An Order issued by the Telecommunications Regulatory ... Order issued by the Telecommunications Regulatory Authority on the Reference Offer of the Bahrain Telecommunications Company

An Order issued by the Telecommunications Regulatory

Authority on the Reference Offer of the Bahrain

Telecommunications Company B.S.C

Reference Offer Order

14 May 2012

Ref: MCD/05/12/072

Public Version (Confidential information has been replaced by [])

Purpose: To set the fair, reasonable and non-discriminatory charges of Bahrain

Telecommunications Company B.S.C’s Reference Offer (‘RO’).


REFERENCE OFFER ORDER

Page 2 of 167


Pursuant to: 1.

a. The exercise of its powers under article 3(c)(1), 57(b) and 57(e) of Legislative

Decree No. 48 for the year 2002 promulgating the Telecommunications Law (‘the

Law’), and articles 2,3,4,5 and 6 of the Access Regulation issued on 30 April 2005

(the ’Access Regulation’).

b. The Dominance in Interconnection Markets Determination issued 9 August 2003;

the Dominance Determination in Wholesale Markets by Batelco issued 22 January

2006; the Dominance Determination in Wholesale Broadband Markets issued 14

September 2009; and the Dominance Designation for Termination Services on

Individual Mobile Networks issued 1 February 2010.

c. The legal basis and reasoning set out in Annex A to this Order. Annex A forms an

integral part of the Order.

The Telecommunications Regulatory Authority (‘the Authority’) hereby orders the charges 2.

as detailed in the following table to be implemented by Bahrain Telecommunications

Company B.S.C (‘Batelco‘). The Authority’s decisions must be reflected in Batelco’s

Reference Offer (‘RO‘) within 10 working days following the date of issuance of this Order.

Batelco shall inform all its wholesale customers and the Authority by email of the new

charges and their associated implementation date within 2 working days following the date

of issuance of this Order.



Page 3 of 167

Table 1: Final Order charges

Chargeable activity

Approved/ ordered in

January 2011 (or currently

implemented)

Batelco's submitted charges in April 2011

TRA FRND draft charges

TRA FRND final Order

charges

Evolution of Order FRND as compared to previously

approved/ ordered

ISI and CSI Link Services

ISI Link services ( 1-1 )

in BD

1-1.5A - ISI Link - Port and E1 line rental for unilateral traffic routes - 1-21 links

60.000 114.000 removed removed

1-1.5B - ISI Link -Port and E1 line rental for unilateral traffic routes - 22-42 links



21.612 48.599


15.101 30.181

1-1.5C - ISI Link -Port and E1 line rental for unilateral traffic routes - 29-42 links

13.624 26.002

1-1.5D - ISI Link -Port and E1 line rental for unilateral traffic routes - 43-63 links

39.000 33.000 12.917 24.003 -38.5%

1-1.12 - ISI Link -Signalling Link rental 50.000 138.000 14.192 25.366 -49.3%

CSI Link services ( 1-2 )

in BD

1-2.2A - CSI Link Rent (Basic) - 1-21 Links 154.000 267.000 removed removed

1-2.2B - CSI Link Rent (Basic)- 22-42 Links 75.000 91.000 removed removed

1-2.2A - CSI Link Rent (Basic) - 1-14 Links 121.790 169.039

1-2.2B - CSI Link Rent (Basic) - 15-28 Links 54.916 73.195

1-2.2C - CSI Link Rent (Basic) - 29-42 Links 39.741 51.447

1-2.2D - CSI Link Rent (Basic) - 43-63 Links 58.000 55.000 32.484 41.046 -29.2%

1-2.11 - CSI Link -Signalling Link rental 50.000 138.000 21.827 25.366 -49.3%

Interconnection services in fils

1-3.1 - Fixed terminating access from OLO GMSC 3.040 3.040 replaced replaced

1-3.2 - Fixed terminating access from OLO Transit 2.382 2.382 removed removed

1-3.1 - Fixed terminating access 2.711 2.711

1-3.3 - Delivery to tone or announcement 2.000 2.000 2.000 2.000 0.0%

1-4.1 - Mobile terminating access from OLO GMSC 6.203 4.680 replaced replaced

1-4.2 - Mobile terminating access from OLO Transit 6.553 4.530 removed removed

1-4.1 - Mobile terminating access 4.736 6.378


1-6.1 - SMS terminating access 0.443 1.480 0.288 0.443 0.0%

1-7.1 - Conveyance of emergency call to 999 1.045 1.100 1.233 1.233 18.0%

1-7.2 - Conveyance of emergency call to 990 2.382 2.382 same as 1-3.1 same as 1-3.1 13.8%




1-8.1 - Freephone from mobile 8.060 6.020 6.150 7.578 -6.0%

1-8.2 - Freephone from fixed 2.710 2.710 2.710 2.710 0.0%

1-11.1 - MMS delivery service 124.495 90.500 89.747 124.495 0.0%

2-2.1 - Directory assistance service for call to 181 121.402 111.010 112.684 112.684 -7.2%

2-2.2 - Directory assistance service for call to 188 123.884 112.540 112.800 112.800 -8.9%

2-7.1 - International Inbound calls to fixed 2.43 30.160 same as 1-3.1 same as 1-3.1 11.6%

2-8.1 - International inbound calls to Batelco mobile from OLO GMSC

6.122 37.800 replaced replaced

2-8.2 - International inbound calls to Batelco mobile from OLO Transit


2-8.1 - International inbound calls to mobile same as 1-4.1 same as 1-4.1

2-9.1 - Inter-Operator Transit Access Service (from

OLO GMSC/Transit to OLO Transit/GMSC) 1.724 1.724 replaced replaced

2-9.2 - Inter-Operator Transit Access Service (from

OLO Transit to Transit) 1.490 1.100 removed removed

2-9.1 - Inter-Operator Transit Access Service: Per Transit Call

1.380 1.723



Page 4 of 167

Chargeable activity



implemented)




charges


approved/ ordered

Duct access ( 2-3.9 ) in BD

2-3.2 Site Survey if required 300.000 300.000

Time and materials basis as set out in Annex 1. For duct access, the field study total charge should not exceed BD 0.600 per metre of the straight-line distance separating the two physical locations between which duct access is requested.

Time and materials basis as set out in Annex 1.

For duct access, the field study total charge should not exceed BD 0.430 per metre of the duct route

provided to the OLOs. Upon request, Batelco should provide a detailed map of the duct route to the OLO at no additional cost.

n/a

2-3.9 – Duct Rental charge 0.189 0.213 0.155 0.189 0.0%

CAT/LLCO ( 2-5, 2-6 )

in BD

Low-speed CAT/LLCO in BD (Charges apply for open period)

64 kbit/s 58.000 97.000 49.405 58.508 0.9%

128 kbit/s 61.000 99.000 50.955 60.963 -0.1%

256 kbit/s 68.000 102.000 54.056 65.872 -3.1%

512 kbit/s 81.000 108.000 60.257 75.692 -6.6%

1.024 Mbit/s 119.000 122.000 74.471 97.143 -18.4%

1.536 Mbit/s 145.000 135.000 86.873 116.781 -19.5%

2.048 Mbit/s 171.000 150.000 101.734 138.879 -18.8%

High-speed CAT/LLCO

maximum price in BD * (price ceiling)

DS3 (44.736 Mbit/s) 4,686.310 * 5,678.000 * 2,583.542 * 2,512.235 * -46.4%

STM-1 (155.52 Mbit/s) 6,630.690 * 9,204.000 * 3,956.858 * 3,552.331 * -46.4%

STM-4 (622.08 Mbit/s) 15,211.840 * 14,698.000 * 9,224.239 * 8,185.213 * -46.2%

IPLC ( 2-10 )

IPLC - Zone 1 – Low-speed IPLC

in BD

64 kbit/s 137.000 89.000 77.944 77.944 -43.1%

128 kbit/s 167.000 114.000 100.276 100.276 -40.0%

256 kbit/s 227.000 165.000 144.939 144.939 -36.2%

512 kbit/s 348.000 267.000 234.264 234.264 -32.7%

768 kbit/s 468.000 396.000 323.590 323.590 -30.9%

1.024 Mbit/s 595.000 475.000 416.542 416.542 -30.0%

1,536 Mbit/s 835.000 679.000 595.193 595.193 -28.7%

2.048 Mbit/s 1076.000 882.000 773.845 773.845 -28.1%

IPLC - Zone 1 – High-speed IPLC maximum price in BD ** (price ceiling)

DS3 (44.736 Mbit/s) 6,800.000 ** 4,998.000 ** 3,242.769 ** 2,204.551 ** -67.6%

STM-1 (155.52 Mbit/s) 11,495.000 ** 7,504.000 ** 5,719.290 ** 4,272.430 ** -62.8%

STM-4 (622.08 Mbit/s) 26,779.000 ** 16,232.000 ** 14,221.281 ** 10,921.226 ** -59.2%

** The price ceiling applies when the IPLC uses the following international cable and landing partner:

Destination International

Cable Landing Partner

UAE FOG Etisalat

Kuwait FOG Ministry of Communications (MOC)

Oman FALCON OmanTel



Page 5 of 167

Chargeable activity



implemented)




charges


approved/ ordered

Qatar FOG QTel

Saudi Arabia SFO STC Saudi

Prices may differ from the above prices ceilings if another international cable and landing partner are requested by the ordering party.

IPLC - Zone 2

in BD

64 kbit/s 165.000 144.000 126.406 126.406 -23.4%

128 kbit/s 223.000 225.000 197.199 197.199 -11.6%

256 kbit/s 339.000 386.000 338.785 338.785 -0.1%

512 kbit/s 571.000 709.000 621.958 621.958 8.9%

768 kbit/s 803.000 1,032.000 905.130 905.130 12.7%

1.024 Mbit/s 1041.000 1,359.000 1,191.928 1,191.928 14.5%

1,536 Mbit/s 1,505.000 2,004.000 1,758.273 1,758.273 16.8%

2.048 Mbit/s 1,969.000 2,650.000 2,324.618 2,324.618 18.1%

IPLC - Zone 3 in BD

64 kbit/s 172.000 107.000 94.069 94.069 -45.3%

128 kbit/s 236.000 151.000 132.525 132.525 -43.8%

256 kbit/s 366.000 239.000 209.437 209.437 -42.8%

512 kbit/s 625.000 414.000 363.262 363.262 -41.9%

768 kbit/s 883.000 586.000 517.086 517.086 -41.4%

1.024 Mbit/s 1148.000 769.000 674.537 674.537 -41.2%

1,536 Mbit/s 1666.000 1,120.000 982.186 982.186 -41.0%

2.048 Mbit/s 2,183.000 1,470.000 1,289.835 1,289.835 -40.9%

Wholesale DSL (2-11)

Wholesale DSL- Residential

in BD

Contention Ratio of 15:1

up to 256 kbit/s (2 GB) 6.210 6.070 6.107 6.108 -1.6%

up to 512 kbit/s (8 GB) 10.310 8.980 9.023 9.025 -12.5%

up to 640 kbit/s (2 GB) 6.450 6.260 6.294 6.296 -2.4%

up to 640 kbit/s (5 GB) 8.420 7.650 7.690 7.692 -8.6%

up to 1.024 Mbit/s (4 GB) 8.010 7.370 7.411 7.415 -7.4%

up to 1.024 Mbit/s (8 GB) 9.100 9.230 9.273 9.277 1.9%

up to 1.024 Mbit/s (15 GB) 15.230 12.490 12.530 12.534 -17.7%

up to 2.048 Mbit/s (15 GB) 13.010 12.990 13.029 13.037 0.2%

up to 2.048 Mbit/s (20 GB) 19.160 15.230 15.355 15.363 -19.8%

up to 3.072 Mbit/s (8 GB) 10.410 10.270 10.282 -1.2%

up to 4.096 Mbit/s (25 GB) 18.960 18.640 18.679 18.695 -1.4%

up to 6.144 Mbit/s (15 GB) 15.630 15.023 15.047 -3.7%

up to 8.192 Mbit/s (25 GB) 21.590 20.674 20.706 -4.1%

up to 8.192 Mbit/s (40 GB) 36.200 27.620 27.654 27.686 -23.5%

up to 8.192 Mbit/s (60 GB) 37.850 36.920 36.960 36.992 -2.3%

up to 8.192 Mbit/s (90 GB) 51.840 50.920 50.952 -1.7%

up to 10.240 Mbit/s (50 GB) 44.060 33.270 33.304 33.345 -24.3%

up to 10.240 Mbit/s (80 GB) 48.460 47.230 47.264 47.304 -2.4%

up to 10.240 Mbit/s (120 GB) 67.100 65.877 65.917 -1.8%

up to 16.384 Mbit/s (80 GB) 67.660 50.220 50.256 50.320 -25.6%

up to 16.384 Mbit/s (100 GB) 61.660 59.520 59.563 59.627 -3.3%

up to 16.384 Mbit/s (150 GB) 84.980 82.829 82.893 -2.5%

Notes: The packages and charges written in blue colour were introduced after the RO Order of 25 January 2011 (‘2011 RO Order’).

Wholesale DSL- Business Threshold - Cost with CPE in BD

Contention ratio of 8:1 (except 256 kbit/s with 15:1)

up to 256 kbit/s without CPE (2.5 GB) 6.540 5.530 6.065 5.957 -8.9%

up to 256 kbit/s (5 GB) 12.320 18.280 11.229 11.120 -9.7%

up to 512 kbit/s (10 GB) 15.900 20.840 13.789 13.793 -13.3%



Page 6 of 167

Chargeable activity



implemented)




charges


approved/ ordered

up to 1.024 Mbit/s (15 GB) 19.800 23.640 16.583 16.591 -16.2%

up to 2.048 Mbit/s (20 GB) 24.300 26.900 19.845 19.860 -18.3%

up to 4.096 Mbit/s (130 GB) removed 79.960 removed removed -





Wholesale DSL- Business Flat rate - Cost with CPE in BD


up to 256kbit/s (Flat) 12.560 17.620 13.555 13.447 7.1%

up to 512 kbit/s without CPE (Flat) 14.660 14.442 14.446 -1.4%

up to 512 kbit/s (Flat) 18.650 21.020 18.442 18.446 -1.1%

up to 1.024 Mbit/s (Flat) 23.920 23.690 23.563 23.570 -1.5%

up to 2.048 Mbit/s (Flat) 48.410 39.790 47.764 47.779 -1.3%

up to 4.096 Mbit/s (Flat) 97.390 96.166 96.197 -1.2%

up to 6.144 Mbit/s (Flat) 118.450 116.649 116.695 -1.5%

up to 8.192 Mbit/s (Flat) 139.510 137.132 137.193 -1.7%

up to 10.240 Mbit/s (Flat) 155.920 152.962 153.037 -1.8%

up to 16.384 Mbit/s (Flat) 191.190 186.491 186.612 -2.4%

Over the threshold charge per incremental GB (Usage tariffs DSL.8)

0.465 0.465 0.465 0.465 0.0%

Notes: The packages and charges written in blue colour were introduced after the 2011 RO Order.

Bitstream (2-12)

Bitstream- Residential

in BD

Contention ratio of 15:1

up to 256 kbit/s 3.640 3.070 3.064 3.065 -15.8%

up to 512 kbit/s 3.800 3.190 3.189 3.191 -16.0%

up to 640 kbit/s 3.880 3.250 3.251 3.254 -16.1%

up to 1,024 Mbit/s 4.130 3.440 3.438 3.442 -16.7%

up to 2.048 Mbit/s 4.780 3.940 3.937 3.945 -17.5%

up to 3.072 Mbit/s 5.430 4.435 4.447 -18.1%

up to 4.096 Mbit/s 6.090 4.940 4.934 4.950 -18.7%

up to 6.144 Mbit/s 7.390 5.931 5.956 -19.4%

up to 8.192 Mbit/s 8.700 6.930 6.929 6.961 -20.0%

up to 10.240 Mbit/s 10.010 7.930 7.926 7.966 -20.4%

up to 16.384 Mbit/s 13.920 10.920 10.918 10.982 -21.1%

Bitstream- Business in BD


up to 256 kbit/s 3.780 2.680 3.173 3.065 -18.9%

up to 512 kbit/s 4.090 2.910 3.407 3.411 -16.6%

up to 640 kbit/s 4.240 3.030 3.524 3.529 -16.8%

up to 1.024 Mbit/s 4.700 3.380 3.874 3.882 -17.4%

up to 2.048 Mbit/s 5.920 4.310 4.809 4.824 -18.5%

up to 4.096 Mbit/s 8.370 6.180 6.679 6.710 -19.8%

up to 6.144 Mbit/s 10.820 8.050 8.549 8.595 -20.6%

up to 8.192 Mbit/s 13.270 9.920 10.419 10.480 -21.0%

up to 10.240 Mbit/s 15.720 11.790 12.289 12.365 -21.3%

up to 16.384 Mbit/s 23.070 17.400 17.899 18.020 -21.9%

One-off charges applicable to Bitstream

Bitstream

in BD

BS.3 - Maintaining relationship charge 1,552.000 4,029.000 872.917 872.917 -43.8%

BS.12 INET Helpdesk premium rate call (per 0.250 removed removed



Page 7 of 167

Chargeable activity



implemented)




charges


approved/ ordered

minute)

International Falcon Connection Service (IFC Service) (2-14)

2-14.3 Co-location space 350 350 Refer to Schedule 3 2-15.2.2

Refer to Schedule 3 2-15.2.2

-

2-14.4 Riser room and riser access 0.712 0.712

Monthly duct rental charge Schedule 3 2-3.9 + 300% premium (per metre for a maximum of 100 metres)


0.0%

Note: The final Order charges are written in red. When the final Order charges are different from the draft Order charges, they are also highlighted in light yellow.

Source: The Authority



Page 8 of 167

The Authority hereby orders Batelco to reflect the following changes in its RO: 3.

a. Batelco shall amend the cancellation charge formula in its RO Schedule 4 clause

8 as follows:

with:

P: Amount to be paid (cancellation charge);

WC: Relevant wholesale charge (i.e. ISI/CSI) applied to the average number of E1s at

which the link has operated since its first operation (i.e. between the Ready for Test

(“RFT”) Date and the removal order date) or the current number of E1s at the removal

order date whichever of the two is higher, based on the current link rate applied to the

band in which that number of E1s falls.

M: Number of months between the Ready for Test (“RFT”) Date and the removal order

date rounded-up to the next full month.

The above formula shall apply to both existing and new services.

b. Batelco shall amend the names of interconnection, transit and access services in

its RO in accordance with the above Table 1. This applies to services 1-3.1, 1-4.1,

1-8.1, 1-8.2, 2-7.1, 2-8.1 and 2-9.1.

c. When relevant, Batelco shall amend the data transfer and data usage units of

regulated services (such as WDSL, Bitstream, CAT/LLCO, IPLC…) in accordance

with the International System of Units (‘SI’) detailed in Table 77 and Table 78 of

the Annex (page 142).

d. Batelco shall provide accurate maps of the duct route provided to OLOs upon

request. This should be provided to OLOs at no additional costs and at any time

after the completion of the field study. Batelco shall amend its RO accordingly.

e. Batelco shall remove the chargeable activity BS.12 (related to INET Helpdesk

premium rate call) from the RO.

Compliance

Batelco shall comply with the terms of this Order. Failure to comply with the terms of this 4.

Order may constitute a material breach of the Telecommunications Law and may

consequently be subject to enforcement action pursuant to the relevant provisions of the

Telecommunications Law.

Entry into force

This Order is effective on the date of its issuance. The charges shall apply from 1 June 5.

2012 (the first calendar day of the month following the issuance of this Order) with the

exception of Wholesale DSL charges which shall apply from the start of the next billing

cycle following the date of issuance of this Order. Batelco shall inform all its wholesale

P = WC × ( 36 - M )



Page 9 of 167

customers and the Authority by email of the new charges and their associated effective

dates within 2 working days following the date of issuance of this Order.

This Order is without prejudice to any further orders, regulations and determinations that 6.

the Authority may consider necessary pursuant to its powers and duties under the

Telecommunications Law.

Signed on 14 May 2012

Mohammed Bubashait

General Director

Telecommunications Regulatory Authority

Manama, Kingdom of Bahrain


Annex– Order legal basis and reasoning

Page 10 of 167

Annex– Order’s legal basis and reasoning

Table of contents

Table of contents ........................................................................................................................ 10

List of acronyms and definitions ................................................................................................. 12

1 Introduction ......................................................................................................................... 13

2 Legal basis ......................................................................................................................... 13

3 2011 RO review process and chronology .......................................................................... 15

4 Premise of fair, reasonable and non-discriminatory tariffs ................................................. 18

Summary of the responses received by the Authority on Sections 1, 2, 3 and 4 of the draft

Order ....................................................................................................................................... 18

The Authority’s analysis and conclusion ................................................................................ 20

5 Context of this year’s RO review ........................................................................................ 21

Draft Order Text ...................................................................................................................... 21

Summary of responses received by the Authority .................................................................. 21


6 Wholesale costs ................................................................................................................. 23

Draft Order Text ...................................................................................................................... 23



7 ISI and CSI link services (1-1 and 1-2) .............................................................................. 40

Draft Order Text ...................................................................................................................... 40



8 Interconnection and transit services................................................................................... 61

Draft Order Text ...................................................................................................................... 61

8.1 Information provided by Batelco ................................................................................ 61

8.2 Review of the submitted charges for interconnection and transit services ............... 82

8.3 Draft Order fair, reasonable and non-discriminatory charges for interconnection and

transit services ........................................................................................................................ 90



8.4 Order fair, reasonable and non-discriminatory charges for interconnection and transit

services ................................................................................................................................... 97



Page 11 of 167

9 Duct access service (2-3.9) ................................................................................................ 98

Draft Order Text ...................................................................................................................... 98

Summary of responses received by the Authority ................................................................ 107

The Authority’s analysis and conclusion .............................................................................. 110

10 CAT/LLCO services (2-5 and 2-6) .................................................................................... 114

Draft Order Text .................................................................................................................... 114



11 International Private Leased Circuit service (‘IPLC’) (2-10) ............................................. 128

Draft Order Text .................................................................................................................... 128



12 Wholesale DSL service (2-11) and Bitstream service (2-12) ........................................... 137

Draft Order Text .................................................................................................................... 137

12.1 Wholesale DSL service (2-11) ................................................................................. 137

12.2 Bitstream service (2-12) .......................................................................................... 151



13 International Falcon Connection (‘IFC’) service (2-14) .................................................... 164

Draft Order Text .................................................................................................................... 164



14 Other matters raised by operators ................................................................................... 167





Page 12 of 167

List of acronyms and definitions

APM Accounting Procedures Manual

Batelco Bahrain Telecommunications Company B.S.C

BB Broadband

BD Bahraini Dinar

CAPEX CAPital EXpenditure

CAT Customer Access Tail

CSI Customer Sited Interconnect

FAC Fully Allocated Cost

FRND Fair, reasonable and non-discriminatory

G1 Grade 1

GCC countries Gulf Cooperation Council countries

ISC Interconnect Specific Charge

ISI In-Span Interconnect

kbit/s Kilobits per second

LLCO Local Leased Circuit for OLO

LLU Local Loop Unbundling

LRAIC Long Run Average Incremental Cost

LRIC Long Run Incremental Cost

MB Megabytes

Mbit/s Megabits per second

MPLS Multiprotocol Label Switching

MSAN Multi-Service Access Node

MTR Mobile Termination Rate

NA Network Activity

NB Narrowband

NGN Next Generation Network

NRA National Regulator Agency

OLO Other Licensed Operator

POP Point Of Presence

RAN Radio Access Network

RAO Reference Access Offer

RIO Reference Interconnection Offer

RO Reference Offer

S&M Support and Maintenance

SHDSL Symmetrical High-speed Digital Subscriber Line

SLA Service Level Agreement

SMP Significant Market Power

SNFM Service Node Facilities Management Service

TRA Telecommunications Regulatory Authority of the Kingdom of Bahrain

UC Un-attributable Costs

WACC Weighted Average Cost of Capital

WDSL Wholesale Digital Subscriber Line



Page 13 of 167

1 Introduction

Batelco’s Reference Offer (‘RO’) is a key regulatory instrument that drives competition in 7.

the telecommunications market in the Kingdom of Bahrain. It affects Batelco and other

operators. Accordingly, the Authority has decided to consult with the wider industry and

stakeholders on this Order.

This Annex contains the legal basis on which the decisions of the Authority have been 8.

made and detailed reasoning for the ordered charges. It also sets out the premise of fair,

reasonable and non-discriminatory tariffs as well as the context of this review of Batelco’s

2011 RO submission and the chronology of this review.

The final Order follows the same structure as the draft Order issued for consultation on 3 9.

November 2011. It includes the original text of the draft Order with minor amendments. A

summary of the points raised in submissions is provided along with the Authority’s analysis

and conclusions.

By the end of the consultation period, the Authority had received 7 submissions as 10.

detailed in Table 2 page 16. The present Order concludes a lengthy and comprehensive

process whose various steps are documented in Section 3.

2 Legal basis

Article 57 (b), 57 (c) and 57 (e) of Legislative Decree No. 48 of 2002 promulgating the 11.

Telecommunications Law (the ’Telecommunications Law‘) and article 4 of the Access

Regulation issued 30 April 2005 require operators determined by the Telecommunications

Regulatory Authority (the ‘Authority’) to have a dominant position in a particular

telecommunications market to publish a RO after obtaining the Authority’s approval of the

offer.

Pursuant to article 57 of the Telecommunications Law and articles 5 and 6 of the Access 12.

Regulation, in reviewing the proposed offer, the Authority must assess whether the terms

and conditions and tariffs are fair, reasonable, non-discriminatory and based on forward-

looking costs or benchmarked against tariffs in comparable telecommunications markets.

When doing so, the Authority shall:

a. pursuant to its obligations under article 3(a) of the Telecommunications Law,

exercise its powers inter alia reasonably, in a non-discriminatory and transparent

manner.

b. pursuant to its obligations under article 3(b) of the Telecommunications Law,

ensure that when assessing such terms or tariffs it will carry out its duties in a

manner best calculated to:

i. protect the interests of Subscribers or Users as set out in article 3(b)1;

and

ii. promote effective and fair competition as set out in article 3(b)2.

In accordance with article 57 of the Telecommunications Law, should the Authority 13.

consider that the proposed tariffs are not fair, not reasonable or are discriminatory, then

the Authority may issue an order specifying the terms and conditions and tariffs.



Page 14 of 167

Bahrain Telecommunications Company B.S.C. (‘Batelco‘), having been found dominant in 14.

certain markets pursuant to the Dominance in Interconnection Markets Determination

issued 9 August 2003, the Dominance Determination in Wholesale Markets by Batelco

issued 22 January 2006, the Dominance Determination in Wholesale Broadband Markets

issued 14 September 2009, and the Dominance Designation for Termination Services on

Individual Mobile Networks issued 1 February 2010, submitted its latest RO for review and

approval on 11 April 2011.

Other than as detailed in this Order, the Authority has used costs as set out in the 2009 15.

Fully Allocated Cost (‘FAC‘) and Long Run Incremental Cost (‘LRIC‘) regulatory accounts

to set tariffs. Those costs have been adjusted where appropriate. The regulatory accounts

are prepared in accordance with Batelco’s Accounting Procedures Manual (‘APM’)

approved by the Authority. The APM sets the principles and methods according to which

Batelco’s regulatory accounts must be prepared. It provides some details on the

accounting treatment of costs and their allocation.

After having conducted a review of the tariffs contained in the initial RO submission, 16.

requested, received and reviewed additional information considered necessary by the

Authority to complete its analysis, the Authority considers that certain tariffs listed in the

initial RO submission are not fair, reasonable and non-discriminatory.

Consequently the Authority has decided to exercise its power in accordance with articles 17.

3(c)(1) and 57 of the Telecommunications Law and article 5.3 of the Access Regulation to

issue this Order to Batelco with respect to its RO submitted on 11 April 2011.

The effective dates for the final charges are the first calendar day of the month following 18.

the issuance date of the order for wholesale services billed with Batelco’s wholesale billing

platform and on the next billing cycle date in all other cases (e.g. Wholesale DSL).



Page 15 of 167

3 2011 RO review process and chronology

In its letter dated 9 November 2010 (MCD/11/10/100), the Authority set out a number of 19.

requirements consistent with the Telecommunications Law to facilitate the RO review:

a. Justify the proposed charges in light of the relevant legal provisions, including

article 57 of the Telecommunications Law;

b. Provide at the time of submission all supporting documents and in particular fully

functioning and documented spreadsheets to enable TRA to follow the

calculations as well as to ensure consistency and accuracy of the figures and data

provided;

c. Explain and justify in writing at the time of the submission changes to previously

agreed/ordered positions, if any, so that the review can be more focused and

rapid;

d. Provide 2008 and 2009 comparison of cost stacks in order to facilitate the

understanding of costs as well as explain wide movement in costs; and

e. Meet with the Authority to present all submitted documents.

Where Batelco has not provided any justifications or new arguments to depart from the 20.

positions set in the 2011 RO Order, the Authority has reverted to the position set in the

2011 RO Order. Where the Authority has departed from the 2011 RO Order, the reasons

for doing so are set in this Order.

The following table summarizes the chronology of the 2011 RO submission review up to 21.

the publication of the final RO Order.



Page 16 of 167

Table 2: 2011 RO submission review chronology

Date Event description Reference File(s) name(s)

07/04/2011 Batelco submits the calculation spreadsheets of its 2011 RO based on 2009 regulatory accounts.

BTC RO submission GCL/126/11

20110407 BTC RO 2011 submission spreadsheets.zip

11/04/2011 Batelco submits the complete soft copy set of its 2011 RO.

RE: BTC RO submission GCL/126/11


11/04/2011

Batelco re-submits the complete soft copy set of its 2011 RO as ITAS costs were not correct in the previous submission.

RE: BTC RO submission GCL/126/12


15/06/2011

The Authority issues a request for information under article 53 of the Telecommunications Law. Batelco is required to provide its response by 28 July 2011 4pm.

MCD06/11/091 MCD 06 11 091 Article 53 related to Batelco 2011 RO submission vF

28/07/2011

Batelco provides a partial response to the article 53 request for information of 15 June 2011. As the response is incomplete, Batelco indicates that it will send the outstanding elements the following week.

GCL/264/11

RO artc 53 costing attachments.zip 20110728 response to Article 53 related to Batelco 2011 RO submission - final.docx 20110728 response to Article 53 - 2011 RO review.xlsx

02/08/2011

As part of the 2010 APM review, the Authority issues a request for information under Article 53 of the Telecommunications Law. The questionnaire includes a set of questions on wholesale activities cost allocation (Questions - Wholesale cost allocation.xlsx)

MCD/08/11/113

MCD0811113 Request for information for 2010 APM.pdf Questions - Wholesale cost allocation.xlsx

08/08/2011

Batelco sends additional elements to complete its response to the article 53 request for information sent on 15 June 2011.

GCL/282/11 20110808 Updated response to Article 53 related to Batelco 2011 RO submission - final.docx

23/08/2011

Batelco provides a response to the wholesale activities cost allocation question of the article 53 request for information sent on 2 August 2011.

GCL/299/11 Questions - Wholesale cost allocation.xlsx

03/11/2011

Following a presentation to the industry held in its premises, the Authority issues Batelco’s 2011 RO draft Order for public consultation.

Operators are invited to submit a response by 8 December 2011 at 4pm

MCD11/11/150

20111103ROdraftOrder-Presentationtotheindustry.pdf

MCD11111502011ROdraftOrderPV.pdf

21/11/2011 Batelco requests an extension of the consultation period to 28 December 2011.

GCL/402/11 20111121 - GCL 402 11 - Reference Offer Draft Order_RFE(2).pdf

29/11/2011 The Authority extends the consultation period to 28 December 2011.

The Authority’s website announcement and email to all licensees

N/A

04/12/2011 Batelco requests clarifications from the Authority on the 2011 RO draft Order.

GCL/415/11 20111204 - GCL 415 11 - RODO clarification request.pdf

04/12/2011 The Authority provides the clarifications that were requested by Batelco the same day.

Email 20111204 Tables 14 - 39 - 62.xlsx



Page 17 of 167

28/12/2011 The Authority receives seven responses before the end of the consultation period.

Soft and hard copies

Responses of Batelco,1 Etisalcom,

2

Lightspeed,3 Menatelecom,

4 Viacloud,

5

Viva6 and Zain.

7

After the closing date for submission (28/12/2012)

After 28/12/2012

The Authority receives two responses after the end of the consultation period. Those submissions have been disregarded as they were submitted after the extended submission date.

Emails Reponses of 2Connect received on 12 January 2012 and Kalaam received on 15 January 2012

01/02/2012

The Authority issues a request for information under article 53 of the Telecommunications Law. The information requested relates to Batelco’s international traffic in 2009 and 2010 for which the Authority has identified a large discrepancy.

MCD/02/12/012 MCD 02 12 012 Request for information under Article 53 Batelco International Minutes 2009 and 2010.pdf

06/02/2012 Batelco requests an opportunity to meet the Authority to discuss the RO Order prior to its publication.

CEB 001/2/12 batelco reference offer 2011.pdf

14/02/2012 The Authority provides a response to the above letter sent by Batelco.

MCD/02/12/019 MCD 02 12 019 Batelco Reference Offer 2011.pdf

16/02/2012 Batelco submits its response to the request for information sent by the Authority on 1 February 2012.

GCL/57/12 20120216 International traffic minutes article 53 response.pdf 20120216 Traffic 2010 article 53.xlsx

01/04/2012

The Authority issues a request for information under article 53 of the Telecommunications Law in relation to Batelco’s costing of SDH-based products.

MCD04/12/050 MCD 04 12 050 Request for clarification and A53 request for information on the costing of SDH-based products.pdf

09/04//2012 Batelco submits its response to the request for information sent by the Authority on 1 April 2012.

GCL142/12

20120409 Article 53 response - SDH costing.pdf 20120409 SDH allocations 2010 - annex.xlsx

25/04/2012

The Authority issues a request for clarification on the Wholesale Duct Access Service and more specifically on the limitation of the service to physical addresses.

MCD04/12/064 MCD 04 12 064 Request for clarification on the Wholesale Duct Access Service in the context of the 2011 RO review.pdf

06/05/2012 Batelco submits its response to the request for clarification sent by the Authority on 25 April 2012.

GCL/189/12 20120506 Batelco letter - Wholesale Duct Access Service.pdf

06/05/2012

Batelco submits further information in response to the request for clarification sent by the Authority on 25 April 2012.

GCL/200/12 GCL 200 12 Wholesale Duct Access.pdf


1 Batelco, “RESPONSE TO THE TELECOMMUNICATIONS REGULATORY AUTHORITY OF BAHRAIN (TRA)

REFERENCE OFFER DRAFT ORDER (REF MCD/11/11/150) BY BAHRAIN TELECOMMUNCATIONS COMPANY (BATELCO) BSC ON 28 DECEMBER 2011 (Our Ref GCL/434/11)”, 28 December 2011. 2 Etisalcom, “Consultation on the draft order issued on Batelco’s Reference Offer”, 7 December 2011.

3 Lightspeed, “Lightspeed Submission in Response to the Draft Order On The Reference Offer of the Bahrain

Telecommunications Company B.S.C (Reference Offer Draft Order) Issued by the Telecommunications Regulatory Authority (TRA)”, 26 December 2011. 4 Menatelecom, “Response to TRA Consultation Document on A Draft Order issued by the Telecommunications

Regulatory Authority on the Reference Offer of the Bahrain Telecommunications Company B.S.C – Ref: MCD/11/11/150”, 28 December 2011. 5 Viacloud, “Viacloud comments on Bahrain Telecommunications Company B.S.C?s Reference Offer (RO) –

Confidential”, 26 December 2011. 6 Viva, “VIVA's Response to the draft Order issued on Batelco's Reference Offer”, 28 December 2011. Viva’s

submission only said “VIVA has No comments on Batelco’s drafted Reference Offer.” Viva’s “submission” is therefore not considered further. 7 Zain, “Zain Bahrain’s Reply Comments to the TRA consults on a draft Order issued on Batelco’s Reference

Offer” (Ref: RI/1112/042), 28 December 2011.



Page 18 of 167

4 Premise of fair, reasonable and non-discriminatory tariffs

The Authority considers tariffs to be fair and reasonable if such tariffs are based on 22.

relevant, efficiently incurred economic costs calculated on a forward-looking incremental

basis, including the regulated rate of return on capital employed.

In assessing whether charges are fair and reasonable and non-discriminatory, the 23.

Authority also considers the relative relationship between the prices of wholesale services

and the equivalent retail services. To this end the Authority has consistently applied the

same competition-based analytical framework to analyse wholesale and retail tariffs in

order to ensure that there is consistency between the charges applicable at various levels

of the value chain. This framework looks at whether retail services can be replicated by

OLOs which rely on wholesale regulated products and remain profitable, thereby ensuring

that tariffs are compatible with the development of sustainable competition. The objective

of introducing wholesale products which give access to bottlenecks controlled by dominant

operators is to enable competitors that do not control such bottlenecks to compete at the

downstream level. This is a core premise of the wholesale regulation of dominant

operators.

In setting charges which are fair and reasonable, the Authority must also take into account 24.

the principle of non-discrimination referred to in article 57(b) of the Telecommunications

Law and article 6 of the Access Regulation.

Summary of the responses received by the Authority on Sections 1, 2, 3 and 4 of

the draft Order

Batelco

In relation to the implementation and entry into force of the RO Order, Batelco considers 25.

that it is appropriate for changes to be implemented within 10 working days of the date of

the final Order except when changes require material redrafting of legal terms and

conditions. Batelco also considers reasonable that changes to the charges are notified

within 2 working days of the date of the final Order.

In relation to the ordered changes listed in paragraph 3 of the Order, Batelco makes the 26.

following comments:

a. paragraph 3.a: Batelco refers the Authority to the comments included in its

submission (summarized by the Authority in paragraphs 124 to 129);

b. paragraph 3.b: Batelco accepts the changes with respect to 1-3.1, 1-4.1, 1-8.1, 1-

8.2, and 2-9.1 but is concerned with any changes being made with respect to 2-

7.1 and 2-8.1 (regarding international inbound services) pending the proposed

consultation;

c. paragraphs 3.c and 3.e: Batelco accepts the ordered changes; and

d. IFC backhaul restriction: Batelco refers the Authority to the comments included in

its submission (summarized by the Authority in paragraphs 453 and 454).



Page 19 of 167

In relation to paragraph 5, Batelco agrees that, “with the exception of wholesale DSL, 27.

charges should commence with effect from the first calendar of the month following the

final order, although Batelco submits that if the final order is made in the last few days of a

calendar month it may appropriate for those changes to roll over at the commencement of

the subsequent calendar month.”8

In relation to paragraphs 11 to 18, Batelco highlights that article 57(b) of the 28.

Telecommunications Law requires an operator to publish a RO within 3 months of being

found dominant and establishes the power of the Authority to issue an order should it not

approve the terms and conditions and the tariffs of such offer. Batelco notes that the

Authority has found Zain dominant in respect of the wholesale market for termination

services on Zain’s mobile network in 2010. Batelco submits that Zain’s RO should also be

subject to public consultation and suggests that the Authority synchronize both the reviews

of Zain’s and Batelco’s ROs.

Batelco’s submission contained several comments in relation to the Authority’s view on 29.

fair, reasonable, and non-discriminatory tariffs as well as on replicability. At paragraph 10

of its submission, “Batelco urges the TRA not to adopt this inflexible pricing policy

position”. Batelco also calls the Authority “not to allow an over-aggressive doctrine of

replicability to effectively “lock down” all flexibility in the development and offering of

Batelco products” (Batelco’s response, paragraph 26).

Lightspeed

Lightspeed concurs with the Authority on the pricing principles of regulated charges. 30.

Lightspeed also questions the use of Batelco’s FAC regulatory accounts as a basis to

calculate regulated charges. Lightspeed considers instead that it would be more

appropriate to use the LRIC bottom-up cost models which are currently being developed. If

the Authority continues to use the FAC accounts, Lightspeed considers that the Authority

should determine the charges in the draft RO order as indicative and inform that they will

be retroactively replaced by the charges calculated by the bottom-up cost LRIC models

when available.

