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Cost-Modelling

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Cost-Modelling

  1. 1. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile Interconnection Cost Modeling BTRC, 09 Feb 2012 Interconnection Cost Analysis 1
  2. 2. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile 2 Pricing issues is the largest single lever affecting the industry Source, McKinsey, A Case Study in Assessing and Managing the Impact of Telecommunications Deregulation, Brussels December 2000 and windsor-place consulting
  3. 3. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile Legacy Model : 1 : Sender Keeps All In this model, originating operator does not pay any compensation to the terminating operator for using its network. This model is used in countries where the subscriber market share is generally equally (or close to equal) distributed. In such a model, the processing cost outweighs the amount receivable. Interconnection Settlement: Legacy Models 3
  4. 4. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile Legacy Model : 2 : Peak / Off – Peak Differentiation Peak Hour Tariff Off – Peak Hour Tariff Settlement charges for peak hour (received by the terminating operator from the originating operator) was fixed at BDT 0.90 per minute. Settlement charges for off – peak hour (received by the terminating operator from the originating operator) was fixed at BDT 0.66 per minute. Interconnection Settlement: Legacy Models 4
  5. 5. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile Legacy Model : 3 : Flat Charging Method No Peak / Off – Peak hour differentiation. Settlement charges are applicable at a flat rate (received by the terminating operator from the originating operator) and the rate is fixed at BDT 0.40 per minute. Based on international best practices, the interconnection charge is always ‘how much you pay’ connecting the terminating network. That indicates BDT 0.18 + BDT 0.04 = BDT 0.22 being the Interconnection charge. The off-net charge can’t go beyond that. Interconnection Settlement: Legacy Models 5
  6. 6. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile Current Model : Flat charging method through ICX We introduced ICX (Interconnection Exchange) in February, 2008, to work as a transit operator for receiving and distributing calls from different operators as well as to ensure revenue sharing appropriately and also to ensure central monitoring of nationwide off net calls of different operators. In this method all off net calls go through different ICXs and the settlement charges are distributed in two parts ICX receives an amount of BDT 0.04 per minute from the originating operator. Terminating operator receives BDT 0.18 per minute from the originating operator. Interconnection Settlement: Current Model 6
  7. 7. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile Present Minimum Tariff status: For Mobile & PSTN On – Net : 0.25 / min (BDT) Off – Net : 0.65 / min (BDT) For IPTSP On – Net : 0.00 / min (BDT) Off – Net : 0.40 / min (BDT) Interconnection Settlement Charges: For Terminating Operator 0.18 / min (BDT) For ICX 0.04 / min (BDT) 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Mobile PSTN IPTSP Tariff in BDT Mobile PSTN IPTSP On - net 0.25 0.25 0 Off - net 0.65 0.65 0.4 Tariff Regime: Present Scenario 7
  8. 8. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile Current Model : Flat charging method through ICX Cost : A : Cost of the originating operator to transmit the call from the originating subscriber to ICX. Cost : B : Cost of the terminating operator to transmit the call from the ICX to the terminating subscriber end. Cost : C : Cost of the ICX operator (call transit cost). Cost : D : Additional Cost, not used in cost modeling. D B C A 0.25 0.18 0.04 0.18 Cost Components of an Inter-operator Call 8
  9. 9. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile Interconnection Settlement: Cost Components 9
  10. 10. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile For On – Net calls: Present Tariff Limit (X) = 0.25 (BDT per minute) Total cost (Y) = Origination cost (A) + Termination cost (B) = 0.18 + 0.18 = 0.36 (BDT per minute) Total Retainable Amount = X – Y = 0.25 – 0.36 = -0.11 (BDT per minute) D B C A 0.25 0.18 0.04 0.18 Analysis on present Tariff rate : On – Net Calls 10
  11. 11. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile For Off – Net calls: Present Tariff Limit (X) = 0.65 (BDT per minute Origination Cost (A) = 0.18 (BDT per minute) Termination Cost (B) = 0.18 (BDT per minute) Transit cost (C) = ICX cost = 0.04 (BDT per minute) Total Extra Amount = X – A – B – C = 0.65 – 0.18 – 0.18 – 0.04 = 0.25 (BDT per minute) Analysis on present Tariff rate : Off – Net Calls D B C A 0.25 0.18 0.04 0.18 11
  12. 12. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile Cost Components: PSTN / IPTSP Operators PSTN Operator to Mobile Operator Off – Net Tariff : 0.65 BDT / min IPTSP Operator to Mobile Operator Off – Net Tariff : 0.40 BDT / min 12
  13. 13. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile Operators & Services: Mobile Operators : Prime service with full mobility PSTN Operators : Basic service with limited/no mobility IPTSP Operators : Voice layered service Interconnectivity and Gateway ICX Operators : Nationwide call transit service IGW Operators : International call transit service Operator Types and Services 13
  14. 14. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile 14 Common and Overhead Costs Shared Network Costs Service A Direct Costs Service B Direct Costs Common and Overhead Costs Shared Network Costs Service A Direct Costs Service B Direct Costs Common Overhead Cost + Shared Cost
  15. 15. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile 15 Service A Cost Volume Fixed, common costs LRIC of B LRIC Cost FAC Service B Service A Service B FAC A FAC B V Volume A VB VA VB Common Overhead Cost + Shared Cost
  16. 16. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile 16 LRIC of B Cost TS LRIC Service A Service B Fixed and Common Costs V Volume A VB Common Overhead Cost + Shared Cost
  17. 17. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile Proposed Tariff Rates: For Mobile Operators On – Net : 0.25 / min (BDT) Off – Net : 0.65 / min (BDT) For PSTN & IPTSP Operators On – Net : 0.00 / min (BDT) Off – Net : 0.40 / min (BDT) Cost Modeling Proposal : 1 -0.1 6E-16 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Mobile PSTN IPTSP Tariff in BDT Mobile PSTN IPTSP On - net 0.25 0 0 Off - net 0.65 0.4 0.4 17
  18. 18. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile Proposed Tariff Rates: For Mobile Operators On – Net : 0.25 / min (BDT) Off – Net : 0.50 / min (BDT) For PSTN & IPTSP Operators On – Net : 0.00 / min (BDT) Off – Net : 0.40 / min (BDT) Cost Modeling Proposal : 2 -0.1 6E-16 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Mobile PSTN IPTSP Tariff in BDT Mobile PSTN IPTSP On - net 0.25 0 0 Off - net 0.5 0.4 0.4 18
  19. 19. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile -0.1 6E-16 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Mobile PSTN IPTSP Tariff in BDT Mobile PSTN IPTSP On - net 0.4 0 0 Off - net 0.6 0.4 0.4 Proposed Tariff Rates: For Mobile Operators On – Net : 0.40 / min (BDT) Off – Net : 0.60 / min (BDT) For PSTN & IPTSP Operators On – Net : 0.00 / min (BDT) Off – Net : 0.40 / min (BDT) Cost Modeling Proposal : 3 19
  20. 20. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 Present Proposal - 1 Proposal - 2 Proposal - 3 On – Net Tariff in BDT per minute Mobile PSTN IPTSP 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Present Proposal - 2 Off – Net Tariff in BDT per minute Mobile PSTN IPTSP Proposal Summary 20
  21. 21. Bangladesh Telecommunication Regulatory Commission Interconnection Cost Modeling, PSTN, Mobile Thank You Lt Col Rakibul Hassan rhassan@btrc.gov.bd 21

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