1. GENERELLE FORHOLD...4

Transkript

1 Notat Høringsnotat over udkast til revideret LRAIC-model sendte den 25. august 2006 udkast til revideret LRAIC- model i høring, hvori den foreliggende LRAIC-model var blevet udbygget med bit stream access og delstrækninger.. Inden høringsfristens udløb d. 22. september 2006 havde modtaget høringssvar fra LRAIC-arbejdsgruppen og TDC. I dette notat kommenteres høringssvarene under følgende overskrifter: 1. GENERELLE FORHOLD REDUCTION OF BSA PRICES THE PRICING OF ATM BSA VS. ETHERNET BSA BANDWIDTH DIFFERENTIATED BSA PRICES MODELLENS RESULTATER FOR EKSISTERENDE KUNDEFORHOLD LRAIC-PRISFASTSÆTTELSE FOR YDERLIGERE BSA-PRODUKTER Multikanaler VDSL GEOGRAPHICAL DIFFERENTIATED BSA PRICES BSA INTERCONNECT BSA at street cabinets (SC) BSA at L OPERATIONAL EXPENDITURE AND ANNUALISATION OPERATIONAL EXPENDITURE Functional Area costs Changes in the allocation of interconnect specific costs ANNUALISATION WACC risk-free interest rate Scrap values for DSLAM Asset lives for BSA equipment EQUIPMENT COSTS GENERAL TECHNICAL ISSUES INDREGNING AF FREMTIDIGE NETOMKOSTNINGER VOLUMES AND DIMENSIONING LRAIC volumes Network dimensioning NETWORK STRUCTURE AND ETHERNET SWITCHING REQUIREMENTS oktober 2006 Markedskontoret Sagsbehandler Mette Mølsted Kristiansen Telefon E-post mmk@itst.dk

2 3.4. DISTRIBUTION OF XDSL OVER ASM ROUTE FACTORS Route factors for BSA at SC Access routing table for BSA Copper usage by BSA Routing factor for retail xdsl Copper usage by ISDN NETWORK MANAGEMENT SYSTEM NM system for the transportation and switching network Remote access network for network management DSLAM EQUIPMENT COSTS OF DSLAMS INSTALLATION COSTS OF DSLAM DSLAM LINE CARD FILLING FACTORS DSLAM ACCOMMODATION CABINETS FOR REMOTE DSLAM RESERVE STOCK ETHERNET EQUIPMENT COSTS OF ETHERNET SWITCHES RESERVE STOCK DIMENSIONING OF L2 RINGS L3 SWITCHES COPPER CABLE MANAGEMENT PLAN TRENCH SHARING BETWEEN PDP LINKS PDP SIZE AND NUMBER OF JOINT BOARDS TRANSPORT TRANSMISSION COSTS TO XDSL POWER AND COOLING POWER AND COOLING CONSUMPTION POWER AND COOLING EQUIPMENT CO-LOCATION AND OTHER SERVICES CO-LOCATION IN TECHNICAL HOUSES Modelling of co-location in technical houses Applicability of prices for co-location in technical houses ANCILLARY PRODUCTS Time consumption Ancillary products SPECIFIC COMMENTS CORRECTION OF ACCESS DEMAND NUMBER PORTING COSTS ERROR IN I_FA_COSTS, J XDSL SUBSCRIBERS ON SHARED ACCESS DEMAND FOR SHARED ACCESS...58 Side 2

3 10.6. OVER ALLOCATION OF ACCESS COSTS ALLOCATION OF INTERCONNECT SPECIFIC COST TO ACCESS SERVICES..59 Side 3

4 1. Generelle forhold 1.1. Reduction of BSA prices TDC states that if the final LRAIC model for 2007 has BSA costs at the level of the draft version, this will result in BSA prices in Denmark that are lower than all comparable European countries. This appears from a comparison of BSA prices made by the consultancy Ovum for TDC. As a result of the transition to LRAIC regulation, a further gradual reduction in BSA prices must be expected in the coming years, as equipment prices are expected to drop while BSA volumes are expected to increase. Consequently, TDC requests NITA to be lenient with regards to the LRAIC BSA modelling allowing the uncertainty to become reflected in the cost modelling. Future considerable reduction of BSA prices will most probably jeopardize the competitive conditions on the market for broadband access to the detriment of both TDC and the competitors and on the long run also the consumers. This problem is avoided in other countries by the retail minus regulation on wholesale prices. TDC has knowledge of retail minus regulation in France, Italy, Portugal, Spain, Sweden and UK. Side 4 skal i forbindelse med alle prisfastsættelsesmetoder tilgodese de formål med prisreguleringen, der fremgår af telelovens 1, stk. 3, nr. 3. Det fremgår af denne bestemmelse, at prisreguleringen skal: > sikre, at udbydere uden en stærk markedsposition kan opnå en reel konkurrencemargin på alle områder, hvor det er muligt, > sikre, at priserne herfor ikke belastes af utidssvarende teknik, fejlinvesteringer, ineffektiv drift m.v. hos den samtrafikforpligtede udbyder af elektroniske kommunikationsnet eller -tjenester, > understøtte innovationsprægede investeringer bredt i markedet, > understøtte, at nye infrastrukturinvesteringer sker på grundlag af fremadrettede teknologivalg, der fremmer en samlet, optimal infrastrukturudvikling, og > fremme kapacitetsorienterede investeringer, i det omfang det er sandsynliggjort, at der vil opstå et udækket behov for infrastruktur, og at konkurrenceog efterspørgselspresset ikke vil være tilstrækkeligt til at sikre den fornødne udbygning. Det er s vurdering, at den udsendte LRAIC-model med de ændringer og tilpasninger, der følger af inkluderingen af BSA og delstrækninger, er i fuld overensstemmelse med disse principper. Det forhold, at priserne for lignende bit stream access produkter i andre lande måtte være lavere end de modelberegnede priser, kan imidlertid ikke inddrages, idet ændringer til den foreliggende LRAIC-model må forudsætte konkrete ændringsforslag til modelleringen. Af hensyn til at sikre forudsigeligheden, og for at sikre en overgang fra den nuværende prisstruktur, er det dog s indstilling, at der bør indføres en overgangsperiode for priserne for bit stream access. På grund af den hastige teknologiske udvikling på markedet, foreslås en 1-årig overgangsperiode, således at de modelberegnede priser implementeres fuldt ud pr. 1. januar 2008.