Lightspeed is of the view that “the basis for considering whether a price is fair and 31.

reasonable should always be international benchmarks and the ability for competitors to

pay such a price and simultaneously provide their services to their customers with a

reasonable return” (Lightspeed’ response, paragraph 1.3).

Lightspeed considers that the contractual period of a dominant operator providing 32.

interconnection service to a non-dominant operator should be limited to one year.

According to Lightspeed, imposing a minimum contractual period of three year is unfair

and represents a barrier to market entry for new and non-dominant OLOs.

8 Batelco’s submission, paragraph 10.



Page 20 of 167

The Authority’s analysis and conclusion

The Authority concurs with Batelco’s suggestion to synchronize the review of some 33.

elements of Zain’s and Batelco’s ROs, and more specifically for mobile termination

services, which are regulated services for Batelco and Zain. The rest of Batelco’s RO

could be reviewed separately (to avoid delays) and any overlapping issues would be dealt

with in the most appropriate way. The Authority intends to follow this approach going

forward. This would be facilitated by the use of mobile bottom-up models which should be

readily available for the next RO review. While specific cost models are being developed

for each of the three mobile operators, a generic model will also be available. This would

enable the Authority to understand the differences in the cost structures of all three mobile

operators and thus take better informed decision regarding the setting of interconnection

charges.

Batelco’s submission contained several comments in relation to the Authority’s view on 34.

fair, reasonable, and non-discriminatory tariffs as well as on replicability. The Authority

notes that most of Batelco’s comments have already been raised by Batelco in previous

submissions.9 The Authority also notes that Batelco has not articulated the relevance of its

comments on the decisions made by the Authority in relation to the charges ordered for

individual services. These generic comments do not appear to call for any specific actions

in relation to this Order.

With regards to Lightspeed’s comments regarding the use of bottom-up cost models to set 35.

regulated charges, the Authority highlights that, while the additional source information

provided by bottom-up cost models will be useful in the context of reviewing and setting

regulated charges, this does not however mean that Batelco’s top down information (i.e.

FAC and LRIC regulated accounts) would not be considered nor that the regulated

charges will necessarily be set equal to cost models outputs.

The Authority considers that Lightspeed’s suggestion (final Order to include ‘indicative 36.

charges’ which will be retroactively adjusted based on the results of the bottom-up model)

is neither appropriate nor legally sound; it would leave the market exposed to undesirable

uncertainty.

9 See e.g. paragraphs 17-29 of Batelco’s response to the Authority’s RO draft Order, 7 November 2010 (ref

GCL/425/10).



Page 21 of 167

5 Context of this year’s RO review

Draft Order Text

In accordance with article 57 of the Telecommunications Law, the Authority’s overreaching 37.

objective of the review of Batelco’s RO submission is to ensure that the final charges

approved are fair, reasonable and non-discriminatory and reflect forward-looking costs.

The charges should be sustainable and consistent with the promotion of competition. This

is to the long term benefit of both Batelco and the telecommunications market in the

Kingdom of Bahrain.

The 2011 review of Batelco’s 2011 RO submission is the last review which is based on a 38.

single source of costing information, i.e. Batelco’s regulatory FAC and LRIC accounts for

2009. For the review of next year’s RO submission (based on 2010 regulatory accounts),

the Authority will use the bottom-up LRIC cost models that are currently being developed

by the Authority.

The bottom-up LRIC cost model project was kicked-off in January 2011. Since then, the 39.

Authority has undertaken a consultation with all operators on the proposed approach for

the development, implementation and use of the future bottom-up fixed and mobile

network cost models. The final Position paper was released on 19 October 2011. The data

collection phase and model development phase are expected to take place during Q4

2011. The validation of the model is expected to be completed during Q1 2012. Thus, the

model’s results will be available during Q2 2012, which is when Batelco has been

submitting its RO in the last couple of years.

Summary of responses received by the Authority

Viacloud

Viacloud notes that the 2011 review of Batelco’s 2011 RO submission is based on 40.

Batelco’s 2009 FAC and LRIC regulatory accounts. Viacloud considers that the draft

charges set in the draft RO Order do not reflect the steep reduction in equipment and

services cost due to technological advancements and increased efficiencies achieved.

Consequently, it considers that the draft charges are outdated and overstated by at least

two years.

Viacloud calls for the retroactive application of the draft ordered charges from at least 41.

January 2010, as according to Viacloud, OLOs have been overpaying Batelco for the last

2 years. For the year 2010, Viacloud estimates that it has overpaid Batelco by USD [],

an amount which Viacloud considers should be refunded by Batelco if the Order was to

apply retroactively from January 2010.

Viacloud further insists that large operators enjoy advantages due to their size which, 42.

contrarily to smaller OLOs, enable them to benefit from: a) economies of scale and scope;

b) greater marketing visibility (branding); c) possibility to cross subsidise due to large

service portfolio; and d) financial strength allowing greater budget for customer acquisition.



Page 22 of 167

Viacloud considers that small OLOs are completely marginalised and have to offer

important discounts to compete with large operators.

Finally, Viacloud is of the view that “sustained and deep access price reduction will create 43.

cost pressures and force incumbents to adopt these cost reduction methods [sic] more

aggressively benefiting consumers at large.” (Viacloud’ response, paragraph 5).


Pursuant to article 57 (b) of the Telecommunications Law, “[the] Authority may issue an 44.

order specifying the terms and conditions and the tariffs if it does not approve the contents

of such offer in this respect, which order shall be effective from the date of issue, unless

the Authority specifies another date”. On 25 January 2011, the Authority has approved or

ordered the charges which have been applicable since and which will be applicable up to

the date stipulated in this Order in paragraph 5. More generally, the Authority considers

that ordered/approved charges rates should not apply retroactively unless special

circumstances expressly justify it.

While the Authority accepts that most of the cost information used to set charges in this 45.

Order relate to 2009 and may be perceived as ‘dated’, this was the latest information

available when the draft RO Order was issued. It should also be noted that the Authority

has made considerable efforts in the past few years to improve the quality and reliability of

the cost information supplied by Batelco while shortening the duration between the time at

which costs are incurred and the time at which regulatory accounts are available. In the

context of annual declines in cost, the gap between the time at which costs are incurred

and the time at which this cost information is used to set prices means that Batelco

effective return is higher than its regulated cost of capital. Therefore decisions based on

past cost information are favourable to Batelco.

For the next RO review, bottom-up cost models should be readily available. They will 46.

provide an additional source of information enabling the Authority to appreciate the

expected evolution of network services costs. As services costs will be modelled for the

next three to four years, the bottom-up cost models will enable the Authority to take

decisions of a more forward-looking nature.

Viacloud’s comments on the advantages of larger operators are noted. The Authority 47.

notes that in so far as the wholesale regulated charges are cost-based, economies of

scale and scope are reflected in the regulated charges and as such are passed on to

OLOs.



Page 23 of 167

6 Wholesale costs

Draft Order Text

This section examines in some detail the non-network costs which Batelco incurs in the 48.

provision of wholesale services. The purpose of this section is to provide a description of

wholesale costs, how they are derived and allocated based on the top-down approach of

Batelco. In doing so this section highlights a number of issues and concerns associated

with the current approach which the Authority intends to address as part of the next RO

review through the use of a bottom-up approach to the analysis of wholesale costs.

Notwithstanding the issues and concerns identified, the Authority has accepted for all

access products, except low speed CAT/LLCO, the wholesale cost as submitted by

Batelco.

This section complements the description and analysis of the wholesale department costs 49.

included in section 13 (page 138 and following) of the RO Order dated 25 January 2011

(‘2011 RO Order’).

Total cost incurred in the provision of wholesale interconnection and access services

The costs related to the provision of wholesale services fall into 4 broad categories: 50.

a. Interconnect specific costs are coded under the core network activity ‘CN90’ in

Batelco’s costing system. They are recovered by Batelco through the ISC

(‘Interconnect Specific Charge’) which is a cost component of interconnection

services charges (item A in the following table);

b. Wholesale activities costs (WS01 to WS05) are specific to the provision of

wholesale products. The relevant portion of these costs is recovered through the

wholesale access product charges (item B in the following table);

c. Shared activities costs which are common to both retail and wholesale products

(e.g. Revenue Assurance & Fraud Management activity, Customer Assistance

Centre activity, Billing activity.). The relevant portion of these costs is recovered

through the wholesale access product charges (item C in the following table);

d. Network specific costs incurred in the provision of wholesale products and

services. In the regulatory accounts, these costs are equal to the transfer charges

of network business units to the wholesale department (excluding CN90 which is

included in the transfer charge of the core network business unit).

The table below provides a summary of the cost of each category for the years 2007, 2008 51.

and 2009. It provides a general description of the cost incurred by the wholesale

department in the provision of interconnection and wholesale services to OLOs as

presented by Batelco. It is based on information provided by Batelco and the regulatory

accounts. In some instances the figures do not reconcile back with the Wholesale



Page 24 of 167

Business Unit of the regulatory accounts because the way certain costs are recorded

differs.10

Table 3: Wholesale cost breakdown for the year 2007-2009 (based on FAC)

Item Item 2007 2008 2009

21050 [IT - Fixed Billing] [] []

30400 [Commercial Lawyer] [] []

30500 [Wholesale & Carrier] [] []

36552 [Market Comm] [] []

62110 [Commercial Operation] [] []

62400 [Costing & Regulatory Accounting] [] []

64670 [Billing Systems] [] []

UA01 [Corporate Management Services] [] []

UA03 [Security & Safety] [] []

UA04 [Corporate Planning And Accounting] [] []

A_56c [Interconnect Reconciliation and Suspense] [] []

A Interconnect specific costs (CN90) [] [] []

evolution [] []

Interconnect specific costs allocated to the wholesale

business unit through the transfer charges mechanism [] [] []

WS01 Wholesale & Carrier Relations - Access Product Management

[] [] []

WS02 Commercial Operation- Access [] [] []

WS03 Finance Support Services - Reg & WS Support Access

[] [] []

WS04 Legal & Regulatory Affairs - Access Support [] [] []

WS05 Fixed Billing - IAA Access [] [] []

B Wholesale support activities costs (sum of WS01

to WS05) [] [] []

evolution [] []

C = D-B Portion of shared activities cost allocated to

wholesale (deducted) * [] [] []

evolution [] []

D Own OPEX, depreciation and cost of capital of

wholesale business unit [] [] []

evolution [] []

E = A+B+C = A+ D

Total wholesale costs [] [] []

evolution [] []

F Wholesale business unit network specific costs

(excluding CN90) [] [] []

evolution [] []

G = E + F Total wholesale business unit costs including

network specific cost [] [] []

evolution [] []

* For 2007 and 2008, Line D does not include the return on capital of the wholesale business unit. As a result, the 2007 and 2008 figures in lines C to G are not directly comparable. Note: The cost of wholesale support activities (WS01to WS05) already include the cost of un-attributable

10 For example CN90 is recorded as a network element in the regulatory accounts.



Page 25 of 167

activities (UA01, UA03 and UA04) Source: The Authority from Batelco’s regulatory accounts and RO submissions

In the remainder of this section, ‘wholesale costs’ refer to the non-network costs incurred 52.

by Batelco in the provision of wholesale products and services to OLOs, i.e. item E in the

above table. They include:

a. interconnect specific costs (CN90);

b. wholesale activities costs (WS01 to WS05); and

c. a portion of shared activities costs.

From the above table, it can be seen that wholesale costs have increased by 16% 53.

between 2007 and 2008 and by 8% between 2008 and 2009. They amounted to BD []

in 2007 and reached BD [] in 2009.

The main cost centres which feed into wholesale support activities and CN90 are:11

54.

a. 21050 IT- Fixed Billing

b. 30400 Legal Counsel (called 30400 Commercial Lawyer in 2009)

c. 30500 Wholesale and Carrier Relations

d. 62110 Commercial Operation

e. 62400 Costing & Regulatory Accounting

f. 64670 Billing Systems which are only allocated to CN90

The next two tables provide more details on each cost centre, the allocation destinations, 55.

allocation bases and resulting cost allocations in 2009 (in BD and in %).

11 Un-attributable activities are allocated to the different activities according to their share in the total OPEX and

depreciation costs (EPMU allocation).



Page 26 of 167

Figure 1: Cost centres’ and assets’ downstream allocation to wholesale support activities and CN90

Source: AS Appendices Comparison btwn 2009 and 2010_final.xlsx Interconnect specific costs



Page 27 of 167

Table 4: Description and 2009 cost allocation breakdown of the cost centres and assets which are allocated to the wholesale support activities and CN90

CC Code

Cost Centre Name

Cost Centre Description Allocation to Activities

Amount of the

total cost of the CC allocated

to the activity

Allocation percentag

e

Allocation Method

Allocation Description

30500 Wholesale & Carrier Relations

Responsible for managing Wholesale customers, products and Carrier relations

WS01- Wholesale & Carrier Relations - Access Product Management

[] []

[] []

CN90 - Interconnect Specific [] []

UB01 - Joint ventures [] []

IN01 - International Switches [] []

NA01 - Manage international network capacity

[] []

62110 Commercial Operation

Responsible for end-to-end processing, accuracy and reconciliation of Wholesale Accounting (both International and Local Carriers), billing wholesale customers, controlling receivables and payables and managing cash flow.

WS02- Commercial Operation- Access

[] []

[] []

WS06- Commercial Operation - Roaming

[] []



62400 Costing & Regulatory Accounting

Responsible for supporting wholesale and retail business, providing costing information and working on costing exercises to satisfy product managers and top management needs and meeting regulatory requirements.

WS03- Costing & Regulatory Accounting - Reg & WS Support Access

[] []

[] [] CN90 - Interconnect Specific [] []

SA16 - Finance support services [] []



Page 28 of 167

CC Code

Cost Centre Name

Cost Centre Description Allocation to Activities

Amount of the

total cost of the CC allocated

to the activity

Allocation percentag

e

Allocation Method

Allocation Description

30400 Legal Counsel

This is the cost centre that provides legal and regulatory support for Bahraini businesses, such as interaction with TRA (and other government departments, regulators and agencies) and legal matters predominantly but not solely of a corporate and commercial nature.

FR36 - Legal Counsel - NCT support (Fixed)

[] []

[] []

MR36 - Legal Counsel - NCT support (Mobile)

[] []

OR36 - Legal Counsel - NCT support (Others)

[] []

WS04 - Legal Counsel - Access Support

[] []

UB01 - Joint ventures [] []

SA85 - Legal admin & litigation services

[] []



21050 IT - Fixed Billing

This is the cost of the billing system asset.

CN90 Interconnect Specific [] []

[] [] WS05 Fixed Billing - IAA Access [] []

FR27 Billing (Fixed) [] []

64670 Billing System

This is the cost centre responsible for the support and maintenance of following systems: 1. Billing systems, such as Fixed Wire Billing, Mobile Billing , Route Optimization, Mediation and IAA. 2. Network systems, such as LPAM/ GIS-SWAT, UIM.

FR27 [Billing (fixed)] [] []

[] [] MR27 [Billing (mobile)] [] []

OR27 [Billing (Others)] [] []

CN90 [Interconnect Specific] [] []

Source: The Authority from Batelco (APM 2010 submission: Additional TRA Information_02052011.xlsx, response to Article 53 request: Questions - Wholesale cost allocation.xlsx)



Page 29 of 167

Interconnect specific costs (CN90)

The total cost of CN90 decreased by 30% from BD [] in 2008 to BD [] in 2009. 56.

Between 2008 and 2009, there have been significant variations in the cost of each

category allocated to CN90. For example, these variations ranged from [] for ‘62400

[Costing & Regulatory Accounting]’ to [] for ‘62110 [Commercial Operation]’ (while the

total cost of these cost centres prior to any cost allocation varied respectively by [] and

[]). These opposing variations reveal the limitations inherent to the top-down accounting

based cost allocation approach which is discussed further at paragraph 73 below.

Table 5: CN90 cost breakdown in 2008 and 2009 by category (as submitted by Batelco)

[]

[]

[]

[]

[]

[]

[]

[]

[]

[]

[]

[]

[]

[]

Note: UA01, UA03, UA04 are un-attributable costs allocated based on EPMU Source: the Authority from Batelco’s submissions



Page 30 of 167

Table 6: Evolution of CN90 cost breakdown by category between 2008 and 2009 (as submitted by Batelco)

CN90 ISC: Breakdown

2008 2009 Evolution 2009/2008

Allocation Basis 2008 total

2008 amount

allocated to CN90

CN90 / Total 2009 total

Amount allocated to

CN90 CN90 / Total

Total (unallocated)

Amount allocated to

CN90

21050 [IT - Fixed Billing] [] [] [] [] [] [] [] [] Bill Systems Analysis

30400 [Legal & Regulatory] [] [] [] [] [] [] [] [] Number of staff, Time Analysis and number of NCTs.

30500 [Wholesale & Carrier] [] [] [] [] [] [] [] [] Number of staff & time management

36552 [Market Comm] [] [] [] [] [] [] [] []

Combination of number of staff, number of services and actual marketing expenditure analysis

62100 [Commercial Operation] [] [] [] [] [] [] [] [] Staff Time Analysis

62400 [Costing & Regulatory] [] [] [] [] [] [] [] [] Number of Staff

64670 [Billing Systems] [] [] [] [] [] [] [] [] Number of Staff Employed and Time Estimates

UA01 [Corporate Management Services]

[] [] []

[]

[]

[] []

[] EPMU

UA03 [Information Security] [] [] [] [] [] EPMU

UA04 [Corporate Planning And Accounting]

[] [] [] [] [] EPMU

Other Reconciliation & capital projects items

[] [] [] [] [] [] [] [] Direct allocation

Total cost CN90 [] [] []

Source: the Authority from Batelco’s submissions



Page 31 of 167

Interconnect specific charge (‘ISC’)

In the file ‘20110407 Annex B ISC and ASC 2009.xlsx’, Batelco calculates that the 2009 57.

ISC is equal to [] fils per equivalent minute. This charge is derived from [] equivalent

minutes of traffic. This traffic includes interconnected minutes and messages as well as

Batelco’s mobile to fixed and fixed to mobile minutes.

The Authority notes that the total traffic and the submitted ISC charge of [] are 58.

inconsistent with the cost-based ISC included in the 2009 regulatory accounts. In the

regulatory accounts, the cost-based ISC is equal to [] fils per equivalent minute for a

total traffic of [] billion of equivalent minutes. The traffic used for the calculation of the

ISC in the regulatory accounts should include all minutes as per the 2009 APM approval

dated 9 November 2011.

In accordance with the 2011 RO Order, which set the current ISC at 0.7 fils per equivalent 59.

minute, the Authority does not intend to review the ISC as part of this review of the RO. In

this context it is worth mentioning that Batelco informed the Authority on 14 and 20 July

2011 of its decision to unilaterally withdraw from the arbitration of the 2011 RO Order (and

more specifically in relation to the Authority’s decision on the ISC) that Batelco initiated on

23 February 2011.

Wholesale support activities costs

Wholesale support activities costs are composed of: 60.

a. WS01 [Wholesale & Carrier Relations - Access Product Management]

b. WS02 [Commercial Operation- Access]

c. WS03 [Finance Support Services - Reg & WS Support Access]

d. WS04 [Legal & Regulatory Affairs - Access Support]

e. WS05 [Fixed Billing - IAA Access]

Table 7: Description of wholesale support activities

WS01 Wholesale & Carrier Relations - Access Product Management

This is the wholesale department cost of Managing the access products and services.

WS02 Commercial Operation- Access

Portion of Commercial Operation department's cost(62100) which mainly consists of handling the OLO accounts, preparing invoices, adjusting the rating on a monthly basis, configuring new scenarios for new WS products, etc.

WS03 Finance Support Services - Reg & WS Support Access

The cost of the Regulatory Costing Team providing the support and meeting the wholesale regulatory requirements.

WS04 Legal & Regulatory Affairs - Access Support The regulatory and legal team's cost of supporting wholesale access services and products.

WS05 Fixed Billing - IAA Access The cost of billing systems related to Interadmin (including the Int'l and OLO accounts).

Source: Batelco's responses to 17 May 2010 article 53 information request on RO, 20100614 RO assessment article 53 response phase one excel.

The following table summarizes the wholesale support activities costs evolution between 61.

2007 and 2009.



Page 32 of 167

Table 8: Wholesale support activities cost in 2007, 2008 and 2009.

Wholesale support activities

Total cost

in 2007

(in BD)

Total cost

in 2008

(in BD)

Total cost

in 2009

(in BD)

Evolution

2009/2008

WS01 [Wholesale & Carrier Relations - Access Product

Management] [] [] [] []

WS02 [Commercial Operation- Access] [] [] [] []

WS03 [Finance Support Services - Reg & WS Support

Access] [] [] [] []

WS04 [Legal & Regulatory Affairs - Access Support] [] [] [] []

WS05 [Fixed Billing - IAA Access] [] [] [] []

Total cost [] [] [] []

Source: Batelco’s ROs submissions

As observed in the case of CN90, the Authority notes that wholesale support activities 62.

costs are subject to important variations between 2007 and 2009. These variations do not

appear to be correlated with the increase in the volume of sales of wholesale access

products. To the contrary, the two support activities for which costs would, from a logical

stand-point, be expected to increase in similar proportion as volume of sales, namely

‘WS01 [Wholesale & Carrier Relations - Access Product Management]’ and ‘WS02

[Commercial Operation- Access]’, have experienced cost increases two to three times

greater (with the volume of sales increase ranging from []% to []% as opposed to an

increase in costs of []% and []%).

Table 9: Wholesale access products sales volume in 2008 and 2009.

Code Access products Unit EOY 2007

volume EOY 2008

volume EOY 2009

volume Evolution 2009/2008

950l Duct wholesale ducts length in m [] [] [] []

951a WSDSL number of WDSL lines [] [] [] []

951b Bitstream number of Bitstream lines [] [] [] []

950y CAT/LLCO number of circuits [] [] [] []

950z IPLC number of circuits [] [] [] []


The following table summarizes the total cost of wholesale support activities allocated to 63.

each access product. Contrary to 2008, no costs from WS01, WS02, and WS03 are

allocated to WDSL, only costs from WS04 and WS05 are allocated to WSDL. This mainly

explains the sharp decrease in the wholesale support cost allocated to WDSL.



Page 33 of 167

Table 10: Total cost of wholesale support activities (WS01-WS05) allocated to each access product

Access products 2008 total wholesale

support activities cost allocation destination

2009 total wholesale support activities cost allocation destination

Evolution 2009/2008

Duct [] [] [] [] []

WSDSL [] [] [] [] []

Bitstream [] [] [] [] []

CAT/LLCO [] [] [] [] []

IPLC [] [] [] [] []

Total cost [] 100.0% [] 100.0%


The costs of wholesale support activities are allocated to access products based on time 64.

analysis produced for WS01. As can be seen from the table below, the time estimates

have fluctuated between 2008 and 2009 resulting in a clear transfer of allocated cost from

duct access, WDSL and Bitstream services to leased lines services (domestic and

international). Further, Batelco’s practice to apply the time estimates for WS01 to other

wholesale support activities is unlikely to reflect the cost of each wholesale support

activity.

Table 11: Cost allocation of each of the wholesale support activities to wholesale products

Wholesale Activity cost allocation by product 2008

Total Duct WDSL Bitstrea

m CAT/LL

CO IPLC

WS01 [Wholesale & Carrier Relations - Access Product Management]

[] [] [] [] [] []

WS02 [Commercial Operation- Access] [] [] [] [] [] []

WS03 [Finance Support Services - Reg & WS Support Access]

[] [] [] [] [] []

WS04 [Legal & Regulatory Affairs - Access Support]

[] [] [] [] [] []

WS05 [Fixed Billing - IAA Access] [] [] [] [] [] []

Total [] [] [] [] [] []

Wholesale Activity cost allocation by product 2009

Total Duct WSDSL Bitstrea

m CAT/LL

CO IPLC


[] [] [] [] [] []



[] [] [] [] [] []


[] [] [] [] [] []


Total [] [] [] [] [] []

Wholesale Activity cost allocation by

product 2008 % Total Duct WDSL

Bitstream

CAT/LLCO

IPLC


[] [] [] [] [] []



[] [] [] [] [] []


[] [] [] [] [] []


Total [] [] [] [] [] []



Page 34 of 167

Wholesale Activity cost allocation by product 2009 %

Total Duct WSDSL Bitstrea

m CAT/LL

CO IPLC


[] [] [] [] [] []



[] [] [] [] [] []


[] [] [] [] [] []


Total [] [] [] [] [] []


To further illustrate that Batelco’s top-down cost allocations are problematic, the Authority 65.

has calculated the monthly unit cost of wholesale support activities per unit of access

product. The results are presented in the following table.

Table 12: Wholesale support activities cost per unit of access product sold in 2008 and 2009

Access products

Unit

Wholesale support

activities cost per unit in

2008 (in BD per

month)

Wholesale support

activities cost per unit

in 2009 (in BD per

month)

Evolution 2009/2008

2009 cost expressed in

monthly time of G1 grade staff (based on 2009 G1 hourly rate)

Duct access per km [] [] [] []

WSDSL per line [] [] [] []

Bitstream per line [] [] [] []

WS CAT/LLCO per circuit [] [] [] []

WS IPLC per circuit [] [] [] []

Source: The Authority from Batelco’s submission

The above results seem completely unrealistic especially when the monthly wholesale 66.

support activities cost per unit of wholesale product is converted into equivalent staff time.

For instance, the average unit cost per CAT/LLCO circuit is equivalent to almost []

hours of working time of a Grade 1 technician. The same conversion for an IPLC circuit

produces an even less realistic result of [] hours.

While the allocation of cost centres to wholesale support activities WS01-WS05 is 67.

undertaken with the use of documented allocation methods (see above Table 4 page 27),

the same allocation approach does not appear to be rigorously observed in the allocation

of the costs of each wholesale support activity to each access product.

For instance, the table below compares both the cost and the time allocation breakdown of 68.

the “Wholesale and Carrier Services Department” (cost centre 30500 or WS01) by access

products. While the cost allocation driver is clearly defined by Batelco as being “Number of

staff & time management”, the Authority observes that the resulting cost allocation is not

proportional to the time spent by the ‘Wholesale and Carrier Services Department’ staff on

each access product. This is a significant discrepancy.



Page 35 of 167

Table 13: 2009 ‘Wholesale and Carrier Services Department’ (WS01) cost and time allocation breakdown to

access products

[]

[]

[]

[]

[]

[]

[]

[]

[]

[]

Note: the ‘Wholesale and Carrier Services Department’ is not fully dedicated to the provision of the above services (for ease of comparison it has been normalized to 100%).

Source: the Authority from Batelco’s 2011 RO submission and Batelco’s response to 2010 APM questions dated 23 August 2011 (Questions - Wholesale cost allocation.xlsx)

Shared activities costs allocated to wholesale products

There are 18 activities whose costs are allocated to both retail and wholesale services. For 69.

each of these activities, the 2009 cost allocation to the wholesale business unit is listed in

the following table.

Table 14: Portion of 2009 shared activities costs allocated to the wholesale business unit (as submitted by

Batelco)

Shared activity name Total cost

allocated in 2009

Percentage of total

OR05a [Residential & Inet Helpdesk - Residential (881188) Others] [] []

OR05b [Residential & Inet Helpdesk - Business (881177) Others] [] []

OR05c [Residential & Inet Helpdesk - Technical Support(90000100) Others] [] []

OR27 [Billing (Others)] [] []

OR28 [Operations & Helpdesk - Bill printing & dispatch (others)] [] []

OR29 [Customer Services - (Other)] [] []

MR02 [Customer Assistance Centre - (181 & 188) Mobile] [] []

OR72 [Revenue Assurance & Fraud Management- (other)] [] []

FR72 [Revenue Assurance & Fraud Management - (fixed)] [] []

MR72 [Revenue Assurance & Fraud Management - (mobile)] [] []

FR28 [Operations & Helpdesk - Bill printing & dispatch (Fixed)] [] []

FR27 [Billing (fixed)] [] []

FR05 [Residential & Inet Helpdesk - (881111&196) Fixed] [] []

FR29 [Customer Services - (Fixed)] [] []

FR12 [Retail Sales Operation and Development - Collections (Fixed)] [] []

FR26 [Fixed Services Management (fixed)] [] []

FR26 [Fixed Services Management (fixed)] [] []

FR71 [Bad debt and Dispute charges - (fixed)] [] []

Total [] 100.0%

Source: Batelco (Questions - Wholesale cost allocation.xlsx)



Page 36 of 167

The Authority notes that the total cost of the shared activities (BD [] in 2009) accounts 70.

for []% of the non-network cost of the wholesale business unit. The remaining []%

(BD 1,883,514) is the sum of all wholesale support activities (WS01 to WS05) and CN90,

each representing []% and []% respectively.

More than []% of the shared activities is MR02 [Customer Assistance Centre - (181 & 71.

188) Mobile] which is the call centre cost of the Directory Assistance regulated service

(DQ).

Batelco seeks to recover these costs from the charges of regulated services such as 72.

WDSL and Bitstream (e.g. Helpdesk, Billing and Customer service: OR05a,

OR05b,OR05c, OR27, OR28, OR29), DQ services charge (e.g. Customer assistance

centre: MR02) and interconnection services (e.g. Revenue Assurance & Fraud

Management: FR72, MR72).

Weaknesses inherent to a top-down cost allocation approach

As illustrated by several examples above, the top-down cost allocation approach currently 73.

used by Batelco is subject to several weaknesses and limitations:

a. Cost causation principle: while a top-down approach may document how costs

are allocated, it does not guarantee that only relevant costs are included.

Further, the various stages of the top-down cost allocation process may lead to a

de-coupling of the allocated cost from the actual cost incurred. With a top-down

approach, there is a high risk of not properly allocating costs, a risk which is

increased when:

i. allocation drivers are not properly identified;

ii. operational data sources which provide the basis for allocation drivers are

not sufficiently robust;

iii. operational data sources do not provide a sufficient level of granularity for

cost to be allocated to individual products; and

iv. the allocation drivers are based on ‘management estimates’ which due to

their subjective dimension could lead to a mis-allocation of cost while

giving the impression of precision.

b. Cost minimisation principle: contrary to a bottom-up approach, the top-down

allocation approach does not best satisfy the cost minimisation principle. A top-

down approach does not give any guarantee that the cost recorded represents

efficiently incurred cost. Since all costs are allocated to products and services

regardless of whether these costs have been efficiently incurred, the top-down

allocation approach does not give sufficient incentives to:

i. adapt the wholesale department workforce to the volume of wholesale

sales;

ii. develop efficient, reactive and customer-friendly processes; and

iii. rationalise and automate processes in order to reduce faults, errors and

inefficiencies.

c. Cost stability: the top down allocation approach allocates costs regardless of

whether a portion of these costs corresponds to one-time projects which are not



Page 37 of 167

repeated in the following years. As a consequence the cost of regulated charges

may show significant ups and downs year on year without fundamental changes to

the underlying economic costs. This issue is more acute for smaller countries such

as Bahrain compared to larger countries/companies for whom one-off costs are

likely to represent a much smaller proportion of costs or may be incurred over

several years.

d. Vertical integration and strategic allocation of cost: Batelco, as a vertically

integrated company operating at the wholesale and retail levels, is likely to be

incentivised to over-allocate cost at the wholesale level to the benefit of the retail

division as in so doing it hinders competition at the downstream level between

OLOs and Batelco. This is especially likely to occur when the incentive structure

and KPIs (e.g. commercial targets, bonus schemes) of the wholesale department

are not ‘localised’ and are instead aligned with the targets of the overall company

(e.g. company profits). At present the incentive structure and KPIs of the

wholesale department are not known to the Authority.

To address the above issues, the Authority intends, as part of the next RO review, to carry 74.

out an extensive review of the costs incurred by Batelco in the provision of wholesale

services using a bottom-up approach. Such review will involve the mapping of all

wholesale processes and an organisational review of the wholesale department.

By combining a bottom-up approach with top-down inputs, the Authority will be able to 75.

identify and address potential inefficiencies and issues and thereby ensure that regulated

charges are fair and reasonable.

The question of wholesale department costs and their recovery has been an issue 76.

between the Authority and Batelco for some time. The Authority considers that a review of

wholesale costs at the same time as bottom-up cost models are introduced in the review

of the RO is timely.

Notwithstanding the issues with Batelco’s current top-down approach, the Authority has for 77.

the purposes of this RO review accepted the wholesale costs as submitted by Batelco for

all access products with the exception of low-speed CAT-LLCO circuits.


Batelco

Batelco acknowledges that the treatment of wholesale costs is an important issue which 78.

has been punctuated with several agreements and disagreements between the Authority

and Batelco since 2003. While Batelco considers that it is still under-recovering its

wholesale costs, it appreciates the outcome of this year’s review in so far as Batelco’s RO

submission as it relates to wholesale costs has, by and large, been accepted by the

Authority (although Batelco expresses concerns over the Authority’s treatment of

wholesale costs for CAT/LLCO services). In its submission, Batelco provides detailed and

lengthy comments on the analysis of the Authority included in the draft RO Order, some of

which are summarised below. With the exception of Batelco’s comments regarding

wholesale costs of CAT/LLCO and Bitstream, none of the comments made by Batelco

needs addressing for the purpose of the Order.



Page 38 of 167

More generally Batelco expresses two concerns: 79.

a. Batelco is concerned by the level of uncertainty associated with the Authority’s

future conclusions with regards to the wholesale activity costs and the ISC in a

context where bottom-up cost models may be used for assessing wholesale costs

and where RO prices may be set for a multi-year period. Batelco notes that any

under-recovery of wholesale costs from wholesale activities would result in

Batelco’s retail services and other non-regulated services subsidizing Batelco’s

competitors which rely on wholesale services. Batelco adds that it would

jeopardize the establishment of sustainable pricing. If wholesale costs remain

under the Authority’s strict control, Batelco argues that it would not be incentivised

to increase its wholesale staff and thus improve the reactiveness and timeliness of

its wholesale processes, contrarily to what OLOs have been expecting.

b. Batelco is also concerned by the Authority’s revision of wholesale activity costs

that flows in the calculation of low-speed CAT/LLCO. This change which only

impact one product may have “a distorting effect on access options for its

wholesale customers” (Batelco’s response paragraph 28).

Batelco has no specific comments in relation to the ISC. However, Batelco highlights that 80.

its unilateral withdrawal in July 2012 of the arbitration proceedings it commended in

February 2010 does not imply that it concurs with the Authority’s findings on this issue in

the RO Order of 25 January 2011. Batelco reserves its legal position in relation to the

calculation of the ISC and the notion of headroom resulting from the difference between

the calculated ISC and the approved ISC.

Lightspeed

Lightspeed considers that the billing system is not a wholesale cost but a network element 81.

cost that should be allocated by the use of routing factors in the costing model. As a result,

Lightspeed does not agree with the Authority’s criteria to allocate wholesale costs.

Lightspeed also submits that wholesale cost should be allocated on the basis of EPMU.


The Authority notes the various comments raised by Batelco. It remains of the view that it 82.

would be essential as part of the next RO review to carry out an extensive review of the

costs incurred by Batelco in the provision of wholesale services using a bottom-up

approach. Batelco’s submission does not assuage the concerns raised by the Authority.

The Authority acknowledges Batelco’s overall acceptance of the treatment of wholesale 83.

costs in this RO review with the exception of low-speed CAT/LLCO services. For this

specific service, the Authority refers Batelco to its final position detailed in paragraphs 360-

363 of the Order.

With regards to Lightspeed comment regarding the cost allocation of the billing system, it 84.

should be noted that the cost of the billing department is shared by all services provided

by Batelco (voice, data and access services) and as such, its cost allocation is not

straightforward and requires several steps. The Authority refers here Lightspeed to Figure

1 page 26 (see cost centre 64670 and asset 21050).



Page 39 of 167

Lightspeed also suggests that wholesale cost should be allocated on the basis of EPMU. 85.

The Authority considers that such an approach can be an appropriate method to allocate

shared or common costs when no other alternative allocation drivers can be identified.

This is not the case for certain cost categories of wholesale costs.



Page 40 of 167

7 ISI and CSI link services (1-1 and 1-2)

Draft Order Text

Services definition

According to Batelco’s RO, “[t]he In-Span Interconnect (‘ISI’) Link Service is used, at the 86.

Licensed Operator's request, by the parties to jointly establish the facility for delivery of

agreed traffic types between the parties' Networks. The In-span Interconnect Link Service

is one option to establish interconnection between a Batelco Switch Connection and a

Licensed Operator Switch Connection.”12

According to Batelco’s RO, “[t]he Customer Sited Interconnect (‘CSI’) Link Service is 87.

provided by Batelco, at the Licensed Operator's Seeker’s request, to establish the facility

for delivery of traffic between the parties' Networks. The CSI Link Service is an alternative

to use of the In-Span Interconnect Link Service to establish interconnection between a

Batelco Switch Connection and a Licensed Operator Switch Connection.”13

The following figures were adapted from the Batelco Joint Working Manual in Batelco’s 88.

RO (see page 7, Figure 1a The Carrier System, ISI and Figure 1b The Carrier System,

CSI).

12 Batelco, SERVICE DESCRIPTION 1-1: IN-SPAN INTERCONNECT LINK SERVICE.

13 Batelco, SERVICE DESCRIPTION 1-2: CUSTOMER SITED INTERCONNECTION SERVICE.



Page 41 of 167

Table 15: ISI and CSI link services diagrams

Source: The Authority from Batelco Joint Working Manual, page 7



Page 42 of 167

Information provided by Batelco

As part of its 11 April 2011 RO submission, Batelco included one Excel file called 89.

“20110407 Annex D CSI ISI 2009.xlsx” in which calculation details of ISI and CSI Link

services charges were provided.

Further clarifications were sought by the Authority to assess whether the proposed 90.

charges were fair, reasonable and non-discriminatory. Batelco subsequently sent

additional information as part of its response to the Authority’s article 53 request for

information dated 15 June 2011.

The calculations of Batelco’s 2011 proposed charges and cost stacks for the ISI and CSI 91.

link services are detailed in the following tables.

Table 16: ISI submission charges proposed by Batelco

ISI Link Service

Yr 2009 Cost (LRIC)

SDH Transmission 1 to 21 22 to 42 43 to 63 Signalling

SDH Transmission cost 2009 [] [] []

E1 total capacity [] [] []

Total cost per E1*3 [] [] [] []

Additional Network Elements

Core Huawei port per OLO [] [] []

Joining Box [] [] []

Average no. of E1 per OLO [] [] []

Cost per Port [] [] [] []

Fibre Cost

Access Fibre Cost [] [] []

Total Fibre Km [] [] []

Cost per 2 Km per E1 [] [] [] []

Total cost per E1 pa [] [] [] []

Total cost per E1 pm [] [] [] []

Total cost per Port pa [] [] []

Total cost per Port pm [] [] []

Total per mth 114 47 33 138

Source: Batelco, 20110407 Annex D CSI ISI 2009.xlsx



Page 43 of 167

Table 17: CSI submission charges proposed by Batelco

CSI Link Service

Yr 2009 Cost (LRIC)

SDH Transmission 1 to 21 22 to 42 43 to 63 Signalling

SDH Transmission cost 2009 [] [] []

E1 total capacity [] [] []

Total cost per E1 [] [] [] []


DDF Cost [] [] []

ODF Cost [] [] []

Core Huawei port per OLO [] [] []

OSN 3500 per OLO [] [] []

Average no. of E1 per OLO [] [] []

Average no. of ports per OLO [] [] []

Cost per E1 [] [] [] []

Cost per Port [] [] []

Access Fibre Cost

Access Fibre Cost [] [] []

Total Fibre Km [] [] []

Cost of 2 fiber per E1 [] [] [] []

Total cost per E1 pa [] [] [] []

Total cost per E1 pm [] [] [] []

Total cost per Port pa [] [] []

Total cost per Port pm [] [] []

Total per mth 267 91 55 138


The following table summarizes the proposed charges with their prior year comparators. 92.

