COW to network components and then onto the appropriate service based on usage factors
and actual service volumes.
Switch
This sector contains the asset values for switching equipment. This equipment is located in BT
exchanges. The key drivers are the surveys of BT’s asset base that allocate the depreciation charge
through classes of work on the basis of surveys and engineering models and direct mapping of COW to
network component and then onto the appropriate service based on usage factors and actual service
volumes.
28
Other
This sector contains the asset values for a range of assets used by BT Businesses including categories
such as Software, Motor Transport and 21CN. The key drivers are the surveys of BT’s asset base that
allocate the depreciation charge through classes of work on the basis of surveys, engineering models
and direct mapping of COW to network components and then onto the appropriate service based on
usage factors and actual service volumes.
Working Capital
The figures for debtors and creditors include an approximation of the internal “notional” debtors and
creditors that would be incurred if trades between BT’s lines of business were undertaken to a third
party and at arm’s length. They are based upon the average trading terms of BT Group’s external trades.
External debtors reflect BT’s external debts being allocated to services and products.
Section 6 - Attribution of Wholesale Current Cost and Mean Capital Employed
Investments
Total Non-current Assets
Current Assets
Stocks
Debtors
- Internal
- External
Technical areas (Point of Handover)
Sub-total Other Wholesale & National
Markets
Wholesale Broadband Access Market 1 BT only operator
Wholesale Broadband Access Market 2 2 to 3 principal operators
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
£m
124
284
166
26
12
84
432
4,186
775
3,735
307
1,130
928
62
n/a
99
116
147
104
14
n/a
60
22
43
10
1
n/a
n/a
n/a
5
13
13
12
5
20
11
44
17
60
n/a
100
115
148
100
17
n/a
n/a
102
n/a
124
14
n/a
n/a
n/a
n/a
7
-
166
0
5
381
269
526
258
4
81
n/a
n/a
n/a
102
-
2
28
n/a
n/a
n/a
31
-
192
91
n/a
113
13
182
389
198
200
0
113
13
315
389
364
200
5
494
282
841
647
92
73
8
140
103
223
415
888
4,459
788
4,369
692
2,194
1,990
n/a
7,748
Total Access Markets
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0
n/a
n/a
n/a
0
0
n/a
0
280
290
1,195
200
213
871
696
11,493
528
149
32
109
523
257
7
1,605
187
61
980
1,228
2,833
1,054
15,380
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
-
0
n/a
0
n/a
n/a
2
2
2
39
41
19
4
42
3
76
8
7
1
12
-
59
3
42
16
558
170
26
1
11
-
1
-
8
-
21
1
30
-
-
97
2
33
n/a
19
n/a
70
10
122
10
219
12
(57)
443
720
625
436
23
45
84
8
12
62
58
728
27
11
1
8
22
30
0
99
33
19
82
134
233
425
1,386
n/a
(623)
n/a
(22)
n/a
(29)
n/a
(139)
n/a
(15)
n/a
(13)
n/a
(59)
n/a
(120)
0
(1,020)
n/a
(58)
n/a
(16)
n/a
(2)
n/a
(14)
n/a
(45)
n/a
(14)
n/a
-
0
(149)
n/a
-
n/a
-
n/a
(172)
0
(172)
0
(321)
n/a
(738)
0
(2,079)
Total Liabilities falling due within one year
(623)
(22)
(29)
(139)
(15)
(13)
(59)
(120)
(1,020)
(58)
(16)
(2)
(14)
(45)
(14)
0
(149)
0
0
(172)
(172)
(321)
(738)
(2,079)
Net Current Assets/Liabilities
(187)
1
16
(55)
(7)
(1)
3
(62)
(292)
(31)
(5)
(1)
(6)
(23)
16
0
(50)
33
19
(90)
(38)
(88)
(313)
281
306
500
273
7
1,555
220
80
890
Total Current Assets
Liabilities falling due within one year
- Internal
- External
Total Assets less Current Liabilities
Provisions for liabilities & charges
Roundings
Mean Capital Employed
n/a
Total Markets
Wholesale trunk segments
£m
8
340
286
n/a
172
65
Wholesale Residual
Fixed call termination
£m
Total Other Wholesale Markets
Technical areas (Interconnect Circuits)
Sub-total Other Wholesale & Geographic
Markets
Single transit on fixed public
narrowband networks
£m
13
10
23
n/a
101
66
Wholesale Broadband Access Market 3
(4 or more principal operators) and non
geographic
Local-tandem conveyance and transit on
fixed public narrowband networks
£m
11
38
31
n/a
86
34
Call origination on fixed public
narrowband networks
£m
90
26
271
295
379
134
Wholesale local access
£m
13
9
114
58
12
69
15
TISBO (above 8Mbit/s up to and
including 45Mbit/s)
£m
16
103
75
32
9
45
TISBO (up to and including 8Mbit/s)
AISBO (up to and including 1Gbit/s)
Non-current Assets
Land & Buildings
Access - Copper
Access - Fibre
Access - Duct
Switch
Transmission
Other
Wholesale business ISDN30 exchange
line services
£m
157
3,764
2
2,801
237
302
485
Wholesale analogue exchange line
services
TISBO (above 45Mbit/s up to and
including 155Mbit/s)
Re-presented for the year ended 31 March 2009
Wholesale ISDN2 exchange line services
Section 6.4 - Attribution of Wholesale Current Cost Mean Capital Employed 2009 (Annex 6A)(Re-presented)
301
135
7,561
1,140
193
212
874
634
11,201
497
144
31
103
(39)
(3)
(4)
(18)
(1)
(1)
(1)
(10)
(77)
(10)
(4)
-
(1)
(9)
(1)
-
(25)
-
-
(5)
(1)
(1)
1
-
-
-
3
(3)
4
2
(1)
(1)
-
(2)
-
2
1
(1)
1,123
192
211
873
627
491
142
7
1,532
221
7,517
277
301
11,121
29
30
101
491
270
79
(17)
1,190
(17)
2,745
741
(693)
14,687
(42)
(8)
-
0
2
3
(127)
2
873
1,173
2,705
736
14,562
Section 7 - Review of Access Markets
Section 7 - Review of Access Markets
Section 7
Review of Access Markets
30
Section 7 - Review of Access Markets
Section 7.1 - Financial Performance in Access Markets (Annex 7)
For the year ended 31 March 2010
Wholesale analogue exchange line services
Wholesale ISDN2 exchange line services
Wholesale Business ISDN30 exchange line services
TISBO (up to and including 8Mbit/s)
TISBO (above 8Mbit/s up to and including 45Mbit/s)
TISBO (above 45Mbit/s up to and including 155Mbit/s)
AISBO (up to and including 1Gbit/s)
Wholesale local access
Total Access Markets
Re-presented for the year ended 31 March 2009
Wholesale analogue exchange line services
Wholesale ISDN2 exchange line services
Wholesale Business ISDN30 exchange line services
TISBO (up to and including 8Mbit/s)
TISBO (above 8Mbit/s up to and including 45Mbit/s)
TISBO (above 45Mbit/s up to and including 155Mbit/s)
AISBO (up to and including 1Gbit/s)
Wholesale local access
Total Access Markets
Internal
Turnover
£m
1,857
92
217
338
32
79
281
0
2,896
Internal
Turnover
£m
2,077
110
262
340
39
99
279
0
3,206
External
Turnover
£m
563
59
103
316
15
19
208
439
1,722
External
Turnover
£m
470
53
88
294
18
5
212
349
1,489
Roundings
Turnover
£m
0
0
0
0
0
0
0
0
0
Roundings
Turnover
£m
2
(1)
(2)
(1)
(1)
0
3
1
1
Total
Turnover
£m
2,420
151
320
654
47
98
489
439
4,618
Total
Turnover
£m
2,549
162
348
633
56
104
494
350
4,696
CCA
HCA Costs Adjustments
£m
£m
1,798
(1,640)
83
(45)
132
(22)
548
(137)
51
(13)
45
(11)
321
(116)
364
(165)
3,342
HCA Costs
£m
1,904
84
130
575
68
62
197
351
3,371
(h) See Section 4 - Basis of Preparation for the CCA Revaluation Adjustment.
31
(2,149)
CCA
Adjustments
£m
419
10
(6)
(36)
(7)
(4)
(28)
49
397
Roundings
£m
0
0
0
0
0
0
0
0
0
Roundings
£m
0
0
0
1
4
0
0
0
5
Total CCA
Operating
costs
£m
158
38
110
411
38
34
205
199
1,193
Total CCA
Operating
costs
£m
2,323
94
124
540
65
58
169
400
3,773
Return on
MCE
%
28.5 %
41.7 %
69.7 %
19.8 %
6.6 %
47.8 %
25.4 %
25.4 %
Return
excl.
reval.
adj. (h)
£m
1,105
79
187
108
(3)
54
152
130
ROCE
excl.
reval.
adj. (h)
%
13.9 %
29.6 %
62.1 %
8.8 %
(2.4)%
39.7 %
13.5 %
13.7 %
12,080
28.4 %
1,812
15.0 %
Mean
Capital
Employed
£m
7,517
277
301
1,123
192
211
873
627
Return on
MCE
%
3.0 %
24.6 %
74.3 %
8.1 %
(3.8)%
22.3 %
37.3 %
(8.0)%
11,121
8.3 %
Return
£m
2,262
113
210
243
9
64
284
240
Mean
Capital
Employed
£m
7,937
268
302
1,227
141
135
1,120
950
3,425
Return
£m
226
68
224
93
(9)
46
325
(50)
923
Section 7 - Review of Access Markets
Section 7.2 - Access Markets Review (Annex 10 & 14)
Section 7.2.1 - Access Markets Group Level Review (Annex 10)
Section 7.2.1 - Access Markets Group Level Review (Annex 10)
Overall in the WLR Access markets, there is a reduction in copper lines due to the difficult macroeconomic conditions, continuing migrations to MPF and a shift to mobile alternatives. The slowdown in
the economy has led to an increase in business closures and fewer new business expansions and startups. Meanwhile, the LLU operators migrated significant numbers of lines previously using WLR and
SMPF to full MPF. The cumulative impact of reduced copper lines and product mix change has been to
reduce revenue by circa £80m (2%).
Overall returns in TISBO markets have increased whereas returns in the wholesale trunk market have
decreased. Prior to the Leased Lines Charge Control (LLCC), BT had already made amendments to some
wholesale trunk and TISBO prices. Ofcom made some adjustments to these prices via the LLCC. The
overall effect was a rebalancing between wholesale trunk and TISBO. Both TISBO and the wholesale
trunk market are now subject to price controls as a result of the LLCC. The charges resulting from the
LLCC are the subject of an appeal in front of the Competition Appeal Tribunal, where one
Communications Provider has appealed against Ofcom’s decision.
The Alternative Interface Symmetric Broadband Origination (AISBO) market has continued to show
growth in WES and EAD products due to the increased demand from mobile operators and a general
migration from older technologies including the products within the TISBO market. Revenues have
remained flat due to the full impact of price reductions made in February 2009 now being reflected in
the annual revenue. Additionally in January 2010 there were price reductions in line with the LLCC
Statement.
Historic costs have remained flat; this is mostly a combination of lower provision and maintenance
costs, reduced fault rates on the copper network and reduced depreciation on legacy switch and
transmission assets which is offset by investment in BT’s 21CN network.
CCA adjustments have decreased by around £2,550m; this is primarily caused by the large holding gain
arising from (i) the revaluation of duct (see Section 4.1 Basis of Preparation) and (ii) the rise in copper
commodity prices compared to the large holding losses arising from large decreases in copper
commodity prices in 2008/09.
Access Markets Openreach Level Review
A calculation of the return for all Openreach markets has been performed and is described as part of the
Openreach Notes in Section 10.7. This explains the return before and after adjusting for a number of
significant items.
32
Section 7 - Review of Access Markets
Section 7.2.2 - Access Market Level Financial Review (Annex 14)
Section 7.2.2 - Access Market Level Financial Review (Annex 14)
Market: Wholesale ISDN2 Exchange Line Services
Market: Wholesale Analogue Exchange Line Services
Definition
The links between an end user and the remote concentrator unit by means of ISDN2 technology.
Definition
Digital ISDN2 exchange lines are basic rate ISDN lines, which provide a means to deploy a wide range
of digital services over a standard local loop. A single ISDN2 line supports two 64Kbit/s channels for
voice and data calls, plus a 16Kbit/s channel for signalling.
The links between an end user and the remote concentrator unit by means of analogue technology.
An analogue exchange line provides a single 64Kbit/s channel, designed originally to support voice
traffic, but also capable of supporting data modems with bandwidths of up to 56Kbit/s, DSL Services
and facsimile traffic. These are the most common types of exchange lines.
Key Regulatory Changes
Key Regulatory Changes
Ofcom published its Wholesale Fixed Narrowband Market Review on 15 September 2009. This review
determined that there are no longer two separate markets for Residential and Business analogue
exchange line services, rather there is a single market for wholesale analogue exchange line services.
Ofcom also published two Statements setting the Wholesale Line Rental (WLR) Charge Controls on 26
October 2009 and 23 February 2010. These Statements set out the charge controls for WLR Analogue
services for the period 23 November 2009 to 31 March 2011. Given the change in market definition,
Ofcom determined that it would set a single charge control to a core rental service rather than setting
separate controls for residential and business lines. Openreach is required to make changes to its
residential analogue product such that it can also be used for business users (to be referred to as the
WLR Core rental service) during 2010/11.
The charge controls that applied to WLR Analogue during 2009/10 included charge ceilings of £100.68
to the WLR residential rental services, £67 to connections and £3 to the WLR transfer charge.
Ofcom also re-introduced the charge ceiling of £110 for WLR business exchange lines services, which
will expire when the WLR Core rental service is introduced in 2010/11. The cost orientation obligation
was also removed for service levels beyond the WLR Core rental product.
On 24 December 2009, Carphone Warehouse lodged an appeal with the Competition Appeal Tribunal
contesting certain parts of Ofcom’s WLR Charge Control Statement of the 26 October 2009. If
successful, this could affect both future year WLR analogue prices in 2010/11.
Key Market Changes
Residential rental lines have decreased significantly in 2009/10 as a result of the continuing migrations
from WLR to MPF by Sky and TalkTalk and the poor economic conditions.
Business rentals have also declined in 2009/10 as a result of the current economic climate where there
has been an increase in business closures and end users within the SME market have looked to cut costs
by moving to mobile or alternative technologies. New Connections have increased year on year due to
a proactive commencement by large non-BT Communication Providers (CPs) of WLR new provides at
the end of 2008/09 (previously BT Retail (BTR) had completed 95% of all Basic new connections). The
Growth Incentive Offer will have stimulated the market with a lower connection price being backed by
focused marketing activity by the CPs.
33
Ofcom published its Wholesale Fixed Narrowband Market Review on 15 September 2009. This review
determined that there are no longer two separate markets for Residential and Business ISDN2 exchange
line services, rather there is a single market for wholesale ISDN2 exchange line services.
BT continues to be found to have SMP in the wholesale ISDN2 market. The only material change to the
existing obligations has been a change to the time period associated with price notifications, which has
decreased from 90 to 28 days for services other than the ISDN2 rental service.
Key Market Changes
ISDN2 rental base has declined year on year as end users move to suitable alternatives such as IP
networks and V-Sat technology. During the current economic climate SME end users who used ISDN2
as a back-up to their primary service have simply ceased the product rather than pay for two services.
Demand for new connections has reduced significantly.
Market: Wholesale Business ISDN30 Exchange Line Services
Definition
The links between a business end user and the remote concentrator unit by means of ISDN30
technology.
Digital ISDN30 exchange lines are primary rate ISDN lines, which provide a means to deploy a wide
range of digital services over a 2Mbit/s bearer. A single ISDN30 line supports thirty 64Kbit/s channels
for voice and data calls, plus a 64Kbit/s channel for signalling. ISDN30 lines are used only by business
customers, and always in conjunction with a business PBX (Private Branch Exchange).
Key Regulatory Changes
There have been no regulatory changes affecting these products in the 2009/10 period. Ofcom did not
reach a conclusion on the ISDN30 market as part of its Wholesale Fixed Narrowband Market Review
during 2009/10 and will separately review the market during 2010/11. Should Ofcom introduce new
regulation, this may impact financial reporting for 2010/11.
Section 7 - Review of Access Markets
Key Market Changes
Demand for ISDN30 continued declining in 2009/10 although at a more accelerated rate driven by the
current economic conditions and changes in technology with Session Initiation Protocol (SIP) Trunking
providing a more cost effective alternative.
Basket & services
Value
of X
Sub Caps
TI - Low bandwidth connection
and rental.
3.25
RPI-0% sub-cap on sub-basket of TISBO
terminating segments.
RPI + 5% sub-cap on each charge
(excluding POH charges).
Market: Traditional Interface Symmetric Broadband Origination (up to and
including 8Mbit/s)
RPI – 0% sub-cap on each charge (POH
charges only).
Definition
Traditional Interface Symmetric Broadband Origination (TISBO) services include:
• Wholesale terminating segments (PPCs).
• Radio base station (RBS) backhaul (including the Core Conveyance element).
• Local Loop Unbundling (LLU) backhaul which consists of LLU backhaul trunk and LLU backhaul
link. LLU backhaul links are regarded as a symmetric broadband origination service and should
therefore be included within the TISBO or AISBO markets, depending on the technology in use –
bandwidth considerations being taken into account in the case of the Synchronous Digital
Hierarchy (SDH) technology.
• Netstream 16 Long Line (including the Core Conveyance element).
Ofcom also views SDSL as a symmetric broadband origination service and it is therefore included within
the TISBO market.
Ofcom has concluded that BT has SMP in the low, high and very high bandwidth TISBO markets outside
Central and East London Area (CELA) as well as in the Trunk market at all bandwidths. Consequently, it
has imposed regulation on all relevant circuits and technical areas that fall within these markets,
including RBS backhaul circuits.
Key Regulatory Changes
On 8 December 2008 Ofcom published its Final Statement on the Business Connectivity Market Review.
Ofcom found BT to continue to have SMP in the low bandwidth TISBO market.
Ofcom increased regulation in the trunk market by imposing a charge control and requiring prices to be
notified at 90 days. In addition, Ofcom changed the definition of trunk segments from one based on
links between two BT SDH Tier 1 nodes to one based on routes between defined major urban areas. This
new methodology was backdated to 8 December 2008 and impacts upon prices for 2009/10.
Ofcom imposed additional Service Level Agreement/Service Level Guarantee requirements from
December 2008.
Following a separate Consultation, Ofcom published on 2 September 2009 its Statement on the Leased
Lines Charge Controls. Ofcom imposed the following RPI – X% charge control on low bandwidth TISBO
services as a remedy to its finding of SMP for BT (note that there is a single overall TI basket comprising
connection and rental for low bandwidth, high bandwidth and very high bandwidth TISBO services as
well as rental for Trunk services):
34
POC end and third party end
equipment charges.
RPI-0
No charge can increase more than 5% in
nominal terms.
All relevant ancillary services used
in the provision of TI services in
scope of the TI Basket.
RPI-0
None.
These controls run from 1 October 2009 to 30 September 2012.
In addition, Ofcom determined starting charges for terminating and trunk segments. They also required
the introduction of separate Point of Handover rental charges to replace the current local end uplift
factor included in the rental price of external local ends. To balance the introduction of the new
separate Point of Handover charges, Ofcom required a corresponding reduction to external local end
prices.
The values of X in the charge control apply to BT’s prices after these adjustments have been made.
On 2 September 2009, Cable & Wireless lodged an appeal with the Competition Appeal Tribunal
contesting certain parts of Ofcom’s Leased Line Charge Control Statement. If successful, this could
affect both future year wholesale line prices and prices for wholesale leased lines in 2010/11.
Key Market Changes
For PPCs there continues to be migration of external customers from 64K/bit circuits to 2M/bit circuits.
In addition the demand for Time Division Multiplexing (TDM) circuits has started to decline as customers
migrate to 21CN services.
Price changes in the market took place in September and October 2009 and again in March 2010 to
enable compliance with the charge control Statement and obligations.
In the Mobile Market, as evidenced by the increase of 2Mbit/s circuits, we are seeing growth of
bandwidth from mobile customers to enable them to use new mass market mobile broadband services,
music downloads, other bandwidth-hungry applications and mobile TV.
RBS prices changed in line with changes to PPC pricing.
Section 7 - Review of Access Markets
Market: Traditional Interface Symmetric Broadband Origination (above 8Mbit/s
up to and including 45Mbit/s)
Basket
Value of X
Sub Caps
Definition
TI-High bandwidth connection
and rental (outside CELA).
3.25
RPI - 0% sub-cap on sub-basket of
TISBO terminating segments.
Traditional Interface Symmetric Broadband Origination (TISBO) services include:
• Wholesale terminating segments (PPCs).
• Local Loop Unbundling (LLU) backhaul which consists of LLU backhaul trunk and LLU backhaul
link. LLU backhaul links are regarded as a symmetric broadband origination service and should
therefore be included within the TISBO or AISBO markets, depending on the technology in use bandwidth considerations being taken into account in the case of the SDH technology.
• Netstream 16 Long Line (including the Core Conveyance element).
Ofcom also views SDSL as a symmetric broadband origination service and it is therefore included within
the TISBO market.
Ofcom has concluded that BT has SMP in the low, high and very high bandwidth TISBO markets outside
the Central and East London Area (CELA) as well as in the Trunk market at all bandwidths. Consequently,
it has imposed regulation on all relevant circuits and technical areas that fall within these markets,
including RBS backhaul circuits.
Key Regulatory Changes
In December 2008 Ofcom published its Final Statement on the Business Connectivity Market Review.
Ofcom found BT to continue to have SMP in the high bandwidth TISBO market (but only outside the
Central and East London Area “CELA”) as well as in the market for trunk segments at all bandwidths.
Ofcom increased regulation in the Trunk market by imposing a charge control and requiring prices to be
notified at 90 days. It also changed the definition of trunk segments from one based on links between
two BT SDH Tier 1 nodes to one based on routes between defined major urban areas. This new
methodology was backdated to 8 December 2008 and impacts upon prices for 2009/10.
RPI + 5% sub-cap on each charge
(excluding POH charges).
RPI – 0% sub-cap on each charge
(POH charges only).
POC end and third party end
equipment charges.
RPI-0
No charge can increase more than
5% in nominal terms.
All relevant ancillary services used
in the provision of TI services in
scope of the TI Basket.
RPI-0
None.
These controls run from 1 October 2009 to 30 September 2012.
In addition, Ofcom determined starting charges for Terminating and trunk segments. They also required
the introduction of separate Point of Handover rental charges to replace the current local end uplift
factor included in the rental price of external local ends. To balance the introduction of the new
separate Point of Handover charges, Ofcom required a corresponding reduction to external local end
prices.
The values of X in the charge control apply to BT’s prices after these adjustments have been made.
On 2 September 2009, Cable & Wireless lodged an appeal with the Competition Appeal Tribunal
contesting certain parts of Ofcom’s Leased Line Charge Control Statement. If successful, this could
affect both future year wholesale line prices and prices for wholesale leased lines in 2010/11.
Key Market Changes
Ofcom also imposed more stringent Service Level Agreement/Service Level Guarantee requirements
which will impact future years.
Following a separate Consultation, Ofcom published on 2 September 2009 its Statement on the Leased
Lines Charge Controls. Ofcom imposed the following RPI – X% charge control on high bandwidth TISBO
services as a remedy to its finding of SMP for BT (note that there is a single overall TI basket comprising
connection and rental for low bandwidth, high bandwidth and very high bandwidth TISBO services as
well as rental for Trunk services):
Despite some PPC migration from the lower bandwidth market and deregulation in CELA, significant
competition has affected this market resulting in falling volumes and revenue. In addition customers
are looking for 21CN alternatives where possible.
There were price changes in this market in October 2009 and March 2010 to meet the charge control
obligations.
In the Mobile Market, in which only Netstream is offered at this bandwidth, we are seeing growth of
bandwidth from mobile customers to enable them to use new mass market mobile broadband services,
music downloads, other bandwidth-hungry applications and mobile TV.
35
Section 7 - Review of Access Markets
Market: Traditional Interface Symmetric Broadband Origination (above 45Mbit/s
up to and including 155Mbit/s)
Basket
Value of X
Sub Caps
Definition
Very high bandwidth connection
and rental (outside CELA).
3.25
RPI – 0% sub-cap on sub-basket of
TISBO terminating segments.
Traditional Interface Symmetric Broadband Origination (TISBO) services include:
• Wholesale terminating segments (PPCs).
• Local Loop Unbundling (LLU) backhaul which consists of LLU backhaul trunk and LLU backhaul
link. LLU backhaul links are regarded as a symmetric broadband origination service and should
therefore be included within the TISBO or AISBO markets, depending on the technology in use bandwidth considerations being taken into account in the case of the SDH technology.
• Netstream 16 Long Line (including the Core Conveyance element).
Ofcom also views SDSL as a symmetric broadband origination service and it is therefore included within
the TISBO market.
Ofcom has concluded that BT has SMP in the low, high and very high bandwidth TISBO markets outside
Central and East London Area (as well as in the Trunk market at all bandwidths). Consequently, it has
imposed regulation on all relevant circuits and technical areas that fall within these markets, including
RBS backhaul circuits.
Key Regulatory Changes
In December 2008 Ofcom published its Final Statement on the Business Connectivity Market Review.
Ofcom found BT to continue to have SMP in the very high bandwidth TISBO market (but only outside
the Central and East London Area “CELA”) as well as in the market for trunk segments at all bandwidths.
Ofcom increased regulation in the Trunk market by imposing a charge control and requiring prices to be
notified at 90 days. It also changed the definition of trunk segments from one based on links between
two BT SDH Tier 1 nodes to one based on routes between defined major urban areas. This new
methodology was backdated to 8 December 2008 and impacts upon prices for 2009/10.
RPI + 5% sub-cap on each charge
(excluding POH charges).
RPI – 0% sub-cap on each charge
(POH charges only).
POC end and third party end
equipment charges.
RPI-0
No charge can increase more than 5%
in nominal terms.
All relevant ancillary services used
in the provision of TI services in
scope of the TI Basket.
RPI-0
None.
These controls run from 1 October 2009 to 30 September 2012.
In addition, Ofcom determined starting charges for terminating and trunk segments. They also required
the introduction of separate Point of Handover rental charges to replace the current local end uplift
factor included in the rental price of external local ends. To balance the introduction of the new
separate Point of Handover charges, Ofcom required a corresponding reduction to external local end
prices.
The values of X in the charge control apply to BT’s prices after these adjustments have been made.
On 2 September 2009, Cable & Wireless lodged an appeal with the Competition Appeal Tribunal
contesting certain parts of Ofcom’s Leased Line Charge Control Statement. If successful, this could
affect both future year wholesale line prices and prices for wholesale leased lines in 2010/11.
Key Market Changes
Ofcom also imposed more stringent Service Level Agreement/Service Level Guarantee requirements
which will impact future years.
Following a separate Consultation, Ofcom published on 2 September 2009 its Statement on the Leased
Lines Charge Controls. Ofcom imposed the following RPI – X% charge control on very high bandwidth
TISBO services as a remedy to its finding of SMP for BT (note that there is a single overall TI basket
comprising connection and rental for low bandwidth, high bandwidth and very high bandwidth TISBO
services as well as rental for Trunk services):
36
Despite some PPC migration from the lower bandwidth market and the removal of SMP in CELA at this
bandwidth, significant competition and uncompetitive pricing has affected this market resulting in
falling volumes and revenue. In addition customers are looking for 21C alternatives where possible.
There were price changes in this market in March 2010 to meet the charge control obligations.
In the Mobile Market, in which only Netstream 16 Longline is available to customers at this bandwidth,
we are seeing growth of bandwidth from mobile customers to enable them to use new mass market
mobile broadband services, music downloads, other bandwidth-hungry applications and mobile TV.
Section 7 - Review of Access Markets
In the Backhaul market, price reductions in response to the LLCC also impacted BES 100 rentals from
January 2010. BES 100 rental prices reduced from January 2009. Overall volumes for backhaul
products remained relatively flat through the year with a small reduction in BES offset by an increase in
EBD.
Market: Alternative Interface Symmetric Broadband Origination (up to and
including 1Gbit)
Definition
Alternative Interface Symmetric Broadband Origination (AISBO) services include the following Ethernet
services:
•
•
•
•
•
•
Wholesale Extension Services (WES)
Backhaul Extension Services (BES)
Backhaul Network Services (BNS)
Openreach Network Backhaul Services (ONBS)
Ethernet Backhaul Direct (EBD)
Ethernet Access Direct (EAD)
Market: Wholesale Local Access
Definition
Ofcom concluded in the Leased Lines Market Review (LLMR)1 that BT has SMP in the wholesale AISBO
market (UK excluding Hull) and, as such, it is appropriate that regulation be imposed on all bandwidths
that fall within this market. These products are covered by the Undertakings obligations and as such are
managed out of Openreach.
Key Regulatory Changes
WES and BES are specifically covered by the Undertakings, and as such are managed out of Openreach.
BNS, ONBS, EAD and EBD are products which have been developed since the Undertakings were agreed
but are also covered by these obligations and must also be managed out of Openreach. All these
products, with the exception of AISBO circuits above 1Gbit/s, fall within a currently regulated market
and continue to be subject to a cost orientation pricing regime as specified by the relevant Significant
Market Power (SMP) conditions in the Business Connectivity Market Review (BCMR) published 8
December 2008.
There have been some key regulatory changes affecting these products in the 2009/10 period. Ofcom
published the Leased line Charge Control Statement on 3 July 2009 in which they introduced RPI-7%
charge controls for low bandwidth AISBO services. These controls will take effect from 1 October 2009
through to 30 September 2012.
Ofcom determined in December 2004 that BT has significant market power in the market for
"wholesale local access in the UK excluding the Hull Area". Local Access can be defined as those
network elements that comprise metallic loop access networks or 'cable' access networks, between end
user premises and the facility at which those access networks connect to other communications
infrastructure. In practice, this is generally a Main Distribution Frame (for a metallic loop access
network) or a cable head-end (for a 'cable' access network).
Key Regulatory Changes
Ofcom concluded its Financial Framework Review and published the Statement “A new pricing
framework for Openreach” on 22 May 2009. Ofcom determined that price controls will apply from 22
May 2009 through to 31 March 2011 affecting new connection, rental, cease and transfer charges as
well as MPF and SMPF ancillary services and Co-Mingling services. Ofcom also reset the starting
charges for MPF and SMPF rental, MPF transfer, MPF new provide and SMPF connection. All price
changes for 2009/10 were implemented in line with the price control.
In 2009/10 the MPF and SMPF connections services include cessation volumes which were excluded in
2008/09. Including cease volumes in the 2008/9 results increases service volumes to 885,535 for MPF
(average price £29.74) and 2,787,578 for SMPF (average price £28.45).
On 22 July 2009, Carphone Warehouse lodged an appeal with the Competition Appeal tribunal
contesting Ofcom’s Local Loop Unbundling (LLU) Charge Control Statement of 22 May 2009. If
successful, this could affect both future year LLU prices and LLU prices in 2010/11.
Key Market Changes
There has been continued growth in LLU lines in the last 12 months. The MPF rental base continues to
grow as CPs migrate their subscribers from WLR & SMPF.
Key Market Changes
Demand for access services has shown continued volume growth for both WES and EAD products. This
was driven by increased demand from mobile operators and other migration from TDM products to high
speed Ethernet connectivity. Rental and connection prices for EAD and WES services (10Mbit/s and
100Mbit/s) were reduced in response to the Leased Line Charge Control Statement (LLCC) issued by
Ofcom. These reductions took effect in mid January 2010. In addition, WES 1Gbit/s Opt 1 rental prices
were reduced in July 2009. Openreach grew its share of a growing market.
1. Ofcom, Review of the retail leased lines, symmetric broadband origination and wholesale trunk
segments markets, June 2004.
37
There is a year on year increase in the average External SMPF rental base but these volumes were
reducing on a month by month basis throughout 2009/10. The rental base as at 31 March 2010 was
lower than it was as at 31 March 2009 as CPs such as Sky and TalkTalk continue to migrate customers
from SMPF to MPF. SMPF New connections (excluding ceases) also declined due to the same reason.
CPs are keen to maximise their return on investment in PoP infrastructure in exchanges hence continue
to acquire new customers and migrate existing customers to MPF. The number of new LLU Room Builds
increased from prior year as CPs extended their footprint across UK exchanges.
Section 7 - Review of Access Markets
Section 7.3 - Wholesale analogue exchange line services (Annex 11)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with cost orientation and
d non-discrimination obligations
Wholesale analogue exchange line services
Summary
2010
2009 (re-presented)
Internal
Sales
£m
External
Sales
£m
Roundings
£m
1,857
2,077
563
470
2
Note 1: Comparison of average internal and external charges with
each other and with FAC
For the year ended 31 March 2010
Service
Wholesale basic analogue internal service rentals
Wholesale basic analogue external service rentals
Wholesale premium analogue internal service rentals
Wholesale premium analogue external service rentals
Turnover
(note 1)
£m
2,420
2,549
Operating
costs
£m
1,128
1,270
Depreciation
£m
Holding
(gain)/loss Supp. Dep. Other adjs.
£m
£m
£m
670
634
(2,357)
136
185
144
532
139
Total CCA
operating
Roundings
costs
£m
£m
-
158
2,323
Return
£m
MCE
£m
2,262
226
7,937
7,517
Cost orientation
Non-discrimination
Unaudited
LRIC
Ceiling
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
1,382
-
320
-
1,382
320
13,728,813 lines
3,176,807 lines
16,905,620
100.68
100.68
90.37
90.28
55.62
55.54
113.72
113.61
1.11
1.12
397
-
185
-
397
185
3,609,219 lines
1,684,192 lines
5,293,411
110.00
110.00
87.90
87.90
54.59
54.59
110.65
110.65
1.25
1.25
Volume Unit (b)
Average
price
£
FAC (see Unaudited
App 1.2) LRIC Floor
£
£
Average
price/FAC
£
Wholesale basic analogue internal service connections
42
-
-
42
562,789 conns
73.94
43.24
39.33
61.72
1.71
Wholesale premium analogue internal service connections
Wholesale premium analogue external service connections
30
-
53
-
30
53
408,693 conns
717,579 conns
1,126,272
72.94
73.71
43.23
43.23
39.33
39.33
61.69
61.69
1.69
1.71
6
-
5
-
6
5
2.22
2.27
11.42
11.77
9.76
10.09
23.78
24.28
0.19
0.19
Wholesale premium analogue internal service takeovers
Wholesale premium analogue external service transfers
Roundings
-
-
-
2,594,413 tover
2,162,809 transfer
4,757,222
-
1,857
563
-
2,420
1,540
-
287
-
1,540
287
15,299,864 lines
2,851,585 lines
18,151,449
100.68
100.68
126.94
128.55
73.46
74.98
144.43
148.87
0.79
0.78
437
-
157
-
437
157
3,975,802 lines
1,430,527 lines
5,406,329
110.00
110.00
121.20
121.49
71.17
71.46
139.05
140.09
0.91
0.91
Re-presented for the year ended 31 March 2009
Service
Wholesale residential analogue internal service rentals
Wholesale residential analogue external service rentals
Wholesale business analogue internal service rentals
Wholesale business analogue external service rentals
Wholesale residential analogue internal service connections
59
-
-
59
671,894 conns
88.00
61.62
58.74
78.40
1.43
Wholesale business analogue internal service connections
Wholesale business analogue external service connections
34
-
22
-
34
22
389,356 conns
250,078 conns
639,434
88.00
88.00
62.64
62.25
59.72
59.34
80.37
80.03
1.40
1.41
7
-
4
-
7
4
3,632,011 tover
1,790,593 transfer
5,422,604
2.00
2.00
5.51
6.77
6.15
7.35
12.44
14.63
0.36
0.30
Wholesale business analogue internal service takeovers
Wholesale business analogue external service transfers
Roundings
2,077
470
2
2
2
2,549
(b) See glossary for volume unit descriptors.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
38
Return
on
MCE
28.5 %
3.0 %
Return
excl.
reval.
adjs. (h)
£m
1,105
Return on
MCE excl.
reval.
adjs. (h)
13.9 %
Section 7 - Review of Access Markets
Section 7.4 - Wholesale ISDN2 exchange line services (Annex 11)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with cost orientation andd non-discrimination obligations
Wholesale ISDN2 exchange line services
Summary
2010
2009 (re-presented)
Internal
Sales
£m
External
Sales
£m
Roundings
£m
92
110
59
53
(1)
Note 1: Comparison of average internal and external charges with
each other and with FAC
Turnover
(note 1)
£m
151
162
Operating
costs
£m
53
53
Depreciation
£m
Holding
(gain)/loss Supp. Dep. Other adjs.