5 1.2. The pricing of ATM BSA vs. Ethernet BSA Ifølge LRAIC-arbejdsgruppen er et af de væsentligste formål med LRAICprisregulering at komme ineffektivitet til livs. Dette sikres bl.a. ved, at der i modelleringen tages udgangspunkt i den til enhver tid mest effektive teknologi, og dermed ikke nødvendigvis i den teknologi, som den regulerede part rent faktisk anvender. Der er p.t. ikke megen tvivl om, at den mest effektive BSA-teknologi at anvende på transmissionssiden er Ethernet og ikke ATM. At TDC har valgt fremadrettet at anvende Ethernet-baseret udstyr i forbindelse med udbygningen af BSA-nettet, understøtter også dette standpunkt. For at bruge LRAIC terminologien er det Ethernet-baserede udstyr altså det moderne ækvivalente aktiv for ATM-baseret udstyr, hvorfor det også bør anvendes i LRAIC-modelleringen. LRAIC-arbejdsgruppen finder dermed ikke, at en modellering af BSA-produkter baseret på Ethernet-teknologien, i sig selv bør kunne give anledning til nogen form for indskrænkning i anvendelsesområdet for LRAIC-modellens resultater. Side 5 Det er dog klart, at der findes enkelte produkter, der fuldt ud understøttes af Ethernet-teknologi, mens dette ikke nødvendigvis gør sig gældende for ATMteknologien. Et konkret eksempel er adgang til multicastfunktionalitet, som relativt enkelt kan implementeres i en Ethernet verden, mens billedet er væsentligt mere broget i en ATM-verden, jf. nedenfor. Såfremt udbuddet af produkter i praksis forudsætter anvendelse af Ethernetteknologien, er LRAIC-arbejdsgruppen opmærksom på, at adgang til disse produkter og til de vilkår, som fastsættes i LRAIC-modellen, i konkrete tilfælde kan tænkes ikke at være mulig fordi centralerne endnu ikke er tilstrækkeligt opgraderede. TDC argues that the company has started the rollout of a new Ethernet transportation platform and from the beginning of 2007; TDC will also supply BSA based on Ethernet. However, the rollout of Ethernet BSA will take place as a phase-in and TDC will thus supply both Ethernet BSA and ATM BSA in a number of years from now. TDC has agreed with NITA that the LRAIC BSA modelling should be based on the Ethernet platform. However, TDC has also stated that the result of the LRAIC model should only be directly used for the pricing of TDC's Ethernet BSA products and not for the existing ATM BSA products since this is a different product. In case the final LRAIC model for 2007 results in Ethernet BSA costs that are lower than TDC's cost documented prices for ATM BSA, it is TDC's view that ATM BSA should be priced with an add-on compared to the Ethernet BSA products. The maximum add-on should be equal to the present difference between the Historical cost documented ATM BSA prices from 2006 and the LRAIC modelled Ethernet BSA prices.

6 In TDC's view the add-on should be numerical fixed while the LRAIC BSA costs are changed in the yearly LRAIC updates. If TDC is not allowed to take a separate ATM BSA price, TDC will not be able to recover the investments on the ATM platform. TDC note that ATM was an efficiently incurred technical design and is therefore still a modern equivalent asset (MEA) and as such it cannot be arbitrary written off (assuming Ethernet costs are lower and are substituted for ATM) without investment recovery. There is no evidence to support a claim that ATM investments have already been fully recovered, which would allow the ATM systems to be treated as a stranded asset. Thus, TDC recommends NITA only to use the LRAIC calculated BSA costs to be used for pricing Ethernet BSA. Som det fremgår af afsnit 1.1. ovenfor, er et at formålene med prisreguleringen i almindelighed at sikre, at priserne herfor ikke belastes af utidssvarende teknik, og at understøtte at nye infrastrukturinvesteringer sker på grundlag af fremadrettede teknologivalg, der fremmer en samlet, optimal infrastrukturudvikling. Side 6 Dette gælder LRAIC-prisfastsættelsesmetoden i særdeleshed, idet hensigten med LRAIC-metoden er at prisen for et givet samtrafikprodukt fastsættes på grundlag af en beregning af omkostningerne ved at tilvejebringe forskellige samtrafikprodukter i en optimalt opbygget og drevet teleinfrastruktur. Dette sker i praksis ved anvendelse af udstyrstyper, der er moderne ækvivalente aktiver (MEA) til den teknologi, der anvendes i dag. Historiske forhold om teknologianvendelsen hos det regulerede selskab inddrages derimod ikke. Det er s vurdering, at ethernet udgør det moderne ækvivalent i forhold til ATM-teknologi, og at det derfor ikke vil være i overensstemmelse med LRAIC-metoden at foretage en særlig ATM-korrektion som foreslået af TDC. er dog enig med TDC i, at overgangen til LRAICprisfastsættelsesmetoden giver en potentiel risiko for, at TDC ikke får en tilstrækkelig dækning for sine investeringer i sit ATM-net. Der kan dog være andre forhold i forbindelse med overgangen, der modsat giver en risiko for, at TDC får overdækket sine investeringer, jf. afsnit 1.4. nedenfor. Henset til det forhold at TDC først forventer at udbyde BSA baseret på ethernet i begyndelsen af 2007, har til hensigt i medfør af LRAICbekendtgørelsens 4, stk. 4, i det tillige udsendte udkast til afgørelse om prisfastsættelse efter LRAIC-metoden, at beslutte, at der skal anvendes en overgangsordning på 1 år for prisernes ikrafttræden, således at prisen pr. 1. januar 2007 fastlægges som et simpelt gennemsnit af LRAIC-priserne og de gældende priser, og således at LRAIC-priserne for BSA gennemføres med fuld virkning pr. 1. januar 2008.