Table 18: Summary of proposed charges for the ISI/CSI link services

TRA’s FRND charges

approved in January 2011


Evolution* as compared to TRA’s FRND

charges approved in

January 2011


60.000 114.000 +90%


42.000 47.000 +12%


39.000 33.000 -15%

1-1.12 - ISI Link -Signalling Link rental 50.000 138.000 +176%

1-2.2A - CSI Link Rent (Basic) - 1-21 links 154.000 267.000 +73%

1-2.2B - CSI Link Rent (Basic)- 22-42 Links 75.000 91.000 +21%

1-2.2C - CSI Link Rent (Basic) - 43-63 Links 58.000 55.000 -5%

1-2.11 - CSI Link -Signalling Link rental 50.000 138.000 +176%

* Evolution is to be interpreted with careful consideration as Batelco’s average links per band change in the 2011 submission




Page 44 of 167

Review of the submitted charges for ISI/CSI link services

SDH transmission costs

During last year’s RO submission review, Batelco mentioned that it was expecting SDH 93.

LRIC unit costs to increase in 2009. It appears that this has not eventuated. In 2009, the

total cost of SDH transmission has decreased by []% while the total capacity expressed

in E1 equivalent has increased by []%. These evolutions resulted in a []% reduction

in SDH unit cost per E1.

Table 19: SDH transmission cost evolution

2008 2009 Change

SDH transmission cost (LRIC) [] [] []

Total SDH capacity in E1 equivalent [] [] []

Monthly unit cost of SDH transmission per E1 [] [] []

Source: the Authority from Batelco’s submission

While Batelco was not able to provide a detailed breakdown of the SDH cost allocation as 94.

requested in the article 53 request for information dated 16 June 2011, the Authority

accepts the SDH unit cost per E1 of BD [] per month as submitted by Batelco for the

purposes of this Order.

Network equipment costs

In the 2011 RO Order, the Authority set out its approach to calculating network equipment 95.

costs (paragraphs 114 to 119). In its RO submission, Batelco has not explained why the

Authority should depart from that approach. Accordingly the Authority has modified

network equipment costs submitted by Batelco following the 2011 RO Order approach.

Network equipment cost calculations are detailed in the following table:



Page 45 of 167

Table 20: Cost of equipment used in the delivery of ISI/CSI link services

Item Asset price

Average # of optic

ports used per

equipment

Asset lives

Proposed annual cost by Batelco

TRA FRND

Depreciation

S&M Un-

attributable cost

Return on

capital

Total annual FRND cost

DDF Cost [] [] [] [] [] [] [] []

ODF Cost [] [] [] [] [] [] [] []

Core [] port per OLO

[] [] [] [] [] [] [] [] []

[] per OLO [] [] [] [] [] [] [] [] []

Joining Box [] [] [] [] [] [] [] []

Signalling Port []* [] [] [] [] [] [] []

Item Value Assumption/Description

Regulated WACC 9.50%

NBV/GBV 60% The Authority assumes that equipment is on average [] years old.

S&M (‘Support and Maintenance’) 9.0% Expressed as a percentage of asset price

Average annual price trend of electronic equipment

-5.0%

To take into account the downward price trend of electronic equipment. * 2009 asset price derived from 2007 price by multiplying it by (1-5%)

2

Un-attributable costs []% Expressed as a percentage of total cost (Depreciation + Opex)

Source: the Authority following the 2011 RO Order approach

Tariffs bands and number of Ports/E1 per OLO used in the calculation of the charges

In its 2010 RO submission, Batelco proposed to change the 3 tariff bands to 1-15 links, 16-96.

25 links and 26-63 links. In its response to the 2010 draft RO Order, Batelco also asked

the Authority to use the 2008 market averages of the number of E1s per OLO for the

calculation of the ISI/CSI charges. The Authority explained that such approach could

potentially lead to price volatility as market averages vary from one year to the other.14

Despite the conclusion of the 2011 RO Order Batelco has again calculated in its 2011 RO 97.

submission ISI/CSI charges based on the 2009 market averages of the number of E1s per

OLO without providing any supporting justification. In 2009, the market averages are [],

[]and [] for the bands 1-21, 22-42 and 43-63 which represent significant variations

compared to the 2008 market averages (respectively [], [] and []). These

fluctuations further support the Authority’s position to use the bands’ arithmetic averages

instead of market averages.

The Authority remains of the view that arithmetic averages should be used. However, the 98.

Authority proposes to introduce a fourth additional tariff band for the ISI/CSI. With a

greater granularity of entry level tariffs bands, the monthly charges paid by OLOs which

have a limited number of E1 circuits better reflect the cost incurred by Batelco. The 4 new

bands will be as follows:

14 2011 RO Order, paragraph 104 and 137.



Page 46 of 167

Table 21: New ISI/CSI tariff bands as compared to existing bands

Existing tariff bands (in number of E1s)

Average number of E1s used to allocate network and access

fibre costs

New tariff bands (in number of E1s)

Average number of E1s used to allocate network and access

fibre costs

1 to 21 11 1 to 14 7.5

15 to 28 21.0

22 to 42 32 29 to 42 35.5

43 to 63 53 43 to 63 53.0

Source: the Authority

Access fibre network cost

Access fibre network cost amounts to BD [] in 2009. This amount does not reflect the 99.

change of duct asset lives as detailed in the duct section of this document. The Authority

has decided in this instance to not apply any cost decrease adjustment in the ISI/CSI

charge calculation.

The Authority has decided to modify the approach used in the 2001 RO order to calculate 100.

fibre cost. Compared to the existing approach, the proposed approach as set out in the

table below better reflects costs (including the mutualisation of links) and is more

transparent. While the calculated fibre access costs per E1 of the table below differ

between ISI and CSI links, the Authority considers that it is appropriate to take the average

of the two in so far as: (a) the fibre access is intrinsically the same and hence its cost

should not be different; and (b) it ensures that all fibre costs are taken into account and

allocated to ISI and CSI links.

Table 22: Calculation of the average fibre access cost per ISI/CSI link

Services

Number of fibre pairs

used in 2009

Portion of AN08 cost

allocated to the service in

2009

Number of links in 2009

(in E1 equivalent, including signalling

links)

2009 annual fibre access

cost per E1/signalling

link

2009 monthly fibre access

cost per E1/signalling

link

A b

(proportional to a)

c d = b / c e = d /12

950a In-Span Interconnect

[] [] [] [] []

950b Customer sited interconnect

[] [] [] [] []

Average [] []


While the calculated average cost of BD [] per E1 link for CSI, per fibre access and per 101.

year allows Batelco to fully recover its access cost, the Authority still considers that the

OLO interconnecting Batelco with the CSI link service should pay an additional charge for

a distance greater than one kilometre. Therefore, the Authority maintains the existing



Page 47 of 167

charge of BD 1 per 2Mbit/s/per month/per additional km (cf. item 1-2.3 of Batelco’s RO

schedule 3). The 1 km limitation encourages OLOs to build a point of presence at a

location closer to one of Batelco’s switch connection sites.

The monthly regulated charge of CSI covers the access fibre installation cost (which is 102.

annualised) and maintenance and repairs (OPEX).

However, in the case of the ISI link service, the installation of the first 100 metres of fibre 103.

access that connect Batelco’s POP to the footway box (where the OLO’s fibre is spliced

with Batelco’s fibre) is provided free of charge by Batelco to the OLO (cf. item 1-1.2 of

Batelco’s RO schedule 3) and the cost of the remaining distance is split equally between

Batelco and the access seeker. To reflect this specificity, the monthly access fibre cost to

be paid by the OLO to Batelco needs to be adjusted. As explained in the next paragraph,

only []% of fibre cost should be taken into account in the calculation of the charge for

ISI.

Since half the access fibre installation cost is charged to the OLO on a time and materials 104.

basis, the relevant cost of fibre access used in the monthly charge calculation of ISI link

services should not be equal to the total fibre access cost. Instead it should be equal to:

a. For the first 100m: all cost should be included;

b. For the remainder:

i. All maintenance cost should be included as Batelco provides maintenance

for the fibre access;

ii. Half the depreciation cost and half the return on capital employed as the

OLO has already paid in full the installation costs, including CAPEX.

In 2009, there were [] km of fibre access cable for [] fibre pairs which makes

an average cable length per fibre pairs of [] metres15

. This means that there are

on average [] metres of fibre access cable (i.e. [] - []) for which the

installation cost is equally shared between Batelco and the interconnected OLO

(cf. item 1-1.3 of Batelco’s RO schedule 3)

As a result the relevant portion of fibre access cost for ISI is []% of the total cost and is 105.

formally calculated as follows:

15 The actual average length of the access fibre should be greater in practice as there must be portions of fibre

pairs in the same fibre cables.

=100m

[ ]m×100%+

([ ]-100)m

[ ]m×

OPEX

Total of op. & capital costs +

1

2× Depreciation+Returm on capital

Total of op. & capital costs

=100m

[ ]m×100% +

([ ]-100)m

[ ]m ×

BD [ ]

BD [ ]+

1

2× BD [ ]+BD [ ]

BD [ ]

=[ ]%

Percentage of access fibre cost relevant to ISI=



Page 48 of 167

Protection lines

In this year’s RO submission, Batelco has again multiplied by two the cost of access fibre. 106.

However it has not provided any explanation or justification for the use of a factor 2. The

Authority assumes that it is supposed to cover the cost of protection lines.

As per the 2011 RO Order (paragraphs 111 to 113), the Authority has removed the factor 107.

2 from the calculation.

Further to the 2011 RO Order, the Authority considers that the costs of protection lines are 108.

in any case recovered by Batelco as the monthly charge is calculated from a top-down

approach where the total cost of fibre access (including protection lines if any) is divided

by the number of fibre accesses (excluding protection lines). Therefore the unit cost per

fibre access still includes a contribution for protection lines.

Wholesale cost

While the 2011 RO Order charges included wholesale costs, the Authority has not 109.

included any wholesale cost charges this year on the basis of Batelco’s explanation that

wholesale costs related to ISI-CSI links are recovered from the ISC.

Sharing of the cost of ISI and CSI links between OLOs and Batelco

The Authority is of the view that the cost of providing ISI/CSI link services should not be 110.

solely supported by the OLO interconnecting with Batelco. Under a strict causation

principle, Batelco should support half of the cost of the interconnection links as it also

injects its own traffic into the link and therefore benefits from the link. It could therefore be

argued that the fair and reasonable charges for the ISI link should be zero as the other half

of the link is paid for by the OLO and it should be 50% of the CSI estimated cost as in the

case of CSI Batelco provides the full link. However, in order to preserve Batelco’s

incentive to operate and maintain its network, the Authority considers that a reasonable

compromise is to base the ISI and CSI charges on respectively 50% and 75% of the

estimated cost.

Cancellation charge formula

Paragraph 3 of the 2011 RO Order changed the period for which cancellation charges 111.

apply to ISI/CSI Link services (1-1 and 1-2) from 10 years to 3 years. Notwithstanding the

change, the Authority expressed the view that the ISI-CSI cancellation framework (i.e.

current cancellation charge formula and associated conditions) were not fair and

reasonable. In paragraph 136 of the 2011 RO Order, the Authority identified several

deficiencies, including:

a. unnecessary complexity of the framework (e.g. formula calculates the present

value of expected cash flows);

b. unreasonableness as it implies a possible re-utilisation of equipment and

infrastructure in only 10% of cases, 6 months after cancellation;

c. inappropriate reference as the formula takes into account the retail charge and not

the wholesale charge (although there is clearly no retail equivalent for ISI/CSI

links);



Page 49 of 167

d. lack of limitations. The Authority is of the view that in specific circumstances the

early cancellation charge should not apply, including for partial removal of capacity

or migrations (hot migrations, as well as cold migrations, i.e. cease and re-

provide).

For the above reasons, the Authority orders Batelco to reflect the following changes in the 112.

service description of both ISI and CSI link services, Schedule 4 of the RO and the Joint

Working Manual:

a. Cancellation charges shall apply during the first 36 months of service only,

measured from the Ready For Test (“RFT”) date of the service. Any cancellation is

subject to a 6-month notice period irrespective of whether or not the cancellation

occurs before or after the 36-month cut off for cancellation charges. For the

avoidance of doubt no cancelation charges shall apply to circuits cancelled after

the elapse of the first 36 months of service operation provided the 6-month notice

has been given.

b. For the cancellation charge to apply, each of the following conditions shall be met:

i. the entire interconnection link (STM-1 bearer circuit) is cancelled or

capacity is cancelled and this capacity cancellation leads to the physical

removal of the active equipment (e.g. a wholesale client which decreases

its number of active links capacity on the bearer circuit after the first year

of tenure will not be subject to the payment of a cancellation charge if the

bearer circuit is kept live with one or more active E1 connections); and

ii. the cancellation is not due to a like for like service migration (including

both hot and cold migrations) or cease and reprovide.

c. The cancellation charge formula shall be amended to:

with:


WC: Relevant monthly wholesale charge (i.e. ISI/CSI); and

M: Number of months between Ready for Test (“RFT”) Date and removal order date

rounded-up to the next full month.

d. The above changes shall apply to both existing and new services.

P = WC × ( 36 - M )



Page 50 of 167

Draft Order fair, reasonable and non-discriminatory charges for ISI/CSI link services

The following table summarizes the draft Order fair, reasonable and non-discriminatory 113.

(‘FRND’) charges of ISI and CSI link services as calculated by the Authority:

Table 23: Draft Order FRND charges of ISI and CSI link services as compared to Batelco’s submitted charges

and currently approved charges

Chargeable activity

Approved/

Ordered in January

2011 (or

currently implement

ed)


TRA's Draft Order

FRND charges

Evolution of Draft Order

FRND as compared

to Approved/ Ordered


ISI Link services ( 1-1 ) in BD


60.000 114.000 removed -


42.000 47.000 removed -


- - 21.612 -


- - 15.101 -


- - 13.624 -


39.000 33.000 12.917 -67%

1-1.12 - ISI Link -Signalling Link rental 50.000 138.000 14.192 -72%

CSI Link services ( 1-2 ) in BD

1-2.2A - CSI Link Rent (Basic) - 1-21 Links 154.000 267.000 removed -

1-2.2B - CSI Link Rent (Basic)- 22-42 Links 75.000 91.000 removed -

1-2.2A - CSI Link Rent (Basic) - 1-14 Links - - 121.790 -

1-2.2B - CSI Link Rent (Basic) - 15-28 Links - - 54.916 -

1-2.2C - CSI Link Rent (Basic) - 29-42 Links - - 39.741 -

1-2.2D - CSI Link Rent (Basic) - 43-63 Links 58.000 55.000 32.484 -63%

1-2.11 - CSI Link -Signalling Link rental 50.000 138.000 21.827 -71%

Note: Text highlighted in yellow is used to highlight elements in the RO that are either new or modified while text in italics is used for elements that are removed.

Source: the Authority from Batelco submission

The above FRND charges of ISI and CSI link services are derived from the following cost 114.

stacks:



Page 51 of 167

Table 24: Cost stacks of draft Order FRND charges of ISI and CSI link services

ISI Link Service

Yr 2009 Cost (LRIC)

SDH Transmission 1 to 14 15 to 28 29 to 42 43 to 63 Signalling

SDH Transmission cost 2009 [] [] [] [] E1 total capacity [] [] [] []

Total cost per E1*3 [] [] [] [] []


Core [] port per OLO [] [] [] [] Joining Box [] [] [] [] [] [] [] [] Minimum [] [] [] [] Maximum [] [] [] [] Average no. of E1 per OLO [] [] [] []

Cost per Port [] [] [] [] []

Fibre Cost

Annual access fibre cost per E1/signalling link

[] [] [] [] []

Percentage of access fibre cost relevant to ISI

[] [] [] [] []

Relevant annual access fibre cost per E1/signalling link

[] [] [] [] []

Total cost per E1 pa [] [] [] [] [] Total cost per E1 pm [] [] [] [] []

Total cost per Port pa [] [] [] [] Total cost per Port pm [] [] [] []

Total cost to be shared per month [] [] [] [] []

Charges per month (taking into account cost sharing)

21.612 15.101 13.624 12.917 14.192

CSI Link Service

Yr 2009 Cost (LRIC)



Total cost per E1 [] [] [] [] []


DDF Cost [] [] [] [] ODF Cost [] [] [] [] Core [] port per OLO [] [] [] [] [] per OLO [] [] [] [] Minimum [] [] [] [] Maximum [] [] [] [] Average no. of E1 per OLO [] [] [] []

Average no. of ports per OLO [] [] [] []

Cost per E1 [] [] [] [] []

Annual cost per port [] [] [] []

Access Fibre Cost

Annual access fibre cost per E1/signalling link [] [] [] [] []

Total cost per E1 pa [] [] [] [] []



Page 52 of 167

Total cost per E1 pm [] [] [] [] []

Total cost per Port pa [] [] [] [] Total cost per Port pm [] [] [] []

Total cost to be shared per month [] [] [] [] []

Charges per month (taking into account cost sharing)

121.790 54.916 39.741 32.484 21.827



Batelco


In relation to the SDH transmission costs (paragraphs 93 to 94), Batelco acknowledges 115.

that it incorrectly forecasted that its SDH LRIC unit cost would increase in 2009 (they

actually decreased by -40%). Batelco submits that “[the incorrect prediction of SDH cost

increase] should not in itself eliminate the concern that unsustainably low access prices

may result from an aggressive approach to reducing, for example, wholesale activity costs,

where subsequent cost calculation may be expected to increase, pending further

assessment of costs.” (Batelco’s response, paragraph 46).

Network equipment cost

In relation to the network equipment costs (paragraph 95), Batelco expresses concerns 116.

over the Authority’s estimation of the annual S&M costs set at 9% of the total asset price.

Based on the primary cable asset and following the same approach as the Authority (i.e.

removing indirect costs), Batelco submits that the S&M ratio is equal to 13%. According to

Batelco, this is materially higher than the Authority’s estimate.

Tariffs bands

With regards to the tariffs bands (paragraphs 96 to 98), Batelco notes that it has not 117.

proposed to change them in the past. Batelco instead argues that the calculation of the

charges should be based on actual usage in each band (market average of the number of

links actually ordered by OLO in each band) rather than based on an arithmetic average.

Batelco claims that the approach based on actual usage was agreed with the Authority in

2009. Batelco also notes that the new proposed structure of tariffs bands has the effect of

further reducing the prices of interconnection links and hopes that such change will be

implemented with a sensible outcome in respect of the termination charges applicable to

link cancellation.


In relation to the access fibre network cost (paragraphs 99 to 105), Batelco notes that the 118.

Authority has introduced a new approach to calculate the cost of fibre which is based on

the actual number of fibre pairs rather than the access fibre length. While it agrees that the

new approach is reasonable and should be adopted, Batelco is nonetheless concerned by

the resulting lower unit cost per fibre access which may call for a revision of the duct cost

allocation process. It asks for the change in the calculation results to be spread over two



Page 53 of 167

review periods to smooth out the sudden effect of the change. Batelco also notes that the

bottom-up cost model and the change of audit standard will provide greater clarity on this

topic and asks the Authority to smooth the effect of this change over two RO reviews.

Batelco also asks the Authority to reconsider its approach to calculate an average fibre 119.

cost of per E1 link that apply equally to both ISI and CSI services. According to Batelco,

this approach leads to a cross subsidisation of ISI links by operators interconnecting via

CSI links. Batelco is also concerned that this approach will not enable the full recovery of

incurred costs, especially for ISI interconnection links of less than 20 E1s.

Batelco finally submits that the Authority should not adjust the average fibre cost per ISI 120.

link by removing the one-off charges paid by OLOs at the installation stage. Batelco

explains that it has not separately charged OLOs for recent ISI installation and is ready to

remove any mention of ISI installation charge in the Schedule 3 if the Authority does not

proceed with the adjustment.


In relation to the sharing of the cost of ISI and CSI links between OLOs and Batelco 121.

(paragraph 110), Batelco argues that this change should not be introduced as it relies on

the incorrect assumption that Batelco is ‘responsible’ for half of the traffic transiting

through ISI and CSI links. To demonstrate that this assumption is incorrect in the great

majority of cases, Batelco submits ISI and CSI traffic statistics for the month of October

2011 which show that, on average, OLOs are responsible for 98% of traffic passing

through the point of interconnection.

Batelco also submits that the change should not be made as it would overturn 122.

longstanding interconnect and billing practice and it would also affect other services.

Batelco gave one example of such service, the ITAS (transit service)16

which was,

according to Batelco, priced on the basis that interconnection links, for which OLOs bear

the financial responsibility, are already in place to support the service. According to

Batelco, the change introduced by the Authority in the draft RO Order would not allow

Batelco to recover the cost of providing the transit service.

Finally, Batelco highlights that the current RO already includes “a mechanism by which an 123.

OLO could have variable rate charges apply to bilateral traffic on ISI Links” (based on the

proportion of interconnected traffic for which the OLO has responsibility) (Batelco’s

submission, paragraph 62). Batelco submits that so far no OLO has sought to take

advantage of this pricing adjustment mechanism.


With regards to the cancellation charge formula (paragraphs 111 and 112), Batelco argues 124.

that the formula included in the draft RO Order has the effect of transferring risk from

OLOs to Batelco: “[t]the effect of the cancellation formula is that the reliability of cost

recovery only extends to 36 months, despite the fact that the asset life for the SDH

equipment is 5 years and for the fibre is currently 20 years and the duct life is extending to

40 years” (Batelco’s submission, paragraph 63). Batelco also notes that the nature of the

16 In its response to the RO draft Order dated 28 December 2011 (ref: GCL/434/11), Batelco explains that “the ITAS

service provides OLOs with the benefit that they are not required to implement and manage direct interconnection with each other operator in order to provide an any-to-any service.’



Page 54 of 167

risk of non-recovery of costs may vary depending in the type and location of

interconnection links and other services.

Batelco is further concerned with the set of rules applicable to the cancellation charge 125.

formula and potential gaming. According to Batelco an OLO could reduce all its capacity to

a single E1 and wait until the capacity has been reduced by Batelco to cancel the link (and

thus lower the applicable cancellation charge).

Batelco also submits that the existing security arrangements are inadequate to protect 126.

Batelco against commercial risks arising from the non-payment of services charges and

“urges that the terms of regulated services should not unduly add to the risk profile of

service implementation for Batelco.” (Batelco’s submission, paragraph 65).

Batelco proposes several amendments to the conditions to which cancellation charge 127.

apply:

a. Hot or cold migration of link: Migrations should be charged to OLOs on a time

and material basis and should cover network installation and migration assistance.

In the case of a CSI hot migration for single POI operators, the one-off charge

should also cover the cost of the CPE.

b. Relocation of E1s: A one-off charge covering migration assistance (on a time and

material basis) should be charged to OLOs.

c. Cancellation of E1s: Cancellation of E1s should not be permitted in the first 12

months. A cancellation charge equal to 3 monthly rental charges should apply

thereafter.

Batelco submits that the following formula would better reflect the risks faced by Batelco 128.

and the OLOs:

with

P: Amount to be paid (cancellation charge)

BWC: Relevant wholesale charge (i.e. ISI/CSI) applied to the highest number of E1s at

which the link has operated in the 18 months prior to notice of link cancellation, based on

the link rate applied to the band in which that number of E1s falls.

M: Number of months between RFT Date and removal order date rounded-up to the next

full month

CC: The total of E1 cancellation charges levied in respect of that link in the 18 months prior

to notice of link cancellation.

Batelco considers that the changes to the cancellation formula should not apply to existing 129.

services. If they were to apply to any existing services, it should be on fairly long notice to

the industry. Batelco also submits that “this change should be differed in its entirely at

least until after all avenues have been exhausted in relation to any existing dispute over

cancellation charges” and that “the issue of applicability to existing services might usefully

remain unchanged until next year’s reference offer review process so that the situation can

be clarified”(Batelco’s submission, paragraph 69).

P = (BWC × ( 60 - M )) - CC



Page 55 of 167

Lightspeed

In accordance with its general comment summarised in paragraph 32, Lightspeed 130.

considers that the cancellation charge should be amended to apply only in the first 12

months of contract instead of the first 36 months.

Lightspeed considers that the price differentiation in the different price bands is 131.

unjustifiable. According to Lightspeed, such price differentiation prevents smaller operators

to compete with bigger operators which benefit from a lower price per E1. Lightspeed calls

for a fixed price per E1 regardless of the capacity required by the buying operator.

Lightspeed also considers that the cost of a link should be shared by each operator

according to the proportion of traffic that each originates on the link.

Zain

Zain welcomes the lower draft ordered prices of BD 32.484 per E1 as it represents a 44% 132.

decrease compared to current price.



With regards to Batelco’s incorrect prediction of SDH transmission costs, the development 133.

of a bottom-up cost model for Batelco’s fixed core network will enable both Batelco and

the Authority to better understand the relationship between SDH network costs and traffic

variations. This would enable Batelco to make better informed business decision and the

Authority to set regulated prices considering forward-looking information.

Network equipment cost

The Authority considers that the 13% of S&M costs calculated by Batelco is not relevant in 134.

the context of calculating S&M costs for active equipment. Batelco’s calculation is based

on ‘primary cable’, an asset which is very different from active equipment (CPE) both in

terms of investment and maintenance requirements. For the same reasons detailed in the

RO Order dated 25 January 2011 at paragraph 331, the Authority remains of the view that

S&M costs set to 9% of the total asset price is reasonable.

Tariffs bands

The Authority notes that Batelco does not have any material objection with regards to the 135.

new tariff bands proposed by the Authority. With regards to Lightspeed’s comment

regarding the ‘unjustifiable’ price differentiation of ISI/CSI links according to tariff bands,

the Authority notes that the Telecommunications Law requires regulated tariffs to be based

on forward looking incremental cost. As the costs of the fibre access and the CPE are

shared among all E1s that form part of the link, the addition of E1s to the capacity of the

link will translate into a lower average cost per E1. If the Authority were to remove the

differential pricing according to tariff bands, large OLOs requiring higher capacity would be

subsidising the ISI/CSI link service used by smaller OLOs.



Page 56 of 167


The Authority notes Batelco’s acceptance of the Authority’s approach to calculate access 136.

fibre cost. The Authority acknowledges Batelco’s intention to review the duct cost

allocation process and, in that matter, kindly asks Batelco to keep the Authority’s informed

of such review.

With regards to Batelco’s request to reflect the fibre cost based on the new approach over 137.

two reviews, the Authority considers that this is not justified as: (a) the new approach

corrects the over-recovery allowed by the current approach;17

(b) the fibre cost represents

for most charges less than 15% of the charges; and (c) the fibre cost has not been

adjusted by the Authority to reflect the change of duct asset lives, de facto allowing a

smoother transition to a lower fibre access cost.

With regards to the averaging of the monthly access fibre cost per E1 between the ISI and 138.

CSI service, the Authority understands Batelco’s concerns regarding its potential under-

recovery of the fibre access cost for lower capacity links (less than 14 E1s). Accordingly,

the Authority has reconsidered the approach of the draft Order. In the final Order, the

Authority allocates the average cost of fibre access to the link. The cost of fibre access per

E1 is no longer averaged. The cost of fibre access per E1 in each band is equal to the cost

per fibre divided by the arithmetic average of E1s of the band. As the cost of fibre is

recovered through the E1 voice channels, no fibre cost is allocated to the signalling link.

While this approach does not take into account the actual number of fibre pairs used by

the ISI/CSI link services ([] fibre pairs in 2009) and thus may overlook potential cost

sharing, it has the merit of being simpler and it guarantees that both ISI and CSI link

services get allocated the same amount of fibre access cost. It also gives the right price

signal to the market whereby the average unit cost per E1 decreases when the capacity of

the link increases.

On the adjustment of ISI installation charge, the Authority considers that, based on the 139.

definition of the ISI service, it remains pertinent to charge OLOs on a time and material

basis for half of the cost incurred in laying the fibre cable between the two operators’ point

of presence and half of the cost incurred in constructing the footway box. It also prevents

Batelco from bearing an excessive amount of installation cost in situations where the

footway box is distant from Batelco’s service node. The Authority therefore considers that

the adjustment is still justified.18


The Authority acknowledges Batelco’s position against the sharing of ISI/CSI cost between 140.

Batelco and OLOs. In its submission, Batelco introduces the notion of traffic ‘responsibility’

instead of traffic ‘directionality’ as used in the draft Order (see paragraph 110). From

Batelco’s response, the Authority understands that an operator is considered ‘responsible’

of a given portion of traffic when, from the end user’s perspective, the operator is

responsible for the end-to-end delivery of the calls associated with such interconnected

traffic. For instance, an OLO offering prepaid calling card services to international

17 Whereas the current method is based on a 1km of fibre pair access length the operational data provided by

Batelco would suggest that the average fibre pair access length is closer to [] which is [] times lower than Batelco’s estimate ([] metres of total fibre access cable length divided by [] fibre pairs used). The Authority also refers to the justification for the new approach at paragraph 100 above. 18

Further, while it would arguably be appropriate to make further adjustments to the monthly regulated charges to account for the various one-off charges applicable to the ISI and CSI services (e.g. items 1-1.4; 1-1.9; 1-1.10; 1-1.11; 1-1.13; 1-2.1; 1-2.10; 1-2.12; 1-2.13; and 1-2-14), the Authority has not done so.



Page 57 of 167

destinations will use Batelco’s freephone origination service. When a Batelco’s subscriber

makes a call with the OLO’s prepaid card, this generates interconnection traffic in the

direction going from Batelco to the OLO (i.e. Batelco injecting traffic in the ISC/CSI link)

but it is the OLO which is responsible for the correct switching and conveying of the call up

to the international called party (i.e. the OLO is responsible for the end-to end service).

While the notion of ‘responsibility’ is more vague than the notion of ‘directionality’ (e.g.

transit traffic, international inbound traffic), the Authority agrees that it is more relevant

when assessing whether the cost of the ISI/CSI links should be shared between two

interconnected operators.

The Authority expects Batelco’s interconnection traffic with mobile operators to be 141.

relatively symmetric and, in this regards, notes Batelco’s deliberate choice not to include

mobile operators in the table where Batelco reports interconnection traffic with OLOs.

Nonetheless, the Authority notes from the table submitted by Batelco that, in the great

majority of cases, Batelco is only ‘responsible’ for a small portion of traffic (10 to 15% of

traffic). As a result, the Authority has decided to reconsider its draft Order position to share

the cost of the ISI/CSI links between operators. The final ordered charges do not include

any sharing of the cost of the ISI/CSI links; their cost are fully recovered by the OLOs.

As part of the next RO review, the Authority intends to assess whether it may be 142.

appropriate to introduce a certain level of cost sharing for ISI and CSI links when traffic is

relatively balanced and to review the pricing mechanism adjustment detailed in Annex 2 of

Batelco’s RO schedule 3. 19


With regards to the cancellation charge formula, the Authority considers that Lightspeed’s 143.

proposal to reduce the applicability period of the cancellation charge to 12 months would

be unfair in light of the initial investment made by Batelco. In the same manner, extending

such period to 30 months (5 years) as advocated by Batelco would be excessive. In this

regard, the Authority kindly refers Batelco to the justification set in paragraph 134 of the

RO Order dated 25 January 2011 (ref: MCD/01/11/006). The Authority also disagrees with

Batelco’s proposal to prevent an OLO to decrease the capacity of its ISI/CSI link in the first

12 months as such decrease would not involve the removal of any asset. For the same

reason, the Authority disagrees with Batelco’s proposal to introduce a cancellation charge

equal to 3 monthly rental charges for every E1 cancelled after 12 months of service.

The Authority agrees that OLOs should be charged for the migrations and/or relocation of 144.

the link on a time and material basis. The corresponding one-off charge should cover

network installation and migration assistance (but not the cost of CPE in the case of CSI

hot migration as Batelco will recuperate the CPE located in the original location).

The Authority also agrees to modify the cancellation formula to avoid potential gaming by 145.

OLOs which could unduly minimize the cancellation charge by reducing the capacity of the

link before cancelling it. The Authority therefore orders Batelco to amend the cancellation

charge formula to:

19 Batelco’s RO, SCHEDULE 3 – ANNEX 2, CALCULATION OF TRAFFIC BASED REASSESSMENT OF E1

CHARGES



Page 58 of 167

with:


WC: Relevant wholesale charge (i.e. ISI/CSI) applied to the average number of E1s at

which the link has operated since its first operation (i.e. between the Ready for Test

(“RFT”) Date and the removal order date) or the current number of E1s at the removal

order date whichever of the two is higher, based on the current link rate applied to the

band in which that number of E1s falls.

M: Number of months between the Ready for Test (“RFT”) Date and the removal order

date rounded-up to the next full month.

Finally, the Authority remains of the view that the cancellation formula should apply to both 146.

existing and new services. For existing circuits, the cancellation formula should only apply

to circuits which have been cancelled after the issuance of this RO Order (see paragraph

5). The Authority orders Batelco to amend its RO accordingly.

P = WC × ( 36 - M )



Page 59 of 167

Final Order FRND charges for ISI/CSI link services

The following table summarizes the FRND charges of ISI and CSI link services ordered by 147.

the Authority:20

Table 25: Order FRND charges of ISI and CSI link services as compared to Batelco’s submitted charges and

currently approved charges

Chargeable activity

Approved/

ordered in

January

2011

(or

currently

implemen

ted

Batelco's

submitted

charges

in April

2011

TRA

FRND

draft

charges

TRA

FRND

final

Order

charges

Evolution

of Order

FRND as

compared

to

previousl

y

approved/

ordered


ISI Link services ( 1-1 ) in BD


60.000 114.000 removed removed -


42.000 47.000 removed removed -


- - 21.612 48.599 -


- - 15.101 30.181 -


- - 13.624 26.002 -


39.000 33.000 12.917 24.003 -38.5%

1-1.12 - ISI Link -Signalling Link rental 50.000 138.000 14.192 25.366 -49.3%

CSI Link services ( 1-2 ) in BD

1-2.2A - CSI Link Rent (Basic) - 1-21 Links 154.000 267.000 removed removed -

1-2.2B - CSI Link Rent (Basic)- 22-42 Links 75.000 91.000 removed removed -

1-2.2A - CSI Link Rent (Basic) - 1-14 Links - - 121.790 169.039 -

1-2.2B - CSI Link Rent (Basic) - 15-28 Links - - 54.916 73.195 -

1-2.2C - CSI Link Rent (Basic) - 29-42 Links - - 39.741 51.447 -

1-2.2D - CSI Link Rent (Basic) - 43-63 Links 58.000 55.000 32.484 41.046 -29.2%

1-2.11 - CSI Link -Signalling Link rental 50.000 138.000 21.827 25.366 -49.3%

Note: Text highlighted in yellow is used to highlight elements in the RO that are either new or modified while text in italics is used for elements that are removed.


The above FRND charges of ISI and CSI link services are derived from the following cost 148.

stacks:

20 Compared to the draft Order charges, the main changes made relate to: (a) the cost of the fibre access which is

no longer averaged between ISI and CSI but recovered on a per link basis; and (b) the removal of the sharing of ISI and CSI costs between Batelco and OLOs.



Page 60 of 167

Table 26: Cost stacks of Order FRND charges for ISI and CSI link services

ISI Link Service

Yr 2009 Cost (LRIC)



Total annual cost per E1 [] [] [] [] []


Core Huawei port per OLO [] [] [] [] Joining Box [] [] [] [] Minimum [] [] [] [] Maximum [] [] [] [] Average no. of E1 per OLO [] [] [] []


Access Fibre Cost

Annual access fibre cost per link [] [] [] [] [] Annual access fibre cost per E1 [] [] [] [] []

Percentage of access fibre cost relevant to ISI

[] [] [] [] []

Relevant annual access fibre cost per E1/signalling link

[] [] [] [] []

Total annual cost per E1 583.193 362.173 312.020 288.037 304.392 Total monthly cost per E1 48.599 30.181 26.002 24.003 25.366

CSI Link Service

Yr 2009 Cost (LRIC)





DDF Cost [] [] [] [] ODF Cost [] [] [] [] Core Huawei port per OLO [] [] [] [] OSN 3500 per OLO [] [] [] [] Minimum [] [] [] [] Maximum [] [] [] [] Average no. of E1 per OLO [] [] [] []


Access Fibre Cost

Annual access fibre cost per link [] [] [] [] []

Annual access fibre cost per E1 [] [] [] [] []

Total annual cost per E1 2,028.466 878.342 617.360 492.557 304.392 Total monthly cost per E1 169.039 73.195 51.447 41.046 25.366




Page 61 of 167

8 Interconnection and transit services

Draft Order Text

This section reviews Batelco’s proposed charges and associated cost stacks for the 149.

interconnection and transit services.

8.1 Information provided by Batelco

In its 2011 RO submission, Batelco included three files specifically related to 150.

interconnection and transit services, one word document and two excel files in annex

detailing the calculations of the charges:

a. the first, “20110411 Sch 3 09 RO Charges_RO Submission.doc”, is a tracked

change version of Batelco’s RO Schedule 3 which contains all submitted charges

included in the RO;

b. the second, “20110407 Annex A RIO costs 2009.xlsx”, relates to the network

costs for interconnection services; and

c. the third, “20110407 Annex B ISC and ASC 2009.xlsx”, relates to the wholesale

activities costs for interconnection services, called ISC charge.

On 15 June 2011, further clarifications were sought by the Authority through an article 53 151.

request for information to assess whether charges are fair and reasonable. Additional

information was consequently sent by Batelco.

In the following section, a quote of the definition of each interconnection service included 152.

in Batelco’s RO is provided. Under each service definition, the corresponding costing and

charging information submitted by Batelco in its 2011 RO submission is reproduced.

PSTN terminating access (1-3.1 and 1-3.2)

Service definition

In its RO, Batelco defines the PSTN terminating access service as follows: 153.

“The PSTN Terminating Access Service is a service for the carriage

of a Telephone Call from an agreed Point of Interconnection to a

PSTN Number within the Access Provider's Network.

Available To: Public telecommunications operators with an

individual NFL or MNO licence and one or more interconnection

links with Batelco.

Traffic: Traffic which both originates and terminates in Bahrain only.



Page 62 of 167

Reciprocal Service: A traffic delivery service must be offered by

any operator capable of delivering traffic to that operator’s directly

connected customers.” 21

Information submitted by Batelco

Batelco has included the following cost stacks in the file “20110407 Annex A RIO costs 154.

2009.xlsx”.

Table 27: Cost stack submitted by Batelco for the PSTN terminating access service (see note below)

Item Ref Code Network Element

AS cost per

minute LRIC

Routing Factor %

2009 Cost

950c PSTN Terminating Access from OLO GMSC

CN03 CN03 [Transit switches] [] [] []

CN04 CN04 [Soft Switch (inc MRS)] [] [] []

CN05 CN05 [MSAN Traffic Sensitive] [] [] []

CN06 CN06 [Universal Media Gateway (UMG)] [] [] []

CN15 CN15 [Transit switch - GMSC] [] [] []

CN20 CN20 [Distribution - Core Link (Voice )] [] [] []

CN22 CN22 [Aggregation - Distribution Link ( Voice)] [] [] []

CN24 CN24 [MSAN - Aggregation Link (Voice)] [] [] []

CN25 CN25 [UMG - Transit Switches] [] [] []

CN39 CN39 [MPLS Core Voice] [] [] []

CN41 CN41 [MPLS Aggregation ( Voice)] [] [] []

CN57 CN57 [MPLS - Distribution Routers ( Voice )] [] [] []

MN02 MN02 [Gateway MSC (GMSC)] [] [] []

SUBTOTAL

[]

CN90 CN90 [Interconnect Specific] 0.565 1.000 0.565

TOTAL 2.625 2.625

951c PSTN Terminating Access from OLO Transit








new added CN25 CN25 [UMG - Transit Switches] [] [] []




SUBTOTAL

[]

CN90 CN90 [Interconnect Specific]

1.000 0.565

TOTAL

2.254

Note: The Authority has added the ISC used by Batelco to calculate its proposed charges (0.565 fils per equivalent minute).

Source: Batelco’s 2011 RO submission

In the Schedule 3 of the 2011 RO submission, the wholesale charges corresponding to the 155.

two PSTN terminating access service remain unchanged at:

21 Batelco’s RO, Schedule 1 1-3 (PSTN TERMINATING ACCESS SERVICE)



Page 63 of 167

a. 3.040 fils per minute for PSTN Terminating Access transiting through the GMSC;

and

b. 2.382 fils per minute for PSTN Terminating Access using either double tandem or

single tandem.

The proposed charges in the Schedule 3 (3.040 fils per minute and 2.382 fils per minute) 156.

are identical to the current approved charges and do not correspond to the calculated

charges in the cost stacks (2.626 fils and 2.254 fils per minute). This is in line with the RO

approval letter dated 17 September 2009 (GDO/0909/031) in which it was decided to hold

constant the fixed interconnection charges’ rates pending a thorough review of NGN

costing.