£m
£m
£m
30
31
(65)
3
4
3
16
4
Total CCA
operating
Roundings
costs
£m
£m
-
38
94
Return
£m
MCE
£m
113
68
268
277
Cost orientation
Non-discrimination
Unaudited
LRIC
Ceiling
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
86
-
51
-
86
51
783,623 channels
461,968 channels
1,245,591
110.00
110.00
71.01
70.99
51.06
51.05
110.18
110.14
1.55
1.55
Wholesale ISDN2 internal service connections
Wholesale ISDN2 external service connections
7
-
7
-
7
7
56,587 channels
56,452 channels
113,039
116.49
116.49
49.85
67.93
44.52
60.12
427.82
306.22
2.34
1.71
Wholesale ISDN2 internal service takovers
Wholesale ISDN2 external service transfers
0
-
1
-
0
1
11,301 channels
112,056 channels
123,357
5.65
5.65
18.43
18.42
16.26
16.26
42.88
42.87
0.31
0.31
(1)
-
-
(1)
92
59
-
151
For the year ended 31 March 2010
Service
Wholesale ISDN2 internal service rentals
Wholesale ISDN2 external service rentals
Roundings
Volume Unit (b)
Average
price
£
FAC (see Unaudited
App 1.2) LRIC Floor
£
£
Average
price/FAC
£
Re-presented for the year ended 31 March 2009
Service
Wholesale business ISDN2 internal service rentals
Wholesale business ISDN2 external service rentals
99
-
44
-
99
44
898,103 channels
400,915 channels
1,299,018
110.00
110.00
87.68
88.12
60.39
60.82
117.08
118.24
1.25
1.25
Wholesale business ISDN2 internal service connections
Wholesale business ISDN2 external service connections
11
-
8
-
11
8
95,271 channels
64,558 channels
159,829
116.49
116.49
39.41
57.30
37.53
55.10
51.39
170.60
2.96
2.03
0
-
1
-
0
1
30,906 channels
161,424 channels
192,330
5.65
5.65
26.56
4.91
25.72
5.16
132.95
10.61
0.21
1.15
Wholesale business ISDN2 internal service takovers
Wholesale business ISDN2 external service transfers
Roundings
110
-
(1)
(1)
53
(1)
162
(b) See glossary for volume unit descriptors.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
39
Return
on
MCE
41.7 %
24.6 %
Return
excl.
reval.
adjs. (h)
£m
79
Return on
MCE excl.
reval.
adjs. (h)
29.6 %
Section 7 - Review of Access Markets
Section 7.5 - Wholesale business ISDN30 exchange line services (Annex 12)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with non discrimination obligations
Wholesale business ISDN30 exchange line services
Summary
Internal
Sales
£m
External
Sales
£m
Roundings
£m
217
262
103
88
(2)
2010
2009
Note 1: Comparison of average internal and external charges
For the year ended 31 March 2010
Service
Wholesale business ISDN30 internal service connections
Wholesale business ISDN30 external service connections
Wholesale business ISDN30 internal service rentals
Wholesale business ISDN30 external service rentals
Wholesale business ISDN30 internal service takeovers
Wholesale business ISDN30 external service transfer
Roundings
Turnover
(note 1)
£m
320
348
Operating
costs
£m
80
78
Depreciation
£m
Holding
(gain)/loss Supp. Dep. Other adjs.
£m
£m
£m
52
52
(40)
(3)
0
0
Non-discrimination
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
5
-
4
-
5
4
112,003 conns
88,882 channels
200,885
40.71
40.71
212
-
98
-
212
98
1,504,990 channels
697,521 channels
2,202,511
141.00
141.00
0
-
1
-
0
1
100,764 channels
219,489 channels
320,253
4.36
4.36
-
Volume Unit (b)
Average
price
£
-
-
217
103
-
320
-
8
-
5
-
8
5
185,029 conns
111,848 channels
296,877
40.71
40.71
253
-
82
-
253
82
1,793,063 channels
584,239 channels
2,377,302
141.00
141.00
1
-
1
-
1
1
134,235 channels
168,027 channels
302,262
4.36
4.36
For the year ended 31 March 2009
Service
Wholesale business ISDN30 internal service connections
Wholesale business ISDN30 external service connections
Wholesale business ISDN30 internal service rentals
Wholesale business ISDN30 external service rentals
Wholesale business ISDN30 internal service takeovers
Wholesale business ISDN30 external service transfer
Roundings
262
-
(2)
(2)
88
(2)
348
(b) See glossary for volume unit descriptors.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
40
18
(3)
Total CCA
operating
Roundings
costs
£m
£m
-
110
124
Return
£m
MCE
£m
210
224
302
301
Return
on
MCE
69.7 %
74.3 %
Return
excl.
reval.
adjs. (h)
£m
187
Return on
MCE excl.
reval.
adjs. (h)
62.1 %
Section 7 - Review of Access Markets
Section 7.6 - TISBO (up to and including 8Mbit/s)(Annex 11)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with cost orientation andd non-discrimination obligations
Traditional interface symmetric broadband origination (up to and including 8Mbit/s)
Summary
2010
2009
Internal
Sales
£m
External
Sales
£m
Roundings
£m
338
340
316
294
(1)
Note 1: Comparison of average internal and external charges with
each other and with FAC
For the year ended 31 March 2010
Service
Internal Partial and Private Circuits 64Kbit/s - connection
External Partial and Private Circuits 64Kbit/s - connection
Partial and Private Circuits 64Kbit/s - link
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal
Turnover
(note 1)
£m
654
633
Operating
costs
£m
350
361
Depreciation
£m
Holding
(gain)/loss Supp. Dep.
£m
£m
198
214
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
1
-
1
-
1
1
22
-
-
22
Volume Unit (b)
Average
price per
price list
Proportion
included in
calculation
£
1
411
540
8
Partial and Private Circuits 64Kbit/s - distribution
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total Internal
6
-
-
6
3,183,600 km
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total External
-
2
-
2
1,275,891 km
Partial and Private Circuits 64Kbit/s - trunk
Trunk segment charge per year
Enhanced maintenance per kilometre charge per year
Total Internal
12
-
-
12
2,301,387 km
5
-
5
922,327 km
39
-
-
39
92,621 le
8
FAC (see Unaudited
App 1.2) LRIC Floor
£
£
Unaudited
LRIC
Ceiling
Average
price/FAC
£
499.94
499.94
1,530.24
1,530.24
1,407.32
1,407.32
2,615.78
2,615.78
0.33
0.33
158.22
140.73
260.16
0.71
99.90
63.95
1.00
0.20
99.90
12.54
112.44
158.22
140.73
260.16
0.71
1.76
0.02
1.78
4.30
2.90
13.29
0.41
1.76
0.02
1.78
4.30
2.90
13.29
0.41
70,941 links
-
-
19.8 %
8.1 %
99.90
12.54
112.44
1.76
0.02
8
1,227
1,123
1.00
0.20
1.76
0.02
-
243
93
MCE
£m
99.90
63.95
198,256 links
-
Average
price
£
1,181 circuits
1,008 circuits
2,189
8
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total External
89
(10)
Return
£m
Return
on
MCE
Cost orientation
-
Partial and Private Circuits 64Kbit/s - local end
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal
(8)
(13)
Non-discrimination
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total External
Trunk segment charge per year
Enhanced maintenance per kilometre charge per year
Total External
(218)
(13)
Other adjs.
£m
Total CCA
operating
Roundings
costs
£m
£m
1.00
1.00
1.00
1.00
5.25
0.02
1.00
1.00
5.25
0.02
5.27
4.30
2.90
13.28
1.22
5.25
0.02
1.00
1.00
5.25
0.02
5.27
4.30
2.90
13.28
1.22
409.41
63.95
0.90
0.73
370.38
46.51
416.89
396.36
348.39
708.72
1.05
409.41
63.95
1.00
0.80
409.41
51.41
460.82
379.57
307.32
617.30
1.21
16,821 le
41
Return
excl.
reval.
adjs. (h)
£m
108
Return on
MCE excl.
reval.
adjs. (h)
8.8 %
Section 7 - Review of Access Markets
Section 7.6 - TISBO (up to and including 8Mbit/s)(continued)
Note 1: Comparison of average internal and external charges with
each other and with FAC
Cost orientation
Non-discrimination
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
Partial and Private Circuits 2Mbit/s - connection
Internal Partial and Private Circuits 2Mbit/s - connection
External Partial and Private Circuits 2Mbit/s - connection
13
-
14
-
13
14
7,402 circuits
8,240 circuits
15,642
Partial and Private Circuits 2Mbit/s - link
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total internal
40
-
-
40
85,682 links
For the year ended 31 March 2010
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total External
Partial and Private Circuits 2Mbit/s - distribution
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total Internal
-
42
26
-
-
-
26
42
Volume Unit (b)
Proportion
included in
calculation
£
-
27
-
27
565,044 km
5
-
-
5
14,216 le
75
-
-
75
109,543 le
Partial and Private Circuits 2Mbit/s - local end CLZ
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total External CLZ
-
2
-
2
3,737 le
Partial and Private Circuits 2Mbit/s - local end non CLZ
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total External non CLZ
-
40
-
40
51,689 le
£
£
Unaudited
LRIC
Ceiling
Average
price/FAC
£
1,695.04
1,695.04
2,012.98
2,012.98
1,867.67
1,867.67
3,090.67
3,090.67
0.84
0.84
411.61
132.30
1.00
0.40
411.61
53.41
465.02
255.63
221.22
453.38
1.82
411.61
132.30
1.00
0.40
411.61
53.41
465.02
255.63
221.22
453.38
1.82
45.50
1.48
1.00
1.00
45.50
1.48
46.98
49.89
38.38
114.74
0.94
45.50
1.48
1.00
1.00
45.50
1.48
46.98
49.89
38.38
114.74
0.94
758.88
444.90
1,023.00
0.89
891,043 km
Partial and Private Circuits 2Mbit/s - local end CLZ
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal CLZ
Average FAC (see Unaudited
App 1.2) LRIC Floor
price
£
55,799 links
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total External
Partial and Private Circuits 2Mbit/s - local end non CLZ
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal non CLZ
Average
price per
price list
355.40
131.64
0.87
0.40
308.53
53.09
361.62
692.06
132.97
0.88
0.55
609.41
73.28
682.69
355.40
131.64
1.00
0.46
355.40
61.16
416.56
692.06
132.97
1.00
0.63
692.06
83.22
775.28
Weighted average price for CLZ/non CLZ // Nationally averaged cost
678.38
42
Section 7 - Review of Access Markets
Section 7.6 - TISBO (up to and including 8Mbit/s)(continued)
Note 1: Comparison of average internal and external charges with
each other and with FAC
Cost orientation
Non-discrimination
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
12
-
-
12
-
0
-
0
External Radio Backhaul Service - sub 2 Mbit/s rentals
-
17
-
17
Internal Radio Backhaul Service - 2 Mbit/s connection
External Radio Backhaul Service - 2 Mbit/s connection
10
-
20
-
10
20
Internal Radio Backhaul Service - 2 Mbit/s rentals
External Radio Backhaul Service - 2 Mbit/s rentals
41
-
95
-
41
95
For the year ended 31 March 2010
Internal SDSL
External Radio Backhaul Service - sub 2 Mbit/s connection
Volume Unit (b)
Average
price per
price list
£
(u2)
210 circuits
(u3)
7,348 circuits
15,022 circuits
(u3)
(u3)
Average FAC (see Unaudited
price
App 1.2) LRIC Floor
£
£
£
Unaudited
LRIC
Ceiling
Average
price/FAC
£
(s2)
187.05
142.40
328.14
n/a
499.94
1,569.76
1,441.36
2,685.24
0.32
(s3)
497.82
410.43
815.72
n/a
1,355.56
1,355.56
2,018.58
2,018.58
1,872.20
1,872.20
3,102.82
3,102.82
0.67
0.67
(s3)
(s3)
1,629.50
1,629.50
1,080.62
1,080.62
2,446.69
2,446.69
n/a
n/a
External Netstream 16 LL 2Mbit/s connection
-
0
-
0
1,328.99
2,003.71
1,859.37
3,077.15
0.66
External Netstream 16 LL 2Mbit/s rentals non CLZ
-
25
-
25
(u4)
(s4)
n/a
n/a
n/a
n/a
External Netstream 16 LL 2Mbit/s rentals CLZ
-
0
-
0
(u4)
(s4)
n/a
n/a
n/a
n/a
Support Service
Internal Protected Path Variants and Resilience
External Protected Path Variants and Resilience
5
-
4
-
5
4
(u5)
(u5)
(s5)
(s5)
Equipment depreciation
-
-
-
-
10
-
19
-
10
19
(un)
(un)
(un)
(un)
Estimated matched cost of £10.5m (*)
Estimated matched cost of £18.9m (*)
5
-
3
-
5
3
(un)
(un)
(un)
(un)
Estimated matched cost of £3.1m (*)
Estimated matched cost of £2.0m (*)
Internal Third Party Customer Infrastructure
External Third Party Customer Infrastructure
Internal Excess construction charges
External Excess construction charges
Roundings
338
-
-
0
316
-
654
138 circuits
Proportion
included in
calculation
Estimated total cost of £0.2m
Estimated total cost of £0.1m
Estimated equipment depreciation of £41m
(b) See glossary for volume unit descriptors.
(sx) This service comprises a number of individual prices as indicated by the value of x.
(ux) This service comprises a number of individual volumetrics as indicated by the value of x.
(un) This service comprises a large number of volumetrics and prices.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
(*) These are capital costs and therefore not included in the market total for operating costs.
43
Section 7 - Review of Access Markets
Section 7.6 - TISBO (up to and including 8Mbit/s)(continued)
Note 1: Comparison of average internal and external charges with
each other and with FAC
For the year ended 31 March 2009
Service
Internal Partial and Private Circuits 64Kbit/s - connection
External Partial and Private Circuits 64Kbit/s - connection
Partial and Private Circuits 64Kbit/s - link
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total External
Partial and Private Circuits 64Kbit/s - transmission
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total Internal
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total External
Partial and Private Circuits 64Kbit/s - local end
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total External
Non-discrimination
Cost orientation
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
1
-
1
-
1
1
14
-
-
14
-
6
-
6
10
-
-
10
-
28
-
4
-
5
-
-
-
4
28
5
Volume Unit (b)
Average
price per
price list
Proportion
included in
calculation
£
Average FAC (see Unaudited
price
App 1.2) LRIC Floor
£
1,302 circuits
1,745 circuits
3,047
£
£
Unaudited
LRIC
Ceiling
Average
price/FAC
£
499.94
499.94
1,391.77
1,391.77
1,264.66
1,264.66
2,316.77
2,316.77
0.36
0.36
60.57
40.31
1.00
0.18
60.57
7.18
67.75
176.58
165.21
252.87
0.38
60.57
40.31
1.00
0.18
60.57
7.18
67.75
176.58
165.21
252.87
0.38
207,463 links
82,916 links
1.69
0.01
1.00
1.00
1.69
0.01
1.70
4.29
3.17
11.65
0.40
1.69
0.01
1.00
1.00
1.69
0.01
1.70
4.29
3.17
11.65
0.40
5,686,147 km
2,635,215 km
289.67
40.31
0.77
0.63
222.76
25.47
248.23
401.34
321.93
535.65
0.62
289.67
40.31
1.00
0.82
289.67
33.13
322.80
569.82
471.99
783.38
0.57
112,310 le
15,011 le
44
Section 7 - Review of Access Markets
Section 7.6 - TISBO (up to and including 8Mbit/s)(continued)
Note 1: Comparison of average internal and external charges with
each other and with FAC
Non-discrimination
Cost orientation
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
Partial and Private Circuits 2Mbit/s - connection
Internal Partial and Private Circuits 2Mbit/s - connection
External Partial and Private Circuits 2Mbit/s - connection
12
-
17
-
12
17
7,094 circuits
10,079 circuits
17,173
Partial and Private Circuits 2Mbit/s - link
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total internal
42
-
-
42
90,486 links
For the year ended 31 March 2009
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total External
Partial and Private Circuits 2Mbit/s - distribution
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total Internal
-
41
25
-
-
-
25
41
Volume Unit (b)
Proportion
included in
calculation
£
-
27
-
27
576,264 km
6
-
-
6
17,226 le
89
-
-
89
149,315 le
Partial and Private Circuits 2Mbit/s - local end CLZ
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total External CLZ
-
1
-
1
3,018 le
Partial and Private Circuits 2Mbit/s - local end non CLZ
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total External non CLZ
-
43
-
43
55,496 le
£
£
Unaudited
LRIC
Ceiling
Average
price/FAC
£
1,695.04
1,695.04
1,828.23
1,828.23
1,646.12
1,646.12
2,829.98
2,829.98
0.93
0.93
410.00
131.79
1.00
0.40
410.00
52.99
462.99
358.70
319.01
595.41
1.29
410.00
131.79
1.00
0.40
410.00
52.99
462.99
358.70
319.01
595.41
1.29
45.34
1.48
1.00
1.00
45.34
1.48
46.82
49.16
41.37
96.56
0.95
45.34
1.48
1.00
1.00
45.34
1.48
46.82
49.16
41.37
96.56
0.95
1,009.28
688.12
1,338.41
0.61
878,479 km
Partial and Private Circuits 2Mbit/s - local end CLZ
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal CLZ
Average FAC (see Unaudited
price
App 1.2) LRIC Floor
£
53,751 links
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total External
Partial and Private Circuits 2Mbit/s - local end non CLZ
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal non CLZ
Average
price per
price list
392.38
131.08
0.77
0.38
301.74
49.43
351.17
691.92
132.49
0.77
0.48
532.09
63.84
595.93
392.38
131.08
1.00
0.49
392.38
64.28
456.66
691.92
132.49
1.00
0.63
691.92
83.03
774.95
Weighted average price for CLZ/non CLZ // Nationally averaged cost
619.47
45
Section 7 - Review of Access Markets
Section 7.6 - TISBO (up to and including 8Mbit/s)(continued)
Note 1: Comparison of average internal and external charges with
each other and with FAC
Non-discrimination
Cost orientation
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
13
-
-
13
-
0
-
0
External Radio Backhaul Service - sub 2 Mbit/s rentals
-
13
-
13
Internal Radio Backhaul Service - 2 Mbit/s connection
External Radio Backhaul Service - 2 Mbit/s connection
29
-
53
-
29
53
Internal Radio Backhaul Service - 2 Mbit/s rentals
External Radio Backhaul Service - 2 Mbit/s rentals
26
-
65
-
26
65
Support Service
Internal Third Party Customer Infrastructure
External Third Party Customer Infrastructure
12
-
25
-
5
-
4
12
-
5
For the year ended 31 March 2009
Internal SDSL
External Radio Backhaul Service - sub 2 Mbit/s connection
Internal Protected Path Variants and Resilience
External Protected Path Variants and Resilience
Internal Excess construction charges
External Excess construction charges
Roundings
340
Volume Unit (b)
Average
price per
price list
£
(u2)
228 circuits
(u3)
Proportion
included in
calculation
Average FAC (see Unaudited
App 1.2) LRIC Floor
price
£
£
Unaudited
LRIC
Ceiling
£
Average
price/FAC
£
(s2)
301.75
226.17
480.48
n/a
499.94
1,550.51
1,400.61
2,558.80
0.32
(s3)
802.17
685.03
1,133.57
n/a
3,582.66
3,582.66
1,662.26
1,662.26
1,493.34
1,493.34
2,487.57
2,487.57
2.16
2.16
(u3)
(u3)
(s3)
(s3)
1,888.99
1,888.99
1,425.67
1,425.67
2,756.08
2,756.08
n/a
n/a
12
25
(u1)
(u1)
(s1)
(s1)
-
5
4
(u5)
(u5)
(s5)
(s5)
-
12
5
(u1)
(u1)
(s1)
(s1)
-
(1)
(1)
294
(1)
633
8,049 circuits
14,717 circuits
(b) See glossary for volume unit descriptors.
(sx) This service comprises a number of individual prices as indicated by the value of x.
(ux) This service comprises a number of individual volumetrics as indicated by the value of x.
(s) Costs associated with support services are included within the above reported services and hence not disclosed separately.
46
(s)
Section 7 - Review of Access Markets
Section 7.7 - TISBO (above 8Mbit/s up to and including 45Mbit/s)(Annex 11)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with cost orientation andd non-discrimination obligations
Traditional interface symmetric broadband origination (above 8Mbit/s up to and including 45Mbit/s)
Summary
2010
2009
Internal
Sales
£m
External
Sales
£m
Roundings
£m
32
39
15
18
(1)
Note 1: Comparison of average internal and external charges with
each other and with FAC
Turnover
(note 1)
£m
47
56
Operating
costs
£m
25
36
Roundings
Turnover
£m
£m
£m
£m
Service
Internal Partial and Private Circuits 34/45Mbit/s - connection
External Partial and Private Circuits 34/45Mbit/s - connection
0
-
0
-
0
0
Partial and Private Circuits 34/45Mbit/s - link
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal
7
-
-
7
Partial and Private Circuits 34/45Mbit/s - distribution
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total Internal
(20)
(2)
(2)
(4)
9
(1)
Average
price per
price list
Proportion
included in
calculation
4
-
4
-
4
17
-
-
17
Volume Unit (b)
£
Average
price
£
20 circuits
160 circuits
180
9
(9)
141
192
6.6 %
3.8 %
2,872.36
195.90
1.00
0.51
2,872.36
100.19
2,972.55
2,773.42
2,210.10
4,531.72
1.07
2,872.36
195.90
1.00
0.51
2,872.36
100.19
2,972.55
2,773.42
2,210.10
4,531.72
1.07
2,216 links
1,181 links
450.99
2.22
1.00
1.00
450.99
2.22
453.21
389.14
303.58
833.88
1.16
450.99
2.22
1.00
1.00
450.99
2.22
453.21
389.14
303.58
833.88
1.16
2,378.47
82.96
2,461.43
6,542.44
3,110.69
8,391.77
0.38
2,744.12
95.71
2,839.83
5,579.60
3,218.80
7,864.94
0.51
n/a
n/a
n/a
n/a
37,129 km
6
12,929 km
8
-
-
8
3,312 le
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total External
-
3
-
3
1,187 le
Netstream 16 LL 45Mbit/s rentals
-
0
-
0
(u4)
(s4)
Support Service
Internal Protected Path Variants and Resilience
External Protected Path Variants and Resilience
1
-
2
-
1
2
(u4)
(u4)
(s4)
(s4)
2,744.12
195.90
2,744.12
195.90
-
-
-
-
(1)
32
15
-
47
Average
price/FAC
£
0.81
0.81
-
-
£
3,031.82
3,031.82
6
-
£
Unaudited
LRIC
Ceiling
1,837.61
1,837.61
-
(1)
FAC (see Unaudited
App 1.2) LRIC Floor
1,978.15
1,978.15
Partial and Private Circuits 34/45Mbit/s - local end
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal
Roundings
MCE
£m
1,593.44
1,593.44
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total External
Equipment depreciation
38
65
Return
£m
Return
on
MCE
Cost orientation
External
Sales
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total External
26
32
Other adjs.
£m
Total CCA
operating
Roundings
costs
£m
£m
Non-discrimination
Internal
Sales
For the year ended 31 March 2010
Depreciation
£m
Holding
(gain)/loss Supp. Dep.
£m
£m
0.87
0.42
1.00
0.49
Estimated total cost of £0.6m
Estimated total cost of £1.0m
Estimated equipment depreciation of £6.8m
(b) See glossary for volume unit descriptors.
(sx) This service comprises a number of individual prices as indicated by the value of x.
(ux) This service comprises a number of individual volumetrics as indicated by the value of x.
(un) This service comprises a large number of volumetrics and prices.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
47
Return
excl.
reval.
adjs. (h)
£m
Return on
MCE excl.
reval.
adjs. (h)
(3)
(2.4)%
Section 7 - Review of Access Markets
Section 7.7 - TISBO (above 8Mbit/s up to and including 45Mbit/s)(continued)
Note 1: Comparison of average internal and external charges with
each other and with FAC
Non-discrimination
Cost orientation
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
Service
Internal Partial and Private Circuits 34/45Mbit/s - connection
External Partial and Private Circuits 34/45Mbit/s - connection
0
-
0
-
0
0
Partial and Private Circuits 34/45Mbit/s - link
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal
9
-
-
9
For the year ended 31 March 2009
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total External
Partial and Private Circuits 34/45Mbit/s - distribution
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total Internal
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total External
Partial and Private Circuits 34/45Mbit/s - local end
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal
-
4
-
4
18
-
-
18
-
10
7
-
-
-
7
10
Volume Unit (b)
2
-
2
-
2
2
(u4)
(u4)
-
-
(1)
(1)
18
(1)
56
1,494.80
1,494.80
1,346.79
1,346.79
2,202.45
2,202.45
1.07
1.07
4,226.50
3,422.71
6,814.32
0.70
1.00
0.47
2,862.02
92.68
2,954.70
4,226.50
3,422.71
6,814.32
0.70
449.37
2.21
1.00
1.00
449.37
2.21
451.58
417.94
361.16
743.32
1.08
449.37
2.21
1.00
1.00
449.37
2.21
451.58
417.94
361.16
743.32
1.08
3,165.79
195.20
0.77
0.40
2,434.49
78.84
2,513.33
7,039.04
4,947.26
10,552.47
0.36
3,165.79
195.20
1.00
0.53
3,165.79
102.52
3,268.31
10,624.90
7,740.08
15,949.73
0.31
4,093 le
Support Service
Internal Protected Path Variants and Resilience
External Protected Path Variants and Resilience
1,593.44
1,593.44
2,862.02
195.20
14,964 km
1,396 le
Average
price/FAC
£
2,862.02
92.68
2,954.70
40,755 km
5
£
1.00
0.47
1,368 links
-
£
Unaudited
LRIC
Ceiling
2,862.02
195.20
3,099 links
5
Average FAC (see Unaudited
App 1.2) LRIC Floor
price
£
42 circuits
247 circuits
289
-
39
Proportion
included in
calculation
£
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total External
Roundings
Average
price per
price list
(s4)
(s4)
(b) See glossary for volume unit descriptors.
(sx) This service comprises a number of individual prices as indicated by the value of x.
(ux) This service comprises a number of individual volumetrics as indicated by the value of x.
(s) Costs associated with support services are included within the above reported services and hence not disclosed separately.
48
(s)
Section 7 - Review of Access Markets
Section 7.8 - TISBO (above 45Mbit/s up to and including 155Mbit/s)(Annex 11)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with cost orientation andd non-discrimination obligations
Traditional interface symmetric broadband origination (above 45Mbit/s up to and including 155Mbit/s)
Summary
2010
2009
Internal
Sales
£m
External
Sales
£m
Roundings
£m
79
99
19
5
-
Note 1: Comparison of average internal and external charges with
each other and with FAC
For the year ended 31 March 2010
Service
Internal Partial and Private Circuits 140/155Mbit/s - connection
External Partial and Private Circuits 140/155Mbit/s - connection
Partial and Private Circuits 140/155Mbit/s - link
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total External
Partial and Private Circuits 140/155Mbit/s - distribution
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total Internal
Turnover
(note 1)
£m
98
104
Operating
costs
£m
19
36
Depreciation
£m
Holding
(gain)/loss Supp. Dep.
£m
£m
26
26
(16)
(1)
Other adjs.
£m
(3)
(3)
8
0
Average
price per
price list
Proportion
included in
calculation
Total CCA
operating
Roundings
costs
£m
£m
-
MCE
£m
64
46
135
211
47.8 %
22.3 %
Cost orientation
Non-discrimination
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
0
-
0
-
0
0
28
-
-
28
-
1
-
1
31
-
-
31
Volume Unit (b)
£
-
1
1,000 km
10
-
-
10
809 le
£
Average
price/FAC
£
1,804.72
1,804.72
1,980.00
1,980.00
1,839.39
1,839.39
3,033.94
3,033.94
0.91
0.91
10,408.45
159.13
10,567.58
9,036.54
7,166.09
15,923.38
1.17
10,408.45
379.26
1.00
0.42
10,408.45
159.13
10,567.58
9,036.54
7,166.09
15,923.38
1.17
1,177.73
5.32
1.00
1.00
1,177.73
5.32
1,183.05
490.16
368.02
1,176.19
2.41
1,177.73
5.32
1.00
1.00
1,177.73
5.32
1,183.05
490.16
368.02
1,176.19
2.41
26,556 km
1
£
Unaudited
LRIC
Ceiling
1.00
0.42
93 links
-
FAC (see Unaudited
App 1.2) LRIC Floor
10,408.45
379.26
2,627 links
Partial and Private Circuits 140/155Mbit/s - local end
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal
Average
price
£
8 circuits
23 circuits
31
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total External
14,397.82
379.26
0.88
0.51
12,619.81
192.94
12,812.75
12,066.53
7,951.21
15,051.86
1.06
14,397.82
379.26
1.00
0.58
14,397.82
220.12
14,617.94
14,501.69
10,045.65
19,263.06
1.01
10,000.00
2,083.00
1,935.81
3,190.61
4.80
n/a
n/a
n/a
n/a
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total External
-
2
-
2
Netstream 16 LL 155Mbit/s connection
-
0
-
0
Netstream 16 LL 155Mbit/s rentals
-
14
-
14
(u4)
(s4)
10
-
1
-
10
1
(u4)
(u4)
(s4)
(s4)
Equipment depreciation
-
-
-
-
Roundings
-
-
-
-
79
19
-
98
Support Service
Internal Protected Path Variants and Resilience
External Protected Path Variants and Resilience
34
58
Return
£m
Return
on
MCE
107 le
2 circuits
Estimated total cost of £2.2m
Estimated total cost of £0.2m
Estimated equipment depreciation of £0.2m
(b) See glossary for volume unit descriptors.
(sx) This service comprises a number of individual prices as indicated by the value of x.
(ux) This service comprises a number of individual volumetrics as indicated by the value of x.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
49
Return
excl.
reval.
adjs. (h)
£m
54
Return on
MCE excl.
reval.
adjs. (h)
39.7 %
Section 7 - Review of Access Markets
Section 7.8 - TISBO (above 45Mbit/s up to and including 155Mbit/s)(continued)
Note 1: Comparison of average internal and external charges with
each other and with FAC
For the year ended 31 March 2009
Service
Internal Partial and Private Circuits 140/155Mbit/s - connection
External Partial and Private Circuits 140/155Mbit/s - connection
Partial and Private Circuits 140/155Mbit/s - link
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal
Main link fixed charge per year
Enhanced maintenance fixed charge per year
Total External
Partial and Private Circuits 140/155Mbit/s - distribution
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total Internal
Non-discrimination
Cost orientation
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
0
-
0
-
0
0
34
-
-
34
3,242 links
-
1
-
1
98 links
Volume Unit (b)
10,391.84
378.65
-
-
39
-
1
-
1
1,155 km
16
-
-
16
1,365 le
Support Service
Internal Protected Path Variants and Resilience
External Protected Path Variants and Resilience
Roundings
-
2
-
2
10
-
1
-
10
1
-
-
-
99
5
-
1.00
0.40
1.00
0.40
£
Unaudited
LRIC
Ceiling
£
Average
price/FAC
£
1,804.72
1,804.72
1,494.80
1,494.80
1,346.79
1,346.79
2,202.45
2,202.45
1.21
1.21
10,391.84
152.60
10,544.44
13,820.43
11,604.60
24,586.17
0.76
10,391.84
152.60
10,544.44
13,820.43
11,604.60
24,586.17
0.76
1,214.91
5.40
1.00
1.00
1,214.91
5.40
1,220.31
556.05
500.10
1,101.25
2.19
1,214.91
5.40
1.00
1.00
1,214.91
5.40
1,220.31
556.05
500.10
1,101.25
2.19
31,750 km
Partial and Private Circuits 140/155Mbit/s - local end
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total Internal
Average FAC (see Unaudited
App 1.2) LRIC Floor
price
£
3 circuits
32 circuits
35
10,391.84
378.65
39
Proportion
included in
calculation
£
Terminating segment charge per year
Enhanced maintenance per kilometre charge per year
Total External
Local end fixed charge per year
Enhanced maintenance fixed charge per year
Total External
Average
price per
price list
15,394.02
378.65
0.77
0.46
11,838.00
173.83
12,011.83
10,917.46
8,743.32
15,083.46
1.10
15,394.02
378.65
1.00
0.60
15,394.02
226.05
15,620.07
18,507.46
15,124.23
26,727.86
0.84
103 le
(s4)
(s4)
(u4)
(u4)
104
(b) See glossary for volume unit descriptors.
(sx) This service comprises a number of individual prices as indicated by the value of x.
(ux) This service comprises a number of individual volumetrics as indicated by the value of x.
(s) Costs associated with support services are included within the above reported services and hence not disclosed separately.
50
(s)
Section 7 - Review of Access Markets
Section 7.9 - AISBO (up to and including 1Gbit/s)(Annex 11)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with cost orientation andd non-discrimination obligations
Alternative interface symmetric broadband origination (up to and including 1Gbit/s)
Summary
2010
2009
Internal
Sales
£m
External
Sales
£m
Roundings
£m
281
279
208
212
3
Note 1: Comparison of average internal and external charges with
each other and with FAC
For the year ended 31 March 2010
Turnover
(note 1)
£m
Operating
costs
£m
176
103
489
494
Depreciation
£m
Holding
(gain)/loss
£m
145
94
(217)
(13)
Supp. Dep. Other adjs.