7 1.3. Bandwidth differentiated BSA prices LRAIC-arbejdsgruppen er enig med styrelsen i, at der bør ske en fordeling af de løbende omkostninger til forskellige bredbåndskapaciteter. LRAICarbejdsgruppen ville af hensyn til forudsigelighed og transparens foretrække, at denne funktionalitet blev direkte indarbejdet i LRAIC-modellen. LRAICarbejdsgruppen har dog forståelse for, at der i praksis kan være tidsmæssige restriktioner, som vanskeliggør dette. Uanset den faktiske implementering af denne omkostningsfordeling vurderer LRAIC-arbejdsgruppen, at den bør ske under hensyntagen til faktiske efterspørgselsforhold, forskelle i downstream-hastigheder samt gennemsnitlige udnyttelsesgrader. Et naturligt udgangspunkt herfor vil være at normalisere udnyttelsesgraden for prioriterede kanaler til 100 pct. (jf. nedenfor) samtidig med, at udnyttelsesgraden for ikke prioriterede kapaciteter fastsættes som en aftagende funktion af downstream-hastigheden. Det kan oplyses, at LRAIC-arbejdsgruppen med henblik på at kunne bidrage med input til denne proces allerede har iværksat en undersøgelse af realiserede gennemsnitlige udnyttelsesgrader for forskellige downstream-hastigheder. Side 7 TDC notes that the draft version of the new LRAIC model does not include cost differentiation of the BSA products with respect to bandwidth. However, NITA has on September 18 made a data request to TDC regarding the expected number of BSA connections on different bandwidth at the end of 2006 in preparation for the actual implementation of the BSA pricing. TDC's experience is that there is a clear interdependence between the customer's bandwidth and their traffic. And as traffic and capacity are major drivers of the costs in the production of the BSA products, the pricing should also make allowance for these cost differences. Thus, TDC recommends an implementation of the BSA LRAIC costs in bandwidth differentiated prices. At best, the cost differences should be included in the LRAIC modelling. It is not clear to TDC how NITA will make a possible implementation of the LRAIC BSA costs in bandwidth differentiated prices only on the basis of the number of BSA connections broken down to bandwidth. No price differentiations would clearly result in all customers taking the fastest speed available as there is no cost (price) differentiation unless other service providers applied their own pricing differentiation. This leads to inefficient use of resources and market distortions. Thus, TDC recommends that the actual implementation of bandwidthdifferentiated prices be made by TDC. This implementation will be based on TDC's actual knowledge of cost differences on different bandwidth. The implementation should of course ensure that the average price is equal to the LRAIC costs.

8 NITA notes that there seems to be a consensus between the LRAIC Forum and TDC on the need to differentiate price by different speed. The LRAIC Forum suggest that a suitable way to differentiate would be on the basis of average monthly usage (measured in total GB per month or average Kbps over the month) for each of the products, with prioritised capacities having a normalised rate of 100 percent. However, no supporting data has been made available on such average usages, and no indication/justification of how an average prioritised rate should be treated differently to an identical average nonprioritised rate. TDC also do not provide supporting data for the differences in usage across the various speeds. NITA is cautious of basing the differentiation on actual average usage figures due to the retail products being sold on an unlimited usage basis. It is entirely possible that the cheaper, slow products will be used more than the expensive, fast products and this would then result in the cost of the faster products being lower than the cost of the slower products. NITA is therefore of the opinion that the only realistic way to produce speed differential pricing is to base the differentiation on the retail tariff gradient of the broadband products being provided. Side 8 This will be implemented in a separate worksheet that will be used for NITA s decision on setting the price according to the LRAIC method Modellens resultater for eksisterende kundeforhold Ifølge LRAIC-arbejdsgruppen repræsenterer overgangen fra prisregulering af BSA efter modificerede historiske omkostningers (MHO) metode til LRAICmetoden et markant skifte i den måde omkostningerne bliver dækket ind via henholdsvis oprettelse og løbende ydelser. Under MHO-metoden har en meget stor andel af omkostninger til udstyr m.v. været dækket ind allerede i forbindelse med oprettelsen, mens de løbende ydelser dermed har skullet dække en relativt mindre andel. I LRAIC-modellen lægges der derimod op til, at oprettelsen alene skal dække ikke-reversible omkostninger, mens øvrige omkostninger aktiveres og dækkes ind via den løbende ydelse. Dette er fuldt på linie med de principper for omkostningsdækning, som er fastsat af IRG, og LRAIC-arbejdsgruppen er også enig i, at dette er mest retvisende. De økonomiske konsekvenser af selve denne overgang er imidlertid i praksis ganske betydelige. Ifølge det seneste standardtilbud fra TDC er prisen for en Gør- Det-Selv oprettelse af en BSA-kunde således p.t. fastsat til DKK 950 i kerneområdet og DKK i periferiområdet. Hovedparten af TDC s salg af BSA eksternt sker i periferiområdet. I udkastet lægges der op til, at den gennemsnitlige pris for den tilsvarende ydelse fremover skal fastsættes til DKK 357. Denne me-