Mobile terminating access (1-4.1 and 1-4.2)

Service definition

In its RO, Batelco defines the Mobile terminating access service as follows: 157.

“The Mobile Terminating Access Service is a service for the

carriage of a Telephone Call from an agreed Point of

Interconnection to a Called Mobile Party on the Access Provider’s

Mobile Network.

Available to: A public telecommunications operator with an

individual NFL or MNO licence and having one or more

interconnection links with Batelco.

Traffic: Traffic which both originates and terminates in Bahrain only.

Reciprocal Service: A traffic delivery service must be offered by

any operator capable of delivering traffic to that operator’s directly


22 Batelco’s RO, Schedule 1 1-4 (MOBILE TERMINATING ACCESS SERVICE)



Page 64 of 167


Table 28: Cost stack submitted by Batelco for the Mobile terminating access service (see note below)


AS cost per

minute LRIC

Routing Factor %

2009 Cost

950d Mobile Terminating Access from OLO GMSC

MN01 MN01 [Mobile Switching Centre Server ( MSCS )] [] [] []


MN03 MN03 [Home Location Registers (HLR )] [] [] []

MN04 MN04 [Mobile Packet Backbone Network - MPBN] [] [] []

MN05 MN05 [Media Gateway ( MGW )] [] [] []

MN11 MN11 [Base Station Controller (BSC)] [] [] []

MN12 MN12 [Base Transceiver Station (BTS)] [] [] []

MN13 MN13 [GSM 3G Radio N/W Controller-RNC] [] [] []

MN14 MN14 [GSM 3G HSDPA Radio Base Stations-Node B] [] [] []

MN18 MN18 [RNC - MGW] [] [] []

MN19 MN19 [Node B - RNC] [] [] []

MN20 MN20 [Mobile BTS - BSC] [] [] []

MN21 MN21 [Mobile BSC - MGW] [] [] []

MN23 MN23 [Mobile MGW - GMSC] [] [] []

SUBTOTAL

[]


TOTAL

4.681


AS cost per

minute LRIC

Routing Factor %

2009 Cost

951e Mobile Terminating Access from OLO Transit


CN14 CN14 [Transit switch - MGW] [] [] []









MN18 MN18 [RNC - MGW] [] [] []

MN19 MN19 [Node B - RNC] [] [] []



SUBTOTAL

[]


TOTAL

4.530



In the Schedule 3 of the 2011 RO submission, the proposed charges are: 158.

a. 4.680 fils per minute for the mobile terminating access service from OLO GMSC

which is a -24.6% decrease compared to the charge of 6.203 fils per minute set in

the 2001 RO Order; and



Page 65 of 167

b. 4.530 fils per minute for the mobile terminating access service from OLO Transit

which is a -30.9% decrease compared to the charge of 6.553 fils per minute set in

the 2001 RO Order.

By a rounding unit, the charge for the mobile terminating access service from OLO GMSC 159.

in the submitted Schedule 3 (4.680 fils per minute) matches the charge calculated in the

cost stack (4.681 fils per minute). The proposed charge for mobile terminating access

service via OLO transit (4.530 fils per minute) matches the charge calculated from the cost

stack.

SMS terminating access (1-6)

Service definition

In its RO, Batelco defines the SMS terminating access service as follows: 160.

“The SMS Terminating Access Service is a service for the carriage

of SMS Messages from a Point of Interconnection to a mobile

device associated with a Mobile Number on the Access Provider’s

Mobile Network, as further defined by the terms of this Service

Description.

Available to: Public telecommunications operator with an individual

MNO licence and one or more interconnection links with Batelco.

Traffic: SMS Messages which both originate and terminate in

Bahrain only.

Reciprocal Service: A reciprocal service must be offered by any

operator with a Mobile Network.” 23

23 Batelco’s RO, Schedule 1 1-6 (SMS TERMINATING ACCESS SERVICE)



Page 66 of 167


Table 29: Cost stack submitted by Batelco for the SMS terminating access service (see note below)

Item Ref Code Network Element AS cost per

minute LRIC

Routing Factor %

2009 Cost

950f SMS Terminating Access









MN14 MN14 [GSM 3G HSDPA Radio Base Stations-Node B]

[] [] []

MN18 MN18 [RNC - MGW] [] [] []

MN19 MN19 [Node B - RNC] [] [] []




SUBTOTAL

[]


TOTAL

0.924



In the Schedule 3 of the 2011 RO submission, Batelco’s proposed charge is 1.480 fils per 161.

SMS which is a +234.1% increase compared to the charge of 0.443 fils per SMS set in the

2011 RO Order.

Batelco’s proposed charge for the SMS terminating access service in the submitted 162.

Schedule 3 (1.480 fils) does not match the charge calculated in the cost stack (0.924 fils).

The cost difference lies in Batelco’s use of an incorrect value for the routing factor of

CN90. As per the 2011 RO Order (paragraph 191), a conversion factor of 0.025 should be

used to allocate the per minute equivalent ISC to the SMS termination service.

Emergency call access service (1-7)

Service definition

In its RO, Batelco defines the Emergency call access service as follows: 163.

“The Emergency Call Access Service is a service provided by

Batelco to convey Emergency Calls from an agreed Point of

Interconnection to the call centre of the Emergency Service, as

further defined by the terms of this Service Description.

Available to: Public telecommunications operators with an

individual licence and one or more interconnection links with

Batelco.



Page 67 of 167

Traffic: Emergency Calls which both originate and terminate in

Bahrain only.

Reciprocal service: Not required.” 24

Information submitted by Batelco for the conveyance of emergency call to 999 (1-7.1)

Table 30: Cost stack submitted by Batelco for the Emergency call access service (see note below)


AS cost per

minute LRIC

Routing Factor %

2009 Cost

951h Emergency Call Access Service from OLO Transit


SUBTOTAL []


TOTAL []

950g Emergency Access 999




SUBTOTAL []


TOTAL []

2009 Traffic

Total unit cost

Weighted total unit cost

(based on traffic)

951h Emergency Call Access Service from OLO Transit [] [] 1.098

950g Emergency Access 999 [] []

Note: The Authority has added the ISC used by Batelco to calculate its proposed charges (0.565 fils per equivalent minute). The Authority also added the calculation of the weighted charge which was omitted by Batelco.


In the Schedule 3 of the 2011 RO submission, the proposed charge for this service is 164.

1.100 fils per minute which is a +5.3% increase compared to the charge of 1.045 fils set in

the 2011 RO Order.

It is noted that the charge in the submitted Schedule 3 does not exactly match the 165.

weighted average of the calculated charges included in the cost stacks (1.100 fils as

opposed to 1.098 fils). Based on the 2009 traffic weight (1.96% using the transit switch

and 98.04% using the GMSC), the Authority calculates that the cost-based charge should

be equal to 1.098 fils per minutes.

Information submitted by Batelco for the conveyance of emergency call to 990, 992, 994

and 998 (1-7.2 to 1-7.5)

In the Schedule 3 of the 2011 RO submission, the proposed charges for these 166.

conveyance services remain unchanged at 2.382 per minute. Batelco did not provide any

cost stacks for these services.

24 Batelco’s RO, Schedule 1 1-7 (EMERGENCY CALL ACCESS SERVICE)



Page 68 of 167

Freephone call originating access service (1-8)

Service definition

In its RO, Batelco defines the freephone call originating access service as follows: 167.

“The Freephone Originating Access Service is a service for the

delivery of Freephone Calls from a Calling Party to an agreed Point

of Interconnection, as further defined by the terms of this Service

Description.


individual ISL, NFL or MNO licence and one or more


Traffic: Telephone Calls which both originate and terminate in

Bahrain or which originate in Bahrain and are delivered to a network

outside Bahrain.

Reciprocal Service: A reciprocal service must be offered by any

operator which provides an equivalent service to any directly


Information submitted by Batelco for the freephone call originating access service from

a mobile telephone (1-8.1)

Table 31: Cost stack submitted by Batelco for the Freephone call originating access service from mobile (see

note below)


AS cost per

minute LRIC

Routing Factor

%

2009 Cost

951j Free phone Call originating access (using Postpaid to OLO GMSC)










MN18 MN18 [RNC - MGW] [] [] []

MN19 MN19 [Node B - RNC] [] [] []




SUBTOTAL []


TOTAL []

25 Batelco’s RO, Schedule 1 1-8 (FREEPHONE ORIGINATING ACCESS SERVICE)



Page 69 of 167

951l Free phone Call originating access (using Prepaid to OLO GMSC)










MN18 MN18 [RNC - MGW] [] [] []

MN19 MN19 [Node B - RNC] [] [] []




MN41 MN41 [Mobile prepaid platform] [] [] []

SUBTOTAL []


TOTAL []

951k Free phone Call originating access (using Postpaid to OLO Transit)












MN18 MN18 [RNC - MGW] [] [] []

MN19 MN19 [Node B - RNC] [] [] []



SUBTOTAL []


TOTAL []

951m Free phone Call originating access (using Prepaid to OLO Transit)












MN18 MN18 [RNC - MGW] [] [] []

MN19 MN19 [Node B - RNC] [] [] []



MN41 MN41 [Mobile prepaid platform] [] [] []

SUBTOTAL []




Page 70 of 167

TOTAL []

2009 Traffic

Total unit cost

Weighted total unit

cost (based

on traffic)

951j Free phone Call originating access (using Postpaid to OLO GMSC) [] []

6.020 951l Free phone Call originating access (using Prepaid to OLO GMSC) [] []

951k Free phone Call originating access (using Postpaid to OLO Transit) [] []

951m Free phone Call originating access (using Prepaid to OLO Transit) [] []



In the Schedule 3 of the 2011 RO submission, the proposed charge is 6.020 fils per 168.

minute which is a -25.3% decrease compared to the charge of 8.060 fils set in the 2011

RO Order. This charge corresponds to the calculated charge of the service cost stack.

Information submitted by Batelco for the freephone call originating access service from

a fixed PSTN telephone (1-8.2)

Table 32: Cost stack submitted by Batelco for the Freephone call originating access service from fixed PSTN

(see note below)


minute LRIC

Routing Factor

% 2009 Cost

950h Free phone Call originating access (using PSTN to OLO GMSC)







CN22 CN22 [Aggregation - Distribution Link ( Voice)]

[] [] []






new added CN64 CN64 [Public Payphones] [] [] []


SUBTOTAL []


TOTAL []

951i Free phone Call originating access (using PSTN to OLO Transit)






CN22 CN22 [Aggregation - Distribution Link ( Voice)]

[] [] []








Page 71 of 167

new added CN64 CN64 [Public Payphones] [] [] []

SUBTOTAL []


TOTAL []

2009 Traffic Total unit cost

Weighted total unit

cost (based on traffic)

950h Free phone Call originating access (using PSTN to OLO GMSC) [] [] 2.783

951i Free phone Call originating access (using PSTN to OLO Transit) [] []



In the Schedule 3 of the 2011 RO submission, Batelco’s proposed wholesale charges 169.

corresponding to the freephone from PSTN service remain unchanged at 2.710 fils per

minute. This charge does not correspond to the calculated charge in the service cost stack

which equals 2.783 fils. This is in line with the RO approval letter dated 17 September

2009 (GDO/0909/031) in which it was decided to hold constant the fixed interconnection

charges’ rates pending a thorough review of NGN costing.

MMS delivery service (1-11)

Service definition

In its RO, Batelco defines the MMS delivery service as follows: 170.

“The MMS Delivery Service is a service for the carriage of MMS

Messages via a TCP/IP connection to the MMSC of the Access

Provider, as further defined by the terms of this Service Description

and by 3GPP TS 22.140 and 3GPP TS 23.140 specifications.


MNO licence.

Traffic: MMS Messages originating from and terminating to users in

Bahrain only.

Reciprocal Service: A reciprocal delivery service is required.” 26

26 Batelco’s RO, Schedule 1 1-11 (MMS DELIVERY SERVICE)



Page 72 of 167


Table 33: Cost stack submitted by Batelco for the MMS delivery service (see note below)



In the Schedule 3 of the 2011 RO submission, the proposed charge is 90.500 fils per MMS 171.

which is a -27.3% decrease compared to the charge of 124.495 fils set in the 2011 RO

Order.

Batelco’s proposed charge for the MMS terminating access service in the submitted 172.

Schedule 3 (90.500 fils) does not exactly match the charge calculated in the cost stack

(90.125 fils). The difference essentially lies in Batelco’s use of an incorrect value for the

routing factor of CN90. As per the 2011 RO Order (paragraph 191), a conversion factor of

0.333 should be used for the per minute equivalent ISC applicable to the MMS termination

service.


AS cost per

minute LRIC

Routing Factor

%

2009 Cost

950i MMS Terminating Access










MN18 MN18 [RNC - MGW] [] [] []

MN19 MN19 [Node B - RNC] [] [] []




MN25 MN25 [Mobile MGW - SMS platform] [] [] []

MN26 MN26 [Mobile BSC - GPRS platform] [] [] []

MN40 MN40 [SMS Platform] [] [] []

MN43 MN43 [GPRS Platform] [] [] []

MN44 MN44 [MMS Platform] [] [] []

MN45 MN45 [WAP Platform] [] [] []

SUBTOTAL

[]


TOTAL

90.125



Page 73 of 167

PSTN transit service (2-1)

Service definition

In its RO, Batelco defines the PSTN transit service as follows: 173.

“The PSTN Transit Service is a service provided by Batelco for the

carriage of Transit Calls between two Access Seeker Network

Facilities of the same Access Seeker.

Available to: Public telecommunications operator with an NFL or

MNO licence and two or more interconnection links with Batelco.

Traffic: Telephone Calls which originate and terminate on the

Access Seeker’s network only.

Reciprocal Service: Not required.

(…)

Access Seeker Network Facility means the following facilities

operated by the Access Seeker and forming part of its PSTN or

Mobile Network:

(a) switch, but excluding a remote concentrator or multiplexer;

(b) a mobile switching centre;

(c) base station;

(d) satellite earth station; or

(e) cable landing station,

but, for clarification, excludes Access Seeker Customer premises.” 27


Batelco did not propose to modify the charges of these services which remain at: 174.

a. 1.724 fils per Transit call – Fixed; and

b. 1.988 fils per Transit call – Mobile.

Moreover, Batelco did not provide any cost stacks for these services. 175.

27 Batelco’s RO, Schedule 1 2-1 (PSTN TRANSIT SERVICE)



Page 74 of 167

DQ assistance service [for call to 181 (2-2.1) and for call to 188 (2-2.1)]

Service definition

In its RO, Batelco defines the DQ assistance service as follows: 176.

“The Directory Assistance Service is a service provided by Batelco

to Access Seeker Customers to provide them with access to a

Batelco operator to obtain information about Listed Numbers.


NFL or MNO licence and one or more interconnection links with

Batelco.

Traffic: Telephone Calls which originate on the Access Seeker’s

network and are made to the Batelco directory operators.

Reciprocal Service: Not required.” 28


Table 34: Cost stack submitted by Batelco for the DQ assistance service (see note below)


minute LRIC

Routing Factor

% 2009 Cost

950k Directory Assistance Service from OLO GMSC (181)



CN18 CN18 [Transit switch - DQ Services] [] [] []

CN63 CN63 [Directory Services ( DQ )] [] [] []


new added MN25 MN25 [Mobile MGW - SMS platform] [] [] []

new added MN40 MN40 [SMS Platform] [] [] []

Weighted average operating costs per call (181 and 188 calls)

[] [] []

SUBTOTAL []


TOTAL []

951n Directory Assistance Service from OLO Transit (181)





[] [] []

SUBTOTAL []


TOTAL []


Weighted total unit

cost (based on

traffic) 950k Directory Assistance Service from OLO GMSC (181) [] []

112.549 951n Directory Assistance Service from OLO Transit (181) [] []

951y Directory Assistance Service from OLO GMSC (188)

28 Batelco’s RO, Schedule 1 2-2 (DIRECTORY ASSISTANCE SERVICE)



Page 75 of 167






MN25 MN25 [Mobile MGW - SMS platform] [] [] []

MN40 MN40 [SMS Platform] [] [] []


[] [] []

SUBTOTAL []


TOTAL 112.665


The Authority has also added the “Weighted average operating costs per call (181 and 188 calls)” which was omitted by Batelco in the cost stacks (20110407 Annex C DQ 2009 181188.xlsx).

Finally, the Authority has added the calculation of the weighted charge of call to 181 which was also omitted by Batelco.


In the Schedule 3 of the 2011 RO submission, Batelco’s proposed charges are 111.010 177.

fils per call to 181 and 112.540 fils per call to 188 which is respectively a -8.6% decrease

and a -9.2% decrease compared to the charges of 121.402 fils and 123.884 fils set in the

2011 RO Order.

It should be noted that Batelco’s proposed charges for the directory assistance service in 178.

the submitted Schedule 3 (111.010 and 112.549 fils per call) do not match the charges

calculated in the cost stacks (112.549 and 112.665 fils per call).



Page 76 of 167

International inbound calls to Batelco fixed telephones (2-7)

Service definition

In its RO, Batelco defines the International inbound calls to Batelco fixed telephones 179.

service as follows:

“The Fixed Network Access Service for International Inbound Calls

to Batelco Fixed Telephones is a service for the access to a fixed

network for the delivery of International Inbound Telephone Calls

from a Calling International Party to a Called Local Fixed Party as

further described in this Service Description.


individual international services licence and one or more


Traffic: Voice traffic which originates outside Bahrain and

terminates on a Batelco fixed telephone network number.

Reciprocal Service: Not required.” []Information submitted by Batelco

Table 35: Cost stack submitted by Batelco for International inbound calls to Batelco fixed telephones service

(see note below)


AS cost

per

minute

LRIC

Routing

Factor % 2009 Cost

950m Int'l Inbound Calls to fixed from OLO GMSC














SUBTOTAL []


TOTAL 2.625

951o Int'l Inbound Calls to fixed from OLO Transit










Page 77 of 167





SUBTOTAL []


TOTAL 2.254



In the Schedule 3 of the 2011 RO submission, the proposed charge is 30.160 fils per 180.

minute which is a +1,141% increase compared to the previous charge of 2.430 fils.

Batelco’s proposed charge in the Schedule 3 (30.160 fils per minute) is significantly above 181.

the cost-based charges as calculated in the cost stack (2.625 fils per minute from OLO

GMSC and 2.254 fils per minute from OLO Transit).

The Authority notes that there are two call scenarios (from GMSC and from Transit) while 182.

there is only one charge proposed by Batelco in the Schedule 3.

Batelco refers the Authority to the Annex G 2010 of the RO submission dated 1 April 2010 183.

(GCL/425/10) and to its response dated 7 November 2010, pages 52-55, to the RO draft

order for written justifications of the proposed above-cost buffer.



Page 78 of 167

International inbound calls to Batelco mobile telephones (2-8)

Service definition

In its RO, Batelco defines the International inbound calls to Batelco mobile telephones 184.

service as follows:

“The Mobile Network Access Service for International Inbound Calls

to Batelco Mobile Telephones is a service for the access to a mobile

network for the delivery of International Inbound Telephone Calls

from a Calling International Party to a Called Local Mobile Party as

further described in this Service Description.


individual international services licence and one or more


Traffic: Voice traffic which originates outside Bahrain and

terminates on a Batelco mobile telephone number range.

Reciprocal Service: Not required.” []Information submitted by Batelco

Table 36: Cost stack submitted by Batelco for International inbound calls to Batelco mobile telephones (see

note below)


AS cost per

minute LRIC

Routing Factor %

2009 Cost

950n Int'l Inbound Calls to Mobile from OLO GMSC










MN18 MN18 [RNC - MGW] [] [] []

MN19 MN19 [Node B - RNC] [] [] []




SUBTOTAL []


TOTAL 4.681

951q Int'l Inbound Calls to Mobile from OLO Transit











Page 79 of 167




MN18 MN18 [RNC - MGW] [] [] []

MN19 MN19 [Node B - RNC] [] [] []




SUBTOTAL []


TOTAL 4.929



In the Schedule 3 of the 2011 RO submission, Batelco’s proposed charges are 37.800 fils 185.

per minute for the two different call scenarios. For the International inbound calls to

Batelco mobile using GMSC, this represents a +517% increase compared to the current

charge of 6.122 fils. For the second call scenario using the transit switch, the charges’

increase is equal to +477%.

The charges proposed by Batelco in the Schedule 3 (37.800 fils per minute) are 186.

significantly above the cost-based charges as calculated in the cost stack (4.681 fils per

minute from OLO GMSC and 4.929 fils per minute from OLO Transit).

Batelco refers the Authority to the Annex G 2010 of the RO submission dated 1 April 2010 187.

(GCL/425/10) and to its response dated 7 November 2010, pages 52-55, to the RO draft

order for written justifications of the proposed above-cost buffer.



Page 80 of 167

Inter-Operator Transit Access Service (2-9)

Service definition

In its RO, Batelco defines the inter-operator transit access service as follows: 188.

“The Inter-Operator Transit Access Service (ITAS) is a service

provided by Batelco to Licensed Operators for the carriage (in

transit) of Transit Calls between one Licensed Operator’s Network

and another Licensed Operator’s Network.

Available to: Licensed Operator with the right to interconnect its

network to the Batelco Network.

Traffic: Only calls which

(i) originate outside Bahrain and are

for termination in Bahrain;

(ii) originate inside Bahrain and are for

termination outside Bahrain; or

(iii) both originate and terminate in

Bahrain and do not cross a

network which lies outside Bahrain

and for the avoidance of doubt,

may not both originate and

terminate on the network of the

Access Seeker (see the PSTN

Transit Service Description).

Reciprocal Service: Reciprocal Transit is not required.” 29


Table 37: Cost stack submitted by Batelco for Inter-Operator Transit Access Service (see note below)


minute LRIC

Routing Factor

% 2009 Cost

950o Inter-Operator Transit Service ITAS (OLO GMSC/Transit to OLO Transit/GMSC)




SUBTOTAL 0.540

CN90 CN90 [Interconnect Specific] [] [] []

TOTAL []

951v Inter-Operator Transit Service ITAS (OLO Transit to Transit)


SUBTOTAL 0.337

CN90 CN90 [Interconnect Specific] [] [] []

29 Batelco’s RO, Schedule 1 2-9 (INTER-OPERATOR TRANSIT ACCESS SERVICE )



Page 81 of 167

TOTAL []


Weighted total unit cost

(based on traffic)

950o Inter-Operator Transit Service ITAS (OLO GMSC/Transit to OLO Transit/GMSC)

[] [] 1.104

951v Inter-Operator Transit Service ITAS (OLO Transit to Transit) [] []


The Authority also added the calculation of the weighted charge which was omitted by Batelco. Source: Batelco’s 2011 RO submission

In the Schedule 3 of the 2011 RO submission, Batelco’s proposed charge for the transit of 189.

fixed voice traffic remains unchanged at 1.724 fils per minute. For the transit of mobile

voice traffic, Batelco’s proposed charge is 1.100 fils per minute which is a -26.2%%

decrease compared to the previously ordered charge of 1.49 fils. Batelco’s proposed

charge is sensibly equal to the above calculated charge of 1.104 fils per minute.



Page 82 of 167

8.2 Review of the submitted charges for interconnection and transit services

Proposed interconnection charges in the 2011 RO submission

Interconnection charges are composed of: 190.

a. network costs which are based on the 2009 LRIC regulatory accounts and are

allocated to services on the basis of their relative usage of network elements. The

cost allocation is undertaken via a routing factor table which is a double-entry

table with, horizontally, the list of network elements and, vertically, the list of

services. Each intersection in the table is populated with a factor which is the

product of:

i. a conversion factor used to convert service traffic into a unit common to all

services. In the case of interconnection and transit services, this common

unit is called equivalent minute (or routing factor minute); and

ii. a routing factor representing the relative usage required by each network

element in the provision (i.e. routing) of an equivalent minute of service.

b. wholesale activities costs which are grouped under a charge called ISC

(“Interconnection Specific Charge”). This charge allocates interconnect specific

costs to all the minutes conveyed and transited on Batelco’s fixed and mobile

networks.

The following table summarizes the interconnection and transit services charges proposed 191.

by Batelco along with the current charges.



Page 83 of 167

Table 38: Current and proposed interconnection and transit charges

Chargeable activity

Previously approved/ordered in

2008

Previously approved/ordered in

2009

Approved/ordered in January

2011

(or currently

implemented)

Batelco submitted charges in April 2011

Evolution of

submitted as

compared to

Approved/ Ordered


1-3.1 - GMSC PTSN terminating calls 3.040 3.040 3.040 3.040 0.0%

1-3.2 - PSTN terminating access using either double or single tandem

2.382 2.382 2.382 2.382 0.0%


1-4.1 - Mobile call conveyance GMSC 6.626 6.124 6.203 4.680 -24.6%

1-4.2 - Mobile call conveyance Transit switch 7.332 6.556 6.553 4.530 -30.9%


1-6.1 - SMS Terminating access 0.456 0.437 0.443 1.480 +234.1%

1-7.1 - Conveyance of emergency call to 999 1.429 1.591 1.045 1.100 +5.3%

1-7.2 - Conveyance of emergency call to 990 2.711 2.382 2.382 0.0%



1-7.5 - Conveyance of emergency call to 998 2.382 2.382 0.0%

1-8.1 - Freephone from Mobile 7.830 8.060 8.060 6.020 -25.3%

1-8.2 - Freephone from PSTN 2.710 2.710 2.710 2.710 0.0%

1-11.1 - MMS delivery service 150.851 84.109 124.495 90.500 -27.3%

2-2.1 - Directory assistance service for call to 181

115.750 121.402 111.010 -8.6%


118.820 123.884 112.540 -9.2%

2-7.1 - International Inbound calls to Batelco Fixed Telephones

2.430 * 30.160 +1141.2%

2-8.1 - International inbound calls to Batelco mobile using GMSCs

6.122 * 37.800 +517.4%

2-8.2 - International inbound calls to Batelco mobile using either single tandem or double tandem

6.556 * 37.800 +476.6%

2-9.1 - Inter-Operator Transit Access Service Fixed

1.7240 1.7240 1.7240 0.0%

2-9.2 - Inter-Operator Transit Access Service Mobile

1.9880 1.4900 1.1000 -26.2%

* in place since 1 July 2010 Source: The Authority

General comments related to Batelco’s submission

Following the review of Batelco’s submitted cost stacks and Schedule 3, the Authority 192.

makes the following comments:

a. Some of Batelco’s proposed interconnection and transit services charges in the

submitted Schedule 3 (“20110411 Sch 3 09 RO Charges_RO Submission.doc”)

are inconsistent with the charges calculated in the submitted cost stacks

(“20110407 Annex A RIO costs 2009.xlsx”);

b. The ISC is not included in any of the submitted cost stacks;



Page 84 of 167

c. Although absent from the cost stack, the Authority has inferred that Batelco has

used an ISC of 0.565 fils to calculate the charges submitted in its Schedule 3.

Batelco’s use of an ISC of 0.565 fils per minute is inconsistent with the Authority’s

decision taken in the 2011 RO Order, where the ISC charge was set at 0.700 fils

per equivalent minute and the Authority explained that it did not intend to review

the ISC in the new RO review, i.e. not before the RO submission due in December

2011;

d. Routing factors presented in the cost stacks have changed between 2008 and

2009 without being fully documented. Ideally, Batelco should provide routing

diagrams for each call scenario. Such diagrams should be amended whenever

new network routing/new network equipment is introduced.

e. When several call scenarios are possible for the same service charge, Batelco did

not provide the calculation that was used to derive the weighted average charge.

f. Cost stacks are not fully consistent with the Routing Factor (‘RF’) table submitted

along with the 2009 regulatory accounts. As the unit cost per RF minute is

calculated using the RF table, any allocation of these unit costs to services based

on routing factors which differ from the RF table would result in an incorrect cost

allocation.

Appropriate names for interconnection services

Replacement of ‘PSTN’ by ‘fixed’

In light of recent network technology evolution, the Authority questions the 193.

appropriateness of the naming of certain interconnection services. For instance, in a pure

NGN environment it would be more appropriate to replace ‘PSTN terminating access’ with

the more generic and technology-neutral terminology ‘Fixed terminating access’. This

comment also applies to the ‘Freephone from a fixed PSTN Telephone’ which simply

becomes ‘Freephone from fixed’. The Authority has therefore made a number of naming

changes (see below Table 39 page 85)

Replacement of the Gateway Mobile Switching Center (‘GMSC’) and Transit switch by

the ICG Soft Switch

As per section 7.2 Appendix B of Batelco’s submitted 2010 APM30

(page 60), the network 194.

element ‘GMSC’ coded under the reference ‘MN02’ is no longer required for

interconnection services in 2010 and has therefore been removed by Batelco from these

services. The function of this network element is now undertaken by the network element

‘ICG Soft Switch’. The ‘ICG Soft Switch’ coded under ‘CN07’ is used as the single point of

interconnection for all OLOs (both fixed and mobile) since 2010.

While the Authority understands that, for information purposes, Batelco submitted two cost 195.

stacks corresponding to the two different interconnection scenarios operational in 2009

(‘Transit switch’ or ‘GMSC’), it is not clear why Batelco also included two different

interconnection charges in its submitted Schedule 3.

30 AS Methodology 2010_final_April 2011 without track changes revised.doc, submitted by Batelco on 5 May 2011.



Page 85 of 167

The Authority considers that this differentiation of charges should no longer exist in 2011 196.

when all interconnection traffic transits through a single point of interconnection called

‘ICG Soft Switch’.

For these reasons, the Authority orders Batelco to implement the changes defined in Table 197.

39 in its RO.

Table 39: Changes to be reflected in the list of interconnection services

Current list of services New list of services to be reflected in the RO

1-3.1 - GMSC PSTN Terminating Access

1-3.1 - Fixed terminating access 1-3.2 - PSTN Terminating Access using either

double tandem or single tandem

1-3.3 - Delivery to tone or announcement 1-3.3 - Delivery to tone or announcement

1-4.1 - Mobile call conveyance GMSC 1-4.1 - Mobile terminating access

1-4.2 - Mobile call conveyance Transit switch

1-4.3 - Delivery to tone or announcement 1-4.3 - Delivery to tone or announcement

1-6.1 - SMS terminating access 1-6.1 - SMS terminating access

1-7.1 - Conveyance of emergency call to 999 1-7.1 - Conveyance of emergency call to 999





1-8.1 - Freephone from a Mobile Telephone 1-8.1 - Freephone from mobile

1-8.2 - Freephone from a fixed PSTN Telephone 1-8.2 - Freephone from fixed

1-11.1 - MMS delivery service 1-11.1 - MMS delivery service

2-2.1 - Directory assistance service for call to 181 2-2.1 - Directory assistance service for call to 181

2-2.2 - Directory assistance service for call to 188 2-2.2 - Directory assistance service for call to 188

2-7.1 - International Inbound calls to Batelco

Fixed Telephones 2-7.1 - International Inbound calls to fixed

2-8.1 - International inbound calls to Batelco

mobile using GMSCs

2-8.1 - International inbound calls to mobile 2-8.2 - International inbound calls to Batelco

mobile using either single tandem or double

tandem

2-9.1 - Inter-Operator Transit Access Service

Fixed: Per Transit Call 2-9.1 - Inter-Operator Transit Access Service: Per

Transit Call 2-9.2 - Inter-Operator Transit Access Service

Mobile: Per Transit Call


As the Authority does not have any costing information on the ICG Soft Switch network 198.

equipment (such information will be provided by Batelco as part of its 2010 regulatory

accounts), it has decided to calculate the ‘unified’ interconnection charges by averaging

both the GMSC- and Transit switch-based charges.



Page 86 of 167

Charge basis error

There is a typographical error in the “Charge Basis” column of item 1-3.1 of Batelco’s 199.

Schedule 3. The “Charge Basis” should read “Per minute, calculated per second” instead

of “Per fils, calculated per second”.

The Authority orders Batelco to rectify this error. 200.

Omission of legacy network elements in the cost stack of fixed interconnection services

While Batelco did not submit any change for fixed interconnection charges in accordance 201.

with the RO approval letter dated 17 September 2009, it remains that interconnection

costs should be correctly calculated, even though it may be justified to depart from the

calculated costs stacks. This is to ensure the accuracy of the calculations of the model

which uses routing factors.31

The Authority has reviewed the cost stack for fixed interconnection services submitted by 202.

Batelco and notes that although a mixture of NGN and legacy switching equipment was

apparently used until the full NGN migration in Q4 2009, the cost stacks submitted did not

include any of the cost of legacy equipment32

thereby ignoring a significant proportion of

cost (~14% of fixed switching and transmission costs).

The cost stacks present another error: Batelco applied a routing factor of 1 for the NGN 203.

switching equipment whereas it should have used a route factor of 98.3%33

which

represents the percentage of NGN traffic in 2009 (the rest, 1.7%, represents the

percentage of legacy traffic in 2009) used to derive the per minute equivalent unit cost.

Incorrect cost allocation of NP11 and NP29 to CN38 and CN39

During the review of Batelco’s 2009 regulatory accounts, the Authority has identified an 204.

error (which has later been acknowledged by Batelco) in the downstream cost allocation of

the network plants NP11 [Core Network Duct & Infrastructure] and NP29 [MPLS

Reallocation] to the core network elements CN38 [MPLS Core Data] and CN39 [MPLS

Core Voice]. This cost misallocation results in a [] increase of the CN38 FAC cost and a

[] decrease of the CN39 FAC cost.

31 If the per minute equivalent unit cost of a network element has been derived based on 80% of traffic, then a

routing factor of 0.8 should be used to allocate this cost to product. 32

More specifically they did not include the following network elements: CN01 [Remote line units]; CN02 [Local switches]; CN11 [Remote line unit – Local switch]; and CN12 [Local switch – Transit switch]. 33

20110618 RF table 2009 with further explanations.xlsx



Page 87 of 167

Table 40: Correction of the misallocation of NP11 and NP29 costs to CN38 and CN39

Core network element

2009 FAC cost

- Wrong

allocation

Voice/data

ratio

Corrected

allocation

Corrected

voice/data

ratio

Change

(%)

CN38 MPLS Core Data [] [] [] [] []

CN39 MPLS Core Voice [] [] [] [] []

Total [] [] [] []

Source: The Authority based on Batelco’s responses to article 53 information request dated 24 April 2011 and 9 June 2011 (Batelco ref: GCL/173/11, Response to Article 53 information request_20110512.xls; GCL/213/11, 20110609

Response to Article 53 information request dated 30 May 2011_2009 reg accts - supporting excel sheets.xlsx)

In the calculation of the FRND transit and interconnection charges, the Authority has 205.

assumed that the impact of the cost misallocation was similar in both FAC and D-

LRIC+MU accounts. Therefore, the LRIC unit cost of CN39 per equivalent minute has

been adjusted in similar proportion i.e. a decrease of []%.

Incorrect unit cost of network elements

While Batelco has used the routing factors that were ordered for the cost stacks of 206.

interconnection and transit services by the Authority in the 2011 RO Order, Batelco did not

apply the same routing factors to calculate the unit cost per equivalent minute of network

elements. Therefore, all the charges in the submitted cost stacks are incorrect since they

rely on unit costs which are incorrect.

In other words, Batelco did apply routing factors to network element unit costs which were 207.

calculated with another set of routing factors. This is, for example, the case with network

elements MN01 and MN02.

To set the FRND charges detailed in Table 41 page 90, the Authority has corrected unit 208.

costs.

Incorrect RAN routing factors for SMS and MMS termination services

Compared to on-net messaging services, terminating services should use only half the 209.

RAN network elements. As such, the routing factor of SMS termination applicable to the

RAN should be 0.0125 and not 0.025 while for MMS it should be 0.179 instead of 0.358.

To set the FRND charges detailed in Table 41 page 90, the Authority has corrected these 210.

routing factors.

Incorrect CN90 routing factors for SMS and MMS termination services

It appears that Batelco has used a routing factor of 1 to allocate the per minute equivalent 211.

ISC. As per the 2011 RO Order (paragraph 191), a conversion factor of respectively 0.025

and 0.333 should be used to allocate CN90 unit cost to the SMS and MMS termination

services.


routing factors.



Page 88 of 167

Incorrect routing factors for ‘MN01 Mobile Switching Centre Server (MSCS)’

Since the allocation driver of ‘MN01 Mobile Switching Centre Server (MSCS)’ detailed in 213.

Batelco’s RF table is the ‘capacity traffic’, the routing factors associated with this network

element should reflect the conversion factors applied to mobile data and mobile

messaging: respectively 4 for mobile data (0.25 MB=1 equivalent minute); 0.025 for SMS

(40 SMS=1 equivalent minute); and 0.333 for MMS (3 MMS=1 equivalent minute).

On this point, the Authority refers to paragraph 180 of the 2011 RO Order where the 214.

Authority had expressly requested Batelco to amend its RF table to be consistent with

these conversion factors.


routing factors.

Constant fixed interconnection charges

While the calculated unit cost of fixed interconnection services appears to be lower than 216.

the current charges, the Authority remains of the view that fixed interconnection rates

should remain at their current level in accordance with the RO approval letter of 17

September 2009 (ref: GDO/09/09/031). That letter said:

“The costing of NGN assets: The agreed approach for this review

has been to hold PSTN-based termination rates constant based on

the July 2008 Reference Offer pending a thorough review on the

most appropriate form of costing for NGN-based charges and if

necessary a glidepath to transition between the legacy and NGN

worlds. Existing PSTN charges are seen as the ceiling or starting

point for the glide path whilst NGN form the floor.”

The Authority intends to review NGN costing and fixed interconnection rates as part of the 217.

next RO submission (based on 2010 accounts). The bottom-up LRIC core network model

will provide a sound basis for the review of NGN costing. It will notably enable the

Authority to undertake sensitivity analyses of fixed interconnection costs to key parameters

(e.g. conversion factors, effective bandwidth calculation, traffic evolution…) and thus help

define a robust and optimal NGN cost allocation approach.

International inbound calls to fixed and mobile

Batelco submits charges for the international inbound calls to fixed and mobile lines which 218.

include a significant above-cost buffer (approximately 27 to 33 fils per minute). To support

such change, Batelco refers the Authority to the Annex G 2010 of the RO submission

dated 1 April 2010 (GCL/425/10) and to its response dated 7 November 2010, pages 52-

55, to the RO draft order.

The Authority notes Batelco’s position. However, from a network usage perspective, the 219.

two termination services (the inbound call termination service and the local call termination

service) are identical: the origination of the call (either offshore or domestic) has no

bearing on the network elements used to terminate the call.

The Authority also highlights that it intends to look at this issue under a separate industry-220.

wide consultative process. As per the Authority’s letter to Licensed Operators dated 27



Page 89 of 167

July 2011, the Authority intends to conduct a public consultation with the industry during

Q4 2011. Pending completion of this review, the termination rates for international inbound

calls remain identical to termination rates for domestically originated calls. The regulatory

treatment of international inbound calls will then be adjusted, if necessary, in accordance

with the conclusion of this consultation.



Page 90 of 167

8.3 Draft Order fair, reasonable and non-discriminatory charges for

interconnection and transit services

Based on the above comments, the Authority has corrected the cost stacks submitted. The 221.

resulting draft Order FRND charges are presented in the following table:

Table 41: Draft Order FRND charges for interconnection and transit services

Chargeable activity

Approved/ Ordered in


implemented)

TRA's Draft Order FRND

charges

Evolution of

Draft Order

FRND as

compared to

Approved/

Ordered


1-3.1 - Fixed terminating access from OLO GMSC 3.040 replaced

1-3.2 - Fixed terminating access from OLO Transit 2.382 replaced

1-3.1 - Fixed terminating access 2.711

1-4.1 - Mobile terminating access from OLO GMSC 6.203 replaced

1-4.2 - Mobile terminating access from OLO Transit 6.553 replaced

1-4.1 - Mobile terminating access 4.736

1-6.1 - SMS terminating access 0.443 0.288 -35.0%

1-7.1 - Conveyance of emergency call to 999 1.045 0.868 -16.9%

1-7.2 - Conveyance of emergency call to 990 2.382 same as 1-3.1 13.8%




1-8.1 - Freephone from mobile 8.060 6.150 -23.7%

1-8.2 - Freephone from fixed 2.710 2.710 0.0%

1-11.1 - MMS delivery service 124.495 89.747 -27.9%

2-2.1 - Directory assistance service for call to 181 121.402 112.684 -7.2%

2-2.2 - Directory assistance service for call to 188 123.884 112.800 -8.9%

2-7.1 - International Inbound calls to fixed 2.43 same as 1-3.1 11.6%


6.122 replaced


6.556 replaced

2-8.1 - International inbound calls to mobile same as 1-4.1

2-9.1 - Inter-Operator Transit Access Service (from OLO GMSC/Transit to OLO Transit/GMSC)

1.724 replaced

2-9.2 - Inter-Operator Transit Access Service (from OLO Transit to Transit)

1.490 replaced


1.380

Note: Rows in grey include interconnection services which have been replaced by the Authority by a unified service. The unified services appear in light yellow rows.