£m
£m
6
2
95
(17)
Total CCA
operating
Roundings
costs
£m
£m
-
205
169
Return
£m
MCE
£m
284
325
1,120
873
Cost orientation
Non-discrimination
Internal
Sales
External
Sales
Roundings
Turnover
Volume Unit (b)
Average
price
FAC (see Unaudited
App 1.2) LRIC Floor
Unaudited
LRIC
Ceiling
Average
price/FAC
£m
£m
£m
£m
Service
Internal Wholesale extension services 10Mbit/s rental
External Wholesale extension services 10Mbit/s rental
75
-
39
-
75
39
36,532 le
19,418 le
55,950
2,040.50
2,005.61
1,675.41
1,675.41
620.22
620.22
2,239.13
2,239.13
1.22
1.20
Internal Wholesale extension services 100Mbit/s rental
External Wholesale extension services 100Mbit/s rental
58
-
28
-
58
28
24,992 le
12,213 le
37,205
2,313.46
2,273.25
1,719.82
1,719.82
648.31
648.31
2,318.70
2,318.70
1.35
1.32
Internal Wholesale extension services 1000Mbit/s rental
External Wholesale extension services 1000Mbit/s rental
24
-
8
-
24
8
4,117 le
1,518 le
5,635
5,819.71
5,554.59
2,097.62
2,097.62
905.70
905.70
3,027.96
3,027.96
2.77
2.65
Internal Wholesale extension services other bandwidth rental
External Wholesale extension services other bandwidth rental
13
-
2
-
13
2
16,808 le
351 le
17,159
746.63
6,815.20
1,731.71
1,731.71
652.42
652.42
2,296.66
2,296.66
0.43
3.94
Internal Wholesale extension services 10Mbit/s connection
External Wholesale extension services 10Mbit/s connection
8
-
5
-
8
5
6,914 le
4,587 le
11,501
1,097.39
995.98
3,322.59
3,322.59
2,919.80
2,919.80
6,462.39
6,462.39
0.33
0.30
Internal Wholesale extension services 100Mbit/s connection
External Wholesale extension services 100Mbit/s connection
13
-
6
-
13
6
10,196 le
5,115 le
15,311
1,239.42
1,099.81
3,224.47
3,224.47
2,829.91
2,829.91
6,165.69
6,165.69
0.38
0.34
Internal Wholesale extension services 1000Mbit/s connection
External Wholesale extension services 1000Mbit/s connection
9
-
2
-
9
2
1,598 le
754 le
2,352
5,557.25
2,201.10
9,267.84
9,267.84
8,090.94
8,090.94
16,410.49
16,410.49
0.60
0.24
<1
-
<1
-
<1
<1
(t)
(t)
(u)
(u)
(u)
(u)
(u)
(u)
n/a
n/a
Internal Wholesale extension services other bandwidth connection (t)
External Wholesale extension services other bandwidth connection (t)
£
(t)
(t)
£
£
£
External Backhaul extension services 100Mbit/s rental
-
8
-
8
5,272 le
1,582.63
1,633.96
678.04
1,730.62
0.97
External Backhaul extension services 1000Mbit/s rental
-
17
-
17
4,106 le
4,198.81
1,934.86
884.78
2,239.47
2.17
External Backhaul extension services other bandwidth rental (t)
-
<1
-
<1
(t)
(t)
(u)
(u)
(u)
n/a
51
Return
on
MCE
25.4 %
37.3 %
Return
excl.
reval.
adjs. (h)
£m
152
Return on
MCE excl.
reval.
adjs. (h)
13.5 %
Section 7 - Review of Access Markets
Section 7.9 - AISBO (up to and including 1Gbit/s)(continued)
Note 1: Comparison of average internal and external charges with
each other and with FAC
For the year ended 31 March 2010
Cost orientation
Non-discrimination
Internal
Sales
External
Sales
Roundings
Turnover
Volume Unit (b)
Average FAC (see Unaudited
App 1.2) LRIC Floor
price
Unaudited
LRIC
Ceiling
Average
price/FAC
£m
£m
£m
£m
External Backhaul extension services 100Mbit/s connection (t)
-
<1
-
<1
External Backhaul extension services 1000Mbit/s connection
-
2
-
2
1,192 le
External Backhaul extension services other bandwidth connection
-
2
-
2
(u1)
External Backhaul network services all bandwidth connection (t)
-
<1
-
<1
(t)
(u)
(u)
(u)
n/a
External Backhaul network services all bandwidth rental
-
6
-
6
876 circuits
6,335.60
1,693.44
677.27
2,815.35
3.74
Internal Ethernet Access Direct connection
External Ethernet Access Direct connection
2
-
1
-
2
1
816 circuits
589 circuits
1,405
2,372.36
2,065.72
<1
-
<1
-
<1
<1
962.58
962.58
1.26
1.23
Internal Ethernet Access Direct rental (t)
External Ethernet Access Direct rental (t)
(t)
(t)
(t)
(t)
£
£
£
£
(t)
(u)
(u)
(u)
n/a
2,013.52
14,439.10
12,551.86
26,860.72
0.14
(s1)
10,445.50
9,019.28
18,010.39
n/a
(t)
(t)
External Ethernet Backhaul Direct connection
-
1
-
1
302 circuits
4,575.00
External Ethernet Backhaul Direct rental
-
6
-
6
759 circuits
7,782.00
Internal Other Ethernet connection
External Other Ethernet connection
2
-
1
-
2
1
257 circuits
566 circuits
823
8,297.79
2,545.33
Internal Other Ethernet rental
External Other Ethernet rental (t)
1
-
<1
-
1
<1
583 circuits
(t)
2,120.20
(t)
Internal Main link rental charges
External Main link rental charges
64
-
61
-
64
61
-
-
-
-
12
-
11
-
12
11
-
2
-
2
208
-
489
Support Service
Equipment depreciation
Internal Excess construction charges
External Excess construction charges
Roundings
281
159,835 fibre km
154,497 fibre km
314,332
(u)
400.95
393.91
319.04
319.04
204.71
204.71
Estimated equipment depreciation of £3.3m
(u1)
(u1)
(s1) Estimated matched cost of £8.0m (*)
(s1) Estimated matched cost of £7.0m (*)
(b) See glossary for volume unit descriptors.
(sx) This service comprises a number of individual prices as indicated by the value of x.
(ux) This service comprises a number of individual volumetrics as indicated by the value of x.
(t) Turnover for this service is <£1m and hence shown within roundings as agreed with Ofcom. Where turnover is immaterial, no volumes or pricees are shown.
(u) Costs associated with these services are immaterial and included within the above reported AISBO services and hence not disclosed separaately.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
(*) These are capital costs and therefore not included in the market total for operating costs.
52
Section 7 - Review of Access Markets
Section 7.9 - AISBO (up to and including 1Gbit/s)(continued)
Note 1: Comparison of average internal and external charges with
each other and with FAC
For the year ended 31 March 2009
Non-discrimination
Cost orientation
Internal
Sales
External
Sales
Roundings
Turnover
Volume Unit (b)
Average FAC (see Unaudited
App 1.2) LRIC Floor
price
Unaudited
LRIC
Ceiling
Average
price/FAC
£m
£m
£m
£m
Service
Internal Wholesale extension services 10Mbit/s rental
External Wholesale extension services 10Mbit/s rental
72
-
29
-
72
29
48,703 le
14,214 le
62,917
1,472.86
2,039.89
1,368.82
1,368.82
588.87
588.87
1,789.80
1,789.80
1.08
1.49
Internal Wholesale extension services 100Mbit/s rental
External Wholesale extension services 100Mbit/s rental
65
-
21
-
65
21
24,084 le
7,820 le
31,904
2,714.70
2,656.36
1,365.22
1,365.22
585.38
585.38
1,781.55
1,781.55
1.99
1.95
Internal Wholesale extension services 1000Mbit/s rental
External Wholesale extension services 1000Mbit/s rental
25
-
6
-
25
6
3,211 le
846 le
4,057
7,887.93
7,568.75
1,382.65
1,382.65
600.00
600.00
1,821.56
1,821.56
5.70
5.47
3
-
2
-
3
2
162 le
345 le
507
18,322.06
6,201.16
2,620.05
2,620.05
1,773.30
1,773.30
4,658.92
4,658.92
6.99
2.37
Internal Wholesale extension services 10Mbit/s connection
External Wholesale extension services 10Mbit/s connection
10
-
6
-
10
6
7,841 le
5,037 le
12,878
1,267.48
1,232.97
1,651.86
1,651.86
1,555.80
1,555.80
2,628.55
2,628.55
0.77
0.75
Internal Wholesale extension services 100Mbit/s connection
External Wholesale extension services 100Mbit/s connection
11
-
8
-
11
8
5,332 le
3,745 le
9,077
2,085.25
2,186.14
1,593.23
1,593.23
1,497.30
1,497.30
2,454.37
2,454.37
1.31
1.37
Internal Wholesale extension services 1000Mbit/s connection
External Wholesale extension services 1000Mbit/s connection
5
-
2
-
5
2
951 le
502 le
1,453
4,758.46
4,578.42
5,778.98
5,778.98
5,430.87
5,430.87
8,899.04
8,899.04
0.82
0.79
Internal Wholesale extension services other bandwidth connection
External Wholesale extension services other bandwidth connection
0
-
0
-
0
0
16 le
29 le
45
4,762.50
4,500.00
3,383.86
3,383.86
3,219.51
3,219.51
6,184.48
6,184.48
1.41
1.33
Internal Wholesale extension services other bandwidth rental
External Wholesale extension services other bandwidth rental
£
53
£
£
£
Section 7 - Review of Access Markets
Section 7.9 - AISBO (up to and including 1Gbit/s)(continued)
Note 1: Comparison of average internal and external charges with
each other and with FAC
Non-discrimination
Cost orientation
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
-
16
-
16
External Backhaul extension services 1000Mbit/s rental
-
30
-
External Backhaul extension services other bandwidth rental
-
2
-
External Backhaul extension services 100Mbit/s connection
-
2
External Backhaul extension services 1000Mbit/s connection
-
External Backhaul extension services other bandwidth connection
For the year ended 31 March 2009
Volume Unit (b)
Average FAC (see Unaudited
App 1.2) LRIC Floor
price
£
£
Unaudited
LRIC
Ceiling
£
Average
price/FAC
£
6,080 le
2,687.33
1,239.00
586.87
1,620.75
2.17
30
6,695 le
4,473.48
1,256.25
601.31
1,660.32
3.56
2
4,099 le
503.23
1,249.92
597.46
1,645.76
0.40
-
2
649 le
2,369.80
1,007.87
997.04
1,703.56
2.35
8
-
8
1,555 le
5,199.15
3,589.53
3,552.26
6,025.57
1.45
-
1
-
1
965 le
1,478.28
1,500.93
1,485.29
2,521.56
0.98
External Backhaul network services all bandwidth connection
-
2
-
2
141 circuits
17,124.77
47,622.13
48,855.69
60,115.26
0.36
External Backhaul network services all bandwidth rental
-
5
-
5
920 circuits
5,691.35
2,440.54
739.48
4,239.74
2.33
Internal Main link rental charges
External Main link rental charges
75
-
63
-
75
63
516.11
513.25
183.50
183.50
116.44
116.44
582.75
582.75
2.81
2.80
Support Service
Internal Excess construction charges
External Excess construction charges
13
-
9
-
13
9
External Backhaul extension services 100Mbit/s rental
Roundings
279
-
3
3
212
3
494
144,634 fibre km
123,010 fibre km
267,644
(u3)
(u3)
(s3)
(s3)
(b) See glossary for volume unit descriptors.
(sx) This service comprises a number of individual prices as indicated by the value of x.
(ux) This service comprises a number of individual volumetrics as indicated by the value of x.
(s) Costs associated with support services are included within the above reported services and hence not disclosed separately.
54
(s)
Section 7 - Review of Access Markets
Section 7.10 - Wholesale local access (Annex 11)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with cost orientation and non-discrrimination obligations
Wholesale local access
Summary
2010
2009
Internal
Sales
£m
External
Sales
£m
Roundings
£m
-
439
349
1
Note 1: Comparison of average internal and external charges with
each other and with FAC
For the year ended 31 March 2010
Turnover
(note 1)
£m
439
350
Operating
costs Depreciation
£m
£m
267
281
Holding
(gain)/loss Supp. Dep. Other adjs.
£m
£m
£m
97
70
(236)
18
23
16
48
15
Non-discrimination
Total CCA
operating
Roundings
costs
£m
£m
-
199
400
Return
£m
MCE
£m
240
(50)
950
627
Cost orientation
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
Volume Unit (b)
Average
price
£
FAC (see Unaudited
App 1.2) LRIC Floor
£
£
Unaudited
LRIC
Ceiling
Average
price/FAC
£
Service
External MPF Connections
-
58
-
58
1,857,350 lines
31.39
29.52
27.23
41.39
External MPF Rentals
-
188
-
188
2,198,228 lines
85.46
85.49
52.09
104.28
1.00
External MPF Room Build
-
7
-
7
11,723.66
400.34
359.43
745.41
29.28
External MPF Hostel Rentals
-
52
-
52
10,091 hostels
5,190.52
4,217.41
3,603.80
6,008.06
1.23
External MPF Tie Cables
-
13
-
13
26,373 cables
476.89
335.21
314.92
426.69
1.42
External SMPF Connections
-
59
-
59
2,259,796 conns
26.06
25.63
23.70
32.65
1.02
External SMPF Rentals
-
62
-
62
3,945,687 lines
15.60
13.50
11.46
20.41
1.16
Roundings
-
-
-
-
-
439
-
439
£m
£m
£m
£m
0.61
For the year ended 31 March 2009
632 rooms
1.06
Service
External MPF Connections
-
26
-
26
705,982 lines
37.31
60.92
57.18
73.89
External MPF Rentals
-
119
-
119
1,469,385 lines
81.16
120.04
69.29
134.58
0.68
External MPF Room Build
-
7
-
7
564 rooms
11,693.78
923.10
94.09
555.44
12.67
External MPF Hostel Rentals
-
47
-
47
9,291 hostels
5,076.04
4,442.22
3,871.28
5,648.97
1.14
External MPF Tie Cables
-
14
-
14
26,207 cables
532.92
1,663.80
764.60
1,700.48
0.32
External SMPF Connections
-
79
-
79
2,103,101 conns
37.71
50.13
46.86
63.83
0.75
External SMPF Rentals
-
57
-
57
3,668,025 lines
15.60
14.59
12.64
18.08
1.07
Roundings
-
-
1
1
-
349
1
350
(b) See glossary for volume unit descriptors.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
55
Return
on
MCE
25.4 %
(8.0)%
Return
excl.
reval.
adjs. (h)
£m
130
Return on
MCE excl.
reval.
adjs. (h)
13.7 %
Section 8 - Review of Other Wholesale Markets
Section 8 - Review of Other Wholesale Markets
Section 8
Review of Other Wholesale Markets
56
Section 8 - Review of Other Wholesale Markets
Section 8.1 - Financial Performance in Other Wholesale Markets (Annex 8)
For the year ended 31 March 2010
Call origination on FPN networks
Local-tandem conveyance and transit on FPN networks
Single transit on FPN networks
Technical areas (Interconnect Circuits)
Fixed call termination
Wholesale trunk segments
Technical areas (Point of Handover)
Wholesale Broadband Access
Total Other Wholesale Markets
For the year ended 31 March 2009
Call origination on FPN networks
Local-tandem conveyance and transit on FPN networks
Single transit on FPN networks
Technical areas (Interconnect Circuits)
Fixed call termination
Wholesale trunk segments
Technical areas (Point of Handover)
Wholesale Broadband Access
Total Other Wholesale Markets
Internal
Turnover
£m
150
57
0
19
68
141
0
570
1,005
Internal
Turnover
£m
155
58
0
22
71
207
0
628
1,141
External
Turnover
£m
52
28
4
40
102
23
12
405
666
External
Turnover
£m
65
30
5
46
108
50
6
420
730
Roundings
Turnover
£m
0
0
0
0
0
0
0
0
0
Roundings
Turnover
£m
1
(1)
0
0
0
0
0
1
1
Total
Turnover
£m
202
85
4
59
170
164
12
975
1,671
Total
Turnover
£m
221
87
5
68
179
257
6
1,049
1,872
CCA
HCA Costs Adjustments
£m
£m
178
(28)
45
(19)
4
0
47
(7)
139
(31)
55
(40)
12
(2)
805
(48)
1,285
HCA Costs
£m
224
58
8
55
184
75
2
672
1,278
(h) See Section 4 - Basis of Preparation for the CCA Revaluation Adjustment.
57
(175)
CCA
Adjustments
£m
(7)
(5)
0
(2)
(7)
(15)
0
(33)
(69)
Roundings
£m
0
0
0
0
0
0
0
0
0
Roundings
£m
1
1
0
6
0
4
1
2
15
Total CCA
Operating
costs
£m
150
26
4
40
108
15
10
757
1,110
Total CCA
Operating
costs
£m
218
54
8
59
177
64
3
641
1,224
Return
£m
52
59
0
19
62
149
2
218
Mean
Capital
Employed
£m
372
142
11
77
388
247
22
1,301
Return on
MCE
%
14.4 %
41.8 %
(1.0)%
23.9 %
15.8 %
60.5 %
7.1 %
16.8 %
561
2,560
21.9 %
Mean
Capital
Employed
£m
491
142
30
101
491
270
7
1,173
Return on
MCE
%
0.6 %
22.7 %
(9.3)%
10.7 %
0.4 %
71.3 %
47.5 %
34.8 %
2,705
24.0 %
Return
£m
3
33
(3)
9
2
193
3
408
648
Return
excl.
reval.
adj. (h)
£m
17
38
0
11
23
108
1
178
376
ROCE
excl.
reval.
adj. (h)
%
4.6 %
27.0 %
(1.0)%
14.7 %
5.9 %
43.7 %
2.3 %
13.7 %
14.7 %
Section 8 - Review of Other Wholesale Markets
Section 8.2 - Review of Other Wholesale Markets (Annex 10 & 14)
Section 8.2.1 - Market Group Level Review (Annex 10)
Section 8.2.1 – Market Group Level Review (Annex 10)
Overall the markets for calls (call origination, call termination, local to tandem conveyance and single
transit) continue to show a decline in revenue, due to reducing volumes. Substitution of fixed PSTN calls
continues with migration to broadband, mobile, LLU operators and other alternatives. As volumes
reduce there is a consequential reduction in the revenue for interconnect circuits, the fixed links that
carry calls traffic between the networks of different operators.
The Network Charge Controls were by updated by Ofcom and the new controls took effect on 1 October
2009, the mid point of 2009/10. The details of the changes to the RPI – X formulae are given in Section
8.2.2. SMP status was removed from the Local to Tandem Conveyance market, and this service will
become part of Wholesale Residual in future years. Single Transit retains SMP status but Ofcom has
determined that a price control is no longer needed as a remedy.
Costs and mean capital employed for the calls markets in total have reduced due to a combination of
ageing PSTN assets approaching the end of their planned lives, and the changes to cost allocation
referred to in Section 4.2.4.
Wholesale trunk segments are bought by Communications Providers in combination with partial private
circuits in the TISBO markets. Revenue and returns have fallen significantly in the year due to significant
price reductions introduced in connection with the new Leased Lines Charge Controls which took effect
on 1 October 2009. This was part of a general re-alignment of PPC and Trunk prices to move them more
into line with costs.
Points of Handover charges relate to the cost of providing interconnection between operators’
networks for TISBO services. Revenue has increased in 2009/10 following changes to the structure and
pricing of Point of Handover services via the Business Connectivity Market Review and Leased Line
Charge Control determinations.
Revenue and returns for the broadband market taken as a whole (Wholesale Broadband Access) have
fallen, partly due to price reductions in the de-regulated part of the market and partly due to additional
network costs.
The Wholesale Broadband market shows returns declining significantly. The main reasons are due to a
combination of lower revenues due to competition conditions and higher costs as a result of continued
roll-out of 21CN services.
58
Section 8 - Review of Other Wholesale Markets
Key Market Changes
Section 8.2.2 – Market Level Financial Review of Other Wholesale SMP Markets
(Annex
(Annex 14)
14)
Section 8.2.2
- Market Level
Financial
of Other
Wholesale SMP Markets
Market:
Call Origination
on Fixed
PublicReview
Narrowband
Networks
The last FRIACO customer ceased their service during 2009 and FRIACO was subsequently withdrawn
from new supply in October 2009.
Call origination has declined steadily throughout the year driven by several factors:
Definition
The conveyance of a call originating on a customer’s exchange line from the remote concentrator to and
over the local exchange.
“Call Origination Services” are defined as any and all of the following specific services provided by the
Dominant Provider:
• call origination (including operator assistance and emergency intermediate services); and
• call origination (including emergency intermediate services).
• The ongoing migration of call origination minutes from fixed public narrowband networks to
mobile networks.
• The substitution impact of VOIP (Voice Over IP) calls is growing and will potentially have a
greater impact in the future as Broadband Service Providers move towards double and triple
play offerings in a move to consolidate market share and grow revenue.
• Growth in Local Loop Unbundling (LLU) lines has eroded call origination volumes with major
players marketing double play offerings to their customer base, where voice services are
provided alongside high speed data.
Key Regulatory Changes
Market: Local-Tandem Conveyance and Transit on Fixed Public Narrowband
Networks
In 2009/10 Ofcom carried out a review of the Fixed Narrowband Services Wholesale Market and a
review of the Network Charge Controls. Ofcom concluded that BT still has SMP in the call origination
market going forward. Ofcom also determined that due to decline in the market BT no longer has an
obligation to supply FRIACO. As of 1 October 2009 the price control on both DLE FRIACO and Single
Tandem FRIACO fell away.
Definition
The Determination on PPP (Product Management, Policy and Planning) was implemented by Ofcom on
1 July 2004. The interconnect costs are pooled with the costs of providing end to end calls for BT’s retail
activities and the costs are recovered over all calls on an equivalent basis. Each physical call crossing BT’s
network is charged PPP only once. As PPP is incurred on all calls in markets where BT has SMP, it is
relevant for the Call Origination market.
The charge controls for these services are as follows:
Local-tandem conveyance (LTC) and local-tandem transit (LTT) are services that convey traffic
between a local and a tandem exchange. A tandem exchange is a telephone exchange whose primary
function to switch traffic between telephone exchanges in a Public Electronic Communications Network
(PECN).
Local-tandem conveyance (LTC) is the service that an originating or terminating operator provides to
convey calls between a local exchange and a tandem exchange.
New NCC
Local-tandem transit (LTT) is a service a transit operator provides to convey calls between a local
exchange and a tandem exchange when a call originates and terminates on networks other than its
own.
(1 Oct 2005 – 30 Sept 2009)
(1 Oct 2009 – 30 Sept 2013)
Key Regulatory Changes
RPI - 3.75%
RPI + 2.75%
In 2009/10 Ofcom carried out a review of the Fixed Narrowband Services Wholesale Market and a
review of the Network Charge Controls. Ofcom concluded that LTC and LTT are in a separate market to
that containing Single Transit. The final Statement confirmed Ofcom’s view that the market for LTC and
LTT is effectively competitive and therefore SMP no longer applies. As a result of this from 1 October
2009 the price control is no longer necessary. This means that the market is not bound by the RPI-X
formula beyond 30 September 2009. Until 30 September 2009 the price control applicable for this
market is RPI-0%
Service
Previous NCC
Call Origination
DLE FRIACO
RPI - 8%
Not applicable
Single Tandem FRIACO
RPI - 8.5%
Not applicable
Product Management,
Policy and Planning (PPP)
RPI + 0.75%
RPI + 1.50%
The Determination on PPP (Product Management, Policy and Planning) was implemented by Ofcom on
1 July 2004. The interconnect costs are pooled with the costs of providing end to end calls for BT’s retail
activities and the costs are recovered over all calls on an equivalent basis. Each call crossing BT’s
network is charged PPP only once. Given that PPP (Product Management, Policy and Planning) is only
59
Section 8 - Review of Other Wholesale Markets
incurred on all calls in markets where BT has SMP, it is not relevant for the LTC and LTT market beyond
30 September 2009. Until that point the price control applicable for PPP is RPI+0.75%.
Key Market Changes
The reduction in turnover is due to the decline in Local-tandem conveyance volumes explained below.
activities and the costs are recovered over all calls on an equivalent basis. Each call crossing BT’s
network is charged PPP only once. As PPP is incurred on all calls in markets where BT has SMP, it is
relevant for the Single Transit market. To 30 September 2009 the price control applicable for PPP is
RPI+0.75%. From 1 October 2009 to 30 September 2013 the price control has been changed to
RPI+1.50%.
Key Market Changes
Overall the fixed line calls market is shrinking. The contraction of the fixed market is driven by
substitution of broadband and mobile.
Volumes of transit calls declined during the financial year ended 31 March 2010 primarily due to direct
connects between other operators.
Local-tandem conveyance has declined steadily throughout the year driven by the following main
factors:
• The ongoing migration of local-tandem conveyance minutes from fixed public narrowband
networks to mobile networks.
• The substitution impact of VOIP (Voice Over IP) calls is growing and will potentially have a
greater impact in the future as Broadband Service Providers move towards double and triple
play offerings in a move to consolidate market share and grow revenue.
• Similarly growth in Local Loop Unbundling (LLU) lines is beginning to erode local-tandem
conveyance volumes with major players marketing double play offerings to their customer base,
where voice services are provided alongside high speed data.
Market: Technical Areas (Interconnect Circuits)
Definition
Ofcom has the ability to apply remedies to technical areas as part of the overall obligation that
addresses SMP in a particular market. Interconnect Circuits have been identified as an appropriate
technical area for the purpose of imposing appropriate regulatory remedies. Interconnect Circuits link
the exchanges of two interconnecting Communication Providers (CPs) in order to enable traffic to pass
between their networks.
BT provides the following types of Interconnect Circuits:
Market: Single Transit on Fixed Public Narrowband Networks
Definition
Single transit is the service an operator provides when a call originates and terminates on networks
other than its own and the originating and terminating operators are directly connected at the same
transit operator’s tandem exchange. The call is therefore transited through a single tandem exchange.
While Inter-tandem conveyance (ITC) and Inter-tandem transit (ITT) are essentially transmission
services, single transit is a connection service that connects two operators who are not directly
connected.
Due to the terms of competition being different in single transit, the 2009/10 market review confirmed
that single transit is in a separate market to ITT/ITC.
Key Regulatory Changes
In 2009/10 Ofcom carried out a review of the Fixed Narrowband Services Wholesale Market and a
review of the Network Charge Controls. Ofcom concluded that Single Transit is in a separate market to
that containing LTC and LTT. The final Statement confirmed Ofcom’s view that the market for Single
Transit is not effectively competitive and that the finding of SMP still applies. However, given the nature
of the market no price control remedy is needed. This means that the market is not bound by the RPIX formula beyond 30 September 2009. Until 30 September 2009 the price control applicable to this
market is RPI-11.5%.
The Determination on PPP (Product Management, Policy and Planning) was implemented by Ofcom on
1 July 2004. The interconnect costs are pooled with the costs of providing end to end calls for BT’s retail
60
• Customer-Sited Interconnect (CSI): BT provides a point of interconnection at the site of the
interconnecting CP by extending its network using a 2Mbit/s circuit;
• In-Span Interconnect (ISI): BT and the other CP build out their networks to a handover point
located between their switches. The handover point is normally close to the BT exchange and
therefore most of the build is the responsibility of the interconnecting CP;
• Interconnection Extension Circuit (IEC): IECs allow an interconnecting CP with an existing ISI to
extend this point of interconnection to a new building. In order to do this, BT provides a 2Mbit/s
circuit between the two buildings. An IEC is subject to the same per km charge as a CSI but has a
reduced fixed charge; and
• Virtual Interconnect Circuit (VIC): VIC is an operationally efficient alternative to physical
interconnect at Digital Local Exchanges (DLE) allowing CPs to continue to benefit from Local
Exchange Segment (LES) rates whilst physically connecting to the Next Generation Switch
(NGS). VIC is an important part of BT’s commitment to maintaining commercial stability as the
company moves its interconnect services onto the new 21CN platform.
Ofcom determined that Interconnect Circuits should properly be considered as a Technical Area as set
out by the Commission.
Key Regulatory Changes
In 2009/10 Ofcom carried out a review of the Fixed Narrowband Services Wholesale Market and a
review of the Network Charge Controls. Ofcom concluded that BT still has SMP in the Technical Area for
Interconnect Circuits going forward. The price control applicable to this Technical Area is RPI-5.25% up
Section 8 - Review of Other Wholesale Markets
to 30 September 2009. From 1 October 2009 the price control changed to RPI+3.75%. These controls
will run until 30 September 2013.
market going forward. The price control applicable to this market is RPI-5% up to 30 September 2009.
From 1 October 2009 the price control changed to RPI+3.75%.
Key Market Changes
The Determination on PPP (Product Management, Policy and Planning) was implemented by Ofcom on
1 July 2004. The interconnect costs are pooled with the costs of providing end to end calls for BT’s retail
activities and the costs are recovered over all calls on an equivalent basis. Each physical call crossing BT’s
network is charged PPP only once. As PPP is incurred on all calls in markets where BT has SMP, it is
relevant for the Fixed Call Termination market. The price control applicable for PPP is RPI+0.75% up to
30 September 2009. From 1 October 2009 the price control for PPP changed to RPI+1.50%.
Overall the fixed line calls market is shrinking. The contraction of the fixed market is driven by
substitution of broadband and mobile.
Interconnect Circuit volumes have declined slowly throughout the year driven by several factors:
•
•
•
•
the migration of narrowband data dial traffic to broadband services; and
the ongoing migration from fixed public narrowband networks to mobile networks.
CPs building direct interconnection with other CPs and by-passing BT.
CPs building their own 21CN networks and considering requirements for NGN inter-connects
with the BT network.
• CPs rationalising their existing interconnections with BT.
• CPs moving to Wholesale Calls packages – removing the requirement for Interconnect Circuits
The charge controls for these services are summarised as follows:
The substitution impact of VOIP (Voice Over IP) calls is growing and will potentially have a greater
impact in the future as Broadband Service Providers move towards double and triple play offerings in a
move to consolidate market share and grow revenue.
Service
Previous NCC
New NCC
(1 Oct 2005 – 30 Sept 2009)
(1 Oct 2009 – 30 Sept 2013)
Call Termination
RPI - 5%
RPI + 3.75%
Product Management,
Policy and Planning
(PPP)
RPI + 0.75%
RPI + 1.50%
Market: Fixed Call Termination
Key Market Changes
Definition
Overall the fixed line calls market is shrinking. The contraction of the fixed market is driven by
substitution of broadband and mobile.
The Review of fixed geographic call termination markets was concerned with the wholesale conveyance
service fixed geographic call termination only.
The economic market is defined as fixed geographic call termination on each individual Public
Electronic Communications Network (PECN). This definition is slightly narrower than that
recommended by the European Commission, which could be adjudged to include non-geographic call
termination services as well. The difference is deemed justifiable in that non-geographic call
termination markets are subject to different payment arrangements that are not purely ‘calling party
pays’ and, moreover, they are competitive in the UK.
After discussions with Ofcom it was agreed that due to the material changes that would be required for
the financial year ended 31 March 2005 the definition would be amended to include non-geographic
as well as geographic calls for the Current Cost Financial Statements 2005.
All PECNs that terminate fixed geographic calls have SMP in the provision of call termination services
when providing such services to all other PECNs. Ofcom therefore designated that each relevant PECN
has SMP.
Key Regulatory Changes
In 2009/10 Ofcom carried out a review of the Fixed Narrowband Services Wholesale Market and a
review of the Network Charge Controls. Ofcom concluded that BT still has SMP in the call termination
61
Call termination has declined steadily throughout the year driven by several factors;
• The ongoing migration of call termination minutes from fixed public narrowband networks to
mobile networks.
• The substitution impact of VOIP (Voice Over IP) calls is growing and will potentially have a
greater impact in the future as Broadband Service Providers move towards double and triple
play offerings in a move to consolidate market share and grow revenue.
• Similarly growth in Local Loop Unbundling (LLU) lines is beginning to erode call termination
volumes with major players marketing double play offerings to their customer base, where voice
services are provided alongside high speed data.
Market: Wholesale Trunk Segments
Definition
This market covers the provision of trunk segments across core transmission networks. These trunk
services are often used to provide a link between origination services where a communications provider
does not have available network to its nearest point of connection. As in the case of symmetric
Section 8 - Review of Other Wholesale Markets
broadband origination services, trunk segment services may be used to provide a wide range of
downstream retail services.
The particular services provided are the same as described above for symmetric broadband origination.
No stand alone trunk segment services were sold to third parties, although such a service may be
requested at some point in the future.
Basket
Value of X
Sub Caps
TI-Trunk (all bandwidths – rental).
3.25
RPI - 0% sub-cap on sub-basket of
TISBO terminating segments.
RPI + 5% sub-cap on each charge
(excluding POH charges).
RPI - 0% sub-cap on each charge
(POH charges only).
POC end and third party end
equipment charges.
RPI - 0
No charge can increase more than 5%
in nominal terms.
All relevant ancillary services used in
the provision of TI services in scope
of the TI Basket.
RPI - 0
None.
LLU backhaul consists of LLU backhaul trunk and LLU backhaul link. LLU backhaul trunk is similar to the
trunk segment of a leased line and is hence a substitute for trunk segments. Therefore, LLU backhaul
trunk segments are considered to be part of the wholesale trunk segment market.
Additionally, LLU backhaul services, RBS backhaul circuits and Netstream 16 Longline may, in
particular circumstances, involve some trunk segment services as part of the overall service. This would
correspond to intra core transmission on the BT network. This element for RBS and Netstream circuits
is included in the relevant TISBO market.
OFCOM concluded that a national market exists for trunk segments and that BT has SMP in the national
market for wholesale trunk segments.
SDSL based circuits fall into the market for low bandwidth traditional interface symmetric broadband
origination. Core conveyance relating to these services is carried across BT’s Asynchronous Transfer
Mode (ATM) network, rather than its SDH network. OFCOM therefore considered that its SMP finding
is equally applicable to trunk segments conveyed across the ATM network as well as the SDH network.
Key Regulatory Changes
In December 2008 Ofcom published its Final Statement on the Business Connectivity Market Review.
Ofcom found BT to continue to have SMP in the market for trunk segments at all bandwidths.
Ofcom increased regulation in the Trunk market by imposing a charge control and requiring prices to be
notified at 90 days. Ofcom also changed the definition of trunk segments from one based on links
between two BT SDH Tier 1 nodes to one based on routes between defined major urban areas. This new
methodology was backdated to 8 December 2008 and impacts upon prices for 2009/10.
Ofcom also imposed additional Service Level Agreement/Service Level Guarantee requirements from
December 2008.
Following a separate Consultation, Ofcom published on 2 September 2009 its Statement on the Leased
Lines Charge Controls. Ofcom imposed the following RPI – X% charge control on Trunk services as a
remedy to its finding of SMP for BT (note that there is a single overall TI basket comprising connection
and rental for low bandwidth, high bandwidth and very high bandwidth TISBO services as well as rental
for Trunk services):
In addition, Ofcom determined starting charges for Terminating and trunk segments. They also required
the introduction of separate Point of Handover rental charges to replace the current local end uplift
factor included in the rental price of external local ends. To balance the introduction of the new
separate Point of Handover charges, Ofcom required a corresponding reduction to external local end
prices.
The values of X in the charge control apply to BT’s prices after these adjustments have been made.
On 2 September 2009, Cable & Wireless lodged an appeal with the Competition Appeal Tribunal
contesting certain parts of Ofcom’s Leased Line Charge Control Statement. If successful, this could
affect both future year wholesale line prices and prices for wholesale leased lines in 2010/11.
Key Market Changes
There is significant competition on major trunk routes. Prices have been reduced significantly during
the year. Customers continue to rationalise their networks which has resulted in a fall in the average
trunk distance per circuit. All of these factors have contributed to a material reduction in revenue.
Market: Technical Areas (Point of Handover)
Definition
Point of Handover (PoH) is a Technical Area associated with the Traditional Interface Symmetric
Broadband Origination (TISBO) market, rather than a market in itself. It is a necessary technical function
to enable network interconnection, in order to allow the provision of wholesale products in the TISBO
market.
In all TISBO markets where BT has SMP (see below), we are required to provide PoH services in two
varieties: Customer Sited Handover (CSH) and In-Span Handover, including ISH Extension. When
62
Section 8 - Review of Other Wholesale Markets
providing CSH, BT delivers TISBO services to the premises of its wholesale customers. When providing
ISH, BT and the wholesale customer connect their networks at a notional mid-point.
Key Regulatory Changes
In December 2008 Ofcom published its Final Statement on the Business Connectivity Market Review.
Ofcom found BT to continue to have SMP in the following markets:
• Low bandwidth TISBO up to and including 8Mb;
• High bandwidth TISBO above 8Mb and including 34/45 Mbit/s (excluding the CELA);
• Very high bandwidth TISBO above 34/45 Mbit/s and including 155Mbit/s (excluding the CELA);
and
• Trunk segments at all bandwidths.