9 get markante forskel kan alene forklares ud fra ændringer i fordelingen af omkostninger, der bliver dækket ind via oprettelse og løbende ydelser. Det er selvsagt ikke acceptabelt for LRAIC-arbejdsgruppen for eksisterende kunder først at skulle dække store dele af TDC s omkostninger til udstyr ind gennem oprettelsesafgiften, hvorefter omkostningsfordelingen avendes rundt på en sådan måde, at de selv samme omkostninger fremadrettet også skal dækkes ind via de løbende ydelser. For at forhindre, at en sådan dobbeltdækning bliver resultatet af den igangværende proces, anmodes om snarest at forholde til konkret hertil. LRAIC-arbejdsgruppen skal også påpege, at styrelsens stillingtagen er påkrævet i forhold til, at BSA markedet kan fungere i resten af Udsigten til en så markant ændring i selve prisstrukturen sammenholdt med en evt. manglende udmelding fra om hvordan overgangen forventes håndteret, vil således gøre det meget økonomisk risikabelt for alternative udbydere at tage nye BSA-kunder ind i resten af Side 9 Som løsning på denne problemstilling vil LRAIC-arbejdsgruppen umiddelbart foreslå, at der i en overgangsperiode på 1-2 år opereres med en rabat på de løbende ydelser for eksisterende kundeforhold indgået før 1. januar 2007 i forhold til modellens resultater. Beregningen af denne rabat vil muligvis kunne foretages konkret på grundlag af de BSA-produktregnskaber, som forventes at have modtaget fra TDC i forbindelse med kontrollen af BSA-prissætningen under anvendelse af MHO-metoden. Dette forudsætter dog, at regnskaberne er tilstrækkeligt detaljerede, således at det præcist kan identificeres, hvilke netelementer oprettelsesafgiften tidligere har dækket, og som derfor ikke samtidig skal omkostningsdækkes i LRAIC-modellen for eksisterende kundeforhold. Såfremt dette ikke er tilfældet, kan i stedet periodisere værdien af den merpris for oprettelsen, som TDC tidligere har opkrævet i forhold til LRAIC-modellens mere korrekte beregninger, som kun inkluderer ikkereversible omkostninger. Denne værdi vil herefter skulle fratrækkes de løbende omkostninger i den periode, som periodiseringen omfatter. er enig i, at overgangen til prisregulering af bit stream access giver anledning til en noget anden prisstruktur end den hidtidige prisstruktur. For oprettelse giver ændringerne anledning til et større prisfald, mens prisfaldet for den løbende ydelse er af en mindre størrelsesorden. Disse prisreduktioner er især et resultat af anvendelsen af en anden teknologi (ethernet frem for ATM), men også et resultat af mere præcise principper for allokering af omkostninger end hidtil. Den samlede effekt af disse ændringer kan også potentielt betyde, at TDC ikke får dækket sine afholdte omkostninger til sit ATM-net.

10 Foranlediget af LRAIC-arbejdsgruppens og TDC s bemærkninger om forskellige overgangsordninger for at tage hensyn hertil, er det s vurdering, at der - som nævnt ovenfor bør anvendes en overgangsordning på 1 år for prisernes ikrafttræden. Dette sker særligt for at tage hensyn til det forhold, at TDC først i 2007 rent faktisk går i drift med BSA på ethernet LRAIC-prisfastsættelse for yderligere BSA-produkter Multikanaler LRAIC-arbejdsgruppen finder, at udvidelsen af LRAIC-modellen til i særdeleshed også at omfatte BSA er et vigtigt skridt i retning af fremover at sikre en transparent og retvisende prissætning af disse produkter. Det er i denne forbindelse imidlertid også særdeles vigtigt, at er opmærksom på udviklingen på bredbåndmarkedet, således at det i videst mulig udstrækning sikres, at LRAIC-prisreguleringen til enhver tid rent faktisk også omfatter alle de væsentligste BSA-produkter. Side 10 Udviklingen på bredbåndsmarkedet går utvetydigt i retning af, at der skal kunne tilbydes flere tjenester over samme adgangsvej, og at dette skal kunne ske ved stadig større hastigheder. Multikanal-produkter I forhold til det kobberbaserede BSA-produkt forudsætter kravet om, at der skal kunne tilbydes flere IP-tjenester, at der for udbyderen er mulighed for at kunne prioritere i trafikken, herunder garantere forskellige kvalitetsniveauer til de forskellige tjenester. Prioritering af trafikken tilbydes allerede i dag af TDC som BSA-tillægsprodukt under samlebetegnelsen multikanal-produkter. TDC s prissætning heraf er imidlertid hidtil sket uden om den eksisterende regulering og herunder s kontrol. LRAIC-arbejdsgruppen kan ikke understrege for kraftigt, at såfremt multikanalprodukter fremadrettet holdes uden for prisreguleringen, vil det i praksis fuldstændigt kunne undergrave effekten af den øvrige eksisterende regulering af BSA. Multikanalprodukter bør derfor ikke anses som et såkaldt accessorisk delprodukt i forhold til LRAIC- prisreguleringen, men derimod som et helt centralt kerneprodukt. Overordnet set eksisterer der to typer af multikanal-produkter. For det første produkter, hvor der etableres prioriterede individuelle kanaler for hele transmissionsstrækningen, dvs. fra slutkundens tilslutningspunkt via DSLAM til opsamlingspunktet ( DSLAM, layer 2, eller layer 3). For det andet et såkaldt multicast produkt, hvor den samme downstream datastrøm til flere ADSL-kunder kun sendes én gang til DSLAM en, hvorefter den repliceres. Individuelle multikanaler Et konkret eksempel på behovet for individuelle multikanaler er, når der skal udbyde VoIP. I dette tilfælde er kvaliteten af TDC s traditionelle best effort BSA-