Page 91 of 167


Batelco

Fixed terminating access

Batelco says that there is in place an understanding between Batelco and the Authority in 222.

relation to the freezing of fixed termination and origination rates. Batelco is however

concerned that, as the RO review is now a public consultation, OLOs may expect a

significant drop in fixed termination rates as soon as NGN costs are reviewed.

Mobile terminating access

Batelco has no comment regarding the mobile terminating access service provided that 223.

the policy on symmetrical termination rates remains.

SMS terminating access

Batelco acknowledges its errors in the submitted schedule prices of the SMS terminating 224.

access service. Batelco confirms that the submitted cost stacks and their assessment by

the Authority are both correct.

Emergency call access service

Batelco has no objection to the price of emergency call access service being set at 1.098 225.

fils.

Freephone call originating access service

With regards to the freephone originating access service, Batelco refers the Authority to its 226.

comments on the fixed terminating access service (see summary above in paragraph

222).

MMS delivery access service

Batelco acknowledges its error in the submitted schedule price of the MMS delivery 227.

access service and confirms that Batelco’s cost stack and the Authority’s assessment of

the cost stack are both correct.

PSTN transit service

With respect to the fixed transit service, Batelco appears to reiterate its request to 228.

withdraw the service from the RO as the service has neither been implemented nor used.

Further, in Batelco’s opinion, it is unlikely to be requested in the future. Batelco suggests

that the cost stack of the service should be reviewed only if an operator expresses an

interest in the service.

DQ assistance service

Batelco agrees with the weighted average charge approach followed by the Authority for 229.

the calculation of the DQ assistance service charge.

International inbound calls



Page 92 of 167

With regards to the international inbound to fixed and mobile phones, Batelco explains that 230.

differential rates for these services are in the interests of Bahrain’s consumers and

network operators. Batelco indicates that it will submit its detailed view when the Authority

issues a consultation on this matter.

Inter-Operator Transit Access Service

With regards to Inter-Operator Access Service (‘ITAS’), Batelco considers that given the 231.

agreement to maintain the price of fixed network services, the blended ITAS rate should

continue to be priced at the higher rate of 1.724 fils/min.34

Cost allocation issues raised by the Authority

In relation to paragraph 192.f above, Batelco explains that the differences in routing 232.

factors between the APM and the RO submission are due to the fact that the RO

submission is based on the LRIC accounts which assume a forward-looking approach

where all legacy network elements are phased out while the APM routing factors reflect

the actual status of the network’s structure at the time of the regulatory accounts

production.

With regards to paragraphs 202 and 203, Batelco submits that it has removed legacy 233.

network elements from the cost stack of interconnection services consistent with a

forward-looking LRIC approach, which assumes a full NGN network structure.35

With regards to the routing factor applicable to the network element MN01 [Mobile 234.

Switching Centre Server ( MSCS)], Batelco explains that it should be set to 1 for all

applicable services because the MSCS is a transaction-based network element (i.e. used

by the controlling layer) as opposed to a traffic-based network element. As a result, the

cost of the MSC should be allocated based on the number of transactions (number of

calls, messages or mobile data session) and not based on traffic.

Etisalcom

As Etisalcom terminates a large number of minutes to Batelco’s fixed numbers via the 235.

International Inbound calls to fixed service, Etisalcom is concerned about the +11.6%

increase of the service charge which it considers will affect the volume of minutes

terminating into Etisalcom.

Menatelecom

In relation to the cost stack submitted by Batelco for the freephone origination from fixed 236.

lines (see Table 32 page 70), Menatelecom questions the inclusion of the network element

GMSC (MN02) in the cost stack and requests that the Authority re-examine the

corresponding call scenario to ensure that the GMSC cost is a relevant cost for this

scenario.

Viacloud

34 The Authority has proposed to blend the ITAS rate based on the average of the GMSC and Transit switch based

rates to reflect the fact that all interconnection traffic goes through the ICG soft Switch. 35

The Authority notes in passing that the D-LRIC+EPMU regulatory accounts still include legacy elements and that Batelco has not justified its approach. Batelco’s approach to MEA is arguably questionable.



Page 93 of 167

Viacloud submits that the retail prices in the “IP IDD” market have dropped significantly 237.

while in the meantime, competitors offering this service have increased fivefold. As a

result, small OLOs suffered huge losses and had to recapitalise or shut up operations.

Viacloud thus urges the Authority to reduce wholesale access cost from the current

proposed level for the survival of smaller OLOs.

Viacloud states that the freephone origination charge is currently the greater cost 238.

component in delivering an international call and that it represents more than 50% of the

total cost for certain top traffic destination. Viacloud considers unfortunate that the

freephone origination charge has not decreased in line with retail prices. Viacloud submits,

without providing specific example or evidence, that the charge of the freephone services

in other countries have dropped significantly which has helped sustaining healthy

competition and bringing retail price down. As a result, Viacloud urges the Authority to

quickly reduce freephone origination charges and to help sustain smaller operators such

as Viacloud.

Zain

Mobile termination rate

Zain strongly disagrees with a further reduction of Batelco’s mobile termination rate (MTR) 239.

by 25% from 6.203 fils to 4.736 fils. Zain considers that the current MTR charge of 6.203

fils should not be further reduced but instead remain unchanged. Zain provides the

following arguments to support its views:

a. Symmetrical MTR agreement between Batelco and Zain: Zain highlights that

any reduction in Batelco’s MTR will also apply to Zain pursuant to the symmetrical

interconnection agreement that Zain signed with Batelco. Zain submits that it is

already providing the termination service below cost to Batelco and a further rate

reduction would further adversely impact Zain. Since the launch of Viva in 2010,

Zain highlights that the market dynamics have changed and thus have “triggered

the need of conducting an early market review” (Zain’s submission, paragraph

B.1.i). In this respect, Zain submits that the Authority should take into account the

proposed MTR in Zain’s RO in setting Batelco’s MTR.

b. Zain termination service provided is sold below cost: Zain submits that it is

currently incurring a loss in providing its termination service to Batelco as its

calculated 2010 MTR based on its LRIC+ bottom-up cost model is 6.4 fils per

minute which is greater than the approved MTR of 6.203 fils per minutes. With the

proposed draft ordered MTR of 4.736 fils, the loss incurred by Zain in providing its

termination service to Batelco would significantly increase. With the loss of market

share consequent to Viva’s commercial launch, Zain submits that it is

experiencing a decrease in its total interconnection traffic. Zain also explained that

as it continues to invest in its network the MTR should go up or at least remain

unchanged.

c. The current MTR is one of the lowest in the world: Zain provides a benchmark

of countries with MTR below 38 fils (about 40 countries from Europe, the Middle

East, and Africa). In the benchmark, Bahrain is the country with the lowest MTR.

Zain also notes that, 2 years after commercial launch, Viva has become the first

operator in terms of market share. According to Zain, this demonstrates that the

current MTR is giving the right economic signal to investors and as such, there is



Page 94 of 167

no need for further MTR reductions. Zain further claims that any reduction in MTR

will have a disruptive effect on investment and revenue. As an illustration, Zain

mentions the case of Kenya where the 50% MTR cut in 2010 “sparked of a price

war among mobile operators with detrimental effects on quality of service,

reorientation of investments towards profitable high-density urban areas as well as

a drop in revenues and taxes for the government”, (Zain’s submission, paragraph

B.1.iii).

d. Low mobile off-net rate: According to Zain, the argument that a low MTR drives

competition in off-net retail prices is no longer relevant for Bahrain. Mobile

customers in Bahrain already benefit from some of the lowest on-net and off-net

retail tariffs in Arab countries as highlighted by the report from the Arab Advisor

Group issued in November 2011 titled “Cellular Rates in the Arab World: A

Regional Comparison”.

Zain also considers that the Authority should wait for the outcome of the LRIC bottom-up 240.

cost model project before reviewing Batelco’s current MTR.

International inbound calls

Zain disagrees with the Authority’s draft position regarding the setting of international 241.

inbound calls at the same level as domestic termination rates. While Zain acknowledges

that the Authority intends to undertake a consultation on this particular issue,36

Zain

strongly recommends the Authority not to change the prices until a final position is

reached.


Mobile termination rate

For the reasons set out in paragraphs 33 above and following Zain’s request to review the 242.

MTR once the bottom-up models are in place, the Authority has decided to freeze the

charge of the mobile terminating access service (item 1-4.1). The Authority considers this

decision to be appropriate pending the completion of the bottom-up mobile cost models.

As previously explained, specific cost models are being developed for each of the three

mobile operators in Bahrain. An additional cost model is also being developed to represent

a generic operator providing mobile services in Bahrain. These cost models will enable the

Authority to understand the differences in the cost structures of all three mobile operators

and set mobile termination rates for regulated operators in an appropriate manner

consistent with the Authority’s Policy on the Regulation of Mobile Termination Services,

issued on 1 February 2010. The Authority’s approach to seek to synchronise the review of

MTRs is consistent with Batelco’s suggestion. The Authority also intends to consult on the

next review of MTRs.

The Authority considers that it would not be appropriate to order a further reduction of the 243.

mobile termination service at this point in time when the bottom-up models are soon due to

be available.

36 The “Draft Regulation for Wholesale Inbound Services” was issued by the Authority for consultation on 26

January 2012 (ref: MCD/01/12/006).



Page 95 of 167

As the mobile terminating access service was previously composed of two distinct charges 244.

(1-4.1 - Mobile call conveyance GMSC and 1-4.2 - Mobile call conveyance Transit switch)

and since all interconnection traffic now transits through a single point of interconnection

called ‘ICG Soft Switch’ (see above paragraphs 194 to 198), the Authority has applied a

simple arithmetic average to the two current charges to derive a ‘frozen’ charge applicable

to the Mobile terminating access service (item 1-4.) of 6.378 fils per minute.

Freephone call originating access service from mobile

The Authority has decided to set the charge for the Freephone from mobile service (item 245.

1-8.1) at 7.578 fils per minute. This charge has been derived by the Authority by adding a

portion of the unit cost of MN41 [Mobile prepaid platform] to the Mobile terminating access

service (i.e. + 1.200 fils).37

The Authority considers that it is appropriate to account for the

additional cost of the mobile prepaid platform in the freephone origination charge as the

great majority of Batelco’s freephone origination traffic is originated from prepaid customer

lines (and thus requires the prepaid platform). Moreover, the Authority notes that it would

not be appropriate for the freephone charge to be set at a lower level than the termination

charge as the freephone service ‘uses’ an additional network element.

While the Authority acknowledges Viacloud’s comment in relation to the freephone 246.

origination service charge, it also highlights that the mobile termination charge in Bahrain

(from which the freephone charge is derived) compares very well with the MTRs in other

countries (see Zain’s benchmark included at page 4 of Zain’s response).

SMS and MMS terminating service

The Authority notes Batelco’s explanation regarding the routing factor applicable to MN01 247.

[Mobile Switching Centre Server (MSCS)]. The Authority considers that while the use of

this network element by mobile services may be transactional-based, it does not

necessary follow that the routing factor for SMS and MMS should be equal to 1 in so far as

voice is the primary network dimensioning parameter of this element and that SMS and

MMS are not prioritized over voice in case of network congestion.

Regardless of the above and consistent with the treatment of the mobile voice termination 248.

charge, the Authority considers it is appropriate to freeze the SMS and MMS terminating

access charges.

37 This figure represents []% of the unit cost of MN41. The []% represents the proportion of prepaid traffic over

the total freephone origination traffic.



Page 96 of 167

Inter-Operator Transit Access Service

Following Batelco’s comments, the Authority has set the final ITAS rate equal to the traffic 249.

weighted average of the current two ITAS services rates (2-9.1 and 2-9.2). The final ITAS

is set at 1.723 fils/min.38

Other comments

The Authority disagrees with Batelco’s request to remove PSTN transit from the RO. 250.

In relation to international inbound, the Authority refers the industry to the on-going 251.

consultation on this matter.

In response to Menatelecom’s comment, the Authority confirms that the GMS-C is a 252.

relevant network element for the purpose of provisioning the fixed origination service.

The other comments made are noted. 253.

38 The Authority has proposed to blend the ITAS rate based on the average of the GMSC and Transit switch based

rates to reflect the fact that all interconnection traffic goes through the ICG soft Switch.



Page 97 of 167

8.4 Order fair, reasonable and non-discriminatory charges for interconnection

and transit services

The final ordered FRND charges are detailed in the following table:39

254.

Table 42: Order FRND charges for interconnection and transit services

Chargeable activity

Approved/ ordered in January

2011 (or

currently implemente

d




charges

Evolution of

Order FRND

as compared

to previously

approved/

ordered


1-3.1 - Fixed terminating access from OLO GMSC


1-3.2 - Fixed terminating access from OLO Transit


1-3.1 - Fixed terminating access 2.711 2.711

1-4.1 - Mobile terminating access from OLO GMSC


1-4.2 - Mobile terminating access from OLO Transit


1-4.1 - Mobile terminating access 4.736 6.378

1-6.1 - SMS terminating access 0.443 1.480 0.288 0.443 0.0%

1-7.1 - Conveyance of emergency call to 999

1.045 1.100 1.233 1.233 -16.9%


2.382 2.382 same as 1-3.1 same as 1-3.1 +13.8%


2.382 2.382 same as 1-3.1 same as 1-3.1 +13.8%


2.382 2.382 same as 1-3.1 same as 1-3.1 +13.8%


2.382 2.382 same as 1-3.1 same as 1-3.1 +13.8%

1-8.1 - Freephone from mobile 8.060 6.020 6.150 7.578 -6.0%

1-8.2 - Freephone from fixed 2.710 2.710 2.710 2.710 0.0%

1-11.1 - MMS delivery service 124.495 90.500 89.747 124.495 0.0%


121.402 111.010 112.684 112.684 -7.2%


123.884 112.540 112.800 112.800 -8.9%

2-7.1 - International Inbound calls to fixed 2.43 30.160 same as 1-3.1 same as 1-3.1 11.6%





2-8.1 - International inbound calls to mobile same as 1-4.1 same as 1-4.1

2-9.1 - Inter-Operator Transit Access Service (from OLO GMSC/Transit to OLO Transit/GMSC)


2-9.2 - Inter-Operator Transit Access Service (from OLO Transit to Transit)



1.380 1.723

Note: Rows in grey include interconnection services which have been replaced by the Authority by a unified service. The unified services appear in light yellow rows.


39 Compared to the draft ordered charges, the main changes are: (a) the freezing of the mobile terminating access

services charges; and (b) the setting of the mobile freephone origination service charge based on the frozen mobile termination charge.



Page 98 of 167

9 Duct access service (2-3.9)

Draft Order Text

Services definition

Access to duct falls under Schedule 7 - FACILITIES ACCESS SERVICE of Batelco’s RO. 255.


In its RO submission, Batelco submits the following cost stack for the duct access service: 256.

Table 43: Cost stack submitted by Batelco for the duct access service

Access ducts infrastructure

Total Costs

Access ducts infrastructure cost []

Total duct meters (unadjusted length) []

Cost per mtr (BHD/mtr) []

Wholesale activities []

Total WS duct meters []

WS activities Cost per mtr (BHD/mtr) []

Total Cost per mtr per month 0.213


The proposed monthly charge for duct rental in the submitted RO is 213 fils/metre/per duct 257.

bore/month which represents an increase of +12.7% compared to the current charge set in

the 2011 RO Order.



Page 99 of 167

Table 44: Duct access proposed charge for 2011 compared to current charge and charges


Review of the submitted charge for the duct access service

Duct and joint chamber asset lives adjustment

As per the 2011 RO Order and the Authority’s letter approving the 2009 APM,40

the 258.

regulated asset lives of ducts and manholes have been increased from 20 years to 40

years to better reflect their true economic lives. The reasons for this change have been

further detailed in the Authority’s letter dated 10 March 2011.41

Batelco was required to

implement the change of asset lives no later than for the 2010 regulatory accounts.

As the change was not implemented by Batelco in the 2009 regulatory accounts, manual 259.

adjustments to the depreciation charges of both duct and joint boxes are needed to take

into account their extended lives. The depreciation charge adjustments are detailed in the

following table:

Table 45: Adjustments to the depreciation charge of AS-12010 [Duct] and AS-12080 [Joint Chamber] to reflect

the change of asset lives

Asset

2009 depreciation charge allocated to NP10 (in BD)

Asset life: 20 years

(as per the 2009 regulatory accounts)

2009 depreciation charge allocated to NP10 (in BD)

Asset life: 40 years

2009 depreciation charge adjustment to be made

(in BD)

a b = a / 2 (to reflect the

doubling of asset lives) c = - a + b

AS-12010 [Duct] [] [] []

AS-12080 [Joint Chamber]

[] [] []

Total [] [] []

Source: The Authority from Batelco response to the Article 53 request for information (20110728 response to Article 53 - 2011 RO review.xlsx)

On this occasion, the Authority has decided not to adjust the amount of un-attributable 260.

cost allocated to NP10 following the adjustment made to the depreciation charge.

40 2009 Accounting Procedure Manual Approval, Instructions for the Preparation of the 2009 FAC and LRIC

Regulatory Accounts and Reference Offer Submission Date (Ref. MCD/11/10/100), 9 November 2010. 41

Asset lives used in Batelco’s regulatory accounts (Ref. MCD/03/11/031), 10 March 2011.

0.246

0.178 0.189 0.213

0.000

0.050

0.100

0.150

0.200

0.250

0.300

Duct access monthly rental charge

set in 2008

set in 2009

current (set in Januray 2011)

proposed for 2011

+ 12.7 %



Page 100 of 167

One-off wholesale activities and duct infrastructure cost adjustment

As explained in the 2011 RO order,42

it is important to remove one-off wholesale revenues 261.

from the duct infrastructure cost. These one-off revenues cover non-recurring costs that

are incurred by Batelco in providing access to ducts. Not deducting these revenues from

the cost base would lead to cost over-recovery. The cost adjustments made by the

Authority which are detailed in the table below are based on the same approach with

updated parameters used in the 2011 RO Order:

Table 46: 2009 Draft Order adjustments applied to duct infrastructure cost and wholesale activities cost

# Item Value Unit Source

a New wholesale ducts in 2009 [] metres Batelco submitted information under Article 53

b Average estimated duct route length 1,500 metres

In absence of information, the Authority estimates an average duct route length of 1,500 metres. This is broadly consistent with the local loop length

c Quantity of new duct route in 2009 [] duct routes = a / b

d Processing Access Application Fee 100 BD/ application

Batelco's RO item 2-3.1

e Total cost of access application handling [] BD = c x d

f Total revenues to be removed from Wholesale activities cost

[] BD = e

g Total cost of desk study 0 BD

Included in general processing fee (20100614 RO assessment article 53 question 49 annex 2007 Duct Process.docx)

h Average distance between each site to be surveyed

100 metres

Based on different quotes which were sent by Batelco to OLOs, the Authority estimates an average length of 100 metres between each manhole

i Proportion of site survey of route which is unavailable at field study stage

33% The Authority estimates that one third of sites are not available for cabling

j Quantity of site survey per duct route 21 site surveys per duct route

= ( b / h + 1 ) x ( 1 + i )

k Total quantity of site surveys [] site surveys = c x j

l Site Survey cost 300 BD per visit Batelco' RO item 2-3.2

m Total cost of site surveys stage 1 to 3 [] BD = k x l

n Cost of installation per metre 1.50 BD The Authority estimates based on international benchmarks

o Total cost of installation [] BD = a x n

p Total revenues to be removed from duct infrastructure cost

[] BD = g + m + o


Wholesale activities costs

Batelco intends to recover BD [] of wholesale activities costs for the duct access 262.

service. The 2009 amount represents a []% reduction compared to the BD [] of

wholesale activities cost allocated to the duct access service in 2008.

Draft Order fair, reasonable and non-discriminatory charge for the duct access service

42 January 25 2011 RO Order, paragraphs 267-269.



Page 101 of 167

The Authority’s draft Order charge is BD 0.155 and is based on the calculation detailed in 263.

the table below. The draft Order charge represents a decrease of - 17.8% compared to the

2011 RO Order of BD 0.189.

Table 47: Calculation of the Draft Order FRND monthly rental charge for the duct access service

NP10 [Access Network Duct & Infrastructure] []

Adjustment for charge in asset depreciation (40 years) []

Adjustment to discount one-off charges (desk/field study, installation) []

Adjusted ducts infrastructure cost []

Total unadjusted duct length in 2009 (in meters) []

Cost per metre (BD/metre/month) []

Wholesale activities []

Adjustment to discount one-off charges (Processing Access Application Fee) []

Adjusted Wholesale activities cost []

Total WS duct meters in 2009 []

WS activities Cost per metre (BD/metre/month) []

Total cost per metre and per month 0.155


Review of the charge related to field study

Context of the review

When an OLO requests access to ducts to lay a cable and connect two distinct locations, 264.

Batelco carries out a survey of the requested duct route to check to which ducts access

can be granted and to determine the optimal duct route. This phase of the duct access

process is called the field or feasibility study.

The field study is carried out by Batelco’s personnel or a Batelco contractor who survey 265.

manhole sites along the potential duct route to determine whether the ducts are available

and free from potential problems (congested ducts, crushed ducts, etc.). To recover the

cost of field study, Batelco charges BD 300 per manhole.

Following concerns raised by OLOs who contend that the site survey charge is unfair and 266.

unreasonable, the Authority has decided to review the charge as part of this RO review.

From diverse quotes and invoices sent by Batelco and OLOs, the Authority has calculated 267.

that, on average, Batelco charges BD 300 every 60-100 metres of duct route. The site

survey therefore represents a one-off payment that ranges between BD 3 and BD 5 per

metre of duct surveyed. As shown below this is about 10 times more than a benchmark of

European countries. To review the BD 300 site survey charge, the Authority has therefore

required Batelco under an article 53 information request dated 16 June 2011 to provide

the following information:

a. final invoices sent to OLOs for the one-off charges related to wholesale duct

access (to represent at least 90% of the new wholesale duct routes in 2010);



Page 102 of 167

b. wholesale revenue collected for duct access, broken down between recurring and

non-recurring revenues for the year 2009 and 2010;

c. detailed explanations of the operations that are performed by Batelco staff when

surveying a site; and

d. average time spent by Batelco staff per site survey.

Batelco failed to provide all the information requested by the Authority. For instance, 268.

Batelco only provided one invoice sent to an OLO (instead of the above requirement of

90%). Batelco also explained that it was not able to provide its wholesale revenues broken

down between recurring and non-recurring revenues as it was reported under a common

GSL account.

Batelco also argued that it was not able to provide an average time spent per site survey 269.

but maintained that the BD 300 charge was related to the time spent on the activity:

“Batelco does not currently record at either the network or

wholesale level the exact or average time spent on each site survey

as it varies from site to site and will also depend on whether Batelco

has carried out the survey or has outsourced this to a contractor.

We maintain though that this charge is related to the time spent on

such an activity. We refer you to our previously submitted duct

sharing process chart which breaks down the components and

actions required for duct access. The site survey corresponds to

Field Study Stage 1.”43

It is also important to note that it is not the first time that the Authority has given Batelco an 270.

opportunity to justify the current level of the BD300 charge. The Authority refers here for

example to the 2011 RO order and more specifically to paragraphs 263-266.

Finally, the Authority is of the view that OLOs should not have to pay for Batelco’s lack of 271.

detailed and updated GIS information. An updated database would allow Batelco to survey

a much more limited volume of duct. Such database would include information (such as

duct/manhole occupancy, configuration and technical map) and would not only speed up

the delivery date but would also greatly limit the cost associated with the feasibility/field

study.

Benchmark of feasibility/field study charges

In the absence of robust and reliable costing and operational information from Batelco, the 272.

Authority has compiled a benchmark of one-off charges covering feasibility/field study for

duct access in order to assess whether the current site survey charge is fair and

reasonable. The benchmark is presented in the following table:

43 20110808 Updated response to Article 53 related to Batelco 2011 RO submission - final.docx , 8 August 2011.



Page 103 of 167

Table 48: Benchmark of one-off charges for site survey/feasibility study of duct access

Country Operator and

type of offer One-off charges for feasibility/field study

One-off charges

for

feasibility/field

study (converted

to BD)

Average

distance for one-

off charge

calculation (in

metres)

Where such

information is

not available,

the Authority

assumes a

distance of

1,000m

Average cost of

feasibility/field

study per metre

(converted to

BD)

Source

Austria

A1 Telekom

Austria

Regulated offer

EUR 72 for requesting a plan

EUR 288 for requesting an offer

EUR 432 for order and delivery

422.96 1,000m 0.423 http://cdn1.a1.net/final/de/media/pdf/RUO2011.pdf

Bulgaria Vivacom

Duct survey charge:

BGN 33 for length up to 1 km

Access & control charge, when laying cables:

BGN 25 for length of up to 1 km

9.01 1,000m 0.009 http://www.crc.bg/files/_bg/Prilojenie1_ukazanie811.pdf

Finland

Elisa

Commercial

offer

One-off charge for the delivery of lease of cable

placement right: EUR 420 per 500 metres 224.29 500m 0.449

http://www.elisa.com/en/docimages/attachment/Lease_

of_Cable_Placement_Right_v1_0%5B1%5D.pdf

Germany

Telekom

Deutschland

Regulated offer

EUR 100.59 for administration of the offer

EUR 0.60 per m for checking available capacity

EUR 88.55 for administration of the realisation

Project management and technical documentation on

time and materials basis

0.32 1m 0.320

http://www.bundesnetzagentur.de/DE/DieBundesnetza

gentur/Beschlusskammern/1BK-Geschaeftszeichen-

Datenbank/BK3-GZ/2011/2011_001bis100/BK3-11-

009_BKV/BK3-11-

009_Konsultation_Abstimmungsentwurf_download.pdf?

__blob=publicationFile

Greece OTE

Regulated offer

EUR 943.39 for feasibility study

Charges for supervision of works: Standard full-time

working day EUR 292.78

EUR 32.75 for each additional hour outside regular

working hours days

503.80 1,000m 0.504 http://www.eett.gr/opencms/opencms/admin/downloads

/Announcments/CA_OTE_2011.pdf

Italy Telecom Italia EUR 465 per “area” (as defined in TI‟s civil infrastructure 496.65 1000m (crossing 0.497 http://www.wholesale-

http://cdn1.a1.net/final/de/media/pdf/RUO2011.pdf

http://www.crc.bg/files/_bg/Prilojenie1_ukazanie811.pdf

http://www.bundesnetzagentur.de/DE/DieBundesnetzagentur/Beschlusskammern/1BK-Geschaeftszeichen-Datenbank/BK3-GZ/2011/2011_001bis100/BK3-11-009_BKV/BK3-11-009_Konsultation_Abstimmungsentwurf_download.pdf?__blob=publicationFile






http://www.wholesale-telecomitalia.it/wsintranet/swn/1075060379/OFFERTA%20INFRASTRUTTURE%20LOCALI%20ESISTENTI.PDF



Page 104 of 167

(TI) maps) for administrative costs incurred by TI 2 areas) telecomitalia.it/wsintranet/swn/1075060379/OFFERTA

%20INFRASTRUTTURE%20LOCALI%20ESISTENTI.

PDF

Lithuania

TEO LT

Commercial

price list

LTL 560 for ducts up to 1 km for technical feasibility study

and information

LTL 0.560 x length in metres for ducts in excess of 1 km

(excl. VAT)

86.85 1,000m 0.087

http://www.teo.lt/sites/default/files/VERSLAS/Paslaugu_

teikejams/Infrastruktura/Vieta_RKKS_2%20priedas%20

ir%20jo%203%20priedelis.pdf

Norway

Telenor

Regulated

reference offer

NOK 6,000 per placement 416.97 1,000m 0.417 http://www.jara.no/Images/Ovrige_Telelosji_Bilag_3_Pri

ser_og_prisforutsetninger_110101_tcm55-128702.pdf

Spain

Telefónica

Regulated

reference offer

EUR 52.50 one-off for validating an access request.

EUR 154 one-off for the joint feasibility visit, plus a

variable cost depending on the number of manholes,

cabinets and poles visited.

(EUR 44.00 per manhole, EUR 15.41 per cabinet and

EUR 5.49 per pole)

EUR 31.50 one-off per activation of an access request in

Telefónica´s information systems.

368.75

1000m (with

manholes every

100m)

0.369

http://www.cmt.es/en/documentacion_de_referencia/ofe

rtas_mayoristas_reguladas/anexos/100625_Oferta_MA

RCo.zip

Switzerland Swisscom

Regulated offer

The feasibility study including the provision of a cost

estimate is priced at two hours flat fee.

Based on effective costs: CHF 160.40 /hour.

76.64 1,000m 0.077

http://www.swisscom.com/FxRes/NR/rdonlyres/DED04

FFC-240C-4B20-88CC-

3EB4409E23DE/0/DUPRM_contr_KabelkanalisationFM

G_V16.pdf

Average 0.315

Note: Foreign currency rates provided by Citibank N.A. as of 11 September 2011 (1 EUR = 0.534034572 BHD, 1 NOK = 0.0694949952 BHD, 1 LTL = 0.155084167 BHD, 1 CHF = 0.477833701 BHD, 1 BGN = 0.273056985 BHD)

Source: The Authority’s analysis based on Cullen International




http://www.jara.no/Images/Ovrige_Telelosji_Bilag_3_Priser_og_prisforutsetninger_110101_tcm55-128702.pdf

http://www.jara.no/Images/Ovrige_Telelosji_Bilag_3_Priser_og_prisforutsetninger_110101_tcm55-128702.pdf

http://www.cmt.es/en/documentacion_de_referencia/ofertas_mayoristas_reguladas/anexos/100625_Oferta_MARCo.zip



http://www.swisscom.com/FxRes/NR/rdonlyres/DED04FFC-240C-4B20-88CC-3EB4409E23DE/0/DUPRM_contr_KabelkanalisationFMG_V16.pdf






Page 105 of 167

Based on this benchmark, the unit cost per metre of duct of the site survey/feasibility study 273.

ranges between BD 0.010 and BD 0.600 with an average of BD 0.315 per metre. This is

far below (about 10 times less than) the current level of Batelco’s charge which ranges

from BD 3 to BD 5 per metre.

There are a number of reasons to suggest that the average benchmarked cost of BD 274.

0.315 per metre will overstate the actual costs of conducting the site survey/feasibility

study in Bahrain:

a. the Authority has assumed a distance of 1,000m to calculate an average charge

per metre when the one-off charge is fixed (i.e. not distance-related) in the

benchmarked country. The Authority considers this assumption to be quite

conservative since it is likely that the length of duct routes in Bahrain is on

average greater than the 1,000 metres assumed in the above table (this would be

particularly the case where duct access is requested by access seekers for

backhaul links);

b. the above benchmark countries are European countries where the average hourly

wage of a technician tends to be greater than in Bahrain;

c. contrary to the relatively recent infrastructure in Bahrain, urban layouts in the

benchmarked countries have been constantly adapted/modified over long periods

of time. This is likely to result in more costly field studies as the duct networks are

more likely to present singularities with more complex access to underground

infrastructure and reduced accessibility.

Draft Order fair, reasonable and non-discriminatory charge related to field study

For the reasons mentioned above the Authority considers that the site survey charge 275.

represents a significant artificial cost barrier for OLOs wishing to deploy fibre in Bahrain

and hence an impediment to competition.

As a principle, the Authority considers that OLOs should be charged the efficiently incurred 276.

costs for field study. This is more appropriate than the current approach of charging a flat

fee per site of BD 300 as the accessibility of the site and the survey time duration may

greatly vary from one site to the other. Therefore the Authority orders Batelco to set the

site survey charge on a time and materials basis subject to the cap set below.

While the Authority considers that site survey and more generally field study for duct 277.

access should be charged on a time and materials basis, the Authority considers that a

cap should be introduced to prevent over-charging and incentivise Batelco to minimise

costs.

This cap can be expressed as a factor of the straight-line distance (i.e. flying distance) 278.

between the two physical locations between which an OLO requests duct access. There

are several advantages to basing the cap of the total field study charge on the straight-line

distance rather than the duct route distance, including:

a. increased transparency and predictability: in the absence of an accurate and

up to date GIS database, neither Batelco nor the OLO know in advance the exact

distance of the future duct path and the quantity of sites that need to be surveyed

before the actual physical field survey takes place;



Page 106 of 167

b. increased visibility: OLOs would be able to make better-informed business

decisions regarding the choice of technology which they will favour to connect two

different sites (e.g. wire link vs. wireless link);

c. efficient use of infrastructure: as the cap is expressed as a function of a

straight-line distance, Batelco would be incentivised to find the shortest available

path.

For the purposes of setting the cap, the Authority considers the average of the 279.

benchmarked countries above with the exception of three countries which appear to be

outliers (Bulgaria, Lithuania and Switzerland) to be a fair and reasonable maximum for

efficiently incurred costs associated with field study work. However as this average

benchmark rate of BD0.426 is expressed as a factor of the duct route distance and not as

a factor of the straight-line distance, an adjustment is required. Given that duct routes

follow streets’ and roads’ layouts, the Authority considers that multiplying the average

benchmark rate by √2 is an appropriate adjustment. This adjustment is derived from the

Pythagorean Theorem. Apart from the case where the two sites to be connected are

located in the same road axis, the duct route distance is always greater than the straight-

line distance. This concept is illustrated by the following figure:

Table 49: Maximum duct route distance expressed as the straight line distance


Multiplied by √2 , the adjusted average benchmarked rate is BD 0.602 per metre, which 280.

rounded to BD 0.600 per metre gives the cap set by the Authority.

For the above reasons, the Authority orders Batelco to introduce a cap on all charges 281.

related to field study for duct access. The total charge paid by OLOs for field study should

not exceed BD 0.600 per metre of the straight-line distance separating the two physical

locations for which duct access is requested. For the avoidance of doubt, the charge ‘2-3.1

Processing Access Application Fee’ remains unchanged at BD 100 per application.



Page 107 of 167

Table 50: Draft Order FRND charges for duct access and site survey

Chargeable activity

Approved/Ordered

in January 2011

(or currently

implemented)

TRA's Draft Order FRND charges

Evolution

of Draft

Order

FRND as

compared

to

Approved/

Ordered


2-3.2 Site Survey if required 300.000

Time and materials basis as set out in Annex 1.

For duct access, the field study total charge

should not exceed BD 0.600 per metre of the

straight-line distance separating the two physical

locations between which duct access is requested.

n/a

2-3.9 – Duct Rental charge 0.189 0.155 -17.8%



Batelco

Duct and joint chamber asset lives adjustment

Batelco is concerned that a further reduction in the price of duct access may conflict with 282.

future assessment of costs.

In relation to the Authority’s adjustment to decrease by 50% the depreciation charge of 283.

ducts to reflect the change of asset life from 20 to 40 years (see above Table 46 page

100), Batelco submits that the change of asset life was intended to take effect from the

2010 regulatory accounts and considers that a prior adjustment that applies selectively

solely to the duct access product is inconsistent. Batelco considers that such adjustment

creates a distortion in so far as it makes the wholesale duct access more attractive

compared to other downstream product that gets allocated duct cost based on asset life of

20 years. Batelco suggests to apply a smaller reduction (such as 25%) or a glide path

reduction in stages.


Batelco considers that the Authority should not make any adjustment for one-off site 284.

survey charges. If the Authority were to maintain its position regarding this issue, Batelco

submits that such adjustment should be done by taking into consideration the Authority’s

cap set at BD 0.6 per metre.

In the same manner, Batelco considers that the Authority should not deduct the revenues 285.

of one-off installation charges from the total cost of duct which constitute the basis of the

unit cost calculation. Batelco explains that it installs the fibre for OLO on a case-by-case

basis following commercial negotiations. In some cases, the OLO directly contract an

approved contractor and in other, Batelco subcontracts the work to a third party and add a

mark-up for supervision and administration.



Page 108 of 167

Batelco also notes that the total amount of one-off costs depends on the number of orders 286.

placed by OLOs and thus may vary from one year to the next.


Batelco also submits that the wholesale duct meters for 2009 ([]) and for 2010 ([]) 287.

previously submitted by Batelco in its 2010 and 2011 RO submissions are incorrect.

According to Batelco, this figure was based on a manual calculation which led to a

material over-estimation of wholesale duct. Batelco claims that the [] metres

corresponds to the number of surveyed ducts at the end of 2009 but not to actual length of

ducts rented by OLOs. Batelco submits that the total wholesale duct length was not

available in 2009, but claims that it was equal to [] metres in 2010. By deduction,

Batelco claims that the wholesale duct metre should be close to [] metres in 2009.


With regards to the benchmark used by the Authority to set the cap for the duct survey 288.

charge, Batelco submits that:

a. It is not certain whether the benchmark values compare ‘like for like’ with the

scope of Batelco’s site survey charge (which cover various study stages).

Depending on the quantity and volume of ducts ordered, Batelco also notes that it

has provided discounts on site surveys to better reflect the time involved in the

survey.

b. The Authority’s assumption that the benchmark fee apply to 1,000 metres duct

access may have a distorting effect on the data;

c. The benchmarked countries may not be comparable with Bahrain and may give a

disproportional weight to European countries which tend to follow converging

regulatory approaches.

d. The benchmarking methodology that has been followed does not appear to be

rigorous. For example, while Germany allows charging for project management

and technical documentation on a time and material basis, this has not been

monetised in the benchmark.

e. The comparative simplicity of Batelco’s service model may not be taken into

account by the Authority. Aside from application, administration and actual

installation, Batelco only levies two charges (the site survey charge and the rental

charge). For example, the ‘headline’ charges of BT Openreach Physical

Infrastructure Access for duct access44

may compare favourably to European

countries included in the Authority’s benchmark but, contrary to Batelco, it consists

of several service components, with an abundant list of one-offs and other

charging points together with minimum contract period.

f. The benchmark does not reflect certain factors which are specific to Bahrain. For

instance, the imperative of national security leads to additional requirements for

network security. Water and noxious gas clearance of Bahrain’s reclaimed land

may also be materially higher than those in Europe.

44 See BT Openreach, http://www.openreach.co.uk , Physical Infrastructure Pricing, issued on 21 November 2011

http://www.openreach.co.uk/



Page 109 of 167

g. Third party charges for duct surveying (which neither include Batelco’s own cost

nor additional costs for water and gas clearance) are approximately 50% of the

cap which the Authority intends to impose based on a straight line assessment.

Regarding the Authority’s straight line basis to calculate the cap applicable to field study 289.

charge, Batelco submits that such approach does not provide additional visibility to OLOs

to make an informed decision between technologies since it does not identify in advance

the availability of the route to be used. Batelco further submits that it already has an

incentive to provide the shortest route available since duct rental is the lowest wholesale

revenue available with which to occupy available duct space. While Batelco agrees that

the formula based on Pythagoras may provide an appropriate proxy for shorter duct route,

Batelco also provides a sample of wholesale duct rentals for which the straight line

approach would understate the actual duct route provided to OLOs.

Lightspeed

Lightspeed considers that the Site Survey should be provided free of charge by Batelco in 290.

order not to increase the financial burdens on licensed operators “for no reason”.

Lightspeed further submits that all relevant network information should be made available

to all licensees on Batelco’s website and should be free of charge. Lightspeed is also of

the view that the Site Survey should not be a prerequisite of the duct access service.

Lightspeed considers that the duct access service charge is still excessive and that the 291.

service should be offered on a sub-duct level as this would decrease the charge by a

factor three and maximize the utilisation of such a scarce resource.

Menatelecom

Menatelecom expresses certain reserves with regards to the cost basis of the Processing 292.

Access Application Fee set at BD 100 per application (item 2-3.1 of Batelco’s RO schedule

3). Menatelecom considers that all charges associated with the duct access service should

be cost based.