Ofcom increased regulation in the Trunk market by imposing a charge control and requiring prices to be
notified at 90 days. It also changed the definition of trunk segments from one based on links between
two BT SDH Tier 1 nodes to one based on routes between defined major urban areas. This new
methodology was backdated to 8 December 2008 and impacts upon prices for 2009/10.
Ofcom also imposed more stringent Service Level Agreement/Service Level Guarantee requirements
which will impact future years.
Following a separate Consultation, Ofcom published on 2 September 2009 its Statement on the Leased
Lines Charge Controls. Ofcom imposed the following RPI – X% charge control on TISBO services as a
remedy to its finding of SMP for BT (note that there is a single overall TI basket comprising connection
and rental for low bandwidth, high bandwidth and very high bandwidth TISBO services as well as rental
for Trunk services):
Basket
Value of X
Sub Caps
Low bandwidth connection and rental
3.25
RPI - 0% sub-cap on subbasket of TISBO terminating
segments.
Very high bandwidth connection and
rental
In addition, Ofcom determined starting charges for Terminating and trunk segments. They also required
the introduction of separate Point of Handover rental charges to replace the current local end uplift
factor included in the rental price of external local ends. To balance the introduction of the new
separate Point of Handover charges, Ofcom required a corresponding reduction to external local end
prices.
The values of X in the charge control apply to BT’s prices after these adjustments have been made.
On 2 September 2009 Cable & Wireless lodged an appeal with the Competition Appeal Tribunal
contesting certain parts of Ofcom’s Statement. Depending on the outcome of the appeal there may be
a varying effect on BT’s pricing.
Key Market Changes
There are new services published within this market in 2009/10 which capture the revenues associated
with the new Point of Handover rental charges introduced from October 2009. Other changes reflected
in the market include customers looking to rationalise their networks, i.e. reduce the number of sites
and consequently points of handover, and instead increase the bandwidth to remaining sites. There
were price changes in this market in March 2010 to implement the LLCC obligations.
Market: Wholesale Broadband Access
Definition
Wholesale Broadband Access relates to asymmetric broadband access and any backhaul as necessary to
allow interconnection with other Communications Providers which provides an always-on capability,
allows both voice and data service to be used simultaneously and provides data at speeds greater than
a dial-up connection. This market includes both business and residential customers in the UK.
Wholesale Broadband Access is split into three markets based on an analysis leading up to the May 2008
final statement on the WBA Market Review:
RPI + 5% sub-cap on each
charge (excluding POH
charges).
High bandwidth connection and rental
These controls run from 1 October 2009 to 30 September 2012.
• Market 1 - those geographic areas covered by exchanges where BT was the only operator;
• Market 2 - those geographic areas covered by exchanges where there were 2 or 3 operators,
and exchanges where there were 4 or more operators where the exchange served less than
10,000 homes and businesses; and
• Market 3 - those geographic areas covered by exchanges where there were 4 or more operators
and where the exchange served 10,000 or more homes and businesses.
RPI - 0% sub-cap on each
charge (POH charges only).
POC end and third party end equipment
charges.
RPI - 0
No charge can increase more
than 5% in nominal terms.
Key Regulatory Changes
All relevant ancillary services used in
the provision of TI services in scope of
the TI Basket.
RPI - 0
None
BT Wholesale continues to have regulatory and EoI obligations in relation to the supply of wholesale
broadband access products in Markets 1 & 2.
63
Section 8 - Review of Other Wholesale Markets
The floors pricing commitment agreed with Ofcom in November 2006 expired on 31 December 2008.
The ceilings price commitment agreed with Ofcom is not due to expire until 31 December 2010.
Looking forward, Ofcom is conducting a review of the Wholesale Broadband Access Market. This is due
to be concluded in the Autumn 2010. Ofcom have also proposed 12-month transitional arrangements
in the exchanges moving to Market 3 which delays the impact of de-regulation. Ofcom is also
proposing to introduce price regulation, with a cost orientation obligation in Market 2 and a charge
control in Market 1. There will be a separate consultation on the charge control in the autumn 2010.
The outcome of this statement and the proposed price regulation will impact future years.
Key Market Changes
Broadband revenue has fallen year on year, mainly as a result of lower prices in the now deregulated
Market 3, where there are 4 or more principal operators. Overall the broadband market has seen a small
fall in DSL broadband users, driven by competition from LLU operators and maybe migration to
alternative suppliers.
Operating costs and capital employed have risen for the broadband market as a whole. Extra capital
costs and the associated depreciation are driven by the continued roll out of new services such as
Wholesale Broadband Connect, BT’s higher bandwidth service delivered over the 21CN network, and
by the change to cost allocation referred to in Section 4.2.2.
64
Section 8 - Review of Other Wholesale Markets
Section 8.3 - Call origination on fixed public narrowband networks (Annex 13)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with cost orientation and non-discrimin
nation obligations where a cost gradient applies
Call origination on fixed public narrowband networks
Summary
Internal
Sales
£m
External
Sales
£m
Roundings
£m
150
155
52
65
1
2010
2009
Turnover
(note 1)
£m
202
221
Operating
costs Depreciation
£m
£m
120
155
58
69
Note 1: Comparison of average internal and external charges with each other and
with FAC
Holding
(gain)/loss Supp. Dep. Other adjs.
£m
£m
£m
(52)
(6)
(3)
(4)
27
3
1
150
218
Return
£m
MCE
£m
52
3
372
491
Return
on
MCE
14.4 %
0.6 %
Non- discrimination
Internal
Sales
External
Sales
Roundings
Turnover
Day
Evening
Weekend
£m
£m
£m
£m
Service
Internal Wholesale call originating local exchange segment PSTN and ISDN (excl OA)
External Wholesale call originating local exchange segment PSTN and ISDN (excl OA)
3
-
33
-
3
33
720
10,879
640
2,541
491
1,965
Internal Wholesale call originating local exchange segment (incl Operator Assistance)
External Wholesale call originating local exchange segment (incl Operator Assistance)
124
-
8
-
124
8
34,402
2,224
17,136
781
13,575
763
Return
excl.
reval.
adjs. (h)
£m
17
Return on
MCE excl.
reval.
adjs. (h)
4.6 %
Cost orientation
Average NCC rates - pence per minute (ppm)
NCC tra ffic - millions of minutes (mm)
For the year ended 31 March 2010
Total CCA
operating
Roundings
costs
£m
£m
24 hours
Day
Evening
Weekend
Weighted
Average
Unaudited
FAC LRIC Floor
Unaudited
LRIC
Ceiling
Average
price/FAC
ppm
ppm
ppm
ppm
ppm
ppm
ppm
1,851
15,385
0.255
0.255
0.117
0.117
0.092
0.092
0.164
0.211
0.201
0.201
0.163
0.163
0.415
0.415
0.82
1.05
65,113
3,768
0.264
0.264
0.121
0.121
0.095
0.095
0.191
0.200
0.201
0.201
0.163
0.163
0.417
0.417
0.95
1.00
12
-
-
12
4,198
516
316
5,030
0.264
0.121
0.095
0.239
0.208
0.168
0.428
1.15
Internal Wholesale call origination local exchange Stick
3
-
-
3
1,699
1,013
759
3,471
0.131
0.060
0.047
0.092
0.134
0.099
0.293
0.69
Internal Wholesale call origination local exchange Stick (ISDN)
0
-
-
0
152
13
10
175
0.131
0.060
0.047
0.121
0.141
0.104
0.308
0.86
Internal Wholesale PPP
External Wholesale PPP
9
-
11
-
9
11
46,686
60,470
20,648
24,991
16,099
19,722
83,433
105,183
0.014
0.014
0.006
0.006
0.005
0.005
0.010
0.010
0.019
0.019
0.018
0.018
0.033
0.033
0.54
0.55
(1)
-
-
(1)
150
52
-
202
Internal Wholesale call originating local exchange segment (ISDN) (incl OA)
Roundings
65
Section 8 - Review of Other Wholesale Markets
Section 8.3 - Call origination on fixed public narrowband networks (continued)
Note 1: Comparison of average internal and external charges with each other and
with FAC
Non- discrimination
Cost orientation
NCC tra ffic - millions of minutes (mm)
For the year ended 31 March 2009
Internal
Sales
External
Sales
Roundings
Turnover
Day
Evening
Weekend
£m
£m
£m
£m
Service
Internal Wholesale call originating local exchange segment PSTN and ISDN (excl OA)
External Wholesale call originating local exchange segment PSTN and ISDN (excl OA)
7
-
47
-
7
47
1,634
14,713
1,531
4,889
1,180
3,741
Internal Wholesale call originating local exchange segment (incl Operator Assistance)
External Wholesale call originating local exchange segment (incl Operator Assistance)
125
-
7
-
125
7
34,422
2,104
17,654
847
Average NCC rates - pence per minute (ppm)
24 hours
Day
Evening
Weekend
Weighted
Average
Unaudited
FAC LRIC Floor
Unaudited
LRIC
Ceiling
Average
price/FAC
ppm
ppm
ppm
ppm
ppm
ppm
ppm
4,345
23,343
0.254
0.254
0.116
0.116
0.092
0.092
0.161
0.199
0.233
0.233
0.192
0.192
0.408
0.408
0.69
0.86
13,866
771
65,942
3,722
0.263
0.263
0.120
0.120
0.095
0.095
0.189
0.196
0.231
0.231
0.192
0.192
0.410
0.410
0.82
0.85
13
-
-
13
4,639
599
370
5,608
0.263
0.120
0.095
0.237
0.251
0.206
0.444
0.94
Internal Wholesale call origination local exchange Stick (o)
3
-
-
3
1,804
1,103
830
3,737
0.133
0.061
0.048
0.093
0.156
0.121
0.285
0.60
Internal Wholesale call origination local exchange Stick (ISDN) (o)
0
-
-
0
212
20
14
246
0.133
0.061
0.048
0.122
0.179
0.138
0.327
0.68
Internal Wholesale PPP
External Wholesale PPP
7
-
11
-
7
11
42,169
66,226
19,182
28,664
14,847
22,583
76,198
117,473
0.013
0.013
0.006
0.006
0.005
0.005
0.010
0.010
0.015
0.015
0.015
0.015
0.047
0.047
0.65
0.65
Roundings
-
-
1
1
65
1
221
Internal Wholesale call originating local exchange segment (ISDN) (incl OA)
155
(o) Retail sticks previously reported as Internal sales services only provided internally.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
66
Section 8 - Review of Other Wholesale Markets
Section 8.4 - Local-tandem conveyance and transit on fixed public narrowband networks (Annex 13)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with cost orientation and non-discrimination obligations where a cost gradient applies
Local-tandem conveyance and transit on fixed public narrowband networks
Summary
Internal
Sales
£m
External
Sales
£m
Roundings
£m
57
58
28
30
(1)
2010
2009
Turnover
(note 1)
£m
85
87
Operating
costs Depreciation
£m
£m
29
37
Holding
(gain)/loss Supp. Dep. Other adjs.
£m
£m
£m
16
21
Note 1: Comparison of average internal and external charges with each other and
with FAC
(32)
(3)
0
(1)
13
(1)
Total CCA
operating
Roundings
costs
£m
£m
1
26
54
Return
£m
MCE
£m
59
33
142
142
Return
on
MCE
41.8 %
22.7 %
Non- discrimination
Return
excl.
reval.
adjs. (h)
£m
38
Return on
MCE excl.
reval.
adjs. (h)
27.0 %
Cost orientation
NCC traffic - millions of minutes (mm)
Average NCC rates - pence per minute (ppm)
Unaudited
LRIC
Ceiling
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
47
-
28
-
47
28
Internal Wholesale local-tandem conveyance segment (ISDN)
5
-
-
5
3,768
476
286
4,530
0.116
0.053
0.042
0.105
0.055
0.044
0.130
1.90
Internal Wholesale local-tandem transmission stick
6
-
-
6
15,746
7,421
5,799
28,966
0.027
0.012
0.010
0.020
0.039
0.031
0.103
0.51
Internal Wholesale local-tandem transmission stick (ISDN)
0
-
-
0
1,566
177
125
1,868
0.027
0.012
0.010
0.024
0.039
0.031
0.103
0.63
(1)
-
-
(1)
57
28
-
85
Internal
Sales
External
Sales
Roundings
Turnover
Unaudited
FAC LRIC Floor
Unaudited
LRIC
Ceiling
£m
£m
£m
£m
46
-
30
-
46
30
Internal Wholesale local-tandem conveyance segment (ISDN)
5
-
-
5
4,046
541
328
4,915
0.116
0.053
0.042
0.104
0.061
0.050
0.113
1.71
Internal Wholesale local-tandem transmission stick (o)
6
-
-
6
15,456
7,745
6,053
29,254
0.027
0.012
0.010
0.020
0.042
0.036
0.086
0.46
Internal Wholesale local-tandem transmission stick (ISDN) (o)
1
-
-
1
2,137
256
176
2,569
0.027
0.012
0.010
0.024
0.042
0.036
0.086
0.58
Roundings
-
-
(1)
(1)
58
30
(1)
87
For the year ended 31 March 2010
Service
Internal Wholesale local-tandem conveyance segment
External Wholesale local-tandem conveyance segment
Roundings
For the year ended 31 March 2009
Service
Internal Wholesale local-tandem conveyance segment
External Wholesale local-tandem conveyance segment
Day
29,626
18,504
Day
29,069
19,602
(o) Retail sticks previously reported as Internal sales services only provided internally.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
67
Evening
14,410
7,261
Evening
14,318
8,146
Weekend 24 hours
11,272
5,691
55,308
31,456
Weekend 24 hours
11,084
6,372
54,471
34,120
Day
Evening
Weekend
Weighted
Average
Unaudited
FAC LRIC Floor
ppm
ppm
ppm
ppm
ppm
ppm
ppm
0.116
0.116
0.053
0.053
0.042
0.042
0.085
0.088
0.055
0.055
0.044
0.044
0.130
0.130
Day
Evening
Weekend
Weighted
Average
ppm
ppm
ppm
ppm
ppm
ppm
ppm
0.116
0.116
0.053
0.053
0.042
0.042
0.084
0.087
0.061
0.061
0.050
0.050
0.113
0.113
Average
price/FAC
1.54
1.60
Average
price/FAC
1.38
1.43
Section 8 - Review of Other Wholesale Markets
Section 8.5 - Single transit on fixed public narrowband networks (Annex 13)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with cost orientation and non-discrimination obligations where a cost grad
dient applies
Single transit on fixed public narrowband networks
Summary
2010
2009
Internal
Sales
£m
External
Sales
£m
Roundings
£m
0
0
4
5
-
Turnover
(note 1)
£m
4
5
Operating
costs Depreciation
£m
£m
2
5
2
3
Note 1: Comparison of average internal and external charges with each other and
with FAC
Holding
(gain)/loss Supp. Dep. Other adjs.
£m
£m
£m
0
0
0
0
0
0
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
Service
Internal Wholesale single transit segment PSTN & ISDN
External Wholesale single transit segment PSTN & ISDN
0
-
4
-
0
4
Roundings
-
-
-
-
0
4
-
4
Internal
Sales
External
Sales
Roundings
Turnover
For the year ended 31 March 2009
-
4
8
Return
£m
MCE
£m
0
(3)
11
30
Return
on
MCE
(1.0)%
(9.3)%
£m
£m
£m
£m
Service
Internal Wholesale single transit segment PSTN & ISDN
External Wholesale single transit segment PSTN & ISDN
0
-
5
-
0
5
Roundings
-
-
-
-
0
5
-
5
Day
175
13,237
Day
1,575
15,216
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
68
Evening
99
5,952
Evening
379
7,002
Weekend 24 hours
56
4,780
330
23,969
Weekend 24 hours
287
5,696
Return
excl.
reval.
adjs. (h)
£m
0
Return on
MCE excl.
reval.
adjs. (h)
(1.0)%
Cost orientation
Non- discrimination
NCC traffic - millions of minutes (mm)
For the year ended 31 March 2010
Total CCA
operating
Roundings
costs
£m
£m
2,241
27,914
Average NCC rates - pence per minute (ppm)
Day
Evening
Weekend
Weighted
Average
Unaudited
FAC LRIC Floor
Unaudited
LRIC
Ceiling
ppm
ppm
ppm
ppm
ppm
ppm
ppm
0.024
0.024
0.011
0.011
0.009
0.009
0.018
0.018
0.023
0.023
0.017
0.017
0.039
0.039
Unaudited
FAC LRIC Floor
Unaudited
LRIC
Ceiling
Day
Evening
Weekend
Weighted
Average
ppm
ppm
ppm
ppm
ppm
ppm
ppm
0.024
0.024
0.011
0.011
0.009
0.009
0.020
0.018
0.040
0.040
0.030
0.030
0.067
0.067
Average
price/FAC
0.76
0.77
Average
price/FAC
0.50
0.44
Section 8 - Review of Other Wholesale Markets
Section 8.6 - Technical areas (Interconnect Circuits)(Annex 11)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with cost orientatio
on and non-discrimination obligations
Technical areas (Interconnect Circuits)
Summary
Internal
Sales
£m
2010
2009
19
22
External
Sales Roundings
£m
£m
40
46
Note 1: Comparison of average internal and external charges
with each other and with FAC
Operating
costs
£m
Depreciation
£m
59
68
33
33
14
22
External
Sales Roundings
Turnover
£m
£m
£m
£m
-
2
8
5
-
2
8
5
In Span Interconnect with Interconnect Extension Circuit (end
to end circuit)
External Wholesale IEC connections
External Wholesale IEC rentals
External Wholesale IEC rentals - per km
-
0
8
8
-
In Span Interconnect
External Wholesale intra-building circuits connections
External Wholesale intra-building circuits rentals
External Wholesale ISI rentals
-
3
3
0
External Nominated ISI - per km
-
External Wholesale rearrangements
-
4
0
6
40
59
MCE
£m
19
9
77
101
Volume Unit (b)
Average
price (v)
FAC (see Unaudited
App 1.2) LRIC Floor
Unaudited
LRIC
Ceiling
Average
price/FAC
£
£
£
£
970 circuits
6,748 circuits
204,127 km
1,790.74
1,196.52
22.80
6,130.81
639.54
5.56
5376.74
470.85
4.10
9744.08
896.53
14.06
0.29
1.87
4.10
0
8
8
451 circuits
13,862 circuits
345,025 km
968.57
585.84
22.80
3,805.39
451.30
11.47
3186.49
379.86
8.04
5530.09
767.50
32.34
0.25
1.30
1.99
-
3
3
0
3,842 circuits
34,320 circuits
7,954 100m
808.36
92.88
0.00
3,278.01
136.26
248.09
2709.29
114.35
207.68
4581.44
245.08
436.79
0.25
0.68
0.00
2
-
2
29,900 100m
1
-
1
10
-
-
10
Internal Wholesale standard CSI rentals - per km
6
-
-
6
Internal Wholesale intra-building circuits rentals
2
-
-
2
1
-
-
1
19
40
-
59
Roundings
(1)
(2)
Return
£m
Cost orientation
Service
Customer Sited Interconnect (end to end circuit)
External Wholesale standard CSI connection (v)
External Wholesale standard CSI rental - fixed (v)
External Wholesale standard CSI rentals - per km (v)
Internal Wholesale standard CSI rental - fixed
(10)
0
Non- discrimination
Internal
Sales
For the year ended 31 March 2010
-
Turnover
(note 1)
£m
Total CCA
Holding
operating
(gain)/loss Supp. Dep. Other adjs. Roundings
costs
£m
£m
£m
£m
£m
68.75
62.98
40.41
210.99
1.09
2,906 circuits
412.87
1,201.05
1122.48
2173.31
0.34
9,134 circuits
1,103.64
503.28
356.50
651.45
2.19
22.80
5.56
4.10
14.06
4.10
92.88
89.07
74.75
160.21
1.04
276,152 km
18,278 circuits
(b) See glossary for volume unit descriptors.
(v) Revenue shared by BT and OCPs will cause different average charges for the year to occur.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
69
Return
on
MCE
23.9 %
10.7 %
Return
excl.
reval.
adjs. (h)
£m
Return on
MCE excl.
reval.
adjs. (h)
11
14.7 %
Section 8 - Review of Other Wholesale Markets
Section 8.6 - Technical areas (Interconnect Circuits)(continued)
Note 1: Comparison of average internal and external charges
with each other and with FAC
Non- discrimination
Cost orientation
Unaudited
LRIC
Ceiling
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
0
-
2
-
0
2
263 circuits
1,872 circuits
2,135
1,000.56
1,000.56
1,652.91
1,652.91
1,508.38
1,508.38
2,584.47
2,584.47
0.61
0.61
14
-
8
-
14
8
12,800 circuits
6,941 circuits
19,741
1,124.16
1,124.16
576.64
576.64
505.08
505.08
805.39
805.39
1.95
1.95
Internal Wholesale standard CSI rentals - per km (v)
External Wholesale standard CSI rentals - per km (v)
8
-
4
-
8
4
22.80
22.80
5.69
5.69
4.91
4.91
12.81
12.81
4.01
4.01
External Wholesale ISI rentals
-
-
-
-
7,954 100m
0.00
354.61
383.39
558.82
0.00
External Nominated ISI - per km
-
3
-
3
48,360 100m
68.75
36.14
29.28
105.70
1.90
External Wholesale IEC connections
-
0
-
0
257 circuits
160.21
264.66
241.52
413.83
0.61
External Wholesale IEC rentals - fixed
-
8
-
8
15,499 circuits
492.96
450.99
378.20
617.68
1.09
External Wholesale IEC rentals - per km
-
9
-
9
22.80
11.59
11.93
30.12
1.97
Internal Wholesale intra-building circuits connections (v)
External Wholesale intra-building circuits connections (v)
0
-
2
-
0
2
40 circuits
2,612 circuits
2,652
813.88
813.88
6,845.66
6,845.66
5,241.93
5,241.93
9,892.66
9,892.66
0.12
0.12
Internal Wholesale intra-building circuits rentals (v)
External Wholesale intra-building circuits rentals (v)
0
-
6
-
0
6
985 circuits
64,377 circuits
65,362
93.60
93.60
148.75
148.75
146.29
146.29
268.37
268.37
0.63
0.63
External Wholesale rearrangements
-
4
-
4
10,724 circuits
415.74
686.80
626.75
1,073.87
0.61
Roundings
-
-
-
-
22
46
-
68
For the year ended 31 March 2009
Service
Internal Wholesale standard CSI connection (v)
External Wholesale standard CSI connection (v)
Internal Wholesale standard CSI rental - fixed (v)
External Wholesale standard CSI rental - fixed (v)
Volume Unit (b)
Average
price (v)
FAC (see Unaudited
App 1.2) LRIC Floor
£
336,640 km
180,945 km
517,585
392,766 km
£
(b) See glossary for volume unit descriptors.
(v) Revenue shared by BT and OCPs will cause different average charges for the year to occur.
70
£
Average
price/FAC
£
Section 8 - Review of Other Wholesale Markets
Section 8.7 - Fixed call termination (Annex 13)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with cost orientation and non-discrimination obligations where a cost grad
dient applies
Fixed call termination
Summary
Internal
Sales
£m
External
Sales
£m
Roundings
£m
68
71
102
108
-
2010
2009
Turnover
(note 1)
£m
170
179
Operating
costs Depreciation
£m
£m
83
116
56
68
Note 1: Comparison of average internal and external charges with each other and
with FAC
Holding
(gain)/loss Supp. Dep. Other adjs.
£m
£m
£m
(55)
(5)
(4)
(5)
28
3
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
61
-
101
-
61
101
20,034
33,443
8,918
14,234
6,881
10,984
Internal Wholesale call termination local exchange segment (ISDN)
4
-
-
4
1,718
191
Internal Wholesale call termination local exchange stick
3
-
-
3
1,699
Internal Wholesale call termination local exchange stick (ISDN)
0
-
-
0
152
For the year ended 31 March 2010
Roundings
Day
Evening
388
491
15.8 %
0.4 %
Cost orientation
0.083
0.083
0.171
0.172
0.190
0.190
0.154
0.154
0.388
0.388
0.90
0.91
135
2,044
0.230
0.105
0.083
0.209
0.197
0.158
0.398
1.06
1,013
759
3,471
0.131
0.060
0.047
0.092
0.134
0.099
0.293
0.69
13
10
175
0.131
0.060
0.047
0.121
0.141
0.104
0.308
0.86
Unaudited
FAC LRIC Floor
Unaudited
LRIC
Ceiling
Turnover
£m
£m
£m
£m
62
-
108
-
62
108
20,152
35,480
9,462
15,614
7,310
12,003
Internal Wholesale call termination local exchange segment (ISDN)
6
-
-
6
2,348
276
Internal Wholesale call termination local exchange stick (o)
3
-
-
3
1,804
Internal Wholesale call termination local exchange stick (ISDN) (o)
0
-
-
0
212
-
(o) Retail sticks previously reported as Internal sales services only provided internally.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
71
Average
price/FAC
0.105
0.105
Roundings
179
Unaudited
LRIC
Ceiling
0.230
0.230
External
Sales
-
Unaudited
FAC LRIC Floor
35,833
58,661
Internal
Sales
-
Weighted
Average
ppm
1
-
Weekend
ppm
170
108
Evening
ppm
-
-
Day
ppm
-
71
5.9 %
ppm
1
Day
23
ppm
102
Roundings
62
2
Return on
MCE excl.
reval.
adjs. (h)
ppm
-
For the year ended 31 March 2009
108
177
MCE
£m
Return
excl.
reval.
adjs. (h)
£m
Average NCC rates - pence per minute (ppm)
Weekend 24 hours
68
Service
Internal Wholesale call termination local exchange segment
External Wholesale call termination local exchange segment
-
Return
£m
Return
on
MCE
Non- discrimination
NCC traffic - millions of minutes (mm)
Service
Internal Wholesale call termination local exchange segment
External Wholesale call termination local exchange segment
Total CCA
operating
Roundings
costs
£m
£m
Evening
Weekend 24 hours
Day
Evening
Weekend
Weighted
Average
Average
price/FAC
ppm
ppm
ppm
ppm
ppm
ppm
ppm
36,924
63,097
0.229
0.229
0.105
0.105
0.083
0.083
0.168
0.171
0.221
0.221
0.181
0.181
0.373
0.373
0.76
0.77
190
2,814
0.229
0.105
0.083
0.207
0.238
0.194
0.404
0.87
1,103
830
3,737
0.130
0.060
0.047
0.091
0.156
0.121
0.285
0.58
20
14
246
0.130
0.060
0.047
0.120
0.179
0.138
0.327
0.67
Section 8 - Review of Other Wholesale Markets
Section 8.8 - Wholesale trunk segments (Annex 11)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with cost orientation andd non-discrimination obligations
Wholesale trunk segments
Summary
2010
2009
Internal
Sales
£m
External
Sales
£m
Roundings
£m
141
207
23
50
-
Note 1: Comparison of average internal and external charges with
each other and with FAC
For the year ended 31 March 2010
Service
Partial and Private circuits 2Mbit/s - trunk
Trunk charge per year
Enhanced maintenance per km charge per year
Total Internal
Turnover
(note 1)
£m
Operating
costs
£m
24
30
164
257
Depreciation
£m
Holding
(gain)/loss Supp. Dep. Other adjs.
£m
£m
£m
31
45
(63)
(5)
(3)
(7)
26
(3)
Roundings
£m
Total CCA
operating
costs
£m
4
15
64
Return
£m
MCE
£m
149
193
247
270
Cost orientation
Non- discrimination
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
75
-
-
75
Volume Unit (b)
Average
price
£
FAC (see Unaudited
App 1.2) LRIC Floor
£
£
Unaudited
LRIC
Ceiling
Average
price/FAC
£
1,057,728 km
69.53
1.48
71.01
26.00
20.37
56.36
2.73
26.00
20.37
56.36
2.73
Trunk charge per year
Enhanced maintenance per km charge per year
Total External
-
16
-
16
225,159 km
69.53
1.48
71.01
Partial and Private circuits 34/45Mbit/s - trunk
Trunk charge per year
Enhanced maintenance per km charge per year
Total Internal
31
-
-
31
57,177 km
541.92
2.22
544.14
216.48
163.36
433.90
2.51
216.48
163.36
433.90
2.51
259.53
186.92
626.89
1.01
Trunk charge per year
Enhanced maintenance per km charge per year
Total External
-
6
-
6
11,824 km
541.92
2.22
544.14
Partial and Private circuits 140/155Mbit/s - trunk
Trunk charge per year
Enhanced maintenance per km charge per year
Total Internal
14
-
-
14
51,724 km
256.45
5.32
261.77
259.53
186.92
626.89
1.01
1,135.67
811.91
3,103.55
0.84
Trunk charge per year
Enhanced maintenance per km charge per year
Total External
Internal Partial and Private circuits 622Mbit/s - trunk
Support Service
Internal Protected Path Variants and Resilience
External Protected Path Variants and Resilience
Roundings
-
0
-
0
1,880 km
256.45
5.32
261.77
16
-
-
16
17,145 km
958.50
4
-
1
-
4
1
(u3)
(u3)
1
-
-
1
141
23
-
164
(s3)
(s3)
(b) See glossary for volume unit descriptors.
(sx) This service comprises a number of individual prices as indicated by the value of x.
(ux) This service comprises a number of individual volumetrics as indicated by the value of x.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
72
Estimated total cost £1.1m
Estimated total cost £0.3m
Return
on
MCE
60.5 %
71.3 %
Return
excl.
reval.
adjs. (h)
£m
108
Return on
MCE excl.
reval.
adjs. (h)
43.7 %
Section 8 - Review of Other Wholesale Markets
Section 8.8 - Wholesale trunk segments (continued)
Note 1: Comparison of average internal and external charges with
each other and with FAC
Non- discrimination
Cost orientation
Unaudited
LRIC
Ceiling
Internal
Sales
External
Sales
Roundings
Turnover
For the year ended 31 March 2009
£m
£m
£m
£m
Service
Internal Partial and Private circuits 2Mbit/s - trunk
External Partial and Private circuits 2Mbit/s - trunk
135
-
38
-
135
38
1,316,568 km
372,658 km
1,689,226
102.24
102.24
25.79
25.79
22.09
22.09
44.14
44.14
3.96
3.96
Internal Partial and Private circuits 34/45Mbit/s - trunk
External Partial and Private circuits 34/45Mbit/s - trunk
33
-
9
-
33
9
58,922 km
16,916 km
75,838
552.16
552.16
274.29
274.29
238.77
238.77
473.95
473.95
2.01
2.01
Internal Partial and Private circuits 140/155Mbit/s - trunk
External Partial and Private circuits 140/155Mbit/s - trunk
18
-
1
-
18
1
70,389 km
2,110 km
72,499
260.00
260.00
212.75
212.75
168.66
168.66
413.35
413.35
1.22
1.22
Internal Partial and Private circuits 622Mbit/s - trunk
17
-
-
17
17,853 km
927.51
776.90
621.68
1,768.56
1.19
4
-
2
-
4
2
(u3)
(u3)
Support Service
Internal Protected Path Variants and Resilience
External Protected Path Variants and Resilience
Roundings
-
-
-
-
207
50
-
257
Volume Unit (b)
Average
price
£
(s3)
(s3)
(b) See glossary for volume unit descriptors.
(sx) This service comprises a number of individual prices as indicated by the value of x.
(ux) This service comprises a number of individual volumetrics as indicated by the value of x.
(s) Costs associated with support services are included within the above reported services and hence not disclosed separately.
73
FAC (see Unaudited
App 1.2) LRIC Floor
£
£
Average
price/FAC
£
(s)
Section 8 - Review of Other Wholesale Markets
Section 8.9 - Technical areas (Point of Handover)(Annex 11)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with cost orientation and non-discrrimination obligations
Technical Areas (Point of Handover)
Summary
2010
2009
Internal
Sales
£m
External
Sales
£m
Roundings
£m
-
12
6
-
Note 1: Comparison of average internal and external charges with
each other and with FAC
For the year ended 31 March 2010
Turnover
(note 1)
£m
Operating
costs Depreciation
£m
£m
5
0
12
6
Holding
(gain)/loss Supp. Dep. Other adjs.
£m
£m
£m
7
2
(2)
0
(1)
0
1
0
Total CCA
operating
Roundings
costs
£m
£m
1
10
3
Return
£m
MCE
£m
2
3
22
7
Cost orientation
Non- discrimination
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
Service
External Customer Sited Handover connection
-
0
-
0
External Customer Sited Handover rental
-
2
-
2
External In Span Handover connection
-
3
-
3
External In Span Handover rental
-
0
-
0
External 3rd Party POH Rental 64Kbit/s
-
1
-
1
External 3rd Party POH Rental 2Mbit/s non CLZ
-
5
-
External 3rd Party POH Rental 2Mbit/s CLZ
-
0
External 3rd Party POH Rental 34/45Mbit/s
-
1
External 3rd Party POH Rental 155Mbit/s
-
Roundings
Volume Unit (b)
Average
price
£
130 conns
4,866 lines
1,463.86
FAC (see Unaudited
App 1.2) LRIC Floor
£
£
Unaudited
LRIC
Ceiling
Average
price/FAC
£
710.72
649.62
850.39
2.06
792.53
0.65
428.69
662.36
605.42
44,749.17
22,670.95
20,722.11
27,126.44
1.97
541.13
1,401.70
1,281.21
1,677.18
0.39
16,821 le
50.07
40.41
36.26
69.02
1.24
5
59,164 le
85.12
110.83
65.22
149.42
0.77
-
0
3,737 le
85.12
113.91
62.52
147.59
0.75
-
1
1,437 le
430.58
837.69
406.43
1,074.31
0.51
0
-
0
137 le
801.08
1,563.28
1,067.46
2,038.51
0.51
-
-
-
-
-
12
-
12
57 conns
483 lines
(b) See glossary for volume unit descriptors.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
74
Return
on
MCE
7.1 %
47.5 %
Return
excl.
reval.
adjs. (h)
£m
1
Return on
MCE excl.
reval.
adjs. (h)
2.3 %
Section 8 - Review of Other Wholesale Markets
Section 8.9 - Technical areas (Point of Handover)(continued)
Note 1: Comparison of average internal and external charges with
each other and with FAC
For the year ended 31 March 2009
Non- discrimination
Cost orientation
Internal
Sales
External
Sales
Roundings
Turnover
Volume Unit (b)
£m
£m
£m
£m
Service
External Customer Sited Handover connection
-
0
-
0
External Customer Sited Handover rental
-
4
-
4
External In Span Handover connection
-
2
-
2
109 conns
External In Span Handover rental
-
0
-
0
453 lines
Roundings
-
-
-
-
-
6
-
6
276 conns
4,943 lines
(b) See glossary for volume unit descriptors.
75
Average FAC (see Unaudited
price
App 1.2) LRIC Floor
Unaudited
LRIC
Ceiling
Average
price/FAC
1,591.23
589.94
508.71
701.29
2.70
768.17
352.96
304.36
419.58
2.18
22,420.45
18,839.79
16,245.83
22,395.89
1.19
533.41
274.27
236.51
326.05
1.94
Section 8 - Review of Other Wholesale Markets
Section 8.10 - Wholesale Broadband Access (Annex 12)
Market summary
Purpose of statement: to provide more detail on financial performance and first order tests of compliance with non discrimination obligationns
Wholesale Broadband Access *
Summary
Internal
Sales
£m
External
Sales
£m
Roundings
£m
570
628
405
420
1
2010
2009
Turnover
(note 1)
£m
Operating
costs Depreciation
£m
£m
469
402
975
1,049
Holding
(gain)/loss Supp. Dep. Other adjs.
