BT Group plc Detailed Attribution Methods (DAM) 2014

Transcription

1 BT Group plc Detailed Attribution Methods (DAM) th August

2 2

3 Contents Section Page Section 1 Introduction 4 Section 2 Business Overview 6 Section 3 Overview 9 Section 4.1 Except Bases 32 Section 4.2 Other Bases 50 Section 5 Activity Group Dictionary 122 Section 6 Plant Group Dictionary 132 Section 7 Network Component Allocations 206 Section 8 Data Sources 252 Section 9 Line of Business Organisational Unit Codes (OUCs) 292 Section 10 Glossary of Terms 293 Appendix A Appendix B Key Destinations (attached in Excel spreadsheet format DAM 2014_Appendix A ) Sectors List (attached in Excel spreadsheet format DAM 2014_Appendix B )

4 1 Introduction In the UK, the telecommunications industry is regulated through various European Union directives, the Communications Act 2003 (the Communications Act), Ofcom (the UK s independent communications regulator), and other regulations and recommendations. 1.1 Regulatory Reporting Requirements Regulatory financial reporting obligations are imposed by Ofcom to monitor and enforce other ex-ante obligations e.g. for cost orientation, cost recovery, price controls and no undue discrimination. We are required to demonstrate compliance with these obligations in certain SMP markets. 1.2 The Accounting Documents The Regulatory Financial Statements (RFS) are prepared in accordance with the Accounting Documents, where the Accounting Documents means together the Primary Accounting Documents (PAD) and the Secondary Accounting Documents. The PAD sets out the framework under which the statements are to be prepared. The Secondary Accounting Documents set out more detailed descriptions of the policies, methodologies, systems, processes and procedures for deriving or calculating the costs, revenues, assets and liabilities underlying the RFS and comprise the following three documents: The Detailed Attribution Methods (DAM) - describes the processes used to derive the fully allocated costs of BT s network components, SMP Markets, Technical Areas and Disaggregated Activities (as applicable). The Detailed Valuation (DVM) - describes the methods used to derive current cost valuations. The Long Run Incremental Cost Model: Relationship and Parameters (R&P) - describes the calculation of the long run incremental costs for network elements. The Wholesale Catalogue - describes the wholesale services included in the Wholesale SMP markets and technical areas where BT has a regulatory financial reporting obligation. 1.3 The DAM The purpose of the DAM is to: Describe the costing principles used by BT to prepare the RFS on a fully allocated cost basis. Describe the methods used in the Accounting Separation process to attribute revenue, costs and capital employed to the Markets, Technical Areas and Disaggregated Activities in the RFS. Outline the systems and processes used by BT to support Accounting Separation. The DAM provides detailed and granular descriptions of the procedures used to apply the principles set out in the PAD. The DAM is structured in sections explaining the different stages of the Accounting Separation process. Accounting Separation is the attribution of costs, revenues and capital employed to the defined Markets and Disaggregated Activities of BT. Section 1 - Provides an introduction and guide to using the DAM. Section 2 - Provides an overview of the BT business, describes how the underlying financial transactions supporting the business activities and functions recorded in the financial ledgers are grouped to provide the starting costs, revenues, assets and liabilities used by the Accounting Separation (AS) system. This provides the starting cost pools ( F8 items ), grouped and presented by different areas of BT s business (sectors). The AS system attributes the costs, revenues, assets and liabilities to defined products and components which aggregate into the Markets, Technical Areas and Disaggregated Activities to create a view of BT s financial position and results against SMP Markets. Section 3 - Provides an overview of the AS solution, in terms of the underlying costing principles and the conceptual flow of costs and revenues from source financial systems to the separated Markets, Technical Areas and Disaggregated Activities to create a view of BT. It sets out the main types of cost pool used by 4

5 the solution, in terms of F8 items, activity groups, plant groups, network components and products, and explains the flow of costs and revenues across the different types of cost pool. This section also provides an overview description of each sector. Section 4 - The base methodology dictionary provides a complete description of the attribution base methodologies referred to in the sector tables (Appendix B) for each given base methodology, based on the current year profit and loss accounts and closing balance sheet. In the majority of cases opening balance sheet destinations are not materially different. Where a methodology applies to the opening balance sheet only, the key destinations will still be shown (see Appendix A). Section 5 - Provides an overview description of activity groups, followed by a table setting out the Activity Groups contained in the DAM. The table shows, for each Activity Group, a high level summary of the methodology that is applied to attribute the costs to the next cost pool (e.g. plant groups, products) in the AS system. The main costs pool destinations can be found in the Key Destination tables (Appendix A). The Activity Group Dictionary provides a complete description of the attribution methodologies applicable to the Activity Groups based on the current year profit and loss accounts and closing balance sheet. In the majority of cases the opening balance sheet destinations are not materially different. Section 6 - Sets out the Plant Groups used in the AS system. The attribution table shows a high level summary of the base methodology used for each Plant Group follows the overview of the Plant Groups. The Plant Group dictionary sets out the detailed descriptions of the Plant Group attribution methodologies. The main costs pool destinations can be found in the Appendix A key destinations table. Section 7 - Sets out an overview of network components, followed by attribution tables. These explain the attribution of network components and standard services to final products in the AS system. Section 8 - Provides a dictionary of data sources. Section 9 - Shows the Line of Business Organisational Unit Codes (LoB OUCs). Section 10 - Glossary of terms used. Appendix A - The key destinations table identifies the key destinations of all the markets described in sections 4-6. This is based on the current year Profit and Loss account and closing Balance Sheet. In the majority of cases the opening balance destinations are not materially different. Appendix B The Sector Allocation Table identifies the base applied to each F8 code/ouc combination s for these bases can be found in sections 4-6. Key destinations are contained in Appendix A. 5

6 2 Business Overview This section provides: a brief overview of our business and the regulatory financial reporting obligations. a brief description of how the underlying financial transactions supporting the business activities and functions recorded in BT Group s financial ledgers are grouped into cost pools ( F8 items ) to provide the starting costs, revenues, assets and the liabilities used by the Accounting Separation (AS) system. 2.1 BT Group and Regulatory Reporting We explained in the RFS and the PAD that we are subject to various regulatory financial reporting obligations for Markets, Technical Areas and Disaggregated Activities (as applicable) where we are deemed to have Significant Market Power (SMP). We prepare the RFS which show our costs, revenues, assets and liabilities against defined regulatory Markets and Services. The statements are prepared via the AS process and comprise a financial performance summary, review of financial performance by groupings of markets and by individual markets, other information including the network activity statement and the calculation of Fully Allocated Costs (FAC) based on component costs and usage factors statement and reconciliation statements. For regulatory reporting purposes, revenue is recorded against a range of services provided. Cost associated with operational and support activities undertaken to support the provision of these services are recorded against sectors such as planning and development, provision and installation, maintenance and plant support. This is explained in Section 3 of the DAM. 2.2 AS Systems and the Reporting Hierarchy Our financial and reporting system uses a hierarchical pyramid coding structure to support the data capture and information summation at the Line of Business (LoB) and activities level. This is explained below. Diagram: BT s SMP Reporting and Coding Structure Regulatory Reporting Layer ASPIRE Reporting Layer Wholesale SMP Sectors AS Sectors Retail Residual Used in Financial & Management Reporting Systems Group Financial Accounting Layer Financial & Management Accounting Layer GFR Lines SFR Lines Used in Financial & Management Reporting Systems Base & Apportionment Layer F8 Codes Used in Feeder Systems Accounting Transactions Layer GL Codes OUC BTs_SMP_Reporting_Diagram_2_2_0910 The diagram above shows the grouping of financial accounting information from general ledger cost accounts to F8 codes and sectors. The different levels of the hierarchy are discussed below. 6

7 Accounting Transaction (GL Codes) Layer The costs, revenues, assets and liabilities of our main business activities (within the operating businesses of BT Retail, BT Wholesale, Openreach, BT Global Services, and other parts of the BT Group organisation) are recorded in the group General Ledger (GL) system. There are approximately 28,000 GL Codes. Base Apportionment (F8 codes) Layer General ledger codes are grouped into F8 codes, which represent groups of similar general ledger codes. One or many GL Codes are aggregated to an F8 code. The costs, revenues, assets and liabilities associated with an individual F8 code (for a given Organisational Unit Code - see OUC description below) will be attributed to Products, Plant Groups (PGs) and/ or Activity Groups (AGs) using a base methodology appropriate to the OUC that records. There are approximately 18,000 F8 Codes. The Regulatory Reporting system ASPIRE receives general ledger feeds at the F8 code level and attributes costs, revenues, assets and liabilities to the regulatory Markets and Services. Financial and Management Accounting (SFR Lines and Reports) Layer General ledger codes are aggregated to Standard Financial Report (SFR) Lines. One or many GL Codes are aggregated to a SFR line which form the basis of BT s Financial and Management Reports used internally. The SFRs form the basis of both Financial and Management reports. There are approximately 100 SF Reports and approximately 8,200 SFR Lines. Group Accounting (GFR Lines and Reports) Layer SF Lines aggregate to Group Financial Reporting (GFR) Lines. One or many SFR Lines are aggregated to a GFR line. GFR lines form the basis of BT s Group Financial Reports, from which, BT s external Financial Reports are produced. There are approximately 50 GF Reports and approximately 1,510 GFR Lines. Self-accounting Units (SAUs) not using the BT Group General Ledger (GL) system provide summarised details of their financial accounts on a Group Financial Return (GFR), with line items from the GFR mapped to GL codes for use in the AS system. All SAU revenues, costs and liabilities are allocated to the BT Retail Residual Market. Regulatory Reporting (AS Sectors and SMP Sectors) Layer One or many F8 codes are grouped into similar functional categories called AS sectors to make regulatory reporting more manageable. Although sectors contain functionally similar categories of cost, an individual sector is likely to use multiple attribution base methodologies. AS sectors can be grouped in two broad categories Income Statement and Balance Sheet. There are approximately 150 AS sectors. All AS sectors point to SMP sectors. One or many AS sectors can point to a SMP sector. It is worth noting that the pointing of AS sectors to SMP sectors for BT s Wholesale Markets reporting are different from BT Retail Residual. This is primarily due to the different nature of the activities carried out within Wholesale and Retail. The AS sectors are grouped in to SMP reporting sectors to produce the Wholesale SMP Reports. Organisational Unit Code (OUC) OUCs provide a horizontal, organisational cut of the financial data in the vertical GL-F8-sector pyramid. Costs/ revenues/assets/liabilities are recorded by OUC, at the class of work/general ledger account level. The codes for OUCs follow a hierarchical structure, with the first level of the OUC code defining the highest level of the organisation unit and the subsequent letters of the OUC code representing the more detailed sub-divisions within the top-level organisation unit. For example, OUC code K, represents BT Wholesale, and code KB represents a subsidiary organisational unit within BT Wholesale. A sector is represented by a series of F8 codes, with OUCs showing their financial values against the different F8 codes. Each sector can be represented by a matrix of the F8-OUC combinations. The AS system looks at each F8- OUC combination to identify an appropriate base attribution methodology to attribute the costs, revenues, assets and liabilities. There are approximately 35,000 OUC codes. F8_OUC combinations are the lowest level at which discrete cost pools are defined for the purposes of the Accounting Separation System F8_OUC_Combination 7

8 2.2.2 Attribution of BT s financial information to Markets and Services The DAM explains how the costs, revenues, assets and liabilities of the BT Group business are attributed to the products of the defined regulatory Markets and Services. OUC F8 IV M KB KU J W etc x x x x x x x x x x x etc F8_OUC_Diamgra The DAM sets out for each sector the component F8/OUC codes and the base methodologies that are applied to each F8/OUC code to attribute them to products (and/or intermediate cost pools). Several F8-OUC combinations may share the same base, if they have similar cost behaviour. Sector e.g. Transport F8 OUC Base Ref Summary Ref MT MTPN Y3 EXCEPT Summary description of base Fuel Y FUEL Licences Y3 EXCEPT Etc. Etc. Etc. Etc. Sectir_Transport_v1_Diagram_0910 The base methodologies are summarised in the sector tables against the relevant F8/OUC code, and described in detail in the Base Dictionary Scope of Document There are approximately 40,000 separate F8/OUC combinations populated in BT s ledgers (that is, showing a yearend balance reflecting the posting of transactions by one or more OUCs to the relevant F8 codes during the year). Approximately 7,000 F8/OUC items account for more than 90% of the total ledger value represented by the total population of F8/OUC items. The DAM has been written specifically to describe the attribution of the items comprising at least 90% of the total ledger value in absolute terms. However, actual coverage exceeds this threshold. Methodologies have been described that are relevant to the attribution of the items that make up approximately 90% of each sector within the ledgers. Some attribution methods apply to more than one F8/OUC combination. Therefore, there are F8/OUC items whose attribution would be described by the methodologies included in the DAM, but which are not specifically identified. The methodologies described cover substantially all of the revenues, costs and capital employed recorded in the ledgers. The document follows this principle of identifying only those material items, rather than the total population of items that is relevant to a methodology. Key destination tables specify the destinations of at least 90% of the costs being attributed by a methodology. We do not document every single item of revenue, cost and capital employed because the 90% coverage applied identifies substantially all of the different ways in which attribution is carried out. 8

9 3 Overview 3.1 Basis of preparation The Regulatory Financial Statements (RFS) show costs, revenues, assets and liabilities on a current cost accounting (CCA) basis, for the defined regulatory Markets, Technical areas and the Disaggregated activities of BT. The source of the financial data is the central ledgers and consolidation system for BT, where financial transactions are recorded by the organisational units within BT, supplemented by CCA adjustments as described in the Detailed Valuation (DVM). Accounting Separation (AS) uses this information to present costs, revenues, assets and liabilities for each of the Markets, Technical Areas and Disaggregated Activities defined for regulatory purposes Source of transactions The historical cost, financial transactions and balances for use in the separated accounts come from two main sources: The core central General Ledger (GL) system. The Group Consolidation System (GCS). Core GL system The core BT businesses record their financial transactions on a historic cost basis in the core GL system. These ledgers are supplemented by feeder systems that capture details at transaction level of: Pay. Stores. Other additional costs. Transactions relating to engineering activities are collected and posted to the ledgers at Class of Work (CoW) level. CoW specifies the type of activity or asset type on which the engineer is engaged. Transactions for non-engineering activities are captured in the GL against the relevant functions involved (e.g. marketing, billing, etc.). Consolidation system for self-accounting units The non-core BT businesses do not use BT s core GL to record their financial transactions and instead provide details of their financial information on a Group Financial Return (GFR). GFR follows a standard format, allowing individual GFR line items to be mapped to a special GL code for use in the AS system. CCA Adjustments The current cost accounting adjustments for BT Group and other adjustments such as accounting journals posted outside the GL system are also recorded through the GFR system. The adjustments follow a similar mapping, from the GFR to individual GL account codes, for use in the AS system. CCA adjustments are described in detail in the DVM Gross Adjusted Costs Costs are presented on a gross adjusted basis, i.e. this reflects all external costs together with all transfer charges between divisions. There are two main types of transfer charges: Cost transfer charges between divisions/organisational units, which go through the GLs. Such charges are eliminated in the consolidated results, and usually in the AS framework, where they are replaced by the underlying cost. Transfer charges between Markets e.g. from the Wholesale Significant Market Power (SMP) Markets to the BT Retail Residual. Such charges are calculated and presented only within the AS framework (rather than through the GLs). 3.2 Costing principles In order to translate the financial information of the accounting ledgers from a functional and organisational view to the separate Markets, Technical Areas and Disaggregated Activities defined for regulatory purposes, it is necessary to attribute each financial cost (or revenue, etc.) item to the relevant Market, Technical Areas and Disaggregated Activity. The AS system achieves this by defining each Market and Technical Area in terms of its Disaggregated Activities (Components, Retail Products and Wholesale Services) a number of constituent services, and attributing the source costs, revenues, assets and 9

10 liabilities to the relevant services. The attribution is underpinned by a strict set of costing principles as explained in the Primary Accounting Documents. Cost drivers or bases This is the underlying basis on which costs are incurred, e.g. accommodation costs are incurred on the basis of floor space requirements. The cost driver or base method is therefore floor-space. Allocation The item of cost is allocated wholly to a particular Retail Product, Plant Group (PG) or Activity Group (AG), without the need to split the underlying cost pool. Apportionment This is where an item of cost cannot be identified directly with one Product (or PG or AG) and needs to be split across several cost pools on an appropriate basis. The cost driver will provide an objective basis for splitting the costs, as the cost driver will show how the cost was caused subsequently the costs are then split in proportion to the value of the driver associated with each subsequent cost pool. Attribution This is a general term encompassing both allocation and apportionment. There are certain types of cost (e.g. the costs of running the Chairman s Office) which do not have a causal relationship with any Products. Additionally, at very detailed levels of reporting, cost attribution may not be possible on a strictly cost causal basis (e.g. attribution of common sales costs to a series of similar services). In such cases, a reasonable method is used. 3.3 Conceptual model The AS solution provides a logical structure for the attribution of costs, revenues, assets and liabilities of BT to, ultimately, the components and Products that aggregate into: Markets. Technical Areas. Disaggregated Activities. Wholesale Services of BT. The term cost pool is used as a generic term referring potentially to a pool of cost, revenues, assets or liabilities Attribution of GL/F8/OUCs Costs, revenues, assets and liabilities form the starting cost pools of the attribution process. These are defined in terms of F8/Organisational Unit Code (OUC) combinations. An F8 code is a group of one or more similar GL codes within the core GL system. In an OUC each F8 code can be attributed using an appropriate cost driver of base methodology. F8/OUC cost pools are allocated or apportioned to Products, Intermediate Activities or PGs Attribution of Initial Intermediate Activity Groups (Initial IAGs) Initial IAGs are intermediate cost pools used to collect costs relating to activities such as fleet, facilities management and general corporate costs. The category includes the apportionment of specific activity costs for units that perform a service to other organisation units and recover their costs through a transfer charge. The external costs of the unit supplying the services are apportioned on the basis of an analysis of the transfer charges to the receiving units. The costs of the Initial IAGs may be attributed to Products and support PGs Attribution of Support PGs Support PGs are intermediate cost pools used to collect costs relating to plant overheads, such as accommodation costs for network buildings and costs of providing power to the exchanges and transmission assets. These costs are apportioned directly to the relevant PGs, which they support. 10

11 3.3.4 Attribution of PGs PGs are intermediate cost pools used to collect costs relating to the BT Wholesale Markets. The PGs carry the capital costs and values (depreciation, net book values) and expense items (e.g. maintenance) for specific types of network assets, as well as other general costs allocated to PGs via Initial IAGs and support PGs. PGs are attributed to Network Components on a one to one or one to many basis. A PG could contribute costs to many Network Components, and a Network Component could receive costs from many PGs. Examples of PGs are Local Lines Fibre Cable (Current and Capital) and Main Digital Exchange Switch block Attribution/Charging of Network Components Network Components collect costs from the PGs and constitute discrete parts of the network. The Network Components (which are in some cases grouped for presentation in the RFS) are used to provide network services to Markets and Products as well as to Other Communication Providers (OCPs). Network Components are charged to Services or OCPs via Standard Services. Calculation of charges for Network Components may support Standard Services or be consumed directly (non Standard Services), and the charging structure is different for each. Standard Services are segments of the network that represent a bundle of network Components. The Standard Services provide use of the network to both BT businesses (e.g. BT Wholesale) and OCPs. The charge applied is calculated as: Volume of usage by Product Multiplied by Unit Charge Equals Charge Applied ChargingofNwkComponents Products and Markets By the end of the final stage of attribution from Network Components and own use AGs to Products, all the non-network costs and the network charges are attributed to Wholesale Services. Wholesale Services can be grouped together to represent the distinct Markets, Technical Areas and Disaggregated Activities defined for regulatory purposes. 11

12 3.4 System process BT uses a system called ASPIRE to perform the fully allocated cost attribution for AS. The system defines different categories of costs, which are treated in a similar manner in the system. At each level of the system processing, a particular category of costs will be emptied (attributed) to other cost pools, and usually receive no further costs itself. This causes a sequential flow of costs across different categories at each stage of the system, with all the costs ultimately emptying into the end Product categories. The process of cost pools emptying as the costs are attributed forwards is referred to as exhaustion. The diagram below illustrates the main processing stages of the ASPIRE system for AS. Diagram: Overview of ASPIRE s main processing stages for AS Key Interfaces Processing levels/sequence Attribution of costs, revenue, assets and liabilities (fully allocated costing) Revenue and cost data General ledger feed Group Financial Return (GFR) extract Other transaction data Exhausted to: Source cost centre Level 1 Costs, revenues, assets, liabilities, at F8 OUC level AGs PGs Prods Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8 Level 9 Level 10 AG , AG111 AG112+ PGs Prods AG112 AG113+ PGs Prods AG113 AG114 AG120 AG130 PGs NCs AG213 AG114+ PGs Prods Prods PGs Prods NCs AG300s Prods AG300s Prods Attribution of charges Price data (NCC or cost plus) Level 8 NCs Std & non std services Level 9 Std & non std services AG300s Prods Level 10 AG300s Prods SystemProcess_diagram 12

13 3.4.1 Key Interfaces Different types of data are fed into ASPIRE tables from a number of sources. The diagram below illustrates the main types of transaction data entering the ASPIRE system prior to processing: Overview of Data entering ASPIRE Financial Accounts Data Non- Financial Accounts Data Core General Ledger (GL) Feed Bases Data Non Core General Ledger (GL) Feed ASPIRE Volumes Data - by sub- product CHART Turnover to Product relationship Data_ entering_aspire_ vsd KeyInterfaces All of the above data types, except for the core GL feed are uploaded to ASPIRE via a data management and validation system called ASSURE to ensure data integrity and maintain version control. Financial account data In the first stage of the system process, the cost, revenue, assets and liabilities for apportioning are brought into ASPIRE. This is done through two main feeds: Core GL feed The core GL feed provides values for costs, revenues, assets and liabilities at GL account level. This covers areas of the business that use the central accounting system and GL for BT (i.e. excluding the Self-Accounting Units). The information is input into ASPIRE via an automatic upload. Non-core GL feed The non-core GL feed provides values for costs, revenues, assets and liabilities for parts of the BT business that do not use the main central accounting systems and GL. These parts of the business ( Self-Accounting Units ) provide financial information on a GFR, with information reported by individual GFR line (e.g. GFR Other Operating Income - Other). The GFR information is then updated into a system called Group Consolidation System (GCS), maintained centrally by BT Group. Information at GFR level from GCS is translated into specific OUC and GL code references, which will be used in the ASPIRE system. The non-core trial balance feed is then uploaded to ASPIRE (via the ASSURE system) to enable the GL codes, OUC references and values to be populated in ASPIRE. Other cost adjustments such as CCA adjustments and accounting journals are also entered into ASPIRE via the non-core GL feed. GL accounts are the lowest level at which financial information is brought into ASPIRE. A CHART file is fed into ASPIRE, which sets out a mapping of GL accounts to F8 codes, sectors, transaction types etc. This is done through a series of markers, which enable the system to track and report results against a number of views: 13

14 Diagram: Overview of a CHART file which is fed into ASPIRE CID7 CID10 Sub transaction type SFR Sector F8 Code Core/ Non- Key CID Product Types K CID1 CID2 CID3 CID4 CID5 CID6 CID8 CID9 Transaction type Finance type Sub Sector (LRIC marker) SFR Line Direct Indirect Core Indicator Ownership Central Information Database (see Data Source Section) Non-financial account data In addition to the basic financial data in ASPIRE, volume data and other non-financial data for base attribution methodologies are entered. For example, data on the square metre usage of different buildings by different activities would be converted into a set of percentages (representing the proportion of total space used by each activity) and entered into ASPIRE, for use in the apportionment of accommodation costs on the basis of floor space usage. Base and volumes information comes from a variety of sources (e.g. Core Transmission Costing System (CTCS) and Call Statistics Centralisation System (CSCS) for Product volume data) System processing levels Level 1 (Fully Allocated Cost (FAC)) The source cost pools at level 1 are the F8/OUC combinations of cost, revenues, assets and liabilities including current cost adjustments. F8/OUC combinations for revenue are allocated directly to Products and activities at level 1. F8/OUC combinations for costs, assets and liabilities are allocated to subsequent cost pools and/or Products using a number of possible methods. The AS solution uses the following types of method, which are processed in the following order by the system: Attributions using external data base methodologies: Allocation directly to a specified cost pool on a one to one basis. Apportionment to subsequent cost pools on the basis of non-financial data. Apportionment of overheads of certain OUCs to subsequent cost pools using specific information. Attributions based on results of previous apportionments by the system. Apportionment to subsequent cost pools in proportion to the pay costs (per pay - type F8 codes) received by those cost pools. Apportionment to subsequent cost pools in proportion to a specific type of pay costs (per specified restricted pay - type F8 codes e.g. maintenance pay F8 codes) received by those cost pools. Apportionment to subsequent cost pools on the basis of previously apportioned costs pan-divisional. Level 2 (FAC) The IAGs (AGs 101 and 106) are attributed to subsequent AGs, PGs and/or Products. Levels 3 5 (FAC) At level 3, AG 112 Corporate Overhead Costs are apportioned to subsequent AGs, PGs and/or Products. This is followed by the apportionment of AG 113 Total Liquid Funds and Interest (cash and bank balances, short-term investments and borrowings, etc.) at level 4, and AG 114 Non-Core residual balances at level 5. Level 6 (FAC) 14

15 At level 6, the support PGs and Liquid Funds (Network) are apportioned to the PGs to which they provide support. The Activity Group AG401-AG415 [the driver AG s] is apportioned to the PGs to which they provide support. Level 7 (FAC) At level 7, the intermediate retail activities are apportioned to the Products driving the retail overheads. Level 8 (FAC) Level 8 performs the attribution of PGs to network components. This takes place over a number of discrete stages in the Network Cost Apportionment Module (NCAM) of the system: PGs are assigned to network components using apportionment percentages held in fixed base tables. The key stages of processing for Network charges, which also start at level 8 in the system, are as follows: Level 8.1 (Network charges) Level 8.1 performs the calculation of charges by Network Components, using the following data source/s: Network Components used in Standard Services - prices are taken from price lists outside the system. Network Components used in Non Standard Services - prices are calculated (outside this module) by taking the Fully Allocated Costs (FACs) of network Components (per the output from the Fully Allocated Costing (FAC) module), with the price calculated as cost plus a return on capital employed (including network own use). The processing level 8.2 attributes Network Components to Standard Services (or Non Standard Services) based on the volume of usage by the Standard or Non Standard Services. Level 8.5 Openreach Part Services At level 8.7 all Network components have been fully allocated to services Controls There are a number of controls in the AS system to ensure the accuracy and completeness of the results. The key controls include: AS data vetting system All data entry to the ASPIRE system, except the direct interfaces from the GL, takes place through the ASSURE system. The ASSURE system manages version control and improves data integrity. Data is entered or loaded into ASSURE via a bespoke user interface system, and can be managed and reworked in a variety of ways. Once a table has been updated, it is changed from a Local to Global phase. It cannot then be re-edited unless it is changed back to Local by the Run Control Manager, which helps to ensure data integrity. Once data has been collected from all the users it is submitted to an ASPIRE run and cannot be altered after that point. Specification of data sets for runs Each run of the system is given a unique reference, which dictates the combination of data sets and reference data to be used in the run. These are determined from electronic control sheets to effectively commission the run. Completeness of processing ASPIRE produces a series of probity reports to show the completeness of processing at each level of the system Self Accounting Units Revenue, costs and net assets from Self Accounting Units (SAUs) are attributed directly to the Retail Residual activity with the exception of Liquid Funds transactions e.g. cash, short term borrowings, short term investments and net interest payable, which are apportioned to AG Transfer charges as a basis for cost attribution A number of the individual methodology/base descriptions set out in Section 4 (Base Dictionary) refer to the use of an internal transfer charge destination as the basis for attribution of the actual cost underlying the transfer charge within the AS process. This section explains the rationale for using this basis. The purpose of transfer charging is to: 15

16 Enable customer-facing divisions, which are responsible for their own profitability, to receive a correct allocation of income and expenditure. Enable support functions to charge for their services to other group units. Enable control to be exercised over use of key resources. Maintain proper control in accounting units of certain balance sheet items. There is a well-established process for the recording of transfer charges between organisational units, and for the monitoring and control by each unit to ensure that the amount of the charge is properly stated in accordance with the transfer charge agreement, and that the amounts are recorded in the correct organisational unit. Within the AS process, the transfer charge amounts recorded by each unit are replaced with the actual cost underlying the charge, and for which the charge is made. The actual cost is then attributed consistent with the treatment of the transfer charge. This occurs principally in respect of the following types of cost and is attributed on a cost-causal basis: Motor transport charged on the basis of the number and types of vehicles used by each OUC. Computing charged on a monthly fixed charged, taking account of variations in volumes e.g. a reduction in volumes will result in lower charges. Accommodation charged on the basis of floor space occupied by each organisational unit, taking account of the variations in underlying cost (e.g. a central London office space being charged at a higher rate than an office space in a rural location). 3.6 Use of System Generated Bases In some instances, the regulatory accounting process uses previously attributed costs as the basis for further cost attribution. These bases are system generated. A report is run from the accounting system that shows how costs have been attributed to Plant Groups, so that we know what proportion of previously attributed costs has been attributed to Plant Groups 1, Plant Groups 2 etc. The costs subject to the system generated base are then attributed to Plant Groups 1, 2 etc. in these same proportions. For example, supervisory and management labour costs are considered to be incurred in support of the range of activities supervised and/or managed. Accordingly, the supervisory pay costs are attributed as an overhead of the underlying directly apportioned costs. If an OUC, for example PQR1 is engaged in maintenance activity, and the pay costs that result from such activity are attributed to Plant Groups 1 and 2 in the ratio 60:40, then the supervisory costs incurred in OUC PQR are also attributed to Plant Groups 1 and 2 in the same 60:40 ratio. The system generates the base because it is used to determine the 60:40 split of the underlying maintenance costs incurred by OUC PQR1.The system base is generated using data designators Apportioned to specific cost pools on the basis of previously apportioned costs pan-divisionally These bases (known as Rule Type 12s in the ASPIRE System) apportion group costs, revenues and capital employed across multiple business units. These bases are assigned two markers that govern: a) The Primary Data Designator 1 (DD1) Identifies the income/cost transactions the system should draw upon to calculate the appropriate base. Primary Designator CAPEXP DTTCP NCOFADA NCOFADM Transactions drawn upon All non-pay capital additions (purchases of non-current assets) All Trade Receivables ledgered by BT during the year Transmission Depreciation and non-current assets Apparatus Depreciation and non-current assets Cost type to be driven Capital expenditure payables Balance Sheet bad debts Depreciation Core Transmission: Cable & Other Depreciation Apparatus NCOFAEA Amortisation and non-current assets Depreciation Software OPEACN Accommodation costs Sundry receivables and payables arising from 16

17 Primary Designator OPECST OPEOTH OPEPST OPEXPS Transactions drawn upon External operating costs excluding pay, depreciation and capital additions Total operating costs, excluding depreciation and pay costs External operating costs, excluding depreciation, pay and POAS All operating costs, excluding depreciation incurred by BT during the year Cost type to be driven accommodation costs VAT related payables Prepayments Miscellaneous trade payables Prepayments receivables REDUND All redundancy and new start pay costs Redundancy accruals TOTPAY Total capital and current pay costs Payroll related receivables and payables b) The Secondary Data Designator 2 Identifies the AS cost pools to which the divisional balances should be apportioned. Secondary Designator ALA ALL ALLA COR CORA ORP PENA SYBA Destinations of previously attributed relevant costs (e.g. accommodation costs, payroll costs) to be taken into account in deriving the base Majority of all Products, AGs and PGs excluding Openreach PGs All AS cost pools excluding Openreach PGs All AS cost pools Substantially all core Products and PGs excluding Openreach PGs Substantially all core Products and PGs All Openreach cost pools All units in the BT Pension scheme i.e. all UK specific Products, e.g. core Products and PGs All units in the BT Sharesave scheme i.e. all UK specific Products, e.g. core Products and PGs Apportioned on the basis of pay costs System generated pay bases can draw on previously apportioned pay costs in a variety of ways. For example the TOTPAY pan divisional base described in section draws on all pay costs on a pan divisional basis BT wide. Another type of base (known as a Rule Type 6 in ASPIRE) draws on previously apportioned pay costs specific to a Line of business. Using this base it is also possible to restrict the calculation to specific parts of a Line of Business drawing on previously apportioned costs within a defined organisational range (exceptional OUCs are cost pools whose costs are attributed using different bases compared to the standard methodology used by other OUCs for any give cost type). The table below lists all the major Rule Type 6 bases. Designator FTD FTK Procedure This base is compiled from previously allocated Maintenance pay F8 codes, (excluding exceptional OUC pay) This base is compiled from previously allocated Provision and Installation and Maintenance pay F8 codes 17

18 (excluding non-core pay and exceptional OUC pay) FTQ This base is compiled from the previously allocated Capital and Current pay F8 codes (excluding non-core pay and exceptional OUC pay) A further type of pay base is known as a Rule Type 4 in the ASPIRE system. This base is similar to the Rule Type 6 base but draws upon apportioned pay within specific OUCs including exceptional OUCs. This RT4 pay base has one data designator called PCT. The PCT designator offers the ability of specifying a range of Wholesale, Openreach, Retail and Global Services cost pools to which the cost should be apportioned. This type of base can be used where the engineering Travel and Subsistence of certain OUCs has to be apportioned over a limited range of PGs using a pay base specific to the PGs supported by those units. 3.7 Sectors We define our main activities in terms of sectors for reporting purposes. The sectors show the: Main types of services we provided - with revenue recorded against these services. Main functional activities we perform - with operating costs incurred against these activities. Main non-current assets underpinning our activities - with fixed asset values and costs recorded against these assets. Other assets, liabilities and provisions that we incur in support of our services and activities. There are two types of reporting sectors: a) Internally reported ASPIRE sectors Each of the internally reported sectors contains a number of F8 codes, which represent groups of GL codes for costs, revenue, assets and liabilities. The F8 codes provide the starting point for the attribution of costs, revenues, assets and liabilities in the AS system. b) Externally reported sectors F8 codes in an ASPIRE sector are attributed to Wholesale services and Retail products using specific bases. Once revenues and costs are attributed, each service can still be reported by ASPIRE sector. Wholesale ASPIRE sectors are further grouped into higher level sectors for external reporting purposes. We provide a mapping of ASPIRE sectors into reported Wholesale markets in Section Sector Allocations This section provides a description of ASPIRE sectors covering 90% of the absolute value of the cost allocation for each sector and details of cost booked. We separately include in Appendix B a table which shows the allocations from the F8 cost or income pools in each sector with a summary description of the base allocation method. Detailed descriptions of each base are provided in sections 4, 5 and Revenue Revenue is grouped into the following sectors and all relate to Retail activities: Ref AA AU AW Sector Other Revenue Supply of Service Out - Prod Specific Intra-group Elimination Operating Costs and Balance Sheet Sectors This section describes the operating costs and balance sheet sectors relating to activities that we provides to our customers. Provision/Maintenance Provision/Maintenance consists of the following ASPIRE sectors. The most material cost relates to D-side copper which is apportioned on the basis of the number of lines. ASPIRE sector Includes: B1 Provision and Installation Installation activities such as the physical installation of network equipment, cable and/or customer premises equipment to provide network connectivity 18

19 B2 Maintenance and other services to customers. Provision activities such as work to activate and enable the service to a customer. This may involve software configuration to activate or de-activate particular services, using the underlying physical equipment and network provided through installation activities. Costs to operate our network in good working condition to meet service requirements such as performing activities to test, maintain and repair the network e.g. scheduled or planned maintenance of particular network assets or ad hoc maintenance problems reported by BT staff or customers. Network Support Network Support consists of the ASPIRE sectors below. The key drivers for the apportionment of network support costs include pay, the relative floor space occupied by fixed assets and the current cost replacement value of assets. ASPIRE sector BK Plant Support Includes: The costs of activities undertaken to support the running of our Network. E.g. Government levied business rates payable on BT Network installations and specialised estates such as telephone exchanges, radio stations; Coaching pay costs booked by Customer Service Coach (CSC) staff; Transmission Repair and Control pay costs on all core transmission equipment and private circuits; Pay costs for the provision, re-arrangement or cessation of network services; Pay costs relating to plant protection and inspection associated with statutory notices; e.g. inspection of low voltage overhead power crossing clearance; and miscellaneous support work costs e.g. the cost of installation (and subsequent recovery) of emergency plant incorporated in the network at the time of failure of other plant. General Support General Support consists of the ASPIRE sectors below. The key drivers for the apportionment of General Support include pay costs and activity surveys. ASPIRE sector B0 B4 B6 B7 BA General Support Planning and Development Supplies Transport Computing Includes: Staff costs for BT people in the UK transition centre or completing project work. Other costs related to computing, security, mobile and general network maintenance. Also includes cost for payments relating to service level guarantee scheme, wayleaves payments in respect of network plant and the Ofcom administration fee. Costs relating to the planning of the network and the development of new technologies and service offerings e.g. pay costs for operational planning and planning agency staff and research and development contracts. Costs associated with the procurement of materials and services (to support business operations) and the issuing of supplies from stores e.g. outsourcing of finance and accounting work, logistics and procurement pay costs, freight and carriage costs of items held in stores, tools and small items. Costs associated with vehicles e.g. costs of acquiring, maintaining, leasing, managing and retiring our fleet of vehicles. Mainly BT TSO costs re-charged to the rest of BT Group for their use of services such as computer operations, research and development and user support to our employees e.g. installing, setting up computers and helpdesk support. BB Customer Service Costs associated with customer service activities to maintain customer satisfaction e.g. call centre management and customer service field 19

20 BE BV Personnel and Administration Customer Support operations such as faults and maintenance tests. Costs associated with the provision of personnel services e.g. recruitment, release of staff/redundancies, development and implementation of performance management processes and other human resources (HR) support activities. Costs associated with performing diagnostic tests in support of maintenance and repair work and operation of the work manager system to schedule and control repair and maintenance work undertaken by BT engineers. General Management General Management consists of the ASPIRE sectors below. The key drivers are activity surveys and pay costs. ASPIRE sector Includes: BF B5 General Management and Other Operator Services Costs associated with general management activities and other general expenses e.g. New Start leaver payments, General management pay costs for board members for business units, senior managers and support staff working on general management activities; General management and other incidentals such as costs for conference facilities; General legal charges, Group insurance charges, Corporate provisions, and operating costs incurred by our non-core businesses (i.e. subsidiaries, self-accounting units, etc.). Costs associated with operator assistance (OA) services, emergency calls and directory enquiry (DQ) services. Finance and Billing Finance and Billing consists of the ASPIRE sectors below. The key drivers for the apportionment of Finance and Billing include activity surveys and pay costs. ASPIRE sector Includes: B9 Finance and Billing Costs incurred from various activities of a financial nature, such as budget building and management reporting, and costs incurred to generate a bill for the customer and to collect payment. Accounting and general finance activities include financial and management accounting, budgeting, forecasting and payroll processing. Billing activities include customer service, billing and credit control; bad debt costs and post office handling costs. 20

21 Accommodation Accommodation sector consists of the following ASPIRE sectors. Accommodation costs are mainly apportioned based on the use of floor space and utilities. ASPIRE sector Includes: BC Accommodation Costs incurred for buildings maintenance and decoration of sites and buildings, costs of rent payable to landlords on buildings occupied by BT, costs of business rates on land and buildings, building electricity supply costs in both operational and office buildings and payments to external contractors for cleaning services in BT accommodation. Bad Debts Bad debts include costs associated with writing off amounts that cannot be collected from customers. ASPIRE sector Includes: BW Bad Debts The internal and external costs associated with writing off amounts that cannot be collected from customers. The majority of these costs relate to the Retail Residual market. Other Costs Other Costs consists of the ASPIRE sectors below. The key drivers include the pence per minute charging of the other operators for BT traffic on their network. ASPIRE sector Includes: B8 BG Marketing and Sales SLRC Variance Costs to retain and win business from existing, new business and retail customers. E.g. conducting market research to gain intelligence on BT s markets and understanding the demands of our customers and competitor services; providing marketing services such as the design, planning and implementation of marketing activities, publicity and promotions; managing contact with customers and handling customer orders such as understanding the specific needs of the customers, confirming their credit vetting, and determining the feasibility of meeting the order requirements. Cost variances between actual labour costs and the standard rates used for management costing purposes. BU Elimination of Intra-group Transactions between BT group businesses. C1 C2 Other Operating Income Payments to OCP Other operating income relating to non-telecommunications services and hence separately recorded from BT s core Revenue (calls, connections and rental charges etc.). This mainly consists of profits on the disposal of land, buildings and sale of scrap copper cables. There is also smaller sundry other income categories. Payments made to OCPs for use of their network e.g. where BT carries a call originating from a BT customer but terminating on a mobile phone, BT makes a payment to the Operator for carrying the call over their network. Payments may also arise from instances of call termination where BT use OCPs to terminate a call, transit traffic where BT carries traffic over its network for part of a call, but also uses another operator s network. Payments are also made for Premium Rate Services (PRS) where BT customers make calls to the premium rate service telephone numbers of other operators and calls to BT Freephone numbers. C3 Payments to OA Same as sector C2, but for International CPs. 21

22 ASPIRE sector Includes: C7 Internal Product Charge from Core Transfer charges for Products used internally within BT. For internal management purposes, BT runs a 'transfer-charging' process. GL codes for the transfer charges are set up as matched pairs, one for the charge out and one for the charge in. These GL codes are associated with F8 codes. Therefore there will be matching pairs of F8 codes, one for the charge out (F8 codes beginning with 24 ) and one for the charge in (F8 codes beginning with 28 ). EC Other Intangible Asset Identifiable intangible assets such as goodwill and indefinite life assets. F0 F1 F2 F3 T3 U3 F4 Specific item interest Employee Profit Sharing Net Short Term Interest Associated Companies Divisional Supply Service Out Divisional Sup Service In Corporation Tax The net amount of interest payable and receivable by BT on its bank balance which relates to specific items e.g. pensions. The cost of provisions made for payments under the employee profit sharing scheme. The net amount of short term interest payable and receivable by BT on its bank balances. The share of profit or loss before tax of associated undertaking and the profit and loss account charges for the amortisation of goodwill arising from the acquisition of subsidiary undertakings. Internal trading for BT Basic / Social telephony, billing services, directories billing, retail billing to Redcare. (Costs transfer out) Internal trading for BT Basic / Social telephony, billing services, directories billing, retail billing to Redcare. (Costs transfer in) The current year corporation tax charge for BT and subsidiaries, as well as prior year adjustments. F5 Deferred Tax The current year deferred tax charge and prior year adjustments. Depreciation Depreciation is analysed between land and buildings, access, switch and transmission and other (including network power, computers and software). This is described in the individual asset sectors below. The key drivers are engineering models and direct mapping of BT classes of work to network components and then onto the appropriate service, based on usage factors and actual service volumes. Balance Sheet Land & Buildings This sector contains the asset values that are booked to BT Classes of Work for land and buildings, including freehold, long leases and short leases. The sector includes corporate office and network buildings owned by BT. Asset values are mainly apportioned based on the use of floor space and utilities. ASPIRE sector Includes: DF Accommodation Plant Net The asset values and depreciation for Network Plant Accommodation necessary for the operation of network equipment e.g. ventilation and cooling plant. Specific assets held within this sector (by CoW) include: ACPM - Accommodation Plant, Equipment-Related - Motor Transport ACPS - Accommodation Plant, Security for the provision and installation of security equipment. 22

23 DP DQ DR Land Buildings Accommodation Plant ACPR - Accommodation Communication Plant Rooms. ACPA - Accommodation Plant Access Services Division such as the cost of construction provision, installation and recovery of ASD (i.e. Openreach) network equipment-related plant (also known as accommodation plant). ACPN - Accommodation Plant, Equipment Related - Network Operational Buildings. ACPC - Accommodation Plant - Computer Centres. The asset values for land analysed between historic cost values and the CCA adjustments applied to provide a current cost valuation of the assets. The main classes of work against which land values are recorded are land freehold, land long lease and land short lease. The asset values and depreciation for buildings fixed assets. Buildings relate to the freehold, long leasehold and short leasehold buildings that we own such as corporate office building, our shops and service centres, and network buildings (e.g. exchange buildings) that we own. Costs and depreciation costs for accommodation plant. Accommodation plant is held in our freehold, long leasehold and short leasehold buildings, and contains asset items such as furniture and sundry other items used in the buildings e.g. AFH- Accommodation Plant in our Freehold buildings, ALL - Accommodation Plant in our Long lease buildings and ASL - Accommodation Plant in our Short lease, buildings. Access - Copper This sector contains the asset values for access copper (all the copper cables in the access network and all other necessary equipment required to carry signals between the user and the exchange). It includes 'Main' Copper and 'Distribution' Copper, as illustrated in the diagram below. The key driver is the direct mapping of Classes of Work (CoW) to network components and then onto the appropriate service based on usage factors and actual service volumes. Local Exchange Main Copper Primary Connection Point PCP Distribution Copper CUSTOMER PREMISES SectorD2AccessCopper The sector consists of: ASPIRE sector Includes: D2 Access: Copper LDC Construction, Local Distribution Cable for the provision or recovery of Access Copper Distribution and Branch Cables applicable to the copper build programme. This covers all work to increase the capacity of the network. Excludes duct. LDCR - Renewal, Local Line Copper Distribution Cable for the replacement of Access network metallic distribution and branch cables. LMC - Construction, Local/Main Exchange-side Cable relating to the provision or recovery of Access copper main cables to increase the capacity of the network. LMCR Renewal, Local Line Copper Main Cable for the replacement of 23

24 Access network metallic main cables and ancillary plant as a result of a fault. ADSL costs of contract, store and labour for the Construction of Digital Subscriber-line. NWB/NWR - Provision and Installation of business and residential Exchange lines. Access Fibre This sector contains the asset values and depreciation for access fibre and radio. The key driver is the mapping of CoW to network components and then onto the appropriate service based on usage factors and actual service volumes. ASPIRE sector Includes: D1 Access: Fibre and Radio The asset values and depreciation for Access Fibre (optical fibre cables in the access network) and Access Radio (cellular, microwave and satellite radio systems used to connect the user and the exchange). This includes costs relating to: LFDC and LFSC - Construction of Local Line Optical Fibre Spine and Distribution Cable such as the provision, re-arrangement and recovery of optical fibre cable, blown fibre tubing, blown fibre bundle, and sub duct in the access fibre network. LFXE - Construction of Local Line of Exchange Service Module. LFME - Construction of Local Network Service Module Equipment. TPWA - Construction of Access Radio Systems. Access Duct This sector contains the asset and depreciation values for duct. Duct is a pipe, tube or conduit through which underground copper or fibre cables are passed. Duct in the network is split into 'main'/'exchange Side' (Class of Work LMD) and 'Distribution' (Class of Work LDD), Main Underground Duct (Class of Work MUD) and Core Junction Duct (Class of Work CJD). The fibre Network is split into similar sections; the Exchange side is known as Spine Fibre and the Distribution side is known as Distribution Fibre and the main is Core Fibre. The key driver is a duct occupancy model that allocates CoW to network cable components and then onto the appropriate service based on usage factors and actual service volumes. ASPIRE sector Includes: D3 & DB Access: Duct Core Transmission: Duct Asset values and depreciation for Access Duct. Specific assets include the costs of provision or recovery of: LDD - Construction of Local Distribution Duct for Copper Cable. LMD - Construction, Local main (Exchange-side) Duct for Copper. LDR - Renewal, Local line Duct for Copper Cable (either Main or Distribution) to replace or partially replace duct for Access copper cables. LFD - Construction, Local Duct for Optical Fibre Cable in the Access Fibre Network. LFD - Construction, Local Duct for Optical Fibre Cable in the Access Fibre Network. MUD/MUDR - Construction/Renewal of Backhaul/Inner Core Duct. This asset class covers the provision and recovery/renewal of Backhaul/Inner Core Duct. Construction covers all Core Network duct work. CJD/CJDR - Construction/Renewal of Backhaul/Inner Core Duct. This asset class covers the provision and recovery/renewal of Core network duct. Switch 24

25 This sector contains the asset values and depreciation for switching equipment located in BT exchanges and provides the switching function of telephone networks. The key drivers are engineering models that allocate CoW to network component and then onto the appropriate service based on usage factors and actual service volumes. ASPIRE sector Includes: D4 D8 DC Local Exchanges: Digital Main Exchanges Intelligent Networks The asset values and depreciation for: Digital Local Exchanges LDX/LYX - Construction, Local Digital Exchange. This asset class covers all equipment and associated costs incurred as part of basic exchange provision, extension, or re-arrangement. CoW LDX for Digital Local Exchanges manufactured by System X, LYX for Digital Local Exchanges manufactured by Ericsson. Main Distribution Frames LMDF - Construction, MDF for exchanges. This asset class covers the provision, extension, upgrade, replacement, rearrangement and recovery of MDFs connected with Inland (BTUK) telephone exchanges. MDFs are those distribution frames providing direct interface with external circuits terminations (customer or other exchanges). DMC - Construction Operator Service System - Provision and recovery of operating access, Automatic Voice Response (AVR), Directory Assistance System and Operator Keyboard Display Terminal equipment controlled by Operator Services. The asset values and depreciation for the provision, rearrangement, recovery and upgrade of: MDX - Main Network Switching Digital which are digital exchanges providing the certain functions to digital traffic e.g. setting up and clearing down calls, switching traffic and signalling to other exchanges and subscribers. NGS - Next Generation Switch which is a new form of switch. There are two types: one using traditional circuit switching technology the other a hybrid using ATM packet switching technology. The asset values and depreciation for the Intelligent Networks Platform that allows functionality to be distributed flexibly at a variety of nodes on and off the network and allows the architecture to be modified to control the services. The 'Intelligent Network' provides network functionality beyond basic switching. Specific assets include: Costs of construction of the Intelligent Networks Platform (INC) Costs of the Signalling Network and Interconnect (SIGNI) including Signalling Transfer Point (STP) and Signalling Point Relay (STP) switches and Signalling Traffic Management (STMS) equipment. 25

26 Transmission This sector contains the asset values for transmission. Transmission includes Core Transmission Synchronous Digital Hierarchy (SDH), Plesiochronous Digital Hierarchy (PDH), Asynchronous Transfer Mode (ATM), Cables and Repeaters. The Core transmission network is used to link exchanges. For AS purposes the Core Transmission network is split into the Core Distribution network and the Core trunk network, illustrated below: Access Network Core Distribution Core Trunk Cabinet PCP Local Exchange Main (DMSU) Main (DMSU) SectorDaCoreTransmission ASPIRE sector Includes: DA DD Core Transmission: Cable and Other International Transmission SDH Costs of provision and re-arrangement of Construction of Synchronous Digital Hierarchy transmission equipment. SDH is a key element of BT's core transmission network. ATM capital expenditure for Asynchronous Transfer Mode platform equipment. ATM (also referred to as Broadband Integrated Services Digital Network (ISDN) is a fast, cell-switched technology. All broadband transmissions (whether audio, data, imaging or video) are divided into a series of cells and routed across an ATM network consisting of links connected by ATM switches. MUC costs associated with the Construction of Main Underground (Core) Cable to increase the capacity of the network. CJF costs associated with the Construction of Core Optical Fibre Cable in the Core Network. CRF costs associated with the Construction of Repeaters, Optical Fibre in the Core Network. CRD costs associated with the Construction of repeaters, digital, nonoptical in the Core Network. NCRR - International Radio and Repeaters. This asset class is used for Earth Station Capital expenditure on Broadcast Services or Shared Infrastructure Earth Station Assets. The asset class includes Satellite Earth Stations: mobile satellite dishes, small fixed dish systems and radio equipment at Cable or earth station. It also includes microwave links used for Broadcast Services or share infrastructure. DK Private Circuits and SMDS DTTM - Construction of Customer Wideband Services. This asset class covers contract, stores and labour for the construction, installation, commissioning, replacement, re-arrangement of equipment at local exchanges and customer s premises to carry wideband services to customers such as Wideband bearer electronics to support Kilostream service and Access SDH and test equipment for testing and maintenance of customer s wideband services. DTTK - Construction of Kilostream/Automatic cross Connect Equipment (ACE) Services. This asset class covers contract, stores and labour for the construction, installation, commissioning replacement, re-arrangement of Kilostream core network equipment for Kilostream Private Circuits e.g. ACE, Multiplexing Site Units (MSU) and Equipment Network Access (ENA) Contract, stores and labour for the work associated with the Analogue Offload Programme, and supply and installation of all customer end related equipment used for Kilostream Private Circuits (e.g. Line cards, Modern Units, and Network Terminating Units) and 26

27 includes Cost of stores or other materials ordered for the provision of Kilostream service (e.g. Line Cards, modem units, NTU) and the racking and cabling for Kilostream core network equipment. DTTS - Construction of Customer Wideband Services. This asset class covers construction, provision, installation, commissioning, replacement, re-arrangement or recovery of electronic equipment (but not service) for the various Short Haul Data Services (SHDS). DTTW - This asset class covers cost of provisions and such as stores and labour for the construction, installation, commissioning, replacement and upgrade of equipment at BT local exchanges and customers premises. DTTSW - Construction of SHDS links. Construction, provision, installation, commissioning and replacement, electronic equipment for products incorporating SHDS equipment. DT 21st Century Network MSAN (Multi Service Access Nodes) - provide customer access into the network for Voice, Broadband and some Connectivity via line-cards and the traffic generated is sent to Metro Nodes for switching. This can be via other MSANs. Metro/Core Nodes - Core Nodes are a special type of Metro Node where there is a mesh or net of transmission between them. Most Core nodes are connected to all other Core Nodes. Metro Nodes switch traffic and contain the intelligence to direct its path. All traffic will traverse the Metro Node to some degree whether it falls into the category of Voice, Broadband or Connectivity. 21C WDM Transmission (Wave Division Multiplexing). i-nodes (Call Servers) - i-nodes are used just for Voice customers and contain intelligence for numbering and the intelligence for routing i.e. Call Set-Up and Network Features. Ethernet Switches - Ethernet Switches are for Connectivity access into the network and are located at sites that can take advantage of WDM transmission to send and receive traffic to the Metro node. CCI (Common Capability Intelligence) - Common Capability Intelligence is a set of re-usable components used to build our products and services. It includes session management and intelligence voice routing, authentication of customer identity, identification of customer location and instant messaging. The key drivers are engineering inventories and models that allocate CoW to network components and then onto the appropriate service based on usage factors and actual service volumes. Other This sector contains the asset values for a range of assets used by BT businesses including categories such as Software, Motor Transport and 21CN. The key drivers are surveys, engineering models and direct mapping of CoW to network components and then onto the appropriate service based on usage factors and actual service volumes. ASPIRE sector Includes: DG Network Power TPC - Construction of Telecom Power Plant. This asset class covers the provision, installation, construction, replacement and re-arrangement of power plant systems and distributions feeding network operational equipment in operational buildings, i.e. telephone, radio and repeater stations. DH Capital Miscellaneous Miscellaneous capital expenditure DI Other Non-Voice Plant IPNC (Internet Protocol Network Capital) including assets and 27

28 depreciation. DJ Net Enabling Computers Network enabling computing fixed assets and depreciation. DL DM DN Public Payphones Apparatus Motor Transport PCOH This asset class covers the planning, provision and recovery of payphone housing, including lighting and power, other than managed sites. Sector DM contains the asset values and depreciation of Apparatus equipment. NVAC - New Vehicles and Accessories purchased and include pool cars, vans, light goods vehicles, heavy goods vehicles and 4 wheel drive vehicles and trailers. DO DS General Computers Office Machines COMPA - BT Own Use Computer Mainframes and Peripherals. This includes computers which require a controlled environment e.g. air conditioning, water cooling, includes front end processors, tape drives, disk drives, silos, dedicated terminals etc. COMPE - BT Own Use Personal Computers. Includes the processor, display monitor, keyboard, internal CD ROM and modem, one or more diskette drives, internal fixed disk storage and the operating system software purchased as an integral part of the PC. COMPF - BT Own Use Data Communication Equipment. These includes data transmission hardware and test equipment such as modems, multiplexors, routers, bridges, patch panels, protocol converters, line testers, monitor protocol analysers, cluster controllers, hyper-channels, file servers and Open System Cabling Architecture (OSCA) cables. IABC - Internal Infrastructure Cabling and Local Area Networks (LAN) in BT offices. IDX - Big and Large Switches. This asset class covers the provision of all big and large switches and of small/medium switches with an installed cost in excess of 1,500 for the COMMSURE (business continuity solutions) scheme. The COMMSURE scheme provides switch systems to be held on stand-by, to provide participating customers with temporary service in the event of an emergency.. OM - Office machines (BT own use). This asset class covers the procurement and installation of office machines for BT's own use, where the cost is 1,500 or more. EA Software Application system software - Designed to meet a specific business need with an established intended use (and not for use for any other purposes). Operating system software - Manages the basic operations of a computer system and the flow of information into and out of the main processor. 28

29 Other Investments This sector represents the shares of investments in subsidiaries and associated undertakings and relates purely to Retail Residual products. The relevant ASPIRE sectors are as follows: ASPIRE sector Includes: E7 Other Investments the shares of investments in subsidiaries and associated undertakings and relates purely to Retail Residual products E8 FA Invest Adj. CCA CCA adjustments to fixed asset investments E5 Other Non-Current Assets Other non-current assets Working Capital The figures for receivables and payables include an approximation of the internal notional receivables and payables that would be incurred if trades between BT s lines of business were undertaken to a third party and at arm s length. They are based upon the average trading terms of BT Group s external trades. ASPIRE sector G1 Trading Inventories Includes: Trade and finished goods inventories. Work in progress. Raw material inventory. GN AS Notional Receivables This is the calculated cost to BT of financing the payment terms it offers HN G2 AS Notional Payables Trade Receivables This is the calculated amount owed by BT Wholesale to BT Openreach for EOI services Geneva receivables - These are receivables associated with invoices raised through the Geneva system, a billing system used by BT Retail, Global Services and BT Wholesale. It contains customer data, such as the Products they currently rent, usage and any discounts applied. Customer Service System (CSS) billed receivables - These are receivables associated with invoices raised through the CSS. These receivables balances are generated by the Retail business unit of BT and include, for example, balances for invoices due from PSTN call services provided to business and residential customers. Other Communication Provider (OCP) receivables. G3 Intra-group Receivables Internal trading between our lines of businesses relating to receivables. Listed UK investments. Listed non-uk investments. G4 G5 Short Term Investments: TP Short Term Investments: IG Unlisted investments. Overnight deposits. Term deposits at banks. Certificates of tax deposits. BT s intra-group investments (funds deposited by one area of the business into another part of the business) are directly allocated to Retail Residual. 29

30 G6 G9 Cash At Bank Accrued Income The material balances in this sector represent sterling bank accounts, with different F8 codes used for accounts with different banks. This sector relates to the balance sheet value of accrued income for services provided to and used by customers but not yet invoiced by BT. Accrued income arises where the invoice schedule for a particular customer service allows the customer to use the service in advance of being billed e.g. for telephony calls made by residential customers, where customers are billed quarterly in arrears for the call charges. GA Prepayments Prepayments of general expenditure from BT. GB Other Receivables This sector relates to the balance sheet value of Other Receivables for amounts owing to BT. It contains sundry and miscellaneous receivable balances. GC Pay Recharges Relates to pay accounting in BT. This sector always nets to zero. GD H1 Derivative Financial Instrument (Current Assets) Short Term Borrowing This sector holds the balance sheet value of current derivative financial instruments and relates purely to Retail Residual products. The borrowings include: Overdrafts. Short-term loans. Other short-term loans (excluding bank overdrafts). Commercial paper. Liability balances on commercial paper held by the Treasury. H2 Provisions under one year Potential liabilities faced by BT that are due within a year. The key balances of trade Payables in this sector include: H3 Trade Payables Accounts Payable control. Other Communication Provider (OCP) Payables. Capital Trade Payables other. H4 Intra-group Payable Internal trading between our lines of businesses relating to payables. Key balances include: H6 Other Tax and Social Security Output VAT payables, arising from VAT collected by BT from its customers. Input VAT receivable balances, arising from VAT paid by BT on inputs purchased. National Insurance contributions for employees, payable by BT. H7 Provisions Miscellaneous provisions H8 Other Payables Sundry and miscellaneous payable balances. H9 Accrued Expenses Accrued expenses not yet paid by BT. HA Deferred Income Income received for services not yet provided to customers. HF Derivative Financial Instrument (Payables) This sector holds the balance sheet value of derivative financial instrument payables and relates purely to Retail Residual products. 30

31 Provisions for liabilities and charges This sector consists of the following: ASPIRE sector Includes: I2 I4 Provision: Other Provisions Provisions: Pensions This sector contains the balance sheet values of other provisions, which are primarily BT s warranty provisions. This sector contains the balance sheet values of provisions for pension liabilities. 31

32 4.1 Base Dictionary Except bases OUC BE BH BL BT BY s (For all descriptions below, see Appendix A for Key Destinations) Openreach Service Design This unit contains the Chief Engineer s Office, Network Strategy and Business Solutions group. This base apportions Pay, Non-Pay and Assets of the business unit using the same allocation rules as for the BT TSO Development charge into Openreach. This base is a subset of the TA except base (see below). Openreach Human Resources This base apportions Pay, Non-Pay and Assets relating to Openreach Human Resources department. Allocates directly to 100% to AG 401 (Openreach Pay Driver) Openreach Network Investment This base apportions the costs of the access network and capital build expenditure. This uses the FTQ base that is referring to all Unit Pay. The data is system generated from ASPIRE. Openreach Current Liabilities This is a record of the liabilities incurred from unpaid invoices. The value of these invoices relate to current account expenditure received by the accounts payments centre which are unpaid at the period end. This is the FTQ driven on the OUC. The data is system generated from ASPIRE. Openreach Centre Costs This is the adjustment made for running then Openreach CEO s office. This includes staff leaver payments, recognition event costs and advertising costs This is base, 100% apportioned to AG401 (Openreach Pay Driver) 32

33 BZ BLE Openreach Adjustment This is the adjustment made for running then Openreach CEO s office; an example of these are stock adjustments and stocktaking, provisions for insurable incidents and other business costs. 100% apportioned to AG401 (Openreach Pay Driver) Openreach Ethernet End to End This base allocates the Pay, Non-Pay costs of the planning team with staff supporting the provisioning of Openreach services. An example is the actual total pay bill for Supervision and Support staff within the team. 100% direct to PG573B Openreach Service Centre Provision Ethernet. BLH BLP2 Openreach Copper Recovery Team This base allocates the Pay, Non-Pay costs associated with Organisational Unit Code (OUC) BLH. BLH is a copper recovery team where scrap is recovered from the network and then sold as income. 100% direct to PG986R Openreach Other Activities. BP BW BWA BWA1 BWA2 BWA3 BWA6 BWB BWC BWD BWE5 BWF BWG BWG6 Openreach Sales and Product Management team This base allocates the Pay; Non-Pay costs associated with Organisational Unit Code (OUC) BP. BP is the Sales and Product Management division of Openreach. As the various teams support specific services, their costs cannot be spread on a direct pay or revenue basis. 100% direct to PG502B SG&A Openreach Sales Product Management. Openreach Service Division This base apportions the Profit and Loss (P&L), supporting the provisioning and repair of Openreach services. As the various teams support specific services, their costs cannot be spread on a Direct pay or revenue basis. A breakdown of each team s headcount is obtained. The OUC base is then constructed by reference to the respective service that each team member works on. Where a team works for a specific service (for example Wholesale Line Rentals (WLR) External Connections, then their FTE will be spread across Basic and Premier lines by reference to their respective volumes. Headcount analysis. 33