In relation to the Authority’s calculation of the FRND rental charge for the duct access 293.

service (see above Table 46 page 100), Menatelecom is concerned that there seems to be

no adjustment made to account for the proportion of ducts used by Batelco. According to

Menatelecom, it looks as if OLOs are paying for the cost of Batelco’s own duct usage.

Menatelecom advocates for a review of the terms and conditions of RO services and more 294.

especially for the duct access service. Menatelecom explains that it has experienced

problems and delays with the services for which Batelco does not offer SLAs.

Menatelecom also explains that Batelco does not provide accurate maps of ducts 295.

surveyed during the field study stage and that the absence of a defined deliverable can

lead to disputes on the extent of work effectively provided by Batelco.

Zain

Zain welcomes the draft ordered charge of BD 0.155 per meter and the introduction of a 296.

cap for the site survey charge. However Zain submits that the monthly rental charge is still



Page 110 of 167

relatively high, about two to three times the monthly charge applicable in countries such as

France, Portugal or the USA.45

Zain is also critical of the mandatory requirements attached to the application form 297.

applicable for duct access whereby an OLO is required to provide two postal addresses as

end points of the duct route. For instance, Batelco does not accept an application form

with geographic coordinates. Zain considers that this current limitation does not enable

OLOs to get the full benefit of the duct access service such as the ability to connect any

locations in Bahrain (e.g. a Batelco’s manhole).


Operational data

The Authority is very concerned by the lack of robustness of and severe deficiencies of 298.

Batelco’s operational data underlying the calculation of the duct rental charge, notably:

a. the total length of duct infrastructure available in Batelco’s network;

b. the total length of duct used by copper and fibre cables and the associated level of

duct sharing;

c. the total length of wholesale ducts;

d. the total cost of the duct infrastructure including maintenance, construction and

surveying.;

e. the total wholesale activity cost allocated to the duct rental service;

f. the costs associated with each step of the duct rental process (ordering process,

desk study, field study, installation, support and billing).

On several occasions, Batelco admitted that it was experiencing serious difficulties in 299.

extracting reliable, accurate and updated information from its systems and more especially

from its GIS database.46

This is a long-standing issue which has a significant impact on the

costing of regulated access products. Following the issuance of the final Determination

changing the audit standard applicable to Batelco’s regulatory accounts, Batelco is now

required to address this type of issues going forward.47

From Batelco’s response to the RO draft Order (dated 28 December 2011, ref: 300.

GCL/434/11), it appears that Batelco once again experienced difficulties in providing

accurate information.


In page 33 of its response, Batelco submits that there were actually [] metres of 301.

wholesale duct at the end of 2010. By an approximated deduction, Batelco claims that the

accurate figure for 2009 would be closer to [] metres. This represents a very large

45 Zain provides benchmark figures from the report “2010 Shared Infrastructure Access” (CSMG report for OFCOM)

46 For example, see paragraph 261 of Reference Offer Order, 25 January 2011, (ref: MCD/01/11/006) and Batelco’s

response to the draft Determination changing the audit standard, 21 April 2011, (ref: GCL/145/11). 47

Changing the audit standard for Batelco’s regulatory accounts from “Properly prepared within the bounds of materiality” to “Fairly presents”, Determination issued by the Authority on 21 July 2011 (ref: MCD/07/11/100)



Page 111 of 167

difference (by a factor 5) relative to the wholesale ducts length of [] metres as initially

reported by Batelco in its RO submission dated 11 April 2011.

Aside Batelco’s issues regarding the accuracy of its GIS database, the Authority cannot 302.

comprehend that Batelco’s wholesale team does not appear to keep accurate record of

the total duct length rented to OLOs whereas it bills OLOs for the length of duct used and

site survey conducted.

Duct rental charge

With regards to Lightspeed suggestion to offer the duct access service charge on a sub-303.

duct level to decrease the charge by a factor three, it should be noted that the current duct

rental charge already takes into account the sharing of ducts. The total cost of the duct

infrastructure is allocated to all copper and fibre cables running through the ducts (i.e. total

cost of duct infrastructure divided by total cable length). The duct rental charge therefore

takes into account:

a. the cost of ducts used by a single cable (including Batelco’s own usage);

b. the cost of ducts shared by several cables (including Batelco’s own usage); and

c. the cost of empty ducts (allocated to all cables).

The above paragraph also addresses Menatelecom’s concerns regarding the absence of 304.

adjustment to account for the proportion of ducts related to Batelco’s own usage.

The Authority has recalculated the duct rental charged based on Batelco’s corrected 305.

wholesale duct at the end of 2009. The resulting charge would be 3 times higher than the

charge originally calculated by the Authority in the draft Order (2 times higher if the 2010

wholesale duct length is used in the calculation) and significantly higher than the proposed

charges by Batelco. In light of the uncertainties surrounding the duct rental charge

calculation, and in particular the operational data, it would not be appropriate for the

Authority to impose such increase on OLOs before ensuring that it is fully justified and

based on robust operational data. As a result, the Authority orders the freezing of the duct

access monthly rental charge to BD 0.189 per metre.

For the next RO assessment (RO charges based on 2010 regulatory accounts), the 306.

Authority notes that Batelco’s access bottom-up cost model which is currently being

developed should be readily available. The bottom-up information is expected to provide a

clearer view of Batelco’s total duct infrastructure and the allocation of its costs to the

different products offered by Batelco. Batelco is also currently preparing itself to meet the

fairly present audit standard. As part of this process, it is required to remedy any

deficiencies to its operational data. As a consequence, it can be expected that the

uncertainty surrounding the assessment of the FRND duct rental charge will be

significantly reduced.


In the absence of empirical evidence provided by Batelco, the Authority remains of the 307.

view that the adjustments referred to at paragraph 261 are necessary to avoid double

counting.



Page 112 of 167


With regards to the cap for the duct survey charge, the Authority highlights, that, despite 308.

multiple opportunities (including this consultation) Batelco has chosen to not submit any

relevant information (including for example, invoices, quotes, price list of subcontractors)

to support the BD 300 site survey charge. Instead Batelco has concentrated its comments

on the benchmark produced by the Authority.

Benchmarking is seldom a straightforward exercise. There are inherent limitations to 309.

benchmarks. For instance, they often require some assumptions to be made and their

comparability and representativeness may not be perfect. However the Authority considers

that the benchmark presented in Table 48 (see page 103) is robust and well documented,

contrarily to what Batelco is suggesting in its submission. In passing, the Authority notes

that Batelco has questioned the representativeness and methodology of the Authority’s

benchmark but has not provided any additional information to complement the benchmark.

Moreover, while there are a number of reasons to suggest that the average benchmarked 310.

cost of BD 0.315 per metre could overstate the actual costs of conducting the site

survey/feasibility study in Bahrain (see paragraph 274), the Authority has followed a

prudent approach by excluding three countries which presented an average feasibility cost

per metre significantly lower than other countries (Bulgaria, Lithuania and Switzerland).

Therefore in the absence of robust and reliable costing and operational information from

Batelco, the Authority considers that the average benchmark rate of BD 0.426, which

excludes outliers unfavourable to Batelco, is sufficiently robust to serve as a basis for

setting a cap applicable to the duct survey charge.

With regards to the straight line basis to calculate the cap applicable to the field study 311.

charge, the Authority has carefully considered the sample provided by Batelco. Batelco’s

sample suggests that the ‘Pythagoras’ factor of √2 applied to the straight line distance

may be underestimating the actual duct route. While Batelco did not provide any evidence

that the submitted sample is representative, the Authority has decided to abandon any

reference to the straight line distance and has decided instead to set the cap of the field

study charge to a maximum of BD 0.430 per metre of the actual duct route to be provided

to the OLO. The Authority would monitor potential abuse.

The Authority concurs with Menatelecom’s comment regarding the provision of accurate 312.

maps to be valid (see paragraph 295). Consequently the Authority orders Batelco to

provide accurate maps of the duct route provided to OLOs upon request. This should be

provided to OLOs upon request at no additional costs and at any time after the completion

of the field study. The Authority orders Batelco to update its RO accordingly.

Limitations of duct rental to physical addresses

The Authority is also concerned by Batelco’s apparent limitations regarding the geographic 313.

location of the end-points that an OLO can request for a duct route in its application form.

This issue has been raised by Zain (see paragraph 297). At this point in time and based

on the information provided by Batelco, the Authority is of the view that a limitation to

physical addresses is unfair and unreasonable. Therefore, the Authority considers that

Batelco should endeavour to accommodate any reasonable request from OLOs. This

includes the provision of the wholesale duct access service anywhere in Bahrain with no

such limitations. The Authority also notes that Batelco’s “Duct Sharing Policy” refers to

“[t]he availability of duct space for sharing is assessed for each segment of a primary

network route only between identified physical location (sic) nominated by the Access



Page 113 of 167

Seeker” (emphasis added); it makes no reference to physical addresses. The Authority will

monitor closely the matter.

Final Order FRND charges for duct access and site survey

The following table summarizes the FRND charges of duct access and site survey ordered 314.

to Batelco by the Authority:48

Table 51: Order FRND charges for duct access and site survey

Chargeable activity

Approved/

ordered in

January 2011

(or currently

implemented)

Batelco's

submitted

charges in

April 2011

TRA FRND

draft charges

TRA FRND

final Order

charges

Evolution of

Order FRND

as compared

to previously

approved/

ordered


2-3.2 Site Survey if required 300.000 300.000

Time and

materials basis

as set out in

Annex 1.

For duct

access, the

field study total

charge should

not exceed

BD 0.600 per

metre of the

straight-line

distance

separating the

two physical

locations

between which

duct access is

requested.

Time and

materials basis

as set out in

Annex 1.

For duct

access, the

field study total

charge should

not exceed

BD 0.430 per

metre of the

duct route

provided to the

OLOs. Upon

request,

Batelco should

provide a

detailed map

of the duct

route to the

OLO at no

additional cost.

n/a

2-3.9 – Duct Rental charge 0.189 0.213 0.155 0.189 0%


48 Compared to the draft Order, the final Order has introduced the following main changes: (a) the freezing of the

duct access service rental charge; and (b) the setting of the cap applicable to the field study charge based on the actual duct route distance instead of the straight line distance.



Page 114 of 167

10 CAT/LLCO services (2-5 and 2-6)

Draft Order Text

Services definition

The CAT and LLCO services are both wholesale dedicated private leased circuit services 315.

which only differ by their end-segments: whereas a CAT is a service between an OLO and

an end-user, the LLCO is a service between two points of presence of an OLO.

Customer Access Tail (‘CAT’) service definition

In its RO, Batelco defines the CAT service as follows: 316.

“The CAT Service is a wholesale dedicated private leased circuit

service for carrying Access Seeker’s traffic within Bahrain between

an End User premises and an Access Seeker’s Point of Presence.

Available To: Public telecommunications operators with an

individual licence.

Traffic: Only traffic (a) agreed between the Access Seeker and the

Access Seeker’s customer and (b) covered by the Access Seeker’s

licence.


Local Leased Circuit for OLO (‘LLCO’) service definition

In its RO, Batelco defines the LLCO service as follows: 317.

“The Local Leased Circuit for OLO (LLCO) Service is a wholesale

dedicated private leased circuit service for carrying Access Seeker’s

traffic within Bahrain between two of the Access Seeker’s Points of

Presence.

Available To: Licensed Operators.

Traffic: Only traffic of the Access Seeker.



The calculations of Batelco’s 2011 proposed charges and cost stacks for the CAT /LLCO 318.

services are detailed in the following tables:

49 Batelco’s RO, Schedule 1 2-6 (CUSTOMER ACCESS TAIL SERVICE )

50 Batelco’s RO, Schedule 1 2-5 (LOCAL LEASED CIRCUIT FOR OLO )



Page 115 of 167

Table 52: Submitted cost stack for low-speed CAT/LLCO services

speed #pair/ speed

WS Factor

Wholesale Activities

Cost

Access Copper pair Cost per one

Circuit (TWO ENDS)*2

MSAN G.SHDSL per circuit

Cost per one circuit

(2 CPEs)

Network Cost

Total cost

9.6k [] [] [] [] [] [] [] 97.41

14.4k [] [] [] [] [] [] [] 97.41

19.2k [] [] [] [] [] [] [] 97.41

64k [] [] [] [] [] [] [] 97.41

128k [] [] [] [] [] [] [] 98.96

256k [] [] [] [] [] [] [] 102.06

384k [] [] [] [] [] [] [] 105.16

512k [] [] [] [] [] [] [] 108.26

768k [] [] [] [] [] [] [] 114.46

1024k [] [] [] [] [] [] [] 122.47

1.5mb [] [] [] [] [] [] [] 134.88

2048k [] [] [] [] [] [] [] 149.74

Source: Batelco’s submission

Table 53: Submitted cost stack for high-speed CAT/LLCO services

speed WS Factor Wholesale Activities

Cost

Access Fibre

Cost for 2 ends

Equipment Cost for two ends

Network Cost

Total cost

DS3 [] [] [] [] [] 5,677.76

STM1 [] [] [] [] [] 9,203.64

STM4 [] [] [] [] [] 14,697.71


The different charges submitted by Batelco are summarized in the following table along 319.

with the currently approved/ordered charges.

Table 54: Current approved/ordered and proposed CAT/LLCO charges

Chargeable activity Approved/Ordered

in 2009

Approved/Ordered in January 2011

(or currently implemented)

Batelco’s submitted charges

in April 2011

Evolution of submitted as compared to Approved/ Ordered

CAT/LLCO ( 2-5, 2-6 ) in BD

Low speed CAT/LLCO in BD (charges apply for open period )

64 kbit/s 58.000 58.000 97.000 +67.2%

128 kbit/s 61.000 61.000 99.000 +62.3%

256 kbit/s 68.000 68.000 102.000 +50.0%

512 kbit/s 81.000 81.000 108.000 +33.3%

1024 kbit/s 119.000 119.000 122.000 +2.5%

1536 kbit/s 145.000 145.000 135.000 -6.9%

2048 kbit/s 171.000 171.000 150.000 -12.3%

High speed CAT/LLCO maximum price in BD * (price ceiling)

DS3 4,686.310 * 5,678.000 * +21.2%

STM-1 6,630.690 * 9,204.000 * +38.8%

STM-4 15,211.840 * 14,698.000 * -3.4%


Most of the submitted charges are greater than the current charges. This is especially the 320.

case for lower speeds where, for example, the submitted charge for the speed 256 Kbps is

50% greater than the current charge.



Page 116 of 167

The Authority also notes that Batelco has calculated the cost-based charges for the 321.

speeds 384 kbit/s and 768 kbit/s but has not included them in the submitted Schedule 3.

For the avoidance of doubt Batelco is required to provide CAT/LLCO at such speeds if

requested by OLOs, in which case the Authority would set the FRND charges for those

speeds prior to their launch.

Review of the submitted charges for CAT/LLCO services

Number of circuits

The Authority notes that there is still a majority of low-speed CAT/LLCO circuits which are 322.

delivered on the SDH network. Ethernet based circuits (NGN circuits) accounted for []%

of the total low-speed CAT/LLCO circuits by end 2009. As Batelco progresses its NGN

migration, the SDH circuits are progressively replaced by NGN based circuits.

Table 55: Number of CAT/LLCO circuits at the end of 2009

Item

Number of legacy circuits (SDH)

Number of NGN circuits (Ethernet)

Total number of circuits

Capacity in 'weighted' E1 equivalent

Low-speed CAT/LLCO [] [] [] []

High-speed CAT/LLCO [] [] [] []


To avoid any confusion with other services, the Authority suggests that Batelco use the 323.

terminology ‘low-speed’ and ‘high-speed’ rather than ‘narrowband’ and ‘broadband’ to

differentiate the two types of leased lines.

Transmission costs

The Authority notes that the monthly cost per E1 for legacy low-speed circuits is equal to 324.

BD [] which is more than [] times the comparable NGN based low-speed circuits cost

of BD []. The resulting monthly weighted cost per E1 is BD [] ([]% legacy and

[]% NGN). Legacy circuits are based on a mixture of SDH transmission network, and

the BDDN and ASCOM legacy transmission networks.

For high-speed circuits, the network cost is calculated based on the average monthly cost 325.

per 1024 kbit/s of SDH transmission which is equal to BD [] in 2009. The Authority here

encourages Batelco to use the accurate data transfer speed of DS3 (44.736 Mbit/s), STM-

1 (155.52 Mbit/s) and STM-4 (622.08 Mbit/s).

Fibre costs

Batelco calculates a monthly access fibre cost of BD [] based on an unadjusted length 326.

of 1km of fibre cable (BD [] / [] km × 1 km / 12 months = BD []). The Authority

notes that this approach is based on the incorrect assumption that the high-speed

CAT/LLCO service uses a dedicated fibre cable and that this cable is on average 1km

long. The Authority emphasises that the high-speed service uses only one fibre pair in a

cable that can be shared with other services or for a portion of the distance with other

customers. The Authority prefers the more transparent and cost reflective approach which



Page 117 of 167

consists in dividing the total cost of fibre access by the total number of fibre pairs (BD []

/ [] access fibre pairs / 12 months = BD []). This approach ensures that the sharing of

passive infrastructure is taken into account in the cost allocation.

It also appears that Batelco is using a factor 2 to account for a purported protection line. 327.

For the reasons set out at paragraphs 106 and 108 above, the Authority rejects this

approach.

Equipment costs

While the Authority considers that the unit cost per CPE should not be derived from the 328.

network element ‘AN 09 CPE –Data Equipment’,51

the Authority has in this instance

accepted the submitted monthly cost of BD [] as no alternative source of information

was available. For future submissions, Batelco is required to calculate the cost of CPE

based on the actual CPE used.

To calculate the cost per core port and per CPE for high-speed CAT/LLCO, the Authority 329.

has followed the same approach as for the ISI/CSI link services (see paragraph 95 above).

Wholesale support activities cost allocated to CAT/LLCO services

Batelco intends to recover BD [] of wholesale support activity costs from low-speed 330.

CAT/LLCO circuits and BD [] for high-speed circuits. This translates into a monthly cost

per ‘weighted equivalent’ circuit of respectively BD [] and BD [].

The Authority notes that Batelco did not correctly convert the total number of high-speed 331.

CAT/LLCO circuits into ‘weighted equivalent’ circuit. The correct calculation is presented in

the following table:

Table 56: Correct conversion of CAT/LLCO high speed circuits into ‘weighted equivalent’ circuits

Circuit speed Total Number of

Circuits Wholesale factor

Total equivalent # of circuits

DS3 [] 8.50 []

STM-1 [] 21.25 []

STM-4 [] 21.25 []

STM-16 [] 74.38 []

Grand Total [] []

Note: the total equivalent # of circuit is equal to the total # of circuits time the wholesale factor Source: the Authority

The above correction reduces the monthly wholesale support activities cost per ‘weighted 332.

equivalent’ circuit from BD [] to BD []. Notwithstanding this correction, it is unclear to

the Authority why the monthly unit cost per ‘weighted equivalent’ circuit differs between

low-speed and high-speed circuits.

While the Authority is inclined to accept the submitted top-down wholesale support 333.

activities cost for high-speed CAT/LLCO (but adjusted to reflect the above correction) as

51 AN09 includes a range of CPEs of different sizes and functions and the calculated average unit cost per CPE

might not be representative of the equipment used for low-speed CAT/LLCO.



Page 118 of 167

this cost can more easily “blend” into higher charges,52

it cannot however accept the cost

of BD [] per low-speed circuit. The Authority considers the wholesale activities cost of

BD [] per low-speed circuit to be unreasonable and disproportionate as it would

represent approximately 40% to 60% of the wholesale charges.

It has therefore set the wholesale support activities cost per low-speed leased line circuit 334.

based on the same bottom-up estimation approach used in previous RO orders. This

results in a monthly cost of BD [] per low-speed circuit.

Table 57: Update of monthly wholesale activities cost per low-speed CAT/LLCO circuit

Top down average monthly transaction time per low-speed

CAT/LLCO

Average staff time 2009

chargeout rate

Total

30 minutes G1 staff [] [] []

15 minutes G2 staff [] [] []

Total []


Draft Order fair, reasonable and non-discriminatory charges for CAT/LLCO services

The amended cost stacks and associated draft Order FRND charges for the CAT/LLCO 335.

services are presented in the following tables:

Table 58: Draft Order FRND cost stack for low-speed CAT/LLCO services

Speed #pair/sp

eed WS

Factor


Cost

Access Copper pair cost per

circuit (for two ends)

MSAN G.SHDSL per circuit

Cost per one circuit

(2 CPEs)

Network Cost

Total cost

64 kbit/s [] [] [] [] [] [] [] 49.405

128 kbit/s [] [] [] [] [] [] [] 50.955

256 kbit/s [] [] [] [] [] [] [] 54.056

512 kbit/s [] [] [] [] [] [] [] 60.257

1.024 Mbit/s [] [] [] [] [] [] [] 74.471

1.536 Mbit/s [] [] [] [] [] [] [] 86.873

2.048 Mbit/s [] [] [] [] [] [] [] 101.734


Table 59: Draft Order FRND cost stack for high-speed CAT/LLCO services

Speed Wholesale

factor

Wholesale support activities

Cost

Access fibre cost

for 2 ends

Equipment cost for

two ends

Network Cost

Total cost

DS3 (44.736 Mbit/s) [] [] [] [] [] 2,583.542

STM-1 (155.52 Mbit/s) [] [] [] [] [] 3,956.858

STM-4 (622.08 Mbit/s) [] [] [] [] [] 9,224.239


52 Footnote added at the final Order stage: Contrary to what is suggested in paragraph 333 above, the draft ordered

charges for high-speed CAT/LLCO were based on the same bottom-up approach used to calculate wholesale activities costs applicable to low-speed CAT/LLCO services (e.g. for DS3, BD [] × [])



Page 119 of 167

Table 60: Draft Order FRND charges for CAT/LLCO services

Chargeable activity

Approved in January 2011 (or currently

implemented)


Evolution as compared to Approved/

Ordered

CAT/LLCO ( 2-5, 2-6 ) in BD


64 kbit/s 58.000 49.405 -14.8%

128 kbit/s 61.000 50.955 -16.5%

256 kbit/s 68.000 54.056 -20.5%

512 kbit/s 81.000 60.257 -25.6%

1.024 Mbit/s 119.000 74.471 -37.4%

1.536 Mbit/s 145.000 86.873 -40.1%

2.048 Mbit/s 171.000 101.734 -40.5%

High-speed CAT/LLCO maximum price in BD * (price ceiling)

DS3 (44.736 Mbit/s) 4,686.310 * 2,583.542 * -44.9%

STM-1 (155.52 Mbit/s) 6,630.690 * 3,956.858 * -40.3%

STM-4 (622.08 Mbit/s) 15,211.840 * 9,224.239 * -39.4%



Batelco

CAT/LLCO circuit speeds of 384 kbit/s and 768 kbit/s

With regards to paragraph 321, Batelco indicates that while it has submitted cost stacks 336.

for the CAT/LLCO speeds of 384 kbit/s and 768 kbit/s based on 2007, 2008 and 2009

regulatory accounts, it has not included such speeds in the Schedule 3 of its RO. Batelco

however submits that it has provided such speeds in the past when requested by OLOs.

Batelco explains that such speeds are uncommon both at the retail and wholesale level

(Batelco explains that since 2010 there are no CAT/LLCO at such speeds) Accordingly,

Batelco submits that it would be convenient to remove the CAT/LLCO speeds of 384 kbit/s

and 768 kbit/s from the RO.

Batelco also submits that it has identified an issue in connection with CAT/LLCO speeds 337.

lower than 192 kbit/s: “It seems that Batelco’s configuration of G.SHDSL is not effectively

governing speeds lower than 192 kbit/s where the profile, network configuration and

commercial arrangements are set for lower speeds. This issue will be followed up by

Batelco with the TRA prior to the next reference offer submission.” (Batelco’s submission,

paragraph 103).

Number of circuits

With regards to paragraph 322, Batelco explain that it supplies new CAT/LLCO orders on 338.

the NGN and no longer on the SDH network. Batelco also submits that the legacy network

remains in use for existing CAT/LLCO and other products. Batelco also indicates that it

has no current plan to ‘force’ the migration of legacy circuits to NGN but that it would be

worthwhile considering such migration when the WLA service (wholesale MPLS) would be

introduced.



Page 120 of 167

Fibre cost

Batelco notes that the Authority has followed the same approach as for the ISI/CSI 339.

services to calculate cost of the fibre access. Batelco refers the Authority to the comments

made by Batelco on this specific issue in the ISI/CSI section of its response (such

comments have been summarized by the Authority in paragraph 118 above). As

customers migrate from copper to fibre, Batelco appears concerned that, if the fibre

access is set too low, this may create distortions as Batelco would have to recover the

copper cost from a decreasing number of customers remaining on copper.

Equipment costs

With regards to paragraph 328, Batelco concurs with the Authority’s view that the cost of 340.

CPE should be based on the actual CPE used.

Wholesale support activities cost allocated to CAT/LLCO services

Batelco argues that the Authority has taken a selective approach in addressing wholesale 341.

activity costs in respect of CAT/LLCO. Batelco submits that the wholesale activity cost

includes all the overhead costs from a business perspective (Account management,

Product management, Wholesale technical support, Regulatory, Costing, Finance) and not

only one task (order verification and raising) as suggested by the Authority. Batelco also

submits that the fixed costs (overheads) are not related to the number of circuits and that

the fixed cost per circuit will decrease as volume grows. Batelco’s submission also

includes a pie chart showing the amount of cost which, according to Batelco’s calculation,

would not be recovered with the CAT/LLCO draft ordered charges (approximately 2/3 of

costs in Batelco’s graph).

SDH costing gradients

On 1 April 2012, the Authority sent to Batelco a request for information and clarification to 342.

Batelco regarding the costing of SDH-based products. 53

In that letter, the Authority

explained its concerns with the use of gradients by Batelco to cost high speed CAT/LLCO

and high speed IPLC services which appeared incorrect. In Batelco’s response54

Batelco

did not explicitly indicate whether it agreed with the Authority’s conclusion that Batelco had

incorrectly used gradients. However, it noted that the network gradients used to derive the

number of E1 equivalent circuits in the context of SDH costing are respectively [], []

and [] for DS3, STM-1 and STM-4. Batelco is concerned that the corrected use of

network gradients results in significant decrease in the price ceiling applicable to high-

speed CAT/LLCO and high-speed IPLC for Zone 1. In this context, Batelco concurs with

the Authority that it may be appropriate to use a glide path towards cost-based charges

instead of making a one-off adjustment.

Etisalcom

Etisalcom requests the addition of a wholesale product in the RO that is equivalent to the 343.

local MPLS connectivity offered by Batelco retail. Etisalcom also submits that “the pricing

of local MPLS greatly affects the total cost of any link proposed to any client.” (Etisalcom’s

submission, page 1).

53 Request for clarification and Article 53 request for information on the costing of SDH-based products (ref:

MCD04/12/050), the Authority, 1 April 2012. 54

SDH costing – article 53 response (ref: GCL/142/12), Batelco, 9 April 2012.



Page 121 of 167

Lightspeed

Lightspeed considers that the CAT/LLCO charges are still very expensive when compared 344.

to international and regional benchmarks. To illustrate its statement, Lightspeed submits

that the draft order charges are more than twice the charges of an equivalent service in

Jordan.

Menatelecom

Menatelecom notes that the CAT/LLCO service is limited to circuit speed up to 2 Mbit/s 345.

and to higher speeds that includes DS3, STM-1 and STM-4. Menatelecom is of the view

that Batelco should also offer circuit speeds between 2 Mbit/s and DS3 (i.e. 44.736 Mbit/s)

as it is currently the case at the retail level where speeds of 4, 8, 10 and 20 Mbit/s are

available. Menatelecom also explains that Batelco has referred Menatelecom to its retail

price of BD 1,790 when Menatelecom has requested a 4 Mbit/s circuit, which according to

Menatelecom, is the speed the most commonly demanded by OLOs.

Menatelecom is concerned that the RO draft Order does not define one-off charges for the 346.

CAT/LLCO service in order to prevent any potential abuse by Batelco.

Menatelecom remains deeply concerned by the absence of SLAs for wholesale services 347.

and in particular for CAT/LLCO. With regards to the CAT/LLCO service, Menatelecom

expects a full review of the service terms and more especially the response time for

service application and service quotation (in case of non-standard products). In that

regard, Menatelecom explains that time needed by Batelco wholesale to provide a

response to the service application of an OLO easily allows Batelco’s retail arm to capture

the potential customer in the meantime.

Zain

Zain agrees with the draft ordered charges for CAT/LLCO. 348.


CAT/LLCO circuit speeds of 384 kbit/s and 768 kbit/s

In relation to CAT/LLCO circuit speeds of 384 kbit/s and 768 kbit/s, the Authority does not 349.

require Batelco to include the service charges in its Schedule 3. However, these speeds

should be made available to OLOs upon request and the charges should be calculated in

accordance with the approach set by the Authority.



Page 122 of 167

Transmission cost and SDH costing gradients

The issue of SDH costing has been raised by the Authority on several occasions in the 350.

past few years. However, Batelco has not been in a position to clearly and fully explain its

approach.

In one of Batelco’s submission related to the wholesale MPLS service (WLA service),55

351.

Batelco did provide additional details on its SDH network cost allocation approach and

more especially on how Batelco was using gradients to derive a SDH cost per ‘E1

equivalent’ circuits.

Batelco’s use of SDH gradients raises serious concerns as it appears that Batelco does 352.

not use gradients in a consistent manner when costing high-speed CAT/LLCO and high-

speed IPLC services:56

a. Based on SDH gradients (i.e. Batelco used Factors), Batelco calculates that there

are [] E1 equivalent SDH circuits at the end of 2009 (c.f. tab “SDH capacity” of

RO excel file “20110407 Annex D CSI ISI 2009.xlsx”). This ‘weighted’ number of

E1 circuits translates into a ‘weighted’ SDH transmission cost per E1 of BD []

per month.

b. However, when costing the high speed CAT/LLCO services, Batelco does not use

those gradients as it should to derive correct charges, but allocate SDH costs

linearly according to the speed of leased lines.

The Authority considers that Batelco’s approach is mathematically wrong and result in 353.

incorrect costing of the CAT/LLCO services: it over-allocates cost to those services. The

allocation of SDH transmission cost to DS3 and STM-x leased lines should use the same

gradients as those used initially to calculate the cost per ‘E1 equivalent’.

In its response57

to the request for information and clarification sent by the Authority to 354.

Batelco on 1 April 2012,58

Batelco did not explicitly indicate whether it agrees with the

conclusions of the Authority on this point.

As the impact of the SDH network gradients correction on the price ceilings applicable to 355.

high-speed CAT/LLCO services is significant, the Authority has decided on this occasion

to apply a 2-year glide path whereby the SDH network cost allocated to high-speed

CAT/LLCO is calculated as the arithmetic average between the SDH network cost derived

from speed-based factors (no use of gradients) and the SDH network cost derived from

the consistent use of SDH gradients. The SDH network cost applicable to high-speed

CAT/LLCO services is calculated in the following table.

55 Annex 5 of information submitted by Batelco on 7 February 2012 (Ref: GCL/41/12) in relation to the Notified

Controlled Tariff 42 Local MPLS 56

The issue was put to Batelco in the Authority’s letter dated 1 April 2012 (Ref MCD04/12/050). 57

SDH costing – article 53 response (ref: GCL/142/12), Batelco, 9 April 2012. 58

Request for clarification and Article 53 request for information on the costing of SDH-based products (ref: MCD04/12/050), the Authority, 1 April 2012.



Page 123 of 167

Table 61: Correct use of SHD network gradients and SDH network cost glide path.

Circuit speed

Incorrect speed-based

factors (in E1)

(Batelco’s approach)

SDH network cost allocated to the circuit with incorrect speed-based factors (in BD

per circuit)

(Batelco’s approach)

Correct gradients to

allocate network costs

(in E1 equivalent)

SDH network cost allocated to the circuit with correct gradients (in

BD per circuit)

FRND SDH network cost

allocated to the circuit based on

2-year glide path (average value in BD)

a = ( circuit speed in Mbit/s )

/ 2.048 Mbit/s

b = a × (SDH monthly cost per E1 equivalent) *

c ** d = c × (SDH

monthly cost per E1 equivalent)*

e = (b + d ) / 2

DS3 (44.736 Mbit/s)

[] [] [] [] []

STM-1 (155.52 Mbit/s)

[] [] [] [] []

STM-4 (622.08 Mbit/s)

[] [] [] [] []

Note: *The SDH monthly cost per E1 equivalent is BD [] in 2009. ** These are the gradients used by Batelco to calculate the SDH monthly cost per E1 equivalent. In its Request for clarification and Article 53 request for information on the costing of SDH-based products (ref: MCD04/12/050), the

Authority had applied SDH gradients based on 1.024 Mbit/s when the basis was an E1 equivalent. Source: the Authority from Batelco’s submission

Transmission cost (MPLS network cost for low-speed CAT/LLCO services)

The Authority has identified another error in Batelco’s costing of MPLS network cost 356.

applicable to the low-speed CAT/LLCO services delivered on NGN. Batelco does not

correctly apply the routing factors of the MPLS distribution and aggregation networks

(CN19, CN21, CN23, CN40 and CN56). While Batelco correctly derives the ‘2 Mbit/s unit

cost’ of MPLS distribution and aggregation by taking into account the fact that MPLS-

based leased lines use twice the MPLS aggregation and MPLS distribution networks (for

the two ends of the leased line), it omits to multiply the ‘2 Mbit/s unit cost’ by 2 when

costing the low-speed CAT/LLCO services delivered on NGN.

For the purposes of this Order, the Authority has decided to take as an input the ‘2 Mbit/s 357.

unit cost’ of the MPLS network calculated by the Authority in its Decision relating to

Batelco's Local MPLS services.59

The Authority considers that the MPLS network unit cost

calculated in the Decision is more robust (In the context of that Decision, the Authority

revamped the costing of MPLS network (including MPLS network the routing factors and

MPLS network gradients).60

Fibre cost

Batelco’s comments are addressed at paragraphs 136-139 above. 358.

Equipment cost

In addition to the cost of the CPE at the OLO’s site, the Authority notes that Batelco also 359.

intends to recover the cost of the ODF, the cost of the DDF and the cost of the core SDH

port for high-speed CAT/LLCO services. It is not clear to the Authority whether these costs

are not already captured in the cost of SDH transmission (CN52). In this instance, the

59 see Table 8 page 41, Decision relating to Batelco's Local MPLS services dated 27 March 2012 (ref:

MCD03/12/047) 60

The ‘2 Mbit/s unit cost’ of MPLS network calculated in the MPLS Decision is BD [] while it is BD [] in Batelco’s RO submission dated 11 April 2011.



Page 124 of 167

Authority has decided not make any adjustment but intends to further investigate the

scope of cost included in CN52 as part of the next RO review.

Wholesale activities costs allocated to CAT/LLCO services

While Batelco’s submission in relation to wholesale activities costs has not assuaged the 360.

Authority’s concerns over wholesale activities costs as set out in Section 6 above and in

paragraphs 330-334, the Authority has decided to amend its approach to the allocation of

wholesale activities costs to CAT/LLCO services for the purposes of this Order. The

change of approach does not mean that the Authority no longer considers that the level of

wholesale activities costs that Batelco seeks to recover from CAT/LLCO services appears

to be excessive. In that respect, the Authority reserves the right to make other bottom-up

adjustments in the future.

The Authority has re-calculated the number of E1 equivalent to allocate wholesale 361.

activities costs based on the same gradients used for SDH network allocation with the

exception of low-speed CAT/LLCO services (below 2.048 Mbit/s) which all use a gradient

equal to 1. The details of the calculation are presented in the below table.

Table 62: Calculation of the number of ‘E1 circuit equivalent’ used to allocate wholesale activities costs to

CAT/LLCO services

Network

Access technology

Speed

Number of CAT/LLCO

circuits (end of 2009)

Wholesale gradients (to

allocate wholesale

activities costs)

Number of E1 equivalent to

allocate wholesale

activities costs

a b c = a × b

Legacy – SDH

Copper

64 kbit/s [] [] []

128 kbit/s [] [] []

256 kbit/s [] [] []

384 kbit/s [] [] []

512 kbit/s [] [] []

1.024 Mbit/s [] [] []

E1 (2.048 Mbit/s) [] [] []

Fibre

DS3 (44.736 Mbit/s) [] [] []

STM-1 (155.52 Mbit/s) [] [] []

STM-4 (622.08 Mbit/s) [] [] []

STM-16 (2488.32 Mbit/s) [] [] []

NGN Copper

64 kbit/s [] [] []

128 kbit/s [] [] []

256 kbit/s [] [] []

512 kbit/s [] [] []

1 Mbit/s [] [] []

2 Mbit/s [] [] []

Total [] []


From the calculated total number of E1 equivalent, the Authority has derived the monthly 362.

wholesale activities costs per circuit which allow full recovery of the wholesale activities

costs as submitted by Batelco.



Page 125 of 167

Table 63: Wholesale activities costs allocated to CAT/LLCO services

Item Description Amount/Quantity

a Wholesale activities costs that Batelco seeks to recover from low-speed CAT/LLCO

[] BD

b Wholesale activity cost that Batelco seeks to recover from high-speed CAT/LLCO

[] BD

c = a + b Total wholesale activities costs that Batelco seeks to recover from CAT/LLCO

[] BD

d Number of E1 equivalent [] circuits

e = c / d / 12 Monthly wholesale activities costs per E1 equivalent [] BD/month

f = e × 1 Monthly wholesale activities costs per Low-speed CAT/LLCO circuit (≤ 2.048 Mbit/s)

[] BD/month

g = e × (gradient DS3) Monthly wholesale activities costs per CAT/LLCO DS3 circuit (44.736 Mbit/s)

[] BD/month

h = e × (gradient STM-1) Monthly wholesale activities costs per CAT/LLCO STM-1 circuit (155.52 Mbit/s)

[] BD/month

i = e × (gradient STM-4) Monthly wholesale activities costs per CAT/LLCO STM-4 circuit (622.08 Mbit/s)

[] BD/month


The Authority is of the view that it may be appropriate to reduce the amount of wholesale 363.

activities costs allocated to high-speed CAT/LLCO by reducing the wholesale gradients

applicable to high-speed circuits as it is very unlikely that, for example, the provision of an

STM-4 circuit would require [] times more effort from the wholesale department than the

provision of an E1 circuit. However, while the Authority has decided to apply Batelco’s

gradients in this instance, it intends to work with Batelco on a more realistic wholesale

activities costs allocation among circuits.

Final Order FRND charges for CAT/LLCO services

The final cost stacks for the low-speed and the high-speed CAT/LLCO services charges 364.

are presented in the following pages.61

61 Compared to the draft RO Order charges, the main changes relate to: (a) transmission cost and the correct use of

SDH gradient with glide path; and (b) a new approach to allocate wholesale activities costs as submitted by Batelco.



Page 126 of 167

Table 64: Order FRND cost stack for low-speed CAT/LLCO services

Legacy network costing

speed Number of access

copper pairs required at one-end

Wholesale activities Cost

Access Copper pair cost per circuit (for

two ends)

CPE cost per one circuit (2 CPEs)

SDH network cost

BDDN / ASCOM

Total network cost

Total cost

64 kbit/s [] [] [] [] [] [] [] []

128 kbit/s [] [] [] [] [] [] [] []

256 kbit/s [] [] [] [] [] [] [] []

512 kbit/s [] [] [] [] [] [] [] []

1.024 Mbit/s [] [] [] [] [] [] [] []

1.536 Mbit/s [] [] [] [] [] [] [] []

2.048 Mbit/s [] [] [] [] [] [] [] []

NGN network costing

speed Number of access

copper pairs required at one-end

Wholesale Activities Cost

Access Copper pair cost per circuit (for

two ends)


MSAN G.SHDSL per

circuit

MPLS network cost

*

Total network cost

Total cost

64 kbit/s [] [] [] [] [] [] [] []

128 kbit/s [] [] [] [] [] [] [] []

256 kbit/s [] [] [] [] [] [] [] []

512 kbit/s [] [] [] [] [] [] [] []

1.024 Mbit/s [] [] [] [] [] [] [] []

1.536 Mbit/s [] [] [] [] [] [] [] []

2.048 Mbit/s [] [] [] [] [] [] [] []

Weighted average between legacy and NGN network costing

speed

Number of access copper pairs required at one-end (weighted

average)

Wholesale activities Cost

Access Copper pair cost per circuit (for two ends, weighted

average))


Average network cost mix ([]% of legacy circuits, []% of NGN circuits)

Total cost (weighted average)

64 kbit/s [] [] [] [] [] 58.508

128 kbit/s [] [] [] [] [] 60.963

256 kbit/s [] [] [] [] [] 65.872

512 kbit/s [] [] [] [] [] 75.692

1.024 Mbit/s [] [] [] [] [] 97.143

1.536 Mbit/s [] [] [] [] [] 116.781

2.048 Mbit/s [] [] [] [] [] 138.879

* The monthly MPLS network cost per 2.048 Mbit/s is based on the Authority’s Decision relating to Batelco's Local MPLS services dated 27 March 2012 (ref: MCD03/12/047), see Table 8 page 41 of the Decision.