£m
£m
£m
336
270
(65)
(4)
(2)
(30)
Non- discrimination
Note 1: Comparison of average internal and external charges
Wholesale Broadband Access Market 1 - BT only operator
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
14
-
7
-
14
7
121
-
101
-
121
101
Internal BT only Datastream end user access connection
External BT only Datastream end user access connection
0
-
0
-
0
0
Internal BT only Datastream end user access rental
External BT only Datastream end user access rental
1
-
14
-
1
14
9,115 lines
164,473 lines
35
-
39
-
35
39
216,104 circuits
237,453 circuits
163.32
163.32
Volume Unit (b)
Average
price
For the year ended 31 March 2010
Service
Internal BT only IPstream end user access connection
External BT only IPstream end user access connection
Internal BT only IPstream end user access rental
External BT only IPstream end user access rental
Internal BT only backhaul circuits (excluding Virtual Paths) (m)
External BT only backhaul circuits (excluding Virtual Paths) (m)
Roundings
-
Volume Unit (b)
Average
price
£
388,043 conns
187,918 conns
1,444,378 lines
1,228,398 lines
693 conns
11,138 conns
-
-
-
171
161
-
332
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
8
-
4
-
8
4
70
-
40
-
70
40
Internal 2-3 operators Datastream end user access connection
External 2-3 operators Datastream end user access connection
0
-
0
-
0
0
Internal 2-3 operators Datastream end user access rental
External 2-3 operators Datastream end user access rental
1
-
13
-
1
13
7,174 lines
151,936 lines
21
-
19
-
21
19
127,854 circuits
115,935 circuits
Total geographic revenue for Wholesale Broadband Access Market 1
(excludes non geographic revenues - see below)
19
1
36.16
36.09
83.80
82.42
36.01
35.92
86.47
86.47
Wholesale Broadband Access Market 2 - 2 to 3 principal operators
For the year ended 31 March 2010
Service
Internal 2-3 operators IPstream end user access connection
External 2-3 operators IPstream end user access connection
Internal 2-3 operators IPstream end user access rental
External 2-3 operators IPstream end user access rental
Internal 2-3 operators backhaul circuits (excluding Virtual Paths) (m)
External 2-3 operators backhaul circuits (excluding Virtual Paths) (m)
Roundings
Total geographic revenue for Wholesale Broadband Access Market 2
(excludes non geographic revenues - see below)
100
-
-
-
76
-
176
£
219,324 conns
102,272 conns
36.11
36.06
834,687 lines
475,424 lines
84.14
83.54
556 conns
9,044 conns
35.93
35.81
86.47
86.47
163.32
163.32
76
Roundings
£m
2
Total CCA
operating
costs
£m
757
641
Return
£m
MCE
£m
218
408
1,301
1,173
Return
on
MCE
16.8 %
34.8 %
Return
excl.
reval.
adjs. (h)
£m
178
Return on
MCE excl.
reval.
adjs. (h)
13.7 %
Section 8 - Review of Other Wholesale Markets
Section 8.10 - Wholesale Broadband Access (continued)
Wholesale Broadband Access Market 3
(4 or more principal operators) and non geographic
Non- discrimination
Internal
Sales
External
Sales
Roundings
For the year ended 31 March 2010
£m
£m
£m
£m
Service
Market 3 (excluding non-geographical)
177
73
-
250
0
-
4
-
0
4
Ancillary charges (migration, cessation, re-grades)
69
18
-
87
(u2)
(s2)
Internal Broadband conveyance in the UK
External Broadband conveyance in the UK
53
-
73
-
53
73
(u6)
(u6)
(s6)
(s6)
Internal Virtual Paths handover (k)
External Virtual Paths handover (k)
Roundings
WBA Total
-
Turnover
-
-
-
299
168
-
467
570
405
0
975
Volume Unit (b)
Average
price
£
(u5)
436 pipes
3,452 pipes
(s5)
571.93
1,103.14
* The market summary for the Wholesale Broadband Access Market includes geographical sub markets 1, 2 and 3.
(b) See glossary for volume unit descriptors.
(k) This service comprises a number of individual prices.
(m) Backhaul circuits represents the elements of IPStream Centrals and Datastream Virtual Paths which fall into the wholesale broadband access market .
(sx) This service comprises a number of individual prices as indicated by the value of x.
(ux) This service comprises a number of individual volumetrics as indicated by the value of x.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
77
Section 8 - Review of Other Wholesale Markets
Section 8.10 - Wholesale Broadband Access (continued)
Non- discrimination
Note 1: Comparison of average internal and external charges
Wholesale Broadband Access Market 1 - BT only operator
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
13
-
8
-
13
8
101
-
107
-
101
107
Internal BT only Datastream end user access connection
External BT only Datastream end user access connection
0
-
1
-
0
1
Internal BT only Datastream end user access rental
External BT only Datastream end user access rental
1
-
17
-
1
17
7,753 lines
210,684 lines
81.42
81.42
16
-
17
-
16
17
171,696 circuits
188,084 circuits
92.44
92.44
Volume Unit (b)
Average
price
For the year ended 31 March 2009
Service
Internal BT only IPstream end user access connection
External BT only IPstream end user access connection
Internal BT only IPstream end user access rental
External BT only IPstream end user access rental
Internal BT only backhaul circuits (excluding Virtual Paths) (m)
External BT only backhaul circuits (excluding Virtual Paths) (m)
Roundings
Volume Unit (b)
Average
price
£
370,360 conns
225,846 conns
1,181,917 lines
1,243,388 lines
1,046 conns
29,088 conns
34.86
34.86
85.45
86.29
34.86
34.86
-
-
-
-
131
150
-
281
Internal
Sales
External
Sales
Roundings
Turnover
£m
£m
£m
£m
8
-
4
-
8
4
65
-
47
-
65
47
Internal 2-3 operators Datastream end user access connection
External 2-3 operators Datastream end user access connection
0
-
1
-
0
1
Internal 2-3 operators Datastream end user access rental
External 2-3 operators Datastream end user access rental
1
-
18
-
1
18
7,403 lines
222,413 lines
81.42
81.42
10
-
11
-
10
11
112,313 circuits
118,800 circuits
92.44
92.44
-
-
1
1
84
81
1
166
Total geographic revenue for Wholesale Broadband Access Market 1
(excludes non geographic revenues - see below)
Wholesale Broadband Access Market 2 - 2 to 3 principal operators
For the year ended 31 March 2009
Service
Internal 2-3 operators IPstream end user access connection
External 2-3 operators IPstream end user access connection
Internal 2-3 operators IPstream end user access rental
External 2-3 operators IPstream end user access rental
Internal 2-3 operators backhaul circuits (excluding Virtual Paths) (m)
External 2-3 operators backhaul circuits (excluding Virtual Paths) (m)
Roundings
Total geographic revenue for Wholesale Broadband Access Market 2
(excludes non geographic revenues - see below)
£
237,577 conns
111,829 conns
34.86
34.86
761,849 lines
547,863 lines
85.89
86.00
1,075 conns
30,727 conns
34.86
34.86
78
Section 8 - Review of Other Wholesale Markets
Section 8.10 - Wholesale Broadband Access (continued)
Wholesale Broadband Access Market 3
(4 or more principal operators) and non geographic
Non- discrimination
Internal
Sales
External
Sales
Roundings
Turnover
For the year ended 31 March 2009
£m
£m
£m
£m
Service
Market 3 (excluding non-geographical)
253
97
-
350
1
-
3
-
1
3
38
11
-
49
(u2)
(s2)
121
-
78
-
121
78
(u6)
(u6)
(s6)
(s6)
Internal Virtual Paths handover (k)
External Virtual Paths handover (k)
Ancillary charges (migration, cessation, re-grades)
Internal Broadband conveyance in the UK
External Broadband conveyance in the UK
Roundings
WBA Total
-
-
-
-
413
189
-
602
628
420
1
1,049
Volume Unit (b)
Average
price
£
(u5)
1,485 pipes
2,419 pipes
(s5)
817.26
1,115.86
* The market summary for the Wholesale Broadband Access Market includes geographical sub markets 1, 2 and 3.
(b) See glossary for volume unit descriptions.
(k) This service comprises a number of individual prices.
(m) Backhaul circuits represents the elements of IPStream Centrals and Datastream Virtual Paths which fall into the Wholesale Broadband Access Markeet.
(sx) This service comprises a number of individual prices as indicated by the value of x.
(ux) This service comprises a number of individual volumetrics as indicated by the value of x.
79
Section 9 - Reconciliation Statements
Section 9 - Reconciliation Statements
Section 9
Reconciliation Statements
80
Section 9 - Reconciliation Statements
Section 9.1 - BT Reconciliation Statements
Section 9.1.1 - BT Reconciliation Statement 2010 (Annex 19)
Consolidated profit and loss account
For the year ended 31 March 2010
Markets
Turnover
£m
Operating
Costs
£m
HCA Return
Holding
or Profit
gain/(loss)
before
and other
taxation adjustments
£m
£m
Access markets
4,618
3,342
1,276
2,354
Other Wholesale markets
1,671
1,285
386
161
Sub total markets
6,289
4,627
1,662
2,515
Supplementary
depreciation
£m
(205)
CCA Return
or Profit
before
Taxation
£m
CCA
adjs.
excl.
reval.
adj. (h)
£m
CCA
Return or
Profit
before
Taxation
excl.
reval.
adj. (h)
£m
3,425
536
1,812
561
(10)
376
(191)
3,986
526
2,188
(1)
227
14
146
-
74
-
74
(1)
301
14
220
14
Residual activities
Wholesale residual activities
2,799
2,667
132
96
Retail residual activities
17,291
17,217
74
-
Sub total residual activities
20,090
19,884
206
96
Adjustments
Access
Wholesale
Retail
-
-
-
-
-
-
-
-
Sub total adjustments
-
-
-
-
-
-
-
-
Total BT Markets
26,379
24,511
1,868
2,611
4,287
540
2,408
Adjustments
Elimination of inter-market turnover and costs
Other Operating Income
Profits on disposal of property, plant and equipment
Share of post tax profits of associates and joint ventures
Loss on disposal of associate
Net short term interest
Long term interest payable
(5,520)
-
(5,520)
305
75
54
(12)
(297)
-
As In the Annual Report
20,859
19,116
(861)
1,007
(h) See Section 4 - Basis of Preparation for the CCA Revaluation Adjustment.
81
(192)
Section 9 - Reconciliation Statements
Section 9.1.2 - BT Reconciliation Statement 2009 (Restated)(Annex 19)
Consolidated profit and loss account
Restated for the year ended 31 March 2009
Markets
Turnover
£m
Operating
Costs
£m
HCA Return
Holding
or Profit
gain/(loss)
before
and other
taxation adjustments
£m
£m
Access markets
4,696
3,376
1,320
Other Wholesale markets
1,872
1,293
579
Sub total markets
6,568
4,669
1,899
Supplementary
depreciation
£m
CCA Return
or Profit
before
Taxation
£m
(252)
(145)
923
20
49
648
(232)
(96)
1,571
Residual activities
3,255
2,959
10
3
309
Retail residual activities (l)
Wholesale residual activities
17,706
19,169
(1,463)
296
683
-
(780)
Sub total residual activities
20,961
22,128
(1,167)
693
3
(471)
Adjustments
Access
Wholesale
Retail (l)
2
2
-
3
1
-
(1)
1
-
-
1
-
1
-
Sub total adjustments
4
4
-
-
1
1
Total BT Markets
27,533
26,801
732
461
Adjustments
Elimination of inter-market turnover and costs
Other Operating Income
Profits on disposal of property, plant and equipment
Share of post tax profits of associates and joint ventures
Share Based Payments (e)
Net short term interest
Long term interest payable
(6,143)
-
(6,143)
287
52
75
110
246
-
(110)
(866)
As In the Annual Report
21,390
21,428
(244)
(e) Restated to reflect changes in BT's Annual Report.
(l) Retail Residual has been re-presented to reflect the removal of Retail Markets reporting obligations.
82
(92)
1,101
Section 9 - Reconciliation Statements
Section 9.1.3 - BT Reconciliation Statement MCE (Annex 20)
Mean capital employed of BT Markets
Consolidated mean capital employed
For the year ended 31 March 2010
Shareholders’ funds as in the 2010 Annual Report
CCA adjustments
2010
2009
£m
(2,650)
3,736
1,086
£m
142
1,316
1,458
(1,432)
(1,489)
Adjustments
Goodwill
Retirement benefit asset
Derivative financial instruments - assets
Deferred tax liabilities
Deferred tax assets
Current tax liabilities
Long term loans and other borrowings:
Due in less than one year
Due in more than one year
Derivative financial instruments - liabilities
Other payables
Minority interests
Retirement benefit obligations
-
-
(1,677)
(2,693)
1,456
1,728
(2,196)
(1,103)
320
1
3,260
9,522
693
804
24
7,864
640
12,365
764
794
27
3,973
Closing CCA capital employed at 31 March
19,724
16,465
Opening CCA capital employed at 1 April
16,465
17,870
Average CCA capital employed
18,095
17,168
Daily averaging adjustment
Total CCA mean capital employed
1,096
19,191
2010
2009
Re-presented (l)
£m
11,121
2,705
Access markets
Other Wholesale markets
£m
12,080
2,560
Sub total BT Markets
14,640
13,826
Residual activities
Wholesale residual activity
Retail residual activity (l)
1,135
3,416
736
2,585
Sub total residual activities
4,551
3,321
Roundings and other adjustments
Wholesale markets
Retail markets & activities (l)
-
-
Sub total roundings and other adjustments
-
-
19,191
17,147
Total CCA mean capital employed
(l) Retail Residual has been re-presented to reflect the removal of Retail Markets reporting obligations.
(21)
17,147
83
Section 10 - Openreach Information
Section 10 - Openreach Information
Section 10
Openreach Information
84
Section 10 - Openreach Information
Section 10.1 - Openreach P&L Statement 2010
For the year ended 31 March 2010
Operating Costs
Provision/Maintenance
Network Support
General Support
General Management
Finance and Billing
Accommodation
Bad Debts
Other Costs
Depreciation
- Land & Building
- Access
- Switch and Transmission
- Other related
Sub total Depreciation
Sub total HCA operating costs
CCA adjustments
Holding (gain)/loss
Supplementary depreciation
Other adjustments
Roundings
Total CCA Operating Costs
Business ISDN30
exchange line services
Wholesale local access
Sub Total full SMP
services (excluding
AISBO)
Alternative interface
symmetric broadband
origination (up to and
including 1Gbit/s)
Sub Total: Openreach full
SMP services (including
AISBO)
Other Openreach Markets
& Activiities (with no SMP
reporting obligations)
Total: Openreach
Services - by regulated
market
HCA Operating Costs
Charges from Other BT Wholesale Markets
ISDN2 exchange line
services
Openreach Services (by regulated market)
Turnover (No Discounts)
Internal Sales
-service(s) which are also available externally
-service(s) provided internally only
- e-PPCs
- Internal LLU equivalent
- Other
External sales
Roundings
Total Turnover
Analogue exchange line
services
Full service provision
£m
£m
£m
£m
£m
£m
£m
£m
£m
1,857
n/a
92
n/a
217
n/a
n/a
n/a
2,166
0
281
n/a
2,447
0
563
2,420
59
151
103
320
439
439
1,164
0
3,330
208
489
1,372
0
3,819
n/a
0
756
375
350
0
(1)
1,480
2,447
0
756
375
350
1,372
(1)
5,299
n/a
n/a
n/a
n/a
0
n/a
0
n/a
0
170
211
259
326
16
192
2
(48)
6
6
11
16
1
14
(1)
9
7
18
24
1
21
0
65
31
62
66
3
43
(3)
250
255
350
432
21
270
2
(52)
8
20
47
75
3
21
2
258
275
397
507
24
291
2
(50)
210
69
164
218
11
209
1
(59)
18
465
72
115
670
2
15
6
7
30
2
14
27
9
52
13
50
6
28
97
35
544
111
159
849
1
53
49
42
145
36
597
160
201
994
21
79
235
117
452
57
676
395
318
1,446
1,798
83
132
364
2,377
321
2,698
1,275
3,973
(2,357)
185
532
(65)
4
16
(40)
18
(236)
23
48
(2,698)
212
614
(217)
6
95
(2,915)
218
709
38
110
199
0
505
240
2,825
158
113
284
0
710
3,109
(521)
(11)
198
(3,436)
207
907
941
0
1,651
539
3,648
Return
2,262
Return on mean capital employed
28.5 %
41.7 %
69.7 %
25.4 %
29.8%
25.4 %
29.4 %
20.3 %
27.6 %
CCA adjustments excl. reval. adj. (h)
Holding (gain)/loss
Supplementary depreciation
Other adjustments
Roundings
Total CCA Operating Costs excl. reval. adj.
(552)
186
(117)
1,315
(14)
5
(2)
72
(4)
0
5
133
(64)
23
(14)
309
(634)
214
(128)
0
1,829
(10)
5
21
337
(644)
219
(107)
0
2,166
(25)
(10)
20
1,260
(669)
209
(87)
0
3,426
Return excl. reval adj.
1,105
79
187
130
1,501
152
1,653
220
1,873
Return on mean capital employed excl. reval adj.
13.9 %
15.6 %
8.3 %
14.2 %
29.6 %
210
205
468
344
561
725
35
500
3
(109)
62.1 %
13.7 %
15.9%
13.5 %
(h) See Section 4 - Basis of Preparation for the CCA Revaluation Adjustment.
85
Section 10 - Openreach Information
Section 10.2 - Openreach P&L Statement 2009 (Re-presented)
Re-presented for the year ended 31 March 2009
Analogue exchange line
services
ISDN2 exchange line
services
Business ISDN30
exchange line services
Wholesale local access
Sub Total full SMP
services (excluding
AISBO)
Alternative interface
symmetric broadband
origination (up to and
including 1Gbit/s)
Sub Total: Openreach full
SMP services (including
AISBO)
Other Openreach Markets
& Activiities (with no SMP
reporting obligations)
Total: Openreach
Services - by regulated
market
Full service provision
£m
£m
£m
£m
£m
£m
£m
£m
£m
Turnover (No Discounts)
Internal Sales
-service(s) which are also available externally
-service(s) provided internally only
- e-PPCs
- Internal LLU equivalent
- Other
External sales
Roundings
2,077
n/a
470
2
110
n/a
53
(1)
262
n/a
88
(2)
n/a
n/a
349
1
2,449
0
0
0
0
960
0
279
n/a
212
3
2,728
0
0
0
0
1,172
3
0
n/a
775
327
359
n/a
0
2,728
0
775
327
359
1,172
3
Total Turnover
2,549
162
348
350
3,409
494
3,903
1,461
5,364
n/a
n/a
n/a
n/a
0
n/a
0
n/a
0
231
230
339
284
19
173
(6)
10
7
12
11
1
12
-
9
9
21
19
1
19
-
78
30
83
48
4
40
(2)
328
276
455
362
25
244
0
(8)
4
24
34
31
1
9
-
332
300
489
393
26
253
0
(8)
189
91
209
223
11
192
(73)
14
452
66
102
634
1
18
7
5
31
1
16
25
10
52
11
31
7
21
70
27
517
105
138
787
46
38
10
94
27
563
143
148
881
21
75
230
115
441
48
638
373
263
1,322
2,469 (13)
197
2,666
1,283
3,949
154
163 169
155
(13)
2
(17)
Openreach Services (by regulated market)
HCA Operating Costs
Charges from Other BT Wholesale Markets
Operating Costs
Provision/Maintenance
Network Support
General Support
General Management
Finance and Billing
Accommodation
Bad Debts
Other Costs
Depreciation
- Land & Building
- Access
- Switch and Transmission
- Other related
Sub total Depreciation
CCA adjustments
Holding
(gain)/loss
Sub total
HCA operating costs
Supplementary depreciation
Other adjustments
CCA adjustments
Holding (gain)/loss
Roundings
Supplementary depreciation
Total CCA Operating Costs
Other adjustments
Return
Roundings
Total CCA
Operating
Return
on mean
capitalCosts
employed
Return
Return on mean capital employed
136 1,904
144
139
3
3
4
84 (3)
130 18
154
351
(3)
400
(3)
0
16
2,941
(3)
2,323
136
144 94
139
3
3124
4
226
68
224
3.0 %2,323
24.6 %
226
3.0 %
16
15
(50)
163
155
18
15
468
94
74.3 %
124
(8.0)%
400
5.4%
68
224
(50)
24.6 %
74.3 %
(8.0)%
2
(17)
325
0
2,941
37.3 %
468
5.4%
141
165
138
(29)
(28)
(14)
521
391
698
616
37
445
0
(81)
112
137
124
169
0
3,110
8
1,220
8
4,330
325
793
241
1,034
37.3 %
86
8.3 %
10.1 %
8.6 %
Section 10 - Openreach Information
Section 10.3 - Openreach MCE Statement 2010
Full service provision
ISDN2 exchange line services
Business ISDN30 exchange line
services
Wholesale local access
Sub Total full SMP services
(excluding AISBO)
Alternative interface symmetric
broadband origination (up to
and including 1Gbit/s)
Sub Total: Openreach full SMP
services (including AISBO)
Other Openreach Markets &
Activiities (with no SMP
reporting obligations)
Total: Openreach Services - by
regulated market
Openreach Services (by regulated market)
Analogue exchange line
services
For the year ended 31 March 2010
£m
£m
£m
£m
£m
£m
£m
£m
£m
153
3,667
3
3,266
195
310
385
16
102
92
27
9
21
17
12
95
65
10
70
28
125
405
313
15
18
98
311
4,186
98
3,736
247
407
532
16
378
374
n/a
246
125
327
4,186
476
4,110
247
653
657
237
159
363
912
29
758
488
564
4,345
839
5,022
276
1,411
1,145
n/a
n/a
n/a
n/a
0
n/a
0
n/a
0
7,979
267
297
974
9,517
1,139
10,656
2,946
13,602
Non-current Assets
Tangible fixed assets
Land & Buildings
Access-Copper
Access- Fibre
Access - Duct
Switch and Transmission
- Switch
- Transmission
Other
Investments
Total Non-current Assets
Current Assets:
Stocks
Debtors
- Internal
- External
n/a
n/a
n/a
n/a
0
n/a
0
34
34
285
86
18
3
38
1
52
10
393
100
58
1
451
101
2
82
453
183
Total Current Assets
371
21
39
62
493
59
552
118
670
Liabilities falling due w ithin one year
- Internal
- External
n/a
(382)
n/a
(17)
n/a
(29)
n/a
(79)
0
(507)
n/a
(75)
0
(582)
n/a
(368)
0
(950)
Total Liabilities falling due w ithin one year
(382)
(17)
(29)
(79)
(507)
(75)
(582)
(368)
(950)
(11)
4
10
(17)
(14)
(16)
(30)
(250)
(280)
271
307
957
Net Current Assets/Liabilities
Total Assets less Current Liabilities
Provisions for liabilities and charges
Roundings
Mean capital employed
7,968
(31)
0
7,937
(3)
0
268
(5)
0
302
(7)
0
950
9,503
(46)
0
9,457
1,123
(3)
0
1,120
2,696
10,626
(49)
(41)
0
2,655
0
10,577
87
13,322
(90)
0
13,232
Section 10 - Openreach Information
Section 10.4 - Openreach MCE Statement 2009 (Re-presented)
Full service provision
ISDN2 exchange line services
Business ISDN30 exchange line
services
Wholesale local access
Sub Total full SMP services
(excluding AISBO)
Alternative interface symmetric
broadband origination (up to
and including 1Gbit/s)
Sub Total: Openreach full SMP
services (including AISBO)
Other Openreach Markets &
Activiities (with no SMP
reporting obligations)
Total: Openreach Services - by
regulated market
Openreach Services (by regulated market)
Analogue exchange line
services
Re-presented for the year ended 31 March 2009
£m
£m
£m
£m
£m
£m
£m
£m
£m
157
3,764
2
2,801
237
302
485
16
103
75
32
9
45
13
9
114
58
12
69
15
124
284
166
26
12
84
310
4,160
116
3,100
307
392
629
8
340
286
n/a
172
65
318
4,160
456
3,386
307
564
694
185
99
325
735
39
929
411
503
4,259
781
4,121
346
1,493
1,105
n/a
n/a
n/a
n/a
0
n/a
0
n/a
0
7,748
280
290
696
9,014
871
9,885
2,723
12,608
Non-current Assets
Tangible fixed assets
Land & Buildings
Access - Copper
Access - Fibre
Access - Duct
Switch and Transmission
- Switch
- Transmission
Other
Investments
Total Non-current Assets
Current Assets:
Stocks
Debtors
- Internal
- External
n/a
n/a
n/a
-
0
n/a
0
39
39
301
135
19
4
42
3
42
16
404
158
59
3
463
161
28
101
491
262
Total Current Assets
436
23
45
58
562
62
624
168
792
Liabilities falling due within one year
- Internal
- External
n/a
(623)
n/a
(22)
n/a
(29)
n/a
(120)
0
(794)
n/a
(59)
0
(853)
n/a
(406)
0
(1,259)
Total Liabilities falling due within one year
(623)
(22)
(29)
(120)
(794)
(59)
(853)
(406)
(1,259)
Net Current Assets/Liabilities
(187)
1
16
(62)
(232)
3
(229)
(238)
(467)
281
306
634
Total Assets less Current Liabilities
Provisions for liabilities and charges
Roundings
Mean capital employed
7,561
(39)
(3)
(4)
(5)
7,517
(1)
277
(1)
301
(10)
3
627
8,782
(56)
(4)
8,722
874
(1)
873
88
9,656
(57)
(4)
9,595
2,485
(33)
4
2,456
12,141
(90)
0
12,051
Section 10 - Openreach Information
Section 10.5 - Reconciliation of Openreach P&L Statement 2010
For the year ended 31 March 2010
HCA
Notes
(per 10.7)
Regulatory entity (as per Section 10.1)
Reconciliation differences:
Use of BT Operate assets
Northern Ireland (revenues and returns not subject to BT Undertakings)
Other trading differences
Total reconciliation differences
As per published Annual Report
CCA (a)
Turnover
Operating
Cost
Return
CCA
adjustments
Return
£m
£m
£m
£m
£m
3,973
1,326
5,299
(b)
(c)
(d)
CCA (a)
(135)
(135)
5,164
179
(112)
20
87
4,060
(179)
(23)
(20)
(222)
1,104
(h) See Section 4 - Basis of Preparation for the CCA Revaluation Adjustment.
89
2,322
3,648
CCA
Return
adjustments
excl.
excl. reval. reval.adj.
adj. (h)
(h)
£m
£m
547
1,873
Section 10 - Openreach Information
Section 10.6 - Reconciliation of Openreach P&L Statement 2009
For the year ended 31 March 2009
Notes
(per 10.7)
Regulatory entity (as per Section 10.1)
HCA
Operating
Turnover
Cost
£m
£m
Return
£m
5,364
3,957
1,407
-
199
(199)
(91)
(52)
56
(42)
52
(189)
Reconciliation differences:
Use of BT Operate assets
Northern Ireland (revenues and returns not included in Openreach
management structure)
Other trading differences
Total reconciliation differences
As per published Annual Report
(b)
(c)
(d)
(133)
(133)
5,231
4,013
1,218
90
CCA (a)
CCA
adjustments
Return
£m
£m
(373)
1,034
Section 10 - Openreach Information
Section 10.7
10.7 -- Openreach
Openreach Notes
Notes
Section
1. Openreach Statements
As noted within the ‘Regulation in the UK section’ of these accounts, on the 22 September 2005, BT
offered certain undertakings to Ofcom in lieu of a reference under the Enterprise Act 2002 (“the
Undertakings”). In accordance with section 5.31 of the Undertakings, with effect from the start of BT’s
2006/07 financial year, BT’s Regulatory Financial Statements need to separately present the financial
results of Openreach and include a reconciliation of Openreach’s revenue, operating profit (and other
items agreed between BT and Ofcom) with the financial information about Openreach as shown in BT
Group plc’s Annual Report.
The form, content and basis of preparation of the financial results of Openreach follow, to the fullest
extent possible, those used in the preparation of the Current Cost Financial Statements.
The Primary Accounting Documents outline the methodologies used to present the financial results of
Openreach within the Current Cost Financial Statements for 2009/10 (‘Openreach regulatory
statement’). The reconciliation of that statement to the Openreach segmental financial information as
shown in BT Group plc’s Annual Report is shown for the Profit and Loss Account above.
BT’s Current Cost Financial Statements have been prepared in accordance with the Final Statements
and Notifications imposed on BT by Ofcom, where Ofcom has defined certain markets where BT is
deemed to have Significant Market Power (SMP) in the UK. However, the products sold by Openreach
do not align directly with these definitions of these economic markets.
The Primary Accounting Documents, dated 28 July 2010, detail how we have disaggregated the SMP
definitions in order to show the Openreach regulatory statement and reconciliation of that to the
Openreach financial information as shown in BT Group plc’s Annual Report. For the sake of clarity of
presentation, within the Openreach regulatory statement, separate columns are contained for each
‘Full Openreach market’ and the remaining ‘Part Openreach market’ activities have been consolidated
into a single column.
The Openreach information includes comparative information for the year ended 31 March 2009
published on 13 August 2009 prepared in accordance with the Primary Accounting Documents dated
13 August 2009.
2. Access Markets Openreach Level Review
To assess the underlying performance of Openreach's markets on a like for like basis each year it is
necessary to adjust for a number of significant one off items which impact the operating profit in one
year and not in another. The return shown in these statements for total Openreach before these items
was 27.6% for the financial year 2009/10 and 8.6% for the financial year 2008/09 including non-SMP
activity and 29.8% in 2009/10 and 5.4% for 2008/09 excluding non-SMP results and Openreach
Ethernet services (AISBO market). If adjustments are made to these markets, for comparability
purposes, the return is £714m for 2009/10 and £760m for 2008/09 resulting in a ROCE of 7.7% and
8.9% respectively. The adjustments are as follows:
• Wholesale Local Access Co-location activity has been excluded. BT charges customers upfront
for the cost of equipment and the installation of its exchanges. Turnover is recognised and
received in the year of connection but the capitalised costs are depreciated over the life of the
91
asset. The non-matched element between revenue and costs of these items distorts the
reported return in the local access market.
• Remove the Current Cost Accounting (CCA) Holding Gains and losses from each year, as these
items are the change in valuation driven by price effects in the year and can swing significantly
in amount and direction from year to year.
• Remove Other CCA adjustments, as these items are principally due to methodology changes,
where any changes resulting from change or modification to the valuation methodology are
taken through the Profit and Loss account. The specific adjustments are not, in general,
expected to recur.
3. Reconciling Differences
The reconciling differences between the Openreach regulatory statement and the Openreach
segmental financial information reported in BT Group plc’s Annual Report fall into the following main
categories:
(a) Basis of preparation under Current Cost Accounting (‘CCA’)
BT Group plc’s Annual Report has been prepared under the historical cost convention (‘HCA’), modified
for the revaluation of certain financial assets and liabilities at fair value. As directed by Ofcom through
the Explanatory Statement and Notification, BT’s Current Cost Financial Statements have been
prepared on a CCA basis, in accordance with the Primary Accounting Documents and the Detailed
Valuation Methods, all of which are annually updated. As such, a reconciliation entry has been made to
exclude the aggregated CCA adjustments included within the Openreach regulatory statement.
(b) Rental charge to Openreach for use of assets owned by BT Operate
Within the Openreach segmental financial information reported in BT Group plc’s Annual Report, the
results of BT Wholesale include a charge for an appropriate return on capital where assets are owned by
BT Operate (e.g. for line cards, electronics and network features) but are used by Openreach. The
Openreach regulatory statements do not include this charge, as the basis for attribution of costs and
assets to products in the regulatory accounts is actual costs and assets.
(c) Results relating to Northern Ireland operations
The Current Cost Financial Statements have been prepared in accordance with the Final Statements and
Notifications imposed on BT where Ofcom has defined certain markets in which BT is deemed to have
Significant Market Power (SMP) in the UK. This definition includes BT’s Northern Ireland operations.
The Openreach segmental financial information reported in BT Group plc’s Annual Report excludes BT’s
operations in Northern Ireland. Accordingly, the results of the access network element of BT’s Northern
Ireland operations form part of the reconciliation.
(d) Other Trading Differences
The Openreach segmental financial information reported in BT Group plc's Annual Report reflect the
internal charges between BT's lines of business rather than the allocation of actual costs and capital
employed as shown in the Current Cost Financial Statements. The other trading differences reflect the
total of these timing differences across the year.
Appendix 1 - Other Information
Appendix 1 - Other Information
Appendix 1
Other Information
92
Appendix 1 - Other Information
Appendix 1.1 - Network Activity Statements (Annex 15)
Appendix 1.1.1 - Network Activity Statement - Consolidated 2010
For the year ended 31 March 2010
Network Activity Statement - Consolidated (this is a consolidation of all markets where there are cost accounting obligations)
Fully Allocated Cost (£m) (h)
HCA operating
cost
Supplementary
depreciation
Holding
(gain)/loss and
other CCA
adjustments
Total CCA
operating
costs
CCA mean
capital
employed
Applicable
rate of return
on capital %
Capital
costs
Total of
operating
costs and
capital costs
relating to
current year
Volume (b)
Average costs
per min/unit on
a current cost
basis relating to
current year
SMP Cost Accounting components
Local exchange concentrator
Local exchange processor
Main exchange switching
Remote - local transmission link
Remote - local transmission length (c)
Local - tandem transmission link
Local - tandem transmission length (c)
Product management policy & planning
Interconnect local end rental 2Mbit
Interconnect 2Mbit connection
Interconnect extension circuits (IEC) 2Mbit link
Customer Sited Interconnect cct (CSI) 2Mbit link
Interconnect extension circuits (IEC) 2Mbit per km
Customer Sited Interconnect cct (CSI) 2Mbit per km
In Span Interconnect circuits (ISI) transmission
Nominated In Span I/Connect cct (ISI) transmission
Intra Building Circuit (IBC) connection
Intra Building Circuit (IBC) rental
PC rental 2Mbit link per km distribution
PC rental 2Mbit link per km trunk
PC rental 34Mbit link per km distribution
PC rental 34Mbit link per km trunk
PC rental 140Mbit link per km distribution
PC rental 140Mbit link per km trunk
PC rental 622Mbit link per km trunk
Point of Handover electronics
PC rental 64Kbit link
PC rental 2Mbit link
PC rental 34Mbit link
PC rental 140Mbit link
PC rental 64Kbit link per km transmission
64Kbit PC link connection cct provision
64Kbit PC link connection cct rearrangements
2Mbit and above PC link connection cct provision
PC rental 64Kbit link local end
PC rental 34Mbit link local end
PC rental 140Mbit link local end
PC rental 2Mbit local end copper
PC rental 2Mbit local end fibre
PPC support services
Netstream equipment
Low Tisbo equipment depreciation
High Tisbo equipment depreciation
78
86
20
48
33
25
9
38
3
6
3
3
2
2
2
1
16
9
68
25
13
9
11
9
10
5
41
25
3
8
19
2
1
63
28
16
10
18
123
4
7
38
7
(4)
(4)
0
(3)
4
(1)
1
0
0
0
0
0
0
0
0
0
0
0
(4)
(2)
(1)
(1)
(1)
0
0
(1)
(2)
(2)
(1)
(1)
1
0
0
0
0
(1)
(1)
0
(1)
0
(2)
0
0
10
9
0
1
3
0
1
0
0
0
0
0
0
0
0
0
0
0
5
2
0
0
1
1
1
0
1
1
0
0
2
0
0
0
0
1
1
0
5
0
0
0
0
84
91
20
46
40
24
11
38
3
6
3
3
2
2
2
1
16
9
69
25
12
8
11
10
11
4
40
24
2
7
22
2
1
63
28
16
10
18
127
4
5
38
7
156
162
54
62
309
28
84
1
8
2
5
7
14
9
3
8
12
6
279
111
50
42
56
51
66
7
57
67
8
20
149
0
0
14
51
65
29
25
434
22
14
0
0
(a) This component is attributed on a % basis so no volume or unit cost is derivable.
(b) See glossary for volume unit descriptions.
(c) Unit of length is 10 kilometres.