34 C CRG CRX CW Corporate Costs The costs within this OUC include costs relating to personnel and administration, computing, planning and development, general support and general management type costs. These costs are identified as Corporate Costs, which support BT in general (both the people in BT and the management of its assets). AG112 is an activity pool including costs in support of the Chairman s office, Group Personnel, Chief Technology Officer and Technology Director. These activities tend to be of a head office nature. Costs are allocated 100% to the Corporate Costs AG112. Group Internal Communications This base apportions the costs (e.g. current ETG and Non ETG Pay) associated with BT's internal communications team. The team keep BT employees informed about major company issues and initiatives. Costs are mainly pay, internal publicity and postage. AG112 is an activity pool including costs in support of the Chairman s office, Group Personnel, Chief Technology Officer and Technology Director. These activities tend to be of a head office nature. Costs are allocated 100% to the Corporate Costs AG112. Group External Communications This base apportions the cost of BT s external communication team. These units are responsible for the BT Group website and for Media Relations. AG112 is an activity pool including costs in support of the Chairman s office, Group Personnel, Chief Technology Officer and Technology Director. These activities tend to be of a head office nature. Costs are allocated 100% to the Corporate Costs AG112. This base apportions Profit and Loss (P&L) costs and Balance sheet items booked to Group Billing Organisational Unit Code (OUC) CW. Group Billing was created from the combination BT Retail and BT Wholesale billing teams. It was formed from Billing and Revenue assurance teams from BT Retail and Revenue management team from BT Wholesale. The unit is predominantly made up of BT Retail c88%. The retail versus Wholesale element of the cost is determined using a management assessment of revenue billed against each respectively. The retail element of the cost is allocated to P008 (Retail Other). The Wholesale element of the cost is allocated using a Wholesale revenue base. The Openreach element of the cost is allocated using an Openreach revenue base. The final overall base for CW is derived by weighting the Retail and Wholesale bases. The source data is the Wholesale and Openreach external revenue split by product and management information on the Group Billing cost split. 34

35 E F KB KD, KK, KU, KV, KY Miscellaneous Corporate Spend This base apportions Corporate Costs include those relating to personnel and administration, computing, planning and development, general support and general management associated with this Organisational Unit Code (OUC) E. They support BT in general (both the people in BT and the management of its assets) and are allocated directly to AG112 Corporate Costs. AG112 is an activity pool including costs in support of the Chairman s office, Group Personnel, Chief Technology Officer and Technology Director. These activities tend to be of a head quarters nature. Costs are apportioned 100% to AG112 Corporate Costs. BT Facilities Services This base apportions Profit and Loss (P&L) costs and Balance sheet items booked to BT Facilities Services, Organisational Unit Code (OUC) F. BTFS provide facilities management services to BT. These costs are part of BT s property costs and are therefore 100% apportioned by the property activity group AG106. Mobile Service Delivery and BT Managed Services Ltd BT Mobile Service Delivery provides a dedicated end to end service fulfilment function for major Mobile Customers. The unit s management and support team support the engineering activities. BT Managed Services Ltd supports BT s managed services capability and 3 rd party contracts with mobile network operators and service providers. Allocation by a direct charge from TSO or by standard allocation which is on the value of sales. BT Wholesale Functional Units The five listed OUCs are the main functional units within the Wholesale Line of Business (LoB), covering all aspects of the relationship with Communication Providers (CPs). KD Product Management KK Customer Services KU Markets KV Managed Services KY White Label Managed Services (ISP Co.) The type of costs covered by these OUC exception bases will be people and pay related. These costs are reported under the title Sales and General Administrative activities. An annual FTE activity based survey is conducted by the Wholesale costing team and is comprised of a mixture of supporting data. This includes estimates of resource working on particular products, product volumes and revenue. An additional analysis of Managed Network contracts supported by the BTW product Finance team is undertaken to identify the split of regulated and unregulated activity. This is because MNS contracts are essentially a sales outlet for BT Wholesale catalogue products meaning it is appropriate to allocate some MNS activities to regulated products. The level of detail is generally at three and four digit OUC level but will be summarised up to a higher level for input. The survey line details are agreed in advance with contacts in the Line of Business to align with their management accounts view and can therefore change or be redefined on an annual basis. 35

36 Annual BT wholesale SG&A FTE activity surveys. M7 ML, MLC, MLC1, MLC2, MLC4, MLC8 MLC1, MLC8 MLC, MP Residential Customer Contact Centres (CCC) Exception Base This base apportions the pay and non-pay costs associated with the Customer Contact Centres (CCC) staff involved in Inland and International Directory Enquiries and Operator Assistance Services, Customer Complaints, Provision Service, Fault Reporting and Repairs and general enquiry activities. Types of costs are Profit and Loss (P&L) Current Non-ETG pay and Balance Sheet (Fixed Asset) costs. This model uses a breakdown of the Total Labour Costs associated with the BT Retail Customer Contact Centres. The Labour Costs associated with Operator Services are then apportioned to Plant Group PG911A Operator Services OA Inland. The remaining costs are apportioned to P006 Retail - Calls Lines & Circuits, P005 (Retail - Broadband Ethernet & Convergence), P008 (Retail Other) Total Cost Survey to be supplied by BT Retail Consumer Finance in P9 and P12. Phonebooks This base apportions costs relating to printing, producing and distributing BT s Phone Book. The BT Phonebooks exception base is apportioned on the basis of a pay analysis completed by the BT Directories Product Reporting Group. This allocates the costs between the Phonebooks Plant Group (PG) PG933A and the Miscellaneous Number Information Retail Product P008. Management estimates of pay analysis completed by the BT Directories Product Reporting Group carried out at P9. Directory Enquires/ Operator Assistance This base apportions costs relating to printing, producing and distributing BT s directory enquires and operator assistance function This model uses call volumes from directory enquiries, Operator Assistance and emergency operator 999 to allocate costs associated with the relevant Class of Works to various plant groups, components and retail products. Data Source The file is a summary of information from a variety of other data sources. Combined Phonebooks / DQ/OA/ Payphones unit This base attributes the costs of the combined units following their reorganisation on 1 August 2013 The base is an average of the bases of MLC1, MLC2, MLC,4 and MLC8, weighted in accordance with their cost Data Source The file is a summary of information from a variety of other data sources. 36

37 TA BT TA : Architecture & Global IT platforms This Operations team provides the development for all of BT s IT platforms, networks and infrastructure. This includes major software updates and thousands of smaller weekly maintenance upgrades. The Internal Trades generated by the AGIP team are billed via the BT TSO Billing System. The apportionment is driven using the BT TSO billing data to determine the costs by Operational Unit Code (OUC), Line of Business (LoB) and Income type (e.g. Development, Application Support and Maintenance etc.). Each LoB has a base built using specific data relevant to the OUC. The base construction is formed of specific bases for each LoB and weighted using the BT TSO Billing data for each 2 digit OUC code. The following income types billed for OUC TA are Development/Non-Volume Development/ICT The costs relate to volume driven, non-volume driven and ICT software development for the rest of BT. The apportionment is driven using the BT TSO billing data to determine the costs by Line of Business (LoB). Each LoB has a base built using specific data relevant to the OUC. For Openreach the development costs will use specific data provided from Openreach to determine which plant groups the costs will be attributed to. Unspecified development costs use OR Fixed Asset base to apportion. BT Wholesale uses business case analysis where each business case spends relevant to BTW is identified and where possible pointed to the specific relevant SG&A Plant Group. Any unspecific business case spend for BTW will be spread using BTW Current Account Pay BT Global Services and BT Retail are allocated directly to Retail Products BT Group allocates to AG112 Media & Broadcast The costs relate to the dedicated teams supporting the Media & Broadcast (including BT Sport), TV and Content portfolio. They are apportioned using the BT TSO Billing data and previously apportioned pay to allocate to plant groups. Other Contract Specific These costs cover the BT TSO FTE support for specific support for external contracts and are allocated directly to Retail Products. Application Support and Management Design/In Life AS&M Design and In life covers the activities of BTTSO FTE to provide the systems and support of new BT designed software applications across BT LoBs. They are apportioned to the respective lobs using the BT TSO Billing data and previously apportioned pay to apportion to plant groups. IT Support (Cat 1/Cat 2) BT IT Systems Support teams are responsible for keeping BT s Networks, IT equipment, operating systems and data centres up and running. The teams support Servers and Storage, Main Frame Computers support, Personal Computers, IT Helpdesk, as well as specific Lob Computing Support teams. The apportionment methodology utilises the BT TSO trade analysis, which is supported by cost analysis, and previously apportioned pay to allocate to plant groups. EUT and Desktop Security The unit is responsible for BT s Desktop and Personal Computer portfolio, as well as related IT and Security systems. The apportionment methodology utilises the BT TSO trade analysis, which is supported by cost analysis, and previously apportioned pay to allocate to plant groups. Contract & In-Life Product Support 37

38 This covers the trade for the Specialised IT support teams for BT contracts for support to BT s external customers for products and/or services, as well as specific product support. The apportionment methodology utilises the BT TSO trade analysis and then the BT TSO Resource Planning data & analysis to allocate to plant groups. BT TSO Functions (including Oracle License) Certain costs in BT TSO TA cannot be directly allocated to services provided to other lobs. The costs in this support function relate to supporting and maintaining BT TSO network and are apportioned via AG102 which uses the net book value of the assets managed by BT TSO. The BT Enterprise Wide Oracle Licence costs also sit within OUC TA Functions and point 100% to AG112. TB BT TSO : Service, Strategy & Operations This BT TSO unit provides the operational support to maintain BT platforms, together with the 2 nd and 3 rd line technical support to the LoBs. They also lead on Strategic Business Planning for BT TSO. The Internal Trades generated by the SSO team are billed via the BT TSO Billing System. The apportionment is driven using the BT TSO billing data to determine the costs by Operational Unit Code (OUC), Line of Business (LoB) and Income type (e.g. Development, Application Support and Maintenance etc.). Each LoB has a base built using specific data relevant to the OUC. The base construction is formed of specific bases for each LoB and weighted using the BT TSO Billing data for each 2 digit OUC code. The following income types billed for OUC TB are Development/Non-Volume Development/ICT The costs relate to volume driven, non volume driven and ICT software development for the rest of BT. The apportionment is driven using the BT TSO billing data to determine the costs by Line of Business (LoB). Each LoB has a base built using specific data relevant to the OUC. For Openreach the Development costs will use specific data provided from Openreach to determine which plant groups the costs will be attributed to. Unspecified development costs use OR Fixed Asset base to apportion. BT Wholesale uses business case analysis where each business case spend relevant to BTW is identified and where possible pointed to the specific relevant SG&A Plant Group. Any unspecific business case spend for BT Wholesale will be spread using BTW Current Account Pay BT Global Services and BT Retail are allocated directly to Retail Products.BT Group allocates to AG112 driven on the analysis of the Trial Balance data. Other Contract Specific These costs cover the BT TSO FTE support for specific support for external contracts and are allocated directly to relevant Products Exchange Infrastructure Plan & Build The costs relate to the FTE that are responsible to plan and build the exchange infrastructure such as Transmission, Ethernet and LLU. Costs are apportioned to plant groups using the BT TSO FTE Resource Capacity Plan. Contract & In-Life Product Support This covers the trade for the Specialised IT support teams for BT contracts for support to BT s external customers for products and/or services, as well as specific product support. The apportionment methodology utilises the BT TSO trade analysis and then the BT TSO Resource Planning data & analysis to allocate to plant groups Power, Radio, and Other Infrastructure Support The costs in this unit relate to the Field based FTE for Power, Radio & common/generic network infrastructure 38

39 support activities. The costs are apportioned via PDT bases based on CoW bookings and the power routines are allocated to the power Activity groups (AG161 and AG163). BT TSO Functions Certain costs in BT TSO TB cannot be directly allocated to services provided to other lobs. The costs in this support function relate to 1) supporting and maintaining BT TSO network - This is apportioned via AG102 which uses the net book value of the assets managed by BT TSO - and 2) Activities supporting BT TSO overall either as Project Management, Business Strategy, or other general support and management type costs. These costs support BT TSO s people and the assets that BT TSO manages and are pointed to AG103. TN BT TSO : Global Network Services (GNS) Management and Support This BT TSO unit is responsible for the design, build and running or BT s network platforms. The Internal Trades generated by the GNS team are billed via the BT TSO Billing System. The apportionment is driven using the BT TSO billing data to determine the costs by Operational Unit Code (OUC), Line of Business (LoB) and Income type (e.g. Development, Application Support and Maintenance etc.). Each LoB has a base built using specific data relevant to the OUC. The base construction is formed of specific bases for each LoB and weighted using the BT TSO Billing data for each 2 digit OUC code. The following income types billed for OUC TN are Development/Non-Volume Development/ICT The costs relate to volume driven, non volume driven and ICT software development for the rest of BT. The apportionment is driven using the BT TSO billing data to determine the costs by Line of Business (LoB). Each LoB has a base built using specific data relevant to the OUC. For Openreach the Development costs will use specific data provided from Openreach to determine which plant groups the costs will be attributed to. Unspecified development costs use OR Fixed Asset base to apportion. BT Wholesale uses business case analysis where each business case spends relevant to BTW is identified and where possible pointed to the specific relevant SG&A Plant Group. Any unspecific business case spend for BT Wholesale will be spread using BTW Current Account Pay BT Global Services and BT Retail are allocated directly to Retail Products.BT Group allocates to AG112 driven on the analysis of the Trial Balance data. GVF Provide, Cease & Alter The costs cover the system & process support activities for the downstream LoBs, primarily for Ethernet and Private Circuit products and services, but also covering other products that use the BT network and platforms. The apportionment methodology utilises the BT TSO trade analysis, which is supported by cost analysis, and previously apportioned pay to allocate to plant groups. Media & Broadcast The costs relate to the dedicated teams supporting the Media & Broadcast (including BT Sport), TV and Content portfolio. They are apportioned using the BT TSO Billing data and previously apportioned pay to allocate to plant groups. Other Contract Specific These costs cover the BT TSO FTE support for specific support for external contracts and are allocated directly to relevant Products Application Support and Management Design/In Life AS&M Design and In life covers the activities of BT TSO FTE to provide the systems and support of new BT 39

40 designed software applications across BT LoBs. They are apportioned to the respective lobs using the BT TSO Billing data and previously apportioned pay to allocate to plant groups. IT Support (Cat 1/Cat 2) BT IT Systems Support teams are responsible for keeping BT s Networks, IT equipment, operating systems and data centres up and running. The teams support Servers and Storage, Main Frame Computers support, Personal Computers, IT Helpdesk, as well as specific Lob Computing Support teams. The apportionment methodology utilises the BT TSO trade analysis, which is supported by cost analysis, and previously apportioned pay to allocate to plant groups. Contract & In-Life Product Support This covers the trade for the Specialised IT support teams for BT contracts for support to BT s external customers for products and/or services, as well as specific product support. The apportionment methodology utilises the BT TSO trade analysis and then the BT TSO Resource Planning data & analysis to allocate to plant groups. CSNO (Customer Service Network Operations) These costs cover the desktop based Operations Centre managing the network traffic etc. Support costs for BT GS Global & UK networks including architects and design who manage the network. Also covers any costs for Radio Licences for spectrum. The apportionment methodology utilises the BT TSO trade analysis, which is supported by cost analysis, and previously apportioned pay to allocate to plant groups. BT TSO Functions Certain costs in BT TSO TN cannot be directly allocated to services provided to other lobs. The costs in this support function relate to supporting and maintaining BT TSO network and are apportioned via AG102 which uses the net book value of the assets managed by BT TSO. TC BT TC : Group Customer Experience This BT TSO unit is responsible for the measurement, analysis, reporting and improvement initiatives focused on customer experience across BT. It also hosts the Centre of Excellence in business processes. The Internal Trades generated by the GCE team are billed via the BT TSO Billing System. The apportionment is driven using the BT TSO billing data to determine the costs by Operational Unit Code (OUC), Line of Business (LoB) and Income type (e.g. Development, Application Support and Maintenance etc.). Each LoB has a base built using specific data relevant to the OUC. The base construction is formed of specific bases for each LoB and weighted using the BT TSO Billing data for each 2 digit OUC code. The following income types billed for OUC TC are Development/Non-Volume Development/ICT The costs relate to volume driven, non volume driven and ICT software development for the rest of BT. The apportionment is driven using the BT TSO billing data to determine the costs by Line of Business (LoB). Each LoB has a base built using specific data relevant to the OUC. For Openreach the Development costs will use specific data provided from Openreach to determine which plant groups the costs will be attributed to. Unspecified development costs use OR Fixed Asset base to apportion. BT Wholesale uses business case analysis where each business case spend relevant to BTW is identified and where possible pointed to the specific relevant SG&A Plant Group. Any unspecific business case spend for BT Wholesale will be spread using BTW Current Account Pay BT Global Services and BT Retail are allocated directly to Retail Products.BT Group allocates to AG112 driven on the analysis of the Trial Balance data. 40

41 BT TSO Functions Certain costs in BT TSO TC cannot be directly allocated to services provided to other lobs. The costs in this support function relate to supporting and maintaining BT TSO network and are apportioned via AG102 which uses the net book value of the assets managed by BT TSO. TG BT TG : Chief Information Officer s Global Services The CIO units design, build and deploy services for the LoB customers they support and the systems, networks and processes that support these services. There is a Chief Information Office team supporting the respective lobs, BT Wholesale, BT Group, BT Global Services, Openreach and BT Retail. The Internal Trades generated by the CIO GS team are billed via the BT TSO Billing System. The apportionment is driven using the BT TSO billing data to determine the costs by Operational Unit Code (OUC), Line of Business (LoB) and Income type (e.g. Development, Application Support and Maintenance etc.). Each LoB has a base built using specific data relevant to the OUC. The base construction is formed of specific bases for each LoB and weighted using the BT TSO Billing data for each 2 digit OUC code. The following income types billed for OUC TG are Development/Non-Volume Development / ICT The costs relate to volume driven, non volume driven and ICT software development for the rest of BT. The apportionment is driven using the BT TSO billing data to determine the costs by Line of Business (LoB). Each LoB has a base built using specific data relevant to the OUC. For Openreach the Development costs will use specific data provided from Openreach to determine which plant groups the costs will be attributed to. Unspecified development costs use OR Fixed Asset base to apportion. BT Wholesale uses business case analysis where each business case spend relevant to BTW is identified and where possible pointed to the specific relevant SG&A Plant Group. Any unspecific business case spend for BT Wholesale will be spread using BTW Current Account Pay BT Global Services and BT Retail are allocated directly to Retail Products.BT Group allocates to AG112 driven on the analysis of the Trial Balance data. GS Recharge These costs cover the support for non ICT / Dev activities such as quality assurance and system transformation and are pointed to a BT Global Services Product Code BT TSO Functions Certain costs in BT TSO TG cannot be directly allocated to services provided to other lobs. The costs in this support function relate to supporting and maintaining BT TSO network and are apportioned via AG102 which uses the net book value of the assets managed by BT TSO. TM BT TM : Chief Information Officer s Group The CIO units design, build and deploy services for the lob customers they support and the systems, networks and processes that support these services. There is a Chief Information Office team supporting the respective lobs, BT Wholesale, BT Group, BT Global Services, Openreach and BT Retail. 41

42 The Internal Trades generated by the CIO Group team are billed via the BT TSO Billing System. The apportionment is driven using the BT TSO billing data to determine the costs by Operational Unit Code (OUC), Line of Business (LoB) and Income type (e.g. Development, Application Support and Maintenance etc.). Each LoB has a base built using specific data relevant to the OUC. The base construction is formed of specific bases for each LoB and weighted using the BT TSO Billing data for each 2 digit OUC code. The following income types billed for OUC TM are Development / Non-Volume Development / ICT The costs relate to volume driven, non volume driven and ICT software development for the rest of BT. The apportionment is driven using the BT TSO billing data to determine the costs by Line of Business (LoB). Each LoB has a base built using specific data relevant to the OUC. For Openreach the Development costs will use specific data provided from Openreach to determine which plant groups the costs will be attributed to. Unspecified development costs use OR Fixed Asset base to apportion. BT Wholesale uses business case analysis where each business case spend relevant to BTW is identified and where possible pointed to the specific relevant SG&A Plant Group. Any unspecific business case spend for BT Wholesale will be spread using BTW Current Account Pay BT Global Services and BT Retail are allocated directly to Retail Products.BT Group allocates to AG112 driven on the analysis of the Trial Balance data. Application Support and Management Design/In Life AS&M Design and In life covers the activities of BT TSO FTE to provide the systems and support of new BT designed software applications across BT LoBs. They are apportioned to the respective lobs using the BT TSO Billing data and previously apportioned pay to allocate to plant groups. Contract & In-Life Product Support This covers the trade for the Specialised IT support teams for BT contracts for support to BT s external customers for products and/or services, as well as specific product support. The apportionment methodology utilises the BT TSO trade analysis and then the BT TSO Resource Planning data & analysis to allocate to plant groups. BT TSO Functions Certain costs in BT TSO TM cannot be directly allocated to services provided to other lobs. The costs in this support function relate to supporting and maintaining BT TSO network and are apportioned via AG102 which uses the net book value of the assets managed by BT TSO. TP BT TP : Chief Information Officer s Openreach The CIO units design, build and deploy services for the lob customers they support and the systems, networks and processes that support these services. There is a Chief Information Office team supporting the respective lobs, BT Wholesale, BT Group, BT Global Services, Openreach and BT Retail. 42

43 The Internal Trades generated by the CIO Openreach team are billed via the BT TSO Billing System. The apportionment is driven using the BT TSO billing data to determine the costs by Operational Unit Code (OUC), Line of Business (LoB) and Income type (e.g. Development, Application Support and Maintenance etc.). Each LoB has a base built using specific data relevant to the OUC. The base construction is formed of specific bases for each LoB and weighted using the BT TSO Billing data for each 2 digit OUC code. The following income types billed for OUC TP are Development/Non-Volume Development/ICT The costs relate to volume driven, non-volume driven and ICT software development for the rest of BT. The apportionment is driven using the BT TSO billing data to determine the costs by Line of Business (LoB). Each LoB has a base built using specific data relevant to the OUC. For Openreach the Development costs will use specific data provided from Openreach to determine which plant groups the costs will be attributed to. Unspecified development costs use OR Fixed Asset base to apportion. BT Wholesale uses business case analysis where each business case spend relevant to BTW is identified and where possible pointed to the specific relevant SG&A Plant Group. Any unspecific business case spend for BT Wholesale will be spread using BTW Current Account Pay BT Global Services and BT Retail are allocated directly to Retail Products.BT Group allocates to AG112 driven on the analysis of the Trial Balance data. BT TSO Functions Certain costs in BT TSO TP cannot be directly allocated to services provided to other lobs. The costs in this support function relate to supporting and maintaining BT TSO network and are apportioned via AG102 which uses the net book value of the assets managed by BT TSO. TR BT TR : Chief Information Officer s Retail The CIO units design, build and deploy services for the lob customers they support and the systems, networks and processes that support these services. There is a Chief Information Office team supporting the respective LoBs, BT Wholesale, BT Group, BT Global Services, Openreach and BT Retail. The Internal Trades generated by the CIO Retail team are billed via the BT TSO Billing System. The apportionment is driven using the BT TSO billing data to determine the costs by Operational Unit Code (OUC), Line of Business (LoB) and Income type (e.g. Development, Application Support and Maintenance etc.). Each LoB has a base built using specific data relevant to the OUC. The base construction is formed of specific bases for each LoB and weighted using the BT TSO Billing data for each 2 digit OUC code. 43

44 The following income types billed for OUC TR are Development/Non-Volume Development/ICT The costs relate to volume driven, non volume driven and ICT software development for the rest of BT. The apportionment is driven using the BT TSO billing data to determine the costs by Line of Business (LoB). Each LoB has a base built using specific data relevant to the OUC. For Openreach the Development costs will use specific data provided from Openreach to determine which plant groups the costs will be attributed to. Unspecified development costs use OR Fixed Asset base to apportion. BT Wholesale uses business case analysis where each business case spend relevant to BTW is identified and where possible pointed to the specific relevant SG&A Plant Group. Any unspecific business case spend for BT Wholesale will be spread using BTW Current Account Pay BT Global Services and BT Retail are allocated directly to Retail Products.BT Group allocates to AG112 driven on the analysis of the Trial Balance data. BT TSO Functions Certain costs in BT TSO TR cannot be directly allocated to services provided to other lobs. The costs in this support function relate to supporting and maintaining BT TSO network and are apportioned via AG102 which uses the net book value of the assets managed by BT TSO. TW BT TW : Chief Information Officer s BT Wholesale The CIO units design, build and deploy services for the lob customers they support and the systems, networks and processes that support these services. There is a Chief Information Office team supporting the respective lobs, BT Wholesale, BT Group, BT Global Services, Openreach and BT Retail. The Internal Trades generated by the CIO BT Wholesale team are billed via the BT TSO Billing System. The apportionment is driven using the BT TSO billing data to determine the costs by Operational Unit Code (OUC), Line of Business (LoB) and Income type (e.g. Development, Application Support and Maintenance etc.). Each LoB has a base built using specific data relevant to the OUC. The base construction is formed of specific bases for each LoB and weighted using the BT TSO Billing data for each 2 digit OUC code. The following income types billed for OUC TW are Development/Non-Volume Development/ICT The costs relate to volume driven, non volume driven and ICT software development for the rest of BT. The apportionment is driven using the BT TSO billing data to determine the costs by Line of Business (LoB). Each LoB has a base built using specific data relevant to the OUC. For Openreach the Development costs will use specific data provided from Openreach to determine which plant groups the costs will be attributed to. Unspecified development costs use OR Fixed Asset base to apportion. BT Wholesale uses business case analysis where each business case spends relevant to BTW is identified and where possible pointed to the specific relevant SG&A Plant Group. Any unspecific business case spend for BT Wholesale will be spread using BT Wholesale Current Account Pay BT Global Services and BT Retail are allocated directly to Retail Products.BT Group allocates to AG112 driven on the analysis of the Trial Balance data. BT TSO Functions Certain costs in BT TSO TW cannot be directly allocated to services provided to other lobs. The costs in this support function relate to supporting and maintaining BT TSO network and are apportioned via AG102 which uses the net book value of the assets managed by BT TSO. 44

45 TF, TH, TT, TX, TY,TZ, and T TSD TU V WP BT TSO : Other Management and Support functional units including Finance, Human Resources, and Strategy The costs within these OUCs include costs relating to the BT TSO Finance functions, Human Resources personnel and administration functions, together with BT TSO s central functions and other general support and management type costs. These costs cannot be directly attributed to another Lob, but support BT TSO s people, and the assets BT TSO manages. Costs are allocated to AG103 which is an activity pool for costs relating to the management of BT TSO people and the maintenance of BT TSO s managed assets. BT TSO : BT Energy and Carbon Unit The Energy and Carbon unit is responsible managing energy, and carbon emissions, across all of BT s Lines of Business (LoBs). The costs are treated as AG102. AG102 is an activity pool for the costs of maintaining TSO s managed assets i.e. the Network. BT TSO : Research & Innovation The Research & Innovation unit runs a set of programmes to facilitate the use of new technologies to generate revenue or transform costs. These costs benefit all BT s activities and assets, and it is therefore appropriate to attribute 100% to the Corporate Cost AG112. BT Security The BT Security team is situated within Group. The function is responsible for keeping BT buildings secure, and protecting BT s networks and systems from outside interference. Costs include those for BT staff, and also subcontracted security costs. BT Security recovers its costs from Lines of Business (Lobs) via internal Trades. The traded values are supported by an analysis of costs by activity and customer, and therefore provide the basis for the apportionment methodology. Analysis of BT Security trades from BT Security BT Property Partners The base apportions costs associated with BT Property Partners. WP is the Organisational Unit Code (OUC) for BT Property Partners ICU, who acts as the informed strategic interface between the Lines of Business (LoB), Group and the external property infrastructure and service providers. Property Partners manages the supply of all property and facilities in accordance with the requirements of BT Property Partners and also holds, on behalf of BT Group, all interests in land and property including leases and licences and manages all property and related projects on behalf of LoB) and Group, including appointing and instructing external property and construction consultants. Property Partners manages the supply of the following activities for the benefit of the BT Group: Provision of premises this includes the provision of land, the allocation of existing/refurbished space and provision of new space. Building and plant maintenance/replacement this includes planned/reactive maintenance and external site maintenance. Alteration to accommodation this includes minor alterations, fit out of accommodation, refurbishment and upgrade of space. Moves and space management this includes managing large-scale people moves, vacation management and internal space brokerage. Estate management and strategic advice this includes property related financial support, strategy planning and portfolio management e.g. sub-letting. Rating and valuation this includes property asset accounting and property taxation cost control in accordance with current legislation. 45

46 Property consultancy this includes real estate strategy planning, property efficiency and utilisation studies, call centre build and operation and flexible working advice. Global property service this includes portfolio strategy construction, project management and real estate. All costs within this OUC are allocated to the Facility Management Intermediate Activity Group AG106 for onward apportionment to Products and Services. Other suitable cost centre allocations are made for relevant Other Operating Income when material. YF Y3/YL YK Group Procurement Group Procurement performs activities associated with the procurement of materials and services (to support business operations) and the issuing of supplies. This base apportions the Profit & Loss (P&L) costs e.g. Procurement pay. This is the staff cost in respect of personnel involved in work associated with supplies, for example, storekeepers, managers and other logistical support staff. Group Procurement provides support to the different Lines of Business (LoBs) and these costs relate to BT Retail. Costs generated by Group Procurement in support of BT Retail are allocated 100% to Retail residual product P683. BT Fleet BT Fleet provides motor vehicles and associated services to employees within BT and to external customers. BT Fleet Ltd provides its services to BT units and also to customers external to BT. It uses transfer codes to charge, at commercial rates, for the services it provides to the relevant BT units. It records the revenue it receives from external parties in other income codes. This base apportions all the profit and loss (P&L) and relevant balance sheet items relating to this subsidiary to the following: The intermediate Activity Group AG101 (Motor Transport). Products relating to the other operating income received from external parties. The apportionment between these destinations is determined by BT Fleet cost analysis which considers costs drivers for different elements of the BT Fleet cost base and accordingly provides the appropriate apportionment. Management cost split based on Hyperion download data. Group Procurement supporting Openreach Group Procurement performs activities associated with the procurement of materials and services (to support business operations) and the issuing of supplies. This base apportions the Profit & Loss (P&L) costs e.g. Procurement pay. This is the staff cost in respect of personnel involved in work associated with supplies, for example, storekeepers, managers and other logistical support staff. Group Procurement provides support to the different Lines of Business (LoBs) and these costs relate to Openreach. Costs generated by Group procurement in support of Openreach are apportioned using the existing Openreach Common costs base COMCOS. Ledgered data for Procurement costs. Existing Openreach base COMCOS on ASPIRE. YM Group Procurement supporting BT Wholesale Group Procurement performs activities associated with the procurement of materials and services (to support 46

47 business operations) and the issuing of supplies. This base apportions the Profit & Loss (P&L) costs e.g. Procurement pay. This is the staff cost in respect of personnel involved in work associated with supplies, for example, storekeepers, managers and other logistical support staff. Group Procurement provides support to the different Lines of Business (LoBs) and these costs relate to BT Wholesale. Costs generated by Group procurement in support of BT Wholesale are apportioned using an existing Wholesale SG&A base (K EXCEPT) Ledgered data for Procurement costs. Existing BT Wholesale base on ASPIRE YL BT Fleet - Motor Vehicle Assets BT Fleet provides motor vehicles and associated services to employees within BT and to external customers. BT Fleet Ltd provides its services to BT units and also to customers external to BT. It uses transfer codes to charge, at commercial rates, for the services it provides to the relevant BT units. It records the revenue it receives from external parties in other income codes. This base apportions all the profit and loss (P&L) and relevant balance sheet items relating to this subsidiary to the following: The intermediate Activity Group AG101 (Motor Transport). Products relating to the other operating income received from external parties. The apportionment between these destinations is determined by BT Fleet cost analysis which considers costs drivers for different elements of the BT Fleet cost base and accordingly provides the appropriate apportionment. 100% allocation to BT Fleet cost base 47

48 YW Group Procurement supporting TSO Group Procurement performs activities associated with the procurement of materials and services (to support business operations) and the issuing of supplies. This base apportions the Profit & Loss (P&L) costs e.g. Procurement pay. This is the staff cost in respect of personnel involved in work associated with supplies, for example, storekeepers, managers and other logistical support staff. Group Procurement provides support to the different Lines of Business (LoBs) and these costs relate to TSO. Costs generated by Group Procurement in support of TSO are apportioned using the BT TSO managed Assets Intermediate Activity Group AG102. YE,YP, YV YQ,YZ Ledgered data for Procurement costs. AG102 on ASPIRE Group Procurement supporting HQ Group Procurement performs activities associated with the procurement of materials and services (to support business operations) and the issuing of supplies. This base apportions the Profit & Loss (P&L) costs e.g. Procurement pay. This is the staff cost in respect of personnel involved in work associated with supplies, for example, storekeepers, managers and other logistical support staff. Group Procurement provides support to the different Lines of Business (LoBs) and these costs relate to Pan-LoB activities. AG112 is an activity pool including costs in support of the Chairman s office, Group Personnel, Chief Technology Officer and Technology Director. These activities tend to be of a head office nature. Costs are allocated 100% to the Corporate Costs AG112. Y3 Motor Transport Fixed Assets This base apportions the Net Book Value (NBV) of Motor Transport fixed assets. This Group unit makes detailed internal transfer charges with regard to which units use its service. The costs generated are apportioned using AG101 Motor Transport. YS Supply Chain Partners Organisation Unit Code (OUC) YS represents Supply Chain Partners, which is part of Business Services. Its responsibilities (services) include: The inventory management, warehousing and distribution of engineering materials and network infrastructure items to Field Engineers. The warehousing and distribution of Customer Premises equipment to BT s trade distributors. The warehousing and distribution of Telephone directories. The provision of an internal mail service as well as a Document Design and Management Service. These services are provided to other Lines of Business (LoB), and to non-bt customers e.g. O2. The major costs of Supply Chain Partners relates to: Internal labour and agency costs for the unit. Freight, postage and delivery charges associated with materials procurement. The Supply Chain Finance team prepare details of their costs, by Activity, cumulative to Period 12. The costs are further split by Line of Business (LoB) and/or Channel e.g. Openreach, BT Wholesale, BT Retail, BT Northern Ireland and Third Parties. Costs related to Stores management are apportioned using the relevant Store management activity groups. 48

49 Costs relating to BT Retail or BT Global Services are allocated directly to residual products. A weighted base is then prepared by combining the Supply Chain costs analysis. Supply Chain Finance management accounts data. 49

50 4.2 Base Dictionary Other Bases Base Ref OUC s (For all descriptions below, see Appendix A for Key Destinations) BASENGT E This base does not allocate any cost. It is used to offset a dummy cost which is put through each plant group to understand how the cost exhausts to the various markets. This is for reference only. To ensure none of this cost is actually allocated, the offsetting entry to this dummy cost is allocated on this base to ensure the net impact is nil. CAPEXP_A LL ALL Core OUCs Capital Creditors This base is used to apportion BT Group capital creditors relative to the capital additions (purchase of Fixed Assets) made over the year. Capital creditors are the value of authorised invoices for capital expenditure due to suppliers, but that are unpaid at the accounting period end. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach; this is recalculated each time the capital addition costs are updated. Each base has two stages as follows: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. CAPEXP). The Accounting Separation (AS) Cost centres to which the balances should be apportioned (Data Designator 2, i.e. ALL). Diagram: Capital Creditors Apportion Process. DD1: List of F8 Codes in Aspire from which bases are is derived by Cost Centre Use Use F8s F8's to to produce data data in ASPIRE in ASPIRE ASPIRE: array relevant base information by AS Cost Centre Array : AS Cost Centre A AS Cost Centre B AS Cost Centre C 100% Eliminate data for AS Cost Centres not in DD2 DD2: List of AS Cost Centres to which the balance should be apportioned AS Cost Centres that are not list in DD2 are excluded from the ASPIRE download and the remaining data is rebased to 100% Array: AS Cost Centre A AS Cost Centre B AS Cost Centre C = 100% Download: AS Cost Centre A AS Cost Centre C = 100% CAPEXP_Diagram1 CAPEXP, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived i.e. all non-pay capital additions (purchases of Fixed Assets) during the year. This data is held within the system by AS Cost Centre. ALL, the Data Designator 2, specifies the AS Cost Centres to which the capital creditor balance should be apportioned. The CAPEXP base represents a smaller number of Products that are within the ALL BT Group AS Cost Centres and the existing CAPEXP base is apportioned to the existing array of AS Cost Centres. Income / cost to be apportioned Apportionments from DD1 (CAPEXP) AS Cost Centres in DD2 (ALL) Capital Creditors DD1: CAPEXP Purchase of Fixed Assets during year. DD2: ALL BT Group Cost Centres CAPEXP_Diagram2 50

51 Base Ref OUC s (For all descriptions below, see Appendix A for Key Destinations) System generated base from ASPIRE. CAPEXP_P CT B, T, J, K, and M Capital Creditors This base is used to apportion Line of Business capital creditors relative to the capital additions (purchase of noncurrent assets) made over the year. Capital creditors are the value of authorised invoices for capital expenditure due to suppliers, but that are unpaid at the accounting period end. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach; this is recalculated each time the capital addition costs are updated. Each base has two stages as follows: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. CAPEXP). The Accounting Separation (AS) Cost centres to which the balances should be apportioned (Data Designator 2, i.e. PCT). Diagram: Capital Creditors Apportion Process. DD1: List of F8 Codes in Aspire from which bases are is derived by Cost Centre Use Use F8s F8's to to produce produce data data in ASPIRE in ASPIRE ASPIRE: array relevant base information by AS Cost Centre Array : AS Cost Centre A AS Cost Centre B AS Cost Centre C 100% Eliminate data for AS Cost Centres not in DD2 DD2: List of AS Cost Centres to which the balance should be apportioned AS Cost Centres that are not list in DD2 are excluded from the ASPIRE download and the remaining data is rebased to 100% Array: AS Cost Centre A AS Cost Centre B AS Cost Centre C = 100% Download: AS Cost Centre A AS Cost Centre C = 100% CAPEXP_PCT_Diagram1 CAPEXP, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived i.e. all non-pay capital additions (purchases of Fixed Assets) during the year. This data is held within the system by AS Cost Centre. PCT, the Data Designator 2, specifies the AS Cost Centres to which the capital creditor balance should be apportioned. The CAPEXP base represents a smaller number of Products that are within the PCT BT Group AS Cost Centres and the existing CAPEXP base is apportioned to the existing array of AS Cost Centres. Income / cost to be apportioned Apportionments from DD1 (CAPEXP) AS Cost Centres in DD2 (PCT) Capital Creditors DD1:CAPEXP Purchase of Fixed Assets during year DD2: ALL BT Group Cost Centres CAPEXP_PCT_Diagram2 CCAFIB BV,BY, MJ System generated base from ASPIRE. Access Fibre CCA Adjustment 51

52 Base Ref OUC s (For all descriptions below, see Appendix A for Key Destinations) This base apportions CCA adjustments relating to access fibre to plant groups (PGs). CCA adjustments are allocated to PG111C and PG959C based on the existing cost bases for the PG weighted to take into account their relative share of total CCA valuation of access fibre for the year. Costing bases PDTLFDC and PDTLFSC, and Life of Plant (LoP) list. COMCOS_ PCT COMCOS B BLL,B LP, BA, BF, BQ, BR Openreach Common Costs Openreach common costs Apportionment Summary Based on factorised current salary costs and return on assets within Openreach Apportionment The ASPIRE system is given instruction to take the following costs to generate an apportionment allocation: Factorised salary expenses for the whole of Openreach (current and capital account). Net book value of fixed assets revalued for current cost accounting (CCA) for the whole of Openreach. The COMCOS base draws on the result of the previously attributed Openreach pay costs within the ASPIRE system following the base reference stage. The return on assets percentage is then applied to the CCA net book value of each fixed asset class identified by the Regulatory Accounting system. This percentage is determined by Ofcom. This is applied to ensure that the driver reflects the corporate activities of managing the assets of the company to create a return. By weighting the previously attributed pay costs together with the CCA fixed asset values (taking into account the fact that the asset amounts have already had the return on assets and investments percentages applied to them) an apportionment base for COMCOS can be derived. The final base apportionment excludes subsidiaries and associates as these are overseas activities and the COMCOS costs are being attributed solely to UK activities. ASPIRE. Openreach Common Costs Openreach common costs Apportionment Summary Based on factorised current salary costs and return on assets within Openreach Apportionment The ASPIRE system is given instruction to take the following costs to generate an apportionment allocation: Factorised salary expenses for the whole of Openreach (current and capital account). Net book value of fixed assets revalued for current cost accounting (CCA) for the whole of Openreach. The COMCOS base draws on the result of the previously attributed Openreach pay costs within the ASPIRE system following the base reference stage. The return on assets percentage is then applied to the CCA net book value of each fixed asset class identified by the Regulatory Accounting system. This percentage is determined by Ofcom. This is applied to ensure that the driver reflects the corporate activities of managing the assets of the company to create a return. By weighting the previously attributed pay costs together with the CCA fixed asset values (taking into account the fact that the asset amounts have already had the return on assets and investments percentages applied to them) an apportionment base for COMCOS can be derived. ASPIRE. 52

53 Base Ref OUC s (For all descriptions below, see Appendix A for Key Destinations) CUMNOR M W BT s Cumulo Rates liabilities BT s cumulo rates liability covers what we pay in non-domestic rates on its rateable network assets in the UK. Non domestic rates are effectively a form of property tax. Most businesses pay rates on properties and other rateable assets that they occupy. The rateable assets within BT s cumulo assessment include exchange buildings, telegraph poles, duct, manholes, cabinets, payphones, copper and fibre. Under rating principles these are assessed together, hence the term cumulo. Other parts of BT s property estate - e.g. offices and workshops - are assessed separately and do not form part of BT s cumulo assessment. Non-domestic rating liabilities are calculated by applying a rate in the pound (rate poundage) to a rateable value (RV). Rate poundages are the same for all ratepayers in each UK country. RVs are set by the UK rating authorities under statutory rating law and principles. The rateable value of BT s cumulo assessment reflects the value of all the assets considered together. This cannot be deconstructed to reflect individual lines of business or individual products. The base apportions BT s cumulo rates charges to products and services. Rate poundages generally increase by RPI each year. RVs are reset every five years; however ratepayers may appeal their RVs if they believe there have been material changes in circumstance (MCCs). What constitutes a valid MCC is defined by legislation. In recent years BT has successfully appealed its cumulo RV primarily as a result of increased levels of unbundling. The CUMRBTE base applies to the changes to BT s cumulo liabilities as a result of increased unbundling. The CUMNORM base applies to all other BT cumulo liabilities. BT s cumulo rates charge is allocated to products and services using a three stage process. Stage 1: BT s cumulo liabilities are divided into those to be allocated using the CUMNORM base and those to be allocated using the CUMRBTE base. Stage 2: CUMNORM base costs are allocated across line of business (LoB) and the rateable classes of work (CoW) using profit weighted net replacement costs at the start of the rating valuation period. Stage 3: These CoW liabilities are then allocated to plant groups, components and then services using standard LoB allocation bases Rationale The key principle underlying the allocation is that it should reflect the use or occupation of rateable assets. The use of profit weighted NRCs (PWNRCs) as the primary allocation basis can be shown to have clear links back to the underlying rating and valuation theory in that it is a reasonable proxy for the expected return on the landlord s assets under the hypothetical rating tenancy. The use of PWNRCs produces a relatively stable and consistent allocation. It is also superior to other potential bases for example service revenues or product profitability. Not all of BT s assets are rateable. For example, computer software switching equipment and modems are not. The Plant and Machinery (Rating) (Amendment) Order 1974 (and subsequent amendments) defines those assets that are rateable. The CoWs that include rateable assets are set out in the table below. 53

54 Base Ref OUC s (For all descriptions below, see Appendix A for Key Destinations) The above list excludes exchange buildings (specialised accommodation) as these are no longer part of BT s fixed assets following their sale to what is now Telereal Trillium in However BT is the rateable occupier of these assets so they need to be included. The NRCs of exchange buildings have been valued by Telereal Trillium using a methodology consistent with that applied to the corresponding BT estate prior to the 2001 sale. Profit weighted NRCs are calculated by applying the return reported in the RFS for each market (Access, Other Wholesale and Wholesale Residual) to the NRC of each CoW allocated to that market as at the rating valuation date. For NGA, the valuation authorities currently apply an incremental fixed rateable value per connection as an MCC. This is apportioned in the same way as the main charge but only across the assets that NGA uses. The Organisational Unit Code (OUC) for CUMNORM is W Current Cost Accounting (CCA) valuations at year end. CUMRBTE W CUMRBTE (Unbundling driven reductions to BT s Cumulo Rates liabilities) See CUMNORM for a general description of BT s cumulo rates liabilities and the allocation approach. CUMRBTE covers the reductions in BT s cumulo rates liabilities as a result of increased unbundling. Other changes to BT s cumulo liabilities are allocated using CUMNORM. Unbundling causes a loss of value in BT s core network and it is this effect that the valuation authorities estimate when they reassess BT s cumulo RV for increased unbundling. CUMRBTE liabilities are therefore allocated in exactly the same way, using the same principles and rationale, as CUMNORM except that in Stage 2 the liabilities are apportioned across core rateable classes of work (CoW) only. The relevant CoW that includes rateable core assets is shown in the table below. 54

55 Base Ref OUC s (For all descriptions below, see Appendix A for Key Destinations) The Organisational Unit Code (OUC) for CUMRBTE is W. Current Cost Accounting (CCA) valuations at year end. DTNASBT T TS BT owned property charges. This base allocates the BT owned property charges. This allocation is based on the overall floor space utilisation. A download of floor space utilisation is taken from the Horizon system. The dimension size of the equipment is then used to determine the floor space occupied by the TSO network. Relevant heat dissipation factors are applied to the dimension data of the equipment to account for necessary cooling space. This provides a total floor space occupation for a particular equipment type Horizon DTNASBT B BT owned property charges. This base allocates the BT owned property charges. Ledger information for the Openreach transfer charges from Group Property are downloaded from CID. These charges are apportioned to the three areas Openreach own: MDF, Cable Chambers and LLU with an amount remaining as Other (e.g. Service centres). The apportionment is based on analysis of the transfer charges by Group Property Finance who also supplies the amount of charge for vacant space. The vacant space charge is then allocated to MDF, Cable Chambers and LLU. The total charges against LLU, MDF are allocated to the relevant Plant Groups. Cable Chambers costs are apportioned to the relevant Plant Groups by the Gross Replacement Costs. The amount remaining in Other is apportioned to Plant Groups by AG407 (Openreach engineering pay). Horizon DTNASTR T Property costs associated with leasing from Telereal Trillium. This base allocates the property costs associated with leasing from Telereal Trillium. This allocation is based on the overall floor space utilisation. A download of floor space utilisation is taken from the Horizon system. Dimension data of the equipment is then used to determine the floor space occupied by the TSO network. Relevant heat dissipation factors are applied to the dimension data of the equipment to account for necessary cooling space. This provides a total floor space occupation for a particular equipment type. The cost is then allocated in proportion to floor space utilisation to service depending on what the space is used for. Horizon DTNASTR B Property costs associated with leasing from Telereal Trillium. This base allocates the property costs associated with leasing from Telereal Trillium. Ledger information for the Openreach transfer charges from Group Property are downloaded from CID. These charges are apportioned to the three areas Openreach own: MDF, Cable Chambers and LLU with an amount remaining as Other (e.g. Service centres). 55

56 Base Ref OUC s (For all descriptions below, see Appendix A for Key Destinations) The apportionment is based on analysis of the transfer charges by Group Property Finance who also supplies the amount of charge for vacant space. The vacant space charge is then allocated to MDF, Cable Chambers and LLU. The total charges against LLU, MDF are allocated to the relevant Plant Groups. Cable Chambers costs are apportioned to the relevant Plant Groups by the Gross Replacement Costs. The amount remaining in Other is apportioned to Plant Groups by AG407 (Openreach engineering pay). Horizon DTNCAP2 BL, BV Capitalisation of field provision costs OUC BC undertakes customer related activities that are collectively described as field provision. The costs are either booked to the current account or capitalised on to the relevant capital classes of work (CoW). The current account costs involved in this case are for a variety of activities such as tools and small stores, travel and subsistence, fuel, clothing, materials handling charges. We use details of how much has been capitalised against the relevant capital CoW. Each capital CoW is assigned to the relevant Plant Group (PG) according to its treatment in ASPIRE. The costs are apportioned to the PGs in proportion to the amounts capitalised to each capital CoW. Capitalisation data Latest available Life of Plant (LoP) List. DTNCNSP O J4 POLO This base attributes the costs relating to out payments to overseas operators. Costs are apportioned to CB561 (Interconnect outpayments overseas) and to P006 (Retail Calls Lines & Circuits). The payment data is obtained from a report produced from Oracle Business Intelligence using the billing system IXBS NG (Interconnect Bureau Service New Generation) as its data source. Retail IDD volume data is obtained from the Call Statistics Centralisation System (CSCS) 56

57 DTNELSP T Electricity Transfer Charge This base allocates the electricity transfer charge. Volume data of the BT TSO network equipment is obtained from certain key data sources (mainly the PACS system). Power consumption data for the various equipment types is obtained from a number of sources including technical specifications and measured consumption. From this information the total power consumption of the TSO network by equipment type is determined. A relevant equipment allocation is applied for each different part of the TSO network A model of the power consumption across the BT TSO network is built based on equipment volume and power consumption DTNELSP B Electricity Transfer Charge This base allocates the electricity transfer charge. Ledger information for the Openreach transfer charges from Group Property are downloaded from CID. These charges are apportioned to the three areas Openreach own: MDF, Cable Chambers and LLU with an amount remaining as Other (e.g. Service centres). The apportionment is based on analysis of the transfer charges by Group Property Finance who also supplies the amount of charge for vacant space. The vacant space charge is then allocated to MDF, Cable Chambers and LLU. The total charges against LLU, MDF are allocated to the relevant Plant Groups. Cable Chambers costs are apportioned to the relevant Plant Groups by the Gross Replacement Costs. The amount remaining in Other is apportioned to Plant Groups by AG407 (Openreach engineering pay). Horizon DTNFA WP BT Property Fixed Assets This base is used to apportion the Net Book Values (NBV) of the retained BT Property Fixed Assets. The BT asset values are apportioned using an analysis of the transfer charges made to the BT occupants. Overview of Transfer Pricing Process A regular review is carried out of space consumed by BT units in BT owned buildings. BT units are then charged for the occupancy. The base charge is then calculated as floor space times the market rent. Buildings are designated as either Specialised (e.g. exchanges) or General Purpose (e.g. offices) and the charges detailed by both OUC and Building on the Group Properties Horizon system. ASPIRE is used to generate a base for the General Purpose buildings, utilising the charges by OUC and the corresponding pay bases. The base used to support the Specialised Buildings is derived by an analysis of the floor space occupied by equipment type. The two bases are then combined, weighted by the relative charges, and applied against the BT Retained Estate Fixed Asset values. Horizon and ASPIRE: 57

58 DTNFA Y3 Motor Transport Fixed Assets This base apportions the Net Book Value (NBV) of Motor Transport fixed assets. These points to AG101. This Group unit makes detailed internal transfer charges with regard to which units use its service, an ASPIRE report can be produced of the internal transfer charges identifying the Products and Plant Groups (PGs) which are served by it and an apportionment is made on this basis. ASPIRE internal transfer charges reports. DTNHQ YS Supply Chain Partners WILLOW (Fleet management system on which all vehicles are tracked and monitored). Organisation Unit Code (OUC) YS represents Supply Chain Partners, which is part of Business Services. Its responsibilities (services) include: The inventory management, warehousing and distribution of engineering materials and network infrastructure items to Field Engineers. The warehousing and distribution of Customer Premises equipment to BT s trade distributors. The warehousing and distribution of Telephone directories. The provision of an internal mail service as well as a Document Design and Management Service. These services are provided to other Lines of Business (LoB), and to non-bt customers e.g. O2. The major costs of Supply Chain Partners relates to: Internal labour and agency costs for the unit. Freight, postage and delivery charges associated with materials procurement. The Supply Chain Finance team prepare details of their costs, by Activity,. The costs are further split by Line of Business (LoB) and/or Channel e.g. Openreach, Wholesale, Retail, Northern Ireland and Third Parties. Costs related to Stores management are apportioned using the relevant Store management activity groups. Costs relating to BT Retail or Global Services are allocated directly to residual products. A weighted base is then prepared by combining the Supply Chain costs analysis. Supply Chain Finance management accounts data. DTNIK MJ Northern Ireland, Customer Service Centres This base apportions the pay and non-pay costs (in Organisational Unit Code (OUC) MJ and F8 codes / only) associated with the Customer Contact Centres (CCC) staff involved in Billing, Inland and International Directory Enquiries and Operator Assistance Services, Customer Complaints, Provision Service, Fault Reporting and Repairs and general enquiry activities. Data is used from the Call Centre Internal Trading Model developed by Customer Service Finance. The QBC (Queue Based Costing) Model matches volumes to Customer Service (CS) costs by call queue levels. Data sources are from the Merlin and Nexus systems, which are Performance and Management Information Reporting systems. Each call queue either has a Product identifier so it can be pointed directly to Products or, if not, it is treated as follows: Where the Product identifier is All Products, then it is broken down further by sub-product identifiers into activities including Consumer and Business Repair, Billing, Provision Service (PSU) and various others. The repair element is apportioned to Products by using an analysis of fault clear codes from Galileo. The Billing element is apportioned by spreading across Residential Revenue. The remaining other All Products activities 58

59 DTTCE DTTCY ALL Core OUCs ALL Core OUCs are apportioned across either Residential, Business, Major Business or Northern Ireland Revenue. Where the Product identifier is Calls and Lines, that element is pointed to an agreed range of Calls and Rentals Products.. Where the Product identifier is described as Not TLC (Total Labour Cost), that element is recognised and treated as an overhead of the whole base. Galileo, Merlin and Nexus systems. Trading Stocks Network Equipment This base apportions trading stocks arising as a result of BT s trade in network equipment, such as private circuits, optical fibre network etc. These fixed assets relate to the engineering stores entitled Materials Awaiting Installation. The Material Awaiting Installation balance is apportioned using the closing stock balances from stock reports that are maintained and provided by the Stock Accounting Unit. Each item of BT s stock is assigned a Quarterly Rolling Forecast (QRF) code (groups of item codes with similar functional categories) and the base is derived from a download of closing stock balance by QRF code specifically for network stock. A separately maintained spreadsheet provides the stock COWs and these are mapped to specific cost centres based on where the costs are allocated. The data is sourced through the Automated Supply Chain (ASC) system which is a stores ordering, issuing and reporting system. The data is then fed through Management Information Database (MIRAS) before being forwarded by the Data supplier. Stock report that gives closing balances by QRF. Spreadsheet that maps QRF codes to AS cost centres. Management have used a cumulative period which they believe to be reflective of the full year. Output VAT This base apportions the Output VAT creditor, which arises from the VAT collected by BT from UK customers for forwarding on to HMRC. These VAT creditor balances are attributed pro-rata using BT's core revenue. This base is prepared using revenue generated by BT UK sourced from apparatus sales, connection charges, other single payments, rentals, enhanced maintenance, calls gross, calls discounts and receipts from Other Communication Providers (OCPs). These different classifications of revenue equate to specific sectors (groups of General Ledger codes with similar functional categories) within the ASPIRE system. The apportionment for this base is derived from a download of BT s UK revenue from the ASPIRE system for each of these sectors by cost centres and is solely apportioned to Products. System generated base. FTQ ALL Core Capital and Current Pay FTQ is a base that uses previously apportioned core capital and current pay F8 codes, excluding those in Exceptional Organisational Unit Codes (OUCs); to form system generated overhead bases. This method is used to attribute costs that are relevant to all of a unit e.g. coaching and training costs within a unit and it would be appropriate for them to be apportioned in line with the previously apportioned pay costs of that unit. This base is also used to apportion balance sheet balances including Fixed Asset, Work in Progress. The FTQ overhead base is derived as follows: 59

60 The FTQ Base Base derivation F 8 Costs All costs in the Line of Business (LoB) OUC Self contained processing OUCs Other OUCs in LoB Costs types Other costs Capital and current pay costs (core only) Other costs Capital and current pay costs (core only) Previous apportionments x + y + z = 100% x% y% z% x% y% z% OUC Overhead Products Product A Product B Product C Product A Product B Product C Base application F8 apportioned by FTQ FTQ_Diagram1 Self contained processing units Other OUCs taking these costs x% y% z% x% y% z% Product A Product B Product C Product A Product B Product C The core current and capital pay costs of the unit are identified. These costs will have been previously apportioned in the ASPIRE system using methodologies relevant to the particular activities. Previous apportionments will have exhausted these pay costs to cost centres. The percentage weights applied to these Products provide the base FTQ. The data is system generated from ASPIRE FTQ_PCT ALL Core Capital and Current Pay Previously apportioned The designator FTQ_PCT uses all previously apportioned core capital and current pay F8 codes, including those in Exceptional OUCs; to form system generated overhead bases. This method is used to attribute costs that are relevant to the whole of a unit, including Exceptional OUCs, and as such it would be appropriate for them to be apportioned in line with all the previously apportioned pay costs. The FTQ_PCT base is typically applied to overhead costs related to the activity of the whole unit such as NewStart Leaver Payments, General Management pay, general travel and subsistence and stationery costs. The PAY Base Base derivation F8 Costs All costs in the LoB OUC Self contained processing OUCs Other OUCs in LoB Costs types Other costs Capital and Current Pay costs (core only) Other costs Capital and current pay costs (core only) Previous apportionments x + y + z = 100% x% y% z% x% y% z% OUC Overhead Products Product A Product B Product C Product A Product B Product C Base application F8 apportioned by PAY FTQ_PCT_Diagram1 Self contained processing units Other OUCs taking these costs x% y% z% x% y% z% Product A Product B Product C Product A Product B Product C The FTQ overhead base is derived as follows: The core current and capital pay costs of the unit (including those in Exceptional OUCs) are identified. These costs will have been previously apportioned in the Accounting Separation (AS) system using methodologies relevant to the particular activities. Previous apportionments will have exhausted these pay costs to cost centres. The percentage weights applied to these products provide the base PAY. 60

61 Use F8s to DD1: List of F8 Codes to be used to dervive relevant download from ASPIRE Use Use F8s F8's to to produce produce data data ASPIRE: array relevant base information by AS Cost Centre Array : AS Cost Centre A AS Cost Centre B AS Cost Centre C 100% Eliminate data for AS Cost Centres not in DD2 DD2: List of AS Cost Centres to which the balance should be apportioned FTQ_PCT_Diagram2 AS Cost Centres that are not list in DD2 are excluded from the ASPIRE download and the remaining data is rebased to 100% Array: AS Cost Centre A AS Cost Centre B AS Cost Centre C = 100% Download: AS Cost Centre A AS Cost Centre C = 100% FTQ, the Data Designator 1, specifies the pay transactions (range of F8 codes) from which the base is derived i.e. pay codes. This data is held within the ASPIRE system. PCT the Data Designator 2, specifies the AS Cost Centres to which the cost should be apportioned. This type of base can be used where the engineering Travel and Subsistence of certain OUCs has to be apportioned over a limited range of Plant Groups (PGs) using a pay base specific to the PGs supported by those units. The data is system generated from ASPIRE. FUEL Y, Y3, YL External Payment for Vehicle Fuel This base apportions BT External Payment for Vehicle Fuel. The cost of Motor Transport (MT) vehicle fuel is recovered from the Lines of Business (LoB) via the transfer charges to the Organisational Unit Codes (OUCs)/Organisational Units based on the utilisation of the services provided to the OUC. The transfer charges are used to provide an analysis of the fuel in the different parts of BT. The analysis of the transfer charge amounts are used to calculate an overall base that is then applied to the underlying actual costs, which are attributed pro-rata to the transfer charge. Internal transfer charges for fuel on the BT general ledger. NCOFADA -ALLA Non- Core OUC - G Transmission Depreciation and Fixed Assets This base is used to apportion corporate provisions relating to Transmission depreciation costs and fixed assets. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. It is recalculated each time the underlying Transmission costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. NCOFADA). The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. ALLA). 61

62 DD1: List of F8 codes to be used to derive relevant download from ASPIRE download ASPIRE: Download relevant base information by AS Cost Centre Download : AS Cost Centre A AS Cost Centre B AS Cost Centre C = 100 % Eliminate data for AS Cost Centres not in DD2 DD2: List of AS Cost centres to which the balance should be apportioned AS Cost Centres that are not listed in DD2 are excluded from the ASPIRE download and the remaining data is rebased to 100% Download: : AS Cost Centre A AS Cost Centre B AS Cost Centre C = 100 % Download : AS Cost Centre A AS Cost Centre C = 100 % NNCOFADA_ALLA_Diagram1 NCOFADA, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived, i.e. total Transmission depreciation costs incurred by BT during the year. ALLA, the Data Designator 2, specifies the AS Cost Centres to which the corporate provisions relating to Transmission should be apportioned i.e. all AS Cost Centres. The NCOFADA apportionment base is adapted to exclude data that apportions to any AS Cost Centres not listed in the ALLA group of AS Cost Centres. The remaining data is rebased to 100% and this base is applied to the balance on the corporate Transmission provisions. ALLA refers to all BT Business Cost Centres. Income / cost to be apportioned Apportionments from DD1 (NCOFADA) AS Cost Centres in DD2 (ALLA) Corporate Provisions Transmission DD1: NCOFADA Previously apportioned Transmission costs on all units DD2: ALLA BT Business Cost Centres NCOFADA-ALLA_Diagram2 NCOFAEA Non- Core OUC - G Software Amortisation and Fixed Assets This base is used to apportion corporate provisions relating to amortisation depreciation costs and fixed assets. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. It is recalculated each time the underlying Software costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. NCOFAEA). The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. ALLA). 62

63 DD1: List of F8 codes to be used to derive relevant download from ASPIRE Use F8s to produce download ASPIRE: Download relevant base information by AS Cost Centre Download : AS Cost Centre A AS Cost Centre B AS Cost Centre C = 100 % Eliminate data for AS Cost Centres not in DD2 DD2: List of AS Cost centres to which the balance should be apportioned AS Cost Centres that are not listed in DD2 are excluded from the ASPIRE download and the remaining data is rebased to 100% Download: : AS Cost Centre A AS Cost Centre B AS Cost Centre C = 100 % Download : AS Cost Centre A AS Cost Centre C = 100 % NCOFADM_ALLA_Diagram1 NCOFAEA, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived, i.e. total Software depreciation costs incurred by BT during the year. ALLA, the Data Designator 2, specifies the AS Cost Centres to which the corporate provisions relating to Transmission should be apportioned i.e. all AS Cost Centres. The NCOFAEA apportionment base is adapted to exclude data that apportions to any AS Cost Centres not listed in the ALLA group of AS Cost Centres. The remaining data is rebased to 100% and this base is applied to the balance on the corporate Apparatus provisions. ALLA refers to all BT Business Cost Centres. Income / cost to be apportioned Apportionments from DD1 (NCOFAEA) AS Cost Centres in DD2 (ALLA) Corporate Provisions Transmission DD1: NCOFAEA Previously Apportioned Apparatus costs on all units DD2: ALLA BT Business Cost Centres NCOFADA-ALLA_Diagram2 NCOLF NCOTH ALL Non- Core OUCs B111 6 Liquid Fund Transactions This base apportions all liquid fund transactions which are defined as Net Short Term Interest Payable, including Interest Receivable, Profit and Loss (P&L) Cash, Short Term Investments (both internal and third party), and Short Term Borrowings on the Balance Sheet. This base apportions mainly to an Intermediate Activity Group AG113 (Total Liquid Funds and Interest) All liquid funds (e.g. cash, short-term borrowings and short-term investments) are attributable to the Access, Wholesale and Retail Markets. To allow visibility of such transactions in these Markets, the monies are collected against AG113 (Total Liquid Funds and Interest). There are four specific GFR lines which determine whether an activity is Liquid Funds: GFR 160 Net Interest Payable. GFR 231 Short-Term Investments. GFR 232 Cash. GFR 250 Short-Term Borrowings. These sectors are 100% apportioned to AG113 (Total Liquid Funds and Interest) Non-Core Usually non-core entities, such as B1116, attribute all of their revenues, costs and capital employed directly to Retail Residual. However for Openreach an exception has been made, because all of this LoB's costs are attributed to Services/Markets, the costs on B1116 flow into the Wholesale Residual Market NCOVATD G106 BT Group Output VAT Related Creditors 63