Page 127 of 167

The Authority has re-calculated the FRND price ceilings of high-speed CAT/LLCO services 365.

of the draft RO Order issued 3 November 2011 (see below table). The corrected FRND

price ceiling is - 2.3% for DS3 to - 11.3 % for STM-4 lower than the draft RO Order

charges.

Table 65: Order FRND cost stack for high-speed CAT/LLCO services

Speed Wholesale

support activities Cost

Access fibre cost for 2

ends

Equipment cost for two

ends Network Cost

Total cost

DS3 (44.736 Mbit/s) [] [] [] [] 2,512.235

STM-1 (155.52 Mbit/s) [] [] [] [] 3,552.331

STM-4 (622.08 Mbit/s) [] [] [] [] 8,185.213


The final ordered FRND charges for CAT/LLCO services are summarized in the following 366.

table. The charges have been set in the context of the expected introduction of wholesale

Ethernet-based leased lines by Batelco following the Authority’s Decision dated 27 March

2012 (MCD03/12/047). It may be appropriate to review the CAT/LLCO charges once the

wholesale Ethernet high-speed leased lines have been introduced.

Table 66: Order FRND charges for CAT/LLCO services

Chargeable activity


January 2011 (or currently implemented




charges


approved/ ordered

CAT/LLCO ( 2-5, 2-6 )

in BD


64 kbit/s 58.000 97.000 49.405 58.508 0.9%

128 kbit/s 61.000 99.000 50.955 60.963 -0.1%

256 kbit/s 68.000 102.000 54.056 65.872 -3.1%

512 kbit/s 81.000 108.000 60.257 75.692 -6.6%

1.024 Mbit/s 119.000 122.000 74.471 97.143 -18.4%

1.536 Mbit/s 145.000 135.000 86.873 116.781 -19.5%

2.048 Mbit/s 171.000 150.000 101.734 138.879 -18.8%

High-speed CAT/LLCO maximum price in BD * (price ceiling)

DS3 (44.736 Mbit/s) 4,686.310 * 5,678.000 * 2,583.542 * 2,512.235 * -46.4%

STM-1 (155.52 Mbit/s) 6,630.690 * 9,204.000 * 3,956.858 * 3,552.331 * -46.4%

STM-4 (622.08 Mbit/s) 15,211.840 * 14,698.000 * 9,224.239 * 8,185.213 * -46.2%




Page 128 of 167

11 International Private Leased Circuit service (‘IPLC’) (2-10)

Draft Order Text

Service definition

In its RO, Batelco defines the International Private Leased Circuit service (‘IPLC’) service 367.

as follows:

“The International Private Leased Circuit (IPLC) Service is a

wholesale dedicated international private leased circuit service for

carrying Access Seeker’s traffic between an Access Seeker’s Point

of Presence in Bahrain and a location outside Bahrain. The IPLC

Service is provided by Access Provider from the Point of Handover

at a location in Bahrain up to the effective mid-point of the

international segment of the circuit.

Available To: ISL and ISP licence holders.

Traffic: Only traffic (a) agreed between the Access Seeker and the

other relevant operator (if the traffic originates from or passes

through a network other than the Access Seeker’s network) and (b)

covered by the Access Seekers licence.



Batelco first submitted a cost stack for the IPLC service on 11 April 2011. As some of the 368.

formulas included in the cost stack were not functioning, Batelco submitted a second cost

stack for the IPLC service on 28 July 2011 (ref: GCL/246/11).

The calculations of Batelco’s 2011 proposed charges and cost stacks for the IPLC 369.

services are detailed in the following tables:

62 Batelco’s RO, Schedule 1 2-10 (INTERNATIONAL PRIVATE LEASED CIRCUIT)



Page 129 of 167

Table 67: Cost stack submitted by Batelco for the low-speed IPLC service


speed #pair/speed no of 64K Wholesale

Factor


Cost

Access Copper Cost per

pair

Cost per one CPE

Network Core Cost same as

CAT/LLCO (legacy only)

Total cost of National

Leg and Wholesale Activities

64k [] [] [] [] [] [] [] []

128k [] [] [] [] [] [] [] []

256k [] [] [] [] [] [] [] []

512k [] [] [] [] [] [] [] []

768k [] [] [] [] [] [] [] []

1024k [] [] [] [] [] [] [] []

1536k [] [] [] [] [] [] [] []

2048k [] [] [] [] [] [] [] []

Circuit Speed

Speed Factor

Int'l Leg Network Total Cost Total Cost Plus Risk Factor

Zone 1 Zone 2 Zone 3 Zone 1 Zone 2 Zone 3 Zone 1 Zone 2 Zone 3

64kbps 0.031 [] [] [] [] [] [] 89 144 107

128kbps (2x64kbps) 0.063 [] [] [] [] [] [] 114 225 151

256kbps (4x64kbps) 0.125 [] [] [] [] [] [] 165 386 239

512kbps (8x64kbps) 0.250 [] [] [] [] [] [] 267 709 414

768kbps (12x64kbps) 0.375 [] [] [] [] [] [] 369 1,032 589

1mbps (16x64kbps) 0.500 [] [] [] [] [] [] 475 1,359 769

1,5mbps (24x64kbps) 0.750 [] [] [] [] [] [] 679 2,004 1,120

2mbps (32x64kbps) 1.000 [] [] [] [] [] [] 882 2,650 1,470



Page 130 of 167

Table 68: Cost stack submitted by Batelco for the high-speed IPLC service


The proposed charges with prior year comparators are summarized in the following table. 370.

Table 69: Approved and proposed IPLC charges

Chargeable activity Approved/ Ordered in

2009

Approved / Ordered in


implemented)

Batelco’s submitted charges in April 2011

Evolution of submitted charges as

compared to approved/ ordered charges

IPLC ( 2-10 )

IPLC - Zone 1 – Low speed IPLC in BD

64 kbit/s 137.000 89.000 -35.0%

128 kbit/s (2x64 kbit/s) 167.000 114.000 -31.7%

256 kbit/s (4x64 kbit/s) 380.000 227.000 165.000 -27.3%

512 kbit/s (8x64 kbit/s) 576.000 348.000 267.000 -23.3%

768 kbit/s (12x64 kbit/s) 468.000 396.000 -15.4%

1.024 Mbit/s (16x64 kbit/s) 961.000 595.000 475.000 -20.2%

1,536 Mbit/s (24x 64 kbit/s) 835.000 679.000 -18.7%

2.048 Mbit/s (32x64 kbit/s) 1441.000 1076.000 882.000 -18.0%

IPLC - Zone 1 – High speed IPLC maximum price in BD *(price ceiling)

DS3 6,800 * 4,998 * -26.5%

STM-1 11,495 * 7,504 * -34.7%

STM-4 26,779 * 16,232 * -39.4%

IPLC - Zone 2 in BD

64 kbit/s 165.000 144.000 -12.7%

128 kbit/s (2x64 kbit/s) 223.000 225.000 +0.9%

256 kbit/s (4x64 kbit/s) 606.000 339.000 386.000 +13.9%

512 kbit/s (8x64 kbit/s) 940.000 571.000 709.000 +24.2%

768 kbit/s (12x64 kbit/s) 803.000 1032.000 +28.5%

1.024 Mbit/s (16x64 kbit/s) 1510.000 1041.000 1359.000 +30.5%

1,536 Mbit/s (24x 64 kbit/s) 1505.000 2004.000 +33.2%

2.048 Mbit/s (32x64 kbit/s) 2565.000 1969.000 2650.000 +34.6%

IPLC - Zone 3 in BD

64 kbit/s 172.000 107.000 -37.8%

128 kbit/s (2x64 kbit/s) 236.000 151.000 -36.0%

256 kbit/s (4x64 kbit/s) 913.000 366.000 239.000 -34.7%

512 kbit/s (8x64 kbit/s) 1331.000 625.000 414.000 -33.8%

768 kbit/s (12x64 kbit/s) 883.000 586.000 -33.6%

1.024 Mbit/s (16x64 kbit/s) 2050.000 1148.000 769.000 -33.0%

1,536 Mbit/s (24x 64 kbit/s) 1666.000 1120.000 -32.8%

2.048 Mbit/s (32x64 kbit/s) 3383.000 2183.000 1470.000 -32.7%


The submitted charges are between -15% to -40% lower than the current approved 371.

charges for Zone 1 and for Zone 3 and between -12% and +33% for Zone 2.

IPLC BB cost on FOG and SFO Factor Factor for

WS activities Int'l Local

WS activity cost*

Total Local + Int'l

DS3 [] [] [] [] [] 4,998

STM1 [] [] [] [] [] 7,504

STM4 [] [] [] [] [] 16,232



Page 131 of 167

Review of the submitted charges for IPLC services

Network costs (low-speed IPLC)

Batelco was requested in the letter of 16 June 2011 (ref: Ref. MCD/06/11/091) to provide a 372.

fully functioning spreadsheet model for IPLC low-speed circuits. Whilst Batelco supplied

on 28 July 2011 a spreadsheet model with working formulae, several cells remained hard

coded numbers with no explanation of the source or validity of these numbers. These hard

coded numbers are key for the review of the network costs of the ‘international leg’ of the

IPLC services as they represent the average rental and maintenance cost per E1 per zone

of the international leg. As a result, the Authority is not in a position to assess whether the

international leg network costs of the IPLC service are fair and reasonable. However, it

has used the submitted cost for the calculation of the FRND charges.

The network costs of the ‘national leg’ of the low-speed service are identical to the network 373.

cost of the legacy CAT/LLCO service. In deriving the FRND charges, the Authority has

therefore used the cost determined for the CAT/LLCO service.

The Authority approves the 2009 cost per copper pair of BD [] and the 2009 cost per 374.

CPE of BD []. They both reconcile back with the 2009 FAC regulatory accounts.

Network costs (high-speed IPLC)

Batelco states that the cost of the ‘national leg’ of the high-speed service is identical to the 375.

charge for the high-speed CAT/LLCO service from which the wholesale costs have been

deducted. The Authority agrees with Batelco and adds that the cost of one fibre access

should also be deducted from the ‘national leg’ cost as IPLC services are half circuits

which only require one local access.

As for the cost of the ‘international leg’, the Authority notes that Batelco uses gradients (or 376.

network weight factors) to allocate costs in such a way that the price per E1 decreases

when the capacity of the circuit increases. The Authority encourages such an approach as

it leads to a more optimal pricing of wholesale circuits. However, such an approach only

works if it is applied consistently, i.e. not only to allocate network costs but also to

calculate the total number of ‘weighted’ equivalent E1s and its unit cost. It is not clear to

the Authority whether Batelco has applied this approach in a consistent manner when

calculating the 2009 total capacity of the SFO and FOG cables in E1 equivalent ([]

E1s).


The wholesale activities costs allocated to IPLC services amount to BD [] in 2009. As 377.

the total quantity of ‘weighted’ circuits sums up to [] (see table below), this represents a

monthly unit cost of BD [] per ‘weighted’ circuit.



Page 132 of 167

Table 70: Total number of ‘weighted’ IPLC circuits in 2009 as submitted by Batelco

Speed NO. of circuits

Copper Pair/circuit

Fibre Pair/circuit

Total Copper

Total Fiber Virtual Weight

No of Virtual Circuits

64 kbit/s [] [] [] [] [] [] []

256 kbit/s [] [] [] [] [] [] []

2.048 Mbit/s [] [] [] [] [] [] []

DS3 [] [] [] [] [] [] []

STM1 [] [] [] [] [] [] []

STM4 [] [] [] [] [] [] []

[] [] []

[]


Risk mark-up (low speed IPLC)

In line with the 2011 RO Order (paragraph 387), the Authority has excluded the risk factor 378.

from the calculation.



Page 133 of 167

Draft Order fair, reasonable and non-discriminatory charges for IPLC services

The draft FRND charges for the IPLC services are presented in the following table: 379.

Table 71: Draft Order FRND charges for IPLC services

Chargeable activity

Approved/Ordered in January 2011

(or currently implemented)

TRA's Draft Order FRND charges

Evolution of Draft Order FRND as

compared to Approved/ Ordered

IPLC ( 2-10 )


64 kbit/s 137.000 77.944 -43.1%

128 kbit/s 167.000 100.276 -40.0%

256 kbit/s 227.000 144.939 -36.2%

512 kbit/s 348.000 234.264 -32.7%

768 kbit/s 468.000 323.590 -30.9%

1.024 Mbit/s 595.000 416.542 -30.0%

1,536 Mbit/s 835.000 595.193 -28.7%

2.048 Mbit/s 1076.000 773.845 -28.1%

IPLC - Zone 1 – High speed IPLC maximum price in BD * (price ceiling) – same restrictions still apply

DS3 6,800 * 3,241.769 * -52.2%

STM-1 11,495 * 5,719.290 * -49.9%

STM-4 26,779 * 14,221.281 * -46.3%

IPLC - Zone 2 in BD

64 kbit/s 165.000 126.406 -23.4%

128 kbit/s 223.000 197.199 -11.6%

256 kbit/s 339.000 338.785 -0.1%

512 kbit/s 571.000 621.958 8.9%

768 kbit/s 803.000 905.130 12.7%

1.024 Mbit/s 1041.000 1,191.928 14.5%

1,536 Mbit/s 1505.000 1,758.273 16.8%

2.048 Mbit/s 1969.000 2,324.618 18.1%

IPLC - Zone 3 in BD

64 kbit/s 172.000 94.069 -45.3%

128 kbit/s 236.000 132.525 -43.8%

256 kbit/s 366.000 209.437 -42.8%

512 kbit/s 625.000 363.262 -41.9%

768 kbit/s 883.000 517.086 -41.4%

1.024 Mbit/s 1148.000 674.537 -41.2%

1,536 Mbit/s 1666.000 982.186 -41.0%

2.048 Mbit/s 2183.000 1,289.835 -40.9%



Batelco

Batelco submits that the Authority’s proposed prices are expected to have a significant 380.

impact on its business and more especially in respect to Zone 2 circuits. If the Authority is

minded to proceed with its initial findings, Batelco would like to withdraw IPLC charges for

Zone 2 and Zone 3 from the RO for the following reasons:



Page 134 of 167

a. Batelco only controls the landing stations or international interconnections to the

SFO and FOG cables which only provide connectivity to Zone 1 destinations (i.e.

to GCC countries). Batelco contends that other cable landing stations are “open

access” and therefore any potential “bottleneck control” does not relate to Zone 2

or Zone 3 destinations.

b. Batelco submits that SFO and FLAG are “merely an input to achieving connectivity

to Zone 2 and Zone 3 by transiting Etisalat in the UAE or STC in the Kingdom of

Saudi Arabia to obtain access to the international cables which provide Zone 2

and Zone 3 destinations. Batelco like any other Licensed operator has to seek

prices and quotations from Etisalat and STC (as well as the cable provider in

some cases) and in such circumstances Batelco does not have any additional

market advantage compared with the other operators.” (Batelco’s submission,

paragraph 108).

c. Batelco submits that it has only a very limited number of circuits at the wholesale

level to Zone 2 or Zone 3 destinations.

In the remaining part of its submission on IPLC, Batelco provides several arguments as to 381.

why the Authority should defer any IPLC charges reduction to after the completion of the

competition review of international markets. Batelco also submits that this comprehensive

review is overdue and considers that it is no longer dominant in the wholesale market for

access to international facilities. Batelco further submits that it considers this market to be

“competitive or prospectively competitive”.

Lightspeed

Lightspeed considers that the IPLC charges are still very expensive when compared to 382.

international and regional benchmarks.

Zain

Zain welcomes any decrease in IPLC charges as Zain considers that they are the most 383.

expensive of all the wholesale services.


Dominance of Batelco in international markets

In line with the Telecommunications Law, the removal of the regulation of IPLC services 384.

and any other regulatory remedies imposed on the basis of a finding of SMP (‘Significant

Market Power’) or dominance can only take place once the relevant market has been

reviewed and no SMP or dominance has been found. Pending such a review, regulatory

obligations, including the regulation of IPLC services, stand. The Authority’s position is

consistent with the Telecommunications Law and has been previously explained to

Batelco. Batelco’s arguments regarding “unexpected announcement”, “unexpected

intervention”, “regulatory flip-flop”, and “regulatory inconsistency” to name a few are in that

context not grounded.



Page 135 of 167

The Authority is currently reviewing the state of competition in international markets and 385.

expects to release a draft for consultation shortly.

In passing Authority also notes a certain degree of contradiction in Batelco’s response. 386.

Batelco submits that the wholesale market for access to international facilities is now

competitive (or becoming competitive). However, at the same time, Batelco deploys a

great amount of arguments against the potential reduction of IPLC charges. If the market

was effectively competitive, prices would be at the competitive level, i.e. in line with

underlying cost, which is precisely what the Authority is seeking to achieve in accordance

with the Telecommunications Law.63

The Authority considers that it remains appropriate to order the IPLC charges reduction. 387.

SDH network cost applicable to high-speed IPLC Zone 1

For consistency purposes, the Authority has decided to apply the network cost of high-388.

speed CAT/LLCO services to the high-speed IPLC applicable to Zone 1 based on a 2-year

glide path (see page 123). Before applying the network cost of high-speed CAT/LLCO

services (i.e. the ‘national leg’ of the IPLC service), the Authority has corrected it to take

into account that the high-speed IPLC services are half circuits and as such require only

one fibre access and one CPE.

Final Order FRND charges for IPLC services

The Authority has not modified the draft ordered charges for low-speed IPLC circuits. The 389.

cost stack of high-speed IPLC services for Zone 1 which reflects the SDH network cost is

reproduced below.

Table 72: Cost stack of high-speed IPLC services for Zone 1

High-speed IPLC services cost on FOG and SFO

Gradients for

international network

cost

Gradients for

wholesale activities

costs

Network cost of

'International leg'

'Network cost of

'national leg'

Wholesale activities

costs

Total price ceiling

applicable to the charge

DS3 (44.736 Mbit/s) [] [] [] [] [] 2,204.551

STM-1 (155.52 Mbit/s) [] [] [] [] [] 4,272.430

STM-4 (622.08 Mbit/s) [] [] [] [] [] 10,921.226


The Authority orders Batelco the following FRND charges for the IPLC services. 390.

63 The Authority also notes that rates are based on 2009 costs and they concern a service whose prices are known

to decrease year-on-year.



Page 136 of 167

Table 73: Order FRND charges for IPLC services

Chargeable activity

Approved/Ordered in


implemented)




charges

Evolution of final charges as compared to previously approved/ordered charges

IPLC ( 2-10 )


64 kbit/s 137.000 89.000 77.944 77.944 -43.1%

128 kbit/s 167.000 114.000 100.276 100.276 -40.0%

256 kbit/s 227.000 165.000 144.939 144.939 -36.2%

512 kbit/s 348.000 267.000 234.264 234.264 -32.7%

768 kbit/s 468.000 396.000 323.59 323.59 -30.9%

1.024 Mbit/s 595.000 475.000 416.542 416.542 -30.0%

1,536 Mbit/s 835.000 679.000 595.193 595.193 -28.7%

2.048 Mbit/s 1076.000 882.000 773.845 773.845 -28.1%

IPLC - Zone 1 – High speed IPLC maximum price in BD * (price ceiling) – same restrictions still apply

DS3 6,800.000 * 4,998.000 * 3,241.769 * 2,204.551 * -67.6%

STM-1 11,495.000 * 7,504.000 * 5,719.290 * 4,272.430 * -62.8%

STM-4 26,779.000 * 16,232.000 * 14,221.281 * 10,921.226 * -59.2%

IPLC - Zone 2 in BD

64 kbit/s 165.000 144.000 126.406 126.406 -23.4%

128 kbit/s 223.000 225.000 197.199 197.199 -11.6%

256 kbit/s 339.000 386.000 338.785 338.785 -0.1%

512 kbit/s 571.000 709.000 621.958 621.958 8.9%

768 kbit/s 803.000 1032.000 905.130 905.130 12.7%

1.024 Mbit/s 1041.000 1359.000 1,191.928 1,191.928 14.5%

1,536 Mbit/s 1505.000 2004.000 1,758.273 1,758.273 16.8%

2.048 Mbit/s 1969.000 2650.000 2,324.618 2,324.618 18.1%

IPLC - Zone 3 in BD

64 kbit/s 172.000 107.000 94.069 94.069 -45.3%

128 kbit/s 236.000 151.000 132.525 132.525 -43.8%

256 kbit/s 366.000 239.000 209.437 209.437 -42.8%

512 kbit/s 625.000 414.000 363.262 363.262 -41.9%

768 kbit/s 883.000 586.000 517.086 517.086 -41.4%

1.024 Mbit/s 1148.000 769.000 674.537 674.537 -41.2%

1,536 Mbit/s 1666.000 1120.000 982.186 982.186 -41.0%

2.048 Mbit/s 2183.000 1470.000 1,289.835 1,289.835 -40.9%




Page 137 of 167

12 Wholesale DSL service (2-11) and Bitstream service (2-12)

Draft Order Text

12.1 Wholesale DSL service (2-11)

Wholesale DSL service (‘WDSL’) definition

In its RO, Batelco defines the Wholesale DSL service (‘WDSL’) as follows: 391.

“The Wholesale DSL service is a service which enables the

Access Seeker to resell to End Users the Access Provider’s high

speed internet access services set out in Annex 2 to this Service

Description. Under the Wholesale DSL service the internet access,

network infrastructure platform, billing information, service

provisioning and support are provided to the Access Seeker by

Batelco and the Access Seeker markets and bills the Wholesale

DSL services to the end user.

Available To: ISP class licensees.

Traffic: Permitted internet access traffic only, for the avoidance of

doubt not including basic voice services.



Batelco provided the following cost stacks to support the charges in Schedule 3 of its RO 392.

submission.

64 Batelco’s RO, Schedule 1 2-11 (WHOLESALE DSL SERVICE)



Page 138 of 167

Table 74: Cost stack submitted by Batelco for the residential WDSL service

Costing Elements - Per Package

Residential

16mb 16 mb

10mb 10mb 8mb 8mb 4mb 2mb 2mb 1mb 1mb 1mb 640k 640k 512K 256k

Usage 80 100 50 80 40 60 25 20 15 15 8 4 5 2 8 2

Capacity 16 16 10 10 8 8 4 2 2 1 1 1 0.625 0.625 0.5 0.25

Network Costs

MSAN [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

Transmission (MPLS) [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

BRAS [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

INET Platform [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

International uplinks [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

CPE- Biz

Copper contribution [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

Totals [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

Wholesale Costs

OR05a Residential & Inet Helpdesk - Residential (881188) Oth

[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

OR05b Residential & Inet Helpdesk - Business (881177) Others

OR27 Billing (Others) [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

OR28 Operations & Helpdesk - Bill printing & dispatch (other

[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

OR29 Customer Services - (Other) [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

OR72 Revenue Assurance & Fraud Management- (other)

[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

WS04 Commercial Lawyer - Access Support

[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

WS05 Fixed Billing - IAA Access [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

Totals [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

Total Package cost 50.22 59.52 33.27 47.23 27.62 36.92 18.64 15.32 12.99 12.49 9.23 7.37 7.65 6.26 8.98 6.07

Source: Batelco’s RO submission



Page 139 of 167

Table 75: Cost stack submitted by Batelco for the business WDSL service

Costing Elements - Per Package

Business

16M 10M 8M 6M 4M 2M Flat

1M Flat

512 flat MB

256 flat MB

2mb 1mb 512k Edu 256k

256k-single

Usage 350 250 200 160 130 48 [] [] [] 20 15 10 5 2.5

Capacity 16 10 8 6 4 2 1 0.5 0.25 2 1 0.5 0.25 0.25

Network Costs

MSAN [] [] [] [] [] [] [] [] [] [] [] [] [] []

Transmission (MPLS) [] [] [] [] [] [] [] [] [] [] [] [] [] []

BRAS [] [] [] [] [] [] [] [] [] [] [] [] [] []

INET Platform [] [] [] [] [] [] [] [] [] [] [] [] [] []

International uplinks [] [] [] [] [] [] [] [] [] [] [] [] [] []

CPE- Biz [] [] [] [] [] [] [] [] [] [] [] [] [] no CPE

Copper contribution [] [] [] [] [] [] [] [] [] [] [] [] [] []

Totals [] [] [] [] [] [] [] [] [] [] [] [] [] []

Wholesale Costs

OR05a Residential & Inet Helpdesk - Residential (881188) Oth

OR05b Residential & Inet Helpdesk - Business (881177) Others

[] [] [] [] [] [] [] [] [] [] [] [] [] []

OR27 Billing (Others) [] [] [] [] [] [] [] [] [] [] [] [] [] []

OR28 Operations & Helpdesk - Bill printing & dispatch (other

[] [] [] [] [] [] [] [] [] [] [] [] [] []

OR29 Customer Services - (Other) [] [] [] [] [] [] [] [] [] [] [] [] [] []


[] [] [] [] [] [] [] [] [] [] [] [] [] []

WS04 Commercial Lawyer - Access Support

[] [] [] [] [] [] [] [] [] [] [] [] [] []

WS05 Fixed Billing - IAA Access [] [] [] [] [] [] [] [] [] [] [] [] [] []

Totals [] [] [] [] [] [] [] [] [] [] [] [] [] []

Total Package cost 193.55 141.40 116.27 95.79 79.96 39.79 23.69 21.02 17.62 26.90 23.64 20.84 18.28 5.53




Page 140 of 167


Table 76: Current and proposed WDSL charges

Chargeable activity Approved/Orde

red in 2009

Approved/Ordered in January

2011 (or currently

implemented)

Batelco's

submitted

charges in April

2011

Evolution of

submitted as

compared to

Approved/

Ordered


Wholesale DSL- Residential in BD in BD


256 kbit/s (2 GB) 7.000 6.210 6.070 -2.3%

512 kbit/s (8 GB) 14.084 10.310 8.980 -12.9%

640 kbit/s (2 GB) 6.450 6.260 -2.9%

640 kbit/s (5 GB) 11.634 8.420 7.650 -9.1%

1.024 Mbit/s (4 GB) 8.010 7.370 -8.0%

1.024 Mbit/s (8 GB) 10.630 9.230 -13.2%

1.024 Mbit/s (15 GB) 20.405 15.230 12.490 -18.0%

2.048 Mbit/s (15 GB) 15.880 12.990 -18.2%

2.048 Mbit/s (20 GB) 25.410 19.160 15.230 -20.5%

3.072 Mbit/s (8 GB) 10.410

4.096 Mbit/s (25 GB) 31.180 23.740 18.640 -21.5%

6.144 Mbit/s (15 GB) 15.630

8.192 Mbit/s (25 GB) 21.590

8.192 Mbit/s (40 GB) 46.960 36.200 27.620 -23.7%

8.192 Mbit/s (60 GB) 49.310 36.920 -25.1%

8.192 Mbit/s (90 GB) 51.840

10.240 Mbit/s (50 GB) 56.971 44.060 33.270 -24.5%

10.240 Mbit/s (80 GB) 63.740 47.230 -25.9%

10.240 Mbit/s (120 GB) 67.100

16.384 Mbit/s (80 GB) 86.970 67.660 50.220 -25.8%

16.384 Mbit/s (100 GB) 80.780 59.520 -26.3%

16.384 Mbit/s (150 GB) 84.980

Wholesale DSL- Business Threshold - Cost with CPE in BD in BD


256 kbit/s without CPE (2.5 GB) 9.230 6.540 5.530 -15.4%

256 kbit/s (5 GB) 19.240 12.320 18.280 +48.4%

512 kbit/s (10 GB) 23.840 15.900 20.840 +31.1%

1.024 Mbit/s (15 GB) 28.800 19.800 23.640 +19.4%

2.048 Mbit/s (20 GB) 34.480 24.300 26.900 +10.7%

4.096 Mbit/s (130 GB) 130.660 removed 79.960

6.144 Mbit/s (160 GB) 158.980 removed 95.790



Page 141 of 167

8.192 Mbit/s (200 GB) 195.780 removed 116.270

10.240 Mbit/s (250 GB) 241.060 removed 141.400

16.384 Mbit/s (350 GB) 334.460 removed 193.550

Wholesale DSL- Business Flat rate - Cost with CPE in BD in BD


256kbit/s (Flat) 14.230 12.560 17.620 +40.3%

512 kbit/s without CPE (Flat) 14.660

512 kbit/s (Flat) 29.270 18.650 21.020 +12.7%

1.024 Mbit/s (Flat) 41.100 23.920 23.690 -1.0%

2.048 Mbit/s (Flat) 74.770 48.410 39.790 -17.8%

4.096 Mbit/s (Flat) 97.390

6.144 Mbit/s (Flat) 118.450

8.192 Mbit/s (Flat) 139.510

10.240 Mbit/s (Flat) 155.920

16.384 Mbit/s (Flat) 191.190

Over the threshold charge per incremental GB (Usage tariffs DSL.8)

0.848 0.465 0.465 +0.0%

Notes: The packages and charges written in blue colour were introduced after the RO Order of 25 January 2011 (‘2011 RO Order’).

It would appear that the WDSL-Residential 2.048 Mbit/s (15 GB) was mistakenly priced at BD15.230 by Batelco in its Schedule 3 instead of the BD 15.880 of the 2011 RO Order.


Review of the submitted charges for the WDSL service

New wholesale packages since the publication of the 2011 RO on 25 January 2011

As Batelco proposed the launch of new retail DSL packages in the first semester of 2011, 394.

it also proposed equivalent wholesale packages in its RO:

a. several new business wholesale DSL packages with unlimited usage were added

to the RO in relation to the introduction of flat plans for retail business users;

b. several new residential wholesale DSL and residential Bitstream packages were

added to the RO in relation to the ‘Value Packages’ launched by Batelco.

Data usage units, data transfer units and appropriate conversion

The Authority notes Batelco’s incorrect use of data transfer units. To avoid confusion, the 395.

unit convention of the International System of Units (‘SI’) should be respected. Batelco is

therefore required to align its RO to the following name and conversion conventions:



Page 142 of 167

Table 77: Data usage units and conversion in bits

SI unit name SI

symbol conversion in bits Comments (IEC 60027 standard)

Kilobit

kbit

(NB: k

lower

case)

1,000 = 103

Not to be confused with kibibit (symbol: Kibit)

which is equal to 1,024 bits

(NB: K uppercase)

Megabit Mbit 1,000,000 = 106

Not to be confused with mebibit (symbol: Mibit)

which is equal to 1,048,576 bits

Gigabit Gbit 1,000,000,000 = 109 Not to be confused with gibibit (symbol: Gibit)

which is equal to 1,073,741,824 bits

Kilobyte

kb

(NB: k

lower

case)

8,000 = 8 × 103

Not to be confused with kibibyte (symbol: KiB)

which is equal to 8,192 bits

(NB: K uppercase)

Megabyte MB 8,000,000 = 8 × 106

Not to be confused with mebibyte per second

(symbol: MiB) which is equal to 8,388,608 bits

Gigabyte GB 8,000,000,000 = 8 × 109

Not to be confused with gibibyte per second

(symbol: GiB) which is equal to 8,589,934,592 bits

Source: International System of Units, IEC 60027

Table 78: Data transfer units and conversion in bits per second

SI unit name SI

symbol

conversion bits per

second Comments (IEC 60027 standard)

kilobit per second

kbit/s

(NB: k

lower

case)

1,000 = 103

Not to be confused with kibibit per second (symbol:

Kibit/s) which is equal to 1,024 bits per second

(NB: K uppercase)

megabit per second Mbit/s 1,000,000 = 106

Not to be confused with mebibit per second

(symbol: Mibit/s) which is equal to 1,048,576 bits

per second

gigabit per second Gbit/s 1,000,000,000 = 109

Not to be confused with gibibit per second (symbol:

Gibit/s) which is equal to 1,073,741,824 bits per

second

kilobyte per second

kB/s

(NB: k

lower

case)

8,000 = 8 × 103

Not to be confused with kibibyte per second

(symbol: KiB/s) which is equal to 8,192 bits per

second (NB: K uppercase)

megabyte per second MB/s 8,000,000 = 8 × 106

Not to be confused with mebibyte per second

(symbol: MiB/s) which is equal to 8,388,608 bits

per second

gigabyte per second GB/s 8,000,000,000 = 8 × 109

Not to be confused with gibibyte per second

(symbol: GiB/s) which is equal to 8,589,934,592

bits per second

Source: International System of Units, IEC 60027

The Authority further requires Batelco to be more specific in its use of the units in its 396.

submissions. This includes the following examples:

a. An E1 link has a data transfer speed of 2.048 Mbit/s and not of ‘2mb’, ‘2M’ or

‘2MB’;

b. The data transfer speed of WDSL and Bitstream packages should be noted

16.384 Mbit/s, 10.240 Mbit/s, 8.192 Mbit/s, 6.144 Mbit/s, 4.096 Mbit/s, 2.048



Page 143 of 167

Mbit/s and 1.024 Mbit/s instead of respectively‘16 MB’, 10 MB, ‘8 MB’, ‘6 MB’, ‘4

MB’, ‘2MB’ and ‘1 MB’.

Adherence to these naming and conversion conventions would limit the risk of calculation 397.

errors.

Access Port (MSAN Combo Cost)

In 2009, the monthly cost per access port is equal to BD [] which is derived by dividing 398.

the total FAC cost of MSAN combo data cards (AN17 [MSAN Combo Card - DATA]) of BD

[] by the number of retail and wholesale lines at the end of 2009 ([] customers). The

Authority also notes that legacy DSLAMs (AN04 [Broadband access equipment -

DSLAMs]) are no longer used in 2009; they have been decommissioned.

Table 79: Access port cost for WDSL and Bitstream

Port cost

2009 2008

Total Monthly

unit cost

Implied #

of port Total

Monthly

unit cost

Implied #

of port

AN17 MSAN Combo Card - DATA

(Bitstream, WSDSL and BB ) [] [] [] [] [] []

AN04 [Broadband access equipment -

DSLAMs] - - - [] [] []

Total [] [] [] [] [] []

* Due to the uncertainty regarding the forward-looking level of the unit port cost, the Authority had set it to BD [] per month in the 2011 RO Order (paragraphs 405-409 and 448-449)

Source: The Authority based on Batelco's FAC regulatory accounts and RO submissions

Core transmission

As per the 2011 RO Order (paragraphs 410-413), Batelco allocates the cost of MPLS 399.

transmission to broadband packages based on the number of equivalent subscribers in

each package (equivalent packages with an uncontended speed of 1,024 kbit/s). As seen

in the following table, the unit cost of core MPLS transmission has decreased by []%

between 2008 and 2009.

Table 80: Access port cost for WDSL and Bitstream

2009

2008 as per 25

January RO

Order

Evolution

2009/2008

Transmission costs BB & WSDSL& Bitstream [] [] []

Total number of channels [] [] []

Total Equivalent Customers [] [] []

Cost per 1Mb @ 1:1 [] [] []

Monthly Cost uncontended 1 Mbps [] [] []

Res - Monthly cost for 1 Mbps contended [] [] []

Bus - Monthly cost for 1 Mbps contended [] [] []

Source: The Authority based on Batelco's RO submissions

While the Authority approves the equivalent subscriber approach to allocate core MPLS 400.

costs to broadband, WDSL and Bitstream packages, it is not in a position to assess



Page 144 of 167

whether the upstream allocation of core MPLS based on effective bandwidth calculation is

fair and reasonable. The Authority intends as part of the next RO to review the effective

bandwidth calculation approach to ensure an appropriate NGN core network cost

allocation.65

MPLS BRAS, INET Platform and International Uplinks

The MPLS BRAS cost of BD []/port/month proposed by Batelco reconciles back to the 401.

regulatory accounts and is accepted by the Authority.

As the 2009 cost of the INET Platform and international uplinks per GB had already been 402.

reviewed by the Authority and introduced in the RO following Batelco’s launch of new

business packages with unlimited usage,66

the cost remains unchanged at BD 0.465 per

GB.

Cost of CPE included in business packages

The Authority notes that Batelco submitted a monthly business CPE cost of BD 11.59 403.

which is derived from the network element “AN 09 CPE –Data Equipment” included in the

2009 regulatory accounts. The Authority refers here to its decision in the 2011 RO Order

(paragraph 451) where it set the monthly cost of CPE at BD 4.

The Authority remains of the view that the cost adjustment is conservative especially in 404.

light of Batelco’s response67

to the article 53 information request dated 16 June 2011

where it provided a list of CPEs included in AN09, their current prices and their average

economic lives.

Copper contribution

In the 2011 RO Order, the Authority set the copper contribution for broadband access 405.

services at 50% of the LLU copper cost. This represents a monthly cost of BD 2.04 per

broadband line. While the Authority’s decision stated that the contribution would remain

50% of the LLU copper cost for the next three years,68

Batelco has included a different

copper contribution in the cost stacks of wholesale DSL packages (BD 2 for residential

packages and BD 1.5 for business packages).

The Authority reasserts its decision that the copper contribution should be equal to 50% of 406.

the LLU copper cost which currently translates to BD 2.04 per broadband line.

Wholesale activities cost

The Authority notes that Batelco intends to recover a total of BD [] for the cost of 407.

wholesale activities which, according to Batelco, was incurred in the provision of WDSL in

2009. This amount translates into a monthly cost of BD [] per residential WDSL

65 The Authority refers here to the Effective Bandwidth calculation section in the Annex of its letter dated 2 August

2011 (Ref: MCD08/11/113 – 2010 APM questions) for example. 66

The Authority refers to its letter “NCT 25 Business broadband Retail Tariff Notification” (ref: MCD 06/11/076), dated 2 June 2011. 67

20110808 Updated response to Article 53 related to Batelco 2011 RO submission - final.docx 68

2011 RO Order, paragraphs 452-467.



Page 145 of 167

subscriber and BD [] per business WDSL subscriber. The following table presents the

breakdown of cost by wholesale activity:

Table 81: Wholesale activities cost related to WDSL as submitted by Batelco

Wholesale Costs Amount in 2009

(in BD)

OR05a Residential & Inet Helpdesk - Residential (881188) Oth []

OR05b Residential & Inet Helpdesk - Business (881177) Others []

OR27 Billing (Others) []

OR28 Operations & Helpdesk - Bill printing & dispatch (other []

OR29 Customer Services - (Other) []

OR72 Revenue Assurance & Fraud Management- (other) []

WS04 Commercial Lawyer - Access Support []

WS05 Fixed Billing - IAA Access []

Total []


The Authority notes that Batelco has removed WS01, WS02, WS03 and OR06 costs from 408.

the WDSL cost stack following the RO Order dated 24 May 2009. It appears that Batelco

has re-allocated the portion of WS01, WS02 and WS03 costs previously allocated to

WDSL to other access products.

The Authority observes that the unit cost of two non-network activities which Batelco 409.

claims to be common to both retail and wholesale appear to be greater for wholesale than

for retail DSL lines. The combined monthly unit cost of ‘OR28 Operations & Helpdesk - Bill

printing & dispatch (other)’ and ‘OR29 Customer Services - (Other)’ is indeed BD []

greater for WDSL lines than it is for retail broadband lines.69

As the cost allocation driver of

these non-network activities is, according to Batelco, the quantity of customers, the

Authority fails to understand the source of this difference. While the difference is not

significant when the overall cost of WDSL is considered, the Authority requires Batelco to

explain this point.