(h) See Section 4 Basis of Preparation.
93
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
17
18
6
7
34
3
9
0
1
0
1
1
1
1
0
1
1
1
31
12
5
5
6
6
7
1
6
7
1
2
16
0
0
1
6
7
3
3
48
2
2
0
0
101
109
26
53
74
27
20
38
4
6
4
4
3
3
2
2
17
10
100
37
17
13
17
16
18
5
46
31
3
9
38
2
1
64
34
23
13
21
175
6
7
38
7
194,979
191,003
161,496
158,295
280,486
87,614
352,158
196,777
15,882
621
13,862
15,882
345,025
480,279
7,954
29,900
5,263
73,208
2,176,325
1,649,596
50,065
69,019
37,544
62,150
17,145
6,697,643
335,231
219,341
3,397
2,910
9,729,372
2,399
580
38,363
113,977
4,803
1,132
40,378
241,785
(a)
(a)
(a)
(a)
mm
mm
mm
mm
mm
mm
mm
mm
circuits
circuits
circuits
circuits
km
km
100m
100m
circuits
circuits
km
km
km
km
km
km
km
eq
links
links
links
links
km
circuits
circuits
circuits
le
le
le
le
le
0.052p
0.056p
0.016p
0.033p
0.026p
0.031p
0.006p
0.019p
£241.23
£10,422.64
£273.00
£220.01
£11.47
£5.56
£248.09
£62.98
£3,253.45
£124.48
£45.80
£22.63
£359.18
£198.46
£473.69
£247.47
£1,064.32
£0.79
£137.44
£144.16
£1,183.43
£3,370.23
£3.95
£1,042.55
£1,014.09
£1,683.66
£297.25
£4,941.61
£11,677.25
£517.63
£722.52
(a)
(a)
(a)
(a)
Appendix 1 - Other Information
Appendix 1.1.1 - Network Activity Statement - Consolidated 2010 (continued)
For the year ended 31 March 2010
Network Activity Statement - Consolidated (this is a consolidation of all markets where there are cost accounting obligations)
Fully Allocated Cost (£m) (h)
HCA operating
cost
Supplementary
depreciation
Holding
(gain)/loss and
other CCA
adjustments
Total CCA
operating
costs
CCA mean
capital
employed
Applicable
rate of return
on capital %
Capital
costs
Total of
operating
costs and
capital costs
relating to
current year
Volume (b)
Average costs
per unit on a
current cost
basis relating to
current year
SMP Cost Accounting components
Very High Tisbo equipment depreciation
Low Tisbo ECC equipment depreciation
AISBO ECC equipment depreciation
Wholesale & LAN extension services electronics
Wholesale & LAN extension services fibre etc
Wholesale & LAN extension services BNS
Backhaul extension services electronics
Backhaul extension services fibre etc
Wholesale & LAN extension services BNS electronics
Ethernet main links
SG & A private circuits
SG & A partial private circuits
National OA non chargeable
Emergency OA (999) non chargeable
SDSL connections
Wholesale Access specific
Routeing & records
MDF Hardware jumpering
Software jumpering
E side copper capital
E side copper current
D side copper capital
D side copper current
Local exchanges general frames capital
Local exchanges general frames current
PSTN line test equipment
Dropwire capital & PSTN NTE
Business PSTN drop maintenance
Residential PSTN drop maintenance
ISDN2 drop maintenance
PSTN line cards
ISDN2 line cards
Pair gain
ISDN2 NTE
Broadband line testing systems
DSLAM capital/maintenance
ADSL connections
External WLR SG & A
Internal WLR SG & A
SG & A other access
Local Loop Unbundling room build
Local Loop Unbundling hostel rentals
Local Loop Unbundling hostel rentals power & vent
Local Loop Unbundling tie cables
0
3
3
70
116
1
12
10
9
23
32
74
1
8
0
30
22
249
4
122
80
634
228
83
69
10
370
24
98
4
141
20
1
8
41
283
12
4
2
18
0
18
13
12
0
0
0
0
1
0
0
0
0
4
0
0
0
0
0
0
0
0
0
17
0
168
0
8
0
0
29
0
0
0
(7)
(1)
0
0
0
0
0
0
0
0
0
0
0
3
0
0
0
0
7
0
0
0
0
3
0
0
0
0
0
0
0
0
0
(123)
0
(613)
0
0
0
0
(44)
0
0
0
16
3
0
0
0
(6)
0
0
0
0
0
0
0
(11)
0
3
3
70
124
1
12
10
9
30
32
74
1
8
0
30
22
249
4
16
80
189
228
91
69
10
355
24
98
4
150
22
1
8
41
277
12
4
2
18
0
18
13
4
0
0
0
135
541
4
23
46
17
293
8
3
1
2
0
69
5
15
1
758
11
6,475
27
38
17
31
1,127
2
7
1
300
48
13
10
108
524
9
1
1
1
0
51
62
59
(a) This component is attributed on a % basis so no volume or unit cost is derivable.
(b) See glossary for volume unit descriptions.
(h) See Section 4 Basis of Preparation.
94
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
10.9
10.1
10.1
10.1
10.1
10.1
10.1
10.1
10.1
10.1
10.1
10.1
10.1
10.1
10.1
10.1
10.1
10.1
10.1
10.1
10.4
11.0
11.0
10.1
10.1
11.0
10.1
10.1
10.1
10.1
0
0
0
15
60
0
3
5
2
32
1
0
0
0
0
7
1
1
0
77
1
654
3
4
2
3
114
0
1
0
30
5
1
1
11
58
1
0
0
0
0
5
6
6
0
3
3
85
184
1
15
15
11
62
33
74
1
8
0
37
23
250
4
93
81
843
231
95
71
13
469
24
99
4
180
27
2
9
52
335
13
4
2
18
0
23
19
10
(a)
(a)
(a)
37,012
116,230
876
4,451
9,876
1
316,108
(a)
(a)
55,125
93,631
1,976
6,596,446
1,816,070
13,114,617
11,769,545
26,152,110
29,607,602
26,152,110
29,607,602
39,515,018
39,288,658
25,379,230
25,031,937
5,293,410
19,115,731
1,245,591
22,199,030
1,245,591
307,437
1,245,591
14,178,794
8,034,887
2,036,072
(a)
(a)
(a)
632
10,091
10,091
26,373
le
le
circuits
le
le
circuits
fibre km
mm
mm
conns
trans
lines
lines
lines
lines
lines
lines
lines
lines
lines
lines
lines
lines
lines
channels
lines
channels
eq
channels
lines
lines
conns
rooms
hostels
hostels
cables
(a)
(a)
(a)
£2,285.39
£1,583.42
£1,595.96
£3,244.72
£1,549.65
£11,034,494.00
£199.23
(a)
(a)
0.003p
0.008p
£5.19
£5.62
£12.37
£19.10
£0.35
£3.51
£2.73
£32.23
£7.78
£2.41
£1.79
£0.53
£18.71
£4.58
£5.16
£3.56
£8.13
£21.18
£6.52
£7.02
£3.69
£41.66
£6.17
(a)
(a)
(a)
£254.37
£2,284.35
£1,899.25
£328.66
Appendix 1 - Other Information
Appendix 1.1.1 - Network Activity Statement - Consolidated 2010 (continued)
For the year ended 31 March 2010
Network Activity Statement - Consolidated (this is a consolidation of all markets where there are cost accounting obligations)
Fully Allocated Cost (£m) (h)
HCA operating
cost
Supplementary
depreciation
Holding
(gain)/loss and
other CCA
adjustments
Total CCA
operating
costs
CCA mean
capital
employed
Applicable
rate of return
on capital %
Total of
operating
costs and
capital costs
relating to
current year
Capital
costs
Volume (b)
Average costs
per unit on a
current cost
basis relating to
current year
SMP Cost Accounting components
Local Loop Unbundling systems development
Directories
Service assurance Retail
Service assurance Global services
Service Centres - Provision
Sales product management
Service Centres - Assurance
Combi Card voice
Combi Card broadband
Access Cards (ISDN2 services)
Core/Metro (voice)
Border gateway & signalling firewall
MSAN-POSI Voice Link
Access Cards (other services)
MSAN-METRO Connectivity Link
Core/Metro connectivity
Edge Ethernet ports
iNode (call set up and features)
ATM customer interface 2Mbit
ATM customer interface 34Mbit
ATM customer interface > 155Mbit
ATM network interface
ATM network switching
Inter ATM transmissions
ISDN30 connections
ISDN30 access
ISDN30 line cards
Internal LLU Tie Cables
Broadband backhaul circuits (excl Virtual Paths)
Special Fault Investigation
MSAN-BRAS Broadband Link
Core/Metro (broadband)
Access Cards (ISDN30 services)
Geographic broadband adjustments
SMP Accounting Separation components
Residual components
Roundings
Total
17
40
0
0
100
27
50
47
20
1
13
0
5
8
50
107
30
16
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
17
40
0
0
100
27
50
47
20
1
13
0
5
8
50
107
30
16
40
(6)
2
0
(3)
(6)
3
140
55
2
29
1
14
19
118
239
66
47
10.1
10.1
11.0
11.0
10.1
11.0
10.1
10.1
11.0
10.1
11.0
11.0
11.0
11.0
11.0
11.0
11.0
11.0
4
(1)
0
0
0
(1)
0
14
6
0
3
0
2
2
13
26
7
5
21
39
0
0
100
26
50
61
26
1
16
0
7
10
63
133
37
21
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
410
2,446
(2)
7,294
(a)
(a)
(a)
(a)
(a)
(a)
(a)
22,199,030
8,034,887
1,245,591
371,275
194,866
194,979
(a)
(a)
(a)
(a)
(a)
lines
lines
channels
mm
mm
mm
(a)
(a)
(a)
(a)
(a)
(a)
(a)
£2.77
£3.22
£0.57
0.004p
0.000p
0.003p
(a)
(a)
(a)
(a)
(a)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(5)
4
(2)
192
7
412
967
106
518
n/a
(20)
2,430
664
68
2,498
n/a
n/a
(3)
8
8
n/a
n/a
15,779
1,651
8,405
4
(732)
6,754
(a) This component is attributed on a % basis so no volume or unit cost is derivable.
(b) See glossary for volume unit descriptions.
(h) See Section 4 Basis of Preparation.
(n) Accounting Separation components require no costs to be disclosed.
95
n/a
Appendix 1 - Other Information
Appendix 1.1.2 - Network Activity Statement - Consolidated 2009
For the year ended 31 March 2009
Network Activity Statement - Consolidated (this is a consolidation of all markets where there are cost accounting obligations)
Fully Allocated Cost (£m)
HCA operating
cost
Supplementary
depreciation
Holding
(gain)/loss and
other CCA
adjustments
Total CCA
operating
costs
CCA mean
capital
employed
Applicable
rate of return
on capital %
Capital
costs
Total of
operating
costs and
capital costs
relating to
current year
Volume (b)
Average costs
per min/unit on
a current cost
basis relating to
current year
SMP Cost Accounting components
Local exchange concentrator
Local exchange processor
Main exchange switching
Remote - local transmission link
Remote - local transmission length (c)
Local - tandem transmission link
Local - tandem transmission length (c)
Product management policy & planning
Interconnect local end rental 2Mbit
Interconnect 2Mbit connection
Interconnect extension circuits (IEC) 2Mbit link
Customer Sited Interconnect cct (CSI) 2Mbit link
Interconnect extension circuits (IEC) 2Mbit per km
Customer Sited Interconnect cct (CSI) 2Mbit per km
In Span Interconnect circuits (ISI) transmission
Nominated In Span I/Connect cct (ISI) transmission
Intra Building Circuit (IBC) connection
Intra Building Circuit (IBC) rental
PC rental 2Mbit link per km distribution
PC rental 2Mbit link per km trunk
PC rental 34Mbit link per km distribution
PC rental 34Mbit link per km trunk
PC rental 140Mbit link per km distribution
PC rental 140Mbit link per km trunk
PC rental 622Mbit link per km trunk
Point of Handover electronics
PC rental 64Kbit link
PC rental 2Mbit link
PC rental 34Mbit link
PC rental 140Mbit link
PC rental 64Kbit link per km transmission
64Kbit PC link connection cct provision
64Kbit PC link connection cct rearrangements
2Mbit and above PC link connection cct provision
PC rental 64Kbit link local end
PC rental 34Mbit link local end
PC rental 140Mbit link local end
PC rental 2Mbit local end copper
PC rental 2Mbit local end fibre
PPC support services
92
106
24
64
44
34
13
32
5
11
6
5
4
2
3
1
12
10
68
37
18
16
15
12
11
4
53
31
6
12
24
3
1
59
33
29
15
31
158
0
(4)
(4)
0
(4)
2
(2)
1
0
0
0
(1)
(1)
0
0
0
0
0
0
(5)
(4)
(2)
(2)
(1)
(1)
(1)
(1)
(3)
(3)
(1)
(1)
0
0
0
0
0
(1)
(2)
0
(2)
0
7
5
0
0
(16)
0
(5)
0
0
0
0
0
0
0
0
0
0
0
(7)
(3)
(1)
(1)
(1)
(2)
(2)
0
1
1
0
0
(7)
0
0
0
0
(2)
0
0
(12)
0
95
107
24
60
30
32
9
32
5
11
5
4
4
2
3
1
12
10
56
30
15
13
13
9
8
3
51
29
5
11
17
3
1
59
33
26
13
31
144
0
159
165
55
50
304
22
88
(3)
10
0
6
9
15
10
3
8
12
6
212
128
52
52
54
51
55
8
53
57
12
23
144
(1)
0
7
45
77
36
27
421
7
(b) See glossary for volume unit descriptions.
(c) Unit of length is 10 kilometres.
96
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
18
19
6
6
35
3
10
0
1
0
1
1
2
1
0
1
1
1
24
15
6
6
6
6
6
1
6
7
1
3
16
0
0
1
5
9
4
3
48
1
113
126
30
66
65
35
19
32
6
11
6
5
6
3
3
2
13
11
80
45
21
19
19
15
14
4
57
36
6
14
33
3
1
60
38
35
17
34
192
1
213,758
209,859
163,660
172,868
307,195
89,148
357,177
205,752
18,365
6,632
15,499
19,741
392,766
517,585
7,954
48,360
2,652
65,362
1,907,808
1,945,530
55,719
75,838
35,498
76,688
17,853
9,118,959
356,180
193,710
4,467
3,499
8,633,799
3,275
743
40,263
102,012
4,544
1,235
32,869
214,500
18,501
mm
mm
mm
mm
mm
mm
mm
mm
circuits
circuits
circuits
circuits
km
km
100m
100m
circuits
circuits
km
km
km
km
km
km
km
eq
links
links
links
links
km
circuits
circuits
circuits
le
le
le
le
le
circuits
0.053p
0.060p
0.019p
0.038p
0.021p
0.039p
0.005p
0.015p
£287.34
£1,652.91
£386.61
£255.95
£11.59
£5.69
£354.61
£36.14
£5,187.34
£148.75
£42.03
£22.81
£372.00
£243.87
£510.54
£197.86
£776.90
£0.45
£157.18
£178.83
£1,527.30
£3,830.74
£3.86
£979.52
£938.03
£1,494.80
£374.88
£7,502.13
£13,588.01
£1,030.30
£898.72
£44.20
Appendix 1 - Other Information
Appenidix 1.1.2 - Network Activity Statement - Consolidated 2009 (continued)
For the year ended 31 March 2009
Network Activity Statement - Consolidated (this is a consolidation of all markets where there are cost accounting obligations)
Fully Allocated Cost (£m)
HCA operating
cost
Supplementary
depreciation
Holding
(gain)/loss and
other CCA
adjustments
Total CCA
operating
costs
CCA mean
capital
employed
Applicable
rate of return
on capital %
Capital
costs
Total of
operating
costs and
capital costs
relating to
current year
Volume (b)
Average costs
per unit on a
current cost
basis relating to
current year
SMP Cost Accounting components
Wholesale & LAN extension services electronics
Wholesale & LAN extension services fibre etc
Wholesale & LAN extension services BNS
Backhaul extension services electronics
Backhaul extension services fibre etc
Wholesale & LAN extension services BNS electronics
Ethernet main links
SG & A private circuits
SG & A partial private circuits
National OA non chargeable
Emergency OA (999) non chargeable
SDSL connections
Wholesale Access specific
Routeing & records
MDF Hardware jumpering
Software jumpering
E side copper capital
E side copper current
D side copper capital
D side copper current
Local exchanges general frames capital
Local exchanges general frames current
PSTN line test equipment
Dropwire capital & PSTN NTE
Business PSTN drop maintenance
Residential PSTN drop maintenance
ISDN2 drop maintenance
PSTN line cards
ISDN2 line cards
Pair gain
ISDN2 NTE
Broadband line testing systems
DSLAM capital/maintenance
ADSL connections
External WLR SG & A
Internal WLR SG & A
SG & A other access
Local Loop Unbundling room build
Local Loop Unbundling hostel rentals
Local Loop Unbundling hostel rentals power & vent
Local Loop Unbundling tie cables
Local Loop Unbundling systems development
38
90
1
8
14
6
25
31
72
2
9
0
14
46
220
8
100
85
683
281
84
68
10
335
30
124
4
161
21
0
9
37
258
33
3
6
28
0
18
13
14
2
0
0
0
0
0
0
3
0
0
0
0
0
0
0
0
0
22
0
116
0
8
0
0
26
0
0
0
(8)
(1)
0
0
0
(20)
0
0
0
0
0
0
0
4
0
0
(16)
0
0
(2)
0
(14)
0
0
0
0
0
0
0
0
0
174
0
108
0
(2)
0
0
7
0
0
0
11
2
0
0
0
4
0
0
0
0
0
0
0
18
0
38
74
1
8
12
6
14
31
72
2
9
0
14
46
220
8
296
85
907
281
90
68
10
368
30
124
4
164
22
0
9
37
242
33
3
6
28
0
18
13
36
2
88
429
8
18
66
10
238
1
(5)
1
3
0
102
1
11
0
734
9
5,723
29
33
9
27
1,131
1
5
0
321
75
3
13
94
454
0
0
0
(4)
0
51
57
71
20
(a) This component is attributed on a % basis so no volume or unit cost is derivable.
(b) See glossary for volume unit descriptions.
97
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
11.4
11.4
11.4
10.0
10.0
11.4
10.0
10.0
10.0
10.0
10.0
10
49
1
2
8
1
27
0
(1)
0
0
0
10
0
1
0
73
1
572
3
3
1
3
113
0
1
0
32
8
0
1
11
52
0
0
0
0
0
5
6
7
2
48
123
2
10
20
7
41
31
71
2
9
0
24
46
221
8
369
86
1,479
284
93
69
13
481
30
125
4
196
30
0
10
48
294
33
3
6
28
0
23
19
43
4
30,367
99,593
920
9,791
16,902
141
268,639
(a)
(a)
62,516
93,303
3,109
6,944,278
2,149,453
6,687,225
8,329,942
27,159,871
29,094,532
27,159,871
29,094,532
56,514,141
56,320,621
27,016,310
25,689,590
5,406,329
19,633,755
1,299,018
23,557,777
1,299,018
483,659
1,299,018
13,333,480
8,196,070
2,196,211
(a)
(a)
(a)
564
9,291
9,291
26,207
(a)
le
le
circuits
le
le
circuits
fibre km
mm
mm
conns
trans
lines
lines
lines
lines
lines
lines
lines
lines
lines
lines
lines
lines
lines
channels
lines
channels
eq
channels
lines
lines
conns
rooms
hostels
hostels
cables
£1,589.08
£1,241.50
£2,307.29
£978.90
£1,112.05
£47,622.13
£156.40
(a)
(a)
0.003p
0.010p
£14.56
£3.45
£21.37
£33.12
£0.97
£13.62
£2.95
£54.48
£9.75
£1.64
£1.23
£0.48
£18.74
£5.55
£6.35
£2.88
£8.33
£22.75
£1.27
£7.36
£3.60
£35.84
£15.18
(a)
(a)
(a)
£789.84
£2,431.59
£1,976.36
£1,659.64
(a)
Appendix 1 - Other Information
Appendix 1.1.2 - Network Activity Statement - Consolidated 2009 (continued)
For the year ended 31 March 2009
Network Activity Statement - Consolidated (this is a consolidation of all markets where there are cost accounting obligations)
Fully Allocated Cost (£m)
HCA operating
cost
Supplementary
depreciation
Holding
(gain)/loss and
other CCA
adjustments
Total CCA
operating
costs
CCA mean
capital
employed
Applicable
rate of return
on capital %
Total of
operating
costs and
capital costs
relating to
current year
Capital
costs
Volume (b)
Average costs
per unit on a
current cost
basis relating to
current year
SMP Cost Accounting components
Directories
Service assurance Retail
Service assurance Global services
Service Centres - Provision
Sales product management
Service Centres - Assurance
Combi Card voice
Combi Card broadband
Access Cards (ISDN services)
Core/Metro (voice)
Border gateway & signalling firewall
MSAN - POSI (dense) link voice
MSAN - POSI (non dense) link voice
Access Cards (other services)
MSAN-Metro connectivity (dense)
MSAN-Metro connectivity (non dense)
Core/Metro connectivity
Edge Ethernet ports
iNode (call set up and features)
33
10
0
44
37
16
36
13
1
35
0
9
10
6
26
0
47
20
10
ATM customer interface 2Mbit
ATM customer interface 34Mbit
ATM customer interface > 155Mbit
ATM network interface
ATM network switching
Inter ATM transmissions
ISDN30 connections
ISDN30 access
ISDN30 line cards
Broadband backhaul circuits (excl Virtual Paths)
MSAN - BRAS (dense) link broadband
MSAN - BRAS (non dense) link broadband
Core/Metro (broadband)
Geographic broadband adjustments
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
SMP Accounting Separation components
Residual components
Roundings
Total
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
33
10
0
44
37
16
36
13
1
35
0
9
10
6
26
0
47
20
10
(6)
0
0
(5)
(3)
0
137
47
6
160
0
42
43
23
179
2
204
87
66
11.4
10.0
10.0
10.0
11.4
10.0
10.0
11.4
10.0
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.4
(1)
0
0
(1)
0
0
14
5
1
18
0
5
5
3
20
0
23
10
8
32
10
0
43
37
16
50
18
2
53
0
14
15
9
46
0
70
30
18
(a)
(a)
(a)
(a)
(a)
(a)
23,557,777
8,196,070
1,299,018
406,932
218,810
53,440
160,319
(a)
(a)
(a)
(a)
(a)
(a)
lines
lines
channels
mm
mm
mm
mm
(a)
(a)
(a)
(a)
(a)
(a)
£2.10
£2.20
£1.44
0.013p
0.000p
0.026p
0.009p
(a)
(a)
(a)
(a)
(a)
(a)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
(n)
309
(13)
(11)
285
835
90
375
n/a
n/a
2,876
(1)
(11)
2,864
484
52
2,916
n/a
n/a
(1)
(1)
(3)
(5)
2
(1)
n/a
n/a
222
7,946
14,562
1,536
9,482
(1)
7,632
92
(a) This component is attributed on a % basis so no volume or unit cost is derivable.
(b) See glossary for volume unit descriptions.
(n) Accounting Separation components require no costs to be disclosed.
98
Appendix 1 - Other Information
Appendix 1.2 - Calculation of FAC based on component costs and usage factors (Annex 16)
Appendix 1.2.1 - Calculation of FAC based on component costs and usage factors 2010
For the year ended 31 March 2010
Components
Unit (d)
E side copper capital
£/line
£
£
£
3.51
£
3.67
£
3.67
£
3.49
£
£
£
£
£
3.49
£
£
1.75
1.75
£
£
£
£
£
£
£
SMPF Rentals
SMPF Connections
MPF Tie Cables
MPF Room Build
MPF Rentals
MPF Connections
£
MPF Hostel Rentals
Wholesale local access
Wholesale ISDN2 external service
transfers
Wholesale ISDN2 internal service
takovers
Wholesale ISDN2 external service
rentals
Wholesale ISDN2 internal service rentals
Wholesale ISDN2 external service
connections
Wholesale ISDN2 internal service
connections
Wholesale premium analogue external
service transfers
Wholesale ISDN2 exchange line
services
Wholesale premium analogue internal
service takeovers
Wholesale premium analogue external
service rentals
Wholesale premium analogue internal
service rentals
Wholesale basic analogue external
service rentals
Wholesale basic analogue internal
service rentals
Wholesale premium analogue external
service connections
Wholesale premium analogue internal
service connections
Fully Allocated Cost (£) (h)
Wholesale basic analogue internal
service connections
Average cost per unit (from annex 15)
Wholesale analogue exchange line
services
£
3.51
E side copper current
£/line
2.73
2.73
2.73
2.73
2.73
1.60
1.60
3.55
D side copper capital
£/line
32.23
33.69
33.69
32.02
32.02
16.04
16.04
32.23
D side copper current
£/line
7.78
7.78
7.78
7.78
7.78
4.55
4.55
10.11
2.33
Local exchanges general frames capital
£/line
2.41
2.41
2.41
2.41
2.41
1.20
1.20
4.81
2.41
Local exchanges general frames current
£/line
1.79
1.79
1.79
1.79
1.79
0.90
0.90
3.59
1.79
PSTN line test equipment
£/line
0.53
0.61
0.53
0.53
0.53
0.42
0.42
£/line
18.71
18.71
18.71
18.71
18.71
9.35
9.35
4.58
4.58
5.16
5.16
Dropwire capital & PSTN NTE
Business PSTN drop maintenance
£/line
4.58
Residential PSTN drop maintenance
£/line
5.16
£/line
8.13
8.13
8.13
8.13
8.13
Pair gain
£/eq
6.52
0.08
0.08
0.13
0.13
Routeing & records
£/line
12.37
12.26
12.26
12.26
MDF Hardware jumpering
£/line
19.10
19.10
19.10
19.10
Software jumpering
£/line
0.35
0.35
0.35
0.35
Wholesale Access specific
£/trans
5.62
5.62
5.62
5.62
ISDN2 drop maintenance
£/channel
3.56
3.56
3.56
ISDN2 line cards
£/channel
21.18
21.18
21.18
ISDN2 NTE
£/channel
7.02
7.02
7.02
Combi Card voice
£/line
2.77
Access Cards (ISDN2 services)
£/channel
0.57
0.57
0.57
5.62
Broadband line testing systems
£/lineline
3.69
DSLAM capital/maintenance
£/lineline
41.66
ADSL connections
£/lineconn
Local Loop Unbundling room build
£/linerooms
Local Loop Unbundling hostel rentals
£/hostel rental
2,284.35
Local Loop Unbundling hostel rentals power & vent
£/hostel rental
1,899.25
Local Loop Unbundling tie cables
£/linecables
Local Loop Unbundling systems development (q)
%
£21m
Directories (q)
%
£39m
Service assurance Retail (q)
%
Service assurance Global services (q)
%
Service Centres - Provision (q)
%
£100m
5.86
5.86
5.86
Sales product management (q)
%
£26m
0.05
0.04
0.04
Service Centres - Assurance (q)
%
£50m
External WLR SG & A (q)
%
£4m
Internal WLR SG & A (q)
%
£2m
2.77
18.71
5.16
PSTN line cards
2.77
0.82
2.77
9.18
9.36
9.55
9.55
0.35
0.18
0.18
0.18
0.18
0.32
5.62
2.81
2.81
2.81
2.81
23.08
22.07
0.31
0.26
2.77
2.16
2.17
1.48
6.17
1.01
254.37
254.37
2,284.35
1,899.25
328.66
328.66
0.73
1.76
-
Fully Allocated Costs (£)
1.76
1.76
1.76
0.06
0.06
0.06
0.06
1.01
1.01
1.01
1.01
0.60
9.31
5.99
0.76
0.61
27.20
5.06
0.15
0.62
0.73
1.22
0.01
5.80
5.80
15.39
15.71
1.00
0.99
0.95
0.93
1.92
1.92
71.01
70.99
15.38
15.38
4.65
5.56
0.06
0.05
0.43
0.45 131.10
0.61
1.53
0.09
1.19
29.33
11.74
43.24
43.23
43.23
90.37
90.28
87.90
87.90
11.42
11.77
49.85
67.93
(d) ppm = pence per minute; £/2Mbit cct = £ per 2 Mbit/s circuit; £/km = £ per kilometre; £/100m = £ per 100 metres; £/trans = £ per transaction; £/circuit = £ per circuit;
£/ hostel rental = £ per hostel rental; % = % utilisation; £/line = £ per line; £/room = £ per room; £/cable = £ per cable; £/link = £ per link; £/eq = £ per equipment unitss;
£/le = £ per local end; £/conn = £ per connection; £/channel = £ per channel; £/fibre km = £ per fibre km.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
(q) This is the total cost not unit cost for this component.
99
18.43
18.42
29.52
85.49 400.34 4,217.41 335.21
25.63
13.50
Appendix 1 - Other Information
Appendix 1.2.1 - Calculation of FAC based on component costs and usage factors 2010 (continued)
For the year ended 31 March 2010
£
3.51
4.55
4.55
£
£
£
£
£
4.55
1.15
£
7.68
SDSL
£
Netstream 16 LL 2Mbit/s connection
£
Radio Backhaul Service - 2 Mbit/s
rentals
£
Radio Backhaul Service - 2 Mbit/s
connection
Partial and Private Circuits 2Mbit/s connection
£
Partial and Private Circuits 2Mbit/s - local
end
Radio Backhaul Service - sub 2 Mbit/s
rentals
£
Partial and Private Circuits 2Mbit/s distribution
Radio Backhaul Service - sub 2 Mbit/s
connection
£
Partial and Private Circuits 2Mbit/s - link
Partial and Private Circuits 64Kbit/s external local end
£/line
£
Partial and Private Circuits 64Kbit/s internal local end
E side copper capital
£
Partial and Private Circuits 64Kbit/s trunk
Unit (d)
Partial and Private Circuits 64Kbit/s distribution
Components
Partial and Private Circuits 64Kbit/s - link
Fully Allocated Cost (£) (h)
Partial and Private Circuits 64Kbit/s connection
Average cost per unit (from annex 15)
Traditional interface symmetric broadband origination (up to and including
8Mbit/s)
£
3.51
E side copper current
£/line
2.73
2.73
2.73
2.73
0.24
1.58
3.55
D side copper capital
£/line
32.23
41.75
41.75
41.75
10.52
70.38
32.23
10.11
D side copper current
£/line
7.78
7.78
7.78
7.78
0.67
4.50
Local exchanges general frames capital
£/line
2.41
2.41
2.41
2.41
0.61
4.06
4.81
Local exchanges general frames current
£/line
1.79
3.59
Dropwire capital & PSTN NTE
£/line
18.71
18.71
Residential PSTN drop maintenance
£/line
5.16
5.16
Routeing & records
£/line
12.37
12.37
MDF Hardware jumpering
£/line
19.10
18.35
Software jumpering
£/line
0.35
64Kbit PC link connection cct provision (y)
£/circuit
PC rental 64Kbit link
£/link
1,287.73
0.02
1,287.73
137.44
1,287.73
137.44
PC rental 64Kbit link per km transmission
£/km
PC rental 64Kbit link local end
£/le
2Mbit and above PC link connection cct provision
£/circuit
PC rental 2Mbit link
£/link
144.16
PC rental 2Mbit link per km distribution
£/km
45.80
PC rental 2Mbit local end copper
£/le
517.63
69.11
57.19
PC rental 2Mbit local end fibre
£/le
722.52
573.56
759.44
PC rental 2Mbit link per km trunk
£/km
3.95
137.44
3.95
3.95
297.25
3.95
310.04
257.99
198.43
1,683.66
1,686.01
1,682.01
144.16
1,681.70
144.16
45.80
45.80
22.63
22.63
Broadband line testing systems
£/line
3.69
2.74
DSLAM capital/maintenance
£/line
41.66
41.03
SDSL connections
£/conn
5.19
5.19
Combi Card broadband
£/line
3.22
3.22
5.60
Service Centres - Provision (q)
%
£100m
Sales product management (q)
%
£26m
Service Centres - Assurance (q)
%
£50m
SG & A private circuits (q)
%
£33m
94.43
11.71
0.19
0.19
SG & A partial private circuits (q)
%
£74m
148.08
9.07
0.16
0.16
3.73
0.66
27.10
62.36
282.03
98.78
134.68
14.81
0.57
54.85
192.29
20.08
3.52
48.17
336.57
435.50
12.47
SG & A other access (q)
%
£18m
MSAN-METRO Connectivity Link (q)
%
£63m
42.04
42.04
Core/Metro connectivity (q)
%
£133m
28.99
28.99
Edge Ethernet ports (q)
%
£37m
5.55
5.55
Fully Allocated Costs (£)
322.01
1,530.24
158.22
4.30
4.30
396.36
379.57
1,569.76
497.82 2,012.98
255.63
(d) ppm = pence per minute; £/2Mbit cct = £ per 2 Mbit/s circuit; £/km = £ per kilometre; £/100m = £ per 1000 metres; £/trans = £ per transaction; £/circuit = £ per circuit;
£/ hostel rental = £ per hostel rental; % = % utilisation; £/line = £ per line; £/room = £ per room; £/cabl e = £ per cable; £/link = £ per link; £/eq = £ per equipment units;
m.
£/le = £ per local end; £/conn = £ per connection; £/channel = £ per channel; £/fibre km = £ per fibre km
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
(q) This is the total cost not unit cost for this component.
(y) Unit costs calculated as a weighted average of the 64Kbit PC link connection cct provision & 64Kbit PC link connection cct rearrangements.
100
49.89
758.88 2,018.58 1,629.50 2,003.71
187.05
Appendix 1 - Other Information
Appendix 1.2.1 - Calculation of FAC based on component costs and usage factors 2010 (continued)
For the year ended 31 March 2010
£/circuit
1,683.66
PC rental 34Mbit link
£/links
1,183.43
PC rental 34Mbit link per km distribution
£/km
PC rental 34Mbit link local end
£/le
4,941.61
PC rental 140Mbit link
£/links
3,370.23
PC rental 140Mbit link per km distribution
£/km
PC rental 140Mbit link local end
£/le
PC rental 2Mbit link per km trunk
£/km
22.63
PC rental 34Mbit link per km trunk
£/km
198.46
PC rental 140Mbit link per km trunk
£/km
247.47
PC rental 622Mbit link per km trunk
£/km
1,064.32
Sales product management (q)
%
Partial and Private Circuits 140/155Mbit/s external local end
£
£
£
£
£
£
1,687.29
1,684.81
£
£
£
£
1,784.00
1,183.43
359.18
359.18
5,613.97
3,431.49
3,319.09
473.69
473.69
11,677.25
11,795.85 11,818.55
22.63
198.46
247.47
1,064.32
£26m
84.29
10.92
260.81
203.87
19.04
Access Cards (other services) (q)
%
£10m
MSAN-METRO Connectivity Link (q)
%
£63m
714.60
2,942.46
Core/Metro connectivity (q)
%
£133m
492.89
2,029.54
Edge Ethernet ports (q)
%
£37m
94.34
388.44
1,978.15 2,773.42
389.14
6,542.44
10.69
6.53
1.37
490.16 12,066.53 14,501.69 2,083.00
26.00
216.48
3.86
32.53
£74m
747.73
11.49
1.43
12.61
69.38
£33m
%
1,400.38
1.94
287.63
%
SG & A partial private circuits (q)
180.74
299.00
78.19
214.52
SG & A private circuits (q)
Fully Allocated Costs (£)
£
Partial and Private circuits 622Mbit/s trunk
Partial and Private Circuits 140/155Mbit/s internal local end
£
Partial and Private circuits 140/155Mbit/s trunk
Partial and Private Circuits 140/155Mbit/s distribution
£
Partial and Private circuits 34/45Mbit/s trunk
Partial and Private Circuits 140/155Mbit/s link
£
Wholesale trunk segments
Partial and Private circuits 2Mbit/s - trunk
Partial and Private Circuits 140/155Mbit/s connection
£
Netstream 16 LL 155Mbit/s connection
Partial and Private Circuits 34/45Mbit/s external local end
2Mbit and above PC link connection cct provision
Partial and Private Circuits 34/45Mbit/s internal local end
Unit (d)
Partial and Private Circuits 34/45Mbit/s distribution
Components
Partial and Private Circuits 34/45Mbit/s link
Fully Allocated Cost (£) (h)
Partial and Private Circuits 34/45Mbit/s connection
Average cost per unit (from annex 15)
Traditional interface symmetric
Traditional interface symmetric broadband
broadband origination (above 8Mbit/s up origination (above 45Mbit/s up to and including
to and including 45Mbit/s)
155Mbit/s)
270.68
2,683.14
71.35
747.73
5,579.60 1,980.00 9,036.54
(d) ppm = pence per minute; £/2Mbit cct = £ per 2 Mbit/s circuit; £/km = £ per kilometre; £/100m = £ per 100 metres; £/trans = £ per transacction; £/circuit = £ per circuit;
m = £ per room; £/cable = £ per cable; £/link = £ per linkk; £/eq = £ per equipment units;
£/ hostel rental = £ per hostel rental; % = % utilisation; £/line = £ per line; £/room
£/le = £ per local end; £/conn = £ per connection; £/channel = £ per channel; £/fibrre km = £ per fibre km.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
(q) This is the total cost not unit cost for this component.