64 OPEACN- ALL ALL Core OUCs This base apportions the Output VAT related creditors arising from the VAT collected by BT s corporate unit forwarding on to HMRC. This base is prepared using revenue generated by BT UK sourced from: Apparatus sales. Connection charges. Other single payments. Rentals. Enhanced maintenance. Calls gross. Calls discount. Revenue from Other Communication Providers (OCPs). These different classifications of revenue equate to specific sectors (groups of General Ledger codes with similar functional categories) within the ASPIRE system. This base apportions using the analysis produced for the core VAT Creditors base - DTTCY. All core revenues are taken but Revenue from Other Communication Providers is excluded from the final allocation. Accommodation Charges Creditors and/or Receivables This base apportions creditors/receivables arising from accommodation charges, such as balances on accommodation costs (external rent receivables, prepaid accommodation expenditure and provisions for dilapidations and major repairs). The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. It is recalculated each time accommodation charges are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. OPEACN). The Accounting Separation (AS) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. ALL). DD1: List of F8 Codes to be used to derive relevant download from ASPIRE Use Use F8s F8's to to produce download ASPIRE: download relevant base information by AS Cost Centre Download : AS Cost Centre A AS Cost Centre B AS Cost Centre C 100% Eliminate data for AS Cost Centres not in DD2 DD2: List of AS Cost Centres to which the balance should be apportioned AS Cost Centres that are not list in DD2 are excluded from the ASPIRE download and the remaining data is rebased to 100% Download AS Cost Centre A AS Cost Centre B AS Cost Centre C = 100% Download: AS Cost Centre A AS Cost Centre C = 100% OPEACN_ALL_Diagram1 OPEACN, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived, i.e. accommodation costs incurred by BT during the year. This data is held within the ASPIRE system by AS Cost Centre. ALL, the Data Designator 2, specifies the AS Cost Centres to which these Receivables/creditors associated with accommodation should be apportioned. 64

65 The OPEACN apportionment base is adapted to exclude apportionments to AS Cost Centres not listed in the ALL group of AS Cost Centres. The remaining data is then rebased to 100% and this base is applied to the accommodation Receivables and creditors. ALL refers to BT Group Cost Centres. Income / cost to be apportioned Apportionments from DD1 (OPEACN) AS Cost Centres in DD2 (ALL) Creditors/debtors arising from accommodation charges DD1: OPEACN P&L accommodation costs DD2: ALL BT Group Cost Centres OPEACN_ALL_Diagram2 OPEPST- PCT B, T, J, K and M The data is system generated from ASPIRE Miscellaneous Creditors This base apportions the input VAT related creditors based on the assumption that the amount to be claimed from HMRC arises from BT purchases. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. It is recalculated each time operating costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to provide the appropriate base (Data Designator 1, i.e. OPECST). The Accounting Separation (AS) cost centres to which the balances should be apportioned (Data Designator 2, i.e. PCT). Diagram: Miscellaneous Creditors Apportion Process Use F8s to produce download OPECST, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived i.e. external operating costs, excluding pay, depreciation and capital additions. This data is held within the system by AS Cost Centre. PCT, the Data Designator 2, specifies the AS Cost Centres to which these VAT input creditors should be apportioned. The OPECST apportionment base is adapted to exclude apportionments to AS Cost Centres not listed in the ALL group of AS Cost Centres. The remaining data is then rebased to 100% and this base is applied to the VAT Input Creditors. PCT refers to BT Group Cost Centres. 65

66 Income / cost to be apportioned Apportionments from DD1 (OPECST) AS Cost Centres in DD2 (PCT) Input VAT in Balance Sheet DD1: OPECST Previously apportioned Operating Costs (exc Pay, Depreciation) and capital additions DD2: PCT BT Group Cost Centres OPECST_PCT_Diagram2 OPECST- ALL ALL Core OUCs The data is system generated from ASPIRE Miscellaneous Creditors This base apportions the input VAT related creditors based on the assumption that the amount to be claimed from HMRC arises from BT purchases. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach and relates to the total BT Group costs. It is recalculated each time operating costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to provide the appropriate base (Data Designator 1, i.e. OPECST). The Accounting Separation (AS) cost centres to which the balances should be apportioned (Data Designator 2, i.e. ALL). Diagram: Miscellaneous Creditors Apportion Process Use F8s to produce download OPECST, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived i.e. external operating costs, excluding pay, depreciation and capital additions. This data is held within the system by AS Cost Centre. ALL, the Data Designator 2, specifies the AS Cost Centres to which these VAT input creditors should be apportioned. The OPECST apportionment base is adapted to exclude apportionments to AS Cost Centres not listed in the ALL group of AS Cost Centres. The remaining data is then rebased to 100% and this base is applied to the VAT Input Creditors. ALL refers to BT Group Cost Centres. 66

67 Income / cost to be apportioned Apportionments from DD1 (OPECST) AS Cost Centres in DD2 (ALL) Input VAT in Balance Sheet DD1: OPECST Previously apportioned Operating Costs (exc Pay, Depreciation) and capital additions DD2: ALL BT Group Cost Centres OPECST_ALL_Diagram2 OPEOTH- COR All The data is system generated from ASPIRE. Wayleaves Buy Outs Receivables and Accrued Creditors This base is used to apportion BT Group Wayleaves Buy Outs Receivables and accrued creditors. Wayleaves refers to the arrangement in place when another company utilises BT land or plant/equipment (e.g. telegraph poles) to provide service to a third party. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. It is recalculated each time operating costs are updated. Each base has two separate markers that govern: The cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. OPEOTH). The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. COR). Diagram: Normal Trading Activity Apportion Process. Use F8s to produce download OPEOTH, the Data Designator 1, specifies the cost transactions (range of f8 codes) from which the base is derived, i.e. total operating costs, excluding depreciation and pay costs incurred by BT during the year. This data is held within the system by AS Cost Centre. COR, the Data Designator 2, specifies the AS Cost Centres to which Wayleaves Buy Outs Receivables and accrued creditors should be apportioned. The OPEOTH apportionment base is adapted to exclude apportionments to AS Cost Centres not listed in the COR group of AS Cost Centres. The remaining data is rebased to 100% and this base is applied to the Wayleaves Buy Outs Receivables and accrued creditors balances. COR refers to BT Core Business Cost Centres. 67

68 Income / cost to be apportioned Apportionments from DD1 (OPEOTH) AS Cost Centres in DD2 (COR) Wayleaves Debtors Accured Creditors and deferred income DD1: OPEOTH Total Operating Costs excluding depreciation and pay DD2: COR BT Core Business Cost Centres OPEPST, OPEPST- ALA ALL Core OUCs Excep t B's OPEOTH_COR_Diagram2 The data is system generated from ASPIRE. Miscellaneous Creditors This base apportions the miscellaneous creditors arising from current expenditure. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach and relates to BT Group costs It is recalculated each time operating costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. OPEPST). The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. ALA). Use F8s to produce download OPEPST The Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived i.e. all operating costs excluding Payments to Overseas Administrations and Other Communication Providers (OCPs), incurred by BT during the year. This data is held within the system by AS Cost Centre. ALA, the Data Designator 2, specifies the AS Cost Centres to which the miscellaneous creditors balance should be apportioned. The OPEPST apportionment base is adapted to exclude data that apportions to any AS Cost Centres not listed in the ALA group of Cost Centres. The remaining data is rebased to 100% and this base is applied to the miscellaneous creditors balance. ALA refers to all AS Cost Centres, which incurred costs, specifically excluding those with negative costs. 68

69 OPEPST- PCT ALL Core OUCs except B The data is system generated from ASPIRE Miscellaneous Creditors This base apportions the miscellaneous creditors arising from current expenditure. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach and relates to LoB or individual unit costs. It is recalculated each time operating costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. OPEPST). The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. PCT). Use F8s to produce download OPEPST The Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived i.e. all operating costs excluding Payments to Overseas Administrations and Other Communication Providers (OCPs), incurred by BT during the year. This data is held within the system by AS Cost Centre. PCT, the Data Designator 2, specifies the AS Cost Centres to which the miscellaneous creditors balance should be apportioned. The OPEPST apportionment base is adapted to exclude data that apportions to any AS Cost Centres not listed in the ALA group of Cost Centres. The remaining data is rebased to 100% and this base is applied to the miscellaneous creditors balance. PCT refers to all AS Cost Centres, which incurred costs, specifically excluding those with negative costs. 69

70 OPEPST- PCT B, T, J, K and M The data is system generated from ASPIRE Miscellaneous Creditors This base apportions the input VAT related creditors based on the assumption that the amount to be claimed from HMRC arises from BT purchases. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach and relates to LoB or individual unit costs. It is recalculated each time operating costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to provide the appropriate base (Data Designator 1, i.e. OPECST). The Accounting Separation (AS) cost centres to which the balances should be apportioned (Data Designator 2, i.e. PCT). Diagram: Miscellaneous Creditors Apportion Process Use F8s to produce download OPECST, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived i.e. external operating costs, excluding pay, depreciation and capital additions. This data is held within the system by AS Cost Centre. PCT, the Data Designator 2, specifies the AS Cost Centres to which these VAT input creditors should be apportioned. The OPECST apportionment base is adapted to exclude apportionments to AS Cost Centres not listed in the ALL group of AS Cost Centres. The remaining data is then rebased to 100% and this base is applied to the VAT Input Creditors. PCT refers to BT Group Cost Centres. 70

71 Income / cost to be apportioned Apportionments from DD1 (OPECST) AS Cost Centres in DD2 (PCT) Input VAT in Balance Sheet DD1: OPECST Previously apportioned Operating Costs (exc Pay, Depreciation) and capital additions DD2: PCT BT Group Cost Centres OPECST_PCT_Diagram2 OPEXPS,O PEXPS- COR ALL Core OUCs The data is system generated from ASPIRE. Account Payable Activities Prepayments This base apportions the prepayments arising from Accounts Payable activities. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach and relates BT Group costs. It is recalculated each time operating costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. OPEXPS). The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. COR). Use F8s to produce download OPEXPS, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived, i.e. all operating costs, excluding depreciation, incurred by BT during the year. This data is held within the system by AS Cost Centre. COR, the Data Designator 2, specifies the AS Cost Centres to which the Receivables for prepayments balance should be apportioned. The OPEXPS apportionment base is adapted to exclude apportionments to AS Cost Centres not listed in the COR group of AS Cost Centres. The remaining data is rebased to 100% and this base is applied to the Receivables for prepayments balance. COR refers to BT Core Business Cost Centres. 71

72 OPEXPS_C OR C,T,M 7,W The data is system generated from ASPIRE. Account Payable Activities Prepayments This base apportions for prepayments arising from Accounts Payable activities not relating to Wholesale Line of Business. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. It is recalculated each time operating costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. OPEXPS). The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. COR). Use F8s to produce download OPEXPS, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived, i.e. all operating costs, excluding depreciation, incurred by BT during the year. This data is held within the system by AS Cost Centre. COR, the Data Designator 2, specifies the AS Cost Centres to which the Receivables for prepayments balance should be apportioned. The OPEXPS apportionment base is adapted to exclude apportionments to AS Cost Centres not listed in the COR group of AS Cost Centres. The remaining data is rebased to 100% and this base is applied to the Receivables for prepayments balance. COR refers to BT Core Business Cost Centres. 72

73 OPGENAC C OPEXPS- PCR TS, TX K The data is system generated from ASPIRE This base apportions the BT TSO General Office Accommodation Transfer Charges from Group Property. This includes the Data Centres (DC) charges. Group Property charge to BT TSO and these charges are posted on two F8 codes. This base apportions these charges to Products & Plant Groups using the DC budgeted data which splits the overall budget to LOBS. A suitable treatment is applied for each LOB. The remaining (general) charges are apportioned using AG102 (BT TSO Pay & Managed Assets) system base. Data Source(s) BT TSO Finance for the Data Centres Budget Split. The Ledgers for the actual charges Account Payable Activities Prepayments This base apportions for prepayments arising from Accounts Payable activities relating to Wholesale Line of Business. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. It is recalculated each time operating costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. OPEXPS). The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. PCR). Use F8s to produce download OPEXPS, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived, i.e. all operating costs, excluding depreciation, incurred by BT during the year. This data is held within the system by AS Cost Centre. 73

74 PCR, the Data Designator 2, specifies the AS Cost Centres to which the Receivables for prepayments balance should be apportioned. The OPEXPS apportionment base is adapted to exclude apportionments to AS Cost Centres not listed in the COR group of AS Cost Centres. The remaining data is rebased to 100% and this base is applied to the Receivables for prepayments balance. PCR refers to BT Core Business Cost Centres. OPEXPS- PCT ALL The data is system generated from ASPIRE. Account Payable Activities Prepayments This base apportions for prepayments arising from Accounts Payable activities all LoBs The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. It is recalculated each time operating costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. OPEXPS). The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. PCT). Use F8s to produce download OPEXPS, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived, i.e. all operating costs, excluding depreciation, incurred by BT during the year. This data is held within the system by AS Cost Centre. PCT, the Data Designator 2, specifies the AS Cost Centres to which the Receivables for prepayments balance should be apportioned. The OPEXPS apportionment base is adapted to exclude apportionments to AS Cost Centres not listed in the COR group of AS Cost Centres. The remaining data is rebased to 100% and this base is applied to the Receivables for prepayments balance. PCT refers to BT Core Business Cost Centres 74

75 The data is system generated from ASPIRE.. ORCOPOO I ORCUMN OR ALL B OUCs BY Sale of Scrap This base apportions Other Operating Income received by Openreach from the sale of scrap copper. Income from scrap copper is apportioned to PG986R Openreach Other Activities, PG118C D-side Copper Capital and PG980R Repayment Works. Income allocated to PG986R is based on actual cable recovery data provided by Openreach. The remainder is allocated between PG118C and PG980R based on the amount of capital expenditure on D-side copper cable that is proper to Repayment Works. Data Sources Cable recovery data from Openreach, Capex data from the Internal Projects Ledger and the Life of Plant List. Open Reach Cumulo Normal BT s cumulo rates liability covers what we pay in non-domestic rates on its rateable network assets in the UK. Non domestic rates are effectively a form of property tax. Most businesses pay rates on properties and other rateable assets that they occupy. The rateable assets within BT s cumulo assessment include exchange buildings, telegraph poles, duct, manholes, cabinets, payphones, copper and fibre. Under rating principles these are assessed together, hence the term cumulo. Other parts of BT s property estate - e.g. offices and workshops - are assessed separately and do not form part of BT s cumulo assessment. Non-domestic rating liabilities are calculated by applying a rate in the pound (rate poundage) to a rateable value (RV). Rate poundages are the same for all ratepayers in each UK country. RVs are set by the UK rating authorities under statutory rating law and principles. The rateable value of BT s cumulo assessment reflects the value of all the assets considered together. This cannot be deconstructed to reflect individual lines of business or individual products. The base apportions BT s cumulo rates charges to products and services. Rate poundages generally increase by RPI each year. RVs are reset every five years; however ratepayers may appeal their RVs if they believe there have been material changes in circumstance (MCCs). What constitutes a valid MCC is defined by legislation. In recent years BT has successfully appealed its cumulo RV primarily as a result of increased levels of unbundling. The CUMRBTE base applies to the changes to BT s cumulo liabilities as a result of increased unbundling. The CUMNORM base applies to all other BT cumulo liabilities. BT s cumulo rates charge is allocated to products and services using a three stage process. Stage 1: BT s cumulo liabilities are divided into those to be allocated using the CUMNORM base and those to be allocated using the CUMRBTE base. Stage 2: CUMNORM base costs are allocated across line of business (LoB) and the rateable classes of work (CoW) using profit weighted net replacement costs at the start of the rating valuation period. Stage 3: These CoW liabilities are then allocated to plant groups, components and then services using standard LoB allocation bases. 75

76 Current Cost Accounting (CCA) valuations at year end. ASPIRE P9 downloads. PDTACPA B, BF, BI, BJ, BK, BL, BV, BLP BW BY Accommodation Plant Network (Wholesale): Capital The base apportions capital work in BT TSO (CoW ACPA) relating to racks, power and ventilation. The base apportions to PG132B Local Loop Unbundling (LLU) Hosting Rental,PG136A Local Loop Unbundling (LLU) Surveys and PG953C NGA DSLAM and Cabinets, using an analysis of the Fixed Asset Register (FAR) Life of Plant (LoP List) and Capex data from Openreach. The analysis used is extracted from the Period 10 FAR; Life of Plant (LoP List), Policy Code ACPA and Capex data from the Internal Projects Ledger (IPL). Management believe this period is indicative of the full year position. PDTATM BL BV MJ TA TB TBS2 TBS3 TN TT Provision, rearrangement and recovery of Asynchronous Transfer Mode (ATM) equipment This base attributes capital expenditure for provision, rearrangement and recovery work of ATM equipment in the core transmission network by the Broadband and Data division within BT Wholesale. The base contains costs for Depreciation, Pay, Capital Expenditure, contracts and indirects. These costs feed into the classes of work (CoW) ATM. ATM is a high throughput packet switching protocol that provides statistical multiplexing, broadband (multimegabit) data rates, and multiple virtual circuits per network access and flexible bandwidth per connection. Frame Stream allocation is identified by using the LoP (Life of Plant) list Asset Policy Code ATMR depreciation cost as a percentage of the total ATM depreciation. The remaining percentage is allocated to the ATM Plant Groups (PGs) using NEI (Network Element Inventory) and AIM (Analysis and Inventory Module) reports. The NEI and AIM databases provide yearly and half yearly downloads of volumes of ports in the ATM network. The volume data is converted into equivalent card volumes which are then weighted by latest prices from the Alcatel- Lucent price catalogue to take into consideration the different cost profiles of each card. The NEI report provides data on each port as to whether it is customer or network interfacing by using a unique identifier: UNI (customer). NNI (network). This information is used to split customer interface PGs and the network interface PG. The cards that support the customer interface functionality are identified by bandwidth and are allocated to the appropriate bandwidth specific customer interface PGs. The cards recorded in the AIM report primarily support the Network switching function and therefore used to derive the allocation to PG656A (ATM Network Switching) on the same basis as the above. However, the high BW cards which are recorded in the AIM report do not support the network switching function and are therefore allocated to the customer and network interface PGs using the UNI and NNI split as a proxy. The data required for the year end base production will use September volumes/data for the NEI, AIM and LoP list reports. For the interims, March volumes and data will be used to maintain consistency with the Core Transmission base allocations. Spare capacity is spread over the existing PGs for the interface cards as these could be used for either customer or network facing. The split of working customer and network facing cards is used as a proxy to allocate the spare costs to the relevant PGs. Volumes of cards/ports come from the NEI (Network Element Inventory) and AIM (Analysis and Inventory Module) supplied from the Element Manager database via the capacity delivery manager in BT TSO (Interims March, Year end September). Card prices are supplied by BT Wholesale. LoP (Life of Plant) List. 76

77 PDTBHQ B, MJ Inland Sub Sea Cable This base apportions the asset values and annual depreciation charge booked to OUCs B and MJ for Inland Sub Sea Cable to the Openreach Backhaul Fibre Plant Group (PG). Allocates 100% to PG170B Openreach Backhaul Fibre. PDTBHQ PDTCCI PDTCJC B BK BL BV MJ TB TBS2 TBS3 TT TA TB TF TN TT TZ B BK BL BLH BV MJ TN TT Inland Sub Sea Cable This base apportions the asset values and annual depreciation charges booked to all OUCs (except B and MJ) of Inland Sub Sea Cable to the Wholesale Inner Core Fibre Plant Group (PG). Allocates 100% to PG350N Wholesale Inner Core Fibre. Common Capabilities The base apportions costs and balance sheet identified with Common Capability assets such as Intelligent Service Layer (CISL) and Call Messaging assets. CISL is a system which replaces BT's legacy Network Intelligence Platform which provides many of BT's 0800, 0845, 0870 and premium rate number translation services. Call messaging assets support Call Minder Other CCI assets support a variety of applications. During the year depreciation costs for Call Minder and CISL are derived from the Life of Plant (LoP) List using asset policy code (APC) CIIR for CISL (PG276A) and APC CIMS for Call Minder (P287). The percentages allocated to these entities form the basis of the PDTCCI base. Any remaining percentages follow an ASPIRE download for the EXCEPT Base for BT TSO. Where the EXCEPT base allocates for PG276A and P287 these percentages will point to the existing PG276A and P006 entities. Life of Plant List (LoP List) extracted from the fixed asset register. COMP base for BT TSO supplied by Group Network Cost Analysis team. Construction Junction Cable Metallic This base allocates the asset values and annual depreciation charges associated with the construction of metallic junction cables in the core and 21c networks to a number of fibre Plant Groups. PACS contains circuit path information for all SDH circuits. This data is extracted and analysed in an Access database. From this we extract the total fibre km attributable to either 20c or 21c. For 20c fibre the costs are allocated to either PG170B for OUC B & MJ or PG350N for all other OUCs. The remaining percentage attributable to 21c is then broken down by the tier of the bearer and this drives the allocation to 21C PG. 77

78 PACS. PDTCJF ALL Construction Junction Cable Optical Fibre Assets This base allocates the asset values and annual depreciation charges associated with the construction of optical fibre junction cables in the core and 21c networks to a number of fibre Plant Groups. PACS contains circuit path information for all SDH circuits. This data is extracted and analysed in an Access database. From this we extract the total fibre km attributable to either 20c or 21c. For 20c fibre the costs are allocated to either PG170B for OUC B & MJ or PG350N for all other OUCs. The remaining percentage attributable to 21c is then broken down by the tier of the bearer and this drives the allocation to 21c PG. PACS. PDTCOBU S All OUC s Business Drop Maintenance This base apportions repair costs for drop wires to: PG121M - Business PSTN Maintenance PG123M (ISDN Highway Maintenance) PG981R - Openreach Time Related Charges The allocation is based on the share of kilo man hours (KMH) spent on Special Fault Investigation (SFI). The cost for this activity is derived by multiplying the manhour rate x KMH for SFI. The total cost for the CoW is obtained from CID and the proportion of cost allocated to SFI is based on the implied cost from the man hour rate x KMH. The residual proportion of the cost after subtracting the above is then The apportionment split is derived from the relative proportion of business connections between PSTN and ISDN. This connection information is obtained from OR Management Accounts. Data Source Workmanager data. CID Openreach Manhour Rate Openreach Management Accounts. 78

79 PDTCORE S PDTCORL U BV TT Residential Drop Maintenance This base apportions repair costs for drop wires to: PG122M - Residential PSTN Maintenance PG981R - Openreach Time Related Charges PG989A - Special Fault Investigation The allocation is based on the share of kilo man hours (KMH) spent on Time Related Charges (TRCs) and Special Fault Investigation (SFI). The cost for these activities is derived by multiplying the manhour rate x KMH for the above activities. The total cost for the CoW is obtained from CID and the proportion of cost allocated to SFI and TRC is based on the implied cost from the manhour rate x KMH. The residual proportion of the cost after subtracting the above will go to Residential PSTN Maintenance. Data Source Workmanager data. CID Openreach Manhour Rate Core Nodes Alcatel-Lucent This base apportions the historical cost and balance sheet for core node equipment to Plant Groups (PGs). Core nodes are the high capacity, large scale routers providing cost efficient connections between Metro Nodes. BT s strategic equipment suppliers for 21CN have been chosen across each of five (access, metro, core, I-nodes and transmissions) strategic domains. Alcatel-Lucent is one of these suppliers. The Core-Node contains functionality for the transport of connectivity, voice and broadband services, via routers. The latest 21CN business case model is analysed into the categories, for which we have assigned PGs, for the assets the Core node contains. The business case provides estimates of capital spend on a year by year basis. The relative quantities of capital for each of the categories provide the apportionment. The recipients are: PG878A Metro BB LNS PG879A Metro BBL3 PG880A (BEA) Broadband Edge Aggregator PG881A (BRAS) Broadband Remote Access Server PG882A (FER) Front End Router PG887A Ethernet Edge Aggregator Bandwidth PG888A Ethernet Edge Aggregator Port PG889A Infrastructure Ethernet PG890A Media Gateway PG892A Sync Racks PG893A (MSPE) Multi Service Provider Edge Routers PG895A P-Router Large (Core) PG896A P-Router Metro PG898A Core Directors 21CN business case CAPEX forecast. 79

80 PDTCPDM I PDTCRDA ALL C MJ TB TBS2 TBS3 TN TS TT W Wholesale Line of Business of work on ISDN30 connections This apportionment base is used to remap ISDN30 connection (classes of work (CoW) CPDI), Megastream connections ((CoW) CPDM) and Analogue connections ((CoW) PSAA). The costs include Non-ETG Pay and stores. Costs for all three CoW are apportioned to PG114L (ISDN30 Connections), PG413P (Private Circuit Megastream Connections) and PG421S (Private Circuit Analogue Installation) based on an analysis of the volumes and relative price of each of the Products at Period 9. Data Source ISDN 30 Fill Factor from Model 25, IX Vols / Prices from BTWR6_1314_BTW-Interconnect Revenue and IX Vols / Prices OR Revenue P12 Control File. PDH Digital Repeater Equipment This base allocates the depreciation costs and asset values of class of work CRD to Plant Groups representing bearers in the core network. These assets relate to the older transmission network assets which have largely been supplemented by the more modern and fault tolerant Synchronous Digital Hierarchy (SDH) assets. Combinations of assets in the transmission network (i.e. two bits of electronics joined by fibre and duct) make up what is known as a bearer. The bearers within the network carry circuits that relate to different products and bandwidths. More detail can be found in Section 9 Data Sources under CTCS (Core Transmission Costing System). The cost of a bearer includes an apportionment of the costs of these electronic assets. Most PDH electronics are specific to bearer types, and are dependent upon the capacity the of bearer- 2Mbit/s, 8Mbit/s, 34Mbit/s, 140Mbit/s and 565Mbit/s. Individual PGs capture the cost of each bearer type separately. CTCS provides the volumes of each type of bearer. These volumes are weighted by depreciation in order to get the allocation to PG. Direct depreciation costs for PDH electronics, for period 6, sourced from the Life of Plant (LoP) list, are driven directly to the relevant bearers types. Period 6 is used as it is representative of the full year. The LoP list breaks down each CoW into subcategories - asset policy codes, providing further granularity of the equipment types within the CoW. The description of the asset policy codes allows costs to be mapped to bearer types. Traffic grooming equipment, in the form of multiplexers are captured across a number of asset policy codes, depending on the capacity of the equipment - 2/8mux, 2/34mux, 8/34mux, 34/140mux, 140/565mux. All multiplexer depreciation is mapped onto PG PG399T (traffic grooming), for onward apportionment to component. Indirect costs (software, planning and test equipment asset codes) are treated as overheads and are absorbed into PG on the basis of the direct allocations. LoP list for Period 6, CTCS. Management believes this period to be reflective of the full year. PDTCRFA ALL PDH Optical Fibre Repeater Equipment This base allocates the depreciation costs and asset values of class of work CRF to Plant Groups representing bearers in the core network. These assets relate to the older transmission network assets which have largely been supplemented by the more modern and fault tolerant Synchronous Digital Hierarchy (SDH) assets. Combinations of assets in the transmission network (i.e. two bits of electronics joined by fibre and duct) make up what is known as a bearer. The bearers within the network carry circuits that relate to different products and bandwidths. More detail can be found in Section 9 Data Sources under CTCS (Core Transmission Costing System). The cost of a bearer includes an apportionment of the costs of these electronic assets. Most PDH electronics are specific to bearer types, and are dependent upon the capacity of the bearer- 2Mbit/s, 8Mbit/s, 34Mbit/s, 140Mbit/s and 565Mbit/s. Individual Plant Groups (PGs) capture the cost of each bearer type 80

81 PDTCRHQ C PDTDMC ALL M M7F3 MJ MLC separately. CTCS provides the volumes of each type of bearer. These volumes are weighted by depreciation in order to get the allocation to PG. Direct depreciation costs for PDH electronics at Period 6, sourced from the Life of Plant (LoP) list, are driven to the relevant bearer types. Period 6 is used as it is representative of the full year. The LoP list breaks down each CoW into subcategories - asset policy codes, providing further granularity of the equipment types within the CoW. The description of the asset policy codes allows costs to be mapped to bearer types. Traffic grooming equipment, in the form of multiplexers are captured across a number of asset policy codes, depending on the capacity of the equipment - 2/8mux, 2/34mux, 8/34mux, 34/140mux, 140/565mux. All multiplexer depreciation is mapped onto PG PG399T (traffic grooming), for onward apportionment to component. Indirect costs (software, planning and test equipment asset codes) are treated as overheads and are absorbed into PGs on the basis of the direct allocations. Life of Plant (LoP) list for Period 6, CTCS. Management believes this period to be reflective of the full year. PDH Repeaters (by Contractors) This base allocates the depreciation costs and asset values of class of work CRHQ to Plant Groups representing bearers in the core network. These assets relate to the older transmission network assets which have largely been supplemented by the more modern and fault tolerant Synchronous Digital Hierarchy (SDH) assets. Combinations of assets in the transmission network (i.e. two bits of electronics joined by fibre and duct) make up what is known as a bearer. The bearers within the network carry circuits that relate to different products and bandwidths. More detail can be found in Section 9 Data Sources under CTCS (Core Transmission Costing System). The cost of a bearer includes an apportionment of the costs of these electronic assets. Most PDH electronics are specific to bearer types, and are dependent upon the capacity of the bearer- 2Mbit/s, 8Mbit/s, 34Mbit/s, 140Mbit/s and 565Mbit/s. Individual PGs capture the cost of each bearer type separately. CTCS provides the volumes of each type of bearer. These volumes are weighted by depreciation in order to get the allocation to PG. Direct depreciation costs for PDH electronics at Period 6, sourced from the Life of Plant (LoP) list, are driven to the relevant bearer types. Period 6 is used as it is representative of the full year. The LoP list breaks down each CoW into subcategories - asset policy codes, providing further granularity of the equipment types within the CoW. The description of the asset policy codes allows costs to be mapped to bearer types. Traffic grooming equipment, in the form of multiplexers are captured across a number of asset policy codes, depending on the capacity of the equipment - 2/8mux, 2/34mux, 8/34mux, 34/140mux, 140/565mux. All multiplexer depreciation is mapped onto PG PG399T (traffic grooming), for onward apportionment to component. Indirect costs (software, planning and test equipment asset codes) are treated as overheads and are absorbed into PGs on the basis of the direct allocations. LoP list for Period 6. Management believes this period to be reflective of the full year. Operator Call Handling Centres (OCHC) Directory Enquiry Activities This base apportions Profit and Loss (P&L) Capital spend and Balance Sheet costs relating to Operator Call Handling Centres (OCHC) engaged primarily in Directory Enquiry (DQ) activities. Costs relate to the provision and recovery of operating access (e.g. queuing equipment) and test equipment rented to new operator systems (e.g. Operator Service System (OSS), Digital Access Signalling System (DASS)) including: Supply and installation of Remote Integrated Services Line Units and Interface Cabinets to connect Directory Assistance Centres (DAC) to the switch, bureau Primary Multiplexer (PMUX). Provision and upgrade of Automatic Voice Response, DAC and Operator Keyboard Display Terminal 81

82 equipment controlled by Operator Services beyond the interface cabinet and PMUXs in the Enterprise Information System (EIS) and DAC. Extension and modification of Derived Services Network (DSN) switches to facilitate: Automatic Call Distribution for DAC. Directory assistance console. From the F8 Code level, costs flow into the classes of work (CoW) DMC. Value of costs to be apportioned are calculated using volume data (call minutes) and capital cost information obtained from the Fixed Asset Register (updated monthly). Capital costs are attributed by asset (i.e. equipment) as listed by Asset Policy Codes in the Fixed Asset Register. Each asset element is assigned to one of the Plant Group (PG) or Product destinations according to the type/function of the asset: P490 (BT DQ118 Service Provider) P494 (Wholesale Agency Directory Enquiries (DQ)) PG216C (Local exchange general switchboard) PG405A (DMS100 Call centre switches) PG924A (Directory Enquiries (DQ), non-chargeable) Also used is the Operfile, this is a spreadsheet used to derive apportionment information for Operator and Directory Assistance costs. The file is a summary of information from a variety of other data sources and is updated monthly on a cumulative basis. Diagram: Inland and International Directory Assistance. Central Data Store (CDS), Call Statistics Centralisation System (CSCS) and Featurenet (part of the Powerhouse system). PDTDSLP MJ Provision of Digital Subscriber Loop This allocates the cost of provision for ADSL (Asymmetric Digital Subscriber Line) and SDSL (Symmetric Digital Subscriber Line). It contains the Pay and Stores costs for this activity. 82

83 Allocates directly to PG145N ADSL Connections PDTDTTK ALL Kilostream Assets and Depreciation This base apportions the gross book value of Kilostream equipment assets and the associated depreciation and accumulated depreciation charges to Plant Groups (PGs). Kilostream is the brand name for BT s portfolio of low speed digital private circuits. The circuits operate at bandwidths of 2.4kbit/s up to 64kbit/s and are provided using BT s Digital Private Circuit Network (DPCN). The PGs that these Kilostream assets and depreciation amounts are apportioned to are: PG400T (ACE-Automated Cross-connection Equipment/ENA-Equipment Network Access core equipment) PG412C (Private Circuits Kilostream Rental Capital). An apportionment base between these two PGs is derived by reviewing the Life of Plant (LoP) list. The LoP list is derived from the fixed asset register and provides a greater level of asset and depreciation detail than is available by F8 code. From the LoP list, information is obtained on the DTTK (Kilostream) classes of work (CoW). This lists the depreciation charges by asset policy code for each different type of asset/equipment type in this class of work. By reviewing the asset policy codes, a distinction between the different equipment types can be identified and the equipment types split into two groups relating to the PGs listed above. An apportionment base can then be created by dividing the depreciation charge allocated to each PG category by the total depreciation for the CoW. LoP List for Period 12. PDTDTTM ALL Megastream Megastream is a 2Mbit/s (2,048Kbit/s) high speed, permanently connected, point to point private circuit. Megastream is a Product offered at different bandwidths (i.e. 1Mbit/s to 622Mbit/s). Apportionment is made to various Megastream bandwidths, Kilostream and ISDN30 Plant Groups (PGs) due to the fact that these Products can be carried over higher bandwidth bearers (e.g. 2Mbit/s, 34Mbit/s, etc.). This base apportions the gross book value of Megastream equipment assets and the associated depreciation and accumulated depreciation charges to PGs. These Megastream assets are the electronic elements of the bearer. The allocation is based on the numbers of bearers on the different bearer sizes weighted by the cost of each type of bearer. Volumes for the different bearer sizes come from the Core Transmission Costing System (CTCS) and the London Local Fibre Network (LLFN). This is multiplied by the cost for the equipment. Different bearer sizes are represented by different Plant Groups. We identify the numbers of circuits on these bearers that are used by Kilostream (expressed in 2Mbit/s). We separate the cost of Kilostream and point it to its own Plant Group.. For bearers of 2Mbit/s size there are two Plant Groups, one for 2Mbit/s supplied over Copper and one for Fibre so a split is derived from the fixed asset register using the depreciation from asset policy codes that relate to 2Mbit/s fibre and 2Mbit/s copper. London Local Fibre Network (LLFN). Core Transmission Costing System (CTCS). LoP List at Period 12. PDTDTTW T Ethernet Electronics This base apportions the electronics associated with Ethernet which are contained within class of work DTTW. Allocates 100% to PG447A. 83

84 PDTDUCT T Duct PDTDUCT B Duct This base creates a direct allocation to the Intermediate Activity Groups (AGs) AG149. This asset covers all duct (core access and shared) within the BT network. Allocates 100% to AG149. This base creates an apportionment to the Intermediate Activity Groups (AGs) AG148 (Backhaul Duct) and AG135 (Access Duct). This asset covers all Ducts (core access and shared) within the BT network. Apportionment to Core and Access AGs is done based upon data from the 1996 Absolute Duct Study (ADS). The ADS was a point in time study of the duct within the network using a sample of 384 of the 5,586 exchange areas. From this survey, the proportion of duct that is solely used\shared between access and core transmission was determined. This proportion is then used to apportion the 1996/97 index uplifted Gross Replacement Cost (GRC), and to this the indexed capital spend, from 1996/97 to the current year, is added for access and Backhaul/Inner Core Duct. The apportionment is then determined based upon the ratio of (1996/7 Access Gross Replacement Cost (GRC) plus Access duct capital spend) and (1996/7 Core Gross Replacement Cost (GRC) plus Core capital Duct spend) Absolute Duct Study (ADS). Internal Project Ledger (IPL). PDTDUCT PDTETHE R BB, BC, BE, BL, BLP, BV, BY, MJ MX TT ALL Duct This base creates an apportionment to the Intermediate Activity Groups (AGs) AG148 (Backhaul Duct) and AG135 (Access Duct). This asset covers all Ducts (core access and shared) within the BT network. Apportionment to Core and Access AGs is done based upon data from the 1996 Absolute Duct Study (ADS). The ADS was a point in time study of the duct within the network using a sample of 384 of the 5,586 exchange areas. From this survey, the proportion of duct that is solely used\shared between access and core transmission was determined. This proportion is then used to apportion the 1996/97 index uplifted Gross Replacement Cost (GRC), and to this the indexed capital spend, from 1996/97 to the current year, is added for access and Backhaul/Inner Core Duct. The apportionment is then determined based upon the ratio of (1996/7 Access Gross Replacement Cost (GRC) plus Access duct capital spend) and (1996/7 Core Gross Replacement Cost (GRC) plus Core capital Duct spend) Absolute Duct Study (ADS). Internal Project Ledger (IPL). Ethernet Switches This base apportions the costs and balance sheet charges for Ethernet switches to Plant Groups (PGs). The Ethernet Switch is part of the 21c network and contains functionality for the access and onward switching of Ethernet customers as well as Broadband including NGA (Next Generation Access).The recipients are: PG901A Ethernet Switches The Ethernet switch contains functionality for the transport of connectivity, voice and broadband services. 84

85 The latest 21CN business case model is analysed into the categories, for which we have assigned PGs, for the assets the Core node contains. The business case provides estimates of capital spend on a year by year basis. The relative quantities of capital, for each of the categories provide the apportionment. There are no data requirements for this base since all costs are allocated directly to PG901A. PDTINCD T Intelligent Network Architecture Equipment This base apportions the capital costs of the Intelligent Network (IN) platform. The IN platform consists of several sub-platforms. The assets for each in sub-platform are registered against their own Asset Policy Code on the Fixed Assets Register; this allows identification of depreciation costs by function and allows the calculation of the relevant split to corresponding Plant Groups (PGs) This forms the basis of the apportionment base. The costs for each sub platform are pointed at the relevant Plant Group (PG) as detailed in the table below Asset Policy Code INIC Intelligent Contact Manager (ICM) INAH/INAS Alfredo Hardware and Software INMH/INMS Montrose Hardware and Software INVS Voice Mail System INCG Indirect Costs, INCM Misc, INCS Network Software in Access, ININ IN Attributed to PG260A Intelligent Contact Manager PRO P007 Retail - ICT and Managed Networks P007 Retail - ICT and Managed Networks P006 Retail - Calls Lines & Circuits Spread in proportion to all the above Fixed Asset Register (LoP List) Intelligent Network data for the latest available period. Management believe this period to be reflective of the full year. PDTINOD E T, TT i-node This base apportions the cost and balance sheet for I-Node equipment to Plant Groups (PGs). I-Node is where the service execution functionality is located in essence the intelligence that controls services. In the 21CN context, this includes soft switches, network intelligence and bandwidth management capabilities. The i-node contains functionality for both the setting up of Voice Calls and the provision of Calling Features e.g. Ring Back When Free. The split of cost used is the current ratio of costs for these activities in the System X and AXE10 Digital Local Exchange PGs as these assets have similar functionality. The recipients are: PG875A I-Node Features PG876A I-Node Voice Call Set-Up Billing records. PDTIPNCO ALL IP (Internet Protocol) Networks This base apportions costs of equipment supporting IP networks. Costs booked to classes of work (CoW) IPNC (Internet Protocol Network Capital) include provision, extension, rearrangement and recovery of IP networks by the Broadband and Data division in BT Wholesale. IPNC is the set of communication tools which enables computers to 'talk' to each other over the Internet. Each computer (known as a host) has at least one address that uniquely identifies it from all other computers on the Internet. Each piece or 'packet' of information sent over the Internet contains both the sender's Internet address and the receiver's address. This allows the packets to reach their intended destination, or, if necessary, to be returned to the sender. According to the type or function of the asset (i.e. equipment), each IP piece of equipment is assigned to one of 85

86 the Plant Group (PG) destinations related to IP. IP data and Broadband capital spend is downloaded from the Internal Project Ledger (IPL) for the previous three years. The sub programme identifies capital spend associated with each PG. IPNC has a life of three years, the capital spend for the last three years (from Internal Project Ledger) is then used to derive the deprecation. The Internal Project Ledger (IPL) lists depreciation costs by CoW, and produces a list of asset registrations by year, which can be found in Central Information Data warehouse (CID) Financial Reporting system. Period 8 data is used as activity after this period does not materially affect the base. PDTKDEN B Kilostream Maintenance This base apportions the costs of maintaining Kilostream equipment assets. Kilostream is the brand name for BT s portfolio of low speed digital private circuits. The circuits operate at bandwidths of 2.4kbit/s up to 64kbit/s and are provided using BT s Digital Private Circuit Network (DPCN). This base apportions the costs of maintaining Kilostream equipment assets to Plant Groups (PGs) and follows the same apportionment percentages as determined in the PDTDTTK base. PDTDTTK apportions using costs booked against various asset policy codes on the Life of Plant List. LoP List for Period 12 PDTLFCM B Local Fibre Network Maintenance This base apportions the costs of maintaining the Access Fibre network equipment assets. Apportions to the Spine Maintenance and NGA (Next Generation Access) Spine and NGA Distribution Plant Groups based on their proportion of the Total GRC for Access Fibre. This information comes from the allocation model for Fibre CoWs.: PG111M PG951M PG950M GRC of Access Fibre. PDTLFDC All Local Fibre Distribution Cable This base apportions the costs and balance sheet associated with local fibre distribution cable. The local fibre distribution cable balance sheet and profit and loss values are apportioned to the following two PGs based on their relative GRC: PG959C PG951C GRC of Access Fibre PDTLFSC All Local Fibre Spine Cable This base apportions costs and balance sheets associated with local fibre spine cable. The local fibre spine cable balance sheet and profit and loss values are apportioned to the following two PGs based on their relative GRC: PG959C PG951C 86

87 * 8 # * 8 # GRC of Access Fibre PDTLMC ALL Exchange Side Cables This base apportions costs and balance sheet associated with exchange side cables. Exchange side cable (e-side cable) is the cable that links the exchange to the primary cross connection point. This is illustrated in the diagram below: Diagram: Exchange Side Cables Process Customer Local Exchange E-side cable E-side cable - LLU Primary Cross Connection Point (PCP) D-side cable D-side cable - LLU Customer PDTLMC_Diagram1 The E-side cable balance sheet and profit and loss values are apportioned to the following three Plant Groups (PGs): PG117C E-side Copper Capital. PG130A Local Loop Unbundling (LLU) Tie Cables. PG192A NGA E-side Copper Capital. PG151B TAMS N.B. LLU Tie cables are the cables from the Main Distribution Frame (MDF) to the Communications Provider s (CP s) own equipment, normally within the exchange. The apportionment between these PGs is based on the relative sizes of the year to date depreciation at a period representative of the full year. These figures are taken from the Life of Plant (LoP) listing which details the historical cost. The proportion for LLU is further subdivided into costs relevant to TAMS and LLU tie Cables based on a survey on registrations. Life of Plant (LoP) List. Survey of asset registrations PDTLMD ALL Local Main (Exchange Side) Duct This base apportions costs and balance sheet associated with Local fibre distribution cable. Apportionment to Core and Access AGs is done based upon data from the 1996 Absolute Duct Study (ADS). The ADS was a point in time study of the duct within the network using a sample of 384 of the 5,586 exchange areas. From this survey, the proportion of duct that is solely used\shared between access and core transmission was determined. This proportion is then used to apportion the 1996/97 index uplifted Gross Replacement Cost (GRC), and to this the indexed capital spend, from 1996/97 to the current year, is added for access and Backhaul/Inner Core Duct. The apportionment is then determined based upon the ratio of (1996/7 Access Gross Replacement Cost (GRC) plus Access duct capital spend) and (1996/7 Core Gross Replacement Cost (GRC) plus Core capital Duct 87

88 * 8 # * 8 # spend). A proportion is also allocated to NGA (Next Generation Access) based on depreciation estimated from detailed capital expenditure on NGA projects on the Internal Project Ledger. Exhausts to: AG148 Backhaul Duct AG135 Access Duct PG192 NGA E-Side Copper Capital 1996 Absolute Duct Study (ADS). Internal Project Ledger (IPL). PDTLMDF ALL Main Distribution Frames in Local Exchanges This base apportions the costs and balance sheet associated with main distribution frames in local exchanges. Main distribution frames are the interface between the exchange side cables and the exchange switching equipment. Exchange side cable is the cable that links the exchange to the primary cross connection point. This is illustrated in the diagram below: Customer Local Exchange Main Distribution Frame E-side cable E-side cable - LLU Primary Cross Connection Point(PCP) D-side cable D-side cable - LLU Customer PDTLMDF_Diagram1 The main distribution frame balance sheet and profit and loss values are apportioned to the following two PGs: PG217E Local Exchange General Frames Capital PG130A Local Loop Unbundling Tie Cables The reason why the main distribution frame values are apportioned to these PGs is that they support the activities of the E-side copper cable. Therefore the apportionment between these two PGs can be based on the relative sizes of the year to date depreciation of MDF assets at Period 11 for both E-side copper cable and local loop unbundling frame usage. These figures are taken from the Life of Plant (LoP) listing which details the historical cost depreciation for the year for different asset classes. The source of the LoP list data is the fixed asset register. LoP List at Period 12. PDTLXTM ALL Local Exchange Testing This base apportions the costs of the Local Exchange Test and Measure (LXTM) classes of work (CoW). This covers common or centralised testing, monitoring or access equipment for Local Exchanges that is not directly associated with a particular exchange system type. The apportionment is based on an analysis of depreciation costs. The depreciation charges from the Life of Plant (LoP) List for the CoW are analysed by asset policy code and broken down into: Exchange equipment used to test local exchanges. 88

89 This is Test Access Matrix (TAMS) equipment for Openreach and is apportioned to the TAMS Openreach Plant Group (PG) - PG151B. BT TSO TAMS get apportioned to PG151N. Other costs. This is line test equipment and is apportioned to the Line Test Equipment PG240A. Latest available Life of Plant (LOP) list. PDTLYX ALL AXE10 Exchanges This base apportions the costs and balance sheet charges for AXE10 local exchange equipment to Plant Groups (PGs). AXE10 equipment is equipment in BT s network manufactured by Ericsson. This base apportions the F8 codes pointing to it in exactly the same way as base reference PDTSYSXD except that the weighting between concentrators and processors is based on modern equivalent asset depreciation values rather than historical cost depreciation values. Therefore this base reference is calculated as follows: There are two fundamental building blocks of AXE10 exchanges: Concentrators. Processors. These building blocks are significantly different, and are each made up of a large number of specific equipment elements. Each of these elements will relate to a specific PG. Therefore to create an apportionment base, we need to dimension each of these specific equipment elements. Concentrators Step 1 Determine the modern equivalent asset value of all the equipment elements of concentrators in the network. Obtain from the Exchange Planning and Review System (EXPRES) system data that details the line types and the total number of lines fitted to each concentrator in the BT network. This data is entered into an engineering model which dimensions the number of equipment elements required to make up that number of lines. The quantities of each equipment element are then multiplied by an appropriate element cost to arrive at the total cost for each equipment element. The appropriate element cost that the engineering model utilises is the modern equivalent asset amounts for each type of equipment element. These are obtained from the Price Element Scheduled (PES) as part of the LEMP (Local Exchange Modernisation Program). The figures that are used from this are the March 1995 figures. These figures are frozen as this equipment is no longer available for purchase. Step 2 Determine an estimate of the modern equivalent asset depreciation value for the equipment building blocks. The current year s asset life determinations are applied to the total modern equivalent asset values of the equipment identified in step 1 to create a modern equivalent asset depreciation charge for the year. Asset lives are calculated and determined by Wholesale Regulatory Finance each year. This is completed via a review process undertaken by experts in this field. Where an individual building block does not have an individual asset life set in this process, the equated life of the Class of Work (CoW) is applied. Step 3 - Allocate the depreciation charge into call set-up, access and call duration categories. Using detailed information obtained from the switch manufacturer, which analyses how the different equipment types within the switch are used to provide service, the total modern equivalent asset depreciation value for each type of equipment element is allocated to the following categories: Call set-up. Call duration. Access. Total modern equivalent asset depreciation charges under each of the three categories can then be calculated. This step illustrates the reason for using modern equivalent asset values to create the apportionment base for the historical cost AXE10 values. The manufacturer s matrix is crucial in providing the link between the F8 codes and the PGs that they are apportioned to. However the equipment elements in the manufacturer s matrix cannot be reconciled to asset policy codes that are based on historical cost values. However the PES equipment elements 89

90 compiled as part of the LEMP do reconcile to the manufacturers matrix and these items are listed at modern asset equivalent values. Step 4 Apportion the Access category into more detailed access categories (which will be linked to PGs at a later stage). The total modern equivalent asset depreciation value allocated to the category access must be further split into the following categories: Public Switched Telephone Network (PSTN). Integrated Services Digital Network (ISDN2). ISDN30. Payphones. This apportionment is calculated based on the relative proportion of cost already identified in the engineering model. Step 5 Create concentrator weighted base. Using the modern equivalent asset depreciation amounts calculated for the above-listed categories, create a weighted base for concentrator kit. The above steps are represented in the flowchart attached below: Diagram: Overview of Historical Cost Balance Sheet Concentrators. EXPRESS PES SWITCH Manufacturers MATRIX EXPRESS (Lines) ASSET LIVES Contractors CURRENT COST DEPRECIATION Concentrator Kit Type Concentrator Kit Type Concentrator Kit Type Concentrator Kit Type Concentrator Kit Type Concentrator Kit Type TOTAL 8,400 MODEL Concentrator Setup Kit 2000 Concentrator Duration Kit 800 Concentrator Access Kit 5600 TOTAL 8,400 PSTN Access Kit 1700 ISDN2 Access Kit 2300 ISDN30 Access Kit 1300 Payphones Access Kit 300 TOTAL 5600 Concentrator Setup Kit 2000 Concentrator Duration Kit 800 PSTN Access Kit 1700 ISDN2 Access Kit 2300 ISDN30 Access Kit 1300 Payphones Access Kit 300 TOTAL 8,400 Concentrator Setup Kit 24% Concentrator Duration Kit 10% PDTLYX_Diagram1 Conc PSTN Access Kit 20% Conc ISDN2 Access Kit 27% Conc ISDN30 Access Kit 15% Conc Payphones Access Kit 4% TOTAL 100% *percentages are for illustrative purposes only Processors Step 1 Determine the modern equivalent asset value of all the equipment elements of processors in the network. Obtain from the EXPRES system data on the number of different lines connected to each processor in the BT network. Data is also obtained from the Network Recording System (NRS) on the size of all the processors in the BT Network. This data is then entered into an engineering model which dimensions the number of equipment elements required to make up that total processing capacity. The quantities of each equipment element are then multiplied by an appropriate element cost to arrive at the total cost for each equipment element. The appropriate element cost that the engineering model utilises is the modern equivalent asset values for each type of equipment. This is obtained from the Price Element Scheduled (PES) items as part of the Local Exchange Modernisation Program (LEMP). The figures that are used from this are the March 1995 figures. These figures are frozen as this equipment is no longer available for purchase. 90

91 Modern equivalent asset values are used for the same reason as stated above for concentrators. Step 2 Determine an estimate of the Current Cost depreciation value for the equipment building blocks. The current year s asset life determinations are applied to the total Current Cost values of the equipment identified in step 1 to create a Current Cost depreciation charge for the year. Asset lives are calculated and determined by the Wholesale Regulatory Finance each year. This is completed via a review process undertaken by experts in this field. Where an individual building block does not have an individual asset life set in this process, the equated life of the CoW is applied. Total modern equivalent asset depreciation values under each of the two categories can then be calculated. Step 3 Create processor weighted base. Using the modern equivalent asset depreciation amounts calculated for the above-listed categories, create a weighted base for processor kit. The above steps are represented in the flowchart attached below: Diagram: Overview of Historical Balance Sheet Processors. EXPRES PES SWITCH MANUFACTURER MATRIX NRS ASSET LIVES P R O C E S S O R S Current Cost Depreciation Processor Kit Type Processor Kit Type Processor Kit Type MODEL Digital Line Termination Switch Block Processor end signalling Total x Digital Line Termination % x y Switch Block % y z Switch Block % z x,y,z Total 100% Processor Kit Type Processor Kit Type Total 3200 PDTLYX_Diagram2 * Percentages are for illustrative purposes only. Apportionment to Plant Groups (PGs) We now have two sets of apportionment data with both the concentrator and the processor apportionments adding up to 100%. The next step in the process is to weight the concentrator and processor apportionments. This base uses modern equivalent asset depreciation values to create the weighting from within the model. Step 1 Total the modern equivalent asset depreciation charges for AXE10 equipment From the calculations above, the total of the modern equivalent asset depreciation charges for processor equipment is calculated. The total of the modern equivalent asset depreciation values for concentrator equipment is also calculated. Step 2 Create a weighted base for apportionment percentages Using the relative proportions between processors and concentrators derived from the previous step, the apportionment s calculated for processors and concentrators can be weighted. The above steps can be represented in the flowchart attached below: Diagram: Historical Balance Sheet Apportionment to PGs 91

92 MODEL B a s e R e f e r e n c e % s Processor Dep n 3,200 Concentrator Dep n 8,400 Processor Dep n 28% Concentrator Dep n72% Digital Line Termination 20% Digital Line Termination 5.6% Switch Block Processor & Signalling Total 40% 40% 100% Switch Block Processor & Signalling Total 11.0% 11.0% 28% Concentrator Set up Kit Concentrator Duration Kit Concentrator PSTN Access Kit Concentrator ISDN2 Access Kit Concentrator ISDN30 Access Kit Concentrator Payphones Access Kit Total 24% 10% 20% 27% 15% 4% 100% Concentrator Set up Kit Concentrator Duration Kit Concentrator PSTN Access Kit Concentrator ISDN2 Access Kit Concentrator ISDN30 Access Kit Concentrator Payphones Access Kit Total 17% 7% 14% 19% 11% 3% 72% PDTLYX_Diagram3 * Percentages are for illustrative purposes only. Step 3 Apportion amounts to PGs The apportionments are applied to the following Plant Groups (PGs) based on an analysis of the most appropriate fit for the building blocks. These are then applied to the historical cost Balance Sheet (i.e. gross book value (GBV) and accumulated depreciation) and historical cost Profit and Loss (i.e. depreciation etc.) charges for AXE10 local exchange equipment. The PGs that the apportionment s point to are as follows: Category AXE10 Local Exchange Processor and Signalling AXE10 Local Exchange Digital Line Termination AXE10 Local Exchange Switch Block AXE10 Concentrator Set-Up AXE10 Concentrator Duration PSTN Linecards ISDN2 Linecards ISDN30 Capital /Maintenance This can be represented in the flowchart below: Plant Group PG280C PG281C PG282A PG283A PG284A PG124A PG127A PG128A Diagram: Historical Balance Sheet and Profit and Loss (P&L) Apportionment to PGs 92

93 A p p o r t i o n m e n T AXE10 Balance Sheet and Profit and Loss F8 Codes (Historical Costs) LE Processor and Signalling 25% Processor DLT Process Switch Block Concentrator Set up Kit Concentrator Duration Kit Conc Kit PSTN Access Conc. ISDN2 Access Kit Conc. ISDN30 Access Kit Conc. Payphones Access Kit Total 3% 3% 17% 7% 14% 19% 11% 3% 100% LE Proc & Sign PG280A LE DLT PG281C LE Switch Block PG282A PG287C Conc SetupPG283A Conc Duration PG284a PG289A PG128A PG128A PG124A PG120A PDTLYX_Diagram4 EXPRES and NRS Systems. Management uses a period that is reflective of the full year. PDTMDEN ALL Private Circuits Megastream Maintenance This base apportions the costs of maintaining Megastream equipment assets. Megastream is a 2Mbit/s (2,048kbit/s) high speed, permanently connected, point to point private circuit. This base apportions the costs of maintaining Megastream equipment assets to Plant Groups (PGs) and follows the same apportionment percentages as determined in the PDTDTTM base. PDTDTTM apportions using a combination of Current Costs values of bearers, volumes of circuit types and depreciation. Current Cost values of bearers, volumes of circuit types and depreciation for the most recent period of the year. London Local Fibre Network (LLFN), Core Transmission Costing System (CTCS) and Life of Plant (LoP) List at Period 11. Management believe this period to be reflective of the full year. PDTMDF ALL Main Distribution Frames (Current) This base apportions current account costs for main distribution frames to: PG217F - Local Exchange Frames (Current) PG981R - Openreach Time Related Charges PG989A - Special Fault Investigation The allocation is based on the share of kilo man hours (KMH) spent on Time Related Charges (TRCs) and Special Fault Investigation (SFI). The cost for these activities is derived by multiplying the manhour rate x KMH for the above activities. The total cost for the CoW is obtained from CID and the proportion of cost allocated to SFI and TRC is based on the implied cost from the manhour rate x KMH. The residual proportion of the cost after subtracting the above will go to Local Exchange Frames. Data Source Workmanager data. CID Openreach Manhour Rate Openreach Management Accounts. 93

94 PDTMDSL PDTMETA L BL, BV, MJ ALL Main Distribution Frames (Current) This base apportions current account costs for maintenance of digital subscriber line equipment to: PG152B - Digital Subscriber Line Openreach PG989A - Special Fault Investigation The allocation is based on the share of kilo man hours (KMH) spent on Special Fault Investigation (SFI). The cost for this activity is derived by multiplying the manhour rate x KMH for SFI. The total cost for the CoW is obtained from CID and the proportion of cost allocated to SFI is based on the implied cost from the manhour rate x KMH. The residual proportion of the cost after subtracting the above will go to Digital Subscriber Line. Data Source Workmanager data. CID Openreach Manhour Rate Openreach Management Accounts. Metro Nodes Alcatel-Lucent This base apportions the costs and balance sheet for Metro node equipment to Plant Groups (PGs). Metro nodes provide the routing and signalling functions for the unified 21CN network for voice, data and video. BT s strategic equipment suppliers for 21CN have been chosen across each of five (access, metro, core, I-Nodes and transmissions) strategic domains. Alcatel Lucent is one of these suppliers. The Metro-Node contains functionality for the transport of connectivity, voice and broadband services, via routers. The latest 21CN business case model is analysed into categories, for which we have assigned PGs, for the assets the Metro node contains. The business case provides estimates of capital spend on a year by year basis. The relative quantities of capital, for each of the categories provide the apportionment. The recipients are: PG878A Metro BB LNS PG879A Metro BBL3 PG880A (BEA) Broadband Edge Aggregator PG881A (BRAS) Broadband Remote Access Server PG882A (FER) Front End Router PG887A Ethernet Edge Aggregator Bandwidth PG888A Ethernet Edge Aggregator Port PG889A Infrastructure Ethernet PG890A Media Gateway PG892A Sync Racks PG893A (MSPE) Multi Service Provider Edge Routers PG895A P-Router Large (Core) PG896A P-Router Metro PG898A Core Directors CAPEX forecast from BT Technology, Service & Operations (BT TSO). 94

95 PDTMETCI ALL Metro Nodes - Cisco This base apportions the costs and balance sheet for Metro node equipment to Plant Groups (PGs). Metro nodes provide the routing and signalling functions for the unified 21CN network for voice, data and video. BT s strategic equipment suppliers for 21CN have been chosen across each of five (access, metro, core, I-Nodes and transmissions) strategic domains. Cisco is one of these suppliers. The Metro-Node contains functionality for the transport of connectivity, voice and broadband services, via routers. The latest 21CN business case model is analysed into categories, for which we have assigned PGs, for the assets the Metro node contains. The business case provides estimates of capital spend on a year by year basis. The relative quantities of capital, for each of the categories provide the apportionment. The recipients are: PG878A Metro BB LNS PG879A Metro BBL3 PG880A (BEA) Broadband Edge Aggregator PG881A (BRAS) Broadband Remote Access Server PG882A (FER) Front End Router PG887A Ethernet Edge Aggregator Bandwidth PG888A Ethernet Edge Aggregator Port PG889A Infrastructure Ethernet PG890A Media Gateway PG892A Sync Racks PG893A (MSPE) Multi Service Provider Edge Routers PG895A P-Router Large (Core) PG896A P-Router Metro PG898A Core Directors PDTMETSI T Metro Nodes -Siemens CAPEX forecast from BT Technology, Service & Operations (BT TSO). This base apportions cost and balance sheet for Metro node equipment to Plant Groups (PGs). Metro nodes provide the routing and signalling functions for the unified 21CN network for voice, data and video. BT s strategic equipment suppliers for 21CN have been chosen across each of five (access, metro, core, I-Nodes and transmissions) strategic domains. Siemens is one of these suppliers. The Metro-Node contains functionality for the transport of connectivity, voice and broadband services, via routers. The latest 21CN business case model is analysed into categories, for which we have assigned PGs, for the assets the Metro node contains. The business case provides estimates of capital spend on a year by year basis. The relative quantities of capital, for each of the categories provide the apportionment. The recipients are: PG878A Metro BB LNS PG879A Metro BBL3 PG880A (BEA) Broadband Edge Aggregator 95