11 produkt typisk ikke tilstrækkelig høj, fordi netdimensioneringen foretages således, at der i fordelingen af den tilgængelige transmissionskapacitet til de tilsluttede slutbrugere sker en betydelig grad af overbookning. I best effort BSA produktet er der altså ikke nogen garanti for, at den nødvendige transmissionskapacitet hele tiden vil være til stede, når en VoIP-kunde ønsker at gennemføre en samtale. Ifølge eksisterende tillægsaftale kan prioriteringen af kanaler i dag ske med følgende servicespeeds: > 192/192 kbit/s (standardproduktet) > 256/256 kbit/s > 384/384 kbit/s > 512/512 kbit/s > 576/576 kbit/s > 864/864 kbit/s > 1152/1152 kbit/s > 1728/1728 kbit/s LRAIC-arbejdsgruppen vurderer, at disse servicespeeds i alt væsentligt p.t. dækker behovet i markedet. I forbindelse med fremtidige opdateringer af BSAmodellen vil det dog kunne være relevant, at udvide listen. Side 11 Alle moderne DSLAM s har præinstalleret tilstrækkelig funktionalitet til uden yderligere tiltag fuldt ud at understøtte anvendelsen af multikanaler (det forudsættes selvfølgelig, at multikanaler understøttes af det kundeplacerede udstyr). I forhold til LRAIC-modellering vil det altså alene være på transmissionssiden, at indarbejdelsen af denne type af multikanaler vil kræve modificeringer. Der kan i den forbindelse identificeres to omkostningsskabende hændelser. For det første skal ordren behandles og implementeres i network management systemet. Dette er en fuldstændig standardprocedure, som allerede i dag er implementeret i bestillingsinterfacet på en sådan måde, at der for TDC er tale om en fuldautomatiseret procedure for langt de fleste ordrer. For en mindre del af ordrerne skal der dog foretages manuel indtastning, hvilket i så fald vil kræve 1-2 minutters arbejde. For det andet vil prioriterede multikanaler kræve relativt større transmissionskapacitet i forhold til best effort produktet. har i det udsendte udkast til BSA-model modelleret kravene til BSA-transmissionsnettet ud fra TDC s indsendte opgørelser af den samlede anvendte transmissionskapacitet og forventninger til fremtidige ændringer i efterspørgslen. Transmissionskapaciteten, som bliver beslaglagt af multikanalprodukter, indgår således allerede i omkostningsgrundlaget, og derfor er det vigtigt også at få fordelt transmissionsomkostninger til disse produkter. Som omtalt ovenfor vurderer LRAIC-arbejdsgruppen, at denne omkostningsfordeling bør ske under hensyntagen til efterspørgselsforhold, forskelle i downstream-hastigheder samt gennemsnitlige udnyttelsesgrader. I den forbindelse vil være relativt enkelt at tage højde for prioriterede individuelle kanaler, idet det vil være naturligt at normalisere udnyttelsesgraden herfor til 100 pct.

12 Multicasting Multicasting i forbindelse med BSA er et nyt produkt, som bliver introduceret af TDC i Q3. Multicasting betegner den mest efficiente måde at sende samme datastrøm til flere slutbrugere på samme tid. I stedet for at replicere den samme datastrøm hele vejen igennem transmissionsnettet er ideen, at datastrømmen kun sendes en gang til en adresse i DSLAM en, hvorefter datastrømmen distribueres til de tilsluttede slutbrugere. Multicasting funktionalitet er en nødvendig forudsætning for at kunne udbyde IP- TV over BSA, og det er derfor af afgørende betydning for alternative udbyderes forretning at få adgang til dette produkt på rimelige vilkår. Ud over prisvilkår omfatter dette adgangen til at unbundle TDC s BSA-produkt, således at udbyderen f.eks. vil blive givet adgang til at udbyde egne multicaststrømme uanset på hvilket niveau BSA-tilslutningen finder sted (selvsagt under forudsætning af, at TDC har etableret DSLAM udstyr med multicastfunktionalitet på de pågældende centraler). Moderne DSLAM s er alle født med indbygget multicast-funktionalitet. Det forholder sig faktisk således, at multicasting nærmest er de nye DSLAM ers raison d être. Ældre ATM-baserede DSLAM s vil typisk også understøtte multicast til et eller andet niveau, men billedet er her noget mere broget. For moderne DSLAM s vil der altså i særdeleshed ikke være tale om, at der skal installeres nye komponenter, kort, el. lign. I lighed med multikanaler skal der selvfølgelig finde en opsætning sted i network management systemet, men dette arbejde bør ikke være mere komplekst end for multikanal. Side 12 The issues of producing costs/prices for Multichannel and Multicast are not straightforward to address within the model. For Multichannel, the object is to tag certain traffic types and to then allocate them different priorities as the traffic flows through the network. Prioritisation in this sense could refer to guaranteed bandwidths or to reduced latencies or even a mix of the two. Almost by definition, prioritised traffic will command a higher retail price than normal traffic. However, there is no guarantee that the usage of the network will be higher, in a similar way to there being no guarantee that a faster speed product will use the network more than a slower speed product. It is therefore currently not possible to adapt the model to calculate costs/prices for Multichannel services on the basis of cost causation, particularly since NITA do not have any data on which to base average usages. For Multicast, the object is to send a single data stream to a DSLAM where it is then available to all customers connected to that DSLAM. This enables, for example, television/video to be broadcast to a large number of customers without unduly stressing the backbone network. At the moment NITA do not have information on: a) whether a single stream can be directed at multiple DSLAMs (we assume probably not), b) the data rate(s) of the Multicast streams (and whether this rate would be constant for the duration of the transmission ), and c) whether the stream would receive prioritisation over normal traffic.