101
259.53 1,135.67
Appendix 1 - Other Information
Appendix 1.2.1 - Calculation of FAC based on component costs and usage factors 2010 (continued)
For the year ended 31 March 2010
Components
Unit (d)
ppm
ppm
ppm
ppm
ppm
Local exchange concentrator
ppm
0.052
0.052
0.052
0.052
Local exchange processor
ppm
0.056
0.056
0.056
0.056
Remote - local transmission link
ppm
0.033
0.027
0.027
0.027
0.027
Remote - local transmission length
ppm (per 10km)
0.026
0.038
0.038
0.038
0.038
National OA non chargeable
ppm
0.003
0.003
0.003
0.008
0.008
ppm
ppm
ppm
ppm
ppm
0.056
0.027
0.027
0.038
0.038
0.015
0.015
ppm
0.031
0.022
0.022
0.022
0.022
0.017
0.017
0.017
0.017
ppm
0.004
Border gateway & signalling firewall
ppm
0.000
MSAN-POSI Voice Link
ppm
0.003
Edge Ethernet ports (q)
%
£37m
iNode (call set up and features) (q)
%
£21m
Fully Allocated Costs (ppm)
ppm
Wholesale call termination local exchange stick
(ISDN)
Retail Sticks
Wholesale call termination local exchange stick
Wholesale call termination local exchange segment
(ISDN)
0.052
Local - tandem transmission link
Core/Metro (voice)
ppm
0.056
0.008
0.006
Call Termination
basket
ppm
ppm
0.052
0.052
0.027
0.027
0.027
0.038
0.038
0.038
0.007
0.010
0.007
0.010
0.003
0.004
0.003
0.004
0.008
0.007
0.010
0.007
0.010
0.023
0.190
0.197
0.134
0.141
0.001
0.016
0.019
Fixed call termination
0.052
0.001
ppm
ppm (per 10km)
ppm
0.052
ppm
ppm
Wholesale single transit segment PSTN & ISDN
Wholesale local-tandem transmission stick (ISDN)
Single Transit Basket (ae)
Main exchange switching
Product management policy & planning
Single transit on fixed
public narrowband
networks
Wholesale call termination local exchange segment
Retail Sticks
Wholesale local-tandem transmission stick
Wholesale local-tandem conveyance segment (ISDN)
Local-tandem
conveyance
basket
Emergency OA (999) non chargeable
Local - tandem transmission length
0.008
0.052
Wholesale call origination local exchange Stick
(ISDN)
Retail Sticks
Wholesale call origination local exchange Stick
PPP
Basket
Wholesale PPP
Wholesale call originating local exchange segment
(ISDN) (incl OA)
Wholesale call originating local exchange segment
(incl Operator Assistance)
Fully Allocated Cost (£) (h)
Wholesale call originating local exchange segment
PSTN and ISDN (excl OA)
Average cost per unit (from annex 15)
Call Origination Basket (ad)
Local-tandem conveyance and
transit on fixed public
narrowband networks
Wholesale local-tandem conveyance segment
Call origination on fixed public narrowband
networks
0.011
0.019
0.008
0.007
0.010
0.007
0.010
0.004
0.003
0.004
0.003
0.004
0.008
0.007
0.010
0.007
0.010
0.201
0.201
0.208
0.134
0.141
0.019
0.004
0.055
(d) ppm = pence per minute; £/2Mbit cct = £ per 2 Mbit/s circuit; £/km = £ per kilometre; £/100
0m = £ per 100 metres; £/trans = £ per transaction; £/circuit = £ per circuit;
£/ hostel rental = £ per hostel rental; % = % utilisation; £/line = £ per line; £/room = £ perr room; £/cable = £ per cable; £/link = £ per link; £/eq = £ per equipment units;
£/le = £ per local end; £/conn = £ per connection; £/channel = £ per channel; £/fibre km = £ per fibre km.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
(q) This is the total cost not unit cost for this component.
(ad) Does not include the service Wholesale Call originating local exchange segment (ISDN) (e
excl. Operator Assistance) due to immaterial volumes.
(ae) Does not include the service Wholesale Single transit segment (ISDN) due to immaterial vvolumes.
102
0.055
0.039
0.039
Appendix 1 - Other Information
Appendix 1.2.1 - Calculation of FAC based on component costs and usage factors 2010 (continued)
For the year ended 31 March 2010
Technical areas (Interconnect Circuits)
Technical Areas (Point of Handover)
Interconnect Specific Basket
Components
Unit (d)
Interconnect local end rental 2Mbit
£
£
£/2Mbit cct
241.23
241.23
Customer Sited Interconnect cct (CSI) 2Mbit link
£/2Mbit cct
220.01
220.01
Customer Sited Interconnect cct (CSI) 2Mbit per km
£/km
Interconnect 2Mbit connection
£/2Mbit cct
5.56
10,422.64
Intra Building Circuit (IBC) rental
£/2Mbit cct
124.48
Intra Building Circuit (IBC) connection
£/2Mbit cct
3,253.45
Interconnect extension circuits (IEC) 2Mbit link
£/2Mbit cct
273.00
Interconnect extension circuits (IEC) 2Mbit per km
£/km
In Span Interconnect circuits (ISI) transmission
£/100m
248.09
Nominated In Span I/Connect cct (ISI) transmission
£/100m
62.98
Point of Handover electronics
£/eq
0.79
E side copper capital
£/line
3.51
£
£
£
£/line
2.73
D side copper capital
£/line
32.23
D side copper current
£/line
7.78
Local exchanges general frames capital
£/line
PC rental 64Kbit link local end
£/le
PC rental 34Mbit link local end
£/le
4,941.61
PC rental 140Mbit link local end
£/le
11,677.25
PC rental 2Mbit local end copper
£/le
517.63
PC rental 2Mbit local end fibre
£/le
722.52
SG & A partial private circuits (q)
%
£
£
£
£
£
£
£
£
£
£
£
£
£
£
£
£
External 3rd Party POH Rental 155Mbit/s
External 3rd Party POH Rental 34/45Mbit/s
External 3rd Party POH Rental 2Mbit/s CLZ
External 3rd Party POH Rental 2Mbit/s non CLZ
External 3rd Party POH Rental 64Kbit/s
In Span Handover rental
In Span Handover connection
Customer Sited Handover rental
Customer Sited Handover connection
Internal Wholesale intra-building circuits rentals
Internal Wholesale standard CSI rental - fixed
External Wholesale rearrangements
External Nominated ISI - per km
£
Internal Wholesale standard CSI rentals - per km
Internal Interconnect
External Wholesale ISI rentals
External Wholesale intra-building circuits
connections
External Wholesale intra-building circuits rentals
In span Interconnect
£
241.23
220.01
5.56
2,857.76
5.56
466.06
136.26
1,201.05
136.26
3,253.45
136.26
3,253.45
89.07
3,253.45
273.00
11.47
E side copper current
External Wholesale IEC rentals - per km
External Wholesale IEC rentals - fixed
External Wholesale IEC connections
External Wholesale standard CSI rental - fixed
External Wholesale standard CSI connection
Average cost per unit (from annex 15)
Fully Allocated Cost (£) (h)
In Span Interconnect with
Interconnect Extension
Circuit (end to end circuit)
External Wholesale standard CSI rentals - per km
Customer Sited
Interconnect (end to end
circuit)
11.47
248.09
62.98
710.72
662.36 22,670.95
1,401.70
2.41
36.52
297.25
1,359.27
£74m
MSAN-METRO Connectivity Link (q)
%
£63m
Edge Ethernet ports (q)
%
£37m
Fully Allocated Costs (£)
733.12
10.47
42.04
42.04
19.60
6,130.81
85.88
639.54
5.56 3,805.39
86.15
99.56
3.89
14.21
14.35
104.57
204.01
40.41
110.83
113.91
837.69
1,563.28
42.04
24.56
451.30
11.47 3,278.01
136.26
248.09
62.98 1,201.05
(d) ppm = pence per minute; £/2Mbit cct = £ per 2 Mbit/s circuit; £/km = £ per kilom
metre; £/100m = £ per 100 metres; £/trans = £ per transaction; £/circuit = £ per circuit;
£/ hostel rental = £ per hostel rental; % = % utilisation; £/line = £ per line; £/ro
oom = £ per room; £/cable = £ per cable; £/link = £ per link; £/eq = £ per equipment units;
£/le = £ per local end; £/conn = £ per connection; £/channel = £ per channel; £/fibre km = £ per fibre km.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
(q) This is the total cost not unit cost for this component.
103
503.28
5.56
89.07
710.72
662.36 22,670.95
1,401.70
Appendix 1 - Other Information
Appendix 1.2.1 - Calculation of FAC based on component costs and usage factors 2010 (continued)
For the year ended 31 March 2010
Components
£
Unit (d)
Wholesale & LAN extension services electronics
£/le
2,285.39
Wholesale & LAN extension services fibre etc
£/le
1,583.42
£
£
£
£
£
2,209.61 2,285.39
1,571.37 1,582.74 1,632.63
£
£
8,296.02
£
£
£
£
£
£
£
Main link rental charges
Backhaul network services all bandwidth rental
Backhaul network services all bandwidth connection
Backhaul extension services other bandwidth connection
Backhaul extension services 1000Mbit/s connection
£
£
(r)
1,586.32
Wholesale & LAN extension services BNS
£/circuit
1,595.96
Backhaul extension services electronics
£/le
3,244.72
Backhaul extension services fibre etc
£/le
Wholesale & LAN extension services BNS electronics
£/circuit
Ethernet main links
£/fibre km
Sales product management (q)
%
£26m
Service Centres - Provision (q)
%
£100m
Service Centres - Assurance (q)
%
£50m
59.17
59.17
59.17
59.17
58.05
58.05
(r)
Access Cards (other services) (q)
%
£10m
2.85
28.49
284.87
67.51
28.49
284.86
(r)
MSAN-METRO Connectivity Link (q)
%
£63m
Core/Metro connectivity (q)
%
£133m
Edge Ethernet ports (q)
%
£37m
Fully Allocated Costs (£)
Backhaul extension services 100Mbit/s connection
Backhaul extension services other bandwidth rental
Backhaul extension services 1000Mbit/s rental
Backhaul extension services 100Mbit/s rental
Wholesale extension services other bandwidth
connection
Wholesale extension services 1000Mbit/s connection
Wholesale extension services 100Mbit/s connection
Wholesale extension services 10Mbit/s connection
Wholesale extension services 1000Mbit/s rental
Wholesale extension services 100Mbit/s rental
Wholesale extension services 10Mbit/s rental
Average cost per unit (from annex 15)
Fully Allocated Cost (£) (h)
Wholesale extension services other bandwidth rental
Alternative interface symmetric broadband origination (up to and including 1Gbit/s)
1,595.96
(r) 11,744.07 10,445.50
1,537.57 1,565.76
1,549.65
(r)
(r)
11,034,494.00
199.23
199.23
42.02
49.42
120.95
18.71
22.42
25.62
95.12
(r)
1,090.56
913.46
876.70
(r)
9.85
26.19
(r)
(r)
12.53
(r)
2,682.50
(r)
39.43
2.47
58.05
117.34
1,675.41 1,719.82 2,097.62
1,731.71
3,322.59 3,224.47
9,267.84
(d) ppm = pence per minute; £/2Mbit cct = £ per 2 Mbit/s circuit; £/km = £ per kilometre; £/1 00m = £ per 100 metres; £/trans = £ per transaction; £/circuit = £ per circuit;
£/ hostel rental = £ per hostel rental; % = % utilisation; £/line = £ per line; £/room = £ peer room; £/cable = £ per cable; £/link = £ per link; £/eq = £ per equipment units;
£/le = £ per local end; £/conn = £ per connection; £/channel = £ per channel; £/fibre km = £ per fibre km.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
(q) This is the total cost not unit cost for this component.
(r) De-minimus services with turnover of less than £1m.
104
(r) 1,633.96 1,934.86
(r)
(r) 14,439.10 10,445.50
(r) 1,693.44
319.04
Appendix 1 - Other Information
Appendix 1.2.2 - Calculation of FAC based on component costs and usage factors 2009 (Re-presented)
Re-presented for the year ended 31 March 2009
Unit (d)
£
£
£
£
£
£
Wholesale business ISDN2 external
service rentals
2.95
2.95
2.95
2.95
2.95
1.91
1.91
£/line
54.48
58.22
58.22
53.94
53.94
26.57
26.57
9.75
6.64
£
£/line
9.75
13.48
Wholesale business ISDN2 internal
service rentals
Wholesale business ISDN2 external
service transfers
Wholesale business ISDN2 internal
service takovers
Wholesale business ISDN2 external
service connections
Wholesale business analogue external
service rentals
Wholesale business analogue internal
service rentals
Wholesale business ISDN2 internal
service connections
£
£/line
9.75
13.48
£
D side copper capital
9.75
14.55
£
E side copper current
£/line
14.55
£
Wholesale ISDN2 exchange line
services
E side copper capital
D side copper current
13.62
£
Wholesale business analogue external
service transfers
£
Wholesale business analogue internal
service takeovers
£
Wholesale business analogue external
service connections
£
Wholesale business analogue internal
service connections
Wholesale residential analogue external
service rentals
Com pone nts
Wholesale residential analogue internal
service rentals
Fully Alloca te d Cost (£)
Wholesale residential analogue internal
service connections
Average cost per unit (from annex 15)
Wholesale analogue exchange
line services
6.64
9.75
6.33
6.33
Local exchanges general frames capital
£/line
1.64
1.66
1.66
1.66
1.66
0.82
0.82
Local exchanges general frames current
£/line
1.23
1.24
1.24
1.24
1.24
0.61
0.61
PSTN line test equipment
£/line
0.48
0.55
0.48
0.48
0.48
0.38
0.38
Dropwire capital & PSTN NTE
£/line
18.74
18.74
18.74
18.74
18.74
9.37
9.37
Business PSTN drop maintenance
£/line
5.55
5.55
5.55
Residential PSTN drop maintenance
£/line
6.35
6.35
6.35
PSTN line cards
£/line
8.33
8.33
8.33
8.33
8.33
Pair gain
£/eq
1.27
0.02
0.02
0.04
0.04
Routeing & records
16.03
16.03
17.57
16.88
0.49
0.49
0.49
0.49
1.72
1.72
1.72
1.72
£/line
21.37
21.37
21.37
21.37
MDF Hardware jumpering
£/line
33.12
33.12
33.36
33.12
Software jumpering
£/line
0.97
0.97
0.97
0.97
W holesale Access specific
£/trans
3.45
3.45
3.45
3.45
ISDN2 drop maintenance
£/channel
2.88
2.88
2.88
ISDN2 line cards
£/channel
22.75
22.75
22.75
ISDN2 NTE
£/channel
7.36
7.36
7.36
Combi Card voice
£/line
2.10
1.44
1.44
Access Cards (ISDN services)
Directories
£/channel
(q)
Service assurance Retail
(q)
Service assurance Global services
Service Centres - Provision
Sales product management
Service Centres - Assurance
External W LR SG & A
Internal W LR SG & A
(q)
(q)
(q)
(q)
(q)
(q)
£32m
£10m
0.05
1.38
1.38
0.55
0.03
£0m
£43m
2.29
£37m
0.37
%
£16m
%
£3m
%
£6m
0.14
0.01
%
%
Fully Alloca te d Costs (£)
2.10
3.45
2.10
2.10
1.38
1.38
1.44
%
%
%
2.10
3.45
0.97
0.47
2.59
0.08
0.19
0.00
0.17
0.03
0.00
0.04
2.90
1.48
1.89
2.33
0.55
1.86
0.00
0.02
0.00
0.58
1.66
0.77
0.19
0.02
0.00
0.00
3.35
3.29
11.82
2.44
0.25
1.04
0.74
0.26
0.36
0.24
17.85
0.81
0.22
0.03
11.79
61.62
126.94
128.55
62.64
62.25
5.51
6.77
121.20
121.49
39.41
57.30
26.56
(d) ppm = pence per minute; £/2Mbit cct = £ per 2 Mbit/s circuit; £/km = £ per kilometre; £/100m = £ per 100 metres; £/trans = £ per transaction; £/circuit = £ per ci rcuit;
£/ hostel rental = £ per hostel rental; % = % utilisation; £/line = £ per line; £/room = £ per room; £/cable = £ per cable; £/link = £ per link; £/eq = £ per equipmennt units;
£/le = £ per local end; £/conn = £ per connection; £/channel = £ per channel; £/fibre km = £ per fibre km.
(q) This is the total cost not unit cost for this component.
105
4.91
87.68
88.12
Appendix 1 - Other Information
Appendix 1.2.2 - Calculation of FAC based on component costs and usage factors 2009 (Re-presented)(continued)
Re-presented for the year ended 31 March 2009
Components
Unit (d)
E side copper capital
£/line
£
£
£
13.62
£
£
14.93
14.93
£
£
£
£
£
14.93
£
£
25.58
£
£
25.53
13.62
£
£
£
£
£
£
SMPF Rentals (External)
SMPF Connections (External)
MPF Tie Cables (External)
MPF Hostel Rentals (External)
MPF Room Build (External)
MPF Rentals (External)
SDSL
MPF Connections (External)
Wholesale local access
Radio Backhaul Service - 2 Mbit/s
rentals
Radio Backhaul Service - 2 Mbit/s
connection
Partial and Private Circuits 2Mbit/s - local
end
Partial and Private Circuits 2Mbit/s distribution
Partial and Private Circuits 2Mbit/s - link
Partial and Private Circuits 2Mbit/s connection
Radio Backhaul Service - sub 2 Mbit/s
rentals
Radio Backhaul Service - sub 2 Mbit/s
connection
Partial and Private Circuits 64Kbit/s external local end
Partial and Private Circuits 64Kbit/s internal local end
Partial and Private Circuits 64Kbit/s transmission
Partial and Private Circuits 64Kbit/s - link
Fully Allocated Cost (£)
Partial and Private Circuits 64Kbit/s connection
Average cost per unit (from annex 15)
Traditional interface symmetric broadband origination (up to and including 8Mbit/s)
£
13.62
E side copper current
£/line
2.95
2.95
2.95
2.95
5.44
4.06
3.60
3.60
D side copper capital
£/line
54.48
59.73
59.73
59.73
102.34
102.14
54.48
54.48
D side copper current
£/line
9.75
9.75
9.75
9.75
18.00
13.43
11.89
11.89
2.14
Local exchanges general frames capital
£/line
1.64
1.64
1.64
1.64
2.80
2.80
4.92
4.92
Local exchanges general frames current
£/line
1.23
2.45
3.68
3.68
Dropwire capital & PSTN NTE
£/line
18.74
18.74
18.74
Residential PSTN drop maintenance
£/line
6.35
6.35
6.35
Routeing & records
£/line
21.37
21.37
21.37
MDF Hardware jumpering
£/line
33.12
33.12
35.30
36.81
0.97
0.97
0.97
Software jumpering
£/line
64Kbit PC link connection cct provision (y)
£/circuit
PC rental 64Kbit link
£/link
PC rental 64Kbit link per km transmission
£/km
PC rental 64Kbit link local end
£/le
2Mbit and above PC link connection cct provision
£/circuit
0.97
1,192.33
1,192.33
1,192.33
157.18
157.18
3.28
157.18
3.86
3.86
3.86
288.28
374.88
374.88
371.52
1,494.80
1,494.80
1,494.80
178.83
178.83
PC rental 2Mbit link
£/link
178.83
PC rental 2Mbit link per km distribution
£/km
42.03
PC rental 2Mbit local end copper
£/le
1,030.30
121.63
106.76
PC rental 2Mbit local end fibre
640.29
798.23
42.03
42.03
£/le
898.72
PC rental 2Mbit link per km trunk
£/km
22.81
Broadband line testing systems
£/line
3.60
3.64
DSLAM capital/maintenance
£/line
35.84
38.54
ADSL connections
£/conn
15.18
SDSL connections
£/conn
14.56
Local Loop Unbundling room build
£/room
Local Loop Unbundling hostel rentals
£/hostel rental
2,431.59
Local Loop Unbundling hostel rentals power & vent
£/hostel rental
1,976.36
Local Loop Unbundling tie cables
£/cable
1,659.64
Combi Card broadband
£/line
Local Loop Unbundling systems development (q)
%
£4m
Service Centres - Provision (q)
%
£43m
Sales product management (q)
%
£37m
Service Centres - Assurance (q)
%
£16m
22.81
1.52
1.05
14.56
789.84
789.84
2,431.59
1,976.36
1,659.64
2.20
2.20
0.21
0.05
15.47
58.61
2.32
40.40
2.84
0.00
0.23
19.14
%
£31m
51.60
8.25
0.16
SG & A partial private circuits (q)
%
£71m
132.37
11.15
0.22
24.06
105.94
358.18
180.61
68.10
18.18
0.36
42.00
206.72
30.03
4.45
51.20
167.46
0.15
4.48
0.51
125.98
1.53
0.15
0.21
32.14
3.40
0.45
0.60
0.61
2.80
0.59
0.31
4.82
0.32
0.00
460.71
%
£28m
MSAN-Metro connectivity (dense) (q)
%
£46m
63.68
63.68
MSAN-Metro connectivity (non dense) (q)
%
£0m
0.70
0.70
Core/Metro connectivity (q)
%
£70m
58.83
58.83
Edge Ethernet ports (q)
%
£30m
8.45
8.45
358.70
49.16 1,009.28 1,662.26 1,888.99
Fully Allocated Costs (£)
1.51
6.87
SG & A private circuits (q)
SG & A other access (q)
0.65
13.40
1,391.77
176.58
4.29
401.34
569.82
1,550.51
802.17 1,828.23
(d) ppm = pence per minute; £/2Mbit cct = £ per 2 Mbit/s circuit; £/km = £ per kilometre; £/100m
m = £ per 100 metres; £/trans = £ per transaction; £/circuit = £ per circuit;
£/ hostel rental = £ per hostel rental; % = % utilisation; £/line = £ per line; £/room = £ per room; £/cable = £ per cable; £/link = £ per link; £/eq = £ per equipment units;
per fibre km.
£/le = £ per local end; £/conn = £ per connection; £/channel = £ per channel; £/fibre km = £ p
(q) This is the total cost not unit cost for this component.
(y) Unit costs calculated as a weighted average of the 64Kbit PC link connection cct provision & 6
64Kbit PC link connection cct rearrangements.
106
301.75
60.92
120.04
923.10 4,442.22 1,663.80
50.13
14.59
Appendix 1 - Other Information
Appendix 1.2.2 - Calculation of FAC based on component costs and usage factors 2009 (Re-presented)(continued)
Re-presented for the year ended 31 March 2009
ppm
ppm
ppm
ppm
ppm
ppm
ppm
Unit (d)
ppm
0.053
0.053
0.053
0.053
ppm
Local exchange processor
ppm
0.060
0.060
0.060
0.060
Remote - local transmission link
ppm
0.038
0.031
0.031
0.031
0.031
Remote - local transmission length
ppm (per 10km)
0.021
0.030
0.030
0.030
0.030
National OA non chargeable
ppm
0.003
0.003
0.003
Emergency OA (999) non chargeable
ppm
0.010
0.010
0.010
Main exchange switching
ppm
0.019
0.017
0.017
Local - tandem transmission link
ppm
0.039
0.028
0.028
0.028
0.028
Local - tandem transmission length
ppm (per 10km)
0.005
0.014
0.014
0.014
0.014
ppm
0.053
ppm
0.053
0.053
0.060
0.060
0.031
0.031
0.030
0.030
0.002
0.002
0.000
ppm
Wholesale call termination local exchange stick
(ISDN)
Retail Sticks
Wholesale call termination local exchange stick
Wholesale single transit segment PSTN & ISDN
ppm
Call Termination
basket
Wholesale call termination local exchange segment
(ISDN)
Single Transit Basket (ae)
Fixed call termination
Wholesale call termination local exchange segment
Single transit on fixed
public narrowband
networks
Wholesale local-tandem transmission stick (ISDN)
Wholesale local-tandem transmission stick
Retail Sticks
Local exchange concentrator
0.053
ppm
Local-tandem
conveyance
basket
Wholesale local-tandem conveyance segment (ISDN)
Wholesale call origination local exchange Stick
(ISDN)
Wholesale call origination local exchange Stick
Retail Sticks
Components
0.010
ppm
PPP
Basket
Wholesale PPP
Wholesale call originating local exchange segment
(ISDN) (incl OA)
Wholesale call originating local exchange segment
(incl Operator Assistance)
Fully Allocated Cost (£)
Wholesale call originating local exchange segment
PSTN and ISDN (excl OA)
Average cost per unit (from annex 15)
Call Origination Basket (ad)
Local-tandem conveyan
nce and
transit on fixed pub
blic
narrowband networrks
Wholesale local-tandem conveyance segment
Call origination on fixed public narrowband
networks
ppm
0.053
0.053
0.031
0.031
0.031
0.030
0.030
0.030
0.030
0.014
Product management policy & planning
ppm
0.015
Core/Metro (voice)
ppm
0.013
0.023
0.021
0.030
0.015
0.020
0.030
0.000
0.000
0.000
0.000
0.013
0.022
0.030
0.020
Border gateway & signalling firewall
ppm
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
MSAN - POSI (dense) link voice
ppm
0.026
0.007
0.006
0.009
0.006
0.009
0.006
0.009
0.006
0.009
MSAN - POSI (non dense) link voice
ppm
0.009
0.007
0.007
0.009
0.006
0.010
0.007
0.009
0.006
0.010
Edge Ethernet ports
%
£30m
0.006
0.005
0.008
0.005
0.008
0.000
0.000
0.000
0.000
0.007
0.006
0.008
0.005
0.008
iNode (call set up and features)
%
£18m
0.006
0.005
0.008
0.005
0.008
0.000
0.000
0.000
0.000
0.006
0.006
0.008
0.005
0.008
0.233
0.231
0.251
0.156
0.179
0.061
0.061
0.042
0.042
0.040
0.221
0.238
0.156
0.179
Fully Allocated Costs (ppm)
0.015
(d) ppm = pence per minute; £/2Mbit cct = £ per 2 Mbit/s circuit; £/km = £ per kilometre; £/100
0m = £ per 100 metres; £/trans = £ per transaction; £/circuit = £ per circuit;
£/ hostel rental = £ per hostel rental; % = % utilisation; £/line = £ per line; £/room = £ perr room; £/cable = £ per cable; £/link = £ per link; £/eq = £ per equipment units;
£/le = £ per local end; £/conn = £ per connection; £/channel = £ per channel; £/fibre km = £ per fibre km.
(q) This is the total cost not unit cost for this component.
(ad) Does not include the service Wholesale Call originating local exchange segment (ISDN) (e
excl. Operator Assistance) due to immaterial volumes.
(ae) Does not include the service Wholesale Single transit segment (ISDN) due to immaterial vvolumes.
107
Appendix 1 - Other Information
Appendix 1.2.2 - Calculation of FAC based on component costs and usage factors 2009 (Re-presented)(continued)
Re-presented for the year ended 31 March 2009
Technical Areas (Point of
Handover)
Technical areas (Interconnect Circuits)
Wholesale trunk segments
£
Components
Unit (d)
£
Interconnect local end rental 2Mbit
£/2Mbit cct
287.34
287.34
Customer Sited Interconnect cct (CSI) 2Mbit link
£/2Mbit cct
255.95
255.95
Customer Sited Interconnect cct (CSI) 2Mbit per km
£/km
Interconnect 2Mbit connection
£/2Mbit cct
1,652.91
Intra Building Circuit (IBC) rental
£/2Mbit cct
148.75
Intra Building Circuit (IBC) connection
£/2Mbit cct
5,187.34
Interconnect extension circuits (IEC) 2Mbit link
£/2Mbit cct
386.61
Interconnect extension circuits (IEC) 2Mbit per km
£/km
In Span Interconnect circuits (ISI) transmission
£/100m
354.61
Nominated In Span I/Connect cct (ISI) transmission
£/100m
36.14
5.69
£
£
£
£
£
£/eq
0.45
PC rental 2Mbit link per km trunk
£/km
22.81
PC rental 34Mbit link per km trunk
£/km
243.87
PC rental 140Mbit link per km trunk
£/km
197.86
PC rental 622Mbit link per km trunk
£/km
776.90
SG & A private circuits (q)
%
£
£
264.66
£
£
£
£
£
£
£
Partial and Private circuits 622Mbit/s - trunk
Partial and Private circuits 140/155Mbit/s - trunk
Partial and Private circuits 34/45Mbit/s - trunk
Partial and Private circuits 2Mbit/s - trunk
In Span Handover rental
In Span Handover connection
Customer Sited Handover rental
Customer Sited Handover connection
Wholesale rearrangements
£
£
686.80
148.75
5,187.34
386.61
11.59
354.61
36.14
589.94
352.96 18,839.79
274.27
22.81
243.87
197.86
776.90
£31m
SG & A partial private circuits (q)
%
£71m
MSAN-Metro connectivity (dense) (q)
%
£46m
32.99
63.68
MSAN-Metro connectivity (non dense) (q)
%
£0m
0.36
0.70
Core/Metro connectivity (q)
%
£70m
1,450.05
Edge Ethernet ports (q)
%
£30m
208.27
Fully Allocated Costs (£)
Wholesale intra-building circuits rentals
Wholesale intra-building circuits connections
£
5.69
1,652.91
11.59
Point of Handover electronics
Wholesale IEC rentals - per km
Wholesale IEC rentals - fixed
Wholesale IEC connections
Nominated ISI - per km
Wholesale ISI rentals
Wholesale standard CSI rentals - per km
Wholesale standard CSI rental - fixed
Fully Allocated Cost (£)
Wholesale standard CSI connection
Average cost per unit (from annex 15)
Interconnect Specific Basket
1,652.91
576.64
5.69
354.61
36.14
264.66
450.99
11.59 6,845.66
148.75
686.80
(d) ppm = pence per minute; £/2Mbit cct = £ per 2 Mbit/s circuit; £/km = £ per kilom
metre; £/100m = £ per 100 metres; £/trans = £ per transaction; £/circuit = £ per circuit;
£/ hostel rental = £ per hostel rental; % = % utilisation; £/line = £ per line; £/ro
oom = £ per room; £/cable = £ per cable; £/link = £ per link; £/eq = £ per equipment units;
£/le = £ per local end; £/conn = £ per connection; £/channel = £ per channel; £/fibre km = £ per fibre km.
(q) This is the total cost not unit cost for this component.
108
589.94
352.96 18,839.79
274.27
1.72
16.85
13.66
1.26
13.57
1.23
25.79
274.29
212.75
776.90
Appendix 1 - Other Information
Appendix 1.2.2 - Calculation of FAC based on component costs and usage factors 2009 (Re-presented)(continued)
Re-presented for the year ended 31 March 2009
PC rental 34Mbit link
£/link
1,527.30
PC rental 140Mbit link
£/link
3,830.74
PC rental 34Mbit link per km distribution
£/km
372.00
PC rental 140Mbit link per km distribution
£/km
510.54
PC rental 34Mbit link local end
£/le
7,502.13
PC rental 140Mbit link local end
£/le
13,588.01
Wholesale & LAN extension services electronics
£/le
1,589.08
Wholesale & LAN extension services fibre etc
£/le
1,241.50
Wholesale & LAN extension services BNS
£/circuit
2,307.29
Backhaul extension services electronics
£/le
£
£
£
£
£
£
£
£
£
£
£
£
£
£
£
£
£
£
£
£
£
Main link rental charges
Backhaul network services all bandwidth rental
Backhaul network services all bandwidth connection
Backhaul extension services other bandwidth connection
Backhaul extension services 1000Mbit/s connection
Backhaul extension services 100Mbit/s connection
Backhaul extension services other bandwidth rental
Backhaul extension services 1000Mbit/s rental
Backhaul extension services 100Mbit/s rental
Wholesale extension services other bandwidth
connection
Wholesale extension services 1000Mbit/s connection
Wholesale extension services 100Mbit/s connection
Wholesale extension services 10Mbit/s connection
Wholesale extension services other bandwidth rental
Wholesale extension services 1000Mbit/s rental
£
Wholesale extension services 100Mbit/s rental
£
Alternative interface symmetric broadband origination (up to and including 1Gbit/s)
Wholesale extension services 10Mbit/s rental
Partial and Private Circuits 140/155Mbit/s - distribution
Partial and Private Circuits 140/155Mbit/s - link
£
Partial and Private Circuits 140/155Mbit/s - connection
£
Partial and Private Circuits 140/155Mbit/s - external local
end
£
Partial and Private Circuits 34/45Mbit/s - distribution
1,494.80
Partial and Private Circuits 34/45Mbit/s - link
1,494.80
Traditional interface symmetric broadband
origination (above 45Mbit/s up to and
including 155Mbit/s)
Partial and Private Circuits 140/155Mbit/s - internal local
end
£/circuit
Partial and Private Circuits 34/45Mbit/s - external local
end
Unit (d)
2Mbit and above PC link connection cct provision
Partial and Private Circuits 34/45Mbit/s - internal local
end
Components
Partial and Private Circuits 34/45Mbit/s - connection
Fully Allocated Cost (£)
Average cost per unit (from annex 15)
Traditional interface symmetric
broadband origination (above 8Mbit/s up
to and including 45Mbit/s)
£
1,494.80
1,527.30
3,830.74
372.00
510.54
5,769.14
7,502.13
10,449.18 13,588.01
1,536.32 1,589.08
1,241.50 1,241.50 1,241.50
5,768.52
2,086.30
1,241.50
2,307.29
978.90 3,553.51 1,482.64
978.90
Backhaul extension services fibre etc
£/le
Wholesale & LAN extension services BNS electronics
£/circuit
Ethernet main links
£/fibre km
1,112.05
1,112.05 1,112.05 1,112.05
Sales product management (q)
%
£37m
SG & A private circuits (q)
%
£31m
154.40
9.89
306.48
26.05
47,622.13
47,622.13
156.40
156.40
10.00
16.74
168.95
2,021.82
638.47
18.44
134.55
10.33
3.60
4.14
1,082.73
115.54
4.15
10.46
1,297.56
3.23
7.19
14.13
28.97
36.02
18.29
27.04
468.28
4919.45
SG & A partial private circuits (q)
%
£71m
Service Centres - Provision (q)
%
£43m
Service Centres - Assurance (q)
%
£16m
Access Cards (other services) (q)
%
£9m
MSAN-Metro connectivity (dense) (q)
%
£46m
1,082.58
4,457.69
26.43
MSAN-Metro connectivity (non dense) (q)
%
£0m
11.91
49.06
0.67
Core/Metro connectivity (q)
%
£70m
1,000.18
4,118.40
Edge Ethernet ports (q)
%
£30m
143.65
591.52
Fully Allocated Costs (£)
1,100.95
1,494.80 4,226.50
1,100.95
417.94 7,039.04 10,624.90
1,494.80 13,820.43
76.89
76.89
76.89
76.91
76.87
29.34
29.34
29.34
29.34
29.34
29.34
29.34
29.34
17.49
17.49
30.78
189.59
17.49
30.78
17.49
556.05 10,917.46 18,507.46 1,368.82 1,365.22 1,382.65
(d) ppm = pence per minute; £/2Mbit cct = £ per 2 Mbit/s circuit; £/km = £ per kilomettre; £/100m = £ per 100 metres; £/trans = £ per transaction; £/circuit = £ per circuit;
£/ hostel rental = £ per hostel rental; % = % utilisation; £/line = £ per line; £/room
m = £ per room; £/cable = £ per cable; £/link = £ per link; £/eq = £ per equipment units;
£/le = £ per local end; £/conn = £ per connection; £/channel = £ per channel; £/fib
bre km = £ per fibre km.