96 PDTMSAN F PDTMSAN H ALL ALL PG881A (BRAS) Broadband Remote Access Server PG882A (FER) Front End Router PG887A Ethernet Edge Aggregator Bandwidth PG888A Ethernet Edge Aggregator Port PG889A Infrastructure Ethernet PG890A Media Gateway PG892A Sync Racks PG893A (MSPE) Multi Service Provider Edge Routers PG895A P-Router Large (Core) PG896A P-Router Metro PG898A TDM Specific Connects CAPEX forecast from BT Technology, Service & Operations (TSO). Fujitsu MSANs This base apportions the cost and balance sheet for Fujitsu manufactured MSANs (Multi Service Access Nodes) equipment to Plant Groups (PGs). The latest 21CN business case model is analysed into categories, for which we have assigned PGs, for the assets the MSAN contains. The business case provides estimates of capital spend on a year by year basis. The relative quantities of capital, for each of the categories provide the apportionment. The recipients are: PG857A CMSAN Combo Cards BB element. PG858A CMSAN Combo Cards Voice element. PG859A CMSAN Control Access. PG860A CMSAN Control Transport. PG861A CMSAN ISDN30 Cards. PG862A CMSAN Low Band SDSL cards =<2Mbit/s. PG864A CMSAN-FMSAN Link. PG869A FMSAN Control Transport. PG872A FMSAN TDM Cards. PG874A FMSAN to WDM Link. CAPEX forecast from BT Technology, Service & Operations (BT TSO). Huawei MSANs This base apportions the cost and balance sheet for Huawei manufactured MSANs (Multi Service Access Nodes) equipment to Plant Groups (PGs). The latest 21CN business case model is analysed into categories, for which we have assigned PG, for the assets the MSAN contains. The business case provides estimates of capital spend on a year by year basis. The relative quantities of capital, for each of the categories provide the apportionment. The recipients are: PG857A CMSAN Combo Cards BB element. 96

97 PDTMTLU R PDTMUC BV MJ B, BV, TT PG858A CMSAN Combo Cards Voice element. PG859A CMSAN Control Access. PG860A CMSAN Control Transport. PG861A CMSAN ISDN30 Cards. PG862A CMSAN Low Band SDSL Cards =<2Mbit/s. PG864A CMSAN-FMSAN Link. PG869A FMSAN Control Transport. PG872A FMSAN TDM Cards. PG874A FMSAN to WDM Link. CAPEX forecast from BT Technology, Service & Operations (BT TSO). Main Distribution Frames (Current) This base apportions current account costs for main distribution frames to: PG122M - Residential PSTN Maintenance PG989A - Special Fault Investigation The allocation is based on the share of kilo man hours (KMH) spent on Special Fault Investigation (SFI). The cost for this activity is derived by multiplying the manhour rate x KMH for SFI. The total cost for the CoW is obtained from CID and the proportion of cost allocated to SFI is based on the implied cost from the manhour rate x KMH. The residual proportion of the cost after subtracting the above will go to Residential PSTN Maintenance. Data Source Workmanager data. CID Openreach Manhour Rate Openreach Management Accounts. Construction of Main Underground Cable This base allocates the asset values and annual depreciation charges associated with the construction of main underground cable in the core and 21c networks to a number of fibre Plant Groups. PACS contains circuit path information for all SDH circuits. This data is extracted and analysed in an Access database. From this we extract the total fibre km attributable to either 20c or 21c. For 20c fibre the costs are allocated to either PG170B for OUC B & MJ or PG350N for all other OUCs. The remaining percentage attributable to 21c is then broken down by the tier of the bearer and this drives the allocation to 21c PG. PACS 97

98 PDTMXD ALL Main Exchange Capital This base apportions the depreciation and capital costs of Main/Trunk Switches. The costs are recorded in two Classes of Work (CoW). MDX for System X switches. NGS for Next Generation Switches. The base also apportions the maintenance costs for Main/Trunk switches. These costs are recorded in two classes of work. DMS for System X Switches NGSM for Next Generation Switches This methodology produces a combined base used for both CoWs. The System X platform asset are part of the legacy network and are no longer manufactured. It is planned they will remain until The newer Next Generation Switches (NGS) switches are used as a Modern Equivalent Asset as part of the process. The remaining value on NGS is very much higher than System X. Firstly, a fixed asset download is taken of both the MDX and NGS CoW. The proportion of depreciation relevant to Intelligent Access and Messaging is attributed to its own Plant Group (PG) PG254A by identifying assets by policy code or asset descriptions. Different results are obtained from the MDX and NGS CoW. The overall proportion of depreciation is weighted by the relevant depreciation in the NGS and MDX CoWs from the previous period (either half year or full year). Once this has been obtained then apportionment to three other relevant PGs can be derived. PG249C Main Exchange DLT (Digital Line Termination) PG254A Main Exchange (I, A and M) already described above PG255B Main Exchange Switch Block PG257C Main Exchange Processor Costs subsequently exhaust to four components: CO220 Main Exchange Call Set-Up. CO221 Main Exchange Call Duration. CO470 Interconnect Rentals CO212 Local Exchange processor set-up. CO260 Cambridge Voice Intelligent Peripherals. In order to proportion costs to the three remaining PGs a Current Cost Accounting (CCA) approach is used to dimension the equipment required using a Modern Equivalent Asset (MEA) of the NGS. The model dimensions the size of the units and costs them using information contained in NGS contract (no ) between BT and Ericsson. The engineering model uses inputs of the NGS capacities from the Switch Deployment Plan sourced from the Planning team. The model dimensions each exchange in the most efficient way. The total cost is obtained for all 98

99 PDTNTE2 1 ALL the exchange units and the model costs are assigned as to whether they relate to the three overall building blocks: Digital Line Termination (DLT). Processor. Switch Block. The relative proportions of these are used for determining the apportionment. The model also contains how much of each building block within the exchange relates to call set up and call duration for further apportionment from PG to component. EXPRES (Exchange Planning and Review System) Supplies the number of System X and Next Generation Switches (NGS) units in service. Network Recording System (NRS) Supplies the fitted and working capacities of System X and Next Generation Switches (NGS) units. Switch Deployment Plan Also contains evidence on the fitted capacity of working NGS units together with dates of migration from System X to NGS. Fixed Asset Register. 21C Network Terminating Equipment This base apportions the historical cost Balance Sheet (i.e. gross book value and accumulated depreciation) and historical cost Profit and Loss (P&L) (i.e. depreciation etc.) charges for 21c Network Terminating Equipment. This allocates 100% to PG867A 21C Ethernet NTE. This base apportions the cost and balance sheet for 21c Network Terminating Equipment. This allocates 100% to PG867A 21C Ethernet NTE. PDTORSFI BL, BV Dropwire repair Overhead Cable This base apportions repair costs for drop wires to: PG122M - Residential PSTN Maintenance, PG989A - Special Fault Investigation PG981R -Openreach Time Related Charges The allocation is based on the share of kilo man hours (KMH) spent on Time Related Charges (TRCs) and Special Fault Investigation (SFI). The cost for these activities is derived by multiplying the manhour rate x KMH for the above activities. The total cost for the CoW is obtained from CID and the proportion of cost allocated to SFI and TRC is based on the implied cost from the manhour rate x KMH. The residual proportion of the cost after subtracting the above will go to Residential PSTN Maintenance. Data Source Workmanager data. CID Openreach Manhour Rate PDTRAR B Routing and Records Base - Openreach The costs within this base are for the routing and records activity. This activity is the physical verification of routings within the network, and records the time associated with the initial recording of routing details on BT systems. There are also Capital Planning Pay and Non Pay costs which are not directly related to the routing and records activity. 99

100 PDTSBSB B BV Bookings to the Class of Work (CoW) RAR (Routing and Records) consist of two elements. The first element is the time booked that is directly related to the Routing and Routing activity as defined in the CoW description. The second element, Capital Planning, is the time spent on activities that are outside of the CoW description and allocated to Capital Programmes. This consists of bookings made by non-field units, maintenance of records and planning indirects. A survey/estimate is provided by the field operations manager for Routing and Records is used to split the costs into the two elements. The proportion of cost proper to Routing and Records will exhaust to PG140A. The portion that relates to capital programme will be allocated using the PDTDUCT base. This based is chosen as it exhausts costs to Fibre capital plant groups which makes use of the planning system that Routing & Records activity uses. Survey/Estimate provided by Operations manager responsible for Routing & Records. Broadband Boost This base apportions repair costs for Broadband Boost to PG118M - D Side Copper Current, PG989A - Special Fault Investigation and PG580B - Broadband Boost. The allocation is based on the share of kilo man hours (KMH) spent on copper repair, SFI and Broadband Boost. Workmanager data. PDTSCNM TN Network Platform Support Contract Costs This base apportions the Profit and Loss (Other Payments) costs of technology vendor provided support usually under fixed term support contracts. The full detailed list of platforms supported is obtained from the Vendor Management team within Technology Service & Operations and includes the following high level Platforms: Transmission Switch Broadband Private Circuits Intelligent Networks etc. Step 1 Platform level breakdown The first step of the methodology breaks down the total Support Contract Costs into technologies or platform specific categories. This data originates from the Support Contract Spend Managers. Step 2 Plant Group (PG) level breakdown The Platform costs are then apportioned to the relevant PG s (weighted by step 1). The method of allocating across each Platform specific PG s is driven by the relevant Platform base. The following data sources are used to provide the step 2 allocations: CoW CoW Data Source ASN Maintenance Intelligent Network Platform Internal GRF sources ATM Asynchronous Transfer Mode Internal GRF sources 100

101 DMC Construction Operator Service System (OCHC) Internal GRF sources DX Mtce:local Digital Exchange, System X Internal GRF sources DY Mtce: Local Digital Exchange, System Y (AXE 10) Internal GRF sources ETHER NETWORK TRANSFORMATION- 21CN ETHERNET Internal GRF sources INM Maintenance Intelligent Network Platform Internal GRF sources IVS Mtce, Synchronous Digital Transmission Equipment Internal GRF sources IVX Mtce, Trunk Transmission Digital Multiplex Equipment Internal GRF sources KDEN Mtce: Kilostream Service Internal GRF sources MDEN Mtce: Megastream Service Internal GRF sources MSAN 21CN MSAN Equipment Internal GRF sources MDX Construction, Main Network Switching Digital Internal GRF sources IP IP Network Capital Internal GRF sources TSO LOP list Technology, Service & Operation Life of Plant list Internal GRF sources OR LOP list Openreach Life of Plant list Internal GRF sources Step 3 Amalgamation The PG level bases calculated in step2 are amalgamated back into a SCNM level base by utilising the outputs from steps 1 and 2. Full year Platform level Contract Support costs Provided by BT TSO Platform specific bases BT TSO & OR Life of Plant list asynchronous PDTSDH ALL SDH (Synchronous Digital Hierarchy) Electronic Assets This base drives the Net Book Value (NBV = Gross Book Value Accumulated Depreciation + Assets in Course of Construction) and depreciation charge costs for classes of work (CoW) SDH and also the maintenance costs on CoW IVS (Maintenance, Synchronous Digital Transmission Equipment). SDH represents newer electronic assets in the Transmission network. They complement the transmission equipment capacity provided by the Plesiochronous Digital Hierarchy (PDH) assets see PDTCRD and PDTCRF. IVS capture the corresponding maintenance costs incurred on SDH equipment. Allocation is to Plant Group (PG), which represent bearers in the core network. SDH CoW is subdivided into a number of asset policy codes, representing the different asset types within SDH. The 101

102 driver and destination for these policy codes does vary. SDH costs are mapped to bearer links, which can either be STM1, STM4, STM16 or STM64, represented by a number of PGs. Asset types Asset types within SDH can be classified into a number of key categories: Add Drop Muxes (Add Drop Muxes (ADMs) - Exchange and customer sited). Cross Connects - (Routing equipment - Two main types-4/1 and 4/4). Line systems. International Backhaul equipment. Other (Software, computer equipment, etc.). CTCS (Core Transmission Circuit costing System) generates a file listing all SDH equipment and the number of factored hits by bearer type (PG). The aim is to allocate the cost of equipment to a number of bearer types based on usage and utilisation. Hits represent the number of times a bearer interfaces with a piece of equipment. A factor is applied in order to ensure utilisation is taken into account, for example an STM 4 (565Mbit/s) bearer would utilise an ADM, four times as much as a STM 1(155Mbit/s) bearer. The CTCS file details all SDH assets by bandwidth, e.g. ADMs are broken down by type - SMA1, SMA4 and SMA 16. BT s initial calculations are at an asset policy level. Asset policy codes group assets into broad categories which we can map to the asset types held in CTCS. The value (Count of equipment * Price) of each equipment type, within a policy code, is used to weight the factored hits. The hits are then grouped together, at an overall asset policy level. These hits are then weighted by Period 6 depreciation from the Period 6 Life of Plant (LoP) list. This is derived from the fixed asset register. Indirect costs are treated as overheads and are allocated to PGs in proportion to the value of the equipment already apportioned. Period 6 circuit data is used in CTCS to allocate year end costs, as this reflects an average position of network utilisation over the year. Period 6 LoP list. SDH prices-procurement/sdh cost model. For further explanation refer to the diagram below. Diagram: SDH Electronic Assets PDTSDH Process PDTSIGNI T, TT Signalling Equipment Capital Costs This base apportions the capital costs of Signalling equipment registered in the SIGNI classes of work (CoW) to Plant Groups (PGs). SIGNI equipment is associated with PSTN (Public Switched Telephony Network] Interconnect (Other Licensed Operator) circuits and PSTN to Intelligent Network (IN) circuits. The main assets are: 102

103 STP (Signalling Transfer Point) switches and Edge Link Monitors for Interconnect Circuits. SPRs (Signalling Point Relay switches) and Core Link Monitors for PSTN to IN Circuits. The Fixed Asset Register records assets against distinct Asset Policy Codes (APCs) which reflect asset function. This allows easy identification of depreciation costs by function and allows the calculation of the relevant split to corresponding PGs. A summary of data from the Fixed Asset Register for the latest available period is used for the base. The relationship between APCs and PGs is shown below. SIGN Signalling Transfer Point switches and SIGE Edge-link monitors - Costs directly attributed to PG228A Signalling Transfer Point switches and Edge-link monitors. SIGC Core-link monitors and SIGS Signalling Point Relay switches - Costs directly attributed to PG229A Signalling Point Relay switches and Core-link monitors. Diagram: Signalling Equipment PDTSIGNI Apportionment Process. Fixed Asset Register (LoP List) data at the latest available period. Management believe this period to be reflective of the full year. PDTSYSXD ALL System X This base apportions cost and balance sheet for System X local exchange equipment to Plant Groups (PGs). There are two fundamental building blocks of System X Concentrators. Processors. Each of these elements will relate to a specific PG. Therefore to create an apportionment base, we need to dimension each of these specific equipment elements. Concentrators Step 1 Determine the Current Cost value of all the equipment elements of concentrators in the network. Obtain from the EXPRES (Exchange Planning and Review System) system data that details the line types and the total number of lines fitted to each concentrator in the BT Network. This data is entered into an engineering model which dimensions the number of equipment elements required to make up that number of lines. The quantities of each equipment element are then multiplied by an appropriate element cost to arrive at the total cost for each equipment element. The appropriate element cost that the engineering model utilises is the Current Cost amounts for each type of equipment element. These are obtained from the Price Element Scheduled (PES) items as part of the LEMP (Local Exchange Modernisation Program). The figures that are used from this are the March 1995 figures. These figures are frozen as this equipment is no longer available for purchase. Step 2 Determine an estimate of the Current Cost depreciation value for the equipment building blocks. 103

104 The current year s asset life determinations are applied to the total Current Cost values of the equipment identified in Step 1 to create a Current Cost depreciation charge for the year. Asset lives are calculated and determined by the Wholesale Regulatory Finance each year. This is completed via a review process undertaken by experts in this field. Where an individual building block does not have an individual asset life set in this process, the equated life of the Class of Work (CoW) is applied. Step 3 - Allocate the depreciation charge into call set-up, access and call duration categories using cost drivers. Using detailed information obtained from the switch manufacturer, which analyses how the different equipment types within the switch are used to provide service, the total Current Cost depreciation value for each type of equipment element is allocated to the following categories: Call set-up. Call duration. Access. Total Current Cost depreciation values under each of the three categories can then be calculated. This step illustrates the reason for using Current Cost values to create the apportionment base for the historical cost System X values. The manufacturer s matrix is crucial in providing the link between the F8 codes and the PGs that they are apportioned to. However the equipment elements in the manufacturer s matrix cannot be reconciled to asset policy codes that are based on historical cost values. However the PES equipment elements compiled as part of the LEMP do reconcile to the manufacturers matrix and these items are listed at modern asset equivalent values. Step 4 Apportion the Access category into more detailed access categories, which will be linked to PGs in later stages. The total Current Cost depreciation allocated to the category access must be further split into the following categories: Public Switched Telephone Network (PSTN). Integrated Services Digital Network (ISDN2). ISDN30. Payphones. This apportionment is calculated based on the relative proportion of cost already identified in the engineering model. Step 5 Create concentrator weighted base. Using the Current Cost depreciation amounts calculated for the above-listed categories, create a weighted base for concentrator kit. The above steps are represented in the flowchart below: 104

105 *percentages are for illustrative purposes only Processors Step 1 Determine the Current Cost value of all the equipment elements of processors in the network. Obtain from the EXPRES system data on the number of different lines connected to each processor in the BT network. Data is also obtained from NRS (Network Recording System) on the size of all the processors in the BT network. This data is then entered into an engineering model which dimensions the number of equipment elements required to make up that total processing capacity. The quantities of each equipment element are then multiplied by an appropriate element cost to arrive at the total cost for each equipment element. The appropriate element cost that the engineering model utilises is the Current Cost amounts for each type of equipment. This is obtained from the PES items as part of the LEMP. The figures that are used from this are the March 1995 figures. These figures are frozen as this equipment is no longer available for purchase. Current Cost values are used for the same reason as stated above for concentrators. Step 2 Determine an estimate of the Current Cost depreciation value for the equipment building blocks. The current year s asset life determinations are applied to the total Current Cost values of the equipment identified in step 1 to create a Current Cost depreciation charge for the year. Asset lives are calculated and determined by the Wholesale Regulatory Finance each year. This is completed via a review process undertaken by experts in this field. Where an individual building block does not have an individual asset life set in this process, the equated life of the CoW is applied. Step 3 Create processor weighted base. Using the Current Cost depreciation values calculated for the above-listed categories, create a weighted base for processor kit. The above steps are represented in the flowchart below: 105

106 * percentages are for illustrative purposes only Apportionment to PGs We now have two sets of apportionment data with the concentrator apportionments add up to 100% and the processor apportionments also add up to 100%. The next step in the process is to weight the concentrator and processor apportionments This base uses modern equivalent asset depreciation values to create the weighting from within the model. Step 1 Total the modern equivalent asset depreciation charges for System X equipment. From the calculations above, the total of the modern equivalent asset depreciation charges for processor equipment is calculated. The total of the modern equivalent asset depreciation values for concentrator equipment is also calculated. Step 2 Create weighted base for apportionment percentages. Using the relative proportions between processors and concentrators derived from the previous step, the apportionments calculated for processors and concentrators can be weighted. The above steps can be represented in the flowchart below: 106

107 *percentages are for illustrative purposes only Step 3 Apportion amounts to PGs. These apportionments are applied to the following PGs based on an analysis of the most appropriate fit for the building blocks. These are then applied to the historical cost Balance Sheet (i.e. GBV and accumulated depreciation) and historical cost Profit and Loss (i.e. depreciation etc.) charges for System X local exchange equipment. The PGs that the apportionments point to are as follows: Category System X Concentrator Call set-up System X Concentrator Call duration PSTN Linecards ISDN2 Linecards ISDN30 Capital Payphones Linecards System X DLE Processor and Signalling Capital System X DLE Processor Capital System X DLE Switch Block Plant Group PG288A PG289A PG127A PG128A PG124A PG120A PG285C PG286C PG287A PDTSYSXD_Diagram5 This is represented in the flowchart below: 107

108 PDTTCR B, TB, TN EXPRES (Exchange Planning and Review System). LEMP (Local Exchange Modernisation Program) Contract - The figures that are used from this are the March 1995 figures. These figures are frozen as this equipment is no longer available for purchase. Costs - Transmission Repair and Control on Trunk and Junction Transmission equipment This base apportions management pay costs of maintenance and repair works carried out on Trunk and Junction transmission equipment. This refers to the supervision of maintenance work carried out on the link sections of optical fibre cables which form part of the Core Network (also known as Core networks) and Private Circuits using the Plesiochronous Digital Hierarchy (PDH) technology (see Plant Group (PG) Overview on descriptions of Core Transmission Bearers). These costs flow into the classes of work (CoW) TCR (Transmission Control and Repair) which relate to PGs representing bearers in the core network. Costs are attributed to PDH PGs based on the number of PDH Line Systems and PDH Multiplexors supporting the different PDH bandwidths. Period 6 circuit data is used in Core Transmission Circuit costing System. PDTTPWC ALL Costs Core Microwave Radio Transmission Equipment This base apportions Net Book Value (NBV = Gross Book Value Accumulated Depreciation + Assets in Course of Construction) and depreciation charge costs related to core microwave radio transmission equipment, classes of work (CoW) TPWC. Unlike cable transmission, radio has only link related equipment to consider. Examples of this equipment are antennas, masts and radio electronics. Costs are apportioned over the different bandwidth bearers based on an analysis of radio bearers in the core transmission network which is derived from Core Transmission costing Circuits System (CTCS) database. CTCS shows the relationship between equipment types and the bearers they support. The depreciation costs of radio equipment can be apportioned to radio bearers based on the bearers' usage of this equipment. Usage is measured as the number of times a certain type of bearer hits the equipment in the network. A usage factor is applied to these hits to get factored hits. The usage factor is used as for bearers on fibre cable, e.g. a 140 Mbit/s radio bearer can support 64 x 2 Mbit/s circuits, and so the usage factor is 1/

109 Period 6 CTCS data on factored bearer hits on each radio system type. Management believes this to be reflective of the full year. PDTUDL BV Distribution Side Copper Repair This base apportions repair costs for drop wires to: PG118M - D-Side Copper Current PG981R - Openreach Time Related Charges PG989A - Special Fault Investigation The allocation is based on the share of kilo man hours (KMH) spent on Time Related Charges (TRCs) and Special Fault Investigation (SFI). The cost for these activities is derived by multiplying the manhour rate x KMH for the above activities. The total cost for the CoW is obtained from CID and the proportion of cost allocated to SFI and TRC is based on the implied cost from the manhour rate x KMH. The residual proportion of the cost after subtracting the above will go to D-Side Copper Current. Data Source Workmanager data. CID Openreach Manhour Rate PDTUEL BV Exchange Side Copper Repair This base apportions repair costs for drop wires to: PG118M - E-Side Copper Current PG989A - Special Fault Investigation The allocation is based on the share of kilo man hours (KMH) spent on Special Fault Investigation (SFI). The cost for this activity is derived by multiplying the manhour rate x KMH for SFI. The total cost for the CoW is obtained from CID and the proportion of cost allocated to SFI is based on the implied cost from the manhour rate x KMH. The residual proportion of the cost after subtracting the above will go to E-Side Copper Current. Data Source Workmanager data. CID Openreach Manhour Rate PDTURSFI BV Dropwire repair Underground Cable This base apportions repair costs for drop wires to: 109

110 PDTWDM 21 PDTWMC N ALL BL, BV, TSH & TBS PG122M - Residential PSTN Maintenance, PG989A - Special Fault Investigation The allocation is based on the share of kilo man hours (KMH) spent on Special Fault Investigation (SFI). The cost for this activity is derived by multiplying the manhour rate x KMH for SFI. The total cost for the CoW is obtained from CID and the proportion of cost allocated to SFI is based on the implied cost from the manhour rate x KMH. The residual proportion of the cost after subtracting the above will go to Residential PSTN Maintenance. Data Source Workmanager data. CID Openreach Manhour Rate Wavelength Division Multiplexor transmission equipment used in 21CN (Ciena) This base apportions cost and balance sheet for the transmission equipment of the WDMSAN chains, the METRO CORE and CORE CORE transmission electronic equipment, to Plant Groups (PGs). BT s strategic equipment suppliers for 21CN have been chosen across each of five (access, metro, core, i-nodes and transmissions) strategic domains. Ciena is one of these suppliers. The WDM equipment contains functionality for the transport of connectivity, voice and broadband services over the WDM chains and the METRO/CORE layer nodes. The latest 21CN business case model is analysed into the categories, for which we have assigned PGs, for the assets of the WDM electronics. The business case provides estimates of capital spend on a year by year basis. The relative quantities of capital, for each of the categories provide the apportionment. The recipients are: PG866A Core-Core Link PG886A Metro-Core Link PG899A WDM-Metro Link CAPEX forecast from BT Technology, Service & Operations (BT TSO). Work Manager Work Manager is a task recording system used in BT Operate to record the time spent by field engineers across many Classes of Work (CoW). It allocates work in the core network and manages the control system for work carried out at non-specialised Network Operations Units. This is system driven within ASPIRE. It will use specific OUC pay to allocate the amount of Work Manager costs booked from each specific OUC. BL ( ) % Allocated on BL OUC pay Work Mgr cost book by OUC BV ( ) TBS ( ) % Allocated on BV OUC pay % Allocated on TBS OUC pay AG's, PG's & P-Codes TSH ( ) % Allocated on TSH OUC pay 110

111 N/A ASPIRE driven PENOFF E Share Benefit Cost Offset This base apportions the Profit and Loss (P&L) costs (current ETG Pay etc.) associated with the Share Option Schemes and represents the discount offered as part of the scheme. This cost is charged to Lines of Business (LoB), with the corresponding credit going to OUC E. The Pan Divisional balance is therefore zero. The PENOFF base is designed to ensure that the Products, Plant Groups (PGs) and Level 1 Activity Groups (AGs) also total zero. The base is created by using a download from the relevant GL code i.e (Share Benefit Costs) and apportioning the credit in OUC E to match the cost in the other divisions. The result is that the credit and the cost have a net impact of nil on regulated markets. Example: F8 Code OUC Product/Plant Group etc Prod/ PG etc Value A P A PG345a B P B PG345a B AG Total E P E PG345a E AG Product Perspective Total -70 Total 0 PROPPRO V REDUND_ COR W ALL Core OUCs Excep t B's PENOFF_Diagram1 Download from ASPIRE on F8 code Property Provision BT Property is currently implementing a property rationalisation strategy by consolidating the office space within the estate, and this is enabling the mothballing and subletting of buildings. The cost associated with this rationalisation is being treated as a provision, as it is not part of business as usual activity. The property rationalisation is limited to office space, and therefore a base derived from the General Purpose Occupation cost charges to Lines of Business (LoB) provides a cost causal apportionment methodology. Effectively the cost of the property rationalisation is being apportioned over current office space usage. Horizon Balance Sheet Redundancy Creditor Accruals This base is used to apportion redundancy creditor accruals in the Balance Sheet. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. It is recalculated each time redundancy costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. REDUND). 111

112 The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. COR). Use F8s to produce download REDUND, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived, i.e. all redundancy and NewStart pay costs incurred by BT during the year. This data is held within the system by AS Cost Centre. COR, the Data Designator 2, specifies the AS Cost Centres to which the redundancy creditors balance should be apportioned. The REDUND apportionment base is adapted to exclude data that apportions to any AS Cost Centres not listed in the COR group of Cost Centres. The remaining data is rebased to 100% and this base is applied to the miscellaneous creditors balance. COR refers to all AS Cost Centres, which incurred costs, specifically excluding any overseas activities. REDUND- PCT B, BV, C, K, TH, TT, TU, TX, V, W, Y, Y3 The data is system generated from ASPIRE. Balance Sheet Redundancy Accruals This base is used to apportion redundancy accruals in the Balance Sheet relating to BT TSO, Openreach and BT Security. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. It is recalculated each time redundancy costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. REDUND). The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. PCT). 112

113 Use F8s to produce download REDUND, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived, i.e. all redundancy and NewStart pay costs incurred by the LoBs (in this case BT TSO and Openreach) during the year. This data is held within the system by AS Cost Centre. PCT, the Data Designator 2, specifies the AS Cost Centres to which the redundancy creditors balance should be apportioned. The REDUND apportionment base is adapted to exclude data that apportions to any AS Cost Centres not listed in the PCT group of Cost Centres. The remaining data is rebased to 100% and this base is applied to the miscellaneous creditors balance. PCT, the Data Designator 2, specifies the AS Cost Centres to which the capital creditor balance should be apportioned. RETOHD MH, MN, MX The data is system generated from ASPIRE.. BT Retail OUC MX This base apportions costs and balance sheet booked by Organisational Unit Code (OUCs) MX, NM and MH which is not otherwise attributed using other bases. Apportioned 100% to Retail Residual. SLGETH BL Service Level Guarantee scheme (SLG) Ethernet This base apportions revenue and costs associated with Service Level Guarantee compensation payments for provision and repair failures associated with Ethernet Products. The Service Level Guarantee scheme (SLG) pays compensation to customers if Openreach fails to meet agree timescales for Provision or Repair activities. Costs against the following F8 Codes. Internal Costs F

114 External Costs F A percentage split between provision and repair activities will be calculated using volume data from Orbit and the costs will then be pointed to the following Plant Groups (PGs). PG573B - OR Service Centre - Provision Ethernet. PG578B - OR Service Centre - Assurance Ethernet. Data is produced from our tactical production files and from service flow The majority of these are fed from Orbit. SLGWLR BV Service Level Guarantee scheme (SLG) WLR This base apportions revenue and costs associated with Service Level Guarantee compensation payments for provision and repair failures associated with WLR Products. The Service Level Guarantee scheme (SLG) pays compensation to customers if Openreach fails to meet agree timescales for Provision or Repair activities. Costs against the following F8 Codes. Internal Costs F External Costs F A percentage split between provision and repair activities will be calculated using volume data from Orbit and the costs will then be pointed to the following Plant Groups (PGs). PG570B - OR Service Centre - Provision WLR. PG575B - OR Service Centre - Assurance WLR. Data is produced from our tactical production files and from service flow The majority of these are fed from Orbit. SOFTCAP SOFTCAP All B OUCs All M OUCs Software Capitalisation Entries The SOFTCAP base apportions software capitalisation entries on the Profit and Loss and Balance Sheet relating to Openreach Organisational Unit Codes (OUCs). SOFTCAP for Openreach uses the same methodology as the OR Development base. Data from OR shows how the development costs should be allocated by product which is translated into the relevant Plant Group. For the SOFTCAP base OR tells us out of each of the projects what percentage will be capitalised, this will be very similar to the development base but with subtle differences. This data enables us to point costs to key areas for example NGA, Management Centres etc. For costs identified as non-specific an OR pay / fixed asset weighted base is derived from ASPIRE and applied. For the Fixed Asset base these figures will be weighted by the Cost of Capital and then used in conjunction with the Pay base. LoB (Line of Business) development base. Openreach development project data Capital Expenditure details (cumulative total) - supplied by LoB finance analysts. ASPIRE P12 Organisational Unit Code (OUC) pay & fixed asset downloads. Software Capitalisation Entries The SOFTCAP base apportions software capitalisation entries on the Profit and Loss and Balance Sheet relating to Retail Organisational Unit Codes (OUCs). 114

115 SOFTCAP uses the current year software capitalisation costs. These costs are provided by Retail Finance with appropriate treatments (e.g. Billing base, Customer Service base, Overhead, etc.) and by Product for Broadband, and those are used to produce the final base. Capital Expenditure details (cumulative total) - supplied by LoB finance analysts. ASPIRE P9 Organisational Unit Code (OUC) revenue downloads. SOFTCAP C Software Capitalisation Entries The SOFTCAP base apportions software capitalisation entries on the Profit and Loss and Balance Sheet relating to Group Organisational Unit Codes (OUCs). SOFTCAP uses the current year software capitalisation costs. The capitalisation costs for OUC C are apportioned 100% to AG112, Corporate costs. AG112 is an activity pool including costs in support of the Chairman s office, Group Personnel, Chief Technology Officer and Technology Director. These activities tend to be of a head office nature. There are no data requirements for this base since all costs are allocated directly to AG112. SOFTCAP K Software Capitalisation Entries The SOFTCAP base apportions software capitalisation entries on the Profit and Loss and Balance Sheet relating to Wholesale Organisational Unit Codes (OUCs). SOFTCAP for BT Wholesale uses the same analysis as the EXCEPT T development bases. The BTW element analyses the BT TSO development billing data specific to BTW. For the SOFTCAP element all the BTW billing data is used with the exception of Applications Support & Maintenance and Overheads as both of these costs do not get capitalised by BTW. The analysis of the billing data identifies the business case entries and maps these to the relevant SG&A Plant Group. Where there is no specific information for any Business case line then this allocation will follow an OUC K Fixed Asset / Pay weighted base derived from ASPIRE. For the Fixed Asset base these figures will be weighted by the Cost of Capital and then used in conjunction with the Pay base. LoB (Line of Business) development base. BT TSO Development billing data P12. ASPIRE P12 Organisational Unit Code (OUC) pay and fixed asset downloads SOFTDEP All B OUCs Software Depreciation The SOFTDEP base apportions software depreciation costs. Profit and Loss and Balance Sheet (Fixed Asset Accumulated Depreciation) relating to Openreach Organisational Unit Codes (OUCs). SOFTDEP uses the current year s depreciation figures extracted from the fixed asset register for Openreach and for Classes of Work COMPG (Externally purchased software) and COMPS (Internally developed software). Each line contains entries that can, for the majority be mapped to a product range. Using Current Year depreciation to provide the allocation. Where necessary a further allocation to Plant Groups is required for example Duct or Service Management Centre entries from the FAR etc then the LOB Development sub base is used. Where nonspecific entries are identified from the FAR then an ASPIRE Fixed Asset/Pay weighted base is built for Openreach and used to allocate to PG s. For the Fixed Asset base these figures will be weighted by the Cost of Capital and then used in conjunction with the Pay base. LoB (Line of Business) development base. Fixed Asset Register software data for Period 12. Management believe this period to be reflective of the full year. 115

116 SOFTDEP All K OUCs ASPIRE P12 Organisational Unit Code (OUC) pay & fixed asset downloads. Software Depreciation The SOFTDEP base apportions software depreciation costs. Profit and Loss and Balance Sheet (Fixed Asset Accumulated Depreciation) relating to BT Wholesale Organisational Unit Codes (OUCs). SOFTDEP uses the current year s depreciation figures extracted from the fixed asset register for BT Wholesale and for Classes of Work COMPG (Externally purchased software) and COMPS (Internally developed software). Each line contains entries that can, for the majority be mapped to a product range. Using Current Year depreciation to provide the allocation. Where necessary a further allocation to Plant Groups is required for example 21CN entries from the FAR etc then the LOB Development sub base is used. Where non- specific entries are identified from the FAR then an ASPIRE Fixed Asset/Pay weighted base is built for BT Wholesale and used to allocate to PG s. For the Fixed Asset base these figures will be weighted by the Cost of Capital and then used in conjunction with the Pay base. LoB (Line of Business) development base. Fixed Asset Register software data for Period 12. Management believe this period to be reflective of the full year. ASPIRE P12 Organisational Unit Code (OUC) pay & fixed asset downloads SOFTDEP C Software Depreciation The SOFTDEP base apportions software depreciation costs. Profit and Loss and Balance Sheet (Fixed Asset Accumulated Depreciation) Group Organisational Unit Code C (OUCs). SOFTDEP uses the current year s depreciation figures. The depreciation costs for C OUC are apportioned 100% to AG112, Corporate costs. THDPTY G101 Third Party Equipment This base is used to apportion the cost of 3rd party Point of Handover (PoH) equipment depreciation which is required when connecting private circuits to 3rd party Communications Provider (CP). The cost of the equipment sits within the SDH Class Of Work (COW) under the SDHC asset policy code. The cost of the 3rd party equipment depreciation is allocated across 22 Plant Groups and then to 35 components. It uses the same allocation as PDTSDH base which is the base for SDH class of works to plant groups (PG). CTCS 116

117 TOTPAY,T OTPAY- CORA ALL Core OUCs Employee-related Receivables and Creditors, Pay Related Group Adjustments and Other Provisions This base is used to apportion employee-related Receivables and creditors, pay related group adjustments and other provisions. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. It is recalculated each time the pay costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. TOTPAY). The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. CORA). DD1: List of F8 codes to be used to derive relevant download from ASPIRE Use F8's to proudce download ASPIRE: Download relevant base information by AS Cost Centre Download : AS Cost Centre A AS Cost Centre B AS Cost Centre C = 100% Eliminate data for AS Cost Centres not in DD2 DD2: List of AS Cost centres to which the balance should be apportioned AS Cost Centres that are not listed in DD2 are excluded from the ASPIRE download and the remaining data is rebased to 100% Download:: AS Cost Centre A AS Cost Centre B AS Cost Centre C = 100% Download : AS Cost Centre A AS Cost Centre C = 100% TOTPAY_CORA_Diagram1 TOTPAY, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived, i.e. total current and capital pay costs incurred by BT during the year. CORA, the Data Designator 2, specifies the AS Cost Centres to which the employee related Receivables and creditors, group adjustments and pay provisions balances should be apportioned i.e. all AS Cost Centres excluding overseas activities. The TOTPAY apportionment base is adapted to exclude data that apportions to any AS Cost Centres not listed in the CORA group of AS Cost Centres. The remaining data is rebased to 100% and this base is applied to the CORA creditors balance. CORA refers to BT Core Business Cost Centres. TOTPAY_C OR All OUCs System generated base from ASPIRE. Employee-related Receivables and Creditors, Pay Related Group Adjustments and Other Provisions This base is used to apportion employee-related Receivables and creditors, pay related group adjustments and other provisions. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. It is recalculated each time the pay costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. TOTPAY). 117

118 The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. COR). DD1: List of F8 codes to be used to derive relevant download from ASPIRE Use F8s to Use produce F8's to proudce download ASPIRE: Download relevant base information by AS Cost Centre Download : AS Cost Centre A AS Cost Centre B AS Cost Centre C = 100% Eliminate data for AS Cost Centres not in DD2 DD2: List of AS Cost centres to which the balance should be apportioned AS Cost Centres that are not listed in DD2 are excluded from the ASPIRE download and the remaining data is rebased to 100% Download:: AS Cost Centre A AS Cost Centre B AS Cost Centre C = 100% Download : AS Cost Centre A AS Cost Centre C = 100% TOTPAY_CORA_Diagram1 TOTPAY, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived, i.e. total current and capital pay costs incurred by BT during the year. COR, the Data Designator 2, specifies the AS Cost Centres to which the employee related Receivables and creditors, group adjustments and pay provisions balances should be apportioned i.e. all AS Cost Centres excluding overseas activities. The TOTPAY apportionment base is adapted to exclude data that apportions to any AS Cost Centres not listed in the COR group of AS Cost Centres. The remaining data is rebased to 100% and this base is applied to the CORA creditors balance. COR refers to BT Core Business Cost Centres. TOTPAY- ORP ALL OUCs The data is system generated from ASPIRE.. Employee-related Receivables and Creditors, Pay Related Group Adjustments and Other Provisions This base is used to apportion employee-related Receivables and creditors, pay related group adjustments and other provisions relating to Openreach. The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. It is recalculated each time the pay costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. TOTPAY). The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. ORP). 118

119 DD1: List of F8 codes to be used to derive relevant download from ASPIRE Use F8s to produce Use F8's to proudce download ASPIRE: Download relevant base information by AS Cost Centre Download : AS Cost Centre A AS Cost Centre B AS Cost Centre C = 100% Eliminate data for AS Cost Centres not in DD2 DD2: List of AS Cost centres to which the balance should be apportioned AS Cost Centres that are not listed in DD2 are excluded from the ASPIRE download and the remaining data is rebased to 100% Download:: AS Cost Centre A AS Cost Centre B AS Cost Centre C = 100% Download : AS Cost Centre A AS Cost Centre C = 100% TOTPAY_ORP_Diagram1 TOTPAY, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived, i.e. total current and capital pay costs incurred by BT during the year. ORP, the Data Designator 2, specifies the AS Cost Centres to which the employee related Receivables and creditors, group adjustments and pay provisions balances should be apportioned i.e. all AS Cost Centres excluding overseas activities. The TOTPAY apportionment base is adapted to exclude data that apportions to any AS Cost Centres not listed in the ORP group of AS Cost Centres. The remaining data is rebased to 100% and this base is applied to the ORP creditors balance. ORP refers to BT Openreach Cost Centres. TOTPAY- PENA ALL Core OUCs The data is system generated from ASPIRE.. Employee Pensions This base is used to apportion staff pension cost ledgered on BT Group consolidation units as well as Receivables and creditors relating to employee pensions. These are apportioned on the basis of total pay (current and capital account). The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. It is recalculated each time the pay costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. TOTPAY). The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. PENA). Diagram: ASPIRE System Process 119

120 Use F8s to produce download TOTPAY, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived, i.e. total current and capital pay costs incurred by BT. The data is held within the ASPIRE system by AS Cost Centre. PENA, the Data Designator 2, specifies the AS Cost Centres to which the group adjustments and staff provisions and Receivables and creditors relating to pensions balances should be apportioned i.e. total BT units excluding subsidiaries. The TOTPAY apportionment base (see above) is adapted to exclude apportionments to AS Cost Centres not listed in the PENA group of AS Cost Centres. PENA refers to those BT units participating in one of the BT Pension schemes. Diagram: Employee Pensions Apportionment Process TOTPAY- SYBA ALL Core OUCs The data is system generated from ASPIRE. Employee Profit Sharing Total Pay (Current and Capital Account) This base is used to apportion staff costs and creditors relating to Employee Profit Sharing on the basis of total pay (current and capital account). The detailed base is a system generated ratio that is derived from the ASPIRE system using a two stage approach. This is recalculated each time the pay costs are updated. Each base has two separate markers that govern: The income/cost transactions the system should draw upon to derive the appropriate base (Data Designator 1, i.e. TOTPAY). The AS (Accounting Separation) Cost Centres to which the balances should be apportioned (Data Designator 2, i.e. SYBA). Diagram: ASPIRE System Process 120

121 Use F8s to produce download TOTPAY, the Data Designator 1, specifies the cost transactions (range of F8 codes) from which the base is derived, i.e. total current and capital pay costs incurred by BT. This data is held within the ASPIRE system by AS Cost Centre. SYBA, the Data Designator 2, specifies the AS Cost Centres to which the creditors relating to Employee Profit Share should be apportioned. The TOTPAY apportionment base is adapted to exclude apportionments to AS Cost Centres not listed in the SYBA group of AS Cost Centres. SYBA refers to those BT Group units in the BT Sharesave scheme, which relate to employee profit share. Diagram: Employee Profit Sharing Apportionment Process. The data is system generated from ASPIRE. 121

122 5 The Activity Group Dictionary AG Base Ref AG101 AG102 AG103 An Intermediate Activity Group (IAG) is a collection pot of revenue, expenditure and balance sheet amounts whose similar underlying nature means they have the same apportionment driver. Instead of creating individual apportionment bases for each F8 code, they can be grouped together and apportioned using the one methodology Detailed (For all descriptions below, see Appendix A for Key Destinations) Motor Transport BT Fleet Management (within BT Group) provides motor vehicles, and associated products and services, to employees within BT. The group recovers its cost by charging other BT units for its activities at commercial rates. It does this by maintaining records of the units 'owning' the expenditure and can recover the costs using internal transactions. It therefore follows that since the activity of this IAG relates to the provision of motor vehicles and associated services to the whole of BT, F8 codes which directly relate to this activity should be apportioned directly to this IAG. This base performs this process by creating a direct allocation to AG101 for these F8 codes. Apportionment Summary The apportionment of Motor Transport costs is made using an analysis of the activity of units receiving the transfer charge from BT Fleet Management. The internal billing systems used by the Fleet Management Unit hold details of every vehicle, the cost and the owner (Organisational Unit Code - OUC) of the vehicle. This system, therefore, enables internal charges to be generated to the other BT units. The internal charges are all at commercial rates. Apportionment It thus follows that the activities of the units being charged, weighted by the amounts each are being charged by Fleet Management, should provide an appropriate base to apply to the costs that have been allocated to AG101. This result is produced automatically by the Regulatory Accounting system using the apportionment of the transfer out (F8 code 28xxxx) charges in Motor Transport and apportioning on the same basis. This is appropriate as the underlying recharges are based on the activities of the units receiving the charges. The DTNHQ base allocates the corresponding transfer in (F8 code 24xxxx) charge. The net impact of transfer charges on the regulated markets is nil as the transfer charge in and out net to zero. BT TSO Operational Costs IAG102 is used to apportion BT TSO s common network management costs and balance sheet values, which cannot be allocated directly to individual Lines of Business (LoBs). F8 codes which directly relate to these activities are allocated to this IAG. Apportionment The ASPIRE system uses the following values to generate an apportionment allocation: Net book value of Core fixed assets, excluding the following fixed asset classes: Copper; Duct, Fibre; Land and Buildings; Vehicles; Office Machines; and Materials Awaiting Installation. The apportionment base is then applied to the amounts contained within AG102. BT TSO Support Functions IAG103 is used to apportion BT TSO s overall support functions costs and balance sheets values, such as the BT TSO Finance team, Human Resources function and BT TSO Strategy function. F8 codes which directly relate to these activities are allocated to this IAG. Apportionment summary Based on direct pay and return on assets which BT TSO directly manages (see AG102 definition). Apportionment 122

123 AG Base Ref AG106 An Intermediate Activity Group (IAG) is a collection pot of revenue, expenditure and balance sheet amounts whose similar underlying nature means they have the same apportionment driver. Instead of creating individual apportionment bases for each F8 code, they can be grouped together and apportioned using the one methodology Detailed (For all descriptions below, see Appendix A for Key Destinations) The costs allocated to AG103 relate to BT TSO s overall support function expenses, e.g. The Finance function, Human Resources function and the TSO Strategy team. The purpose of these TSO support function activities is generally seen as being two-fold: Management of the employees within BT TSO. Management of those assets managed by BT TSO to create a return. The ASPIRE system uses the following costs to generate an apportionment allocation: Salary expenses for BT TSO (current and capital account) Net book value of Core fixed assets, excluding the following fixed asset classes: Copper; Fibre; Land and Buildings; Vehicles; Office Machines; and Materials Awaiting Installation. The AG103 base draws on the result of the previously attributed pay costs within the ASPIRE system following the base reference stage. The return on assets percentage if then applied to the net book value of each of the fixed asset class identified by the Regulatory Accounting system. Certain fixed asset classes are specifically excluded (as described above). The return on assets percentage is determined by Ofcom. This is applied to ensure that the driver reflects the BT TSO support function activities of managing those assets BT TSO manages. By weighting the previously attributed pay costs together with the fixed asset values (taking into account the fact that the asset amounts have already had the return on assets and investment percentages applied to them) an apportionment base for AG103 is derived. Group Property and Facilities Management Group Property is a business unit responsible for all aspects of BT s real estate management, including property strategy, real estate transactions, workplace management and utilisation, property and cumulo rates management, and property cost transformation activities. This business unit is a cost centre that recovers its costs by charging Lines of Business (LoBs) for the occupancy of space (including facilities management) and use of electricity on a building by building basis. It does so by maintaining records of the costs of running each building and then also the use of office and operational floor space, energy usage and facility management by each LoB in each building. Empty space in Operational buildings is charged to Openreach. This is because management believe that the high costs and the disruption to services that would be incurred in moving cable chambers and main distribution frames prevents BT from reducing the size of the operational building portfolio. Apportionment Summary The apportionment of costs within AG106 is made using an analysis of the transfer charges raised by Group Property to the LOBs and then a secondary analysis of how each LOB uses the space or services for which it is being charged. Apportionment AG106 contains the costs and balance sheet amounts of the Group Property Unit (within BT Group) except for the cumulo rates bills which are allocated separately and certain non-core transactions which are allocated to retail residual products.ag106 also includes: the costs of utility bills (that are incurred by BT TSO but transferred into Group Property and facility management costs (which are incurred by the new LoB BT Facilities Services but whose costs are recovered through Group Property billing). We analyse the ledgered values for the Group Property bills received (Transfer In F8 codes: 24xxxx) by each LOB. We then allocate the bills for each LOB according to the occupied space and power usage of their equipment (for operational space) and the activities undertaken by their people (for office space). The regulatory accounting system then automatically matches the cost allocations to the transfer charges by Group Property ( transfer out (F8 codes: 28xxxx) this credit effectively matches the costs received by the LOBs, so at this stage the internal charges and receipts cancel each other out. The system then collates all the transfer out F8 codes to provide a weighted allocation which is then applied to the underlying 123

124 AG Base Ref AG112 An Intermediate Activity Group (IAG) is a collection pot of revenue, expenditure and balance sheet amounts whose similar underlying nature means they have the same apportionment driver. Instead of creating individual apportionment bases for each F8 code, they can be grouped together and apportioned using the one methodology Detailed (For all descriptions below, see Appendix A for Key Destinations) cost within AG106. This process is shown in the diagram below and the methods for allocation for each of the main LOBs are shown below. BT TSO (OUC T) Operational Space is allocated to Plant Groups and other Activity Groups based on detailed analysis of the floor space and power requirements of their equipment and Office Space is allocated to Plant Groups and other Activity Groups based on the previously allocated BT TSO pay. Openreach (OUC B) Operational space and electricity are apportioned to Plant Groups and other Activity Groups based on a detailed analysis of their equipment. In the case of LLU Hostels, space is apportioned using actual space occupied and forecasts received from CP s for new Points of Presence (POP) at exchanges. Office space is apportioned to Plant Groups and other Activity Groups based on the previously apportioned Openreach pay. BT Retail (OUC M) Office space is apportioned primarily to downstream Retail Residual products. BT Global Services (OUC J) Office space is apportioned primarily to downstream Retail Residual products. BT Wholesale (OUC K) Office Space is apportioned to Plant Groups based on the previously apportioned BT Wholesale pay. BT Group (OUC C) Office space is allocated to AG112 Corporate Costs. Corporate Costs IAG AG112 is used to apportion head office type costs an balance sheet values such as the Chairman s office and the Group secretariat. F8 codes which directly relate to these activities are allocated to this IAG. Apportionment Summary Based on factorised current salary and capital salary costs plus a return on assets. Apportionment The costs allocated to AG112 relate to head office type expenses e.g. the Chairman s office and the Group secretariat. The purpose of these head office activities is generally seen as being two-fold: Management of the employees within the company. Management of the assets of the company to create a return. The base to apportion these costs must reflect these activities if it is to reflect cost causality. The ASPIRE system is given instruction to take the following costs to generate an apportionment allocation: Factorised salary expenses for the whole of BT (current and capital account). Net book value of fixed assets revalued for current cost accounting (CCA) for the whole of BT. The AG112 base draws on the result of the previously attributed pay costs within the ASPIRE system following the base reference stage. The return on assets percentage is then applied to the CCA net book value of each fixed asset class identified by the Regulatory Accounting system. This percentage is determined by Ofcom. This is applied to ensure that the driver reflects the corporate activities of managing the assets of the company to create a return. By weighting the previously attributed pay costs together with the CCA fixed asset values (taking into account the fact that the asset amounts have already had the return on assets and investments percentages applied to them) an apportionment base for AG112 is derived. The final base apportionment excludes subsidiaries and associates as these are overseas activities and the AG112 costs are being attributed solely to UK activities. This is illustrated in the following diagram: 124

125 AG Base Ref An Intermediate Activity Group (IAG) is a collection pot of revenue, expenditure and balance sheet amounts whose similar underlying nature means they have the same apportionment driver. Instead of creating individual apportionment bases for each F8 code, they can be grouped together and apportioned using the one methodology Detailed (For all descriptions below, see Appendix A for Key Destinations) Asset Categories How the salary& Asset Categories have been previously apportioned by the Regulatory Accounting System Asset Category 1 20,000 Asset Category 2 40, 000 % Return on Assets (set by Ofcom) Asset Category 2 4,000 Asset Category 2 8,000 P001 1,000 P002 3,000 PG003 5,000 P001 3,000 Apportionment Base: P 001 = ((1,000+3,000+1,000)/18,000)*100= P 002= ((3,000+1,000)/18,000)*100= PG 003= (5, 000/18,000)* 100= PG 004= ((3,000+1,000)/18,000)-100= Salary Category 1 4,000 P001 1,000 PG004 3,000 Salary Category 2 2,000 Salary Categories PG004 1,000 P002 1,000 Total Apportioned Diagram1_AG112_v1 Amount = 18,000 This apportionment base can then be applied to the amounts contained within AG112: Apportionment Base P % P % P % P % P001 27,800 P002 22,200 AG ,000 P003 27,800 Diagram2_AG112 P004 22,200 AG113 Liquid Funds and Interest The AG113 Activity Group apportions all liquid fund transactions, defined as Net Short-term Interest Payable (Profit and Loss) and Short-term Cash, Short-term Investments (both internal and third party), and Short-term Borrowings. All Liquid Funds are collated against AG113 The apportionment of is driven by cash costs, which for these purposes are defined by taking total current account costs and capital account expenditure AG114 Non-Core Suspense 125

126 AG Base Ref AG132 AG135 An Intermediate Activity Group (IAG) is a collection pot of revenue, expenditure and balance sheet amounts whose similar underlying nature means they have the same apportionment driver. Instead of creating individual apportionment bases for each F8 code, they can be grouped together and apportioned using the one methodology Detailed (For all descriptions below, see Appendix A for Key Destinations) Base apportions costs and capital employed for trades between Core and Non-Core units. Attributed directly to Retail Residual. Payphone Revenue Collection Intermediate activity group AG132 acts as the collection pot for the costs relating to coin collection from Public Payphones. Attributed to Retail Residual products. Duct used by Access Cables The amounts, apportioned to AG135, are the costs and balance sheet items for Access Duct. Access duct is apportioned to seven Plant Groups (PGs): PG111C (Access Spine Fibre). PG959C (Access Distribution Fibre). PG950C (GEA Access Fibre Spine). PG951C (GEA Access Fibre Distribution). PG117C (E-Side Copper Cable). PG118C (D-Side Copper Cable). PG130A (Local Loop Unbundling Tie Cables). The Absolute Duct Study determines the split between Access Duct used for fibre and Access Duct used for copper cable when the survey was carried out in This base is then updated based on the split of 1997 Gross Replacement Cost (GRC) for Access Duct plus fibre and copper Access Duct spend by Class of Work (CoW) since For Access Fibre the split to the four PG s is based on derived depreciation using internal project ledger (IPL) spend for the Generic Ethernet Access (GEA) PG s and depreciation from the (Life of Plan) LoP list for the Access Fibre Spine/Distribution PG s. The apportionment to the other three PGs is determined using the depreciation charges for: E-Side copper cable. D-Side copper cable. Local Loop Unbundling cable. By totalling the depreciation for a period representative of the full year for these three items, apportionment percentages are created for the related PGs. These historical cost figures are obtained from the Life of Plant (LoP) list. The LoP list sources its information from the fixed asset register. Absolute Duct Study (carried out in 1997). Life of Plant (LoP) list. Central Information Database (CID). 126

127 AG Base Ref AG148 AG149 AG161 AG162 An Intermediate Activity Group (IAG) is a collection pot of revenue, expenditure and balance sheet amounts whose similar underlying nature means they have the same apportionment driver. Instead of creating individual apportionment bases for each F8 code, they can be grouped together and apportioned using the one methodology Detailed (For all descriptions below, see Appendix A for Key Destinations) Internal Project Ledger (IPL). Duct used by Backhaul Cables The amounts, apportioned to AG148, are the costs and balance sheet items for Backhaul Duct. Backhaul Duct is the national network of underground bores and ducting between exchange nodes that are considered part of the Openreach division s assets and is used to house optical fibre and metallic communications transmission cables. AG148 is allocated 100% to PG170B Openreach Backhaul Fibre. Duct used by Core Cables The amounts, apportioned to AG149, are the costs and balance sheet items for Inner Core Duct. Inner Core Duct is the national network of underground bores and ducting between exchange nodes (excluding Openreach assets) and is used to house optical fibre and metallic communications transmission cables. AG149 is allocated 100% to PG350N Wholesale Inner Core Fibre. Specialised Accommodation Equipment- Maintenance IAG AG161 acts as the collection pot for the current account related overhead costs of maintaining systems providing heating, ventilation, air conditioning and general environmental control in BT s Network Operational Buildings (i.e. non-office buildings such as property occupied by local exchanges). The F8 codes directly relating to this activity are allocated to this IAG. This base apportions AG161 costs to Products and Plant Groups using the electricity consumption of network equipment associated with class of work F2AN. Most recent version of the specialised electricity base DTNELSP/T Period 8 equipment data from network cost analysts and operational groups such as EXPRES and CTCS. Management believes this period to be reflective of the full year. Specialised Accommodation Equipment - non Maintenance IAG AG162 acts as the collection pot for the current account related overhead costs of maintaining systems providing heating, ventilation, air conditioning and general environmental control in BT s Network Operational Buildings (i.e. non-office buildings such as property occupied by local exchanges). The F8 codes directly relating to this activity are allocated to this IAG. This base apportions AG162 costs to Products and Plant Groups using the electricity consumption of network equipment associated with class of work ACPN. Most recent version of the specialised electricity base DTNELSP/T. Period 8 equipment data from network cost analysts and operational groups such as EXPRES and CTCS. Management believes this period to be reflective of the full year. 127

128 AG Base Ref AG163 AG164 AG401 AG402 An Intermediate Activity Group (IAG) is a collection pot of revenue, expenditure and balance sheet amounts whose similar underlying nature means they have the same apportionment driver. Instead of creating individual apportionment bases for each F8 code, they can be grouped together and apportioned using the one methodology Detailed (For all descriptions below, see Appendix A for Key Destinations) Back-up Power Equipment Maintenance IAG AG163 acts as the collection pot for the maintenance costs on equipment providing power to BT s Network Operational Buildings (i.e. non-office buildings such as property occupied by local exchanges). F8 codes directly relating to this activity are allocated to this IAG. This base apportions AG163 costs to Products and Plant Groups using the electricity consumption of network equipment associated with class of work P. Most recent version of the specialised electricity base DTNELSP/T. Period 8 equipment data from network cost analysts and operational groups such as EXPRES and CTCS. Management believes this period to be reflective of the full year. Back-up Power Equipment - non Maintenance IAG AG164 acts as the collection pot for the balance sheet amounts and associated depreciation charges of equipment providing power to BT s Network Operational Buildings (i.e. non-office buildings such as property occupied by local exchanges). F8 codes directly relating to this activity are allocated to this IAG. This base apportions AG164 costs to Products and Plant Groups using the electricity consumption of network equipment associated with class of work TPC. Most recent version of the specialised electricity base DTNELSP/T. Period 8 equipment data from network cost analysts and operational groups such as EXPRES and CTCS. Management believes this period to be reflective of the full year. Openreach Pay Driver IAG AG401 is used to apportion costs and balance sheet values needing to be allocated to products and services based on Openreach Line of Business current and capital pay. Types of costs captured in AG401 are Openreach Human Resources, Openreach HQ costs and miscellaneous costs supporting Openreach Line of Business The AG401 base draws on the result of the previously attributed Openreach Line of Business current and capital pay costs within the ASPIRE system following the base reference stage TSO Pay driver IAG AG402 is used to apportion costs and balance sheet values needing to be allocated to products and services based on TSO Line of Business current and capital pay. Types of cost captured in AG402 are miscellaneous costs supporting BT TSO Line of Business. The AG402 base draws on the result of the previously attributed TSO Line of Business current and capital pay costs within the ASPIRE system following the base reference stage. 128

129 AG Base Ref AG403 AG404 AG405 AG406 An Intermediate Activity Group (IAG) is a collection pot of revenue, expenditure and balance sheet amounts whose similar underlying nature means they have the same apportionment driver. Instead of creating individual apportionment bases for each F8 code, they can be grouped together and apportioned using the one methodology Detailed (For all descriptions below, see Appendix A for Key Destinations) Openreach Store driver IAG AG403 is used to apportion costs and balance sheet values needing to be allocated to products and services based on Openreach Line of Business current and capital stores costs. Types of cost captured in AG403 are elements of supplies management costs supporting Openreach Line of Business. The AG403 base draws on the result of the previously attributed Openreach Line of Business current and capital stores costs within the ASPIRE system following the base reference stage. TSO Store driver IAG AG404 is used to apportion costs and balance sheet values needing to be allocated to products and services based on TSO Line of Business current and capital stores costs. Types of cost captured in AG404 are elements of supplies management costs supporting TSO Line of Business. The AG404 base draws on the result of the previously attributed TSO Line of Business current and capital stores costs within the ASPIRE system following the base reference stage. Retail Store driver IAG AG405 is used to apportion costs and balance sheet values needing to be allocated to products and services based on BT Retail Line of Business current and capital stores costs. Types of cost captured in AG405 are elements of supplies management costs supporting Retail Line of Business The AG405 base draws on the result of the previously attributed Retail Line of Business current and capital stores costs within the ASPIRE system following the base reference stage. Wholesale Pay driver IAG AG406 is used to apportion costs and balance sheet values needing to be allocated to products and services based on Wholesale Line of Business current and capital pay. Types of cost captured in AG406 are miscellaneous costs supporting BT Wholesale. The AG406 base draws on the result of the previously attributed Wholesale Line of Business current and capital pay costs within the ASPIRE system following the base reference stage. AG407 OR Operations pay driver IAG AG407 is used to apportion costs and balance sheet values that need to be allocated to products and services based on Openreach Operations organisational units BV and BL current and capital pay. Types of cost captured in AG407 are miscellaneous costs supporting Openreach Operations Units 129

130 AG Base Ref AG408 An Intermediate Activity Group (IAG) is a collection pot of revenue, expenditure and balance sheet amounts whose similar underlying nature means they have the same apportionment driver. Instead of creating individual apportionment bases for each F8 code, they can be grouped together and apportioned using the one methodology Detailed (For all descriptions below, see Appendix A for Key Destinations) The AG407 base draws on the result of the previously attributed Openreach current and capital pay costs within the ASPIRE system following the base reference stage. Openreach Fixed Asset driver IAG AG408 is used to non-current assets and apportions costs and balance sheet values needing to be allocated to products and services based on Openreach Net Book Value. Types of cost captured in AG408 are non specific Openreach development costs The AG408 base draws on the result of the previously attributed Openreach non-current Net Book Values within the ASPIRE system following the base reference stage. AG409 AG410 Wholesale Pay plus Return on Fixed Asset driver The type of cost captured in AG409 are non specific software depreciation costs for Wholesale Line of Business The ASPIRE system is given instruction to take the following costs to generate an apportionment allocation: Salary expenses for the BT Wholesale Line of Business (current and capital account). Net book value of fixed assets revalued for current cost accounting (CCA) for Wholesale Line of Business. The AG409 base draws on the result of the previously attributed pay costs within the ASPIRE system following the base reference stage. The return on assets percentage is then applied to the CCA net book value of each fixed asset class identified by the Regulatory Accounting system. This is applied to ensure that the driver reflects the Wholesale activities of managing the assets of the company to create a return. By weighting the previously attributed pay costs together with the CCA non-current asset values (taking into account the fact that the asset amounts have already had the return on assets and investments percentages applied to them) an apportionment base for AG409 is derived. Openreach Pay plus Return on Fixed Asset driver The type of cost captured in AG410 are non specific software depreciation costs for Openreach Line of Business The ASPIRE system is given instruction to take the following costs to generate an apportionment allocation: Salary expenses for the Openreach Line of Business (current and capital account). Net book value of fixed assets revalued for current cost accounting (CCA) for Openreach Line of Business. The AG410 base draws on the result of the previously attributed pay costs within the ASPIRE system following the base reference stage. The return on assets percentage is then applied to the CCA net book value of each fixed asset class identified by the Regulatory Accounting system. This is applied to ensure that the driver reflects the Openreach activities of managing the assets of the company to create a return. By weighting the previously attributed pay costs together with the CCA fixed asset values (taking into account the fact that the asset amounts have already had the return on assets and investments percentages applied to them) an apportionment base for AG410 is derived. 130