13 For these reasons, NITA is currently unable to adapt the model to calculate costs/prices for Multicast services. However, it is the view of NITA, that in as far as the current transmission capacity and equipment supports other BSA-products such as multicast and multichannels, these products should bear part of the costs. It is currently the view of NITA that the current transmission capacity and equipment supports the multichannel products. At the current stage given the lack of sufficient information, NITA considers it the most straightforward to include these in the price-setting of the products, i.e. include these as part of the average price, that are to be matched with the calculated costs in the model. Given the current very low demand for these services, this will be included in the update of the model in VDSL2 LRAIC-arbejdsgruppen fremfører, at i forhold til ønsket om fremover at kunne tilbyde højere bredbåndshastigheder f.eks. til brug for IP-TV vil VDSL2 fremover komme til at spille en meget afgørende rolle. Side 13 I praksis etableres DSLAM s på gadeskabsniveau med det altoverskyggende formål at etablere VDSL2 forbindelse og der vil kun rent undtagelsesvis blive tale om udbud af ASDL-produkter fra disse gadeskabe. Hele TDC s udrulningsplan for etablering af DSLAM-udstyr i gadeskabe bør således ses i tæt sammenhæng med den fremtidige udbredelse af VDSL2. En forberedelse af LRAIC-modellen for at kunne tage højde for denne udrulning uden at der samtidig sker en LRAIC-prisfastsættelse af VDSL2-produktet er derfor ikke hensigtsmæssig. Rent praktisk vil det også være særdeles vanskeligt at sikre retvisende fordeling af transmissionsomkostninger i modellen til de forskellige kapaciteter, såfremt dette væsentlige produktsegment holdes udenfor modellen. Indarbejdelse af VDSL2 i LRAIC-modellen vil samtidig kunne foretages relativt enkelt. Eneste substantielle forskel mellem ADSL2+ og VDSL2 på udstyrssiden er således, at der p.t. anvendes forskellige DSLAM liniekort. Det forventes dog, at det allerede indenfor det næste halve års vil blive muligt at købe universalkort. NITA do not believe that it currently is appropriate to update the model for VDSL line cards due to the fact that VDSL services are at best embryonic and the result could therefore be, for example, VDSL line cards that only have one port in use. Instead a supplementary product has been included by an addition to the total cost where the BSA service uses a VDSL port rather than an ADSL port based on the use of an uplift factor to take account of a VDSL port/card being more expensive than an ADSL one. This have been implemented as follows:

14 First, the DSLAM network element has been split into two parts: DSLAM common and DSLAM line cards. This makes it possible to track the line card costs separately through the model and to identify how much of each BSA product comprises line card costs. Then an uplift factor has been added for each of the DSLAM types (small and large) and weighted these factors against the total Equipment and Materials costs for the line cards of each type to arrive at an overall uplift on the final per unit DSLAM line card costs. This uplift to the per unit line card cost (total cost from cell L80 in C_Services of the Consolidation model divided by total usage from cell J72 in I_Parameters of the Consolidation model) has then been used to arrive at the total supplementary cost Geographical differentiated BSA prices TDC notes that the draft version of the new LRAIC model does not include cost differentiation of the BSA products with respect to geography. Side 14 TDC has also experienced cost differentiation in the production with respect to whether the customer is located in rural or urban areas. The cost differentiation could be explained by large differentiation in obtainable utilization rate in for example the DSLAMs. Without a price differentiation, a biased demand for BSA will arise, as TDC's competitors will get a larger incentive to demand BSA from TDC in rural areas where they have relatively few customers. At the same time their incentive to demand BSA in urban areas decreases; instead they could set up own equipment here. If this is the case, TDC will not be able to recover the LRAIC costs of supplying BSA. The economic implications of no geographical differentiation of prices are to discourage deep investments and infrastructure competition in more rural areas and by implication biasing benefits to city dwellers. TDC therefore recommends that NITA allow TDC to make an implementation of the LRAIC calculated costs into geographically differentiated prices corresponding to the present price regime reflecting the actual cost differences. skal indledningsvist bemærke, at det efter LRAICprisfastsættelsesmetoden er der træffer afgørelse om fastsættelse af de enkelte priser. TDC s forslag om at få adgang til at udmønte BSApriserne i geografisk differentierede priser, vil derfor ikke være i overensstemmelse med LRAIC-prisfastsættelsesmetoden. Der indgår i øjeblikket i LRAIC-modellen geografisk differentierede priser for andre produkter. Det er dog muligt udfra access-modellen at beregne særskilte priser for de geotyper (Storby, By, Land A og Land B), der indgår i LRAIC hybridmodellen. Det blev imidlertid i forbindelse med førstegangsudarbejdelsen af LRAIC-modellen i relation til prissætningen af rå kobber og delt rå kobber besluttet, at der som hidtil - skulle anvendes ens nationale LRAIC-priser for rå

15 kobber og delt rå kobber. Baggrunden herfor var, at prissætningen af de tilknyttede detailprodukter (PSTN og ISDN-abonnementer) var ens over hele landet. Det er s vurdering, at geografisk differentierede priser for bit stream access vil forudsætte, at behovet for og modelleringen af - geografisk differentierede priser for andre ydelser i modellen tillige blev underkastet en nærmere analyse. Det vil således forekomme inkonsistent, såfremt der blev anvendt forskellige principper for omkostningselementer inden for samme model. Det er endvidere s vurdering, at såvel en prisstruktur med geografisk differentierede priser som en prisstruktur med ens nationale priser, vil sikre den samme grad af omkostningsdækning for TDC. Baggrunden herfor er, at en eventuelt lavere udnyttelsesgrad i bestemte geografiske områder må forventes at blive opvejet af højere udnyttelsesgrader i andre geografiske områder. Det skal bemærkes, at såfremt TDC har ret i, at en ens national pris vil forøge efterspørgslen efter BSA i landområder, vil udnyttelsesgraderne i TDC s DSLAM er også forøges, hvilket vil reducere eventuelle forskelle i udnyttelsesgrader i by- og landområder. Side 15 Det er på denne baggrund s vurdering, at den i LRAIChybridmodellen beregnede ens nationale priser for bit stream access bør overføres som ens nationale priser for bit stream access i TDC s standardtilbud. Såfremt TDC efterfølgende måtte kunne påvise, at ens nationale priser faktisk har givet anledning til en samlet faldende udnyttelsesgrad, vil kunne inddrage dette i en kommende opdatering af LRAIC-modellen. Det skal afslutningsvist bemærkes, at en prisstruktur med nationale priser for bit stream access vil svare til TDC s prisstruktur for selskabets xdsldetailprodukter. Dermed vil prisstrukturen reducere risikoen for prisklemmer for TDC s konkurrenter BSA interconnect BSA at street cabinets (SC) TDC understands that the inclusion of a BSA product at the SC level has been done in compliance with the market 12 decision regarding access to BSA at the DSLAM (BSA-1). However, TDC strongly recommends removing the possibility of BSA at SC from the model. By this, TDC means the removal of the possibility of interconnection for BSA purposes at the SC, and not the removal of DSLAMs placed in SC. Instead BSA access to customers connected to DSLAMs that are positioned in SC should be obtained at the nearest L2 switch, i.e. in an exchange building or a technical house. This should result in an average cost for BSA at L2 consisting of the weighted costs between customers located on a DSLAM positioned at the exchange/technical house and customers located at a DSLAM positioned at a street cabinet.