The Authority notes that the following one-off charges related to provision of the WDSL 410.

service are not taken into account when calculating wholesale activities cost:

a. DSL.4 - Charges for rejects, reversals, and withdrawals associated with DSL

Transfer, Invalid Transfer: BD 5 per event; and

b. DSL.5 - Fee for a change of speed associated with DSL Transfer if applicable: BD

5 per event.

As for any other wholesale services (see duct access section), one-off charges represent 411.

a revenue which should be subtracted from the cost stack of the service to avoid over-

recovery of cost. As the Authority does not have any information on the 2009 revenues

collected from the above charges, it has decided not to make any such adjustments this

time.

While the Authority has concerns over the wholesale activities costs related to WSDL (e.g. 412.

their amount and how they have been derived), it has decided to accept the wholesale

cost as submitted by Batelco for the purpose of the review of the RO. However the

69 Cost comparison with Batelco’s NCT 25 submission dated 25 April 2009 (GCL/147/11 - NCT 25 - Business

Broadband).



Page 146 of 167

Authority intends to revisit this particular aspect in detail as part of the next RO (see

paragraphs 74-77 above).

Draft Order fair, reasonable and non-discriminatory charges for WDSL service

The reviewed cost stacks and associated draft Order FRND charges for the WDSL service 413.

are presented in the following tables:



Page 147 of 167

Table 82: Draft Order FRND cost stack for the residential WDSL service

Costing Elements - Per line Residential

Speed (contention ratio of 15:1) 16.384 Mbit/s

16.384 Mbit/s

16.384 Mbit/s

10.240 Mbit/s

10.240 Mbit/s

10.240 Mbit/s

8.192 Mbit/s

8.192 Mbit/s

8.192 Mbit/s

8.192 Mbit/s

6.144 Mbit/s

4.096 Mbit/s

3.072 Mbit/s

2.048 Mbit/s

2.048 Mbit/s

1.024 Mbit/s

1.024 Mbit/s

1.024 Mbit/s

640 kbit/s

640 kbit/s

512 kbit/s

256 kbit/s

Included usage in GB 150 GB 100 GB 80 GB 120 GB 80 GB 50 GB 90 GB 60 GB 40 GB 25 GB 15 GB 25 GB 8 GB 20 GB 15 GB 15 GB 8 GB 4 GB 5 GB 2 GB 8 GB 2 GB

Network Costs

MSAN [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

Transmission (MPLS) [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

BRAS [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

INET Platform [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

International uplinks [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

Copper contribution 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04

Totals [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

Wholesale Costs

OR05a Res. & Inet Helpdesk – Residential.(881188) Other

[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

OR27 Billing (Others) [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

OR28 Op. & Helpdesk - Bill print & dispatch (other

[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

OR29 Customer Services - (Other)

[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

OR72 Revenue Ass. & Fraud Management- (other)

[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

WS04 Legal & Regulatory Affairs - Access Support

[] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

WS05 Fixed Billing - IAA Access [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

Totals [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

Total Package cost 82.829 59.563 50.256 65.877 47.264 33.304 50.920 36.960 27.654 20.674 15.023 18.679 10.270 15.355 13.029 12.530 9.273 7.411 7.690 6.294 9.023 6.107




Page 148 of 167

Table 83: Draft Order FRND cost stack for the business WDSL service

Costing Elements - Per line Business


10.240 Mbit/s

8.192 Mbit/s

6.144 Mbit/s

4.096 Mbit/s

2.048 Mbit/s

1.024 Mbit/s

512 kbit/s

512 kbit/s without

CPE

256kbit/s

2.048 Mbit/s

1.024 Mbit/s

512 kbit/s

256 kbit/s

256 kbit/s without

CPE

Included usage in GB FLAT FLAT FLAT FLAT FLAT FLAT FLAT FLAT FLAT FLAT 20 GB 15 GB 10 GB 5 GB 2.5 GB

Usage for calculation in GB [] [] [] [] [] [] [] [] [] []

Network Costs

MSAN [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

Transmission (MPLS) [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

BRAS [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

INET Platform [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

International uplinks [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

CPE- Biz [] [] [] [] [] [] [] [] no CPE [] [] [] [] [] no CPE

Copper contribution 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04

Totals [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

Wholesale Costs

OR05b Res. & Inet Helpdesk - Business (881177) Other

[] [] [] [] [] [] [] [] [] [] [] [] [] [] []

OR27 Billing (Others) [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

OR28 Op. & Helpdesk - Bill print & dispatch (other

[] [] [] [] [] [] [] [] [] [] [] [] [] [] []

OR29 Customer Services - (Other) [] [] [] [] [] [] [] [] [] [] [] [] [] [] []


[] [] [] [] [] [] [] [] [] [] [] [] [] [] []

WS04 Legal & Regulatory Affairs - Access Support

[] [] [] [] [] [] [] [] [] [] [] [] [] [] []

WS05 Fixed Billing - IAA Access [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

Totals [] [] [] [] [] [] [] [] [] [] [] [] [] [] []

Total Package cost 186.491 152.962 137.132 116.649 96.166 47.764 23.563 18.442 14.442 13.555 19.845 16.583 13.789 11.229 6.065




Page 149 of 167

Table 84: Draft Order FRND charges for WDSL service

Chargeable activity

Approved/O

rdered in

January

2011

(or currently

implemente

d)

TRA's Draft

Order FRND

charges

Evolution of

Draft Order

FRND as

compared to

Approved/

Ordered


Wholesale DSL- Residential in BD


256 kbit/s (2 GB) 6.210 6.107 -1.7%

512 kbit/s (8 GB) 10.310 9.023 -12.5%

640 kbit/s (2 GB) 6.450 6.294 -2.4%

640 kbit/s (5 GB) 8.420 7.690 -8.7%

1.024 Mbit/s (4 GB) 8.010 7.411 -7.5%

1.024 Mbit/s (8 GB) 10.630 9.273 -12.8%

1.024 Mbit/s (15 GB) 15.230 12.530 -17.7%

2.048 Mbit/s (15 GB) 15.880 13.029 -18.0%

2.048 Mbit/s (20 GB) 19.160 15.355 -19.9%

3.072 Mbit/s (8 GB) 10.410 10.270 -1.3%

4.096 Mbit/s (25 GB) 23.740 18.679 -21.3%

6.144 Mbit/s (15 GB) 15.630 15.023 -3.9%

8.192 Mbit/s (25 GB) 21.590 20.674 -4.2%

8.192 Mbit/s (40 GB) 36.200 27.654 -23.6%

8.192 Mbit/s (60 GB) 49.310 36.960 -25.0%

8.192 Mbit/s (90 GB) 51.840 50.920 -1.8%

10.240 Mbit/s (50 GB) 44.060 33.304 -24.4%

10.240 Mbit/s (80 GB) 63.740 47.264 -25.8%

10.240 Mbit/s (120 GB) 67.100 65.877 -1.8%

16.384 Mbit/s (80 GB) 67.660 50.256 -25.7%

16.384 Mbit/s (100 GB) 80.780 59.563 -26.3%

16.384 Mbit/s (150 GB) 84.980 82.829 -2.5%



256 kbit/s without CPE (2.5 GB) 6.540 6.065 -7.3%

256 kbit/s (5 GB) 12.320 11.229 -8.9%

512 kbit/s (10 GB) 15.900 13.789 -13.3%

1.024 Mbit/s (15 GB) 19.800 16.583 -16.2%

2.048 Mbit/s (20 GB) 24.300 19.845 -18.3%

4.096 Mbit/s (130 GB) removed removed -







256kbit/s (Flat) 12.560 13.555 7.9%

512 kbit/s without CPE (Flat) 14.660 14.442 -1.5%

512 kbit/s (Flat) 18.650 18.442 -1.1%



Page 150 of 167

1.024 Mbit/s (Flat) 23.920 23.563 -1.5%

2.048 Mbit/s (Flat) 48.410 47.764 -1.3%

4.096 Mbit/s (Flat) 97.390 96.166 -1.3%

6.144 Mbit/s (Flat) 118.450 116.649 -1.5%

8.192 Mbit/s (Flat) 139.510 137.132 -1.7%

10.240 Mbit/s (Flat) 155.920 152.962 -1.9%

16.384 Mbit/s (Flat) 191.190 186.491 -2.5%

Over the threshold charge per incremental GB (Usage tariffs

DSL.8) 0.465 0.465 0.0%

Notes: The packages and charges written in blue colour were introduced after the 2011 RO Order. It would appear that the WDSL-Residential 2.048 Mbit/s (15 GB) was mistakenly priced at BD15.230 by Batelco in its

Schedule 3 instead of the BD 15.880 of the 2011 RO Order. Source: The Authority



Page 151 of 167

12.2 Bitstream service (2-12)

Bitstream service definition

In its RO, Batelco defines the Bitstream service as follows: 414.

“The Bitstream Service is an access service which enables the

Access Seeker to provide high speed services to its End Users via

a digital pathway across the Access Provider’s network. The digital

pathway consists of one or more ADSL Links between End User

premises and one or more Aggregation Links.

Available To: Holders of an appropriate Individual

Telecommunications or Class License.

Traffic: Traffic permitted by the licenses held by Access Seekers.


Table 85: Diagram of Bitstream service

Source: Batelco’s submission, 20110407 Annex K Bitstream 2009.xlsx


Batelco provided the following cost stacks to support the Bitstream charges in Schedule 3 415.

of its RO submission.

70 Batelco’s RO, Schedule 1 2-12 (BITSTREAM SERVICE)



Page 152 of 167

Table 86: Cost stack submitted by Batelco for the residential Bitstream service

Network Cost Res -

16MB

Res -

10MB

Res -

8MB

Res -

4MB

Res -

2MB

Res -

1MB

Res -

640

Res -

512

Res -

256

Copper contribution [] [] [] [] [] [] [] [] []

Access Port (MSAN Combo

Cost) [] [] [] [] [] [] [] [] []

Core Trans [] [] [] [] [] [] [] [] []

IP Link (Router) [] [] [] [] [] [] [] [] []

Fibre Cable [] [] [] [] [] [] [] [] []

Total Network Cost 10.92 7.93 6.93 4.94 3.94 3.44 3.25 3.19 3.07


Table 87: Cost stack submitted by Batelco for the business Bitstream service

Network Cost Bus -

16MB V

Bus -

10MB V

Bus -

8MB V

Bus -

6MB V

Bus -

4MB V

Bus -

2MB V

Bus -

1MB V

Bus -

640 V

Bus -

512 V

Bus -

256 V

Copper contribution [] [] [] [] [] [] [] [] [] []

Access Port (MSAN

Combo Cost) [] [] [] [] [] [] [] [] [] []

Core Trans [] [] [] [] [] [] [] [] [] []

IP Link (Router) [] [] [] [] [] [] [] [] [] []

Fibre Cable [] [] [] [] [] [] [] [] [] []

Total Network Cost 17.40 11.79 9.92 8.05 6.18 4.31 3.38 3.03 2.91 2.68


Table 88: Cost stack submitted by Batelco for the ‘maintaining the relationship’ charge (item BS.3 of Batelco’s

schedule 3)

WS Activities Total cost

OR05b Residential & Inet Helpdesk - Business (881177) Others []

OR05c Residential & Inet Helpdesk - Technical Support(900001 []

WS01 Wholesale & Carrier Relations - Access Product Management []

WS02 Commercial Operation- Access []

WS03 Costing & Regulatory Accounting - Reg & WS Support Access []

WS04 Commercial Lawyer - Access Support []

WS05 Fixed Billing - IAA Access []

Total Cost []

Number of Bitstream OLOs []

maintain relationship fee per month 4,029




Page 153 of 167


Table 89: Approved and proposed Bitstream charges

Chargeable activity Approved in

2009

Approved/Ordered in

January 2011

(or currently implemented

)

Batelco submitted charges in April 2011

Evolution of submitted as compared to Approved/ Ordered

Bitstream (2-12)


in BD


256 kbit/s 3.7890 3.640 3.0700 -15.7%

512 kbit/s 4.0760 3.800 3.1900 -16.1%

640 kbit/s s 4.2190 3.880 3.2500 -16.2%

1 Mbit/s 4.6480 4.130 3.4400 -16.7%

2 Mbit/s 5.7930 4.780 3.9400 -17.6%

3 Mbit/s 5.430

4 Mbit/s 8.0840 6.090 4.9400 -18.9%

6 Mbit/s 7.390

8 Mbit/s 12.6650 8.700 6.9300 -20.3%

10 Mbit/s 14.9560 10.010 7.9300 -20.8%

16 Mbit/s 15.7200 13.920 10.9200 -21.6%

Bitstream- Business


in BD

256 kbit/s 3.861 3.780 2.680 -29.1%

512 kbit/s 4.219 4.090 2.910 -28.9%

640 kbit/s 4.398 4.240 3.030 -28.5%

1 Mbit/s 4.934 4.700 3.380 -28.1%

2 Mbit/s 6.366 5.920 4.310 -27.2%

4 Mbit/s 9.229 8.370 6.180 -26.2%

6 Mbit/s 12.090 10.820 8.050 -25.6%

8 Mbit/s 14.956 13.270 9.920 -25.2%

10 Mbit/s 17.819 15.720 11.790 -25.0%

16 Mbit/s 26.390 23.070 17.400 -24.6%

One-off charges applicable to Bitstream in BD

BS.3 - Maintaining relationship charge 1552.000 4029.000 +160%

BS.5 - Charges for rejects, reversals, and withdrawals associated with Bitstream Order

5.000 5.000 5.000 +0%

BS.6 - Charges for a Change of Speed 5.000 5.000 5.000 +0%

BS.7 - External Removal charge 5.000 5.000 5.000 +0%

Notes: The packages and charges written in blue colour were introduced after the 2011 RO Order. Source: The Authority from Batelco’s submission

Review of the submitted charges for the Bitstream service

Network cost

71 Footnote added at the final Order stage: contention ratio should be read as 8:1.



Page 154 of 167

The costs of access port and MPLS core transmission are common for both WDSL and 417.

Bitstream. The Authority notes that these costs are in line in the cost stacks for both

services.

The copper contribution has been re-adjusted at BD 2.04 per month and per line by the 418.

Authority (see above discussion in relation to WSDL).

The IP Link (Router) and Fibre Cable items represent the cost associated with providing 419.

the physical backhaul link to the OLO. The Authority notes that Batelco has increased the

number of end-users per router (Giga Ethernet) and cable from 500 in the 2010 RO

submission to 1,000 in this submission. As per last year’s RO order, the Authority has

adjusted the asset life of the fibre cable from 10 years to 20 years. The return on capital

employed has been calculated on the basis of a NBV/GBV ratio of 60%.

With the above adjustments, the IP Link (Router) cost and the fibre cable cost have been 420.

determined to be BD []/port/month and BD 0.07/port/month respectively.

‘Maintaining relationship’ charge

Batelco intends to recover BD 48,351 of wholesale activities cost from the Bitstream 421.

service through the ‘maintaining the relationship’ charge (Schedule 3- item BS.3) which

Batelco sets at BD 4,029 per month. This assumes that only one OLO purchases the

Bitstream service. This represents an increase of 160% to the current charge of BD 1,552.

The submitted ‘maintaining relationship’ charge translates into a monthly unit cost of BD 422.

[] per Bitstream line. This wholesale cost is respectively 10% and 35% greater than the

wholesale activity cost of a residential WDSL line (BD []) and of a business WDSL line

(BD[]).

The Authority understands that the OLO’s subscribers are never in direct contact with 423.

Batelco’s ‘Inet Helpdesk’. In so far as the OLO’s customer service representatives call

Batelco’s technical support through a dedicated number (900001) the Authority considers

that the cost of ‘OR05b Residential & Inet Helpdesk - Business (881177) Others’ should

be excluded from the cost stack of the ‘maintaining relationship’ charge. The cost of

‘OR05c Residential & Inet Helpdesk - Technical Support (900001)’ should however

remain.

As the cost of Batelco’s technical support helpdesk is now allocated to the ‘maintaining 424.

relationship’ charge, the charge BS.12 (INET Helpdesk premium rate call) of 250 fils per

minute should be removed from the RO.

The Authority also notes that there are several one-off charges in the RO which cover 425.

wholesale costs incurred by Batelco in the provision of the Bitstream service. This includes

the following chargeable activities:



Page 155 of 167

Table 90: One-off charges related to the Bitstream service

Item Chargeable Activity Effective Date Charge

(BD) Charge Basis

BS.5 Charges for rejects, reversals, and withdrawals associated with Bitstream Order

1 February 2011 5 Per event

BS.6 Charges for Change of Speed 1 February 2011 5 Per event

BS.7 External Removal charge 1 February 2011 5 Per event

BS.9 Port Cessation Charge 12 July 2006 5 Per event

BS.11 Charges for suspension of Bitstream Service at Access Seeker’s request

12 July 2006 5 Per act of suspension and per act of connection

Source: Batelco’s RO

For the same reasons as discussed in the WDSL section and the duct section of this 426.

document, the Authority considers that the revenues collected by Batelco for one-off

charges should be subtracted from the cost stack of the Bitstream service. However, as

the Authority does not have any information on the 2009 revenues collected from the

above charges, it has decided not to make any such adjustments this time.

While the Authority has concerns over the wholesale activities costs related to Bitstream 427.

(e.g. their amount and how they have been derived), it has decided to accept the

‘maintaining the relationship charge’ proposed by Batelco [save for the cost associated

with ‘OR05b Residential & Inet Helpdesk - Business (881177) which has been removed for

the reasons set out above]. The Authority also orders the removal of the charge BS.12

(INET Helpdesk premium rate call) of 250 fils per minute from the RO.

While only one OLO was using the Bitstream service to provide broadband accesses to its 428.

customers in 2009, the Authority understands that there are now at least 4 OLOs which

are using the Bitstream service. Consistent with the principle of forward-looking cost, the

Authority has divided the ‘maintaining relationship’ charge by 4. The draft Order FRND

‘maintaining relationship’ charge is set at BD 872.917 per month and now includes the

cost of Batelco’s Technical Support Helpdesk.

As for the WDSL service, the Authority intends to review in detail the wholesale costs 429.

related to the Bitstream service as part of the next RO (see paragraphs 74-77 above).

Draft Order fair, reasonable and non-discriminatory charges for the Bitstream service

The reviewed cost stacks and associated draft Order FRND charges for the Bitstream 430.

service are presented in the following tables:



Page 156 of 167

Table 91: Draft Order FRND charges for the Bitstream service

Chargeable activity

Approved/Ordered in


implemented)

TRA's Draft Order FRND

charges

Evolution of Draft Order

FRND as compared to Approved/

Ordered

Bitstream (2-12)

Bitstream- Residential in BD


256 kbit/s 3.640 3.0641 -15.8%

512 kbit/s 3.800 3.1888 -16.1%

640 kbit/s 3.880 3.2511 -16.2%

1,024 Mbit/s 4.130 3.4381 -16.8%

2.048 Mbit/s 4.780 3.9368 -17.6%

3.072 Mbit/s 5.430 4.4354 -18.3%

4.096 Mbit/s 6.090 4.9341 -19.0%

6.144 Mbit/s 7.390 5.9314 -19.7%

8.192 Mbit/s 8.700 6.9288 -20.4%

10.240 Mbit/s 10.010 7.9261 -20.8%

16.384 Mbit/s 13.920 10.9181 -21.6%



256 kbit/s 3.780 3.173 -16.1%

512 kbit/s 4.090 3.407 -16.7%

640 kbit/s 4.240 3.524 -16.9%

1.024 Mbit/s 4.700 3.874 -17.6%

2.048 Mbit/s 5.920 4.809 -18.8%

4.096 Mbit/s 8.370 6.679 -20.2%

6.144 Mbit/s 10.820 8.549 -21.0%

8.192 Mbit/s 13.270 10.419 -21.5%

10.240 Mbit/s 15.720 12.289 -21.8%

16.384 Mbit/s 23.070 17.899 -22.4%


Bitstream in BD

BS.3 - Maintaining relationship charge 1552.000 872.917 -43.8%

BS.12 INET Helpdesk premium rate call (per minute) 0.250 removed


72 Footnote added at the final Order stage: contention ratio should be read as 8:1.



Page 157 of 167

Table 92: Draft Order FRND cost stacks for the residential Bitstream service

Costing Elements - Per line Residential


10.240 Mbit/s

8.192 Mbit/s

6.144 Mbit/s

4.096 Mbit/s

3.072 Mbit/s

2.048 Mbit/s

1.024 Mbit/s

640 kbit/s

512 kbit/s

256 kbit/s

Network Cost

Copper contribution 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04

Access Port (MSAN Combo Cost) 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73

Core Trans 7.98 4.99 3.99 2.99 1.99 1.50 1.00 0.50 0.31 0.25 0.12

IP Link (Router) 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15

Fibre Cable 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

Total Network Cost 10.918 7.926 6.929 5.931 4.934 4.435 3.937 3.438 3.251 3.189 3.064


Table 93: Draft Order FRND cost stacks for the business Bitstream service

Costing Elements - Per line Business


10.240 Mbit/s

8.192 Mbit/s

6.144 Mbit/s

4.096 Mbit/s

2.048 Mbit/s

1.024 Mbit/s

640 kbit/s 512 kbit/s 256 kbit/s

Network Cost

Copper contribution 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04 2.04

Access Port (MSAN Combo Cost) 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73 0.73

Core Trans 14.96 9.35 7.48 5.61 3.74 1.87 0.93 0.58 0.47 0.23

IP Link (Router) 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15

Fibre Cable 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02

Total Network Cost 17.899 12.289 10.419 8.549 6.679 4.809 3.874 3.524 3.407 3.173




Page 158 of 167


Batelco

Current and proposed WDSL charges table

In relation to the note to Table 76 above (page 140) concerning a potential mistake in the 431.

RO price of the 2.048 Mbit/s WDSL Residential package (15 GB), Batelco notes that the

charge is in accordance with the Authority’s letter dated 16 October 2011 (ref:

MCD/10/11/141) related to the notified control tariff 34 “Consumer broadband subsidy

offer”.


Batelco agrees that the adherence to international standard references for units is 432.

appropriate and also notes that, for greater precision and consistency, the mention “up to”

should be used to describe WDSL access speeds as the service does not offer dedicated

capacity.

Core transmission

Batelco indicates that it will be using actual data usage readings to allocate NGN core 433.

network costs in the 2011 regulatory accounts onwards. It also expects the difference with

the current theoretical calculation based on effective bandwidth to be minimal.

Cost of CPE included in the business packages

Batelco indicates that the cost allocation of CPE will be reviewed in 2012 and, as a result, 434.

the CPE unit cost may increase.

Wholesale activity cost

In relation to paragraph 409, Batelco explains that the difference between the wholesale 435.

and retail unit cost of the two non-network activities is due to the use of slightly different

customer base when the retail and the wholesale unit cost were calculated.

In relation to paragraph 423, Batelco points out that the Batelco Inet Helpdesk can be 436.

directly contacted by the end-user of Bitstream accesses as provided by clause 9.6 of the

Bitstream service description. Batelco further says that “The TRA would therefore have

amend clause 9.6 before making any proposed charges here and Batelco would have to

modify its internal process accordingly where bitstream support will be treated as any

standard customer”, (Batelco’s response paragraph 132).



Page 159 of 167


Current and proposed WDSL charges table

The Authority maintains that Batelco appears to have mistakenly reported the 25 January 437.

2011 RO ordered charge for the 2.048 Mbit/s WDSL Residential package (15 GB) to its

published RO schedule 3. Instead of recognizing a genuine mistake, Batelco seems to

justify such error by making reference to a letter73

in which the Authority reproduced the

WDSL charges as listed in Batelco’s RO schedule 3 at the time. The Authority notes that

the mistake was already present in Batelco’s schedule 3 prior to the aforementioned letter.


The Authority welcomes Batelco’s willingness to adhere to international standard 438.

references for units and, as correctly pointed out, expects that Batelco will use the mention

‘up to’ when listing the charges of its WDSL and Bitstream packages in its published RO.

Core transmission

The Authority has realised that there was an error in the contention ratios used by Batelco 439.

in its RO submission to derive the draft ordered WDSL and Bitstream charges. This error

was not picked up by the Authority in the draft RO Order. Both WDSL and Bitstream

business packages at 256 kbit/s were calculated based on a 8:1 contention ratio when it

should have been based on a 15:1 contention ratio. This error has a minimal impact on the

cost of core transmission (+[]%). With the exception of the 256 kbit/s business

packages, the FRND charges calculated in the draft Order remain stable. The corrected

table presenting the final estimates of core transmission costs can be found below.

Table 94: Corrected estimates of core transmission costs (correction of Table 80 page 143)

2009

CORRECTED

2008 as per 25 January RO Order

Evolution 2009/2008

Transmission costs BB & WSDSL& bitstream [] [] []

Total number of channel [] [] []

Total Equivalent Customers [] [] []

Cost per 1Mb @ 1:1 [] [] []

Monthly Cost uncontended 1 Mbps [] [] []

Res - Monthly cost for 1 Mbps contended (+ Business packages at 256 kbit/s)

[] [] []

Bus - Monthly cost for 1 Mbps contended [] [] []

Source: The Authority based on Batelco's RO submissions

The Authority welcomes the use of actual network readings by Batelco for the NGN cost 440.

allocation in future regulatory accounts.

Cost of CPE included in the business packages

73 NCT 34 Consumer Broadband Subsidy Offer, a letter sent by the Authority to Batelco on 16 October 2011 (ref:

MCD 10 11 141)



Page 160 of 167

The Authority remains of the view that it is appropriate to correct the submitted cost of 441.

CPE.

Wholesale activity cost

In relation to the difference in the non-network activity unit cost between retail and 442.

wholesale DSL packages, the Authority urges Batelco to be consistent in its submissions.

Such consistency could be easily achieved by producing a report centralising all the

operational data used for cost allocation purposes. Such data report would constitute a

reference to both the Authority and Batelco during the review process of the RO

submission.

In relation to the removal of the Inet helpdesk charge, Batelco did not provide any 443.

evidence that end-users based on Bitstream were directly contacting Batelco’s Inet

Helpdesk. Such evidence could have included, for instance, a detailed breakdown of

incoming traffic to OR05b [Residential & Inet Helpdesk – Business (881177) Other]. While

Batelco explains that, as per clause 9.6 of the Bitstream service description, Batelco Inet

Helpdesk can be directly contacted by end-users, this does not appear to be the case in

practice. As a result and in the absence of empirical evidence, it remains appropriate to

exclude the cost of [OR05b Residential & Inet Helpdesk - Business (881177) Others] from

the cost stack of the ‘maintaining relationship’ charge. Contrary to what Batelco suggests

in its response, this exclusion only impacts the recovery of Inet helpdesk costs and does

not have any kind of incidence on Batelco’s operational processes.

However the recovery of the cost of Batelco’s technical support helpdesk [OR05c 444.

Residential & Inet Helpdesk - Technical Support (900001)] is relevant for the Bitstream

service as OLOs can contact Batelco as required. This cost is now allocated to the

‘maintaining relationship’ charge as proposed.

The Authority orders the removal of the chargeable activity BS.12 (INET Helpdesk 445.

premium rate call) of 250 fils per minute from the RO.



Page 161 of 167

Final Order FRND charges for WDSL service

The only change made to the draft ordered charges is for the 256 kbit/s business 446.

packages to which the correct contention ratio of 15:1 has been applied. The Order FRND

charges for the WDSL service are presented in the following table:

Table 95: Order FRND charges for WDSL service

Chargeable activity

Approve

d/

ordered

in

January

2011

(or

currently

impleme

nted)

Batelco's

submitte

d

charges

in April

2011

TRA

FRND

draft

charges

TRA

FRND

final

Order

charges

Evolution

of Order

FRND as

compare

d to

previousl

y

approved

/

ordered


Wholesale DSL- Residential

in BD


up to 256 kbit/s (2 GB) 6.210 6.070 6.107 6.108 -1.6%

up to 512 kbit/s (8 GB) 10.310 8.980 9.023 9.025 -12.5%

up to 640 kbit/s (2 GB) 6.450 6.260 6.294 6.296 -2.4%

up to 640 kbit/s (5 GB) 8.420 7.650 7.690 7.692 -8.6%

up to 1.024 Mbit/s (4 GB) 8.010 7.370 7.411 7.415 -7.4%

up to 1.024 Mbit/s (8 GB) 9.100 9.230 9.273 9.277 1.9%

up to 1.024 Mbit/s (15 GB) 15.230 12.490 12.530 12.534 -17.7%

up to 2.048 Mbit/s (15 GB) 13.010 12.990 13.029 13.037 0.2%

up to 2.048 Mbit/s (20 GB) 19.160 15.230 15.355 15.363 -19.8%

up to 3.072 Mbit/s (8 GB) 10.410 10.270 10.282 -1.2%

up to 4.096 Mbit/s (25 GB) 18.960 18.640 18.679 18.695 -1.4%

up to 6.144 Mbit/s (15 GB) 15.630 15.023 15.047 -3.7%

up to 8.192 Mbit/s (25 GB) 21.590 20.674 20.706 -4.1%

up to 8.192 Mbit/s (40 GB) 36.200 27.620 27.654 27.686 -23.5%

up to 8.192 Mbit/s (60 GB) 37.850 36.920 36.960 36.992 -2.3%

up to 8.192 Mbit/s (90 GB) 51.840 50.920 50.952 -1.7%

up to 10.240 Mbit/s (50 GB) 44.060 33.270 33.304 33.345 -24.3%

up to 10.240 Mbit/s (80 GB) 48.460 47.230 47.264 47.304 -2.4%

up to 10.240 Mbit/s (120 GB) 67.100 65.877 65.917 -1.8%

up to 16.384 Mbit/s (80 GB) 67.660 50.220 50.256 50.320 -25.6%

up to 16.384 Mbit/s (100 GB) 61.660 59.520 59.563 59.627 -3.3%

up to 16.384 Mbit/s (150 GB) 84.980 82.829 82.893 -2.5%



up to 256 kbit/s without CPE (2.5 GB) 6.540 5.530 6.065 5.957 -8.9%

up to 256 kbit/s (5 GB) 12.320 18.280 11.229 11.120 -9.7%

up to 512 kbit/s (10 GB) 15.900 20.840 13.789 13.793 -13.3%

up to 1.024 Mbit/s (15 GB) 19.800 23.640 16.583 16.591 -16.2%

up to 2.048 Mbit/s (20 GB) 24.300 26.900 19.845 19.860 -18.3%





Page 162 of 167






up to 256kbit/s (Flat) 12.560 17.620 13.555 13.447 7.1%

up to 512 kbit/s without CPE (Flat) 14.660 14.442 14.446 -1.4%

up to 512 kbit/s (Flat) 18.650 21.020 18.442 18.446 -1.1%

up to 1.024 Mbit/s (Flat) 23.920 23.690 23.563 23.570 -1.5%

up to 2.048 Mbit/s (Flat) 48.410 39.790 47.764 47.779 -1.3%

up to 4.096 Mbit/s (Flat) 97.390 96.166 96.197 -1.2%

up to 6.144 Mbit/s (Flat) 118.450 116.649 116.695 -1.5%

up to 8.192 Mbit/s (Flat) 139.510 137.132 137.193 -1.7%

up to 10.240 Mbit/s (Flat) 155.920 152.962 153.037 -1.8%

up to 16.384 Mbit/s (Flat) 191.190 186.491 186.612 -2.4%

Over the threshold charge per incremental GB

(Usage tariffs DSL.8) 0.465 0.465 0.465 0.465 0.0%

Notes: The packages and charges written in blue colour were introduced after the 2011 RO Order. Source: The Authority



Page 163 of 167

Final Order FRND charges for Bitstream service

The Order FRND charges for the Bitstream service are presented in the following table: 447.

Table 96: Order FRND charges for the Bitstream service

Chargeable activity

Approved/ ordered in January

2011 (or

currently implement

ed)


TRA FRND draft

charges


charges

Evolution of Order FRND as

compared to

previously approved/ ordered


in BD


up to 256 kbit/s 3.640 3.070 3.064 3.065 -15.8%

up to 512 kbit/s 3.800 3.190 3.189 3.191 -16.0%

up to 640 kbit/s 3.880 3.250 3.251 3.254 -16.1%

up to 1,024 Mbit/s 4.130 3.440 3.438 3.442 -16.7%

up to 2.048 Mbit/s 4.780 3.940 3.937 3.945 -17.5%

up to 3.072 Mbit/s 5.430 4.435 4.447 -18.1%

up to 4.096 Mbit/s 6.090 4.940 4.934 4.950 -18.7%

up to 6.144 Mbit/s 7.390 5.931 5.956 -19.4%

up to 8.192 Mbit/s 8.700 6.930 6.929 6.961 -20.0%

up to 10.240 Mbit/s 10.010 7.930 7.926 7.966 -20.4%

up to 16.384 Mbit/s 13.920 10.920 10.918 10.982 -21.1%



up to 256 kbit/s 3.780 2.680 3.173 3.065 -18.9%

up to 512 kbit/s 4.090 2.910 3.407 3.411 -16.6%

up to 640 kbit/s 4.240 3.030 3.524 3.529 -16.8%

up to 1.024 Mbit/s 4.700 3.380 3.874 3.882 -17.4%

up to 2.048 Mbit/s 5.920 4.310 4.809 4.824 -18.5%

up to 4.096 Mbit/s 8.370 6.180 6.679 6.710 -19.8%

up to 6.144 Mbit/s 10.820 8.050 8.549 8.595 -20.6%

up to 8.192 Mbit/s 13.270 9.920 10.419 10.480 -21.0%

up to 10.240 Mbit/s 15.720 11.790 12.289 12.365 -21.3%

up to 16.384 Mbit/s 23.070 17.400 17.899 18.020 -21.9%


Bitstream

in BD

BS.3 - Maintaining relationship charge 1,552.000 4,029.000 872.917 872.917 -43.8%

BS.12 INET Helpdesk premium rate call (per minute)

0.250 removed removed




Page 164 of 167

13 International Falcon Connection (‘IFC’) service (2-14)

Draft Order Text

International Falcon Connection (‘IFC’) service definition

In its RO, Batelco defines the IFC service as follows: 448.

“The IFC Service is a wholesale service for providing access to the

Falcon cable landing station comprising one or more IFC Links,

Licensed International Facilities Management Space and IFC

Support Facilities.

Available To: ISL and ISP licensees.

Permitted Traffic: Traffic covered by the Access Seeker’s licence.


Backhaul restrictions

While the IFC service description refers only to a duct access service for the backhauling 449.

of the link from the landing station, the Authority considers that Batelco should not restrict

any other form of backhaul. The Authority therefore orders Batelco to modify the IFC

service description to allow other types of backhauling options such as wireless links.

Amendments to the cost of co-location space (2-14.3) and to the cost of riser room and

riser access (2-14.4)

As per the Determination related to the terms and conditions of Batelco’s International 450.

Falcon Connection Service dated 29 July 2010, the monthly cost of co-location space per

ETSI standard rack should be linked to the corresponding charge in the SNFM service

(item ‘2-15.2.2 License fee – Co-mingling’ in Batelco’s RO).

As per the same Determination, the cost per meter of riser room and riser access (item 2-451.

14.4 of Batelco’s RO) should be 4 times the cost of duct. Batelco is required to link the

charge of riser room and riser access to the duct access charge. The RO should also

make reference to the limitation of the charge to a maximum of 100 metres.

As a result, the following amendments should be made to the Schedule 3 of Batelco’s RO: 452.

74

Batelco’s RO, Schedule 1 2-14 (INTERNATIONAL FALCON CONNECTION SERVICE) (IFC Service)



Page 165 of 167

Table 97: Amendment to the IFC charges

Chargeable activity Currently

implemented TRA’S FRND draft Order

charges

Evolution as compared to January 2011

International Falcon Connection Service (IFC Service) (2-14)

2-14.3 Co-location space 350.000 Refer to Schedule 3 2-15.2.2 -

2-14.4 Riser room and riser access 0.712


-12.8%



Batelco

In relation to the removal of backhauling restrictions, Batelco submits that this proposal 453.

should be put on hold, if not reconsidered, for the following reasons:

a. Batelco is not certain whether there is actual demand for other types of backhaul,

and in the case of proven demand, Batelco would prefer the specific needs and

requirements of the OLO to be discussed and assessed;

b. The IFC service results from the Authority’s order to grant access to the IFC cable

at the Telegraph House. The Authority has not suggested that the current IFC

service is non-compliant with that order;

c. Batelco indicates that the support and maintenance of alternative backhaul such

as wireless backhaul would require that Batelco allows access of additional OLO

personnel to the Telegraph House. Batelco claims that there are good security

reasons for not allowing such additional access;

d. Batelco considers that any material change to the current IFC service should only

be proposed once the arbitration procedure on the same matter is closed. Batelco

also suggests that the Authority wait until the market review for international

facilities is conducted.

Batelco agrees that the charge for co-location space required in the context of the IFC 454.

service should be linked with the charge for co-location (2-15.2.2) included in Schedule 3.

Batelco however indicates that the principle may have to be revisited in the future if

relevant differences in the spaces come into play.

Lightspeed

Lightspeed considers that the infrastructure sharing and co-location services are still very 455.

expensive in comparison with regional benchmarks. As an example, it submits that the

monthly price per square metre in Jordan is less than BD 100.



Page 166 of 167


In relation to the removal of the backhaul restriction, the Authority notes Batelco’s 456.

willingness to accommodate reasonable requests by OLOs for alternative backhaul. In that

context, the Authority has decided not to order the removal of backhaul restrictions for the

time being. The Authority will continue to monitor the issue to ensure that Batelco is

treating any requests by OLOs in a timely and fair manner. For the avoidance of doubt, the

Authority is still of the view that the IFC service should allow other form of backhaul such

as wireless links provided that any risks, such as security risks, can be adequately

mitigated.

As for Lightspeed’s comment on the excessive price of the co-location service in Bahrain, 457.it would appear that there is a large difference (by factor ~3-5) between the regulated charge applicable in Bahrain and the regulated charges applicable in Jordan

75 or in

Oman.76

The Authority intends to look at the co-location charge as part of the next RO review.

75 Jordan Telecom FAC 2007-extended Price List: Applicable from 1/7/2009, SCHEDULE 103 - JT Collocation

Facilities, http://jordantelecomgroup.jo/jtg/group/FAC_2007_extended_price_list_ver.pdf. 76

Omantel Reference Acess Offer of May 2011, Annex M, http://www.omantel.om/wpresources/files/RAO/Annex%20M_Tariffs_V2.3_May%202011.pdf

http://jordantelecomgroup.jo/jtg/group/FAC_2007_extended_price_list_ver.pdf

http://www.omantel.om/wpresources/files/RAO/Annex%20M_Tariffs_V2.3_May%202011.pdf



Page 167 of 167

14 Other matters raised by operators


Menatelecom

Menatelecom remains deeply concerned by the absence of SLAs for wholesale services 458.

and in particular for Carrier Preselection Service (‘CPS’), Wholesale International Switched

Service (‘WSIDD’) and CAT/LLCO.

Menatelecom agrees with the Authority’s approach to drive wholesale charges down to 459.

their cost based level and would appreciate that the Authority ensures the timely

introduction of the charge reductions and conduct RO reviews on amore regular basis.

Viacloud

Viacloud is concerned that the “wholesale ILD (International Long distance) was not 460.

included for any review in this Order. With the drop in the costs (WS01 – Wholesale &

Carrier Relations, WS02 Commercial Operation – Access Page 28 of RO), the wholesale

IDD cost has undergone a significant drop, while we continue to pay at higher cost to

Batelco. We request TRA that Batelco is asked to submit a review on the wholesale IDD

cost and in the interim give a discount on wholesale IDD prices based on the reduction in

access costs and carrier costs already included in this RO.”, (Viacloud’s submission,

paragraph 7).


The Authority shares Menatelecom’ concern regarding the absence of SLAs for wholesale 461.

services. This is an area where the Authority has been working on. The Authority will

consider any appropriate legal routes to ensure that sound and fit for purposes SLAs for

wholesale services are put in place in order to ensure a competitive level playing field.

With regards to Viacloud and Menatelecom’s comments regarding WSIDD, the Authority 462.

highlights that WSIDD rates are regularly reviewed by the Authority on a country per

country basis when Batelco submits new retail rates for the Authority’s approval.

An Order issued by the Telecommunications Regulatory ... Order issued by the Telecommunications Regulatory Authority on the Reference Offer of the Bahrain Telecommunications Company

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