131 AG Base Ref AG412 AG414 AG415 An Intermediate Activity Group (IAG) is a collection pot of revenue, expenditure and balance sheet amounts whose similar underlying nature means they have the same apportionment driver. Instead of creating individual apportionment bases for each F8 code, they can be grouped together and apportioned using the one methodology Detailed (For all descriptions below, see Appendix A for Key Destinations) BT Property Fixed Assets This base is used to apportion the Net Book Values (NBV) of the BT Property non-current assets The BT asset values are apportioned using an analysis of the transfer charges made to the BT occupants. The transfer charges within each Line of Business are allocated to products and cost centres. A regular review is carried out of space consumed by BT units in BT owned buildings. BT units are then charged for the occupancy. Buildings are designated as either Specialised (e.g. exchanges) or General Purpose (e.g. offices) and the charges detailed by both OUC and Building on the Group Properties Horizon system. ASPIRE is used to generate a base for the General Purpose buildings, utilising the charges by OUC and the corresponding pay bases. The base used to support the Specialised Buildings is derived by an analysis of the floor space occupied by equipment type. The two bases are then combined, weighted by the relative charges, and applied against the BT Property Estate Fixed Asset values. The data is system generated from ASPIRE Property Provision BT Property is currently implementing a property rationalisation strategy by consolidating the office space within the estate, and this is enabling the mothballing and subletting of buildings. The cost associated with this rationalisation is treated as a provision, as it is not part of business as usual activity. The property rationalisation is limited to office space, and therefore a base derived from the General Purpose Occupation cost charges to Lines of Business (LoB) provides a cost causal apportionment methodology. Effectively the cost of the property rationalisation is being apportioned over current office space usage. Fleet Fuel This base apportions BT External Payment for Vehicle Fuel. The cost of Motor Transport (MT) vehicle fuel is recovered from the Lines of Business (LoB) via the transfer charges to the Organisational Unit Codes (OUCs)/Organisational Units based on the utilisation of the services provided to the OUC. The transfer charges are used to provide an analysis of the fuel in the different parts of BT. The analysis of the transfer charge amounts are used to calculate an overall base that is then applied to the underlying actual costs, which are attributed pro-rata to the transfer charge. The data is system generated from ASPIRE 131

132 Plant Group PG001X PG002X PG002Y PG003X Detailed and (For all descriptions below, see Appendix A for Key Destinations) POH Equipment Depreciation Adj Debit This Plant Group (PG) provides a debit adjustment for Equipment Depreciation that has been identified from the credit Plant Group (PG001Y). The PG contains bandwidth specific depreciation that is onward allocated to specific equipment services. The number of circuits is multiplied by the price per circuit to give the total revenue. The revenue is then split between the different types of circuits i.e. 2Mbit/s, 34Mbit/s etc. This is then divided by the asset life to give the depreciation charge. The accumulated deprecation is calculated and added into ASPIRE. ASPIRE, COSMOSS. TISBO Excess Construction Adjustment Debit This Plant Group (PG) provides a debit adjustment from a number of TISBO services whereby Excess Construction depreciation that has been recovered under rental services has been extracted and moved to a specific Excess Construction PG. Excess Construction costs, within a number of services, has been removed, based on the excess construction revenue and the estimated margin that BT makes, thus obtaining a total cost for both Traditional Interface symmetric broadband origination (TISBO) and AISBO markets.allocates 100% to the CE103 Low TISBO Excess Construction component. ASPIRE. TISBO Excess Construction Adjustment Credit This Plant Group (PG) provides a credit adjustment from a number of TISBO services whereby Excess Construction depreciation that has been recovered under rental services has been extracted and moved to a specific Excess Construction PG. Excess Construction costs, within a number of services, has been removed, based on the excess construction revenue and the estimated margin that BT makes, thus obtaining a total cost for both Traditional Interface symmetric broadband origination (TISBO) and AISBO markets. ASPIRE. AISBO Excess Construction Adjustment Debit This Plant Group (PG) provides a debit adjustment from a number of AISBO services whereby Excess Construction depreciation that has been recovered under rental services, has been extracted and moved to a specific Excess Construction PG. Excess Construction costs, within a number of services, has been removed, based on the excess construction revenue and the estimated margin that BT makes, thus obtaining a total cost for both Traditional Interface symmetric broadband origination (TISBO) and AISBO markets. Allocates 100% to the CE104 AISBO Excess Construction component. ASPIRE. 132

133 Plant Group PG003Y PG004X PG004Y PG111C Detailed and (For all descriptions below, see Appendix A for Key Destinations) AISBO Excess Construction Adjustment Credit This Plant Group (PG) provides a credit adjustment, from a number of AISBO services, whereby Excess Construction depreciation that has been recovered under rental services has been extracted and moved to a specific Excess Construction PG. Excess Construction costs, within a number of services, has been removed, based on the excess construction revenue and the estimated margin that BT makes, thus obtaining a total cost for both Traditional Interface symmetric broadband origination (TISBO) and AISBO markets.. ASPIRE. POH Depreciation Local End Adjustment Debit This Plant Group (PG) provides a debit adjustment for PoH Equipment Depreciation that has been identified from the credit Plant Group PG004Y. The PG contains bandwidth specific depreciation that is onward allocated to specific POH equipment services. The number of circuits is multiplied by the price per circuit to give the total revenue. The revenue is then split between the different types of circuits i.e. 2Mbit/s, 34Mbit/s etc. This is then divided by the asset life to give the depreciation charge. The accumulated deprecation is also calculated and added into ASPIRE. ASPIRE, LoP List, COSMOSS. POH Depreciation Local End Adjustment Credit This Plant Group (PG) provides a credit adjustment for the specific POH equipment that is contained in a number of Traditional Interface symmetric broadband origination (TISBO) services. These costs have been extracted to a specific POH equipment PG. The number of circuits is multiplied by the price per circuit to give the total revenue. The revenue is then split between the different types of circuits i.e. 2Mbit/s, 34Mbit/s etc. This is then divided by the asset life to give the depreciation charge. The accumulated deprecation is also calculated and added into ASPIRE. ASPIRE, LoP List, COSMOSS. Access Fibre Spine This Plant Group (PG) captures the costs associated with the provision, installation and recovery of spine fibre cable in the access network i.e. the network between the local exchange and distribution node. Exchange Customer S pine C able Node Distribution C able This includes costs associated with clearing existing duct (to allow cable to be installed), jointing and splicing spine fibre. Specifically this PG captures costs from the following areas/functions: Pay costs associated with the installation of spine fibre. Indirect costs of optical fibre replacement from the Local optical Fibre Cable Renewal (LFCR) classes of work (CoW). 133

134 Plant Group Detailed and (For all descriptions below, see Appendix A for Key Destinations) Contract costs associated with renewal of optical fibre. Planning costs, adding spine fibre to the access network. Costs associated with installing spine fibre between the local exchange and the distribution node. Costs associated with installing optical spine cable between the local exchange and last connection point before local distribution fibre or street optical Multiplexors (MUX). Depreciation costs from the following CoW Local Fibre Spine Cable (LFSC). Apportionment to component is based on data supplied via the Core Transmission Circuit costing System (CTCS), using circuits and bearer volumes as at Period 6. The data used from CTCS (refer to Data Source section) includes the percentage of fibre bearer capacity used by a particular circuit (component). CTCS provides the volumes of circuits over a bearer which is then converted into 2Mbit/s equivalents. These are weighted by circuit bandwidth usage of the various bearers. Circuits and Bearer Volumes from CTCS for Period 6. Management believes this period to be reflective of the full year. PG111M PG114L Access Fibre Maintenance This Plant Group (PG) captures the maintenance costs associated with the local line fibre cable in the access network i.e. between the local exchange and customer s premises, or fibre installed up to street multiplexers. This includes costs associated with clearing existing duct (to allow cable to be installed), jointing distribution and spine cable (splicing). This PG captures costs from the following areas/functions: Pay costs associated with the installation of access fibre. Indirect costs of optical fibre replacement from the Local optical Fibre Cable Renewal (LFCR) classes of work (CoW). Contract costs associated with renewal of optical fibre. Planning costs, adding fibre to the access network. Costs associated with installing fibre between the local exchange and a customer (direct feed) and between a local spine fibre and a customer. Costs associated with installing optical spine cable between the local exchange and last connection point before local distribution fibre or street optical Multiplexors (MUX). Depreciation costs from the following CoW Local Fibre Distribution Cable (LFDC) and Local Fibre Spine Cable (LFSC). The costs are attributed on the same basis as the depreciation costs of this equipment (see PG111C Local Lines Fibre Cable Capital); on the basis that maintenance activity is carried out to support the performance of the cable and can therefore be regarded as an overhead of the capital/depreciation expenditure incurred. Circuits and Bearer Volumes etc. from CTCS at Period 6. Management believes this period to be reflective of the full year. ISDN30 Connections This Plant Group (PG) captures the cost associated with the provision, cessation and rearrangement of Integrated Services Digital Network (ISDN30) circuits. Types of costs include pay, stores issued and general equipment. Types of work carried out includes testing, line up of circuits, updating records, labelling equipment for onward connection and connecting transmission equipment at the specified bit rate. These costs can be identified directly from the primary General Ledger (GL) posting, the classes of work (CoW). 134

135 Plant Group Detailed and (For all descriptions below, see Appendix A for Key Destinations) Allocates 100% to the ISDN30 Connection component CL163. PG115C PG115M PG117C Access Radio Equipment This Plant Group (PG) captures the costs associated with the construction, rearrangement and renewal of access radio systems. These systems are used to deliver Megastream and other non-voice services from the local exchange to customers premises. Types of cost include depreciation, stores and pay costs. Equipment used in the provision of this service includes: Feeder cable between BT operational buildings and adjacent antenna. Hand held mobile systems used in connection with the above work. Testing equipment and line-of-sight surveying equipment. Masts, aerials, transceivers and ancillary indoor and outdoor equipment for point-to-point and point to multi-point radio systems. Initial provision of spare plant. The Core Transmission Circuit costing System (CTCS) system is used to obtain circuit numbers from BT main systems. Period 6 data is used as this is representative of the full year. This gives a number of each type of circuit by bandwidths which are converted into 2Mbit/s equivalents, as 2Mbit/s is the smallest unit. These circuits are weighted by the cost of the bearer system used to deliver the circuit. The bearer weighting is the bearer cost. CTCS circuit numbers as at Period 6. Management believes this period to be reflective of the full year. Access Radio Maintenance This Plant Group (PG) captures the maintenance costs of the local line access radio. Types of cost include non-etg pay and stores. Equipment used in the provision of this service includes: Feeder cable between BT operational building and adjacent antenna. Hand held mobile systems used in connection with the above work. Testing equipment and line-of-sight surveying equipment. Masts, aerials, transceivers and ancillary indoor and outdoor equipment for point-to-point and point to multi-point radio systems. Initial provision of spare plant. The costs are attributed on the same basis as the depreciation costs of this equipment (see PG115C Local Lines Access Radio Capital) on the basis that maintenance activity is carried out to support the performance of the radio equipment and can therefore be regarded as an overhead of the capital/depreciation expenditure incurred. Core Transmission Circuit costing System (CTCS) circuit numbers at Period 6. Management believes this period to be reflective of the full year. E-Side Copper Cable 135

136 Plant Group Detailed and (For all descriptions below, see Appendix A for Key Destinations) This Plant Group (PG) captures the capital costs associated with E-SideCopper. The Access Network for Regulatory Accounting purposes is split between exchange (E-side) and distribution side (D-Side) copper cable. Types of cost include depreciation, stores and pay costs. E-Sidecable is the cable that links the local exchange to the primary cross connection point. D-Sidecable is the cable that links the primary cross connection point to the Distribution Point (DP). Allocates 100% to the E-SideCopper Capital component CL171 PG117M PG118C E-Side Copper Cable Maintenance This Plant Group (PG) captures the current costs associated with E-SideCopper. The Access Network for Regulatory Accounting purposes is split between exchange-side (E side) and distribution side (D-Side) copper cable. E-Side cable is the cable that links the local exchange to the primary cross connection point. D-Side cable is the cable that links the primary cross connection point to the Distribution Point (DP). Types of cost include non-etg pay and stores. Allocates 100% to the E-SideCopper Current CL172 D-Side Copper Cable This Plant Group (PG) captures the capital costs associated with D-Side Copper. Types of cost include depreciation, stores and pay costs. The Access Network for Regulatory Accounting purposes is split between exchange-side (E side) and distribution side (D-Side) copper cable. E-Sidecable links the local exchange to the primary cross connection point. D-Sidecable links the primary cross connection point to the Distribution Point (DP). Allocates 100% to the D-Side Copper Capital CL173 PG118M D-Side Copper Cable Maintenance This Plant Group (PG) captures the current costs associated with D-Side Copper. The Access Network for Regulatory Accounting purposes is split between exchange-side (E-side) and distribution side (D-Side) copper cable. E-side cable is the cable that links the local exchange to the primary cross connection point. D-Side cable is the cable that links the primary cross connection point to the Distribution Point (DP). Types of cost include non-etg pay and stores. 136

137 Plant Group Detailed and (For all descriptions below, see Appendix A for Key Destinations) Allocates 100% to the D-Side Copper Current CL174 PG119A PG120A Telephony Over Passive Optical Network (TPON) This Plant Group (PG) captures costs associated with TPON. TPON is a technology which uses fibre from the exchange to the street cabinet and copper from the cabinet to the customer. It is now in the process of being removed as it does not support broadband. Types of cost include pay (from maintenance of exchange electronics and customer sited electronics), planning and depreciation costs from the provision, rearrangement, replacement and renewal of both exchange service modules and customer sited modules. Allocates 100% to the D-Side Copper component CL173. Payphone Line Cards This captures the costs associated with the maintenance of the Payphone line cards. Types of cost include depreciation, stores and pay costs. Allocates 100% to the Public Payphones Access component CL

138 PG121M PG122M PG123M PG124A PG127A Dropwire Maintenance Business This Plant Group (PG) captures the costs associated with the maintenance of Business PSTN, from the distribution point to the customer's premises. Types of cost include stores and pay costs. Allocates 100% to the Business Analogue line drop maintenance component CL180. Dropwire Maintenance Residential This Plant Group (PG) captures costs associated with the maintenance of Residential PSTN, from the distribution point to the customer s premises. Types of cost include stores and pay costs. The distribution point is the point near to a customer s premises where the main cable from a Primary Cross connection point (PCP) is split in order to provide service at one or more localised premises. It could be at the top of telegraph pole, under a walkway or on the E-Side of a building etc. PCP boxes are the green metal cabinets located by the E-Side of the road. Allocates 100% to the Analogue line drop maintenance component CL180. ISDN2 Maintenance This Plant Group (PG) captures the store and pay costs associated with the maintenance of ISDN2, from the distribution point to the customer's premises. Allocates 100% to the ISDNdrop Maintenance component CL181. ISDN30 Equipment This Plant Group (PG) captures the Capital costs of ISDN30. Types of cost include depreciation, stores and pay costs. Allocates 100% to the ISDN30 Line Cards component CL190. Analogue Linecards This Plant Group (PG) captures Profit and Loss (e.g. Depreciation, ETG and Non ETG Pay, and Non Pay) and Balance Sheet items associated with the provision of analogue line cards. Line cards are the electronic cards in the exchange that provide connectivity to the switch. Allocates 100% to the PSTN Line Cards component CL183. (check comp name) 138

139 PG128A PG129A PG130A PG131L PG132B ISDN2 Linecards This Plant Group (PG) captures the capital costs associated with ISDN2 line cards. Line cards are the electronic cards in the exchange that provide connectivity to the switch. Types of cost include depreciation, stores and pay costs. Allocates 100% to the ISDN2 Line Cards component CL184. Pair Gain Systems This Plant Group contains the cost of provisioning, rearranging and recovering pair gain electronics in the access network. Pair gain is a piece of equipment which provides to analogue lines over one pair of copper wires. Types of cost include depreciation, stores and pay costs. Allocates 100% to the Pair Gain component CL185. Intra-exchange Tie Cables This Plant Group (PG) captures costs of tie cables for LLU. LLU enables other communication providers (OCP) to use BT s local loop to provide services to customers. This is delivered by co-mingling in which BT provides a room in an exchange for an OCP and their equipment and arranges for connection of the room to the BT Main Distribution Frame (MDF) via a tie cable. The OCP has to order 'ties' in items of 100 pair cables. Apportions to CL133 Tie cables and CL170 Internal tie cables based on tie cable volumes supplied by the Openreach s management LLU volume report. Liquid Funds (Network Business) This Plant Group (PG) captures the costs of Liquid Fund transactions, which are ultimately apportioned to the network business. This Plant Group apportions to components based on the cash flow of the underlying components.cash flow, for these purposes is defined as operating profit, less depreciation and adds in capital additions. LLU Co-mingling Recurring Costs (OR) This Plant Group (PG) captures the cost of LLU Hosting Rental. Hosting Rental is the rental of a site for hosting LLU equipment. Allocates 100% to the Co-mingling rentals component CL

140 PG132N PG136A PG136N PG140A PG142A PG145B LLU Co-mingling Recurring costs (BT TSO) This Plant Group (PG) captures the cost of LLU Hosting Rental. Hosting Rental is the rental of a site for hosting LLU equipment. Allocates 100% to the Co-mingling power & vent traded component CT134. LLU Co-mingling Surveys This Plant Group (PG) captures the costs of carrying out surveys on BT buildings to enable infrastructure such as Cabling, Vent and Chill equipment, access etc for LLU hostels. Allocates 100% to the Co-mingling new provides component CL131. LLU Co-mingling Provision This PG captures the cost of building the LLU Hostels within BT Exchanges. Allocates 100% to Co-mingling new provides CL131. Routing and Records The Plant Group (PG) captures the costs and balance sheet (Depreciation, ETG and Non-ETG Pay and Non Pay) of Routing and Records work for provision of analogue / ISDN lines, Local Loop Unbundling (LLU) and Fibre based circuits. Plant Group point 100% to component CL160 Routing & Records Main Distribution Frame (MDF) Hardware Jumpering This Plant Group (PG) captures the costs and balance sheet associated with jumpering activities on the Main Distribution Frame (MDF) connecting the Exchange switch equipment to the Exchange-Side (E-Side) cable. An MDF jumper is a copper connection that provides a flexible connection between two terminal ends, commonly used to connect the line sideto the exchange side of the MDF. Allocates 100% to CL161 MDF Hardware Jumpering Asymmetric Digital Subscriber (ADSL) Connections This Plant Group (PG) captures the costs associated with the provision and installation of ADSL. The classes of work (CoW) associated with this PG is Circuit Provision ADSL. This CoW covers all provision activities in serving exchanges and customer site, including end to end testing. Allocates 100% to the ADSL Connections component CO

141 PG145N PG147B PG147N PG149A PG150A PG151B WBA End User NTEs This Plant Group (PG) captures the costs associated with the Provision and Installation costs for Asymmetric Digital Subscriber Line (ADSL). The classes of work (CoW) associated with this Plant Group are Internally Developed Software (COMPS) and NOP (Network Operations Platform) Circuit Provision - ADSL. These CoW s cover all provision and software activities in serving exchanges and customer site, including end-to-end testing. Allocates 100% to the ADSL Connections component CO118. Symmetric Digital Subscriber Line (SDSL) Connections This base apportions costs associated with SDSL Connections. SDSL provides the same bandwidth in both directions, unlike Asymmetric Digital Subscriber Line (ADSL). Allocates 100% to the SDSL Connections component CO136. Symmetric Digital Subscriber Line (SDSL) Connections (Wholesale) SDSL provides the same bandwidth in both directions, unlike Asymmetric Digital Subscriber Line (ADSL). Types of cost include stores and pay costs. Allocates 100% to the SDSL Connections component CO136. Analogue Line Final Drop Drop wires are wires connecting the Distribution Point to the customer s premises. This Plant Group (PG) captures the Drop wire costs associated with specific analogue line based Products. Allocates directly 100% to the Drop wire component CL178. ISDN2 Access Equipment This Plant Group (PG) captures the Network Terminal Equipment (NTE) costs for ISDN2 rentals. It includes Network Terminal Equipment (NTE) and line cards but excludes drop wire. Allocates directly to 100% to the ISDN2 specific component CL186. Broadband Line Testing Equipment (Openreach) This Plant Group (PG) contains the Test Access Management Systems (TAMS) and EvoTAMs costs. These are used to provide remote access facilities on Metallic Path Facility (MPF), Shared Metallic Path Facility (SMPF), Wholesale Line Rental (WLR) and IPstream circuits for testing towards the customer and into the network. Installed between the Main Distribution Frame (MDF) and the Digital Subscriber Line Access Multiplexer (DSLAM). Apportioned to the MPF line testing systems component CF187 and EvoTAM testing systems component CF189 based on the latest available LOP list depreciation figures. For CF189 a further figure for the amount of depreciation is added to account for 141

142 installation of EvoTAMS. This is based on a survey. It is possible to determine how much depreciation is applicable to the two components based on the Asset Policy Code (APC). Latest available Life of Plant (LoP) list PG151N PG152B PG152N PG153N PG170B Broadband Line Testing Equipment (BT TSO) This Plant Group (PG) captures the TAMS costs incurred by BT TSO. Allocates to CR187 - Broadband line testing systems and CT134 Co-mingling power & vent based on depreciation within classes of work (CoW) WTMDF (Wholesale Test Equipment Main Distribution Frames). Depreciation on policy code WMDF is Allocates to CT134, the remainder is allocated to CR187. Latest available Life of Plant (LOP) list. Other Openreach Repairs This Plant Group (PG) contains the values relating to the equipment that supports the DSL product rentals. DSL is a family of technologies that provide digital data transmission over the wires of a local telephone network. These lines that provide faster Internet access to the customer and also allows telephone calls to be made at the same time as Internet usage. This PG contains all the balance sheet values relating to the equipment that supports the DSL product rentals including Digital Subscriber Line Access Multiplexer (DSLAM) equipment. This PG also contains the depreciation and maintenance costs on this equipment as well as overhead type costs such as the accommodation to house equipment etc.. Allocates 100% to the SFI (Special Fault Investigations) component CO989. CO188 onward allocates to Asymmetric Digital Subscriber Line (ADSL) and Symmetric Digital Subscriber Line (SDSL) services. It does not support Local Loop Unbundling (LLU) and Shared Metallic Path Facility (SMPF) as a Service Provider would provide these activities themselves. DSLAM Overheads This PG contains all the balance sheet values relating to the equipment that supports the DSL Product rentals except Digital Subscriber Line Access Multiplexer (DSLAM) equipment itself. This PG also contains the maintenance costs for this equipment as well as overhead type costs such as the accommodation to house equipment etc. Allocates 100% to the DSL rentals- specific component CR188. DSLAM Equipment This PG contains the balance sheet values relating to the Digital Subscriber Line Access Multiplexer (DSLAM) equipment. This PG also contains the depreciation cost relating to the DSL equipment. It does not include the maintenance costs on this equipment or overhead type costs such as the accommodation to house equipment etc. (This is included in PG152N). Allocates 100% to the DSL rentals depreciation - specific component CR189 DSLAM capital / maintenance. Backhaul fibre This Plant Group (PG) captures the depreciation costs and asset values of the backhaul length elements of the bearers in BT s Core Transmission network. 142

143 Combinations of assets in the transmission network (i.e. two bits of electronics joined by fibre and duct) make up what is known as a bearer. The bearers within the network carry circuits that relate to different products and bandwidths. More detail can be found in Section 9 Data Sources under CTCS (Core Transmission Costing System). The costs and asset values on these PGs are allocated to network components (circuits) based on how the circuits use the different bearers. The relationship between circuits and bearers is held in CTCS. Extracts from CTCS give us the total length of fibre used by the circuits over each bearer. Fibre lengths for Ethernet main links are not captured in CTCS but need to pick up some of the costs of backhaul fibre. The fibre km volumes are taken from Openreach volumes and then included in the CTCS output. Ethernet circuits have one circuit per fibre therefore allowing the fibre km to be used as the bearer length. CTCS and Openreach volumes for Ethernet main links data for Period 6. Management believes this Period is reflective of the full year. PG192A PG197A PG198A PG213C FTTC Copper Tie Cables This Plant Group captures the balance sheet values and depreciation associated with Next Generation Access ExchangE- Sidecables. Allocates 100% to the NGA Exchange E-Side Copper Capital CL192. FTTC Service Delivery & Development This Plant Group (PG) captures the costs associated with the Openreach (OR) Next Generation Access (NGA) Fibre to the Cabinet (FTTC) product. Allocates 100% to the NGA FTTC component CL197 (FTTC development). FTTP Development This Plant Group (PG) captures the costs associated with the Openreach (OR) Next Generation Access (NGA) Fibre to the Premises (FTTP) product currently under development. These costs are identified via a transfer charge made from BT TSO to OR. Allocates 100% to the NGA FTTP component CL198 (FTTP development). Remote Concentrators Equipment This Plant Group (PG) captures the cost of constructing, extending and rearranging local UXD5 Exchanges. Types of cost include pay, depreciation and overheads. UXD5 exchanges are deployed in rural areas and cater for about 460 Public Switched Telephone Network (PSTN) customers each. They are in effect mini Local Exchanges (LE). A Modern Equivalent Asset determination using System X and AXE10 equipment is produced. Unit Exchange Digital V5 (UXD5) volumes are taken from EXPRES and the costs of the building blocks for the equivalent System X and AXE10 exchanges are calculated. To this the manufacturers supplied matrices (a mapping of building blocks to Call Set-Up, Duration, Access and Common) elements are applied. This is what happens in the LDX and LYX apportionment process. This base was frozen using this methodology in , as the volumes for UXD5 were unlikely to change and investment in the units is less than 200k. System X and AXE10 volumes in the network from the EXPRES system. 143

144 PG213M PG216C PG216M Remote Concentrators Maintenance This Plant Group (PG) captures the maintenance costs for the Calls related element of UXD5 exchange switching. Apportions to the concentractor set-up and duration components based on the capital apportionment of UXD5 Exchange to the concentrator components. This base was frozen during , as the volumes for UXD5 were unlikely to change and investment in the units is less than 200k. Capital Apportionment for UXD5 s. Operator Assistance Systems Equipment This Plant Group (PG) captures the depreciation costs of switching equipment used to support Operator Assistance (OA) calls. This is achieved through a Period 12 Operfile, this is a spreadsheet used to derive apportionment information for Operator and Directory Assistance costs. The file is a summary of information from a variety of other data sources and is updated monthly on a cumulative basis Attribution is carried out as follows: Call duration information from the central data store (CDS) and Call Statistics Centralisation System (CSCS) is summarised on the basis of call types. A link is then made between the nature of the call and the type of equipment required to carry it. As this is a capital base, the initial summary is then allocated to components on the basis of depreciation charges per switch type. Depreciation is extracted from the Fixed Asset Register. The Operator Assistance costs are attributed to the following components pro-rata to the call minute volumes: Inland and International OA CO911 and CO912 Emergency OA 999 CO919 OA non- chargeable CO941 Emergency OA 999 non-chargeable CO942 Payphones operator assistance non chargeable CO943 Inland and International Directory Assistance (DA). CDS. CSCS and Featurenet (from the Powerhouse system). Inland and International Operator Assistance (OA). Call Centre Management Information System (CCMIS). CSCS (for Retail chargeable). 6A Report (for Wholesale Chargeable). Fixed Asset download by Accounting Policy Code (APC). Lucent Switch billing system (this is incorporated into the CDS file that is produced monthly and used to populate the Operfile). Operator Assistance Systems Maintenance This Plant Group (PG) captures the maintenance costs of the switching equipment used to support Operator Assistance (OA) calls This is achieved through a Period 12 Operfile, this being a spreadsheet used to derive apportionment information for Operator 144

145 and Directory Assistance costs. The file is a summary of information from a variety of other data sources and is updated monthly on a cumulative basis. The costs are attributed on the same basis as the depreciation costs of this equipment (See PG216C), on the basis that maintenance activity is carried out to support the performance of the switching equipment and can therefore be regarded as an overhead of the capital/depreciation expenditure incurred. It should therefore be attributed on a consistent basis with the capital costs. Inland and International Directory Assistance (DA) Central Data Store (CDS). Call Statistics Centralisation System (CSCS) and Featurenet (from the Powerhouse system). Inland and International Operator Assistance (OA) Call Centre Management Information System (CCMIS). CSCS (for Retail chargeable). 6A Report (for Wholesale Chargeable). Fixed Asset download by Accounting Policy Code (APC) Lucent Switch billing system (this is incorporated into the CDS file that is produced monthly and is used to populate the Operfile). PG217E PG217F PG217Q PG217R PG227A Main Distribution Frames Equipment This Plant Group (PG) captures the cost of provision, extension, upgrade, replacement, re-arrangement and recovery of Main Distribution Frames (MDFs). MDFs are those distribution frames providing direct interface with external circuits terminations (customer or other exchanges). Allocates 100% to Local exchanges general frames equipment CL175. Main Distribution Frames Maintenance This Plant Group (PG) captures the maintenance cost of Main Distribution Frames (MDFs). Allocates 100% to Local exchanges general frames equipment CL175 LE Frames Capital (Wholesale) This Plant Group (PG) captures the cost of provision, extension, upgrade, replacement, re-arrangement and recovery of Main Distribution Frames (MDFs) Allocates 100% to Local exchanges general frames equipment CL175 Main Distribution Frames Maintenance (TSO) This Plant Group (PG) captures the maintenance cost of Main Distribution Frames (MDFs) Allocates 100% to Local exchanges general frames maintenance (Wholesale) CL176 Advanced Switching Units 145

146 This Plant Group (PG) captures the cost of construction, installation, re-arrangement, recovery and renewal and maintenance of Advance Service Units (ASUs) equipment and Call Centre DMS100s to provide the platform to support the provision of the Virtual Private Network Service (VPNS). The VPNS Services being Virtual Private Network (VPN) and Virtual Private Services (VPS). This PG also captures the maintenance costs of the above types of equipment. Allocates 100% to the Advanced Switching Units component CO227. PG228A PG229A PG240A PG241A PG249C Signalling Transfer Point (STP) and Edge Link Monitors This Plant Group (PG) captures the costs of BT s signalling network, signalling network management system and interconnect equipment. For example STP and Signalling Point Relay (SPR) switches, Signalling Traffic Management (STMS) equipment, link monitors and associated equipment (core and edge), on site spares, initial databuild associated with switches, testing apparatus and initial provision of spares held for changing purposes. Allocates 100% to the Signalling transfer point component CO270. Signalling Point Relay (SPR) and Core Link Monitors This Plant Group (PG) captures costs of the following signalling equipment: SPR switches and core link monitors, both with associated on site spares. It also captures the costs of the initial databuild associated with the switches. The core link monitors and Signalling Point Relay (SPR) switches are both items of signalling equipment used to interface Public Switched Telephone Network (PSTN) switches with the Intelligent Network (IN)/Common Intelligent Service layer (CISL). The former provides a signalling assurance function whilst the latter concentrates signalling from the PSTN switches onto the Intelligent Network/CISL. Costs are allocated to the IN components CISL and Intelligent Contact Manager (ICM) based on the latest available period year to data CISL and PSTN internal and external call volumes. The CISL volumes provide the split between select services and the IN/CISL Services whilst the PSTN call volumes are used to provide the split between the two select services components. Cumulative CISL platform volumes and PSTN internal and external call volumes. Analogue Line Testing Equipment This Plant Group (PG) captures the costs associated with the equipment that supports line testing of Public Switched Telephone Network (PSTN) and ISDN circuits. Allocates 100% to the PSTN/ISDN line test equipment component CL177. Repair Handling Duty This Plant Group (PG) captures the costs associated with time spent by Repair Handling Duty staff on Network Operations Items (NOUs), Remote Operations Items (ROU) and exchange line testing, report raising and records work. The PG is allocated based upon circuit volumes from Openreach management accounts to one Public Switched Telephone Network (PSTN) component and one Integrated Services Digital Network (ISDN) component. Openreach Management Accounts. Main Exchange Line Transmission Equipment 146

147 This Plant Group (PG) captures the capital and depreciation costs of the Main Digital Exchange DLT equipment. The DLT is part of the Main Exchange System X Processor unit and NGS (Next Generation Switch) that also comprises a switch block and processor and signalling functional groups, and is used for call setup and call duration. Main exchanges come in two types, the older System X unit and a newer NGS. System X units are not available and are being replaced by NGS units. A Current Cost Accounting (CCA) approach and a Modern Equivalent Asset (MEA) of the NGS are used to allocate costs for both types of switch. The NGS is split into its constituent elements: (such as AXD, Regional Processing Group 2 (RPG2) and Group Switch Services (GSS) etc.) then grouped into DLT, switchblock or processor equipment. Account is taken of the additional capacity required to accommodate the remaining System X working capacity which is to be consolidated on to the NGS system. With information from the manufacturers we are able to determine the call setup and duration split for each element. The total cost of all the elements of all the units in the network is summed and then these costs are analysed into setup and duration splits. Common costs can be treated by apportioning a fraction to set-up and duration pro-rata on the already existing split however this makes no difference to the overall result and common costs are ignored. Call setup costs are driven to main exchange call setup component (CO220) and main exchange call duration component (CO221). The relative costs of call setup and call duration are expressed as percentages, and these percentages are applied to the year-end (Period 12) PG costs to determine the attribution to components. However, the DLT cost relating to Other Communications Provider (OCP) has also to be determined. Mid-year port information is downloaded from the Network Recording System (NRS). This provides the origin and destination of each 2Mbit/s port on every local, trunk and main exchange. This data can then be manipulated to analyse where the ports are pointed and what type of switch and of which system type is involved. The fraction of ports that point to OCPs can be identified as a fraction of the total. This percentage is then pointed at the Intra Building Circuits component (CR470). The residual amount is then re-based so that the new total equals 100% and pointed to main exchange call set up and main exchange call duration. NRS. Exchange Planning and Review System (EXPRES). PG249M Main Exchange Line Transmission Repair This Plant Group (PG) captures the maintenance costs of the Main Digital Exchange DLT equipment. The apportionment for maintenance uses the capital base (PG249C), to exhaust the costs to components. Methodologies A Current Cost Accounting (CCA) approach and a Modern Equivalent Asset (MEA) of the NGS are used to allocate costs for both types of switch. The NGS is split into its constituent elements: (such as AXD, Regional Processing Group 2 (RPG2) and Group Switch Services (GSS) etc.) then grouped into DLT, switchblock or processor equipment. Account is taken of the additional capacity required to accommodate the remaining System X working capacity which is to be consolidated on to the NGS system. With information from the manufacturers we are able to determine the call setup and duration split for each element. The total cost of all the elements of all the units in the network is summed and then these costs are analysed into setup and duration splits. Common costs can be treated by apportioning a fraction to set-up and duration pro-rata on the already existing split however this makes no difference to the overall result and common costs are ignored. Call setup costs are driven to main exchange call setup component (CO220) and main exchange call duration component (CO221). The relative costs of call setup and call duration are expressed as percentages, and these percentages are applied to the year-end (Period 12) PG costs to determine the attribution to components. However, the DLT cost relating to Other Communications Provider (OCP) has also to be determined. Mid-year port information is downloaded from the Network Recording System (NRS). This provides the origin and destination of each 2Mbit/s port on every local, trunk and main exchange. This data can then be manipulated to analyse where the ports are pointed and what type of switch and of which system type is involved. The fraction of ports that point to OCPs can be identified as a fraction of the total. This percentage is then pointed at the Intra Building Circuits component (CR470). The residual amount is then re-based so that the new total equals 100% and pointed to main exchange call set up and main exchange call duration. 147

148 NRS. Exchange Planning and Review System (EXPRES). PG252B PG252N PG254A PG255B Openreach Residual Elimination This Plant Group (PG) captures the variance between the calculated notional revenues associated with Other Communication Providers (OCPs), and the actual revenues received from OCPs, relating to Openreach activity. Costs, revenues and debtors from this Plant Group (PG) are apportioned 100% to the component CZ252B OR residual elimination. Network Residual Elimination This Plant Group (PG) captures the variance between the calculated notional revenues associated with Other Communication Providers (OCPs), and the actual revenues received from OCPs relating to Wholesale activity. Costs, revenues and debtors from this Plant Group (PG) are apportioned 100% to the component CZ252N OR residual elimination. Main Digital Exchange - Intelligent Access and Messaging This Plant Group (PG) captures the depreciation costs of Main Digital exchange intelligent access and messaging equipment to calls components only. Apportionment to the Call Set-Up components for Local and Main Exchanges is based on the relative number of Local Exchanges and Main Exchanges in the network sourced from the EXPRES system. Data amendments are more numerous and more time consuming for Main Exchanges than for Local Exchanges, so each Main Exchange is weighted by a factor determined by a survey of time spent on Data Amendments. This factor is determined on the basis of the experience and expertise of the data amendment team, being a management estimate. This gives an estimate of the time and hence relative cost for data amendments on Local relative to Main Exchanges. An apportionment to CO260 Cambridge Voice Intelligent Peripherals is made on the basis of minutes for CNA (Change Number Announcement) relative to minutes for the Televote service and other messaging applications. Exchange Planning and Review System (EXPRES). Data Amendments survey. Minutes Data from Recorded Information Distribution Equipment (RIDE) - Statistics Data Warehouse (SDW). Main Digital Switchblock This Plant Group (PG) captures the capital depreciation and maintenance costs of the Main Digital Exchange Switch Block equipment. Main exchanges come in two types, the older System X unit and a newer Next Generation Switch (NGS). System X units are not available and are being replaced by NGS units. The Switch Block is part of the Main Exchange System X Processor and NGS (Next Generation Switch) unit that also comprises of a Processor and Digital Line Termination (DLT) functional groups, and is used for call setup and call duration. A Current Cost Accounting (CCA) approach and a Modern Equivalent Asset (MEA) of the NGS are used to allocate costs for both types of switch. The NGS is split into its constituent elements: (such as AXD, Regional Processing Group 2 (RPG2) and Group Switch Services (GSS) etc.) then grouped into DLT, switchblock or processor equipment. Account is taken of the additional capacity required to accommodate the remaining System X working capacity which is to be consolidated on to the NGS system. The provisioning rules that govern the NGS are given in the pricing section of the NGS contract (no ) between BT and 148

149 Ericsson. With information from the manufacturers we are able to determine the call setup and duration split for each element. The total cost of all the elements of all the units in the network is summed and then these costs are analysed into setup and duration splits. Common costs can be treated by apportioning a fraction to set-up and duration pro-rata on the already existing split however this makes no difference to the overall result and common costs are ignored. Call setup costs are driven to main exchange call setup component (CO220) and main exchange call duration component (CO221). The relative costs of call setup and call duration are expressed as percentages, and these percentages are applied to the PG costs to determine the attribution to components. However, the DLT cost relating to Other Communications Provider (OCP) has also to be determined. Mid-year port information is downloaded from the Network Recording System (NRS). This provides the origin and destination of each 2Mbit/s port on every local, trunk and main exchange. This data can then be manipulated to analyse where the ports are pointed and what type of switch and of which system type is involved. The fraction of ports that point to OCPs can be identified as a fraction of the total. This percentage is then pointed at the Interconnect Connections component. The residual amount is then re-based so that the new total equals 100% and pointed to main exchange call set up and main exchange call duration. Network Recording System (NRS). Exchange Planning and Review System (EXPRES). PG257C PG257M Main Exchange Processors Equipment This Plant Group (PG) captures the capital and depreciation costs of the Main Digital Exchange Processor and Signalling equipment. Main exchanges come in two types, an older System X unit and a newer Next Generation Switch (NGS). System X units are not available and are being replaced by NGS units. The processor is part of the Main Exchange System X Processor unit that also comprises a Switch Block and Digital Line Termination (DLT) functional groups, and is used for call setup and call duration. A Current Cost Accounting (CCA) approach and a Modern Equivalent Asset (MEA) of the NGS are used to allocate costs for both types of switch. The NGS is split into its constituent elements: (such as AXD, Regional Processing Group 2 (RPG2) and Group Switch Services (GSS) etc.) then grouped into DLT, switchblock or processor equipment. Account is taken of the additional capacity required to accommodate the remaining System X working capacity which is to be consolidated on to the NGS system. With information from the manufacturers we are able to determine the call setup and duration split for each element. The total cost of all the elements of all the units in the network is summed and then these costs are analysed into setup and duration splits. Common costs can be treated by apportioning a fraction to set-up and duration pro-rata on the already existing split however this makes no difference to the overall result and common costs are ignored. Call setup costs are driven to main exchange call setup component (CO220) and main exchange call duration component (CO221). The relative costs of call setup and call duration are expressed as percentages, and these percentages are applied to the PG costs to determine the attribution to components. However, the DLT cost relating to Other Communications Provider (OCP) has also to be determined. Mid-year port information is downloaded from the Network Recording System (NRS). This provides the origin and destination of each 2Mbit/s port on every local, trunk and main exchange. This data can then be manipulated to analyse where the ports are pointed and what type of switch and of which system type is involved. The fraction of ports that point to OCPs can be identified as a fraction of the total. This percentage is then pointed at the Intra Building Circuits component (CR470). The residual amount is then re-based so that the new total equals 100% and pointed to main exchange call set up and main exchange call duration. NRS. Exchange Planning and Review System (EXPRES). Main Digital Processor Maintenance This Plant Group (PG) captures the Profit and Loss (Pay, Non Pay etc.) maintenance costs of the main digital exchange processor 149

150 and signalling equipment. The apportionment for maintenance uses the capital base (PG257C) to exhaust the costs to components. The processor is part of the main exchange System X processor unit that also comprises a switch block and Digital Line Termination (DLT) functional groups, and is used for call setup and call duration. A Current Cost Accounting (CCA) approach and a Modern Equivalent Asset (MEA) of the NGS are used to allocate costs for both types of switch. The NGS is split into its constituent elements: (such as AXD, Regional Processing Group 2 (RPG2) and Group Switch Services (GSS) etc.) then grouped into DLT, switchblock or processor equipment. Account is taken of the additional capacity required to accommodate the remaining System X working capacity which is to be consolidated on to the NGS system. The provisioning rules that govern the NGS are given in the pricing section of the NGS contract (no ) between BT and Ericsson. With information from the manufacturers we are able to determine the call setup and duration split for each element. The total cost of all the elements of all the units in the network is summed and then these costs are analysed into setup and duration splits. Common costs can be treated by apportioning a fraction to set-up and duration pro-rata on the already existing split however this makes no difference to the overall result and common costs are ignored. Call setup costs are driven to main exchange call setup component (CO220) and main exchange call duration component (CO221). The relative costs of call setup and call duration are expressed as percentages, and these percentages are applied to the PG costs to determine the attribution to components. However, the DLT cost relating to Other Communications Provider (OCP) has also to be determined. Mid-year port information is downloaded from the Network Recording System (NRS). This provides the origin and destination of each 2Mbit/s port on every local, trunk and main exchange. This data can then be manipulated to analyse where the ports are pointed and what type of switch and of which system type is involved. The fraction of ports that point to OCPs can be identified as a fraction of the total. This percentage is then pointed at the Intra Building Circuits component (CR470). The residual amount is then re-based so that the new total equals 100% and pointed to main exchange call set up and main exchange call duration. NRS. Exchange Planning and Review System (EXPRES). PG260A PG276A Intelligent Network Platform This Plant Group (PG) captures the costs of all equipment and associated costs incurred as part of provision, extension, rearrangement and recovery of Intelligent Contact Manager equipment excluding Alfredo equipment. It also includes Intelligent Peripherals (IP) Service Control Point (SCP) equipment, on site spares, initial databuild associated with switches, Testing Apparatus and initial provision of spares held for changing purposes. Apportioned 100% to the Intelligent Contact Manager component CO261. Common Intelligence Service Layer (CISL) This Plant Group (PG) captures the cost of the CISL platform that supports basic and advanced number translation services (for example 0800, 0845 etc.) into a geographic number (for example ) so that the call can then be routed by the Public Switched Telephony Network (PSTN) switches. Services on this platform are migrating from the Cambridge and CoreIN platforms (PG263/266). Costs associated with the PG are: Supervising contractors on installation. On site spares. Testing apparatus and initial provision of spares held for changing purposes. Costs from this PG are apportioned between the Cambridge / CISL infrastructure component CO266, the Intelligent Contact Manager CO261, the OR Network Features (internal) component CO291 and the OR Network Features external component CO290 based on call volumes from the CISL platform and Powerhouse volumes. 150

151 Cumulative CISL platform volumes and the split of PSTN internal and external call volumes. PG280C Local Exchange Processor (AXE10) Equipment This Plant Group (PG) captures the costs relating to the AXE10 Digital Local Exchange Processor and Signalling. The switch comprises both concentrator and processor functionality, and is used for call set up and call duration. The class of work (CoW) to PG allocation for AXE10 Local Exchange Processor, is calculated by taken a modern equivalent asset (MEA) value of the components that make up the processor, the depreciation of which is then calculated. Maintenance costs for the processor are then weighted across the DLT, Switchblock and processor. The depreciation and maintenance costs combined are then compared with the depreciation for the other PG s this CoW allocates to. The value of the depreciation of the processor as a percentage of the total depreciation of all PG s is the amount allocated to this PG. The aggregate cost within the network of each of the elements of the switch is determined on the basis of Local Exchange Modernisation Programme2 (LEMP2) contract prices. The volume of each element is multiplied by the unit cost of each element. LEMP2 was the Local Exchange Modernisation Programme (LEMP). The LEMP contract is indicative of normal course of business. It sets out the contract prices for the various switch elements and is negotiated with suppliers by BT s procurement function. The elements of the processor are assigned into three main blocks: Digital Line Termination (DLT). Switch Block. Processor and Signalling. We are concerned with Processor and Signalling only for this PG. Based on advice from switching suppliers, the function of each switch element is analysed between call set up and call duration. This advice showing an analysis between set-up and duration will not change on a year by year basis as the building elements of the asset remain a constant. Certain elements support both functions. All of the above is based historic data until such time as the base is unfrozen. The procedures below are updated each year and any changes mean that historic data is re-based to accommodate these. However, the processor usage of Select Service calls has also to be determined. An extract of billing call record information is gathered from a sample of ten System X and ten AXE 10 Local Exchanges and analysed into whether the record type is Select Service driven or not. Billing record types: Record Types 34 were ignored in this calculation on the assumption that the Select Services to ordinary calls without Select Services is in the same ratio for ISDN as for analogue calls. Billing records were extracted for one whole week during the year at 20 Digital Local Exchange (DLE) sites in the country. The number of processor instructions was derived for call usage types to derive a weighted processor average. The final weighted processor usage percentage for Select Services is then applied to the PG cost. This is further split into Select Services relating to Wholesale and Retail by using volumes from ORBIT. The Retail fraction is pointed at CO291 OR Network Features internal and the Wholesale fraction at CO290 OR Network Features - external. The quantity of processor cost relating to DLE call set up and call duration is then re-based so that the new total equals 100%. NRS EXPRES. 151

152 Billing Records. ORBIT. PG280M Local Exchange Processor (AXE10) Maintenance This Plant Group (PG) captures the costs relating to the maintenance of AXE10 Digital Local Exchange (DLE) Processor and Signalling. The switch comprises both concentrator and processor functionality, and is used for call set up and call duration. The class of work (CoW) to PG allocation for AXE10 Local Exchange Processor and signalling maintenance, is calculated by taken a modern equivalent asset (MEA) value of the components that make up the processor, the depreciation of which is then calculated. Maintenance costs for the processor are then weighted across the DLT, switchblock and processor. The depreciation and maintenance costs combined are then compared with the depreciation for the other PG s this CoW allocates to. The value of the depreciation of the processor as a percentage of the total depreciation of all PG s is the amount allocated to this PG. This percentage is then weighted by the number of engineer hours spent repairing equipment used specifically for calls. The aggregate cost within the network of each of the elements of the switch is determined on the basis of Local Exchange Modernisation Programme2 (LEMP2) contract prices. The volume of each element is multiplied by the unit cost of each element. LEMP2 was the Local Exchange Modernisation Programme (LEMP). The LEMP contract is indicative of normal course of business. It sets out the contract prices for the various switch elements and is negotiated with suppliers by BT s procurement function. The elements of the processor are assigned into three main blocks: Digital Line Termination (DLT). Switch Block. Processor and Signalling. We are concerned with Processor and Signalling only for this PG. Based on advice from switching suppliers, the function of each switch element is analysed between call set up and call duration. This advice showing an analysis between set-up and duration will not change on a year by year basis as the building elements of the asset remain a constant. Certain elements support both functions. All of the above is based historic data until such time as the base is unfrozen. The procedures below are updated each year and any changes mean that historic data is re-based to accommodate these. However, the processor usage of Select Service calls has also to be determined. An extract of billing call record information is gathered from a sample of ten System X and ten AXE10 Local Exchanges and analysed into whether the record type is Select Service driven or not. Billing record types: Record Types 34 were ignored in this calculation on the assumption that the Select Services to ordinary calls without Select Services is in the same ratio for ISDN as for analogue calls. Billing records were extracted for one whole week during the year at 20 Digital Local Exchange (DLE) sites in the country. The number of processor instructions was derived for call usage types to derive a weighted processor average. The final weighted processor usage percentage for Select Services is then applied to the PG cost. This is further split into Select Services relating to Wholesale and Retail by using volumes from ORBIT. The Retail fraction is pointed at CO291 OR Network Features - internal and the Wholesale fraction at CO290 OR Network Features external. The quantity of processor cost relating to DLE call set up and call duration is then re-based so that the new total equals 100%. 152

153 NRS. EXPRES. Billing Records. ORBIT PG281C PG281M Local Exchange Line Transmission (AXE10) Eqpt This Plant Group (PG) captures the costs and balance sheet of AXE10 DLT, which flow through classes of work (CoW) LYX via PDTLYX The DLT switch comprises both call set-up and call duration functionality. The class of work (CoW) to PG allocation for AXE10 Local Exchange DLT, is calculated by taken a modern equivalent asset (MEA) value of the components that make up the processor, the depreciation of which is then calculated. Maintenance costs for the processor are then weighted across the DLT, Switchblock and processor. The depreciation and maintenance costs combined are then compared with the depreciation for the other PG s this CoW allocates to. The value of the depreciation of the processor as a percentage of the total depreciation of all PG s is the amount allocated to this PG. The aggregate cost within the network of each of these switch elements is determined on the basis of LEMP2 contract prices i.e. the volume of each element is multiplied by the unit cost of each element. LEMP2 was the Local Exchange Modernisation Programme. It set out the contract prices for the various switch elements and is negotiated with suppliers by BT s procurement function. The LEMP2 contract is indicative of normal course of business and covers both Local and System X main Exchanges based on advice from switching suppliers. The function of each switch element is analysed between call set-up and call duration. This advice showing an analysis between set-up and duration will not change on a year by year basis as the building elements of the asset remain a constant. These percentages are then weighted for the relative proportion of the PG total cost represented by processor costs as opposed to concentrator costs and are used to attribute costs to Local Exchange Processor Set-Up CO212 and Local Exchange Processor Duration CO210. All of the above is based historic data until such time as the base is unfrozen. The procedures below are updated each year and any changes mean that historic data is re-based to accommodate these. However, the DLT cost relating to Other Communications Providers (OCPs) also needs to be determined. Mid-year port information is downloaded from the NRS. This provides the origin and destination of each 2Mbit/s port on every local, trunk and main exchange. This data can then be manipulated to analyse where the ports are pointed, what type of switch, of which system type and the system type involved. The fraction of ports that point to OCPs can be identified as a fraction of the total is driven to CR470. This percentage is then pointed at the Interconnect Rentals component. The residual amount is then re-based so that the new total equals 100% and point to Local Exchange Call Set-Up and Local Exchange Call Duration. Network Records System (NRS). Exchange Planning and Review System (EXPRES). Billing records. Local Exchange Line Transmission (AXE10) Mtce This Plant Group (PG) captures the costs relating to the maintenance of AXE10 Digital DLE DLT. The DLT switch comprises both call set-up and call duration functionality. The class of work (CoW) to PG allocation for AXE10 Local Exchange DLT maintenance, is calculated by taken a modern equivalent asset (MEA) value of the components that make up the processor, the depreciation of which is then calculated. Maintenance costs for the processor are then weighted across the DLT, Switchblock and processor. The depreciation and maintenance costs combined are then compared with the depreciation for the other PG s this CoW allocates to. The value of the depreciation of the processor as a percentage of the total depreciation of all PG s is the amount allocated to this PG. This percentage is then weighted by the number of engineer hours spent repairing equipment used specifically for calls. The aggregate cost within the network of each of the elements of the switch is determined on the basis of Local Exchange 153

154 Modernisation Programme2 (LEMP2) contract prices. The volume of each element is multiplied by the unit cost of each element. LEMP2 was the Local Exchange Modernisation Programme (LEMP). The LEMP contract is indicative of normal course of business. It sets out the contract prices for the various switch elements and is negotiated with suppliers by BT s procurement function. The elements of the processor are assigned into three main blocks: Digital Line Termination (DLT). Switch Block. Processor and Signalling. We are concerned with Processor and Signalling only for this PG. Based on advice from switching suppliers, the function of each switch element is analysed between call set up and call duration. This advice showing an analysis between set-up and duration will not change on a year by year basis as the building elements of the asset remain a constant. Certain elements support both functions. All of the above is based historic data until such time as the base is unfrozen. The procedures below are updated each year and any changes mean that historic data is re-based to accommodate these. However, the processor usage of Select Service calls has also to be determined. An extract of billing call record information is gathered from a sample of ten System X and ten AXE10 Local Exchanges and analysed into whether the record type is Select Service driven or not. Billing record types: Record Types 34 were ignored in this calculation on the assumption that the Select Services to ordinary calls without Select Services is in the same ratio for Integrated Services Digital Network (ISDN) as for analogue calls. Billing records were extracted for one week during the year at 20 Digital Local Exchange (DLE) sites in the country. The number of processor instructions was derived for call usage types to derive a weighted processor average. The final weighted processor usage percentage for Select Services is then applied to the PG cost. This is further split into Select Services relating to Wholesale and Retail by using Period 8 OR management accounts (these draw on a number of volume sources e.g. Atlantis and Hyperion). The Retail fraction is pointed at CO291 OR Network Features - internal and the Wholesale fraction at CO290 OR Network Features - external. The quantity of processor cost relating to LE call set up and call duration is then re-based so that the new total equals 100%. NRS. Exchange Planning and Review System (EXPRES). Billing records. PG282A Local Exchange Switch Block (AXE10) This Plant Group (PG) captures cost and balance sheet costs of AXE10 Digital LE Switch Blocks. The switch comprises both concentrator and processor functionality, and is used for call set up and call duration. The class of work (CoW) to PG allocation for AXE10 Local Exchange Switchblock, is calculated by taken a modern equivalent asset (MEA) value of the components that make up the processor, the depreciation of which is then calculated. Maintenance costs for the processor are then weighted across the DLT, Switchblock and processor. The depreciation and maintenance costs combined are then compared with the depreciation for the other PG s this CoW allocates to. The value of the depreciation of the processor as a percentage of the total depreciation of all PG s is the amount allocated to this PG. The aggregate cost within the network of each of these switch elements is determined on the basis of LEMP2 contract prices i.e. the volume of each element is multiplied by the unit cost of each element. LEMP2 was the Local Exchange Modernisation 154

155 Programme. It set out the contract prices for the various switch elements and is negotiated with suppliers by BT s procurement function. The LEMP2 contract is indicative of normal course of business and covers both Local and System X main Exchanges based on advice from switching suppliers. The function of each switch element is analysed between call set-up and call duration. This advice showing an analysis between set-up and duration will not change on a year by year basis as the building elements of the asset remain a constant. These percentages are then weighted for the relative proportion of the PG total cost represented by processor costs as opposed to concentrator costs and are used to attribute costs to Local Exchange Processor Set-Up CO212 and Local Exchange Processor Duration CO210). All of the above is based historic data until such time as the base is unfrozen. The procedures below are updated each year and any changes mean that historic data is re-based to accommodate these. However, the DLT cost relating to Other Communications Providers (OCPs) also needs to be determined. Mid-year port information is downloaded from the NRS. This provides the origin and destination of each 2Mbit/s port on every Local, Trunk and Main Exchange. This data can then be manipulated to analyse where the ports are pointed, what type of switch, of which system type and the system type involved. The fraction of ports that point to OCPs can be identified as a fraction of the total is driven to CR470. This percentage is then pointed at the Interconnect Rentals component. The residual amount is then re-based so that the new total equals 100% and point to Local Exchange Call Set-Up and Local Exchange Call Duration. NRS. EXPRES. PG283A Local Exchange Conc (AXE10) Call set-up This Plant Group (PG) captures the costs and balance sheet relating to AXE10 DLE Digital Concentrator Call Set-Up. These assets comprise both call set-up and call duration functionality. The PG contains both Capital and Maintenance costs The class of work (CoW) to PG allocation for AXE10 Local Exchange Concentrator Set-Up, is calculated by taken a modern equivalent asset (MEA) value of the components that make up the concentrator, the depreciation of which is then calculated. Maintenance costs for the concentrator are then weighted across the other elements that make up the concentrator based on a percentage of the number of channels they use that make up the concentrator. Common costs are also split across the plant groups for call set-up / call duration and access costs by pre-defined percentages set by the manufacturers. The depreciation, maintenance and common costs combined are then compared with the depreciation for the other PG s this CoW allocates to. The value of the depreciation of the concentrator as a percentage of the total depreciation of all PG s is the amount allocated to this PG. The amount of concentrator usage for Select Service calls has to be determined. An extract of the Billing Call Record information is gathered from a sample of ten System X Local Exchanges and analysed into whether the record type is Select Service driven or not. Only RT22 makes use of the Concentrator Duration element of the switch assets and the fraction of these compared to the total (RT21+RT22+RT29) are used to determine the relative use of the Concentrator for Select Services. RT34 is ignored in this calculation on the assumption that the Select Services to ordinary calls without Select Services is in the same ratio for ISDN as for Analogue calls. Billing Records are generated only for outgoing calls and do not represent all of the concentrator call set-up capacity. The total amount of Select Service related concentrator usage is further refined relative to the quantity of Originating Calls and Own Exchange Calls in relation to the total. The final weighted concentrator usage percentage for Select Services is then applied to the PG cost. This is further split into Select Services relating to Wholesale and Retail by using volumes from ORBIT. The Retail fraction is pointed at CO290 OR Network Features - external and the Wholesale fraction at CO291 OR Network Features - internal. The residual quantity of concentrator cost relating to Call Set-Up is pointed to CO214 Local Exchange Concentrator Set-Up. 155

156 Billing Records obtained from a sample of ten AXE10 and ten System X Local Exchange. ORBIT. PG284A Local Exchange Conc (AXE10) Call Duration This Plant Group (PG) captures the costs and balance sheet relating to AXE10 DLE Digital Concentrator Call Duration. The switch comprises both concentrator and processor functionality, and is used for call set-up and call duration. The class of work (CoW) to PG allocation for AXE10 Local Exchange Concentrator Duration, is calculated by taken a modern equivalent asset (MEA) value of the components that make up the concentrator, the depreciation of which is then calculated. Maintenance costs for the concentrator are then weighted across the other elements that make up the concentrator based on a percentage of the number of channels they use that make up the concentrator. Common costs are also split across the plant groups for call set-up / call duration and access costs by pre-defined percentages set by the manufacturers. The depreciation, maintenance and common costs combined are then compared with the depreciation for the other PG s this CoW allocates to. The value of the depreciation of the concentrator as a percentage of the total depreciation of all PG s is the amount allocated to this PG. The amount of concentrator usage for Select Service calls has to be determined. A sample extract of Billing Call Record information is gathered from a sample of ten System X local and ten AXE10 Local Exchanges and analysed into whether the record type is Select Service driven or not. Only RT22 makes use of the Concentrator Duration element of the switch assets and the fraction of these compared to the total (RT21+RT22+RT29) are used to determine the relative use of the Concentrator for Select Services. RT34 record types are ignored in this calculation on the assumption that the Select Services to ordinary calls without Select Services is in the same ratio for ISDN as for Analogue calls. Billing records are generated only for outgoing calls and therefore do not represent all of the concentrator call set-up capacity. The total amount of Select Service related concentrator usage is further refined relative to the quantity of Originating Calls and Own Exchange Calls in relation to the total which also includes Call Terminating and DLE Transit. The final weighted concentrator usage percentage for Select Services is then applied to the PG cost. This is further split into Select Services relating to Wholesale and Retail by using volumes from ORBIT. The retail fraction is pointed at CO290 OR Network Features - external and the wholesale fraction at CO291 OR Network Features - internal. The residual quantity of concentrator cost relating to Call Set-Up is pointed to CO215 LE Concentrator Duration. The PG contains both capital and maintenance costs. Billing Records. ORBIT PG285C Local Exchange Processor (Sys X) Equipment This Plant Group (PG) captures the costs and balance sheet relating to System X Digital DLE Processor and Signalling which flow through from classes of work (CoW) LDX via PDTSYSXD. The costs are identified by the CoW to PG exhaustion process. This enables the relative proportions of concentrator and processor costs to be identified. The attribution of processor costs follows a number of steps. The LE processor is analysed into its constituent elements: 156

157 Flexible Voice Platforms. Alarm Utility Subsystems. Network Interface Subsystems. Analogue Junction Line Shelf. This analysis is carried out on the basis of various capacity measures (such as the number of processing clusters, the number of 2Mbit/s switch ports and the number of signalling channels) actually present in the BT Network, as shown in Exchange Planning and Review System (EXPRES) and Processor Utilisation and Loading of Switch Equipment (PULSE). The next step is to determine the number of switches and switching elements within each switch that would be required to provide such capacity if the switching functionality were optimally dimensioned. This gives the number of switch elements of each type for the purposes of this analysis. It is necessary to carry out this step in the process because switching assets are not always purchased and recorded on a switch element-by-element basis, and it would not otherwise be possible to determine the relative split between set up and duration costs. The aggregate cost within the network of each of these switch elements is determined on the basis of Local Exchange Modernisation Programme2 (LEMP2) contract prices. The volume of each element is multiplied by the unit cost of each element. LEMP2 was the Local Exchange Modernisation Programme which set out the contract prices for the various switch elements. It sets out the contract prices for the various switch elements and is negotiated with suppliers by BT s Procurement function. The LEMP2 contract is indicative of normal course of business and covers both Local and System X Main Exchanges. The elements of the processor are assigned into three main blocks: Digital Line Termination (DLT). Switch Block. Processor and Signalling. We are concerned with the Processor and Signalling only for this PG. Based on advice from switching suppliers, the function of each switch element is analysed between call set up and call duration. This advice showing an analysis between set-up and duration will not change on a year by year basis as the building elements of the asset remain a constant. Certain elements support both functions. This overall process is illustrated below: Switch Element /% 1 Volume (from NRS and EXPRES) A Unit cost (from LEMP2) B Total Cost AxB=C Utilisation Setup % X Duration Y Both Z Cost of call setup functionality Cost of call duration functionality CxX CxY 2 3 etc Total etc P Q Cost of elements supporting both functions CxZ R Diagram1_PG285C_v1 The cost of those switch elements that are common to both call set up and call duration functions is loaded to the cost of those functions pro-rata to their unloaded costs: These percentages are then weighted for the relative proportion of the PG s total cost represented by processor costs as opposed to concentrator costs and are used to attribute costs to processor set up CO212 and processor duration CO210). All of the above is based historic data until such time as the base is unfrozen. The procedures below are updated each year and any changes mean that historic data is re-based to accommodate these. However, the Processor usage of Select Service calls has also to be determined. An extract of billing call record information is gathered from a sample of ten System X Local Exchanges (: Billing Records) and ten AXE10 Local Exchanges then analysed into whether the record type is Select Service driven or not. 157