(q) This is the total cost not unit cost for this component.
109
76.89
2,620.05
76.89
1,651.86 1,593.23
5,778.98
76.89
3,383.86 1,239.00 1,256.25 1,249.92 1,007.87 3,589.53 1,500.93
47,622.13 2,440.54
183.50
Appendix 1 - Other Information
Appendix 1.3 - BT Network Services Reconciliation (Annex 17)
Appendix 1.3.1 - BT Network Services Reconciliation 2010
Consolidation Statement (a summary of all wholesale markets where there are cost accountin
ng obligations)
Fully Allocated Cost (£m) (h)
Total (from
annex 15)
Wholesale analogue
exchange line services
Wholesale ISDN2 exchange line
services
Non cost
accounting,
roundings and
residual
Wholesale local access
Components
E side copper capital
E side copper current
D side copper capital
D side copper current
Local exchanges general frames capital
Local exchanges general frames current
PSTN line test equipment
Dropwire capital & PSTN NTE
Business PSTN drop maintenance
Residential PSTN drop maintenance
PSTN line cards
Pair gain
Routeing & records
MDF Hardware jumpering
Software jumpering
ADSL connections
Wholesale Access specific
ISDN2 drop maintenance
ISDN2 line cards
ISDN2 NTE
Directories
Service assurance Retail
Service assurance Global services
Service Centres - Provision
Sales product management
Service Centres - Assurance
External WLR SG & A
Internal WLR SG & A
Broadband line testing systems
DSLAM capital/maintenance
Local Loop Unbundling room build
Local Loop Unbundling hostel rentals
Local Loop Unbundling hostel rentals power & vent
Local Loop Unbundling tie cables
Local Loop Unbundling systems development
Combi Card voice
Access Cards (ISDN2 services)
93
81
843
231
95
71
13
469
24
99
180
2
23
250
4
13
37
4
27
9
39
0
0
100
26
50
4
2
52
335
0
23
19
10
21
61
1
81
60
739
172
53
39
13
415
24
87
181
2
21
33
1
2
2
20
6
1
1
1
12
36
1
4
26
9
39
0
0
37
1
22
8
11
71
31
20
15
41
11
1
1
0
1
93
1
2
0
0
4
1
2
1
2
12
3
6
13
6
0
23
19
9
9
62
1
110
1
7
3
20
20
16
(1)
1
0
1
(1)
0
0
123
2
11
0
0
1
0
0
0
0
15
13
13
3
0
39
329
0
0
0
1
12
(1)
0
Appendix 1 - Other Information
Appendix 1.3.1 - Network Services Reconciliation 2010 (continued)
Consolidation Statement (a summary of all wholesale markets where there are cost accounting obligations)
Fully Allocated Cost (£m) (h)
Total (from
annex 15)
Call origination on fixed
public narrowband
networks
Local-tandem conveyance and
transit on fixed public
narrowband networks
Single transit on fixed public
narrowband networks
Non cost
accounting,
roundings and
residual
Fixed call
termination
Components
National OA non chargeable
Emergency OA (999) non chargeable
Local exchange concentrator
Local exchange processor
Remote - local transmission link
Remote - local transmission length (c)
Product management policy & planning
Main exchange switching
Local - tandem transmission link
Local - tandem transmission length (c)
Core/Metro (voice)
Border gateway & signalling firewall
MSAN-POSI Voice Link
Edge Ethernet ports
iNode (call set up and features)
1
8
101
109
53
74
38
26
27
20
16
0
7
37
21
1
8
49
51
26
36
37
7
0
3
0
7
1
0
13
27
20
0
0
3
0
0
0
2
1
0
111
52
54
27
38
7
0
3
0
8
0
0
0
3
0
0
1
10
0
0
1
0
1
35
4
Appendix 1 - Other Information
Appendix 1.3.1 - Network Services Reconciliation 2010 (continued)
Consolidation Statement (a summary of all wholesale markets where there are cost accounting obligations)
Traditional interface
Traditional interface symmetric Traditional interface symmetric
symmetric broadband
broadband origination (above broadband origination (above
origination (up to and
8Mbit/s up to and including
45Mbit/s up to and including
Total (from
annex 15)
including 8Mbit/s)
45Mbit/s)
155Mbit/s)
Fully Allocated Cost (£m) (h)
Wholesale trunk
segments
Non cost
accounting,
roundings and
residual
Components
E side copper capital
E side copper current
D side copper capital
D side copper current
Local exchanges general frames capital
Local exchanges general frames current
Dropwire capital & PSTN NTE
Residential PSTN drop maintenance
Routeing & records
MDF Hardware jumpering
Software jumpering
Service Centres - Provision
Sales product management
Service Centres - Assurance
SG & A other access
PC rental 2Mbit link per km distribution
PC rental 2Mbit link per km trunk
PC rental 34Mbit link per km distribution
PC rental 34Mbit link per km trunk
PC rental 140Mbit link per km distribution
PC rental 140Mbit link per km trunk
PC rental 622Mbit link per km trunk
PC rental 64Kbit link
PC rental 2Mbit link
PC rental 34Mbit link
PC rental 140Mbit link
PC rental 64Kbit link per km transmission
64Kbit PC link connection cct provision
64Kbit PC link connection cct rearrangements
2Mbit and above PC link connection cct provision
PC rental 64Kbit link local end
PC rental 34Mbit link local end
PC rental 140Mbit link local end
PC rental 2Mbit local end copper
PC rental 2Mbit local end fibre
PPC support services
Low Tisbo equipment depreciation
Low Tisbo ECC equipment depreciation
Netstream equipment
High Tisbo equipment depreciation
Very High Tisbo equipment depreciation
SG & A private circuits
SG & A partial private circuits
Broadband line testing systems
DSLAM capital/maintenance
SDSL connections
Combi Card broadband
Access Cards (other services)
MSAN-METRO Connectivity Link
Core/Metro connectivity
Edge Ethernet ports
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
18
100
37
17
13
17
16
18
46
31
3
9
38
2
1
64
34
23
13
21
175
6
38
3
7
7
0
33
74
(ab)
(ab)
0
26
10
63
133
(aa)
1
1
10
2
1
0
0
0
0
0
0
0
0
0
0
100
8
29
18
0
14
14
2
13
18
46
32
38
3
1
64
33
4
0
10
0
0
23
12
20
169
1
38
3
6
2
2
1
1
7
24
63
0
0
0
0
9
6
1
1
3
0
1
1
3
2
2
0
8
6
1
112
5
2
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
18
0
0
(1)
(1)
3
1
0
0
(1)
(1)
(1)
0
(1)
0
0
1
(1)
1
0
1
0
0
0
0
0
0
2
4
(ab)
(ab)
0
26
2
6
119
(aa)
Appendix 1 - Other Information
Appendix 1.3.1 - Network Services Reconciliation 2010 (continued)
Consolidation Statement (a summary of all wholesale markets where there are cost accounting obligations)
Fully Allocated Cost (£m) (h)
Total (from
annex 15)
Alternative interface symmetric
broadband origination (up to
and including 1Gbit/s)
Technical areas
(Interconnect Circuits)
Technical Areas (Point of
Handover)
AS SMP
Components
Residual
Non cost
accounting,
roundings and
residual
Components
E side copper capital
E side copper current
D side copper capital
D side copper current
Local exchanges general frames capital
PC rental 64Kbit link local end
PC rental 34Mbit link local end
PC rental 140Mbit link local end
PC rental 2Mbit local end copper
PC rental 2Mbit local end fibre
SG & A partial private circuits
Interconnect local end rental 2Mbit
Interconnect 2Mbit connection
Interconnect extension circuits (IEC) 2Mbit link
Customer Sited Interconnect cct (CSI) 2Mbit link
Interconnect extension circuits (IEC) 2Mbit per km
Customer Sited Interconnect cct (CSI) 2Mbit per km
In Span Interconnect circuits (ISI) transmission
Nominated In Span I/Connect cct (ISI) transmission
Intra Building Circuit (IBC) connection
Intra Building Circuit (IBC) rental
Point of Handover electronics
Wholesale & LAN extension services electronics
Wholesale & LAN extension services fibre etc
Wholesale & LAN extension services BNS
Backhaul extension services electronics
Backhaul extension services fibre etc
Wholesale & LAN extension services BNS electronics
Ethernet main links
AISBO ECC equipment depreciation
Service Centres - Provision
Sales product management
Service Centres - Assurance
Access Cards (other services)
MSAN-METRO Connectivity Link
Core/Metro connectivity
Edge Ethernet ports
SMP Accounting Separation components
Residual components
Roundings
TOTAL
(ah)
(ah)
(ah)
(ah)
(ah)
(x)
(ag)
(ai)
(x)
(x)
(x)
4
6
4
4
3
3
2
2
17
10
5
85
184
1
15
15
11
62
3
(ah)
(ah)
(ah)
(ag)
(x)
(x)
(aa)
0
0
0
0
0
0
1
0
1
5
1
(ah)
(ah)
(ah)
(ah)
(ah)
(x)
(ag)
(ai)
(x)
(x)
(x)
0
0
0
1
(1)
0
0
0
0
1
0
5
0
0
1
0
0
(1)
0
(ah)
(ah)
(ah)
(ag)
(x)
(x)
(aa)
4
6
4
3
4
3
2
2
17
9
5
1
80
184
1
14
15
11
63
3
32
8
7
5
37
0
518
518
2,498
2,498
8
8,405
(c) Unit of length is 10 kilometres.
(h) See Section 4 Basis of Preparation for the CCA Revaluation Adjustment.
(x) Total for this component is shown under the Traditional interface symmetric broadband origination (up to & including 8Mbit/s) market abo
ove.
(aa) Total for this component is shown under the Fixed call termination market above.
(ab) Total for this component is shown under the Wholesale local access market above.
(ag) Total for this component is shown under the Traditional interface symmetric broadband origination (above 8Mbit/s up to and including 4
45Mbit/s) market above.
(ah) Total for this component is shown under the Wholesale residential analogue exchange line services market above.
(ai) Total for this component is shown under the Traditional interface symmetric broadband origination (above 45Mbit/s up to and including 155Mbit/s) market above.
113
Appendix 1 - Other Information
Appendix 1.3.2 - BT Network Services Reconciliation 2009 (Re-presented)
Consolidation Statement (a summary of all wholesale markets where there are cost accountting obligations)
Fully Allocated Cost (£m)
Total (from
annex 15)
Wholesale analogue
exchange line services
Wholesale ISDN2
exchange line services
Wholesale local access
Non cost
accounting,
roundings and
residual
Components
E side copper capital
E side copper current
D side copper capital
D side copper current
Local exchanges general frames capital
Local exchanges general frames current
PSTN line test equipment
Dropwire capital & PSTN NTE
Business PSTN drop maintenance
Residential PSTN drop maintenance
PSTN line cards
Pair gain
Routeing & records
MDF Hardware jumpering
Software jumpering
ADSL connections
Wholesale Access specific
ISDN2 drop maintenance
ISDN2 line cards
ISDN2 NTE
Directories
Service assurance Retail
Service assurance Global services
Service Centres - Provision
Sales product management
Service Centres - Assurance
External WLR SG & A
Internal WLR SG & A
Broadband line testing systems
DSLAM capital/maintenance
Local Loop Unbundling room build
Local Loop Unbundling hostel rentals
Local Loop Unbundling hostel rentals power & vent
Local Loop Unbundling tie cables
Local Loop Unbundling systems development
Combi Card voice
Access Cards (ISDN services)
369
86
1,479
284
93
69
13
481
30
125
196
0
46
221
8
33
24
4
30
10
32
10
0
43
37
16
3
6
48
294
0
23
19
43
4
50
2
337
69
1,348
227
39
29
13
441
30
115
196
0
28
43
3
9
2
35
8
1
1
1
12
23
1
4
30
10
20
8
80
25
25
19
27
9
3
3
0
32
9
0
15
20
5
0
0
1
1
0
1
0
15
102
3
14
12
3
1
8
4
0
23
18
43
2
49
0
114
0
6
4
22
28
20
(1)
1
0
1
0
0
0
73
2
19
0
0
0
0
0
1
0
6
3
7
2
6
40
290
0
0
1
0
2
1
2
Appendix 1 - Other Information
Appendix 1.3.2 - Network Services reconciliation 2009 (Re-presented)(continued)
Consolidation Statement (a summary of all wholesale markets where there are cost accounting obligations)
Local-tandem
Call origination on fixed
conveyance and transit
public narrowband
on fixed public
Total (from
annex 15)
networks
narrowband networks
Fully Allocated Cost (£m)
Single transit on fixed
public narrowband
networks
Fixed call termination
Non cost
accounting,
roundings and
residual
Components
National OA non chargeable
Emergency OA (999) non chargeable
Local exchange concentrator
Local exchange processor
Remote - local transmission link
Remote - local transmission length (c)
Product management policy & planning
Main exchange switching
Local - tandem transmission link
Local - tandem transmission length (c)
Core/Metro (voice)
Border gateway & signalling firewall
MSAN - POSI (dense) link voice
MSAN - POSI (non dense) link voice
Edge Ethernet ports
iNode (call set up and features)
2
9
113
126
66
65
32
30
35
19
53
0
14
15
30
18
2
9
56
61
33
32
31
23
0
7
7
6
6
2
0
16
35
19
0
0
4
0
0
2
2
4
0
115
56
62
33
32
24
0
7
7
6
6
0
0
1
1
0
1
1
10
0
0
2
0
0
1
10
4
Appendix 1 - Other Information
Appendix 1.3.2 - Network Services Reconciliation 2009 (Re-presented)(continued)
Consolidation Statement (a summary of all wholesale markets where there are cost accounting obligations)
Traditional interface
Traditional interface
symmetric broadband
symmetric broadband
origination (above 8Mbit/s
origination (up to and
up to and including
Total (from
annex 15)
including 8Mbit/s)
45Mbit/s)
Fully Allocated Cost (£m)
Traditional interface
symmetric broadband
origination (above
45Mbit/s up to and
including 155Mbit/s)
Non cost
accounting,
roundings and
residual
Wholesale trunk
segments
Components
E side copper capital
E side copper current
D side copper capital
D side copper current
Local exchanges general frames capital
Local exchanges general frames current
Dropwire capital & PSTN NTE
Residential PSTN drop maintenance
Routeing & records
MDF Hardware jumpering
Software jumpering
Service Centres - Provision
Sales product management
Service Centres - Assurance
SG & A other access
PC rental 2Mbit link per km distribution
PC rental 2Mbit link per km trunk
PC rental 34Mbit link per km distribution
PC rental 34Mbit link per km trunk
PC rental 140Mbit link per km distribution
PC rental 140Mbit link per km trunk
PC rental 622Mbit link per km trunk
PC rental 64Kbit link
PC rental 2Mbit link
PC rental 34Mbit link
PC rental 140Mbit link
PC rental 64Kbit link per km transmission
64Kbit PC link connection cct provision
64Kbit PC link connection cct rearrangements
2Mbit and above PC link connection cct provision
PC rental 64Kbit link local end
PC rental 34Mbit link local end
PC rental 140Mbit link local end
PC rental 2Mbit local end copper
PC rental 2Mbit local end fibre
PPC support services
SG & A private circuits
SG & A partial private circuits
Broadband line testing systems
DSLAM capital/maintenance
SDSL connections
Combi Card broadband
Access Cards (other services)
MSAN-Metro connectivity (dense)
MSAN-Metro connectivity (non dense)
Core/Metro connectivity
Edge Ethernet ports
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
28
80
45
21
19
19
15
14
57
36
6
14
33
3
1
60
38
35
17
34
192
1
31
71
(ab)
(ab)
0
18
9
46
0
70
(aa)
3
1
12
2
0
0
0
0
0
0
0
0
5
0
0
80
6
1
1
39
21
18
17
14
14
56
35
7
13
33
3
1
60
38
0
0
34
16
34
193
1
20
59
0
0
0
0
12
0
11
2
2
6
3
1
6
5
0
4
1
15
0
14
2
116
5
3
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
(ah)
28
0
0
0
1
2
1
0
1
1
(1)
1
0
0
0
0
0
1
1
0
(1)
0
1
2
(ab)
(ab)
0
18
1
5
0
37
(aa)
Appendix 1 - Other Information
Appendix 1.3.2 - Network Services Reconciliation 2009 (Re-presented)(continued)
Consolidation Statement (a summary of all wholesale markets where there are cost accounting obligations)
Fully Allocated Cost (£m)
Total (from
annex 15)
Alternative interface
symmetric broadband
origination (up to and
including 1Gbit/s)
Technical areas
(Interconnect Circuits)
Technical Areas (Point of
Handover)
AS SMP Components
Residual
Non cost
accounting,
roundings and
residual
Components
Interconnect local end rental 2Mbit
Interconnect 2Mbit connection
Interconnect extension circuits (IEC) 2Mbit link
Customer Sited Interconnect cct (CSI) 2Mbit link
Interconnect extension circuits (IEC) 2Mbit per km
Customer Sited Interconnect cct (CSI) 2Mbit per km
In Span Interconnect circuits (ISI) transmission
Nominated In Span I/Connect cct (ISI) transmission
Intra Building Circuit (IBC) connection
Intra Building Circuit (IBC) rental
Point of Handover electronics
Wholesale & LAN extension services electronics
Wholesale & LAN extension services fibre etc
Wholesale & LAN extension services BNS
Backhaul extension services electronics
Backhaul extension services fibre etc
Wholesale & LAN extension services BNS electronics
Ethernet main links
Service Centres - Provision
Sales product management
Service Centres - Assurance
Access Cards (other services)
MSAN-Metro connectivity (dense)
MSAN-Metro connectivity (non dense)
Core/Metro connectivity
Edge Ethernet ports
6
11
6
5
6
3
3
2
13
11
4
48
123
2
10
20
7
41
(ah)
(ah)
(ah)
(ag)
(x)
(x)
(x)
(aa)
SMP Accounting Separation components
375
Residual components
Roundings
TOTAL
1
0
0
0
1
0
0
0
(1)
1
0
5
0
0
2
1
0
(1)
(ah)
(ah)
(ah)
(ag)
(x)
(x)
(x)
(aa)
5
11
6
5
5
3
3
2
14
10
4
2
0
4
1
43
123
2
8
19
7
42
9
3
3
2
7
0
375
2,916
2,916
(1)
9,482
(c) Unit of length is 10 kilometres.
(x) Total for this component is shown under the Traditional interface symmetric broadband origination (up to & including 8Mbit/s) ma
arket above.
(aa) Total for this component is shown under the Fixed call termination market above.
(ab) Total for this component is shown under the Wholesale local access market above.
(ag) Total for this component is shown under the Traditional interface symmetric broadband origination (above 8Mbit/s up to and inccluding 45Mbit/s) market above.
(ah) Total for this component is shown under the Wholesale residential analogue exchange line services market above.
117
Appendix 2 - Price Control Statements
Appendix 2 - Price Control Statements
Appendix 2
Price Control Statements
118
Appendix 2 - Price Control Statements
Appendix 2.1 - Price Controls in Wholesale Markets (Annex 24)(Unaudited)
Average
charges
2009/10
(z)
NCC Control NCC Control
X factor
X factor
(j)
(j)
Average
charges
2008/09
(z)
% Change
% Change
% Change
% Change
(g)
Basket
Call termination
- Internal
- External
Up to Sep
2009
RPI -5%
From Oct
2009
RPI +3.75%
Call Origination
- Internal (incl Operator Assistance)
- External (incl Operator Assistance)
- Internal (excl Operator Assistance)
- External (excl Operator Assistance)
RPI - 3.75% RPI + 2.75%
Single Transit
- Internal
- External
RPI - 11.5%
Local tandem Conveyance
- Internal
- External
RPI - 0%
n/a
n/a
Product Management, Policy & Planning RPI + 0.75% RPI + 1.50%
- Internal
- External
Day
ppm
0.230
0.229
Evening
ppm
0.105
0.105
Weekend
ppm
0.083
0.083
Day
ppm
0.229
0.229
Evening
ppm
0.105
0.105
Weekend
ppm
0.083
0.083
Day
Evening
Weekend
ppm (f)
0.172
0.172
ppm (f)
0.171
0.171
0.1%
0.1%
0.2%
0.2%
0.1%
0.1%
0.8%
0.7%
ppm
0.264
0.264
0.255
0.255
ppm
0.121
0.121
0.117
0.117
ppm
0.095
0.095
0.092
0.092
ppm (f)
0.195
0.200
0.164
0.211
ppm
0.263
0.263
0.254
0.254
ppm
0.120
0.120
0.116
0.116
ppm
0.095
0.095
0.092
0.092
ppm (f)
0.193
0.196
0.161
0.199
0.4%
0.4%
0.4%
0.4%
0.4%
0.4%
0.3%
0.3%
0.4%
0.4%
0.4%
0.4%
0.7%
2.3%
1.6%
6.1%
ppm
0.024
0.024
ppm
0.011
0.011
ppm
0.009
0.009
ppm (f)
0.017
0.018
ppm
0.024
0.024
ppm
0.011
0.011
ppm
0.009
0.009
ppm (f)
0.020
0.017
0.4%
0.4%
0.9%
0.9%
0.0%
0.0%
-11.4%
1.0%
ppm
0.116
0.116
ppm
0.053
0.053
ppm
0.042
0.042
ppm (f)
0.086
0.088
ppm
0.116
0.116
ppm
0.053
0.053
ppm
0.042
0.042
ppm (f)
0.086
0.087
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
1.1%
ppm
0.014
0.014
ppm
0.006
0.006
ppm
0.005
0.005
ppm (f)
0.010
0.010
ppm
0.013
0.013
ppm
0.006
0.006
ppm
0.005
0.005
ppm (f)
0.010
0.010
5.4%
5.4%
6.8%
6.8%
4.3%
4.3%
6.0%
6.4%
(f) The 24 hour rate is calculated based on the volumes of calls made in the different time bands (day, evening and weekend).
The volume of calls made in each of these bands is different for internal and external traffic. Therefore the 24 hour rate will be different.
(g) When looking at the year on year change the difference will be distorted by the fact that the volumes will be different between one year and another.
The % change shown is based on a combination of both the old and new charge controls.
(j) The RPI used for compliance purposes in 2009/10 is -1.57% which is based on the monthly RPI from June 2008 to June 2009.
(z) The average charges are an annual weighting for the entire reporting year taking account of all price changes within the period.
119
Appendix 2 - Price Control Statements
Appendix 2.1 - Price Controls in Wholesale Markets (Annex 24)(continued)
Average
charges
2009/10
(z)
Average
charges
2008/09
(z)
cct
982.38
982.38
cct
1,103.64
1,103.64
radial km
22.80
22.80
cct
1,000.56
1,000.56
cct
1,124.16
1,124.16
radial km
22.80
22.80
100m
68.75
100m
68.75
cct
160.21
cct
492.96
radial km
22.80
cct
160.21
cct
492.96
radial km
22.80
Wholesale IBC connections
- Internal
- External
Wholesale IBC rentals
- Internal
- External
cct
808.36
808.36
cct
92.88
92.88
cct
813.88
813.88
cct
93.60
93.60
Wholesale rearrangements
- Internal
- External
cct
412.87
cct
415.74
NCC Control NCC Control
X factor
X factor
(j)
(j)
% Change
(g)
Basket
Interconnection Circuits
Wholesale standard CSI connections
- Internal
- External
Wholesale standard CSI rentals - fixed
- Internal
- External
Wholesale standard CSI rentals - per km
- Internal
- External
Wholesale Nominated ISI - per km
- Internal
- External
Wholesale IEC connections
- Internal
- External
Wholesale IEC rentals - fixed
- Internal
- External
Wholesale IEC rentals - per km
- Internal
- External
Up to Sep
From Oct
2009
2009
RPI - 5.25% RPI +3.75%
(g) When looking at the year on year change the difference will be distorted by the fact that the volumes will be different between one year and another.
The % change shown is based on a combination of both the old and new charge controls.
(j) The RPI used for compliance purposes in 2009/10 is -1.57% which is based on the monthly RPI from June 2008 to June 2009.
(z) The average charges are an annual weighting for the entire reporting year taking account of all price changes within the period.
120
-1.8%
-1.8%
-1.8%
-1.8%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
-0.7%
-0.7%
-0.8%
-0.8%
-0.7%
Appendix 2 - Price Control Statements
Appendix 2.1 - Price Controls in Wholesale Markets (Annex 24)(continued)
LLCC
Control X
factor
(j)
LLCC
Control X
factor
(j)
Average
charges
2009/10
(z)
Average
charges
2008/09
(z)
% Change
(g)
cct
1,097.49
1,097.49
288.73
288.73
24.38
24.38
640.50
265.49
2,296.43
2,247.13
487.07
550.89
76.35
cct
1,097.49
1,097.49
265.37
265.37
24.26
24.26
640.50
195.55
3,880.37
3,334.37
398.44
518.14
-
0.0%
0.0%
8.8%
8.8%
0.5%
0.5%
0.0%
35.8%
-40.8%
-32.6%
22.2%
6.3%
n/a
cct
1,593.44
1,593.44
2,972.55
2,972.55
453.21
453.21
2,461.43
2,839.83
430.58
cct
1,593.44
1,593.44
2,954.70
2,954.70
451.58
451.58
2,513.33
3,268.31
-
0.0%
0.0%
0.6%
0.6%
0.4%
0.4%
-2.1%
-13.1%
n/a
cct
1,804.72
1,804.72
10,567.58
10,567.58
1,183.06
1,183.06
12,812.75
14,617.94
801.08
cct
1,804.72
1,804.72
10,544.44
10,544.44
1,220.31
1,220.31
12,011.84
15,620.07
-
0.0%
0.0%
0.2%
0.2%
-3.1%
-3.1%
6.7%
-6.4%
n/a
cct
2,085.44
2,085.44
23,106.51
484.91
cct
2,009.43
2,009.43
12,005.84
650.79
3.8%
3.8%
92.5%
-25.5%
Basket
Up to Sep
Partial Private Circuits
2009
Low Bandwidth
RPI - 4%
- Internal connections
- External connections
- Internal links
- External links
- Internal transmission and distribution
- External transmission and distribution
- Internal SDSL
- External SDSL
- Internal sub 2Mbit/s RBS
- External sub 2Mbit/s RBS
- Internal 2Mbit/s RBS
- External 2Mbit/s RBS
- Internal local end (i)
- External local end (i)
- External 3rd party POH
From Oct
2009
RPI - 3.5%
High Bandwidth
- Internal connections
- External connections
- Internal links
- External links
- Internal distribution
- External distribution
- Internal local end (i)
- External local end (i)
- External 3rd party POH
RPI - 6.5%
RPI - 3.5%
Very High Bandwidth
- Internal connections
- External connections
- Internal links
- External links
- Internal distribution
- External distribution
- Internal local end (i)
- External local end (i)
- External 3rd party POH
RPI - 6.5%
Equipment
- Internal 3rd party infrastructure
- External 3rd party infrastructure
- External POH connections
- External POH rentals
RPI - 8.9%
RPI - 3.5%
RPI - 0%
(g) When looking at the year on year change the difference will be distorted by the fact that the volumes will be different between one year and another.
The % change shown is based on a combination of both the old and new charge controls.
(i) Externally sold PPC local ends includes a premium to pay for the Point of Handover (POH) access. Internally sold private circuits do not require POH access and th erefore do not pay this premium.
NB The POH premium was only applicable up to September 2009.
(j) The RPI used for compliance purposes in 2009/10 is -1.57% which is based on the monthly RPI from June 2008 to June 2009.
(z) The average charges are an annual weighting for the entire reporting year taking account of all price changes within the period.
(af) Commentary on the Price Controls in Wholesale Markets is provided in Section 1.1.
121
Glossary
Glossary
Glossary
122
Glossary
Glossary (continued)
Glossary
21CN
21st Century Network.
CP
Communications Provider.
Accounting
Documents
The Primary Accounting Documents, DAM, DVM and R&P.
CPS
Carrier Pre-Selection.
CSH
Customer Sited Handover.
Accounting
Separation
Accounting separation requirements arise where there is an obligation to
not unduly discriminate and/or there is a reasonable concern that a Dominant Provider may make cross-subsidies, e.g. the means by which a margin
squeeze may be funded.
CSI
Customer Sited Interconnect.
Current Cost
Accounting
("CCA") adjustments
The change to historical costs arising from the revaluation of assets on a current cost basis. In the statements for individual Businesses and activities the
adjustments comprise the holding gains or losses arising from changes in
asset values, together with the effect on asset values and depreciation of the
appropriate allocation of current cost asset values between markets, Technical Areas and Wholesale services.
ADSL
Asymmetric Digital Subscriber Line.
AISBO
Alternative Interface Symmetric Broadband Origination.
Annual Report
BT's Consolidated Group Financial Statements for the year ended 31 March.
These are available on the BT website at http://www.bt.com.
Cust
Customers.
ASBO
Asymmetric Broadband Orgination.
DAM
ATM
Asynchronous Transfer Mode.
The Detailed Attribution Methods. This sets out the detailed processes by
which revenues and costs are attributed to the markets, Technical Areas and
Wholesale services.
Baskets
Baskets are collections of services not considered to be competitive and for
which prices are subject to specific charge controls.
DLRIC
LRIC plus a share of common costs.
DSAC
Stand alone cost (SAC) excluding a share of core common costs.
BES
Backhaul Extension Services.
D-side
Distribution side.
BNS
Backhaul Network Services.
DSL
Digital Subscriber Line.
ca
Cables.
DSLAM
Digital Subscriber Line Access Multiplexer.
cct
Circuits.
DVM
chann
Channels.
The Detailed Valuation Methodology. This sets out the methodology by
which current cost valuations are obtained.
Components
Within these Statements, the term components includes both network components and network parts.
EAB
Equality of Access Board.
eq
Equipment units.
conn
Connections.
EMP
Equivalence Management Platform.
Cost accounting
Cost accounting obligations are to meet the requirements where there is an
obligation in relation to:
Price controls.
Cost orientation.
Cost recovery.
E-side
Exchange side.
FRIACO
Flat Rate Internet Access Call Origination.
HCA
Historic Cost Accounting.
123
Glossary
Glossary (continued)
Glossary (continued)
IEC
Interconnection Extension Circuit.
MPF
Metallic Path Facilities.
IFRS
International Financial Reporting Standards.
ms
Million seconds
ISH
In-Span Handover.
n/a
Not applicable.
ISI
In-Span Interconnect.
ITC
Inter-Tandem Conveyance.
Network Charge
Control regime
("NCC")
The basis on which interconnect charges have been set with effect from 1
October 1997.
ITT
Inter-Tandem Transit.
Ofcom
Office of Communications.
km
Kilometres.
le
Local ends.
Other communications providers
Other telecommunication companies operating in the UK, which purchase
telecommunication services from BT.
Line
Lines.
PECN
Public Electronic Communications Network.
lk
Links.
PIPeR
Physical Inventory for Planning and eRecords.
LLCS
Local Lines Costing Study.
PoH
Point of Handover.
LLMR
Leased Lines Market Review.
PPC
Partial Private Circuit.
LLU
Local Loop Unbundling.
PPM
Pence per Minute
Long Run Incremental Cost
("LRIC")
Defined as the cost caused by the provision of a defined increment of output
given that costs can, if necessary, be varied and that some level of output is
already produced.
PPP
Product management, policy and planning.
LTC
Local-Tandem Conveyance.
Primary
Accounting
Documents
Set out the framework within which the Current Cost Financial Statements
are prepared.
LTT
Local-Tandem Transmission.
r
Rooms.
LUS
Low User Scheme.
RBS
Radio Base Station Backhaul.
m
Metres.
Mean capital
employed
(“MCE”)
Mean capital employed is defined as total assets less current liabilities,
excluding corporate taxes and dividends payable, and provisions other than
those for deferred taxation. The mean is computed from the start and end
values for the period, except in the case of short-term investments and borrowings, where daily averages are used in their place.
Relationships
and Parameters
("R&P")
The BT publication "Long Run Incremental Cost Model: Relationships and
Parameters" describes in detail how BT has applied the principles contained
within the LRIC Methodology section of the Accounting Documents to construct cost volume relationships and to calculate LRIC. The R&P also contains
appendices which detail the relationships and parameters used within the
model.
MEA
Modern Equivalent Asset.
mm
Millions of minutes.
Retail cost
accounting
Cost accounting in Retail markets deals with products and services sold to
end users.
124
Glossary
Glossary (continued)
Glossary (continued)
reval. adj.
CCA Revaluation Adjustment. See Section 4 - Basis of Preparation.
zero
A numerical value of <£0.5m and >£(0.5)m.
Safeguard Caps
Safeguard Caps are a collection of services considered prospectively competitive and for which the rates are subject to specific charge controls.
<1
A value of below £1m.
SDH
Synchronous Digital Hierarchy.
SDSL
Symmetric Digital Subscriber Line.
Stand alone cost
("SAC")
The stand alone cost of an activity or subset of activities is the cost incurred
in providing that activity or activities of services by itself. Stand alone cost
will include all direct variable, activity specific fixed costs, common fixed
costs and joint costs associated with the activity or subset of activities in
question.
SDSL
Synchronous Digital Subscriber Line.
SMP
Significant Market Power.
SMPF
Shared Metallic Path Facilities.
TDM
Time Division Multiplexing.
TISBO
Traditional Interface Symmetric Broadband Orgination.
tover
Takeovers.
Trans
Transactions
UBR
Universal Broadband Router.
VIC
Virtual Interconnect Circuit.
VOIP
Voice Over IP.
Usage Factors
Usage Factors refer to the usage of any network component, including conveyance components.
WES
Wholesale Extension Services.
Wholesale cost
accounting
Cost accounting in Wholesale markets deals with products and services sold
to Communications Providers.
WLR
Wholesale Line Rental.
-
A numerical value of zero.
125
Additional Information
Additional Information
Additional Information
126
Additional Information
Hard copy versions of the published Current Cost Financial Statements, Primary Accounting
Documents, Detailed Attribution Methods, Detailed Valuation Methodology and Long Run Incremental
Cost Model: Relationships and Parameters can be obtained from:
Shareholder Helpline
Tel: Freefone 0808 100 4141
Fax: 01903 833371
Textphone: Freefone 0800 169 6907
From outside the UK:
Tel: +44 121 415 7178
Fax: +44 1903 833371
Textphone: Freephone +44 121 415 7028
E-mail: bt@equiniti.com
Website: www.shareview.co.uk
The Registrar
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
United Kingdom
Website: http://www.equiniti.com
Electronic copies of the above documents are also available from the following website:
http://www.btplc.com/thegroup/RegulatoryandPublicaffairs/Financialstatements/index.htm
127