16 BSA interconnection at the SC level should be avoided for the following reasons: The desired effect of introducing BSA-1 in the market 12 decision was to increase the ISPs ability to get closer to the end-customers thereby utilizing own transportation networks and potential economics of scale. However, the new BSA at L2 will be present at approximately 1,000 nodes while the current BSA-2 product is only present at 138 nodes. An additional 850 BSA interconnection points in Denmark significantly increases the possibility of obtaining the alleged benefits while the economical benefits from adding an additional 1,500 SC will most likely be insignificant. The market 12 decision was based on a BSA product with an underlying network structure with ATM backhaul and without street cabinets. BSA-1 interconnection was therefore implicitly assumed to take place inside an exchange building or a technical house. Interconnection outside an exchange or technical house, i.e. in a street cabinet, is impractical and expensive. In TDC s opinion, the removal of BSA at the SC is not consistent with the market 12 decision, because the decision states that TDC only has to provide access where it is practically possible, cf. page 27 of Afgørelse af 2. november 2005 overfor TDC på engrosmarkedet for bredbåndstilslutning (M12). Side 16 TDC wishes to emphasize that at least the following obstacles would impede practical solutions for BSA at SC or result in a more expensive product than BSA at the nearest L2 ring location - thereby making the product irrelevant: TDC will not place either small or large L2 switches in the SC. The SC used by TDC has room for the DSLAM only. If a L2 Ethernet switch were to be placed at this location, an additional SC - big enough for the L2 switch - would have to be installed, thereby increasing the costs. NITA has suggested the use of a small L2 switch in the SC. However, if an L2 switch is to be placed at the SC, it would have to be the same Cisco 45xx switches as used in exchanges and technical houses due to technical requirements regarding VLAN functionality, QoS and the like. TDC intends to use passive cooling in the SC. If a L2 switch were to be placed in a SC, it would be necessary to establish active cooling at this site. However, active cooling results in noise which could severely reduce the possibilities of been granted permission to establish the SC at the desired locations due to the nuisance to the citizens living nearby. Additional equipment at the SC points would demand more power, cooling, installation and equipment. Protection of the IC installation at SC would also entail additional costs, because the IC is not protected inside an exchange or a technical house. Thus, TDC strongly recommends removing BSA at SC from the model.

17 If BSA at SC is not removed, TDC must insist that the costs of BSA at SC are adjusted to take into account the additional costs of resolving the issues stated above. In addition, since a layer 2 switch will only be deployed in SC in order to enable operator access, the costs of the switch should be carried solely by the ISPs if BSA at SC is implemented. The market 12 decision stipulates a BSA product providing access at the network side of the DSLAM. As there has been no indication of equipment available right now providing such form of multi provider access, we chose to introduce a small Ethernet switch into the model. This was in addition to the large L2 Ethernet switches which have been assumed to be placed in local exchanges and technical houses. TDC argues, that the approximately 1000 interconnect points represented by the large L2 switch locations will fulfil the need of the other providers for access. The argument is essentially that the other providers are currently limited to being able to interconnect at only the 138 ATM-node locations. Thus, with the L2 switches more than 850 additional interconnect points will be introduced. Side 17 NITA is of the opinion that the 1000 interconnect points might indeed fulfil the need from other operators at least in the early part of a roll out - since these points presumably will cover the largest nodes in terms of the number of connected end users (and hence the locations most likely to provide the other operators with a viable business case). As a consequence of the above mentioned considerations, NITA has set the number of small L2 switches in the draft model to zero (and also blanked out the BSA at the Street Cabinet product from the O_Results sheet of the Consolidation model. The underlying calculations have, however, been retained. NITA will closely monitor market developments in this area over the coming years with a view to updating the model (that is, reintroducing the small L2 switches and the BSA at the Street Cabinet product), if relevant and necessary BSA at L2 TDC wishes to underline that BSA at L2 can take place only at approximately 1,000 locations in TDC s network. NITA has modelled a total of 1,693 L2 locations, thereby implying BSA interconnection access at all exchanges and technical houses. TDC will not be placing more than 1,000 L2 switches in the network and objects to any implicit demands of placing L2 switches at additional 693 exchanges or technical houses for pure BSA interconnect purposes. If 1,693 BSA at L2 interconnection points are demanded, TDC insists that the costs of the additional L2 switches are paid for solely by the ISPs wishing BSA at the given geographical location. As mentioned above the additional small L2 switches are now deactivated in the new version of the draft model.