158 RT34s are ignored in this calculation on the assumption that the Select Services to ordinary calls without Select Services is in the same ratio for Integrated Services Digital Network (ISDN) as for analogue calls. Billing records were extracted for one whole week during the year at twenty Digital LE sites in the country. The number of processor instructions was derived for call usage types to derive a weighted processor average. Billing records are generated only for outgoing calls and therefore do not represent all of the processing capacity. The total amount of Select Service related processor usage is further refined relative to the quantity of Originating Calls and Own Exchange Calls relative to the total which also includes Call Terminating any Tandem traffic. The final weighted processor usage percentage for Select Services is then applied to the PG cost. The quantity of processor cost relating to LE call set up and call duration is then re-based so that the new total equals 100%. This is further split into Select Services relating to Wholesale and Retail by using volumes from ORBIT. The retail fraction is pointed at CO290 OR Network Features - external and the wholesale fraction at CO291 OR Network Features - internal. The signalling usage and cost relating to other operators has yet to be determined. Information from Network Recording System (NRS) is downloaded showing destinations including those relevant to Other Operators and compared to the total. Signalling costs form part of the PG total costs but the separate signalling cost is clearly identifiable so on this basis an apportionment is made from this PG to CR470 Intra Building Circuits (Rentals). EXPRES. Billing Records. NRS. ORBIT PG285M Local Exchange Processor (Sys X) Maintenance This Plant Group (PG) captures the cost and balance sheet relating to the maintenance of System X Digital Local Exchange (DLE) Processor and Signalling. The costs are identified by the CoW to PG exhaustion process. This enables the relative proportions of concentrator and processor costs to be identified. The attribution of processor costs follows a number of steps. The LE processor is analysed into its constituent elements: Flexible Voice Platforms. Alarm Utility Subsystems. Network Interface Subsystems. Analogue Junction Line Shelf. This analysis is carried out on the basis of various capacity measures (such as the number of processing clusters, the number of 2Mbit/s switch ports and the number of signalling channels) actually present in the BT Network, as shown in Exchange Planning and Review System (EXPRES) and Processor Utilisation and Loading of Switch Equipment (PULSE). The next step is to determine the number of switches and switching elements within each switch that would be required to provide such capacity if the switching functionality were optimally dimensioned. This gives the number of switch elements of each type for the purposes of this analysis. It is necessary to carry out this step in the process because switching assets are not always purchased and recorded on a switch element-by-element basis, and it would not otherwise be possible to determine the relative split between set up and duration 158

159 costs. The aggregate cost within the network of each of these switch elements is determined on the basis of Local Exchange Modernisation Programme2 (LEMP2) contract prices. The volume of each element is multiplied by the unit cost of each element. LEMP2 was the Local Exchange Modernisation Programme which set out the contract prices for the various switch elements. It sets out the contract prices for the various switch elements and is negotiated with suppliers by BT s Procurement function. The LEMP2 contract is indicative of normal course of business and covers both Local and System X Main Exchanges. The elements of the processor are assigned into three main blocks: Digital Line Termination (DLT). Switch Block. Processor and Signalling. We are concerned with the processor and signalling only for this PG. Based on advice from switching suppliers, the function of each switch element is analysed between call set up and call duration. This advice showing an analysis between set-up and duration will not change on a year by year basis as the building elements of the asset remain a constant. Certain elements support both functions. This overall process is illustrated below: Switch Element /% 1 Volume (from NRS and EXPRES) A Unit cost (from LEMP2) B Total Cost AxB=C Utilisation Setup % X Duration Y Both Z Cost of call setup functionality Cost of call duration functionality CxX CxY 2 3 etc Total etc P Q Cost of elements supporting both functions CxZ R Diagram1_PG285C_v1 The cost of those switch elements that are common to both call set up and call duration functions is loaded to the cost of those functions pro-rata to their unloaded costs: These percentages are then weighted for the relative proportion of the PG s total cost represented by processor costs as opposed to concentrator costs and are used to attribute costs to processor set up CO212 and processor duration CO210). All of the above is based historic data until such time as the base is unfrozen. The procedures below are updated each year and any changes mean that historic data is re-based to accommodate these. However, the Processor usage of Select Service calls has also to be determined. An extract of billing call record information is gathered from a sample of ten System X Local Exchanges (: Billing Records) and ten AXE10 Local Exchanges then analysed into whether the record type is Select Service driven or not. RT34s are ignored in this calculation on the assumption that the Select Services to ordinary calls without Select Services is in the same ratio for ISDN as for analogue calls. Billing records were extracted for one week during the year at 20 DLE sites in the country. The number of processor instructions was derived for call usage types to derive a weighted processor average. Billing records are generated only for outgoing calls and therefore do not represent all of the processing capacity. The total 159

160 amount of Select Service related processor usage is further refined relative to the quantity of Originating Calls and Own Exchange Calls relative to the total which also includes Call Terminating any Tandem traffic. The final weighted processor usage percentage for Select Services is then applied to the PG cost. The quantity of processor cost relating to LE call set up and call duration is then re-based so that the new total equals 100%. This is further split into Select Services relating to Wholesale and Retail by using voumes from ORBIT. The retail fraction is pointed at CO290 OR Network Features - external and the wholesale fraction at CO291 OR Network Features internal. The signalling usage and cost relating to other operators has yet to be determined. Information from Network Recording System (NRS) is downloaded showing destinations including those relevant to Other Operators and compared to the total. Signalling costs form part of the PG total costs but the separate signalling cost is clearly identifiable so on this basis an apportionment is made from this PG to CR470 Intra Building Circuits (Rentals). EXPRES. Billing Records. NRS. ORBIT PG286C Local Exchange Line Transmission (Sys X) Eqpt This Plant Group (PG) captures the costs and balance sheet relating to the System X Digital DLE DLT. The switch comprises both concentrator and processor functionality and is used for call set-up and call duration. The attribution of processor costs follows a number of steps. The local exchange processor is analysed into its constituent elements: Host Core. C7 Signalling Links. 2Mbit/s Systems. Miscellaneous. This analysis is carried out on the basis of various capacity measures (such as the number of processing clusters, the number of 2Mbit/s switch ports and the number of signalling channels) actually present in the BT Network, as shown in Network Records System (NRS) and Processor Utilisation and Loading of Switch Equipment (PULSE). The next step is to determine the number of switches and switching elements within each switch that would be required to provide such capacity if the switching functionality were optimally dimensioned. This gives the number of switch elements of each type for the purposes of this analysis. It is necessary to carry out this step in the process as switching assets is not always purchased and recorded on a switch element-by-element basis. Otherwise it would not be possible to determine the relative split between set-up and duration costs. The aggregate cost within the network of each of element within the switch is determined on the basis of LEMP2 contract prices i.e. the volume of each element is multiplied by the unit cost of each element. LEMP2 was the Local Exchange Modernisation Programme. It set out the contract prices for the various switch elements and was negotiated with suppliers by BT s procurement function. The LEMP2 contract is indicative of normal course of business and covers both local and System X main Exchanges. Based on advice from switching suppliers, the function of each switch element is analysed as between call set-up and call duration. This advice showing an analysis between set-up and duration will not change on a year by year basis as the building elements of the asset remain a constant. Certain elements support both functions. This overall process is illustrated below: 160

161 Switch Element /% 1 Volume (from NRS and EXPRES) A Unit cost (from LEMP2) B Total Cost AxB=C Utilisation Setup % X Duration Y Both Z Cost of call setup functionality Cost of call duration functionality CxX CxY 2 3 etc Total etc P Q Cost of elements supporting both functions CxZ R Diagram1_PG286C_v1 These percentages are then weighted for the relative proportion of the PG total cost represented by processor costs as opposed to concentrator costs and are used to attribute costs to Local Exchange Processor Set-Up CO212 and Local Exchange Processor Duration CO210. However, the DLT cost relating to Other Communications Providers (OCPs) also needs to be determined. All of the above is based historic data until such time as the base is unfrozen. The procedures below are updated each year and any changes mean that historic data is re-based to accommodate these. Mid-year port information is downloaded from NRS. This provides the origin and destination of each 2Mbit/s port on every Local, Trunk and Main Exchange. This data can then be manipulated to analyse where the ports are pointed, what type of switch, of which system type and the system type involved. The fraction of ports that point to OCPs can be identified as a fraction of the total. This percentage is then pointed at the Interconnect Rentals component CO470. The residual amount is then re-based so that the new total equals 100% and is pointed to Local Exchange Call Set-Up and LE Call Duration. NRS. Exchange Planning and Review System (EXPRES). PG286M Local Exchange Line Transmission (Sys X) Mtce This Plant Group (PG) captures the costs and balance sheet relating to the maintenance of System X Digital Local Exchange (LE) Digital Line Termination (DLT). The switch comprises both concentrator and processor functionality and is used for call set-up and call duration. The concentrator call related costs are attributed wholly to the local exchange concentrator CO214 LE Concentrator Set-Up and CO215 LE Concentrator Duration. The costs are identified by the classes of work (CoW) to PG exhaustion process. This enables the relative proportions of concentrator and processor costs to be identified. The attribution of processor costs follows a number of steps. The local exchange processor is analysed into its constituent elements: Host Core. C7 Signalling Links. 2Mbit/s Systems. Miscellaneous. This analysis is carried out on the basis of various capacity measures (such as the number of processing clusters, the number of 2Mbit/s switch ports and the number of signalling channels) actually present in the BT Network, as shown in Network Records System (NRS). The next step is to determine the number of switches and switching elements within each switch that would be required to provide such capacity. It is necessary to carry out this step in the process as switching assets is not always purchased and recorded on a switch element-by-element basis. Otherwise it would not be possible to determine the relative split between set-up and duration costs. The aggregate cost within the network of each of these switch element is determined on the basis of LEMP2 contract prices i.e. 161

162 the volume of each element is multiplied by the unit cost of each element. LEMP2 was the Local Exchange Modernisation Programme. It set out the contract prices for the various switch elements and was negotiated with suppliers by BT s procurement function. The LEMP2 contract is indicative of normal course of business and covers both local and System X main Exchanges. Based on advice from switching suppliers, the function of each switch element is analysed as between call set-up and call duration. This advice showing an analysis between set-up and duration will not change on a year by year basis as the building elements of the asset remain a constant. Certain elements support both functions. This overall process is illustrated below: Switch Element /% 1 Volume (from NRS and EXPRES) A Unit cost (from LEMP2) B Total Cost AxB=C Utilisation Setup % X Duration Y Both Z Cost of call setup functionality Cost of call duration functionality CxX CxY 2 3 etc Total etc P Q Cost of elements supporting both functions CxZ R Diagram1_PG286C_v1 These percentages are then weighted for the relative proportion of the PG total cost represented by processor costs as opposed to concentrator costs and are used to attribute costs to Local Exchange Processor Set-Up CO212 and LE Processor Duration CO210. However, the DLT cost relating to Other Communications Providers (OCPs) also needs to be determined. All of the above is based historic data until such time as the base is unfrozen. The procedures below are updated each year and any changes mean that historic data is re-based to accommodate these. Mid-year port information is downloaded from NRS. This provides the origin and destination of each 2Mbit/s port on every Local, Trunk and Main Exchange. This data can then be manipulated to analyse where the ports are pointed, what type of switch, of which system type and the system type involved. The fraction of ports that point to OCPs can be identified as a fraction of the total. This percentage is then pointed at the Interconnect Rentals component CO470. The residual amount is then re-based so that the new total equals 100% and is pointed to LE Call Set-Up and Local Exchange Call Duration. NRS. Exchange Planning and Review System (EXPRES). PG287A Local Exchange Switch Block (AXE10) This Plant Group (PG) captures the costs and balance sheet relating to the System X Digital Local Exchange Switch Block. The switch comprises both concentrator and processor functionality, and is used for call set-up and call duration. The concentrator call related costs are attributed wholly to the local exchange concentrator components CO214 Local Exchange Concentrator Set- Up and CO215 Local Exchange Concentrator Duration. The costs are identified by the classes of work (CoW) to PG exhaustion process. This enables the relative proportions of concentrator and processor costs to be identified. The attribution of processor costs follows a number of steps. The local exchange processor is analysed into its constituent elements: Flexible Voice Platforms. Alarm Utility Subsystems. 162

163 Network Interface Subsystems. Analogue Junction Line Shelf. This analysis is carried out on the basis of various capacity measures (such as the number of processing clusters, the number of 2Mbit/s switch ports and the number of signalling channels) actually present in the BT Network, as shown in Exchange Planning and Review System (EXPRES) and NRS (Network Recording System). The next step is to determine the number of switches and switching elements within each switch that would be required to provide such capacity. It is necessary to carry out this step in the process as switching assets are not always purchased and recorded on a switch element-by-element basis. Otherwise it would not be possible to determine the relative split between setup and duration costs. The aggregate cost within the network of each of these switch elements is determined on the basis of Local Exchange Modernisation Programme2 (LEMP2) contract prices i.e. the volume of each element is multiplied by the unit cost of each element. LEMP2 was the Local Exchange Modernisation Programme. It set out the contract prices for the various switch elements and is negotiated with suppliers by BT s procurement function. The LEMP2 contract is indicative of normal course of business and covers both Local and System X Main Exchanges. The elements of the processor are assigned into four main blocks. Digital Line Termination (DLT), Switch Block, Processor and Signalling. For this PG we are only concerned with the switch block. Based on advice from switching suppliers, the function of each switch element is analysed as between call set up and call duration. Certain elements support both functions. This overall process is illustrated below: Switch Element /% 1 Volume (from NRS and EXPRES) A Unit cost (from LEMP2) B Total Cost AxB=C Utilisation Setup % X Duration Y Both Z Cost of call setup functionality Cost of call duration functionality CxX CxY 2 3 etc Total etc P Q Cost of elements supporting both functions CxZ R Diagram1_PG2867A_v1 These percentages are then weighted for the relative proportion of the PG total cost represented by processor costs as opposed to concentrator costs and are used to attribute costs to Local Exchange processor set up CO212 and processor duration CO210. The base is currently frozen. NRS. EXPRES. PG288A Local Exchange Concentrator (Sys X) Call Set-Up This Plant Group (PG) captures the costs and balance sheet relating to the System X Digital Concentrator Call Set-Up which flows from classes of work (CoW) LDX via PDTSYSXD. The switch comprises both concentrator and processor functionality, and is used for call set-up and call duration. The processor call related costs (DLT, Switch Block and Processor and Signalling) are attributed to CO210 Local Exchange processor duration and CO212 LE Processor set-up. Additional apportionment is made from the Local Exchange DLT PG to Interconnect Connections and from Local Exchange Processor to Chargeable Services (Select Services). The costs are identified by the CoW to PG exhaustion process. This enables the relative proportions of concentrator and processor costs to be identified. The attribution of Concentrator Call Set-Up costs follows a number of steps and the procedures below are updated each year. The amount of concentrator usage for Select Service calls has to be determined. An extract of billing call record information is gathered from a sample of ten System X Local Exchanges and ten AXE10 Local Exchanges analysed into whether the record type is Select Service driven or not. 163

164 Only RT22s make use of the Concentrator Set-Up element of the switch assets and the fraction of these compared to the total (RT21+RT22+RT29) are used to determine the relative use of the Concentrator for Select Services. RT34 record types were ignored in this calculation on the assumption that the Select Services to ordinary calls without Select Services is in the same ratio for ISDN as for Analogue calls. Billing records are generated only for outgoing calls and therefore do not represent all of the concentrator call set-up capacity. The total amount of Select Service related concentrator usage is further refined relative to the quantity of Originating Calls and Own Exchange Calls in relation to the total which also includes Call Terminating and DLE Transit. The final weighted concentrator usage percentage for Select Services is then applied to the PG. This is further split into Select Services relating to Wholesale and Retail by using volumes from ORBIT The retail fraction is pointed at CO290 OR Network Features - external and the Wholesale fraction at CO291 OR Network Features - internal. The residual quantity of concentrator cost relating to Call Set-Up is pointed to CO214 Local Exchange Concentrator Set-Up. The PG contains both Capital and Maintenance costs. Billing Records. ORBIT. PG289A Local Exchange Concentrator (Sys X) Call Duration This Plant Group (PG) captures costs and balance sheet relating to System X DLE Digital Concentrator Call Duration which flows from classes of work (CoW) LDX via PDTSYSXD. The System X switch comprises both concentrator and processor functionality, and is used for call set-up and call duration. The processor call related costs (Digital Line Termination (DLT), Switch Block and Processor and Signalling) are attributed to CO210 Local Exchange processor duration and CO212 LE Processor Set-Up. Additional apportionments are made from the LE DLT PG to Interconnect Connections and from LE Processor to Chargeable Services (Select Services). The costs are identified by the CoW to PG exhaustion process. This enables the relative proportions of concentrator and processor costs to be identified. The attribution of Concentrator Duration costs follows a number of steps. The procedures below are updated each year. The amount of concentrator usage for Select Service calls has to be determined. An extract of billing call record information is gathered from a sample of ten System X Local Exchanges and ten AXE10 Local Exchanges analysed into whether the record type is Select Service driven or not. Only RT22s make use of the Concentrator Duration element of the switch assets and the fraction of these compared to the total (RT21+RT22+RT29) are used to determine the relative use of the Concentrator for Select Services. RT34s are ignored in this calculation on the assumption that the Select Services to ordinary calls without Select Services is in the same ratio for ISDN as for Analogue calls. Billing records are generated only for outgoing calls and therefore do not represent all of the concentrator call setup capacity. 164

165 The total amount of Select Service related concentrator usage is further refined relative to the quantity of Originating Calls and Own Exchange Calls in relation to the total which also includes Call Terminating and Call Originating. The final weighted concentrator usage percentage for Select Services is then applied to the PG cost. This is further split into Select Services relating to Wholesale and Retail by using volumes from ORBIT. The retail fraction is pointed at CO290 OR Network Features - external and the wholesale fraction at CO291 OR Network Features (Internal). The residual quantity of concentrator cost relating to Call Set-Up is pointed to CO215 LE Concentrator Duration. The PG contains both Capital and Maintenance costs. Billing Records. ORBIT PG300T PG301T PG311T, PG313T, PG315T, PG321T, PG323T, PG325T, PG331T, PG333T, PG335T, PG341T, PG343T, PG345T, PG351T, PG353T, PG355T, PG359T, PG381T, PG383T, PG385T PPC Point of Handover This Plant Group (PG) captures costs and balance sheet associated with providing customer sited point of handover equipment. Allocates 100% to the Point of Handover Electronics component CO379. SDH Tier Equipment This Plant Group (PG) captures depreciation costs and asset values of the link element of Global Backhaul bearers. Bearers provide the transmission capability for the circuits that support BT s Products. Global Backhaul bearers are at Tier 0 (zero) in the core transmission network. This tier is associated with international circuits between Digital International Switching Centres (DISCs) and Satellite earth stations as well as international private circuits. Allocates 100% to the ISC to Frontier Link component CB367. SDH Tier Equipment These Plant Groups (PGs) capture the depreciation, maintenance and other overhead (e.g. accommodation) costs and asset values associated with the link elements of SDH and MSH (Marconi Synchronous Hierarchy) bearers. SDH and MSH are types of technology that form part of BT s Core Transmission network. Combinations of these assets (i.e. two bits of electronics joined by fibre and duct) make up what is known as a bearer. The bearers within the network carry circuits that relate to different products and bandwidths. More detail can be found in Section 9 Data Sources under CTCS (Core Transmission Costing System). PGs exist to differentiate the different tiers of bearers in the network and their transmission rate. Tier 0 is the highest level in the network, intended to handle international traffic. Tier 1 is the long haul intricate or backbone network. It consists of 4/1 and 4/4 cross connect switches. A cell or Supercell is an additional ring between Tiers 1 and 2. Tier 2 is the Regional network linking important cities and local towns. Every Tier 2 ring is dual parented on two separate Tier 1 nodes. Tier 3 is the level used for Booster schemes. Tier 4 is the access network for SDH Customers. MSH is the high capacity platform to cater for traffic at 140Mbit/s and above. SDH bearers have various transmission rates as indicated by the Synchronous Transport Module (STM). STM1 155Mbit/s. [MSH STM1 Equipment] STM4 622Mbit/s. STM Gbit/s. [MSH STM16 Equipment] STM64 10Gbit/s. [MSH STM64 Equipment] 165

166 The costs and asset values on these PGs are allocated to network components (circuits) based on how the circuits use the bandwidth of a bearer. The relationship between circuits and bearers is held in CTCS. Extracts from CTCS give us the data required to derive an allocation, specifically: The bearer equipment that a circuit Hits along its route. The factored volumes (reflecting relative usage of capacity) of the circuit segments carried by a bearer together with the length of these segments. In general a bearer can support many circuits. The cost of an individual bearer is therefore apportioned across all the segments of circuits carried by the bearer. The apportionment of cost is based on a factored volume which is calculated by factoring the raw volume (circuit-bearer equipment hits) figure by a usage factor: The usage factor is the proportion of the total bandwidth of a bearer used by a circuit. For example a 155Mbit/s SDH bearer can support 63 2Mbit/s circuits, 3 34Mbit/s circuits or a single 155Mbit/scircuit so a 2Mbit/s circuit would have a usage factor of one 63rd of a 155Mbit/s bearer whereas a 34Mbit/s circuit would have a usage factor of a third. PG341T, PG343T and PG345T relate to the Tier 4 bearers and need to be split between both Core and Access components. However in CTCS we only see the data for Core components. To calculate the split between the Core and Access elements we the use the output of the PDTSDH. To derive an appropriate allocation to Access components we take the PG to Component data from the Access Rentals model. This is to allocate the costs of electronics in the last serving exchange to the Local end component. CTCS data for Period 6. Management believes this Period to be reflective of the full year. For PG341T, PG343T and PG345T we also use output from PDTSDH base and Access Rentals model. PG350N PG361T, PG365T, PG367T, PG371T, PG373T, PG375T, PG377T, PG379T, PG399T Core Fibre This Plant Group (PG) captures the depreciation costs and asset values of the core length elements of the bearers in BT s Core Transmission network. Combinations of assets in the transmission network (i.e. two bits of electronics joined by fibre and duct) make up what is known as a bearer. The bearers within the network carry circuits that relate to different products and bandwidths. More detail can be found in Section 9 Data Sources under CTCS (Core Transmission Costing System). The costs and asset values on these PGs are allocated to network components (circuits) based on how the circuits use the different bearers. The relationship between circuits and bearers is held in CTCS. Extracts from CTCS give us the total length of fibre used by the circuits over each bearer. CTCS data for Period 6. Management believes this Period is reflective of the full year. Plesiochronous Digital Hierarchy (PDH) Bearer Link These Plant Groups (PGs) capture the depreciation, maintenance and other overhead costs and asset values of the link elements of PDH bearers. Bearers provide the transmission capability for the circuits that support BT s Products. PDH technology forms part of BT s Core Transmission network. Combinations of assets in the transmission network (i.e. two bits of electronics joined by fibre and duct) make up what is known as a bearer. The bearers within the network carry circuits that relate to different products and bandwidths. More detail can be found in Section 9 Data Sources under CTCS (Core Transmission Costing System). PDH bearers have various transmission rates and can use an optical or metallic path. The variations are represented in by the different PGs. 2Mbit/s. [PDH Metal and PDH Optical] 8Mbit/s. [PDH Optical] 34Mbit/s. [PDH Metal and PDH Optical] 140Mbit/s. [PDH Metal and PDH Optical] 166

167 565Mbit/s. [PDH Optical] The costs and asset values on these PGs are allocated to network components (circuits) based on how the circuits use the bandwidth of a bearer. The relationship between circuits and bearers is held in CTCS. Extracts from CTCS give us the data required to derive an allocation, specifically: The bearer equipment that a circuit Hits along its route. PG391T, PG393T, PG395T PG400T The factored volumes (reflecting relative usage of capacity) of the circuit segments carried by a bearer together with the length of these segments. In general a bearer can support many circuits. The cost of an individual bearer is therefore apportioned across all the segments of circuits carried by the bearer. The apportionment of cost is based on a factored volume which is calculated by factoring the raw volume (circuit-bearer equipment hits) figure by a usage factor: The usage factor is the proportion of the total bandwidth of a bearer used by a circuit. For example a 155Mbit/s SDH bearer can support 63 2Mbit/s circuits, 3 34Mbit/s circuits or a single 155Mbit/s circuit so a 2Mbit/s circuit would have a usage factor of one 63rd of a 155Mbit/s bearer whereas a 34Mbit/s circuit would have a usage factor of a third. CTCS Database for Period 6 Management believes this Period to be reflective of the full year. Plesiochronous Digital Hierarchy (PDH) Radio Bearer Link These Plant Groups (PGs) capture the depreciation costs and asset values of the link elements of PDH Radio bearers. Radio Bearers provide the core microwave radio transmission capability for the circuits that support BT s Products.Radio bearers are predominantly used for high capacity, city to city routes (e.g. London to Birmingham) and in inaccessible areas (such as remote parts of Scotland). PDH Radio bearers have various transmission rates which are represented by the different PGs: 8Mbit/s. 34Mbit/s. 140Mbit/s. The costs and asset values on these PGs are allocated to network components (circuits) based on how the circuits use the bandwidth of a bearer. The relationship between circuits and bearers is held in CTCS. Extracts from CTCS give us the data required to derive an allocation, specifically: The bearer equipment that a circuit Hits along its route. The factored volumes (reflecting relative usage of capacity) of the circuit segments carried by a bearer together with the length of these segments. In general a bearer can support many circuits. The cost of an individual bearer is therefore apportioned across all the segments of circuits carried by the bearer. The apportionment of cost is based on a factored volume which is calculated by factoring the raw volume (circuit-bearer equipment hits) figure by a usage factor: The usage factor is the proportion of the total bandwidth of a bearer used by a circuit. For example a 155Mbit/s SDH bearer can support 63 2Mbit/s circuits, 3 34Mbit/s circuits or a single 155Mbit/s circuit so a 2Mbit/s circuit would have a usage factor of one 63rd of a 155Mbit/s bearer whereas a 34Mbit/s circuit would have a usage factor of a third. CTCS data for Period 6. Management believes this Period to be reflective of the full year. ACE (Access Control Equipment) / ENA (Equipment Network Access) Core Equipment This Plant Group (PG) captures the network transmission costs associated with ACE/ENA core equipment. This equipment is used to supply Kilostream. 167

168 Types of cost include depreciation, stores and pay costs. Allocates 100% to the PC Rental 64Kbit/s Link per link component CO381. Allocates directly, no data source/s required. PG401A PG405A PG407A PG408A NetStream Equipment This Plant Group (PG) captures the costs associated with NetStream. NetStream is a Retail Product offering that enables mobile network operators (MNOs) to backhaul their traffic from their cell sites (satellite sites) to their core networks (at major customer sites). Costs are allocated 100% to the Netstream equipment component CO401. DMS100 Call Centre Switches This Plant Group (PG) captures the equipment costs associated with DMS100 Call Centre Switches. The DMS100 (Digital Multiplexer System) is a digital facility that processes OA (Operator Assistance) telephone calls. Allocates 100% to the DMS100 component CO405. Carrier Pre Selection (CPS) Operator Set-Up This Plant Group (PG) captures the cost of CPS Operator Set Up. CPS allows customers to select to have certain call types carried by another network operator. Allocates 100% to the Carrier Pre Selection operator set-up component CO407. Carrier Pre Selection customer set-up This Plant Group (PG) captures the cost of CPS Customer Set Up. CPS allows customers to select to have certain call types carried by another network operator. Allocates 100% to the CPE CSE component CO

169 PG411C PG411P PG412M PG412P PG413P PG414M Analogue Private Circuit Equipment This Plant Group (PG) captures the capital cost of dedicated plant associated with Private Analogue Circuits and allied specialised applications. Allocates 100% to the OR PC Rental Analogue local end component CO431. Analogue Private Circuit Connections This Plant Group (PG) captures the connection costs of providing analogue circuits for National Business Customers. The work takes place primarily within the transmission network. Allocates 100% to the Analogue PC link Connection circuit provision component CO411. Local End Equipment 64kit/s Repair This Plant Group (PG) captures the maintenance costs associated with 64Kbit/s (Kilostream) private circuits. Allocates 100% to the PC rentals 64Kbit/s local end component CO Kbit/s Private Circuit Connections This Plant Group (PG) captures the connection costs of providing Kilostream circuits. The work takes place primarily within the transmission network and includes provision of private circuits. Costs are apportioned to components CO Kbit/s link connection circuit provision and CO418 OR PC rearrangement 64 Kbit/s based on volumes of each activity from Powerhouse and COSMOSS. Powerhouse and COSMOSS. Private Circuits MegaStream and IX Conns This Plant Group (PG) captures the connection costs of providing 2 MegaStream circuits of 2Mbit/s or higher bandwidth based circuits. The work takes place primarily within the transmission network and includes re-arrangement and transfers. Costs from this PG are apportioned to components based on a price-weighted volume of circuits provided during the year. The volumes are sourced from Powerhouse and Customer Oriented System for the Management of Special Services (COSMOSS) and prices from the Carrier Price List. The price-weighting takes into account the difference in providing a connection with that of carrying out a re-arrangement or a transfer. From these price-weighted volumes usage factors are calculated and applied. IX Vols / Prices from BTW Interconnect Revenue and related Pay Costs download from CID. Analogue international leased line Current This Plant Group (PG) captures the maintenance costs associated with Private Circuits International Analogue International Private Leased Circuit (IPLC). Allocates 100% to the Analogue international leased line component CO

170 PG415M PG421S PG422S PG426S PG440C Private Circuits International Digital IPLC Current This Plant Group (PG) captures current costs associated with Private Circuits International Digital International Private Leased Circuit (IPLC). Allocates 100% to the Digital IPLC component CO414. Private Circuits Analogue Installation This Plant Group (PG) captures the connection costs in providing and rearranging analogue circuits.. Allocates 100% to the OR Analogue PC installation component CO421. Private Circuits Analogue Installation This Plant Group (PG) captures the connection costs in providing and rearranging KiloStream circuits. Costs are apportioned to components CO417 64Kbit/s link connection circuit provision and CO418 OR PC rearrangement 64Kbit/s based on volumes of each activity from Powerhouse and COSMOSS. Powerhouse and COSMOSS. Private Circuit Access Lines Installation This Plant Group (PG) captures costs associated with Private Circuit Access Line Installation. Allocates 100% to the OR Analogue PC installation component CO421. Local End Equipment ASDH 4x2Mbit/s Equipment This Plant Group (PG) captures the depreciation costs for ASDH 4x2 Bearer/Line systems, that is, electronics equipment for a Bearer/Line System capacity of 4x2Mbit/s. The attribution of the PG costs to components is based on the number of circuits of different types that are carried over bearers that use these Bearer/Line Systems. These 4x2 bearers are used in the provision of 2Mbit/s private circuits, interconnection circuits, PPCs (Partial Private Clients) and SMDS (Switched Multimegabit Data Services). Each of these circuit types has its own component and the PG costs are attributed to them based on the circuit count using CTCS data. The data source for the number of circuits is the CTCS for Period 6. Management believes this period to be reflective of the full year. 170

171 PG440M PG441C PG441M PG442C Local End Equipment ASDH 4x2Mbit/s Maintenance This Plant Group (PG) captures the costs associated with maintenance of ASDH 4x2 Line systems, i.e. electronics equipment that can carry up to 4x2Mbit/s bearers. The attribution of the PG costs to components is based on the number of circuits of different types that are carried over bearers that use these line systems and follows the attribution of the Capital costs (PG440C). This assumes that a line system with only (for example) private circuits connected to it has the same maintenance profile as the same line systems with only (for example) interconnect circuits. This assumption is consistent with BT s actual experience of maintenance in this area. Local End Equipment ASDH 16x2Mbit/s Equipment This Plant Group (PG) captures the depreciation costs for ASDH 16x2 Bearer/Line systems, electronics equipment for a Bearer/Line System capacity of 16x2Mbit/s. Types of cost include depreciation, stores and pay costs. The attribution of the PG costs to components is based on the number of circuits of different types that are carried over bearers that use these Bearer/Line Systems. These line systems are used in the provision of 2Mbit/s private circuits, interconnection circuits, PPCs (Partial Private Clients) and SMDS (Switched Multimegabit Data Services) and the PG costs are therefore attributed to the components that are used in the provision of these services. Core Transmission Circuit costing System (CTCS) is a circuit inventory system, which holds a count of the number of each circuit type that utilises each equipment type. In this case, it records the number of the above circuit types that use 16x2 line systems. The data source for the number of circuits is CTCS for Period 6 Management believes this period to be reflective of the full year. Local End Equipment ASDH 16x2Mbit/s Maintenance This Plant Group (PG) captures the costs associated with maintenance of ASDH 16x2 Line systems, i.e. electronics equipment that can carry up to 16x2Mbit/s bearers. The attribution of the PG costs to components is based on the number of circuits of different types that are carried over bearers using these line systems and follows the attribution of the Capital costs (PG441C). This methodology assumes that a line system with only (for example) private circuits connected to it has the same maintenance profile as the line systems with only (for example) interconnect circuits. Core Transmission Circuit costing System (CTCS) for Period 6. Management believes this period to be reflective of the full year. Local End Equipment 2Mbit/s (Copper) Equipment This Plant Group (PG) captures the depreciation costs for 2Mbit/s copper Bearer/Line systems, i.e. electronics equipment that supports 2Mbit/s circuits carried over copper pairs. The circuits are almost wholly 2Mbit/s private circuits, but there is a small number of interconnect circuits carried over copper. The attribution of the PG costs to components is based on the number of circuits of each type that is carried over bearers that use these line systems. Total 2Mbit/s circuit over copper volumes are obtained from Powerhouse. The number of interconnect circuits is also taken from Powerhouse, which records the number of such circuits, however the number of these circuits travelling over copper is calculated separately. To do this Core Transmission Circuit costing System (CTCS) 171

172 data is used to determine the split of circuits going over copper, fibre and radio. This percentage is then applied to the Powerhouse total 2Mbit/s circuit volume to determine the number of interconnect circuits using 2Mbit/s copper Bearer/line systems. The PG costs are then attributed to components pro-rata to these volumes. This is illustrated below. Determine interconnect volumes: From Powerhouse: Total number of circuits carried over copper, X. From CTCS: Total number of Interconnect circuits carried over copper, Y. Therefore percentage of circuits carried over copper represented by interconnect circuits = Y / X = Z%. Determine split of Powerhouse volumes between interconnect and private circuits: Take total volume of 2Mbit/s circuits over copper = A. Determine volume of interconnect circuits = A x Z% = B. Then volume of 2Mbit/s private circuits = A B. Powerhouse volumes and CTCS data - Period 6. Management believes this period to be reflective of the full year. PG442M PG443C Local End Equipment 2Mbit/s (Copper) Maintenance This Plant Group (PG) captures the maintenance costs for 2Mbit/s copper Bearer/Line systems, i.e. electronics equipment that supports 2Mbit/s circuits carried over copper pairs. The circuits are almost wholly 2Mbit/s Private Circuits, but there is a small number of interconnect circuits carried over copper The attribution of the PG costs to components is based on the number of circuits of different types that are carried over bearers that use these line systems and follows the attribution of the Capital costs (see PG442C). This assumes that a line system with only (for example) private circuits connected to it has the same maintenance profile as the line systems with only (for example) interconnect circuits. This assumption is consistent with BT s actual experience of maintenance in this area. Powerhouse volumes and Core Transmission Circuit costing System (CTCS) data for Period 6. Management believes this period to be reflective of the full year. Local End Equipment 2Mbit/s (Fibre) Equipment This Plant Group (PG) captures the depreciation costs for 2Mbit/s Bearer/Line systems i.e. electronics equipment that supports 2Mbit/s circuits carried over fibre. The attribution of the PG costs to components is based on the number of circuits of different types that are carried over bearers that use these line systems. As PG443C covers both 2Mbit/s and 4x2Mbit/s circuits the volume of each type of circuit is weighted by the cost of the relevant electronics. These line systems are used in the provision of 2Mbit/s private circuits, interconnection circuits, PPCs (Partial Private Circuits) and SMDS (Switched Multimegabit Data Services) and the PG costs are therefore attributed to the components that are used in the provision of these services. The data source for the number of circuits is Core Transmission Circuit costing System (CTCS). In summary, this is a circuit inventory system, which holds a count of the number of each of circuit type that utilises each equipment type. In this case, it records the number of the above circuit types that use 2Mbit/s line systems. 172

173 The data source for the number of circuits is CTCS. Circuit numbers are based on Period 6 and are believed by management to be representative of the full year. PG443M PG444C Local End Equipment 2Mbit/s (Fibre) Maintenance This Plant Group (PG) Captures the maintenance costs for 2Mbit/s Bearer/Line systems i.e. electronics equipment that supports 2Mbit/s circuits carried over fibre. The attribution of the PG costs to components is based on the number of circuits of different types that are carried over bearers that use these line systems. These line systems are used in the provision of 2Mbit/s private circuits, interconnection circuits, PPCs (Partial Private Clients) and SMDS (Switched Multimegabit Data Services) and the PG costs are therefore attributed to the components that are used in the provision of these services. This base follows the attribution of the Capital costs (see PG443C). This assumes that a line system with only (for example) private circuits connected to it has the same maintenance profile as the same line systems with only interconnect circuits (for example). This assumption is consistent with BT s actual experience of maintenance in this area. The data source for the number of circuits is Core Transmission Circuit costing System (CTCS). In summary, this is a circuit inventory system, which holds a count of the number of each of circuit type that utilises each equipment type. In this case, it records the number of the above circuit types that use 2Mbit/s line systems. The data source for the number of circuits is CTCS. Circuit numbers are based on Period 6 and are believed by management to be representative of the full year. Local End Equipment 34Mbit/s Equipment This Plant Group (PG) Captures the depreciation costs for 34Mbit/s Bearer/Line systems i.e. electronics equipment on which circuits with a bandwidth of up to and including 34Mbit/s can travel over. The attribution of the PG costs to components is based on the number of bandwidth specific circuits that are carried over 34Mbit/s bearers/line Systems. These line systems are used to provide a medium for the circuits to travel over and the PG costs are therefore attributed to the components that are used in the provision of these services. The data source for the number of circuits is Core Transmission Circuit costing System (CTCS). In summary, this is a circuit inventory system, which holds a count of the number of each of circuit type that utilises each equipment type. In this case, it records the total number of the above circuit types that use 34Mbit/s line systems. Circuits for 34Mbit/s and above are taken from CTCS circuit volumes, whereas the 2Mbit/s volumes are derived from the balance of total bearer volumes less the volume of 34Mbit/s and above circuits. However, it is necessary to take into account the different capacity utilisation of each circuit. A 34Mbit/s line system can support 1x34Mbit/s circuit or 16x2Mbit/s circuits. So for example the number of 2Mbit/s circuits is therefore weighted by a factor of 16, to reflect the capacity utilisation, and express the number of 2Mbit/s circuits in terms of their 34Mbit/s equivalent. CTCS. The circuit numbers are based on Period 6 and are believed by management to be representative of the full year. 173

174 PG444M PG445C PG445M Local End Equipment 34Mbit/s Maintenance This Plant Group (PG) captures the maintenance costs for 34Mbit/s Bearer/Line systems i.e. electronics equipment that supports 34Mbit/s circuits carried over fibre. The attribution of the PG costs to components is based on the number of circuits of different types that are carried over bearers that use these line systems and follows the attribution of the capital costs (see PG444C). This assumes that a line system with only (for example) 2Mbit/s private circuits connected to it has the same maintenance profile as the same line system with only (for example) 34Mbit/s circuits. This assumption is consistent with BT s actual experience of maintenance in this area. The data source for the number of circuits is Core Transmission Circuit costing System (CTCS). In summary, this is a circuit inventory system, which holds a count of the number of each of circuit type that utilises each equipment type. In this case, it records the total number of the above circuit types that use 34Mbit/s line systems. Circuits for 34Mbit/s and above are taken from CTCS circuit volumes, whereas the 2Mbit/s volumes are derived from the balance of total bearer volumes less the volume of 34Mbit/s and above circuits. However, it is necessary to take into account the different capacity utilisation of each circuit. A 34Mbit/s line system can support 1x34Mbit/s circuit or 16x2Mbit/s circuits. So for example the number of 2Mbit/s circuits is therefore weighted by a factor of 16, to reflect the capacity utilisation, and express the number of 2Mbit/s circuits in terms of their 34Mbit/s equivalent. CTCS. The circuit numbers are based on Period 6 and are believed by management to be representative of the full year. Local End Equipment 140Mbit/s Equipment This Plant Group (PG) captures the depreciation costs for 140Mbit/s Bearer/Line systems i.e. electronics equipment on which circuits with a bandwidth of up to and including 140Mbit/s can travel over. The attribution of the PG costs to components is based on the number of bandwidth specific circuits that are carried over 140Mbit/s bearers/line Systems. These line systems are used to provide a medium for the circuits to travel over and the PG costs are therefore attributed to the components that are used in the provision of these services. The data source for the number of circuits is Core Transmission Circuit costing System (CTCS). In summary, this is a circuit inventory system, which holds a count of the number of each of circuit type that utilises each equipment type. In this case, it records the total number of the above circuit types that use 140Mbit/s line systems. Circuits for 34Mbit/s and above are taken from CTCS circuit volumes, whereas the 2Mbit/s volumes are derived from the balance of total bearer volumes less the volume of 34Mbit/s and above circuits. However, it is necessary to take into account the different capacity utilisation of each circuit. A 140Mbit/s line system can support one 140Mbit/s circuit or four 34Mbit/s circuits, or 63 2Mbit/s circuits, or some Combination of 34 and 2Mbit/s circuits. The number of 2Mbit/s interconnect circuits is therefore weighted by a factor of 63, to reflect the capacity utilisation, and express the number of 34Mbit/s circuits in terms of their 140Mbit/s equivalent. Similarly, the number of 34Mbit/s circuits is weighted by a factor of four. CTCS. The circuit numbers are based on Period 6 and are believed by management to be representative of the full year. Local End Equipment 140Mbit/s Maintenance This Plant Group (PG) captures the maintenance costs for 140Mbit/s Bearer/Line systems i.e. electronics equipment that supports 140Mbit/s circuits carried over fibre. The attribution of the PG costs to components is based on the number of circuits of different types that are carried over bearers that use these line systems and follows the attribution of the Capital costs (see PG445C). This assumes that a line system with only 2Mbit/s private circuits connected to it has the same maintenance profile as the same 174

175 line system with only 34Mbit/s circuits. This assumption is consistent with BT s actual experience of maintenance in this area. The data source for the number of circuits is Core Transmission Circuit costing System (CTCS). In summary, this is a circuit inventory system, which holds a count of the number of each of circuit type that utilises each equipment type. In this case, it records the total number of the above circuit types that use 140Mbit/s line systems. Circuits for 34Mbit/s and above are taken from CTCS circuit volumes, whereas the 2Mbit/s volumes are derived from the balance of total bearer volumes less the volume of 34Mbit/s and above circuits. However, it is necessary to take into account the different capacity utilisation of each circuit. A 140Mbit/s line system can support 1 140Mbit/s circuit or four 34Mbit/s circuits, or 63 2Mbit/s circuits, or some Combination of 34 and 2Mbit/s circuits. The number of 2Mbit/s interconnect circuits is therefore weighted by a factor of 63, to reflect the capacity utilisation, and express the number of 34Mbit/s circuits in terms of their 140Mbit/s equivalent. Similarly, the number of 34Mbit/s circuits is weighted by a factor of four. The data source for the number of circuits is CTCS. The circuit numbers are based on Period 6 and are believed by management to be representative of the full year. PG446C PG446M Local End Equipment 622Mbit/s Equipment This Plant Group (PG) captures the costs for 622Mbit/s Bearer/Line systems i.e. electronics equipment on which circuits with a bandwidth of up to and including 622Mbit/s can travel over. The attribution of the PG costs to components is based on the number of bandwidth specific circuits that are carried over 622Mbit/s bearers/line Systems. These line systems are used to provide a medium for the circuits to travel over and the PG costs are therefore attributed to the components that are used in the provision of these services. The data source for the number of circuits is Core Transmission Circuit costing System (CTCS). In summary, this is a circuit inventory system, which holds a count of the number of each of circuit type that utilises each equipment type. In this case, it records the total number of the above circuit types that use 622Mbit/s line systems. Circuits for 34Mbit/s and above are taken from CTCS circuit volumes, whereas the 2Mbit/s volumes are derived from the balance of total bearer volumes less the volume of 34Mbit/s and above circuits. However, it is necessary to take into account the different capacity utilisation of each circuit. A 622Mbit/s line system can support one 622Mbit/s circuit, four 140Mbit/s circuits, 16 34Mbit/s circuits, or 252 2Mbit/s circuits, or some Combination of 140, 34 and 2Mbit/s circuits. The number of 2Mbit/s interconnect circuits is therefore weighted by a factor of 252, to reflect the capacity utilisation, and express the number of these circuits in terms of their 622Mbit/s equivalent. Similarly, the number of 140Mbit/s circuits is weighted by a factor of four and the number of 34Mbit/s circuits is weighted by a factor of 16. The data source for the number of circuits is CTCS. The circuit numbers are based on Period 6 and are believed by management to be representative of the full year. Local End Equipment 622Mbit/s Maintenance This Plant Group (PG) captures the maintenance costs for 622Mbit/s Bearer/Line systems, electronics equipment that supports 622Mbit/s circuits carried over fibre. The attribution of the PG costs to components is based on the number of circuits of different types that are carried over bearers that use these line systems and follows the attribution of the capital costs (see PG446C). This assumes that a line system with only (for example) 2Mbit/s private circuits connected to it has the same maintenance profile as the same line system with only (say) 34Mbit/s circuits. This assumption is consistent with BT s actual experience of maintenance in this area. The data source for the number of circuits is Core Transmission Circuit Costing System (CTCS). In summary, this is a circuit inventory system, which holds a count of the number of each of circuit type that utilises each equipment type. In this case, it records the total number of the above circuit types that use 622Mbit/s line systems. Circuits for 34Mbit/s and above are taken from CTCS circuit volumes, whereas the 2Mbit/s volumes are derived from the balance of total bearer volumes less the volume of 34Mbit/s 175

176 and above circuits. However, it is necessary to take into account the different capacity utilisation of each circuit. A 622Mbit/s line system can support 1 622Mbit/s circuit, 4 140Mbit/s circuits, 16 34Mbit/s circuits, or 252 2Mbit/s circuits, or some Combination of 140, 34 and 2Mbit/s circuits. The number of 2Mbit/s interconnect circuits is therefore weighted by a factor of 252, to reflect the capacity utilisation, and express the number of these circuits in terms of their 622Mbit/s equivalent. Similarly, the number of 140Mbit/s circuits is weighted by a factor of 4 and the number of 34Mbit/s circuits is weighted by a factor of 16. CTCS. The circuit numbers are based on Period 6 and are believed by management to be representative of the full year. PG447A PG448A PG448L PG461A PG462A Ethernet Access Equipment This Plant Group (PG) captures costs associated with the dedicated plant connected with the SHDS Products and is wholly assigned to the SHDS components. Where customers are using Local Area Networks (LAN) to access and exchange data at one site, SHDS Products enables them to extend the LAN to other sites. Allocates 100% to Ethernet electronics CO485. CCTV Rental This Plant Group (PG) captures costs associated with the rental of CCTV circuits. Allocates 100% to the Ethernet electronics component CW617. CCTV Connection This Plant Group (PG) captures costs associated with the connection of CCTV circuits. Allocates 100% to the Ethernet electronics component CW619. Private Circuits Test and Maintenance System This Plant Group (PG) captures the costs associated with Private Circuit maintenance and testing work carried out in the Work Manager Control Centres. It includes jeopardy management of jobs, Work Manager Helpdesk and administration costs. Allocates 100% to the Private Circuit test system component CO461. Private Circuits Customer Premises This Plant Group (PG) captures the cost of dealing with Private Circuit maintenance and faulting work in customer premises on analogue private circuits and access lines. Allocates 100% to the Openreach Private Circuit Customer Premises component CO

177 PG463A PG483A PG502B PG504B PG505A PG506N Private Circuits Testing This Plant Group (PG) captures the cost of dealing with Private Circuit maintenance and testing carried out in the Work Manager Control Centres. It includes jeopardy management of jobs, Work Manager Helpdesk and administration costs. It also captures the cost of time spent by exchange maintenance people in co-operation with field people for line test in order to localise a fault. Allocates 100% to the Openreach Private Circuit Testing component CO463. Flexible Bandwidth Services (FBS) This Plant Group (PG) captures the costs associated with the FBS product. The FBS product offers a flexible private virtual network providing the customer with both re-routing, on demand, to pre-determined destinations and band width flexibility within agreed limits. Allocates 100% to the Flexible Bandwidth Services component CO483. SG&A Openreach Sales Product Management This Plant Group (PG) captures the Profit and Loss (Current non-etg Pay) and Balance Sheet (Fixed Asset, Gross Book Value (GBV) costs associated with Organisational Unit Code (OUC) BP. BP is the Sales and Product Management division of Openreach. As the various sub-teams support specific services, their costs cannot be spread on a Direct pay or revenue basis. Allocates 100% to the Sales product management component CP502. Number Portability Operational Management This Plant Group (PG) captures the cost and balance sheet associated with Organisational Unit Code (OUC) BM. BM is the Service division of Openreach. The teams within BM are primarily call centre based, with staff supporting the provisioning and repair of Openreach services. This facility enables a telephone customer to retain their phone number if they switch to another CP. Allocates 100% to the Number Portability Set-up costs component CO732. Selling, General and Administration (SG&A) Private Circuits This Plant Group (PG) captures the cost and balance sheet of the SG&A activity in BT Wholesale supporting Private Circuits. Costs from this plant group are allocated 100% to the SG&A Private Circuits component CO505. SG&A PPC (Wholesale) This Plant Group (PG) captures the cost and balance sheet of the SG&A activity in BT Wholesale supporting PPCs. Costs from this plant group are allocated 100% to the SG&A partial private circuits component CO

178 PG511M PG511P Interconnect OCP Maintenance This Plant Group captures the costs and balance sheet associated with Interconnecting with OCPs for building activity. Allocates 100% to the Intra Building Circuit (IBC) rental component CR470. Interconnect OCP Provision This Plant Group (PG) captures provision costs specific to Interconnect Operational Capacity Planning (OCP) circuits. Interconnect OCP circuits are circuits which connect the BT Network to the networks of Other Communications Providers. Allocates to the Interconnect 2Mbit/s connections component CR453 and Interconnect IBC 2Mbit/sit connection CR469 based on the relative connection volumes of each. Wholesale Customer Reporting System (WCR). PG512A PG561A PG570B PG571B SG&A Calls This Plant Group (PG) captures the costs incurred by BT in servicing and supporting the Interconnect market. The primary unit concerned is BT Wholesale Products with minor contributions from the rest of BT Wholesale. Costs from this plant group are allocated 100% to the PPP component CO512. Interconnect Outpayments International This Plant Group (PG) captures cost of outpayments to overseas carriers. Allocates 100% to the Interconnect outpayments overseas component CB561. OR Service Centre Provision Analogue/ISDN2 This Plant Group (PG) captures the cost and balance sheet of Service Centres for the Provision of Wholesale Line Rental (WLR) and ISDN2. Allocates 100% to the OR Service Centre - Provision Analogue/ISDN2 CL570. OR Service Centre Provision ISDN30 This Plant Group (PG) captures the cost and balance sheet Service Centre for the Provision of Wholesale Line Rental ISDN30. Allocates 100% to the OR Service Centre - Provision WLR ISDN30 CL

179 PG572B PG573B PG574B PG575B PG576B PG577B PG578B OR Service Centre Provision LLU This Plant Group (PG) captures the cost and balance sheet Service Centre for the Provision of Wholesale Line Rental (WLR) Local Loop Unbundling. Allocates 100% to the OR Service Centre - Provision WLA CL572. OR Service Centre Provision Ethernet This Plant Group (PG) captures the cost and balance sheet Service Centre for the Provision of Wholesale Line Rental Ethernet. Allocates 100% to the OR Service Centre - Provision AISBO CL573. OR Service Centre Provision NGA This Plant Group (PG) captures the cost and balance sheet Service Centre for the Provision of Next Generation Access (NGA). Allocates 100% to the OR Service Centre - Provision NGA CL574. OR Service Centre Assurance WLR PSTN/ISDN2 This Plant Group (PG) captures the cost and balance sheet Service Centre for the Assurance Wholesale Line Rental (WLR) PSTN/ISDN2. Allocates 100% to the OR Service Centre - Assurance Analogue/ISDN2 CL575. OR Service Centre Assurance WLR ISDN30 This Plant Group (PG) captures the cost and balance sheet Service Centre for the Assurance Wholesale Line Rental ISDN30. Allocates 100% to the OR Service Centre - Assurance WLR ISDN30 CL576. OR Service Centre Assurance LLU This Plant Group (PG) captures the cost and balance sheet of assurance LLU costs associated with Organisational Unit Code (OUC) BV. BV is the Service division of Openreach. The teams within BV are primarily call centre based, with staff supporting the provisioning and repair of Openreach services. As the various teams support specific services, their costs cannot be spread on a direct pay or revenue basis. Allocates 100% to the OR Service Centre - Assurance WLA CL577. OR Service Centre Assurance Ethernet This Plant Group (PG) captures the cost and balance sheet of assurance Ethernet. Allocates 100% to the OR Service Centre - Assurance Ethernet CL

180 PG579B PG580B PG583N PG584N PG585A PG586N PG590B PG591B OR Service Centre Assurance NGA This Plant Group (PG) captures the cost and balance sheet of Assurance Next Generation Access (NGA). Allocates 100% to the OR Service Centre - Assurance NGA CL579. Broadband Boost This Plant Group (PG) captures the Openreach engineering costs associated with Broadband Boost jobs. Broadband Boost is a solution to improving speed, quality and reliability of customer s Broadband service. Allocates 100% to the Broadband Boost component CO580. SG&A Wholesale Residual This Plant Group (PG) costs and balance sheet of the SG&A activity by BT Wholesale supporting unregulated products which will include Wholesale calls. Allocates 100% to the SG&A Wholesale residual component CO583. SG&A Wholesale Other This Plant Group (PG) captures the costs and balance sheet of the SG&A activity by BT Wholesale supporting unregulated products which will include Managed Wholesale Ethernet. Allocates 100% to the SG&A Wholesale other component CO584. SG&A downstream residual This Plant Group (PG) costs and balance sheet of the SG&A activity by BT Wholesale supporting unregulated downstream products. Products included in this category will include Agile Media and Media and Broadcast. Allocates 100% to the SG&A downstream residual component CO585. SG&A Interconnect This Plant Group (PG) costs and balance sheet of the SG&A activity by BT Wholesale supporting the Interconnect market. Allocates 100% to the SG&A Interconnect component CO586. LLU Service Level Guarantees External This Plant Group (PG) captures costs associated with External LLU SLG costs.. Allocates 100% to the Service Level Guarantees component CL590. LLU Service Level Guarantees Internal 180

181 This Plant Group (PG) captures costs associated with Internal LLU SLG costs.. Allocates 100% to the Service Level Guarantees Internal component CL591 PG599A PG609N PG622A PG622B PG651B PG653A Interconnect Outpayments Inland This Plant Group (PG) captures the cost of Interconnect payments made to Other Communication Providers (OCPs). Allocates 100% to the Interconnect POCPs component CB599. SG&A Broadband This Plant Group (PG) captures the costs and balance sheet of the SG&A activity by BT Wholesale supporting the Wholesale Broadband Access markets. Allocates 100% to the SG&A Broadband component CO609. Public Payphones Kiosks These Plant Groups (PG) captures the costs and balance sheet associated with the Openreach s maintenance of BT Retail Public Payphone kiosks. Allocates Openreach costs 100% to the component CF446. All other OUCs allocate 100% to CR446 Public Payphones Operations These Plant Groups (PG) captures the Profit and Loss (P&L) and Balance Sheet costs associated with the Openreach s maintenance of BT Retail Public Payphone kiosks. Costs from this Plant Group PG622B feed into the Public Payphones Operations component CF446 for Openreach only. Whereas retail costs point to PG622A which in turn point to CR446. Allocates Openreach costs 100% to the component CF446 and in turn to service SK987. All other OUCs allocate 100% to CR446. Number Portability Set-up Costs Operation and Maintenance Centre (OMC) Activities This Plant Group (PG) captures the OMC activity costs associated with Number Portability set-up. This facility enables a telephone customer to retain their phone number if they switch to another CP. Allocates 100% to the Number Portability Set-up costs component CO732. ATM Customer Interface 2Mbit/s Cards This Plant Group (PG) captures the cost of capital expenditure incurred from the deployment of 2Mbit/s Customer Interface Cards, namely, the cost of equipment provision, rearrangement or recovery. These costs fall within the ATM classes of work (CoW). This equipment is located in the ATM PoP (Point of Presence) at the edge of the ATM Network and links the customer's premises via a private circuit, to the ATM network. 181

182 Allocates 100% to the ATM customer interface 2Mbit/s components CO310. PG654A PG656A PG657A PG658A PG659A PG667A ATM Customer Interface 34Mbit/s Cards This Plant Group (PG) captures the cost of capital expenditure incurred from the deployment of 34Mbit/s Customer Interface Cards, namely, the cost of equipment provision, rearrangement or recovery. These costs fall within the classes of work (CoW). The types of cost include pay and stores costs. This equipment is located in the ATM PoP (Point of Presence) at the edge of the ATM Network and links the customer's premises via a private circuit, to the ATM network. Allocates 100% to the ATM customer interface 34Mbit/s components CO311. ATM Network Switching This Plant Group (PG) captures the cost of network switching ports deployed in the ATM platform. ATM is a high throughput packet switching protocol that provides statistical multiplexing, broadband (multimegabit) data rates, multiple virtual circuits per network access, and flexible bandwidth per connection. Allocates 100% to the ATM Network Switching component CO314. FrameStream Switch This Plant Group (PG) captures the cost of Frame relay equipment booked to the Asynchronous Transfer Mode (ATM) classes of work (CoW). This CoW falls within the ATMR asset policy code. The ATMR asset policy code captures the costs for all frame relay equipment. Frame relay equipment is a small network which works alongside the ATM. FrameStream/Frame Relay is a simple, cost effective, frame relay-based Virtual Private Network (VPN) solution that supports high-speed data and Internet Protocol (IP) connectivity in the UK and abroad. Allocates 100% to the FrameStream Switch component CO657. ATM Customer Interface >155Mbit/s Cards This Plant Group (PG) captures the cost of capital expenditure incurred from the deployment of 155Mbit/s and higher bandwidth Customer Interface Cards, namely, the cost of equipment provision, rearrangement or recovery. These costs fall within the ATM classes of work (CoW). ATM is a high throughput packet switching protocol that provides statistical multiplexing, broadband (multimegabit) data rates, multiple virtual circuits per network access, and flexible bandwidth per connection. Allocates 100% to the ATM customer interface > 155Mbit/s components CO312. ATM Network Interface Cards This Plant Group (PG) captures the cost of capital expenditure incurred from the deployment of Network Interface Cards, namely, the cost of equipment provision, rearrangement or recovery. These costs fall within the ATM classes of work (CoW). Types of cost include pay and stores pay. ATM is a high throughput packet switching protocol that provides statistical multiplexing, broadband (multimegabit) data rates, multiple virtual circuits per network access, and flexible bandwidth per connection. Allocates 100% to the ATM Network Interface component CO313. IP International Peering 182

183 This Plant Group (PG) captures the cost of: Gigabit Routers, connecting International transmission and peering links to USA, Europe. Gigabit Routers is a high bandwidth switch, used for switching Internet traffic. Links for World Wide Web (www) Products - anything that uses the Internet such as BTnet and WebPort. BTnet Dial IP service provides remote dial-in access to corporate networks so they can extend their Intranet and Extranet and offers Internet Service Providers (ISPs) with dial ports via BT s fully managed high speed dial network. Allocates 100% to the IP International Peering component CO667. PG668A PG669A PG670A PG671A IP Network Management This Plant Group (PG) captures the costs of IP Network Management including all the costs associated with Operational Support Systems (OSS) these are activities used to run the network and business. Typical activities that are part of OSS are taking a customer s order, configuring network components, logging and managing faults. The types of cost include pay and stores costs. Allocates 100% to the IP Network Management component CO668. IP Network Dial IP This Plant Group (PG) captures the cost of the following types of equipment: IP Dial Ports. Dial Ports connect Public Switched Telephone Network (PSTN) to IP Network. Dial Access Routers. Dial Access Routers connect Dial Ports into IP Network. Home Gateway Routers. Home Gateway Routers are customer specific e.g. ISP (Internet Service Provider). Allocates 100% to the IP Network Dial IP component CO669. IP Network Fixed Access This Plant Group (PG) captures the cost of the following types of equipment: BTnet Direct and Flex NTE (Network Terminal Equipment) Routers, which connect the customer to the BT Network. BTnet Access Routers, which connect the MSIP (Multi Services Intranet Platform) and Synchronous Digital Hierarchy (SDH) access to the IP Network at Colossus PoPs (Point of Presences). Allocates 100% to the IP Network Fixed Access component CO670. IP Network VPN This Plant Group (PG) captures the cost of the platform that delivers the following VPN products: Metro, Equip, and Internet Protocol (IP) Clear and Ethernet delivery services (e.g. Fusion and IP Clear). There are three main types of equipment in this platform: Provider Edge Routers, used to terminate customer ports. Provider Router, used to route traffic through network. Catalyst Switch, used to aggregates traffic into a Provider router. Allocates 100% to the IP VPN component CO

184 PG672A PG673A PG674A PG675A PG676A PG678A IP Network Broadband This Plant Group (PG) captures the cost of the following types of equipment: Remote Authentication Servers (RAS) (which connect Asymmetric Digital Subscriber Line (ADSL) users into IP cloud, for direct connection to the Internet Service Provider Home Gateways. Broadband Access Routers, which connect RAS into IP cloud. Broadband Service Provider Home Gateways. Allocates 100% to the IP Network Broadband component CO672. IP Network BT Intranet This Plant Group (PG) captures the cost of the Command Control Router Network (CCRN) or Information Network (inet). Command Control Router Network (CCRN) is a BT internal structure for the transport of management traffic. Allocates 100% to the IP Network BT Intranet component CO673. IP Core/Colossus This Plant Group (PG) captures the cost of: Gigabit Core Routers. Catalyst LAN (Local Area Network). Switches that aggregate and link router ports from the IP back bone core. Allocates 100% to the IP Core Node Equipment component CO674. IP VOIP Infrastructure VoIP is a method of transporting speech over the internet. This Plant Group (PG) captures the cost of the following types of equipment: Gigabit Routers - Gigabit Routers are high bandwidth switches, used for switching Internet traffic. Gateways and Access Routers are for transmitting voice over the IP Network. Costs include provision, extension, rearrangement and recovery of IP Networks by the Broadband and Data division in BT Wholesale. Allocates 100% to the VoIP Equipment component CO675. IP (Internet Protocol) Applications This Plant Group (PG) captures the cost of DNS (Domain Name Servers). DNS convert IP addresses into world wide web (www) format and vice versa. It also contains Radius Dial, Radius Broadband Servers, Mail and News servers. Allocates 100% to the IP Core Node Equipment component CO674. SIP servers 184

185 This Plant Group (PG) captures the cost of the SIP server equipment. SIP is a signalling protocol used for establishing sessions in an IP network. Allocates 100% to the IP SIP Server component CO678. PG722A PG771A Circuit Provision (CP) Digital Public Network This Plant Group (PG) captures the Profit and Loss (Engineering/non-Engineering Pay, Stores issues, Other payments) costs associated with the provision of transmission circuits for the digital Public Switched Telephony Network (PSTN). This transmission network consists of Remote Concentrator to Local Exchange, Local Exchange to Trunk/Tandem Exchange and Inter- Tandem/Trunk circuits. Costs are apportioned based on the number of PSTN transmission circuits provided, ceased and rearranged over the reporting period. This information is sourced from the Core Transmission Costing System (CTCS). CTCS provides a count of the number of PSTN transmission circuits provided, ceased and rearranged over the reporting period. For full year reporting this is based on the number of aforementioned circuit changes between September (Period 6) prior year and September current year. Special Applications Other Development This plant group (PG) captures provision of Microconnect equipment. Allocates 100% to the Development component CB782. PG772A PG823P Openreach Systems and Development (Product Specific) This Plant Group (PG) captures the cost of Research and Development (R&D) projects, undertaken by Technology Service & Operations on behalf of Openreach, that are specific to Products e.g. Local Loop Unbundling (LLU), Wholesale Line Rental (WLR) and Ethernet. Development projects can range from high-level strategy, down to operational and logistical development. Development project costs are apportioned according to the nature of the individual projects. PG772A (Openreach Systems and Development (Product Specific)) is for Openreach development projects that are specifically relate to Products. Analysis of the Fixed Asset Register (FAR) for CoW s COMPS and COMPG for Openreach Line of Business. Analysis of the Asset and Subgroup fields to ascertain which specific products e.g. Local Loop Unbundling (LLU)/Wholesale Line Rental (WLR)/Ethernet. the asset entry in the FAR relates to. Using the Current Year Depn field and the aforementioned mapping this is the driver to derive the allocation of PG772A to the relevant Components. Fixed Asset Register (FAR) for Class of Work COMPS & COMPG for Openreach BT Own Use Private Circuits This Plant Group (PG) captures those provision costs of BT own use private circuits, which can be identified directly from the ledger systems, along with associated overheads. Allocates 100% to the BT Own Use PC Provision component CO

186 PG855A Border Gateway and Signalling Firewall This Plant Group (PG) captures the Capital costs of the Border Gateway and Signalling Firewall costs contained within Metro Nodes. The Border Gateway provides a connectivity point or POSI (Point of Service interconnect) for Other Communication Providers (OCPs) into the 21CN network. Allocates 100% to the Border Gateway and Signalling Firewall component CN

187 PG856A PG857A PG858A PG859A PG860A CMASN ISDN2 Cards This Plant Group (PG) captures the Capital costs of ISDN2 contained within Multi Service Access Nodes (MSANs). Line cards are the electronic cards in the exchange that provide connectivity to the switch. Allocates 100% to the 21CN ISDN2 Cards component CN852. Copper MSAN Combi Cards Broadband element This Plant Group (PG) captures the capital costs of the Broadband element of ComboCards contained within Multi Service Access Nodes (MSANs). Line cards are the electronic cards in the exchange that provide connectivity to the switch. Allocates 100% to the Combi card broadband access component CN854. Copper MSAN Combi Cards Voice element This Plant Group (PG) captures the capital costs of the Voice element of Combo Cards contained within Multi Service Access Nodes (MSANs). Line cards are the electronic cards in the exchange that provide connectivity to the switch. Allocates 100% to the Combi card voice component CN853. Copper MSAN Control Access This Plant Group (PG) captures the capital costs of the control and common elements of a Copper Multi Service Access Node (MSAN) that are relevant to line cards. Line cards are the electronic cards in the exchange that provide connectivity to the switch. The control/common element of the Copper MSAN is exhausted to the line card components that are connected into a Copper MSAN. The basis of apportionment is the relative number of connections for each service driven by the total volumes for each of the relevant products currently in the network (both on legacy and 21C equipment). 21C migrated volumes are used to derive a split for Broadband and Voice to align with the Combi card split. Elsewhere, in this case the full volume of 21C In-Scope products are used. This is because the Combo card voice access connections capital was originally predicated for a full voice migration and is therefore regarded as a fixed element for voice access. The line card components that are recipients are: CN853 Combi card voice. CN854 Combi card broadband access. 21C Generic Cost Model and Group Volume forecast. Copper MSAN Control Transport This Plant Group (PG) captures the capital costs of the control and common elements of a MSAN that are relevant to the transport of calls or traffic through the switch. The control/common element of the Copper MSAN is exhausted to the traffic and calls components that utilize the Copper MSAN. The basis of apportionment is the contended relative bandwidth that the relevant products would consume if the total volume of relevant products currently in the network were migrated onto 21C equipment. That is ignoring whether the products have migrated to use the 21C network or not with the exception of Voice where migrated, the volume is used. 187

188 The traffic components that are recipients are: CN890 MSAN BB Access. CN861 MSAN POSI Link Voice. 21C Generic Cost Model, Group Volume Forecast. PG861A PG862A PG863A Copper MSAN ISDN30 cards This Plant Group (PG) captures the capital costs of ISDN30 contained within MSANs. Line cards are the electronic cards in the exchange that provide connectivity to the switch. Allocates 100% to the 21CN ISDN30 component CN851. Copper MSAN SDSL cards =<2Mbit/s This Plant Group (PG) captures the capital costs of SDSL contained within MSANs. Line cards are the electronic cards in the exchange that provide connectivity to the switch. Types of cost include depreciation, stores and pay costs. Line Cards are used by Low band data products <=2Mbit/s and ISDN30. The driver for this base is the total volume of underlying relevant products i.e. two in this case currently in the network were migrated onto 21C equipment. That is, ignoring whether the products have migrated to use the 21C network or not. Drives to: CN851 21C ISDN30. 21C Generic Cost Model Copper-Fibre MSAN Length This Plant Group (PG) captures the Capital costs associated with transmission Length related elements (Fibre and Duct) between a CMSAN and a FMSAN. The PG drives to four high level products e.g. Voice, specific transmission components based on the relative bandwidth that these products would consume if the total volume of underlying relevant products currently in the network were migrated onto 21C equipment. That is, ignoring whether the products have migrated to use the 21C network or not with the exception of Voice where migrated, the volume is used. There is therefore a limited cost allocation for the call conveyance services. The traffic components that are recipients are: CN890 MSAN Broadband Access. CN862 MSAN - POSI Length Voice. 21C Generic Cost Model, Group Volume forecast. 188

189 PG864A PG865A PG866A Copper-Fibre MSAN Link This Plant Group (PG) captures the Capital costs associated with transmission electronics between a CMSAN and a FMSAN. Types of cost include Non-ETG Pay and Fixed Assets. The PG drives to four high level products e.g. Voice, specific transmission components based on the relative bandwidth that these products would consume if the total volume of underlying relevant products currently in the network were migrated onto 21C equipment. That is, ignoring whether the products have migrated to use the 21C network or not with the exception of Voice where migrated, the volume is used. There is therefore a limited cost allocation for the call conveyance services. The traffic components that are recipients are: CN890 MSAN Broadband Access. CN861 MSAN - POSI Link Voice. 21C Generic Cost Model, Group Volume forecast. Core-Core Length This Plant Group (PG) captures the Capital costs associated with transmission Length related elements (Duct and Fibre) between a Core Node and another Core Node. The PG drives to seven high level product s e.g. Voice, specific transmission components based on the relative bandwidth that these products would consume if the total volume of underlying relevant products currently in the network were migrated onto 21C equipment. That is, ignoring whether the products have migrated to use the 21C network or not with the exception of Voice where migrated, the volume is used. In the case of Voice there is a variant of POSI-POSI which describes traffic across Core-Core. There is therefore a limited cost allocation for the call conveyance services. The traffic components that are recipients are: CN903 Metro-core broadband transmission. CN866 POSI - POSI Length Voice. CN871 MSAN - METRO Length Connectivity. CN902 Metro-switching IP/VPN. CN618 Ethernet Backhaul Direct CN617 Ethernet Backhaul Direct extended reach 21C Generic Cost Model, Group Volume forecast. Core-Core Link This Plant Group (PG) captures the Capital costs associated with transmission electronics between a Core Node and another Core Node. The PG drives to five high level product s e.g. Voice, specific transmission components based on the relative bandwidth that these products would consume if the total volume of underlying relevant products currently in the network were migrated onto 21C equipment. That is, ignoring whether the products have migrated to use the 21C network or not with the exception of Voice where migrated, the volume is used. 189

190 In the case of Voice there is a variant of POSI-POSI which describes traffic across Core-Core. There is therefore a limited cost allocation for the call conveyance services. The traffic components that are recipients are: CN903 Metro-core broadband transmission. CN865 POSI - POSI Link Voice. CN870 MSAN - METRO Link Connectivity. CN902 Metro-switching IP/VPN. CN618 Ethernet Backhaul Direct CN617 Ethernet Backhaul Direct extended reach 21C Generic Cost Model, Group Volume Forecast. PG867A PG869A PG872A PG873A Ethernet NTE This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the customer sited Ethernet NTE. This is where the BT line from the exchange terminates and allows the customers equipment to be connected. Ethernet is the most widely-installed Local Area Network (LAN) technology. Allocates 100% to CN901 Ethernet Switches. Fibre MSAN Control Transport This Plant Group (PG) captures the Capital costs of the Control and common elements of a FMSAN that are relevant to the transport of calls or traffic through the switch. The control/common element of the FMSAN is exhausted to the traffic and calls components that utilise the Copper MSAN. The basis of apportionment is the relative bandwidth that the relevant products would consume if the total volume of relevant products currently in the network were migrated onto 21C equipment. That is, ignoring whether the products have migrated to use the 21C network or not with the exception of Voice where migrated, the volume is used. There is therefore a limited cost allocation for the call conveyance services. The traffic components that are recipients are: CN890 MSAN Broadband Access. CN861 MSAN - POSI Link Voice. 21C Generic Cost Model FMSAN TDM cards This Plant Group (PG) captures the Capital costs of TDM (Time Division Multiplexing) cards contained within Fibre Multi Service Access Nodes (MSANs). Line cards are the electronic cards in the exchange that provide connectivity to the switch. Allocates 100% to the MSAN TDM Card component CN881. Fibre MSAN-WDM Length This Plant Group (PG) captures the Capital costs associated with transmission Length related elements (Fibre and Duct) between a 190

191 Fibre Multi Service Access Node (MSAN) and a WDM (Wave Division Multiplexing) MSAN. The PG drives to four high level products e.g. Voice, specific transmission components based on the relative bandwidth that these products would consume if the total volume of underlying relevant products currently in the network were migrated onto 21C equipment. That is, ignoring whether the products have migrated to use the 21C network or not with the exception of Voice where migrated, the volume is used. There is therefore a limited cost allocation for the call conveyance services. The traffic components that are recipients are: CN862 MSAN - POSI Length Voice. CN890 MSAN BB Access. 21C Generic Cost Model, Group Volume forecast. PG874A PG875A Fibre MSAN-WDM Link This Plant Group (PG) captures the Capital costs associated with transmission electronics between a FMSAN and a WDM MSAN. The PG drives to two high level products e.g. Voice, specific transmission components based on the relative bandwidth that these products would consume if the total volume of underlying relevant products currently in the network were migrated onto 21C equipment. That is, ignoring whether the products have migrated to use the 21C network or not with the exception of Voice where migrated, the volume is used. There is therefore a limited cost allocation for the call conveyance services. The traffic components that are recipients are: CN890 MSAN Broadband Access. CN861 MSAN - POSI Link Voice. 21C Generic Cost Model, Group Volume forecast. i-node Network Features This Plant Group (PG) captures the Capital costs of Network Features functionality contained within inode. The inode represents the part of the network that contains intelligence associated with routing, verifying and controlling end to end service. Line cards are the electronic cards in the exchange that provide connectivity to the switch. Allocates 100% to the inode Features component CN

192 PG876A PG877A PG878A PG879A PG880A PG881A i-node Voice Call Set-Up This Plant Group (PG) captures the Capital costs of Voice Call Set-Up functionality contained within inode. The inode represents the part of the network that contains intelligence associated with routing, verifying and controlling end to end service. Line cards are the electronic cards in the exchange that provide connectivity to the switch. Allocates 100% to the inode Voice Call Set-Up component CN868. ISDN30 Network Termination Equipment (NTE) This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the ISDN30 Customer sited NTE. This is where the BT line from the exchange terminates and allows the customers equipment to be connected. Allocates 100% to the ISDN30 Access component CL189. Metro Broadband LNS This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the BB LNS. The L2TP (Tunnelling Protocol) Network Server is the Layer 2 Network Server. Current there are only a few Test LNS boxes designed to test connectivity. The LNS boxes are still to be designed for the network. When the boxes are finally designed and deployed, they will be used to provide a Routed Internet Protocol (IP) service. Allocates 100% to the Core/Metro Broadband component CN904 21CN broadband service provider link.. Metro BBL3 This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the BBL3 BBL3 is a device used to interface 21C Broadband to the internet. Traffic is either switched directly to the internet, or looped via CP cages where additional packet processing may be carried out before onward transmission. Allocates 100% to the Core/Metro Broadband component CN860. Metro Broadband Edge Aggregator This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the BEA. BEAs are planned to be deployed across all 21CN Core Point of Presence (PoP). A BEA is essentially the device which a Communication Provider (CP) will interface to, in order to aggregate its traffic from all the Broadband Remote Access Server (BRAS) located within a PoP. Initially a BEA will aggregate a single Logical PoP or 8 BRASs. Allocates 100% to the Core/Metro Broadband component CN860. Metro Broadband Remote Access Server This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the BRAS. BRAS routes traffic to and from the digital subscriber line access multiplexers (DSLAM) on an Internet service provider's (ISP) network. The BRAS sits at the core of an ISP's network, and aggregates user sessions from the access network. 192

193 Allocates 100% to the Core/Metro component CN860. PG882A PG885A PG886A Metro Front End Router (FER) This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the FER. The FERs are used to connect to Communications Providers (CPs) for the Aggregated Wholesale Broadband Managed Connect (WBMC) service. They provide load-balancing and shaping/policing functions. Traffic from the Core to the L2 MPLS (Multi-Protocol Label Switching) network via the FERs will be over L2TP (Tunnelling Protocol) tunnels (for L2TP Pass through). Allocates 100% to the Core/Metro Broadband component CN904 21CN broadband service provider link. Metro-Core Length This Plant Group (PG) captures the Capital costs associated with transmission length related elements (Duct and Fibre) between a Metro Node and a Core Node. The PG drives to eight high level products e.g. Voice, specific transmission components based on the relative bandwidth that these products would consume if the total volume of underlying relevant products currently in the network were migrated onto 21C equipment. That is, ignoring whether the products have migrated to use the 21C network or not with the exception of Voice where migrated, the volume is used. There is therefore a limited cost allocation for the call conveyance services. The traffic components that are recipients are: CN617 EBD Extended Reach CN618 Ethernet Backhaul Direct CN903 Metro-core broadband transmission. CN862 MSAN - POSI Length Voice. CN871 MSAN - METRO Length Connectivity. CN902 - Metro-switching IP/VPN. 21C Generic Cost Model, Group Volume forecast. Metro-Core Link This Plant Group (PG) captures the Capital costs associated with transmission electronics between a Metro Node and a Core Node. The PG drives to five high level products e.g. Voice, specific transmission components based on the relative contended bandwidth that these products would consume if the total volume of underlying relevant products currently in the network were migrated onto 21C equipment. That is, ignoring whether the products have migrated to use the 21C network or not with the exception of Voice where migrated, the volume is used. There is therefore a limited cost allocation for the call conveyance services. The traffic components that are recipients are: CN617 EBD Extended Reach CN618 Ethernet Backhaul Direct CN903 Metro-core broadband transmission. CN861 MSAN - POSI Link Voice. 193

194 CN870 MSAN - METRO Link Connectivity. CN902 Metro-switching IP/VPN. 21C Generic Cost Model, Group Volume forecast. PG887A PG888A METRO-Edge Ethernet Bandwidth This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the Edge Ethernet Bandwidth. The Edge Ethernet Bandwidth is used to groom Virtual Local Area Networks (VLANs) from the Multi-Service Access Nodes (MSANs) to the relevant Metro device such as the Voice PE using Pseudo-Wire Emulation (PWE) tunnels (across the core if necessary). It is also used to provide point to point connectivity for Broadband traffic via Pseudo-Wire Emulation Edge to Edge (PWE3) tunnels. Contended bandwidth is used because the network can be overbooked for capacity and the contention factor reserves or books spaces in the event of this happening. The bandwidth is divided by this factor to show the reserved space on the network for this service and therefore serves as a tool to allocate costs. The allocation to components is derived using total contended bandwidth. The components that are recipients are: CN860 - Core/Metro (broadband). CN869 - Core/Metro (voice). CN902 - Metro-switching IP/VPN. CN905 Multi Service Interconnect Link Generic 21CN cost model. METRO-Edge Ethernet Port This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the Edge Ethernet Port. The Edge Ethernet Port terminates: VLAN - Virtual Local Area Networks. MSIL - Multi Service Interconnect Link. Ethernet services. The allocation to components is derived using total contended bandwidth. Contended bandwidth is used because the network can be overbooked for capacity and the contention factor reserves or books spaces in the event of this happening. The bandwidth is divided by this factor to show the reserved space on the network for this service and therefore serves as a tool to allocate costs. The components that are recipients are: CN883 - Edge Ethernet ports voice. CN884 - Edge Ethernet ports broadband. CN902 - Metro-switching IP/VPN. CN905 - Multi Service Interconnect Link Generic 21CN cost model. 194

195 PG889A PG890A PG892A PG893A PG895A METRO-Infrastructure Ethernet This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the Infrastructure Ethernet. The infrastructure switches are used to provide basic fast, Gigabit and 10 Gigabit Ethernet connectivity within a metro node and Intelligent Node (inode) function. They are used to give efficient port utilisation on the expensive PE (Provider Edge) router Ethernet interfaces and because they provide higher port densities for low-speed interfaces than are typically available on PE routers. The switches are not customerfacing and therefore do not require complex edge features or Virtual Private LAN Services (VPLS) capabilities. Allocates directly (100%) to CN869 Core/Metro (Voice). Allocates directly, no data source/s required. METRO-Media Gateway This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the Media Gateways. The Media GateWay (MGW) components provide inter-working between the packet switched Internet Protocol (IP) domain and the legacy TDM domain. Allocates 100% to the Core/Metro Voice component CN869. METRO-Sync Racks This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the Sync racks. Each Core/Metro Point of Presence (PoP) is equipped with sync equipment to ensure that accurate timing is maintained across the BT network. The sync equipment provides reference clock to equipment within the PoP (e.g. Media Gateway) down to the Multi- Service Access Nodes (MSANs). Allocates 100% to the Core/Metro Voice component CN869. Multi Service Provider Edge Routers This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the Voice Router. The PE (Provider Edge) routers provide the customer interfaces to the Internet Protocol (IP) / Multi-Protocol Label Switching (MPLS) network, receiving customer traffic and encapsulating it as MPLS frames for transmission across the core of the network. The allocation to components is derived using total contended bandwidth. The components that are recipients are: CN869 Core/Metro Voice. CN860 Core/Metro BB. CN902 Metro-switching IP/VPN. Generic 21CN cost model. Network Router (large) Core 195

196 This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the P Router.. The P Routers in the Core nodes (Provider routers) form the core of the network, aggregating traffic from a number of Provider Edge (PE) routers and connecting to P routers in other Point of Presence (PoP) across wide-area transmission links.. The allocation to components is derived using total contended bandwidth. The components that are recipients are: CN860 - Core/Metro (broadband). CN869 - Core/Metro (voice). CN902 - Metro-switching IP/VPN. Generic 21CN cost model. PG896A PG898A PG899A PG900A Network Router Metro This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the P Router. The P Routers in the METRO nodes (Provider Routers) form the core of the network, aggregating traffic from a number of Provider Edge (PE) Routers and connecting to P Routers in other Point of Presence (PoP) across wide-area transmission links. The allocation to components is derived using total contended bandwidth. The components that are recipients are: CN860 - Core/Metro (broadband). CN869 - Core/Metro (voice). CN902 - Metro-switching IP/VPN. Generic 21CN cost model. Core Directors This Plant Group (PG) captures the cost of capital expenditure incurred for the deployment of the the 21C Core Directors which will be used to carry former MSIP data traffic as the MSIP Platform is closed. Allocates 100% to the Core/Metro (Connectivity) component CN878 WDM-Metro Link This Plant Group captures the Capital costs associated with transmission electronics between WDM Multi Service Access Node (MSAN) and a Metro Node. Allocates 100% to the Ethernet Backhaul Direct component CN616 Ethernet Backhaul Direct WDM-Metro Length This Plant Group (PG) captures the Capital costs associated with transmission length related elements (Duct and Fibre) between WDM Multi Service Access Node (MSAN) and a Metro Node. 196

197 Allocates 100% to the Ethernet Backhaul Direct component CN616 Ethernet Backhaul Direct.. PG901A PG902A PG911A Ethernet Switches This Plant Group (PG) captures the Capital costs associated with Ethernet Switches. The allocation to components is derived using total contended bandwidth. The components that are recipients are: CN861 MSAN - POSI Link Voice. CN901 Ethernet Switches. CN891 Ethernet Switch BB. Generic 21CN cost model. Ethernet Switch Customer Access Cards This Plant Group (PG) captures the Capital costs of Ethernet Switch Customer Access Cards contained within Ethernet Switch. Line cards are the electronic cards in the exchange that provide connectivity to the switch. The allocation to components is derived using total contended bandwidth. The components that are recipients are: CN882 High band customer data card CN890 MSAN-Broadband Access Generic 21CN cost model. Operator Services Inland This Plant Group (PG) captures the pay and non-pay costs of operators working on Inland Operator Assistance (OA) 100 and 999 calls. Customers dial 100 (OA) and speak to an Operator if they require help making a call. This PG is apportioned to Operator Assistance (OA) components: CO911 National Operator Assistance. CO919 Emergency operator assistance (999). CO941 National OA non chargeable. CO942 Emergency OA non chargeable. CO943 Payphones operator assistance non chargeable. The apportionment is based on average total operator handling time and volume of calls for both services. Central Data Store (CDS) and Call Statistics Centralisation System (CSCS) are the data sources for total calls to all operator assistance Products which include this PG and the Operator Services OA International PG PG912A. Also used is the Operfile, this being a spreadsheet used to derive apportionment information for Operator and Directory Assistance costs. The file is a summary of information from a variety of other data sources and is updated monthly on a cumulative basis. Inland and International Directory Assistance (DA). Central Data Store (CDS). 197

198 Call Statistics Centralisation System (CSCS) and Featurenet (from the Powerhouse system). Inland and International Operator Assistance (OA). Call Centre Management Information Systems (CCMIS). CSCS (for Retail chargeable). 6A Report (for Wholesale Chargeable). PG912A PG924A PG933A Operator Services International This Plant Group (PG) captures the pay and non-pay costs of operators working on International Operator Assistance (IOA) 155 calls. Customers dial 155 (IOA) and speak to an International Operator if they require help making a call to a foreign country. This is achieved through a Period 12 Operfile, this being a spreadsheet used to derive apportionment information for Operator and Directory Assistance costs. The file is a summary of information from a variety of other data sources and is updated monthly on a cumulative basis. The costs are apportioned to the following components based on average operator handling times and volumes of calls generated by each type of call: International OA (CO912). Emergency OA (999) non-chargeable (CO942). Inland and International Directory Assistance (DA). Central Data Store (CDS). Call Statistics Centralisation System (CSCS) and Featurenet (from the Powerhouse system). Inland and International Operator Assistance (OA). Call Centre Management Information Systems (CCMIS). CSCS, (for Retail chargeable) and 6A Report (for Wholesale Chargeable). Directory Enquiries Non Chargeable This Plant Group (PG) captures the pay and non-pay costs of operators working on Directory Enquires (DQ) non chargeable calls. These type of calls include: Blind and Disabled calls. An Operator service available for Blind, Disabled, Hearing or Speech impaired customers on 195. Internal service line calls to Directory Enquiries (DQ). Calls from foreign operators requesting an inland number. Calls requesting a credit for a previous call where incorrect information had been given. Calls from text phones. Allocates 100% to the Directory enquiries non chargeable Component CO927. Phonebooks This Plant Group (PG) captures costs and balance sheet of Phonebook compilation. Costs for Phonebook compilation are made up of a mixture of direct and internal trading costs for paper, printing, binding, delivery and freight. Allocates 100% to the Directories component CKT

199 PG950C PG950M PG951C GEA Access Fibre Spine This Plant Group (PG) captures the costs associated with the provision, installation and recovery of NGA fibre cable in the access network i.e. the network between the local exchange and a BT Intermediate node (Cabinet). This includes costs associated with clearing existing duct (to allow cable to be installed), jointing and spine cable (splicing). Specifically this PG captures costs from the following areas/functions: Pay costs associated with the installation of NGA access fibre. Indirect costs of optical fibre replacement from the Local optical Fibre Cable Renewal (LFCR) classes of work (CoW). Contract costs associated with renewal of optical fibre. Planning costs, adding fibre to the access network. Costs associated with installing optical spine cable between the local exchange and last connection point before local distribution fibre or street optical Multiplexors (MUX). Depreciation costs from the following CoW Local Fibre Spine Cable (LFSC). Allocates 100% to GEA access fibre spine component CL950. GEA Access Fibre Spine Maintenance This Plant Group (PG) captures the maintenance costs associated with the provision, installation and recovery of NGA fibre cable in the access network i.e. the network between the local exchange and a BT Intermediate node (Cabinet). This includes costs associated with clearing existing duct (to allow cable to be installed), jointing and spine cable (splicing). Specifically this PG captures costs from the following areas/functions: Pay costs associated with the installation of NGA access fibre. Indirect costs of optical fibre replacement from the Local optical Fibre Cable Renewal (LFCR) classes of work (CoW). Contract costs associated with renewal of optical fibre. Planning costs, adding fibre to the access network. Costs associated with installing optical spine cable between the local exchange and last connection point before local distribution fibre or street optical Multiplexors (MUX). Depreciation costs from the following CoW and Local Fibre Spine Cable (LFSC). Allocates 100% to GEA access fibre spine component CL950. GEA Distribution Fibre This Plant Group (PG) captures the costs associated with the provision, installation and recovery of NGA fibre cable in the access network (i.e. the network between the Intermediate node (cabinet) and the customer premises). This includes costs associated with clearing existing duct (to allow cable to be installed), jointing distribution (splicing). Specifically this PG captures costs from the following areas/functions: Pay costs associated with the installation of NGA access fibre. Indirect costs of optical fibre replacement from the Local optical Fibre Cable Renewal (LFCR) classes of work (CoW). Contract costs associated with renewal of optical fibre. Planning costs, adding fibre to the access network. Costs associated with installing optical spine cable between the Intermediate node and the customer premises. Depreciation costs from the following CoW and Local Fibre Spine Cable (LFDC). Allocates 100% to the GEA distribution fibre component CL

200 PG951M PG952C GEA Distribution Fibre Maintenance This Plant Group (PG) captures the maintenance costs associated with the provision, installation and recovery of NGA fibre cable in the access network i.e. the network between the Intermediate node (cabinet) and the customer premises. This includes costs associated with clearing existing duct (to allow cable to be installed), jointing distribution (splicing). Specifically this PG captures costs from the following areas/functions: Pay costs associated with the installation of NGA access fibre. Indirect costs of optical fibre replacement from the Local optical Fibre Cable Renewal (LFCR) classes of work (CoW). Contract costs associated with renewal of optical fibre. Planning costs, adding fibre to the access network. Costs associated with installing optical spine cable between the Intermediate node and the customer premises. Depreciation costs from the following CoW and Local Fibre Spine Cable (LFDC). Allocates 100% to the GEA distribution fibre component CL951. GEA Electronics This Plant Group (PG) captures the NGA costs associated with the provision, rearrangement, recovery, replacement and renewal of NGA Local Access Network equipment at the exchange end of Local Access Optical Fibre Cables. Pay costs associated with the installation of NGA access electronics Contract costs associated with renewal of NGA Electronics. Planning costs. Depreciation costs from the following CoW s Construction of local line exchange service module (LFXE), Circuit Provision, Megastream Services (CPDM), Circuit Provision- Asymmetric Digital Subscriber line(adsl) (CPDSL) Allocates 100% to the GEA electronics component CL

201 PG953C PG954C PG955M PG956M GEA DSLAM and Cabinets This Plant Group (PG) includes the NGA costs associated with the DSLAM cabinets, cabinet shells, and cabinet tie cables relevant for installation /provision. Pay costs associated with the installation of NGA DSLAM and Cabinets. Contract costs associated with renewal DSLAM and Cabinets. Planning costs. Depreciation costs from the following CoW Construction, Local Network Service Module Equipment (LFME). Allocates 100% to the GEA DSLAM and cabinet component CL953. GEA Customer Site Installations This Plant Group (PG) captures the costs associated with the provision, installation and recovery of NGA Customer sited equipment. Specifically this PG captures costs from the following areas/functions. Pay costs associated with the installation of NGA Customer sited Installs. Indirect costs of Customer sited Installs. Contract costs. Planning costs. Depreciation costs from the following CoW Customer Premises Provision (FTTX). Allocates 100% to the GEA customer site installation component CL954. GEA FTTC Maintenance This Plant Group (PG) includes the NGA FTTC costs associated with the repair/ maintenance of the head end electronics, and DSLAM cabinets and specific NGA customer equipment. Pay costs associated with the repair / maintenance of NGA equipment. Indirect costs of any repair / maintenance of NGA specific equipment. Allocates 100% to the GEA FTTC maintenance component CL955. GEA FTTC Maintenance This Plant Group (PG) includes the NGA FTTP costs associated with the repair / maintenance of the head end electronics, and DSLAM cabinets and specific NGA customer equipment. Pay costs associated with the repair / maintenance of NGA equipment. Indirect costs of any repair / maintenance of NGA specific equipment. Allocates 100% to the GEA FTTP maintenance component CL

202 PG957P PG958P PG959C GEA FTTP Provision This Plant Group (PG) includes the NGA FTTP costs associated with the Provision of the head end electronics, and DSLAM cabinets and specific NGA customer equipment. Pay costs associated with the repair / maintenance of NGA equipment. Indirect costs of any repair / maintenance of NGA specific equipment. Allocates 100% to the GEA FTTP provision component CL957. GEA FTTC Provision This Plant Group (PG) includes the NGA FTTC costs associated with the Provision of the head end electronics, and DSLAM cabinets and specific NGA customer equipment. Pay costs associated with the repair / maintenance of NGA equipment. Indirect costs of any repair / maintenance of NGA specific equipment. Allocates 100% to the GEA FTTC provision component CL958. Access Distribution Fibre This Plant Group (PG) captures the costs associated with the provision, installation and recovery of fibre cable in the access network i.e. the network between the Node and customer s premises (see diagram) or fibre installed up to street multiplexers. Exchange Customer S pine C able Node Distribution C able This includes costs associated with clearing existing duct (to allow cable to be installed), jointing distribution. Specifically this PG captures costs from the following areas/functions: Pay costs associated with the installation of access fibre. Indirect costs of optical fibre replacement from the Local optical Fibre Cable Renewal (LFCR) classes of work (CoW). Contract costs associated with renewal of optical fibre. Planning costs, adding fibre to the access network. Costs associated with installing fibre between the node and a customer (direct feed). Costs associated with installing distribution fibre or street optical Multiplexors (MUX). Depreciation costs from the following CoW Local Fibre Distribution Cable (LFDC). Apportionment to component is based on data supplied via the Core Transmission Circuit costing System (CTCS), using circuits and bearer volumes as at Period 6. The data used from CTCS (refer to Data Source section) includes the percentage of fibre bearer capacity used by a particular circuit (component). CTCS provides the volumes of circuits over a bearer which is then converted into 2Mbit/s equivalents. These are weighted by circuit bandwidth usage of the various bearers. Circuits and Bearer Volumes from CTCS for Period 6. Management believes this period to be reflective of the full year. 202

203 PG980R PG981R PG982R PG984R PG985R Repayment Works This Plant Group (PG) captures the costs and balance sheet of Openreach repayment works. The main role of the Repayment Works unit is to ensure the integrity and protection of BT s network, where the highway infrastructure is required to be altered due to promoting authority works under an act of parliament and protecting the network from damage as a result of third party works. The main direct classes of works (CoW) are, HK, HM, HO, HE, HPL, HDM, HUR, HSW, HL HNE. Allocates 100% to the Openreach Repayment Works component CK980. Time Related Charges This Plant Group (PG) captures the costs and balance sheet of with time scale charges. Time scales charges refer to time spend on planned/ Unplanned jobs when a timescale charge is appropriate. Key costs are allocated to this PG from the following classes of work (CoW): TRC Timescale-Time Related charging. CNS - Customer Network Services. NWKB - Non Capital P&I Exchange Lines (Business). NWKR - Non Capital P&I Exchange Lines (Residential). CoW starting with AP/AM. Allocates 100% to the Openreach Time Related charges component CK981 Openreach Managed Services for BT Wholesale This Plant Group (PG) captures the costs of any work done by Openreach that specifically supports BT Wholesale Products and services or activities. Allocates 100% to the Openreach Managed Services for Wholesale component CK982. Openreach Managed Services for BT Global Services This Plant Group (PG) captures the costs of any work done by Openreach that specifically supports BT Global Services or activities. Allocates 100% to the Openreach Managed Services for Global component CK984. Openreach Managed Services for BT Retail This Plant Group (PG) captures the costs of any work done by Openreach that specifically supports BT Retail Products and services or activities. Allocates 100% to the Openreach Managed Services for Retail Other component CK

204 PG986R PG989A PGT01N PGT02N PGT03N PGT04N Openreach Other Activities This Plant Group (PG) captures the income for Openreach other activities on F8 Code Miscellaneous other operating income & F8 Code Openreach Other Operating Income. Allocates 100% to the Openreach Other Activities component CK986. Special Fault Investigation (SFI) This Plant Group (PG) captures the costs and balance sheet of SFI. A Local Loop Unbundling (LLU) SFI can be initiated by an LLU Communications Provider (CP) when a Metallic Path Facility (MPF) or Shared Metallic Path Facility (SMPF) tests OK on the Openreach line test system, but where there might be a problem with the CP s Asymmetric Digital Subscriber Line (ADSL) or Symmetric Digital Subscriber Line (SDSL) service. The LLU SFI is a chargeable investigation product which attempts to identify and resolve DSL service affecting problems. This PG exhausts 100% to component CO989 Special Fault Investigations Line Cards trade This Plant Group (PG) captures the costs of internal trade for Line Cards which provides routing functionality. This PG contains both the revenue earned by BT Wholesale and the related payment made by Openreach therefore netting off to zero. Allocates 100% to the Openreach Internal Trades component CZ900. Backhaul Electronics trade This Plant Group (PG) captures the costs of internal trade for Backhaul Electronics between BT Wholesale and Openreach. This PG contains both the revenue earned by BT Wholesale and the related payment made by Openreach netting off to zero. Allocates 100% to the Openreach Internal Trades component CZ900. Access Electronics trade This Plant Group (PG) captures the internal trade for Access Electronics. This PG contains both the revenue earned by BT Wholesale and the related payment made by Openreach therefore netting off to zero. Allocates 100% to the Openreach Internal Trades component CZ900. WES/BES Electronics trade This Plant Group (PG) captures costs for internal trade for WES/BES electronics. This PG contains both the revenue earned by BT Wholesale and the related payment made by Openreach therefore netting off to zero. Allocates 100% to the Openreach Internal Trades component CZ

205 PGT05N PGT06N PGT07N PGT11M Local Loop Unbundling (LLU) Power and ventilation trade This Plant Group (PG) captures the costs of internal trade for LLU Power and Ventilation. The trade is between Wholesale and Openreach. Allocates 100% to the Openreach Internal Trades component CZ900. Network Features trade This Plant Group (PG) captures the costs of internal trade for Network Features. This PG contains both the revenue earned by BT Wholesale and the related payment made by Openreach. Allocates 100% to the Openreach Internal Trades component CZ900. Network managed service Selling, General and Administration (SG&A) trade This Plant Group (PG) captures the SG&A costs of Network managed services This PG contains both the revenue earned by BT Wholesale and the related payment made by Openreach netting off to zero. Allocates 100% to the Openreach Internal Trades component CZ900. Openreach Contribution to BT Basic This Plant Group (PG) captures the costs of the BT Basic (formerly known as the BT Light User Scheme) internal trade. Allocates 100% to the LUS trade in component CKT

206 7 Network Component Allocations - Network Charging 7.1 Overview Our total network costs are disaggregated into a number of network components. Network components are used in the provision of Wholesale Services. The way in which network components receive costs is by the attribution methods described in detail in earlier sections of the DAM. In this section it is important to bear in mind the distinction between a charge which is the revenue amount generated from providing a service and cost which is the cost of providing that service Wholesale Markets Costs The total costs of the Wholesale Markets are given simply by aggregating the costs of the network components. However, it is necessary to attribute that total cost to individual wholesale services. For services provided on a cost basis, the cost to Wholesale Markets of providing such service is the cost of each component used in providing the service. For some Wholesale Services, the calculation of the cost of service provision is more complicated, as each service represents the utilisation of one or more network components, and its cost is therefore determined by an attribution of component costs. This attribution can involve the calculation and application of route factors, usage factors or other appropriate basis of apportioning components costs. Components are either used in the provision of services for which there is a published price, or are used by themselves and charged on a cost basis. Cost basis services arise in markets in which BT has not been found to have significant market power. Network components represent the collection of various different cost types. One of the distinguishing features of a component is that it would usually have a single cost driver. Call switching is consumed in the provision of minutes of conversation time, and so conversation time is used as the cost driver for switching costs. In the case of switching, component costs or charges flow to downstream retail products via services pro-rata to the volume of call minutes generated by each product or service Wholesale Market Revenues Wholesale Market revenues are from network charges made to BT or to Other Communication Providers (OCPs). In most cases, a published price is used as the basis of charging for the provision of Wholesale Services. Wholesale Services are sold both externally to OCPs and internally to BT s retail activities. These services will use one or more network components. The following sections set out: An overview of network component and Wholesale Service volumes, including discussion of Route/Usage factors. Discussion of the cost basis of charging. Charging to downstream Retail Residual products. Wholesale Market Statements. A table showing components charged on a cost basis. A table showing the Wholesale Service destinations of the costs of components recovered via Wholesale Service charging Network Component Volumes The charge made to each downstream Retail Residual product is driven by the volume of that product sold/used during the year. The product volume also defines the component volumes via the application of Route/Usage factors Conveyance Products and Components Where Retail Residual products incur a cost charge, their volumes drive the component volumes directly. Typically, where a product is carried across a number of components, the product volume can be applied directly to each component. 206

207 Since each component may support more than one product, the total component volume is determined by aggregating the volume of each product that uses it. If component Z is utilised by products A, B and C, which generate 150, 250 and 100 minutes of use respectively, then component Z has a total volume of 500 minutes. In some cases, one product may utilise a component more intensively than another. In this case it is necessary to factor the product volumes. Taking the example above, if it is necessary for product C to utilise component Z twice in each minute, then the total volume of usage of component Z is 600 minutes ( (100x2)). It is necessary to know the utilisation rate of each component by each product. This relationship gives the factored volume for each component. For the utilisation rate to be calculated, we measure calls on the network. It is not practical to measure all calls for every day of the reporting period (in excess of 90 billion), for the purposes of network management, each telephone exchange monitors one call in 300 passing through it. Using this facility, combined with a suitable periodicity (28 days), a statistically significant call sample of approximately 45 million calls can be extracted from which the utilisation factors are calculated. For each call in the sample, its routing is determined from the switch record. Each call has a switch record, this captures its routing detail, of how the call has been carried over the network, and generates such details as distance, and the number of times the call passes through any given component (such as a local exchange). The sample therefore gives an observed relationship between the provision of products and the utilisation of conveyance components. In order to obtain the total factored volume for each conveyance component for the full year, we take the product volumes and apply the sampled utilisation factors (e.g. product volumes x utilisation factor = factored component volume). If Product 1 has a full year volume of 8,000 minutes, then it has generated utilisation of 8,000 minutes of component A and 9,600 minutes of component D. Similarly, if Product 2 has a full year volume of 3,000 minutes, then there is utilisation of component A of 3,000 and of component D of 1,500. By aggregating the result for each product, we get a total factored volume for each component. Following the illustration above, the factored volume for component A is 11,000 minutes, and 11,100 minutes of component D. In order to obtain a unit cost for each component, divide the component cost (derived from Plant Group (PG) and other cost attributions described elsewhere) by the factored volume for each component Transmission Volumes (including Partial Private Circuit components) Transmission costing is based on the Core Transmission Circuit costing System (CTCS). In simple terms, CTCS is an inventory of all circuits. Every circuit in the network is tagged and details of its route length and routing are recorded. An example of the detail captured in CTCS is as follows: The number of 2Mbit/s circuits that use 34Mbit/s bearers, and the total length of those circuits (length is the appropriate volume for attributing the cost of 34Mbit/s bearers). The number of 34Mbit/s circuits that use 34Mbit/s bearers, and the total length of those circuits. By factoring the volumes we can take account of the fact that 16 2Mbit/s circuits can be carried on a 34Mbit/s bearer, whilst alternatively it can carry only one 34Mbit/s circuit. CTCS, also tells us what is the total circuit length carried over 34Mbit/s bearers. Costs can then be attributed on the basis of the number of kilometres of 34Mbit/s bearers used by 2Mbit/s circuits. The detailed workings of CTCS are considered more fully in the data source section of the DAM (section 9) Other volumes For other components, the volume is determined consistent with the principles outlined above. Where there is a one-forone relationship between the product and the component, then there is a direct relationship between the product volume and the component volume. Where the relationship is not so straightforward, it is necessary to take account of different utilisation rates by factoring the component volume Data sources for Volumes Volumes are supplied from the data source most appropriate to each product consistent with reliability and ease of data access. The major data sources used to provide volumes are as follows: 207

208 Call Statistics Centralisation System (CSCS) Inter Network Call Accounting (INCA) Powerhouse/Hyperion Charge Raising System (CRS) Integrated Network System (INS) Planning Assignment and Configuration System (PACS) Core Transmission Circuit costing System (CTCS) Customer Oriented System for Management of Special Services (COSMOSS) Operator Report Generation System (ORGS) Multi Services Intranet Platform Model (MSIP) Data Sources for Volumes_Diagram 7.2 Wholesale Markets Revenue Cost based charging The cost charge for the component is calculated as the historical cost of the component The cost charge to products is determined based on the percentage of each components utilisation driven by the product. If component Y supports a total volume for the year of 100 minutes, and product Q drives 60 minutes of that total, then product Q is charged with 60% of the cost of component Y. The tables set out in section 7.5 show the major charging destinations of those components charged on a cost basis. The destinations listed cover at least 90% of the total network charge made in respect of each component. The tables also describe the cost driver for each component. 7.3 Wholesale Markets Revenue - Charging for Wholesale Services There is a defined relationship between the products provided by BT and network Wholesale Services. Product volumes are translated into Wholesale Service volumes and the network charge in respect of each product is simply the aggregate of the (price x time of day volume) charge calculated for each Wholesale Service used in providing that product. Wholesale Service prices are those published by BT for each service as Network Charge Change Notifications (NCCNs) Partial Private Circuits (PPCs) Calculation of internal and external reported revenues The revenue disclosed in the Regulatory Financial Statements is calculated based on a Price x Quantity (PxQ) basis. This applies to both internal (to downstream BT divisions) and external (to other CPs) revenue. Price (P): The price used for both BT s downstream business (that is BT Retail and BT Global Services) and other CPs is based on the relevant entries in the Carrier Price List (CPL). The CPL is published by BT Wholesale to document contractual pricing and generally to inform Industry of the interconnect charges in use by BT for calls originating, transiting, or terminating on the BT network. For Partial and PPCs, these prices are contained in section B8 of the CPL. The calculation of PPC revenue reported in the Regulatory Financial Statements is described in further detail below: Price (P) The price reported in the RFS for both BT s downstream business (that is BT Retail and BT Global Services) and other CPs is based on the relevant entries in the CPL after applying certain adjustments that are explained below. This process to arrive at the price (applied to internal and external revenue) used for reporting purposes has been discussed and demonstrated to Ofcom. In general, the prices used in the RFS for the revenue calculation are sourced directly from the CPL. If the relevant CPL price for the service reported in the RFS changed within the relevant year, the price reported in the RFS is the calculated weighted average of the relevant price applicable throughout the year, weighted by time. This is further explained below: Connection Prices - the price reported in the RFS is the calculated weighted average of the relevant price applicable throughout the year, weighted by time. Link Prices - the price reported in the RFS is the calculated weighted average of the relevant price applicable throughout the year, weighted by time. Local End Prices - the price reported in the RFS is the calculated weighted average of the relevant price applicable throughout the year, weighted by time. 208

209 Link & Local End - Enhanced maintenance charge: An enhanced maintenance charge applies to all circuits and is separately identified in the CPL. The fixed p.a. enhanced maintenance charge is split between Local End and Link based on the proportion of maintenance pay for the Local End & Link. Terminating / Distribution prices - the price reported in the RFS is the calculated weighted average of the relevant price applicable throughout the year, weighted by time. Trunk Prices - the price reported in the RFS is the calculated weighted average of the relevant price applicable throughout the year, weighted by time. Distribution and Trunk - Enhanced maintenance charge: A per km enhanced maintenance charge is separately identified in the CPL. This was applied to all per km distribution length and per km trunk length. Third Party customer infrastructure - the external charge reported in the RFS is based upon the calculated weighted average of the relevant price applicable throughout the year, weighted by time and the mix of volumes. No separate average price is reported in the RFS due to the mix of many different prices listed on the CPL and associated mix of volumes. Protected path variants and resilience - the external charge reported in the RFS is based upon the calculated weighted average of the relevant price applicable throughout the year, weighted by time and the mix of volumes. No separate average price is reported in the RFS due to the mix of many different prices listed on the CPL and associated mix of volumes. Other single payments (OSPs) - the external charge reported in the RFS is based upon the relevant reported general ledger postings and the internal charge reported in the RFS is based upon the charge in the management accounts. Point of Handover - CSH, ISH and per circuit charge: the external charge reported in the RFS is based upon the calculated weighted average of the relevant connection and rentals prices applicable throughout the year, weighted by time and mix of volumes. Quantity (volumes) (Q) The quantity (also referred to as volumes) used for both downstream BT divisions and other CPs is based on the volume of circuits sold, connected or actively in use. The quantity used in the RFS for PPCs is based on revenue system size (RSS). RSS is a revenue generating measure which counts only the circuits that generate revenue. The primary volume sources used to arrive at the quantity reported in the RFS include CTCS and COSMOSS (for main link, trunk and distribution, local ends) and Powerhouse (connections). The rental volumes reported in the RFS is based on spot volumes. This is based on the revenue generating total volumes as at the end of September, being the mid way point of the accounting period of each year. As such the RFS show the total rental volumes as at 30 September of the relevant year. The connection volumes reported in the RFS are based on the number of total new connections in the relevant financial year. The main adjustments made to the raw volume sources to arrive at the volumes reported in the RFS are explained below: BT Internal (Own Use) circuits: The source system CTCS provides total raw volume data. As such, the volumes in the relevant services have been adjusted to exclude the network element of BT internal (Own Use). Local ends: For certain circuits, the number of local ends is calculated based on a review of the product profile. For these circuits, a factor is applied to the volumes of circuits to convert the raw volumes from source system into local ends. The factor applied is based on the product profile as the number of local ends per circuit can vary depending on the product. Additional service granularity for reporting purposes: The raw volumes provided by the CTCS system do not necessarily provide volumes that meet the exact granularity requirements for reporting purposes requested by Ofcom. As such, where necessary, the raw volumes in these products / services have been adjusted to further analyse the parent product / service into sub-products / services for reporting purposes. The allocation to a product is calculated by using information from the Powerhouse / COSMOSS / CTCS systems to calculate the ratio / percentage split between these sub-products / services and applies this split to the total parent product / service volumes. Average bandwidth for reporting: For reporting purposes, BT reports the Kilostream and Kilostream N products, but does not distinguish between bandwidth for these products. As such, an adjustment is made to the raw volumes using the average bandwidth of all circuits where a factor (derived from information from a system which tracks all kilostream circuits) is applied to Kilostream N to convert this into 64Kbit/s equivalents. Trunk and distribution: As the core transmission only measures over 2Mbit/s lengths, there is no readily available analysis between trunk and distribution lengths for 64Kbit/s lengths, billing data is used to separate the trunk and distribution lengths. 209

210 7.3.2 Interconnect Specific Basket The average charge for the interconnect specific services are taken directly from the Carrier price list. The following table summarises the derivation of Interconnect Circuit Wholesale Service costs from the Interconnect Specific Components within the regulatory accounts. Component Wholesale Service Derivation CO452 Interconnect local end rental 2Mbit/s CO453 2Mbit/s connection CO458 Interconnect Extension Circuits (IEC) 2Mbit/s link CO459 Customer Sited Interconnect cct (CSI) 2Mbit/s link CO466 Interconnect Extension Circuits (IEC) 2Mbit/s per km CO467 Customer Sited Interconnect cct (CSI) 2Mbit/s per km CO468 In Span Interconnect circuits (ISI) transmission CSI Fixed Rental Interconnect Circuit Connection IEC connection Rearrangements IEC per link rental CSI per link rental IEC per Km rental CSI per Km rental ISI transmission The unit costs are derived from this component cost and the relevant circuit volume. The unit cost is derived from the component cost and the relevant product volumes. This component also contains the costs of circuit s rearrangements. The unit cost is derived from the component cost and the relevant product volumes. The unit cost is derived from the component cost and the relevant product volume. The unit cost is derived from the component cost and the relevant product volume. The unit cost is derived from the component cost and the relevant product volume. The unit cost is derived from the component cost and the relevant product volume. CO469 IBC connection IBC Connection The unit cost is derived from the component cost and the relevant product volume Calculation of Wholesale Broadband Access (WBA) revenue reported in the Regulatory Financial Statements (RFS) WBA revenue is divided into 4 areas: 1. End User (EU) rentals, connections and ceases. 2. Pipes Revenues - This covers the costs of backhaul and conveyance through the core network. 3. Broadband Boost - A solution to improving speed, quality and reliability of customer s Broadband service. 4. Ancillaries - This covers the remaining revenues relating to areas such as Special Faults Investigation (SFI), cancellation charges. Wherever possible, these are identified separately with everything else remaining as Other Ancillaries. The revenue for rentals, connections and pipes is calculated based on a Price x Volume (PxV) basis. This applies to both internal (to downstream BT divisions) and external (to other Communications Providers) revenue. Price (P): The price used for both BT s internal downstream business (i.e. BT Retail, BT Global Services & BT Northern Ireland) and other external CPs is based on the relevant entries in the Service Provider Price List (SPPL). The SPPL is published by BT Wholesale to document contractual pricing and generally to inform Industry of the interconnect charges in use by BT. For WBA, these prices are contained in section 44 of the SPPL Wholesale Broadband Services. In the case of the IPStream Connect service, there are several variants sold, each with a different rental price and so a composite price is calculated based on the relative mix of those services. 210

211 Volume (V): The volumes used for both internal and external revenue are an End User (EU) System Size for rentals revenue and the number of new provides (Period 12 cumulative) for connections. This data is taken from the Wholesale Customer Reporting system (WCR) and the volumes are split by the three geographic markets. The market classification within the WCR system is by exchange and is based on the Ofcom s final statement Review of the Broadband Access Markets (December 2010). For pipes, bandwidth data for IPstream and Wholesale Broadband Connect is supplied by the Wholesale Product line. The volume measure is the total contracted bandwidth (b/w) usage plus any burst. This data is not available by geographic market and so a report called Peak Bandwidth Usage (from WCR) is used to split the bandwidth data to the three geographic markets. For Datastream it is the volumes of Virtual Paths (VPs) from GLOSSI and market apportionment is based on the EU rental volumes split. For Broadband Boost, the volumes (number of jobs) are supplied by the Openreach Regulatory finance team with a breakdown by telephone exchange supplied by the Openreach Offshore team. This breakdown enables a split to be made by geographic market. For ancillaries, the revenues are derived and reconciled to the BT general ledger (for external) and internal trading data (for internal). For SFI and Migrations, the split across the 3 geographic markets is driven by the volumes for those categories obtained from the WCR system. For the remaining ancillaries (called other ancillaries ) a split across the 3 geographic markets is in accordance with the rentals, connections & pipes revenue total. 211

212 7.4 Wholesale Significant Market Power (SMP) Financial Statement Preparation Overview The principal set of Wholesale SMP statements are: The Statements of Financial Performance in the Access and Other Wholesale Markets. The Statements of Attribution of Wholesale Current Costs by market. The Statements of Attribution of Wholesale Current Cost Mean Capital Employed. The Network Activity Statement of Costs detailing the fully allocated component costs of published Network components and where appropriate their volumes and unit costs. The Wholesale Service Statements, which show their Fully Allocated Cost (FAC) unit costs, their average charges, and their relationship with the relevant components. Wholesale Market Summary Statements showing service revenue, service volumes, average service prices and service FAC, Long Run Incremental Cost (LRIC) floors and ceilings Network Activity Statement Component operating costs, Mean Capital Employed and capital costs calculated, as previously described, are summarised on this statement. Component unit costs are calculated by dividing the component fully allocated costs by the volume shown. Factored volumes are used when calculating the component fully allocated unit cost because they more accurately reflect the utilisation of a given component by a product Calculation of FAC based on Component Costs and Usage Factors Wholesale Service FAC unit costs are calculated as the sum of all the relevant component fully allocated unit costs multiplied by the appropriate usage factor for each Wholesale Service. The relationship between components and Wholesale services is set out in section 7.7 below. Component fully allocated unit costs are taken from the Network Statement of Costs. 212

213 7.5 Components charged on a cost basis The table below describes those components charged on a cost basis i.e. where a component price is based on cost. Super Comp Comp Driver CB367 CB367 ISC to frontier link: CB451 CB451 Radiostream links: This component represents the link electronics that connect an International exchange to a Frontier Station (This section of the Network is sometimes referred to as the backhaul network). International subsea cables terminate at these Frontier Stations. The costs of point-to-point microwave transmission equipment. CB561 CB561 Interconnect outpayments overseas: Interconnect payments to Communications Networking Services (UK) (CNS) (formerly Concert). CB599 CB599 Interconnect outpayments inland: This Component will capture all costs relating to IX (Interconnect) Payments to Other Communication Providers (POCPs). Allocated on a percentage utilisation basis, pro-rata to the number of international call minutes generated by each product. Volumes for call minute calculations are sourced from CSCS and INCA. Allocated directly to a single Product. Allocated to Products on the volume of call minutes generated by each Product using the other operator's network. The call minutes are sourced from CSCS and INCA and are factored to reflect differing rates for different Products. Allocated to products to the volume of call minutes generated by each Product using the other operator's network. The call minutes are sourced from CSCS and INCA and are factored to reflect differing rates for different Products. CB782 CB782 Development: Captures the cost of development of special applications. Allocated directly to a single Product. CD100 CD100 Low Tisbo 3rd Party Equipment Depn. Allocated directly to a single Product. CD101 CD101 High Tisbo 3rd Party Equipment Depn. Allocated directly to a single Product. CD102 CD102 Very High Tisbo 3rd Party Equipment Depn. Allocated directly to a single Product. CE103 CE103 Low Tisbo Excess Construction. Allocated directly to a single Product. CE104 CE104 AISBO Excess Construction. Allocated directly to a single Product. CO224 CO224 UCP Equipment: This component captures the costs of the Universal Card Platform (UCP) which provides cashless prepaid or post paid Public Switched Telephone Network (PSTN) calls. CO227 CO227 Advanced Switching Units: The Advanced Services Unit (ASU) is a collection of switches, which are used for the following functions: Customer calls for range of products FeatureNet Apportioned using the Number of Calls for each product sourced directly from the platform covering around three quarters of the period e.g. Periods 1-9 for the year end apportionment. Allocated on a percentage basis to the range of products that use this component pro-rata to the call minutes generated by each product. 213

214 Super Comp Comp Driver 5000; FeatureNet 1000; Call Centre Services Automated Call Distribution etc. This relates to all connection costs in respect of providing customers with Advanced Services Unit (ASU) Switching facility from the Digital Local Exchange (DLE) (Local Exchange). CO260 CO260 Cambridge Voice Intelligent Peripheral (VIP): Cambridge Voice Intelligent Peripheral (VIP). Voice Intelligent Peripheral (VIP) Cambridge is an Intelligent Network (IN) platform. This component captures costs of the electronics used for voice prompts. CO261 CO261 Intelligent Contact Manager: This component captures the costs of electronics that provide intelligent call routing to customers for their various call centres. Data source is Nemos. (Network Management Operations System). Allocated pro-rata to the number of call attempts made by products that use this component. The call minutes are sourced from INCA. Allocated directly to a single Product. CO262 CO262 Intelligent Network links Allocate factors sourced from Call Volumes and Route Factor Model. CO263 CO263 CORE IN. Allocate factors sourced from Call Volumes and Route Factor Model. CO266 CO266 Common Intelligence Service Layer (CISL) Allocate factors sourced from Call Volumes and Route Factor Model. CO270 CO270 Signalling Transfer Point. Allocate factors sourced from Call Volumes and Route Factor Model. CO378 CO378 PC Rental 622Mbit/s link per km trunk. Allocated pro-rata to 622Mbit/s Trunk volumes sourced from CTCS. CO401 CO401 Netstream equipment. Allocated directly CO405 CO405 DMS 100 call centre. CO414 CO414 Digital IPLC: Digital Matrix Switches (DMS) that are used for BTs own call centres. This component captures costs such as maintenance for International Transmission Repeater Stations. CO415 CO415 Analogue international leased line: Captures cost of providing international circuits such as connections and maintenance. CO461 CO461 Private circuit test systems: Testing of the analogue network is carried out to protect provision of all services that use it. CO483 CO483 Flexible Bandwidth Services. This component captures costs such as the installation of Flexible Bandwidth Services (FBS) specific Costs populated from discrete assets policy code within CoW DMC. Allocated directly to a single product. Allocated directly to a single Product. Allocated directly to a single Product. Allocated to Products on the number of circuits of each Product. Volumes are sourced from PC Billing System/ COSMOSS (via Powerhouse). Allocated directly to a single Product. 214

215 Super Comp Comp Driver equipment in an exchange or customer s premises. It also captures the cost of FBS specific software. CO657 CO657 Framestream switches: Costs of electronics and maintenance associated with provided X75 protocol switches. CO658 CO658 Inter Framestream switch transmission: CO669 CO669 IP Network Dial IP: Captures transmission costs between X75 Framestream switches. CO670 CO670 IP Network Fixed Access: CO671 CO671 IP Network VPN: Costs associated with dial product such as modems and associated maintenance. This component contains the cost of the following types of equipment. BT Net Direct and Flex Network Terminal Equipment (NTE) Routers (connect the customer premises to the BT Network), BT Net Access Routers (connect the MSIP) and Synchronous Digital Hierarchy (SDH) access to the Internet Protocol (IP) Network at Colossus Points of Presence (POPs). This component captures the cost of the platform that delivers the following products. Metro, Equip, Internet Protocol (IP) Clear and Ethernet delivery services e.g. Fusion and Internet Protocol (IP) Clear Allocated directly to a single Product. Allocated directly to a single Product. Allocated directly to a single Product. Allocated to Product using customer totals on the Multi Services Intranet Platform (MSIP) Model. Allocated to Product using customer totals on the Multi Services Intranet Platform (MSIP) Model. CO673 CO673 IP Network BT Intranet. Allocated directly to a single product. CO678 CO678 SIP Servers. Allocated directly to a single product CO927 CO927 Directory enquiries non chargeable. Allocated directly to a single product. CO928 CO928 DQ Number Information Network: Inland and International Directory Enquiries (DQ) core transmission costs. Apportioned to Non chargeable AGs and Products on a minutes basis. 7.6 Component to Wholesale Broadband Access Services This section describes the apportionment of relevant component costs to Wholesale Broadband Access (WBA). The service destinations of the published super components are shown in the in the published annex called the Calculation of FAC based on component costs and usage factors (Annex 16) of the Current Cost Financial Statements. Comp onent CN854 Component: MSAN Combi card broadband access Super Component: Combi Card Broadband Published super component CN

216 Comp onent CN856 CN857 This component captures the maintenance (Profit and Loss, Pay, Non-Pay, Materials etc.) costs of ports in the Combi card that is situated with the MSAN asset. It is specific to the element of the Combi card that is used for Broadband. The Combi card supplies Broadband with access into the Network. Apportions to both WBC (Wholesale Broadband Connect) services which are migrated onto 21c and IPStream and Datastream services on the legacy network. These exhaust to access rental services in this case. The apportionment in ASPIRE and is based on the relative proportion of the factored end user rental volumes in each service. No component to service factors are applied to influence or weight the final result so in this case factored volume equals raw volume. The source is Wholesale Finance using the Wholesale Customer Reporting system (WCR) which provides the End User Rentals to which this component exhausts. Component: MSAN-Metro BRAS Broadband Link Super Component: MSAN-Metro BRAS This component captures the maintenance (Profit and Loss, Pay, Non-Pay, Materials etc.) costs of the electronics in the backhaul transmission between but not including the Ethernet Switch and the Metro node that are relevant to Broadband products. This component represents the EBD (Ethernet Backhaul Direct) platform consumed internally by Broadband products. The backhaul is a shared element of the network. Apportions to both WBC (Wholesale Broadband Connect) services which are migrated onto 21c and IPStream and Datastream services on the legacy network. The apportionment is based on the volume of end users for WBC services which are migrated onto 21c and IPstream and Datastream services on the legacy network factored by the bandwidth for each service. The bandwidth used is for the WBC product by market and by internal or external variant. The source for the bandwidth volumes is the BT Wholesale Bandwidth Measurement Tool. The source is Wholesale Finance using the Wholesale Customer Reporting system (WCR) which provides the End User Rentals to which this component exhausts and BT Wholesale Bandwidth Measurement Tool. Component: MSAN-Metro BRAS Broadband Length Super Component: MSAN-Metro BRAS This component captures the maintenance (Profit and Loss, Pay, Non-Pay, Materials etc.) costs of the duct and cabling in the backhaul transmission between the Msan and the Metro node that are relevant to Broadband products. The backhaul is a shared element of the network. Apportions to both WBC (Wholesale Broadband Connect) services which are migrated onto 21c and IPstream and Datastream services on the legacy network. The apportionment is based on the volume of end users for WBC services which are migrated onto 21c and IPStream and Datastream services on the legacy network factored by the bandwidth for each service. The bandwidth used is for the WBC product by market and by internal or external variant. The source for the bandwidth volumes is the BT Wholesale Bandwidth Measurement Tool. Published super component CN013 CN