18 2. Operational expenditure and annualisation 2.1. Operational expenditure Functional Area costs TDC is surprised not to find properly updated costs and headcounts in version 2.4, given the emphasis, which NITA had on the development of FA costs in the former version. To operate a data net and to cope with organic growth, significant resources in terms of operational expenditures and headcounts are required in the organisation. In the latter process of implementing FA costing, TDC has provided NITA with a document describing indirect operational expenses and overheads. In this calculation, BSA costs were not included, see table 2 in Driftsomkostninger og indirekte omkostninger som input i LRAIC hybridmodellen of November 16, TDC has included BSA in the previous calculations and attached it as appendix 2. An appendix to TDC s reply shows that indirect operational expenses and overhead should increase. Side 18 Furthermore, TDC has in an appendix provided NITA with a document describing the amount of headcounts required in the organisation. The headcounts are divided between PSTN and non-pstn activities (where non-pstn did not include BSA). It shows that additional headcounts are required to run the BSA production. TDC recommends NITA to update the inputs to the FA calculations accordingly. It should be noted that both appendixes are based on numbers from the Business Segmented Accounts for This is due to the fact, that the calculations regarding indirect operational expenses and overheads were approved by TDC's audit in 2005 as part of the LRAIC revision. Moreover, the numbers will be fully comparable with the documentation without BSA that was part of the LRAIC revision process in TDC also notes that NITA has forgotten important corrections to the formulas in C_FA_Costs, J20:J25, in the Consolidation model. In these formulas, non- PSTN, transmission costs are excluded in order to find costs of PSTN services. However, since non-pstn includes BSA, which is now included in the model, NITA should be aware of updating the formulas and the route factors to calculate transmission related FA costs of PSTN as well as BSA. NITA has noted that the total headcount excluding BSA that TDC refer to is much higher than the total currently in the model (1,625). It is the view of NITA that the level of additional headcount required for the DSLAMs and Layer 2 switches should not be proportionally smaller than the number currently in the model to cater for the entire PSTN switching and SDH transmission network. An additional point that will need to be kept in mind is that the model does not include all IP network costs, only up to the Layer 3 locations. Thus if some spe-

19 cific IP Network headcounts and costs are added, this should be done only for the relevant equipment. Moreover, the way NITA has modelled the costs associated with DSLAMs and Ethernet switches includes an allowance for FTE Maintenance (see section 3.1 of spreadsheet C_xDSL in the core model). Initially, NITA has selected six per cent of equipment costs as an appropriate figure. This equates to a total of around 26 technical staff, which in hindsight NITA consider to be too low. We therefore have increased this input to 20 per cent (corresponding to around 86 technical staff) in lieu of having detailed supporting information on the required staffing levels which could then replace percentage figures with specific headcount levels in spreadsheet I_FA_Costs of the Consolidation model Changes in the allocation of interconnect specific costs The LRAIC Forum notes that according to the report for the first consultation, NITA has requested some model changes to be made to improve the allocation of interconnect specific costs related to core services. The claim that these changes improve the cost allocation has not been substantiated by NITA in any way. Side 19 The LRAIC Forum does not acknowledge that these changes lead to an improvement in the cost allocation. The consequences of the changes are however clear: a 2 percent increase in the core costs allocated to interconnect products and a similar decrease in the allocation to other non-interconnect products. Given that the changes are not objective improvements, e.g. corrects model errors, and do not reflect necessary modifications of the LRAIC model in relation to the BSA project, they should not be undertaken. It is the view of NITA that interconnect specific costs should be recovered through the interconnect products, and therefore should be spread over a relevant a cost-driver for these costs. In principle, several possibilities exist: number of minutes, number of calls, or cost of minutes and calls. In some countries, these costs have been allocated as an additive mark-up to the number of calls. NITA does not believe that there is any particular reasoning behind this practice, but instead believes that the costs should be allocated to both calls and minutes. Moreover, NITA has earlier in the development of the original LRAIC-model in 2002, found that allocating the interconnect specific costs to the costs of minutes and calls seemed appropriate. During the appeal on the current LRAIC hybrid model, NITA however became aware that the interconnect specific costs related to the core-services, was only allocated to the minute-related costs, and not to call-setup related costs. Therefore, the interconnect specific costs in the revised model is now also allocated to the call-setup costs. In order not to change the total relationship between callsetup and minute costs, the allocation of costs to call-setup parameter was also changed, causing a very small total effect on interconnect products.

20 2.2. Annualisation WACC risk-free interest rate TDC notes that the revision of the LRAIC model in 2005 resulted in a reduction of the WACC from 10.85% to 8.5%. This reduction was primarily due to a decrease in the risk-free interest rate from 5.1% to 3.5% in the period 2002 to The WACC has a large impact on the annual raw copper cost in the LRAIC model. Thus, the decrease was one of the main reasons for this cost to decrease from DKK 1,003 in the 2005 LRAIC model to DKK 770 in the 2006 LRAIC model. The risk of large fluctuations in the annual raw copper price in the revision of the LRAIC model every third year could be curtailed, if the WACC is updated in the yearly model updates. Side 20 However, to keep the update of the WACC objective in the years between the model revisions, the WACC could be updated only with respect to the risk-free interest rate. NITA could then determine a fixed yearly cut-off period for the observations of the 10-year Government bond, e.g. December 1. TDC recommends updating the WACC in the LRAIC model on the basis of the average risk-free interest rate from December 1, 2005 to December 1, er enig med TDC i, at en årlig opdatering af WACC en i forhold til den risikofrie rente kan være hensigtsmæssig, idet de større fluktuationer, der ville være ved en 3-årlig opdatering derved reduceres. Samtidig er det hensigtsmæssigt, at en eventuel årlig opdatering af WACC foretages på et helt objektivt grundlag. En årlig opdatering af WACC en rejser dog spørgsmålet om, hvorvidt andre værdier i LRAIC-hybridmodellen bør vurderes nærmere. skal samtidig bemærke, at WACC en hidtil har været fastsat for en treårig periode, hvilket som følge af de seneste års renteudvikling har været til fordel for TDC, men til ulempe for aftagerne af samtrafikprodukterne. bemærker samtidig, at ulempen ved en årlig opdatering af den risikofrie rente er, at der er mindre stabilitet indenfor den treårige reguleringsperiode. Med henblik på at øge stabiliteten indenfor den treårige periode er det derfor s vurdering, at der bør lægges en længere estimeringsperiode til grund for den risikofrie rente. Det er vurdering, at en ændring af estimationsperioden fra ét til to år vil være passende i forbindelse med nærværende opdatering af LRAIC-modellen. har beregnet et foreløbigt estimat af den risikofrie rente pr. 11. oktober Det toårige gennemsnit af den 10-årige statsobligation bereg-