217 Comp onent CN860 CN884 CN890 The source is Wholesale Finance using the Wholesale Customer Reporting system (WCR) which provides the End User Rentals to which this component exhausts and BT Wholesale Bandwidth Measurement Tool. Component: Metro Broadband Super Component: Core Metro Broadband This component captures the maintenance (Profit and Loss, Pay, Non-Pay, Materials etc.) costs of Broadband products contained within the Metro Node. The Metro Node contains elements that are Broadband specific e.g. BRAS (Broadband Remote Access server) and also elements that are shared among other product areas e.g. P-Routers. This component captures both the specific elements of the Metro that are Broadband related and the Broadband related cost of the shared elements. Apportions to both WBC (Wholesale Broadband Connect) services which are migrated onto 21c and IPStream and Datastream services on the legacy network. The apportionment is based on the volume of end users for WBC services which are migrated onto 21c and IPStream and Datastream services on the legacy network factored by the bandwidth for each service. The bandwidth used is for the WBC product by market and by internal or external variant. The source for the bandwidth volumes is the BT Wholesale Bandwidth Measurement Tool. The final result is therefore the original end user volume factored by the bandwidth. The source is Wholesale Finance using the Wholesale Customer Reporting system (WCR) which provides the End User Rentals to which this component exhausts and BT Wholesale Bandwidth Measurement Tool. Component: Edge Ethernet Aggregator Ports Broadband Super Component: Edge Ethernet Ports This component captures the maintenance (Profit and Loss, Pay, Non-Pay, Materials etc.) costs of ports in the EEA (Edge Ethernet Aggregator) that are used for Broadband products. The EEA is situated within the Metro Node and it reported separately to the Broadband Metro component. It provides access into the Metro Node from other parts of the network. The EEA is a shared element of the metro node. Apportions to both WBC (Wholesale Broadband Connect) services which are migrated onto 21c and IPStream and Datastream services on the legacy network. The apportionment is based on the volume of end users for WBC services which are migrated onto 21c and IPStream and Datastream services on the legacy network factored by the bandwidth for each service. The bandwidth used is for the WBC product by market and by internal or external variant. The source for the bandwidth volumes is the BT Wholesale Bandwidth Measurement Tool. The final result is therefore the original end user volume factored by the bandwidth. The source is Wholesale Finance using the Wholesale Customer Reporting system (WCR) which provides the End User Rentals to which this component exhausts and BT Wholesale Bandwidth Measurement Tool. Component: MSAN Broadband Access Super Component: Combi Card Broadband Access Published super component CN015 CN008 CN

218 Comp onent CN891 CN903 This component captures the maintenance (Profit and Loss, Pay, Non-Pay, Materials etc.) costs of the electronics in the backhaul transmission between the MSAN and up to and including the access port on the Ethernet Switch that are relevant to Broadband products. The backhaul is a shared element of the network. Apportions to both WBC (Wholesale Broadband Connect) services which are migrated onto 21c and IPSream and Datastream services on the legacy network. The apportionment is automatic in ASPIRE and is based on the relative end user rental volumes in each service. No component to service factors are applied to influence or weight the final result. The source is Wholesale Finance using the Wholesale Customer Reporting system (WCR) which provides the End User Rentals to which this component exhausts. Component: Ethernet Switch Broadband Super Component: 21CN Backhaul Link & Length This component captures the maintenance (Pay, Non-Pay, Materials etc.) costs of the electronics in the backhaul transmission contained in the Ethernet Switch, that is the element of the Ethernet Switch which is not used for access. This is a shared element of the network. Apportions to both WBC (Wholesale Broadband Connect) services which are migrated onto 21c and IPStream and Datastream services on the legacy network. The apportionment is based on the volume of end users for WBC services which are migrated onto 21c and IPStream and Datastream services on the legacy network factored by the bandwidth for each service. The bandwidth used is for the WBC product by market and by Internal or External variant. The source for the bandwidth volumes is the BT Wholesale Bandwidth Measurement Tool. The final result is therefore the original end user volume factored by the bandwidth. The source is Wholesale Finance using the Wholesale Customer Reporting system (WCR) which provides the End User Rentals to which this component exhausts and BT Wholesale Bandwidth Measurement Tool. Component: Metro-core broadband transmission Super Component: Core/Metro Broadband This component captures the maintenance (Pay, Non-Pay, Materials etc.) costs of the electronics in the transmission contained between Metro nodes and other Metro Nodes and Core nodes. This is a shared element of the network. Apportions to both WBC (Wholesale Broadband Connect) services which are migrated onto 21c and IPStream and Datastream services on the legacy network. The apportionment is based on the volume of end users for WBC services which are migrated onto 21c and IPStream and Datastream services on the legacy network factored by the bandwidth for each service. The bandwidth used is for the WBC product by market and by Internal or External variant. The source for the bandwidth volumes is the BT Wholesale Bandwidth Measurement Tool. The final result is therefore the original end user volume factored by the bandwidth. Published super component CN013 CN

219 Comp onent CO310 The source is Wholesale Finance using the Wholesale Customer Reporting system (WCR) which provides the End User Rentals to which this component exhausts and BT Wholesale Bandwidth Measurement Tool. Component: ATM customer interface 2Mbit/s Super Component: ATM Customer Interface 2Mb Cards This Component captures the cost of capital expenditure incurred from the deployment of 2Mbit/s Customer Interface Cards, namely, the cost of equipment provision, rearrangement or recovery. These costs fall within the ATM (Asynchronous Transfer Mode) Class of Work (CoW). The types of cost include pay and stores costs. This equipment is located in the ATM PoP (Point of Presence) at the edge of the ATM Network and links the customer's premises via a private circuit, to the ATM network. to split costs between WBA and Other services Allocated to the WBA Services (SMxxx) and SOC10 (ATM customer interface 2Mbit/s ). The basis of allocation is on mean year port volumes utilised by the range of products accessing the ATM Network through the 2Mbit/s port card. The sum of the residual product ports (non WBA) over the total ports form the allocation to SOC10 and the remainder goes to the WBA Services. AIM (Analysis and Inventory Module). to split costs across WBA services Step 1 Using data from the element manager (source AIM) a list of all Virtual Paths (VPs) on the ATM is compiled showing the VPID along with the booked bandwidth and A end port (customer interface port). Step 2 The first four characters of the VPID is used to determine the product. Step 3 Using data reports from NuNCAS, the Broadband s VPIDs are matched to their originating DSLAM and exchange. The exchange code is compared to the published Ofcom market document so that each DSLAM (and therefore VPID) can be allocated to its relevant market. Any exchanges that are not included in Ofcom s document are shown as allocated to market 0. This would include DSLAMs such as those used for trials, annual events such as the The Suffolk Show and specific sites such as Heathrow Terminal 5. Step 4 The A end port identifiers are matched to the port file report (source element manager via AIM) in order to determine the type of port, for example E1 (2Mbit/s), E3 (34 Mbit/s), STM1 (155 Mbit/s), Ethernet etc. Step 5 The data is then combined to produce a list of all A end ports with their associated type (e.g. E1), and details of how much booked bandwidth by product is using that port. Step 6 Using the booked bandwidth by product (and market) as a percentage of the total booked bandwidth on each port, a proportion of each port is allocated to the relevant products. Step 7 Using the port allocations calculated in step 6, the total port allocation by port type and product is calculated and a summary produced. Step 8 In order to produce a complete allocation for Broadband, the entries in the above table specifically for Broadband are put into a separate table. The market 0 allocation is allocated proportionately across the other three markets, both for Datastream and then for IPStream. Also, the IPStream Mix line is allocated proportionately across the three IPStream markets. Finally the Broadband test circuits allocation is shared proportionately across both IPStream and Datastream by market. Published super component CO310 Market E1's E3's STM1 219

220 Comp onent DataStream 1 Xx Xx Xx 2 Xx Xx Xx 3 Xx Xx Xx Published super component IPStream 1 Xx Xx Xx 2 Xx Xx Xx 3 Xx Xx Xx xx xx xx Step 9 Using the summary table above, the actual percentage allocation by product and market can be determined. For the 2 Mbit/s E1 circuits this equates to: Market E1's DataStream 1 xx% 2 xx% 3 xx% IPStream 1 xx% 2 xx% 3 xx% xx% Step 10 An allocation by internal and external is then calculated using end user volumes (source Wholesale Customer Reporting (WCR) system). Market 1 IPStream Internal Xx xx% IPStream External Xx xx% Datastream Internal Xx xx% Datastream External Xx xx% CO311 The allocation calculated in step 9 is then multiplied by the above in order to calculate an allocation to each product, internal / external and market combination. AIM (Analysis and Inventory Module) takes its data from the MSIP element managers, it interrogates the ATM platform itself to compile lists of ports and routing. Component: ATM customer interface 34Mbit/s Super Component: ATM Customer Interface 34 Mbit/s Cards This Component captures the cost of capital expenditure incurred from the deployment of 34 Mbit/s Customer Interface Cards, namely, the cost of equipment provision, rearrangement or recovery. These costs fall within the ATM (Asynchronous Transfer Mode) Class of Work (CoW). CO

221 Comp onent The types of cost include pay and stores costs. This equipment is located in the ATM PoP (Point of Presence) at the edge of the ATM Network and links the customer's premises via a private circuit, to the ATM network. ATM is a high throughput packet switching protocol that provides statistical multiplexing, broadband (multimegabit) data rates, multiple virtual circuits per network access, and flexible bandwidth per connection. to split costs between WBA and Other services Allocated to the WBA Services (SMxxx) and SOC11 (ATM customer interface 34 Mbit/s). The basis of allocation is on mean year port volumes utilised by the range of products accessing the ATM Network through the 34 Mbit/s port card. The sum of the residual product ports (non WBA) over the total ports form the allocation to SOC11 and the remainder goes to the WBA Services. AIM (Analysis and Inventory Module). to split costs across WBA services Step 1 Using data from the element manager [source AIM] a list of all Virtual Paths (VPs) on the ATM is compiled showing the VPID along with the booked bandwidth and A end port (customer interface port). Step 2 The first four characters of the VPID is used to determine the product. Step 3 Using data reports from NuNCAS, the Broadband s VPIDs are matched to their originating DSLAM and exchange. The exchange code is compared to the published Ofcom market document so that each DSLAM (and therefore VPID) can be allocated to its relevant market. Any exchanges that are not included in Ofcom s document are shown as allocated to market 0. This would include DSLAMs such as those used for trials, annual events such as The Suffolk Show and specific sites such as Heathrow Terminal 5. Step 4 The A end port identifiers are matched to the port file report [source element manager via AIM] in order to determine the type of port, for example E1 (2 Mbit/s), E3 (34 Mbit/s), STM1 (155 Mbit/s), Ethernet etc. Step 5 The data is then combined to produce a list of all A end ports with their associated type (e.g. E1), and details of how much booked bandwidth by product is using that port. For example, below is an extract: Published super component Product E1 E3 STM1 Broadband Test Ccts Xx Xx Xx Btnet Xx Xx Xx Cellstream Xx Xx Xx DataStream Mkt 0 Xx Xx Xx DataStream Mkt 1 Xx Xx Xx DataStream Mkt 2 Xx Xx Xx DataStream Mkt 3 Xx Xx Xx Enterprise Ethernet Xx Xx Xx IPEnabled Xx Xx Xx IPStream Mkt 0 Xx Xx Xx IPStream Mkt 1 Xx Xx Xx IPStream Mkt 2 Xx Xx Xx IPStream Mkt 3 Xx Xx Xx IPStream Mix Xx Xx Xx 221

222 Comp onent Management traffic Xx Xx Xx Megastream Xx Xx Xx Miscellaneous Xx Xx Xx Site Connect Xx Xx Xx xx xx xx Step 6 Using the booked bandwidth by product (and market) as a percentage of the total booked bandwidth on each port, a proportion of each port is allocated to the relevant products. Step 7 Using the port allocations calculated in step 6, the total port allocation by port type and product is calculated and a summary is produced. Step 8 In order to produce a complete allocation for Broadband, the entries in the above table specifically for Broadband are put into a separate table. The market 0 allocation is allocated proportionately across the other three markets, both for Datastream and then for IPStream. Also, the IPStream Mix line is allocated proportionately across the three IPStream markets. Finally the Broadband test circuits allocation is shared proportionately across both IPStream and Datastream by market. Published super component Market E1's E3's STM1 DataStream 1 xx xx xx 2 xx xx xx 3 xx xx xx xx xx xx IPStream xx xx xx xx xx xx xx xx xx xx xx xx Step 9 Using the summary table above, the actual percentage allocation by product and market can be determined. For the 34 Mbit/s E3 circuits this equates to: Market E3's DataStream 1 xx% 2 xx% 3 xx% IPStream 1 xx% 2 xx% 3 xx% xx% Step 10 - An allocation by internal and external is then calculated using end user volumes (source Wholesale Customer Reporting (WCR) system). Market 1 IPStream Internal xx xx% IPStream External xx xx% 222

223 Comp onent Published super component Datastream Internal xx xx% Datastream External xx xx% CO312 The allocation calculated in step 9 is then multiplied by the above in order to calculate an allocation to each product, internal / external and market combination. Data Source AIM (Analysis and Inventory Module) takes its data from the MSIP element managers, it interrogates the ATM platform itself to compile lists of ports and routing, and the WCR System. Component: ATM customer interface > 155Mbit/s Super Component: ATM Customer Interface >155 Mbit/s Cards This Component captures the cost of capital expenditure incurred from the deployment of 155 Mbit/s and higher bandwidth Customer Interface Cards, namely, the cost of equipment provision, rearrangement or recovery. These costs fall within the ATM (Asynchronous Transfer Mode) Class of Work (CoW). The types of cost include pay and stores pay. ATM is a high throughput packet switching protocol that provides statistical multiplexing, broadband (multimegabit) data rates, multiple virtual circuits per network access, and flexible bandwidth per connection. to split costs between WBA and Other services Allocated to the WBA Services (SMxxx) and SOC12 (ATM customer interface >155 Mbit/s). The basis of allocation is on mean year port volumes utilised by the range of products accessing the ATM Network through the 155 Mbit/s port card. The sum of the residual product ports (non WBA) over the total ports form the allocation to SOC12 and the remainder goes to the WBA Services. AIM (Analysis and Inventory Module). to split costs across WBA services Step 1 Using data from the element manager [source AIM] a list of all Virtual Paths (VPs) on the ATM is compiled showing the VPID along with the booked bandwidth and A end port (customer interface port). Step 2 The first four characters of the VPID is used to determine the product. Step 3 Using data reports from NuNCAS, the Broadband s VPIDs are matched to their originating DSLAM and exchange. The exchange code is compared to the published Ofcom market document so that each DSLAM (and therefore VPID) can be allocated to its relevant market. Any exchanges that are not included in Ofcom s document are shown as allocated to market 0. This would include DSLAMs such as those used for trials, annual events such as The Suffolk Show and specific sites such as Heathrow Terminal 5. Step 4 The A end port identifiers are matched to the port file report [source element manager via AIM] in order to determine the type of port, for example E1 (2 Mbit/s), E3 (34 Mbit/s), STM1 (155 Mbit/s), Ethernet etc. Step 5 The data is then combined to produce a list of all A end ports with their associated type (e.g. E1), and details of how much booked bandwidth by product is using that port. Step 6 Using the booked bandwidth by product (and market) as a percentage of the total booked bandwidth on each port, a proportion of each port is allocated to the relevant products. Step 7 Using the port allocations calculated in step 6, the total port allocation by port type and product is calculated and a summary produced CO

224 Comp onent Published super component Product E1 E3 STM1 Broadband Test Ccts Xx Xx Xx Btnet Xx Xx Xx Cellstream Xx Xx Xx DataStream Mkt 0 Xx Xx Xx DataStream Mkt 1 Xx Xx Xx DataStream Mkt 2 Xx Xx Xx DataStream Mkt 3 Xx Xx Xx Enterprise Ethernet Xx Xx Xx IPEnabled Xx Xx Xx IPStream Mkt 0 Xx Xx Xx IPStream Mkt 1 Xx Xx Xx IPStream Mkt 2 Xx Xx Xx IPStream Mkt 3 Xx Xx Xx IPStream Mix Xx Xx Xx Management traffic Xx Xx Xx Megastream Xx Xx Xx Miscellaneous Xx Xx Xx Site Connect Xx Xx Xx xx xx xx Step 8 In order to produce a complete allocation for Broadband, the entries in the above table specifically for Broadband are put into a separate table. The market allocation is allocated proportionately across the other three markets, both for Datastream and then for IPStream. Also, the IPStream Mix line is allocated proportionately across the three IPStream markets. Finally the Broadband test circuits allocation is shared proportionately across both IPStream and Datastream by market. Market E1's E3's STM1 DataStream 1 Xx Xx Xx 2 Xx Xx Xx 3 xx xx xx IPStream 1 Xx Xx Xx 2 Xx Xx Xx 3 xx xx xx Xx Xx Xx Step 9 Using the summary table above, the actual percentage allocation by product and market can be determined. For the 155 Mbit/s STM1 circuits this equates to: Market STM1 DataStream 1 xx% 2 xx% 224

225 Comp onent Published super component 3 xx% IPStream 1 xx% 2 xx% 3 xx% xx% Step 10 An allocation by internal and external is then calculated using end user volumes (source Wholesale Customer Reporting (WCR) system). Market 1 IPStream Internal xx% IPStream External xx% CO313 Datastream Internal 3691 xx% Datastream External xx% The allocation calculated in step 9 is then multiplied by the above in order to calculate an allocation to each product, internal / external and market combination. Data Source AIM (Analysis and Inventory Module) takes its data from the MSIP element managers, it interrogates the ATM platform itself to compile lists of ports and routing, and the WCR System. Component: ATM Network Interface Cards Super Component: ATM Network Interface This Component captures the cost of capital expenditure incurred from the deployment of Network Interface Cards, namely, the cost of equipment provision, rearrangement or recovery. These costs fall within the ATM (Asynchronous Transfer Mode) Class of Work (CoW). Types of cost include pay and stores pay. ATM is a high throughput packet switching protocol that provides statistical multiplexing, broadband (multimegabit) data rates, multiple virtual circuits per network access, and flexible bandwidth per connection. to split costs between WBA and Other services Allocated to the WBA Services (SMxxx) and SOC13 (ATM network interface). The basis of allocation is on mean year port volumes required by the ATM Network to direct all access ports across the ATM Network. The sum of the residual product ports (non WBA) over the total ports form the allocation to SOC13 and the remainder goes to the WBA Services. AIM (Analysis and Inventory Module). to split costs across WBA services Step 1 Using data from the element manager (source AIM) a list of all transmission circuits in the ATM platform is compiled, along with all the Virtual Paths (VPs) using each circuit. Also included is the booked bandwidth for each VP. Step 2 The first four characters of the VPID is used to determine the product. Step 3 Using data reports from NuNCAS, the Broadband s VPIDs are matched to their originating DSLAM and exchange. The exchange code is compared to the published Ofcom market document so that CO

226 Comp onent each DSLAM (and therefore VPID) can be allocated to its relevant market. Any exchanges that are not included in Ofcom s document are shown as allocated to market 0. This would include DSLAMs such as those used for trials, annual events such as The Suffolk Show and specific sites such as Heathrow Terminal 5. Published super component Step 4 A table is then prepared showing all the transmission circuit s IDs and the booked bandwidth on each circuit by product (and market for Broadband). Step 5 Using the booked bandwidth by product (and market) as a percentage of the total booked bandwidth on each port, a proportion of each port is allocated to the relevant products. However, for each circuit there will be two network interface ports, one at each end. Therefore this allocation is doubled to produce the final port allocation for this circuit. Step 6 Using the port allocations calculated in step 5, the total port allocation by port type and product is calculated and a summary produced: Product Broadband Test Ccts Btnet Cellstream DataStream Mkt 0 DataStream Mkt 1 DataStream Mkt 2 DataStream Mkt 3 e-line Enterprise Ethernet IPClear IPEnabled IPStream Mkt 0 IPStream Mkt 1 IPStream Mkt 2 IPStream Mkt 3 IPStream Mix Management traffic Megastream Metroflex Miscellaneous Site Connect Share of Port Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Step 7 In order to produce a complete allocation for Broadband, the entries in the above table specifically for Broadband are put into a separate table. The market 0 allocation is allocated proportionately across the other three markets, both for Datastream and then for IPStream. Also, the IPStream Mix line is allocated proportionately across the three IPStream markets. Finally the Broadband test circuits allocation is shared proportionately across both IPStream and Datastream by market. Market Share of Port DataStream 1 Xx 2 Xx 3 Xx IPStream 1 Xx 2 Xx 226

227 Comp onent Published super component 3 Xx Xx Step 8 Using the summary table above, the actual percentage allocation by product and market can be determined. This equates to: Market Allocation DataStream 1 xx% 2 xx% 3 xx% IPStream 1 xx% 2 xx% 3 xx% Step 9 An allocation by internal and external is then calculated using end user volumes (source Wholesale Customer Reporting (WCR) system). Market 1 IPStream Internal Xx xx % IPStream External Xx xx% Datastream Internal Xx xx% Datastream External Xx xx% The allocation calculated in step 8 is then multiplied by the above in order to calculate an allocation to each product, internal / external and market combination. Data Source AIM (Analysis and Inventory Module) takes its data from the MSIP element managers, it interrogates the ATM platform itself to compile lists of ports and routing, and the WCR System. CO314 Component: ATM Network Switching Super Component: ATM Network Switching This Component captures the cost of network switching ports deployed in the ATM (Asynchronous Transfer Mode) platform. ATM is a high throughput packet switching protocol that provides statistical multiplexing, broadband (multimegabit) data rates, multiple virtual circuits per network access, and flexible bandwidth per connection. to split costs between WBA and Other services Allocated to the WBA Services (SMxxx) and SOC14 (ATM network switching). The basis of allocation is the volume of Switched Bandwidth required by the ATM Network to carry the products across the ATM Network. The sum of the residual product bandwidth (non WBA) over the total product bandwidth form the allocation to SOC14 and the remainder goes to the WBA Services. AIM (Analysis and Inventory Module). to split costs across WBA services Step 1 Using data from the element manager [source AIM] a list of all Virtual Paths (VPs) on the ATM is CO

228 Comp onent compiled showing the VPID along with the booked bandwidth and A end port (customer interface port). Step 2 The first four characters of the VPID is used to determine the product. Step 3 Using data reports from NuNCAS, the Broadband s VPIDs are matched to their originating DSLAM and exchange. The exchange code is compared to the published Ofcom market document so that each DSLAM (and therefore VPID) can be allocated to its relevant market. Any exchanges that are not included in Ofcom s document are shown as allocated to market 0. This would include DSLAMs such as those used for trials, annual events such as The Suffolk Show and specific sites such as Heathrow Terminal 5. Step 4 The A end port identifiers are matched to the port file report [source element manager via AIM] in order to determine the type of port, for example E1 (2 Mbit/s), E3 (34 Mbit/s), STM1 (155 Mbit/s), Ethernet etc. Step 5 The data is then combined to produce a list of all A end ports with their associated type (e.g. E1), and details of how much booked bandwidth by product is using that port. Step 6 Using the booked bandwidth by product (and market) as a percentage of the total booked bandwidth on each port, a proportion of each port is allocated to the relevant products. Step 7 As the Ethernet ports could be used for either a 10 Mbit/s, 30 Mbit/s or 100 Mbit/s service, the Ethernet ports are now split into their relevant bandwidth. This is done by utilising the data in the PSID Notes field in the Portfile report [source Network Equipment Inventory NEI]. Step 8 Using the port allocations calculated in step 6 and 7, the total port allocation by port type and product is calculated and a summary produced. Then, in order to calculate the actual bandwidth switched by product, the port allocations are multiplied by the port bandwidth. This is then doubled to account for bandwidth being switched at both ends. Step 9 The total switch bandwidth by product is then calculated by adding together the switched bandwidth of every port type. Published super component Product Broadband Test Ccts Btnet Cellstream DataStream Mkt 0 DataStream Mkt 1 DataStream Mkt 2 DataStream Mkt 3 e-line Enterprise Ethernet IPClear IPEnabled IPStream Mkt 0 IPStream Mkt 1 IPStream Mkt 2 IPStream Mkt 3 IPStream Mix Management traffic Megastream Metroflex Miscellaneous Site Connect Grand Total Switch Bwd Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx xx 228

229 Comp onent Published super component Step 10 In order to produce a complete allocation for Broadband, the entries in the above table specifically for Broadband are put into a separate table. The market 0 allocation is allocated proportionately across the other three markets, both for Datastream and then for IPStream. Also, the IPStream Mix line is allocated proportionately across the three IPStream markets. Finally the Broadband test circuits allocation is shared proportionately across both IPStream and Datastream by market. Market Switched Bwd (Mb) DataStream 1 Xx 2 Xx 3 Xx IPStream 1 Xx 2 Xx 3 Xx Xx Step 11 Using the summary table above, the actual percentage allocation by product and market can be determined. This equates to: Market Allocation DataStream 1 xx% 2 xx% 3 xx% IPStream 1 xx% 2 xx% 3 xx% Step 12 An allocation by internal and external is then calculated using end user volumes (source Wholesale Customer Reporting (WCR) system). Market 1 IPStream Internal xx% IPStream External xx% CO316 Datastream Internal 3691 xx% Datastream External xx% The allocation calculated in step 8 is then multiplied by the above in order to calculate an allocation to each product, internal /external and market combination. Data Source AIM (Analysis and Inventory Module) takes its data from the MSIP element managers, it interrogates the ATM platform itself to compile lists of ports and routing, and the WCR System. Component: Inter ATM transmissions Super Component: Inter ATM Transmissions CO

230 Comp onent This Component captures the cost of transmission connecting all of the ATM (Asynchronous Transfer Mode) POP s) Points of Presence nodes together. ATM is a high throughput packet switching protocol that provides statistical multiplexing, broadband (multimegabit) data rates, multiple virtual circuits per network access, and flexible bandwidth per connection. to split costs between WBA and Other services Allocated to the WBA Services (SMxxx) and SOC16 (Inter ATM transmissions). The basis of allocation is the volume of Virtual Path Bandwidth required by to connect the ATM Network together to carry the products across the ATM Network. The sum of the residual Virtual Path bandwidth (non WBA) over the total Virtual Path bandwidth form the allocation to SOC16 and the remainder goes to the WBA Services. Network Equipment Inventory (NEI). to split costs across WBA services Step 1 Using data from the Network Equipment Inventory (NEI) a list of all Transmission circuits in the ATM is compiled showing their A and B end locations and size of circuit (for example STM1). Step 2 Using the grid reference on the Property Portal, the eastings and northings of both ends of each circuit (A end and B end) are added, and these are then used to calculate the radial distance of each transmission circuit. Step 3 A proxy cost for each transmission circuit is then calculated using two costs from the RFS. 1) Link - TISBO market : PPCs 140/155 Mbit/s FAC link cost. 2) Length - Wholesale Trunk Segments: trunk PPC segments on a per Km basis (FAC). These costs are multiplied by 4 for the STM4 circuits, and by 4 again to get costs for an STM16 circuit. This ensures that each transmission circuit has a value relative to its size and distance. Step 4 Using data from the element manager [source AIM] a list of all transmission circuits in the ATM platform is compiled, along with all the Virtual Paths (VPs) using each circuit. Also included is the booked bandwidth for each VP. Step 5 The first four characters of the VPID is used to determine the product. Step 6 Using data reports from NuNCAS, the Broadband s VPIDs are matched to their originating DSLAM and exchange. The exchange code is compared to the published Ofcom market document so that each DSLAM (and therefore VPID) can be allocated to its relevant market. Any exchanges that are not included in Ofcom s document are shown as allocated to market 0. This would include DSLAMs such as those used for trials, annual events such as The Suffolk Show and specific sites such as Heathrow Terminal 5. Step 7 A table is then prepared showing all the transmission circuit s IDs and the booked bandwidth on each circuit by product (and market for Broadband). Step 8 Using the booked bandwidth by product (and market) as a percentage of the total booked bandwidth, a percentage allocation to product is calculated for each circuit. Step 9 The proxy costs for each circuit calculated in step 3 are then allocated out to products based on the allocation percentages calculated above. If there are any circuits with no booked bandwidth on them, the average allocation by product for all other circuits is used to allocate that circuits cost. Step 10 The total proxy cost by product is then calculated by adding together the product cost allocations for every circuit. Published super component Product Cost 230

231 Comp onent Published super component Broadband Test Ccts Btnet Cellstream DataStream Mkt 0 DataStream Mkt 1 DataStream Mkt 2 DataStream Mkt 3 e-line Enterprise Ethernet IPClear IPEnabled IPStream Mkt 0 IPStream Mkt 1 IPStream Mkt 2 IPStream Mkt 3 IPStream Mix Management traffic Megastream Metroflex Miscellaneous Site Connect Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx Xx xx Step 11 In order to produce a complete allocation for Broadband, the entries in the above table specifically for Broadband are put into a separate table. The market 0 allocation is allocated proportionately across the other three markets, both for Datastream and then for IPStream. Also, the IPStream Mix line is allocated proportionately across the three IPStream markets. Finally the Broadband test circuits allocation is shared proportionately across both IPStream and Datastream by market. Market Cost DataStream 1 xx 2 xx 3 xx IPStream 1 xx 2 xx 3 xx xx Step 12 Using the summary table above, the actual percentage allocation by product and market can be determined. This equates to: Market Allocation DataStream 1 xx% 2 xx% 231

232 Comp onent Published super component 3 xx% IPStream 1 xx% 2 xx% 3 xx% Step 13 An allocation by internal and external is then calculated using end user volumes (source Wholesale Customer Reporting (WCR) system). Market 1 IPStream Internal xx% IPStream External xx% CO609 CO681 Datastream Internal 3691 xx% Datastream External xx% The allocation calculated in step 12 is then multiplied by the above in order to calculate an allocation to each product, internal / external and market combination. Data Source Using data from the Network Equipment Inventory (NEI) a list of all Transmission circuits in the ATM is compiled showing their A and B end locations and size of circuit (for example STM-1), and the WCR System. Component: Selling, General and Administration (SG&A) Broadband Super Component: SG&A This Component captures the Profit and Loss (Pay, Depreciation etc.) and Balance Sheet (Fixed Asset) cost of the Selling, General and Administration activity in Wholesale Markets supporting Broadband. This component has been set up to specifically capture Broadband SG&A costs only and includes costs previously allocated to CO509 (SGA Other Access). This component allocates to appropriate Services driven on Network Charge Control (NCC) revenue for Wholesale Broadband Access services. Data Source ASPIRE report Analysis of Charges shows the NCC revenue by Service, these services are then mapped to the appropriate SG&A component and the Price is then used as the usage factor from Component to Service relationship which is loaded into ASPIRE. Component: Broadband backhaul circuits Super Component: Broadband Backhaul Circuits Costs relating to broadband backhaul circuits. These circuits provide connection between the DSLAMs in the local exchange to the ATM conveyance network. The costs include depreciation costs and overheads such as accommodation, maintenance and software. Step 1 a list of all DSLAMs in the network is prepared, including the exchange code [source NISM]. The exchange code is compared to the published Ofcom market document so that each DSLAM can be allocated to its relevant market. Any exchanges that are not included in Ofcom s document are shown as CO509 CO

233 Comp onent allocated to market 0. This would include DSLAMs such as those used for trials, annual events such as The Suffolk Show and specific sites such as Heathrow Terminal 5. Other key data items included are the DSLAM type [source NISM] and the ATM switch that the backhaul terminates at [source ATM element manager via AIM]. The DSLAM type includes within it a reference to the size of the backhaul circuit, either E1, E3 or STM-1. Step 2 Some DSLAMs do not have their own dedicated backhaul but share a backhaul between 2 or more DSLAMs (sub tending) in a parent / child relationship. Published super component Using data that shows the sub tending relationship between DSLAM [source FastCAP] the list of DSLAMs is then split in two, firstly those DSLAMs that have a backhaul circuit from the ATM switch (dedicated and parent) and secondly, child DSLAM that do not have their own backhaul but share a backhaul via another (parent) DSLAM. Step 3 The VP bandwidth at each DSLAM is then added [source NuNCAS] split by IPStream and DataStream. The total bandwidth on each backhaul circuit is then calculated, including both parent and child bandwidth. Step 4 Using the grid reference on the Property Portal, the eastings and northings of all exchanges (A end) and ATM nodes (B end) are added, and these are then used to calculate the radial distance of each backhaul circuit. Step 5 The distance for the segments can be calculated from report data from NISM (Network Inventory Management System) and NUNCAS (New Network Capacity Assignment System). Step 6 A proxy cost for each backhaul circuit is then calculated using the fully allocated component costs of PPC s [source: Wholesale Trunk Segments cost data from the 2009 Current Cost Financial Statements ]. This ensures that each backhaul circuit has a value relative to its size (2 Mbit/s, 34 Mbit/s, 155 Mbit/s) and distance. There are some exchanges where the DSLAM and the ATM node are co-located, i.e. the serving ATM switch is in the same building as the DSLAM. In these cases, the distance is zero and no cost has been calculated as these would be internal across the floor circuits. Step 7 Where the backhaul is shared between more than one DSLAM (sub tending), this proxy cost calculated in step 6 is then allocated proportionately to each DSLAM using the backhaul based on the bandwidth used. Step 8 Finally, the proxy cost is allocated out to IPStream and DataStream products based on the proportional bandwidth usage of each circuit. There may be cases where the total bandwidth on a backhaul is zero, for example if the associated DSLAM is in the process of being recovered from the network or where a new DSLAM and backhaul has been installed but does not yet have any end users. In these cases the backhaul is allocated 100% to IPStream. IPStream end users exist in every enabled exchange whereas DataStream end users do not. Also there continues to be growth in IPStream end users in some exchanges but DataStream end users are declining rapidly. Therefore IPStream would be the driver for any new provision. Step 9 A summary is prepared showing the total proxy cost by market and product 233

234 Comp onent Published super component Market Total Costs IPStream Allocation DataStream Allocation 0 xx xx xx 1 xx xx xx 2 xx xx xx 3 xx xx xx Step 10 Where a sub tending relationship exists, this could take either one of two forms. In some cases the parent and child DSLAM are both in the same exchange and are connected to each other in the rack. However, in other cases the parent and child DSLAMs are in different exchanges and must therefore have a circuit connecting them. Using the grid reference on the Property Portal, the eastings and northings of both the parent and the child DSLAMs are used to calculate the radial distance of each circuit. The size of the circuit is determined by looking at the child booked bandwidth and determining the smallest size circuit that would be required. If the bandwidth > 32 Mbit/s then an STM1 circuit is assumed If the bandwidth is 32 Mbit/s but >1.75 Mbit/s then an E3 circuit is assumed If the bandwidth is 1.75 Mbit/s then and E1 circuit is assumed Step 11 Using the above data, a proxy cost is calculated for the child to parent links following the methodology in Steps 5 and 6. The proxy cost is allocated out to IPStream and DataStream products based on the proportional bandwidth usage of each circuit and a summary is prepared showing the total proxy cost by market and product. Step 12 The two summary tables produced at step 9 (dedicated backhauls and parent) and step 11 (child to parent links) are added together to produce a final summary table: Backhaul P /12 by market Market Total Cost Market % IPStream Cost DataStream Cost 0 xx xx% xx xx 1 xx xx% xx xx 2 xx xx% xx xx 3 xx xx% xx xx xx An allocation is then calculated by market for each product. Market 0 is allocated proportionately across the other three markets: Market IPStream Allocation DataStream Allocation 1 xx% xx% 2 xx% xx% 3 xx% xx% xx% Step 13 An allocation by internal and external is then calculated using end user volumes [source Wholesale Customer Reporting (WCR) system]. xx% 234

235 Comp onent Market 1 IPStream Internal Xx xx% IPStream External Xx xx% Published super component CR118 CR187 CR188 Datastream Internal Xx xx% Datastream External Xx xx% The allocation calculated in step 12 is then multiplied by the above in order to calculate an allocation to each product, internal / external and market combination. Data Source NISM. ATM element manager via AIM. FastCap. NuNCAS. WCR System. Component: ADSL Connections (Wholesale) Super Component: ADSL Connections This Component captures the costs associated with the Provision and Installation costs for Asymmetric Digital Subscriber Line (ADSL). The Class of Work (CoW) associated with this Component is Circuit Provision - asymmetric Digital Subscriber Line (NCDSL). This CoW with failed Broadband provision of service activities. Types of cost include stores and pay costs. Allocated to BT Wholesale WBA end user Services driven on 21CN and 20CN connection volumes. Data Source The source for allocating the costs is Wholesale Customer Reporting (WCR). Component: Broadband Line Testing Systems Super Component: Broadband Line Testing Systems This component captures the depreciation of the EvoTAM test equipment that support the relevant Broadband products. The apportionment in ASPIRE is based on the relative proportion of depreciation directly attributed from CoW WTMDF (Wholesale Test Equipment and MDF). In this case there are 3 asset policy codes within CoW WTMDF that are directly attributable to Broadband line test systems. The cumulative value of these are weighted against the other non broadband asset policy code to form the base. The source is the BT TSO Asset Register at P12. Component: DSLAM overheads Super Component: DSLAM CO118 CO187 CO

236 Comp onent Overheads relating to Digital Subscriber Line Access Multiplexer (DSLAM). DSLAM equipment contains subscriber access cards and concentration to enable broadband services over the copper access network. The component includes costs such as accommodation, maintenance and software. This component excludes overheads relating to capitalised pay (included with CR189). Step 1 a list of all DSLAMs in the network is prepared, including the exchange code [source NISM]. The list of DSLAMs is based on those in use as at period 9. The exchange code is compared to the published Ofcom market document so that each DSLAM can be allocated to its relevant market. Any exchanges that are not included in Ofcom s document are shown as allocated to market 0. This would include DSLAMs such as those used for trials, annual events such as The Suffolk Show and specific sites such as Heathrow Terminal 5. Step 2 Based on an analysis of the various types of cost for DSLAM overheads, the overall component costs are split into fixed costs and variable (per user) costs. Fixed costs are allocated evenly to all DSLAMs, whereas variable costs are allocated to DSLAMs proportionately to the number of end users served by each DSLAM. For each DSLAM, the volume of IPStream end users and DataStream end users is shown, [source NuNCAS] and this is used to allocate a proportion of each DSLAM fixed costs to a product. For example, a DSLAM has 100 end users in total. 90 are IPStream end users and 10 are DataStream end users. Therefore 90/100 = 0.9 of the DSLAM costs are allocated to IPStream and 10/100 = 0.1 of the DSLAM is allocated to DataStream. There may be cases where the total number of end users on a DSLAM is zero, for example if the DSLAM is in the process of being recovered from the network or where a new DSLAM has been installed but does not yet have any end users. In these cases the DSLAM is allocated 100% to IPStream. IPStream end users exist in every enabled exchange whereas DataStream end users do not. Also there continues to be growth in IPStream end users in some exchanges but DataStream end users are declining rapidly. Therefore IPStream would be the driver for any new provision. Step 3 For each DSLAM, an analysis is performed to determine whether the DSLAM is installed to provide end-user capacity or backhaul capacity. For those DSLAMs which are installed to provide backhaul capacity, the fixed costs are separately identified and are allocated to the bandwidth services within the relevant market. Step 4 The total allocation to product and market is summarised in a table: Market Total IPS-eu DS-eu IPS-bw DS-bw 0 xx xx xx xx xx 1 xx xx xx xx xx 2 xx xx xx xx xx 3 xx xx xx xx xx xx xx xx xx xx Published super component Step 5 an allocation is then calculated by market for each product. Market 0 is allocated proportionately across the other three markets: Market IPS Allocation DS Allocation 0 xx% xx% 1 xx% xx% 2 xx% xx% 3 xx% xx% xx% xx% Step 6 An allocation by internal and external is then calculated using end user volumes [source Wholesale Customer Reporting (WCR) system]. Market 1 IPStream Internal Xxx xx% IPStream External Xxx xx% Datastream Internal Xxx xx% 236

237 Comp onent CR189 Datastream External Xxx xx% The allocation calculated in step 4 is then multiplied by the above in order to calculate an allocation to each product, internal / external and market combination. NISM. NunCAS. WCR. Component: DSLAM capital / maintenance Super Component: DSLAM This component is mainly comprised of depreciation costs relating to Digital Subscriber Line Asynchronous Modems (DSLAM). DSLAM equipment contains subscriber access cards and concentration to enable broadband services over the copper access network. The component also includes some overheads as a result of the capitalised pay associated with the DSLAMs. Step 1 a list of all DSLAMs in the network is prepared, including the exchange code [source NISM]. The list of DSLAMs is based on those in use as at period 9. The exchange code is compared to the published Ofcom market document so that each DSLAM can be allocated to its relevant market. Any exchanges that are not included in Ofcom s document are shown as allocated to market 0. This would include DSLAMs such as those used for trials, annual events such as The Suffolk Show and specific sites such as Heathrow Terminal 5. Step 2 each DSLAM is then matched to its Connected to Network date (or planned date if not available), [source NISM]. The asset life of DSLAMs is 6 years. All DSLAMs that are fully depreciated, i.e. more than 6 years old, based on their Connected to Network date, are excluded from further analysis. Step 3 for each remaining DSLAM, depreciation and capital costs are split into fixed and variable costs according to an analysis of the DSLAM component modularity using current prices. Fixed costs are allocated evenly to all remaining DSLAMs, whereas variable costs are allocated to remaining DSLAMs proportionately to the number of end users served by each DSLAM. For each DSLAM, the volume of IPStream end users and Datastream end users is shown, [source NuNCAS] and this is used to allocate a proportion of each DSLAM to a product. For example, a DSLAM has 100 end users in total. 90 are IPStream end users and 10 are DataStream end users. Therefore 90/100 = 0.9 of the DSLAM is allocated to IPStream and 10/100 = 0.1 of the DSLAM is allocated to DataStream. There may be cases where the total number of end users on a DSLAM is zero, for example if the DSLAM is in the process of being recovered from the network or where a new DSLAM has been installed but does not yet have any end users. In these cases the DSLAM is allocated 100% to IPStream. IPStream end users exist in every enabled exchange whereas DataStream end users do not. Also there continues to be growth in IPStream end users in some exchanges but DataStream end users are declining rapidly. Therefore IPStream would be the driver for any new provision. Step 4 For each DSLAM, an analysis is performed to determine whether the DSLAM is installed to provide end-user capacity or backhaul capacity. For those DSLAMs which are installed to provide backhaul capacity, the fixed costs are separately identified and are allocated to the bandwidth services within the relevant market. Step 5 The total allocation to product and market is summarised in a table: Market Total IPS-eu DS-eu IPS-bw DS-bw 0 xx xx xx xx xx 1 xx xx xx xx xx 2 xx xx xx xx xx Published super component CO

238 Comp onent 3 xx xx xx xx xx xx xx xx xx xx Published super component Step 6 an allocation is then calculated by market for each product. Market 0 is allocated proportionately across the other three markets: Market IPS Allocation DS Allocation 0 xx% xx% 1 xx% xx% 2 xx% xx% 3 xx% xx% xx% xx% Step 7 An allocation by internal and external is then calculated using end user volumes [source Wholesale Customer Reporting (WCR) system]. Market 1 IPStream Internal Xxx xx% IPStream External Xxx xx% Datastream Internal Xxx xx% Datastream External Xxx xx% The allocation calculated in step 5 is then multiplied by the above in order to calculate an allocation to each product, internal / external and market combination. NISM. NuNCAS. WCR. 7.7 Component to Wholesale Services The table below shows each component not charged on a cost basis. The table also shows the published super components to which the components are mapped. The service destinations of the published super components are shown in the in the published annex called the Calculation of FAC based on component costs and usage factors (Annex 16) of the Current Cost Financial Statements. Comp Component Supercomp Published Super Component CB367 ISC to frontier link CB367 ISC to frontier link CB451 Radiostream links CB451 Radiostream links CB561 Interconnect outpayments overseas CB561 Interconnect outpayments overseas CB599 Interconnect outpayments inland CB599 Interconnect outpayments inland CB782 Development CB782 Development CD100 Low Tisbo 3rd Party Equipment Depn CD100 Low Tisbo 3rd Party Equipment Depn CD101 High Tisbo 3rd Party Equipment Depn CD101 High Tisbo 3rd Party Equipment Depn CD102 Very High Tisbo 3rd Party Equipment Depn CD102 Very High Tisbo 3rd Party Equipment Depn CDE432 3rd party Depn adjust credit PPC 64Kbit/s LE CO432 PC rentals 64Kbit/s local end CDE434 3rd party Depn adjust credit PPC 34 Mbit/s LE CO434 PC rentals 34Mbit/s local end CDE436 3rd party Depn adjust credit PPC 140 Mbit/s LE CO436 PC rentals 140Mbit/s local end CDE438 3rd party Depn adjust credit PPC 2 Mbit/s Copper LE CO438 PC rentals 2Mbit/s local end copper CDE439 3rd party Depn adjust credit PPC 2 Mbit/s Fibre LE CO439 PC rentals 2Mbit/s local end fibre 238

239 CDO432 3rd party Depn adjust credit PC 64Kbit/s LE CO432 PC rentals 64Kbit/s local end CDO434 3rd party Depn adjust credit PC 34 Mbit/s LE CO434 PC rentals 34Mbit/s local end CDO436 3rd party Depn adjust credit PC 140 Mbit/s LE CO436 PC rentals 140Mbit/s local end CDO438 3rd party Depn adjust credit PC 2 Mbit/s Copper LE CO438 PC rentals 2Mbit/s local end copper CDO439 3rd party Depn adjust credit PC 2 Mbit/s Fibre LE CO439 PC rentals 2Mbit/s local end fibre CE103 Low Tisbo Excess Construction CE103 Low Tisbo Excess Construction CE104 AISBO Excess Construction CE104 AISBO Excess Construction CEA447 ECC Credit BES 100 Mbit/s rental CO447 Backhaul extension services fibre etc CEA450 ECC Credit WES/LES 10Mbit/s rtl - ext CO450 Wholesale & LAN extension services fibre etc CEA454 ECC Credit BNS - rental CT454 Backhaul Network Services rental CEB447 ECC Credit BES 1000 Mbit/s rental CO447 Backhaul extension services fibre etc CEB450 ECC Credit WES/LES 100 Mbit/s rtl - ext CO450 Wholesale & LAN extension services fibre etc CEC447 ECC Credit BES other bwidth rtl CO447 Backhaul extension services fibre etc CEC450 ECC Credit WES/LES 1000 Mbit/s rtl - ext CO450 Wholesale & LAN extension services fibre etc CED450 ECC Credit WES/LES other bwidth rtl - ext CO450 Wholesale & LAN extension services fibre etc CEE438 Excess Construction credit PPC 2 Mbit/s Copper LE CO438 PC rentals 2Mbit/s local end copper CEE439 Excess Construction credit PPC 2 Mbit/s Fibre LE CO439 PC rentals 2Mbit/s local end fibre CEE450 ECC Credit WES/LES 10 Mbit/s rtl - int CO450 Wholesale & LAN extension services fibre etc CEF450 ECC Credit WES/LES 100 Mbit/s rtl - int CO450 Wholesale & LAN extension services fibre etc CEG450 ECC Credit WES/LES 1000 Mbit/s rtl - int CO450 Wholesale & LAN extension services fibre etc CEH450 ECC Credit WES/LES bwth rtl - int CO450 Wholesale & LAN extension services fibre etc CEO438 Excess Construction credit PC 2 Mbit/s Copper LE CO438 PC rentals 2Mbit/s local end copper CEO439 Excess Construction credit PC 2 Mbit/s Fibre LE CO439 PC rentals 2Mbit/s local end fibre CF118 OR ADSL Connections CO118 ADSL Connections CO118 CF136 OR SDSL Connections CO136 SDSL Connections CO136 CF187 MPF line testing systems CO187 LLU/BB Line Testing Systems CO187 CF188 OR DSLAM (capital / maintenance) CO188 DSLAM (capital / maintenance) CO188 CF189 EVOTAM testing systems CO187 LLU/BB Line Testing Systems CO187 CF369 OR ASU Links CO369 ASU links CF371 OR PC rentals 2Mbit/s distribution CO371 PC rental 2 Mbit/s link per km distribution CF373 OR PC rentals 34Mbit/s distribution CO373 PC rental 34 Mbit/s link per km distribution CF375 OR PC rentals 140Mbit/s distribution CO375 PC rental 140 Mbit/s link per km distribution CF377 OR PC Rental 622Mbit/s link per km distribution CO377 PC rental 622 Mbit/s link per km distribution CF381 OR PC rentals 64Kbit/s link CO381 PC rental 64Kbit/s link CF383 OR PC rentals 2Mbit/s link CO383 PC rental 2 Mbit/s link CF385 OR PC rentals 34Mbit/s link CO385 PC rental 34 Mbit/s link CF387 OR PC Rental 622Mbit link CO387 PC rental 622Mbit link CF388 OR PC rentals 140Mbit/s link CO388 PC rental 140Mbit link CF391 OR PC rentals 64Kbit/s link distribution CO391 PC rental 64Kbit/s link per km transmission CF446 OR Payphone kiosks maintenance CO446 Public payphones operations CF453 OR Interconnect 2Mbit/s connection CO453 Interconnect 2Mbit/s connection CF469 OR Intra Building Circuit (IBC) connection CO469 Intra Building Circuit (IBC) connection CF470 OR Intra Building Circuit (IBC) rental CO470 Intra Building Circuit (IBC) rental CF550 OR PC rental 34Mbit/s link WECLA CO550 PPCs 34/45 Mbit/s Link CELA CF551 OR PC rentals 34Mbit/s distribution WECLA CO551 PPCs 34/45 Mbit/s Distribution CELA 239

240 CF553 OR PC rentals 140Mbit/s link WECLA CO553 PPCs 140/155 Mbit/s Link CELA CF554 OR PC rentals 140Mbit/s distribution WECLA CO554 PPCs 140/155 Mbit/s Distribution CELA CF781 OR SMDS CO781 SMDS CO781 CG101 PC rentals 2Mbit/s regional trunk CG101 PC rentals 2Mbit/s regional trunk CG102 PC rentals 34Mbit/s regional trunk CG102 PC rentals 34Mbit/s regional trunk CG103 PC rentals 140Mbit/s regional trunk CG103 PC rentals 140Mbit/s regional trunk CG107 Protected path 2Mbit/s regional trunk CG107 Protected path 2Mbit/s regional trunk CG108 Protected path 34Mbit/s regional trunk CG108 Protected path 34Mbit/s regional trunk CG109 Protected path 140Mbit/s regional trunk CG109 Protected path 140Mbit/s regional trunk CG201 PC rentals 2Mbit/s national trunk CG201 PC rentals 2Mbit/s national trunk CG202 PC rentals 34Mbit/s national trunk CG202 PC rentals 34Mbit/s national trunk CG203 PC rentals 140Mbit/s national trunk CG203 PC rentals 140Mbit/s national trunk CG207 Protected path 2Mbit/s national trunk CG207 Protected path 2Mbit/s national trunk CG208 Protected path 34Mbit/s national trunk CG208 Protected path 34Mbit/s national trunk CG209 Protected path 140Mbit/s national trunk CG209 Protected path 140Mbit/s national trunk CK980 CK981 CK982 CK984 CK985 CK986 Repayment works Time related charges OR Managed Services for Wholesale OR Managed Services for Global OR Managed Services for Retail OR Other activities CK980 CK981 CK982 CK984 CK985 CK986 Openreach repayment works Openreach time related charges Openreach Managed Services for Wholesale Openreach Managed Services for Global Openreach Managed Services for Retail Other Openreach other activities CK988 Openreach Total Care CK988 Openreach Total Care CKT11 OR Contribution to BT Basic CKT11 BT Basic (Low user scheme) CKT12 Directories CKT12 Directories CL131 Co-mingling new provides CL131 Co-mingling new provides CL132 Co-mingling rentals CL132 Co-mingling rentals CL133 Tie cables CL133 Tie cables CL139 Local Loop Unbundling systems development CL139 Local Loop Unbundling systems development CL144 Wholesale Access specific CL144 Wholesale Access specific CL160 Routing & records CL160 Routing & records CL161 MDF Hardware jumpering CL161 MDF Hardware jumpering CL163 ISDN30 connections CL163 ISDN30 connections CL170 Internal tie cables CL170 Internal tie cables CL171 E side copper capital CL171 E side copper capital CL172 E side copper current CL172 E side copper current CL173 D side copper capital CL173 D side copper capital CL174 D side copper current CL174 D side copper current CL175 Local exchanges general frames equipment CL175 Local exchanges general frames equipment CL176 Local exchanges general frames maintenance CL176 Local exchanges general frames maintenance CL177 PSTN line test equipment CL177 PSTN line test equipment CL178 Dropwire capital & PSTN NTE CL178 Dropwire capital & PSTN NTE CL180 Analogue line drop maintenance CL180 Analogue line drop maintenance CL181 ISDN2 drop maintenance CL181 ISDN2 drop maintenance CL183 PSTN line cards CL183 PSTN line cards CL184 ISDN2 line cards CL184 ISDN2 line cards 240

241 CL185 Pair gain CL185 Pair gain CL186 ISDN2 Network Terminating Equipment CL186 ISDN2 Network Terminating Equipment CL189 ISDN30 access CL189 ISDN30 access CL190 ISDN30 line cards CL190 ISDN30 line cards CL191 Public payphones line cards CL191 Public payphones line cards CL192 GEA tie cables between cabinets CL192 GEA tie cables between cabinets CL197 FTTC development CL197 FTTC development CL198 FTTP development CL198 FTTP cevelopment CL501 Service centres - Provision CL501 Service centres - Provision CL503 Service centres - Assurance CL503 Service centres - Assurance CL570 OR Service Centre - Provision Analogue/ISDN2 CL501 Service centres - Provision CL571 OR Service Centre - Provision WLR ISDN30 CL501 Service centres - Provision CL572 OR Service Centre - Provision WLA CL501 Service centres - Provision CL573 OR Service Centre - Provision AISBO CL501 Service centres - Provision CL574 OR Service Centre - Provision NGA CL574 OR Service Centre - Provision NGA CL575 OR Service Centre - Assurance Analogue/ISDN2 CL503 Service centres - Assurance CL576 OR Service Centre - Assurance WLR ISDN30 CL503 Service centres - Assurance CL577 OR Service Centre - Assurance WLA CL503 Service centres - Assurance CL578 OR Service Centre - Assurance Ethernet CL503 Service centres - Assurance CL579 OR Service Centre - Assurance NGA CL579 OR Service Centre - Assurance NGA CL590 Service Level Guarantees CL501 Service centres - Provision CL591 Service Level Guarantees - Internal CL501 Service centres - Provision CL950 GEA access fibre spine CL197 FTTC development CL951 GEA distribution fibre CL197 FTTC development CL952 GEA electronics CL197 FTTC development CL953 GEA DSLAM and cabinets CL197 FTTC development CL954 GEA customer site installation CL197 FTTC development CL955 GEA FTTC maintenance CL197 FTTC development CL956 GEA FTTP maintenance CL197 FTTC development CL957 GEA FTTP provision CL197 FTTC development CL958 GEA FTTC provision CL197 FTTC development CL959 Access Distribution Fibre CL197 FTTC development CL960 Access Fibre Spine CL197 FTTC development CN614 EBD External LINK CN013 21CN Backhaul Link & Length CN615 EBD External Length CN013 21CN Backhaul Link & Length CN616 Ethernet Backhaul Direct CN013 21CN Backhaul Link & Length CN617 Ethernet Backhaul Direct extended reach CN013 21CN Backhaul Link & Length CN618 Ethernet Backhaul Direct resilience CN013 21CN Backhaul Link & Length CN851 21CN ISDN30 CN017 Access Cards (ISDN30 services) CN852 21CN ISDN2 CN016 Access Cards (ISDN2 services) CN853 Combi card voice CN002 Combi Card voice CN854 Combi card broadband CN003 Combi Card Access CN855 inode features CN010 inode (call set up and features) CN856 MSAN - BRAS Broadband Link CN013 21CN Backhaul Link & Length CN857 MSAN - BRAS (dense) length broadband CN013 21CN Backhaul Link & Length 241

242 CN860 Core/Metro (broadband) CN015 Core/Metro (broadband) CN861 MSAN - POSI Voice Link CN011 MSAN - POSI (dense) link voice CN862 MSAN - POSI (dense) length voice CN010 inode (call set up and features) CN865 POSI - POSI link voice CN004 Core/Metro (voice) CN866 POSI - POSI length voice CN010 inode (call set up and features) CN867 Border gateway & signalling firewall CN009 Border gateway & signalling firewall CN868 inode voice call set-up CN010 inode (call set up and features) CN869 Core/Metro (voice) CN004 Core/Metro (voice) CN870 MSAN - METRO Connectivity Link CN005 MSAN-Metro connectivity (dense) CN871 MSAN - METRO (dense) length connectivity CN005 MSAN-Metro connectivity (dense) CN872 MSAN - METRO Connectivity Link OR CN005 MSAN-Metro connectivity (dense) CN873 MSAN - METRO (dense) length connectivity OR CN005 MSAN-Metro connectivity (dense) CN878 Core/Metro (Connectivity) CN007 Core/Metro connectivity CN879 Core/Metro (connectivity) OR CN007 Core/Metro connectivity CN880 Low band SDSL card CN001 Access Cards (other services) CN881 MSAN TDM card CN001 Access Cards (other services) CN882 High band customer data card CN001 Access Cards (other services) CN883 Edge Ethernet ports voice CN008 Edge Ethernet ports CN884 Edge Ethernet ports broadband CN008 Edge Ethernet ports CN885 Edge Ethernet ports connectivity CN008 Edge Ethernet ports CN886 Edge Ethernet Ports Connectivity (Openreach) CN008 Edge Ethernet ports CN887 Ethernet Backhaul CN005 MSAN-Metro connectivity (dense) CN888 EBD Main Links CN005 MSAN-Metro connectivity (dense) CN890 Broadband MSAN access CN003 Combi Card Access CN891 Ethernet Switch BB CN013 21CN Backhaul Link & Length CN901 Ethernet Switches CN001 Access Cards (other services) CN902 Metro-switching IP/VPN CN007 Core/Metro connectivity CN903 Metro-core broadband transmission CN015 Core/Metro (broadband) CN904 21CN broadband service provider link CN015 Core/Metro (broadband) CN905 Multi Service Interconnect Link CN015 Core/Metro (broadband) CO210 Local exchange processor duration CV001 Local exchange processor CO212 Local exchange processor set-up CV001 Local exchange processor CO214 Local exchange concentrator set-up CV034 Local exchange concentrator CO215 Local exchange concentrator duration CV034 Local exchange concentrator CO220 Main exchange set-up CV002 Main exchange switching CO221 Main exchange call duration CV002 Main exchange switching CO224 UCP equipment CO224 UCP equipment CO227 Advanced Switching Units CO227 Advanced Switching Units CO260 Cambridge Voice Intelligent Peripheral (VIP) CO260 Cambridge Voice Intelligent Peripheral (VIP) CO261 Intelligent Contact Manager CO261 Intelligent Contact Manager CO262 Intelligent Network links CO262 Intelligent Network links CO266 Common Intelligence Service Layer (CISL) CO266 Common Intelligence Service Layer (CISL) CO270 Signalling Transfer Point CO270 Signalling Transfer Point CO290 OR Network Features - external CO290 OR Network Features - external CO291 OR Network Features - internal CO291 OR Network Features - internal 242

243 CO310 ATM customer interface 2Mbit/s CO310 ATM customer interface 2Mbit/s CO311 ATM customer interface 34Mbit/s CO311 ATM customer interface 34Mbit/s CO312 ATM customer interface > 155Mbit/s CO312 ATM customer interface > 155Mbit/s CO313 ATM network interface CO313 ATM network interface CO314 ATM network switching CO314 ATM network switching CO316 Inter ATM transmissions CO316 Inter ATM transmissions CO325 Remote - local transmission link CO325 Remote - local transmission link CO326 Remote - local transmission length CO326 Remote - local transmission length CO330 Local - tandem transmission link CO330 Local - tandem transmission link CO340 Local - tandem transmission length CO340 Local - tandem transmission length CO360 Inter - tandem transmission link CO360 Inter - tandem transmission link CO370 Inter - tandem transmission length CO370 Inter - tandem transmission length CO372 PC rental 2Mbit/s link per km trunk CO372 PC rental 2Mbit/s link per km trunk CO374 PC rental 34Mbit/s link per km trunk CO374 PC rental 34Mbit/s link per km trunk CO376 PC rental 140Mbit/s link per km trunk CO376 PC rental 140Mbit/s link per km trunk CO378 PC rental 622Mbit/s link per km trunk CO378 PC rental 622Mbit/s link per km trunk CO379 Point of Handover electronics CO379 Point of Handover electronics CO401 Netstream equipment CO401 Netstream equipment CO405 DMS 100 call centre CO405 DMS 100 call centre CO407 Carrier Pre Selection operator set-up CO407 Carrier Pre Selection operator set-up CO408 Carrier Pre Selection customer set-up CO408 Carrier Pre Selection customer set-up CO411 OR Analogue PC link connection cct prov CO411 OR Analogue PC link connection cct prov CO413 2Mbit/s and above PC link connection cct provision CO413 2Mbit/s and above PC link connection cct provision CO414 Digital IPLC CO414 Digital IPLC CO415 Analogue international leased line CO415 Analogue international leased line CO417 64Kbit/s PC link connection cct provision CO417 64Kbit/s PC link connection cct provision CO418 OR PC rearrangement 64Kbit/s CO418 OR PC rearrangement 64Kbit/s CO421 OR Analogue PC installation CO421 OR Analogue PC installation CO431 OR PC Rental Analogue local end CO431 OR PC Rental Analogue local end CO432 PC rentals 64Kbit/s local end CO432 PC rentals 64Kbit/s local end CO434 PC rentals 34Mbit/s local end CO434 PC rentals 34Mbit/s local end CO436 PC rentals 140Mbit/s local end CO436 PC rentals 140Mbit/s local end CO437 OR PC rental 622Mbit/s link local end CO437 OR PC rental 622Mbit/s link local end CO438 PC rentals 2Mbit/s local end copper CO438 PC rentals 2Mbit/s local end copper CO439 PC rentals 2Mbit/s local end fibre CO439 PC rentals 2Mbit/s local end fibre CO446 Public payphones operations CO446 Public payphones operations CO447 Backhaul extension services fibre etc CO447 Backhaul extension services fibre etc CO450 Wholesale & LAN extension services fibre etc CO450 Wholesale & LAN extension services fibre etc CO451 Ethernet Access Direct Electronics CO450 Wholesale & LAN extension services fibre etc CO452 Interconnect local end rental 2Mbit/s CO452 Interconnect local end rental 2Mbit/s CO458 Interconnect Extension Circuits (IEC) 2Mbit/s link CO458 Interconnect Extension Circuits (IEC) 2Mbit/s link CO459 Customer Sited Interconnect cct (CSI) 2Mbit/s link CO459 Customer Sited Interconnect cct (CSI) 2Mbit/s link CO460 Nominated In Span I/Connect cct (ISI) transmission CO460 Nominated In Span I/Connect cct (ISI) transmission CO461 Private Circuit test systems CO461 Private Circuit test systems CO462 OR Private Circuit customer premises CO462 OR Private Circuit customer premises 243

244 CO463 OR Private Circuit testing CO463 OR Private Circuit testing CO466 Interconnect Extension Circuits (IEC) 2Mbit/s per km CO466 Interconnect Extension Circuits (IEC) 2Mbit/s per km Customer Sited Interconnect cct (CSI) 2Mbit/s per Customer Sited Interconnect cct (CSI) 2Mbit/s per CO467 km CO467 km CO468 In Span Interconnect circuits (ISI) transmission CO468 In Span Interconnect circuits (ISI) transmission CO473 Separation & Diversity CO474 Third Party Equipment PC CO474 Third Party Equipment PC CO474 Third Party Equipment PC CO475 Other Single Payments (internal) CO474 Third Party Equipment PC CO476 Other Single Payments (external) CO474 Third Party Equipment PC CO477 Excess construction charge (internal) CE104 AISBO Excess Construction CO478 Excess construction charge (external) CE104 AISBO Excess Construction CO479 Ancillary charges (internal) CO681 Broadband backhaul circuits CO480 Ancillary charges (external) CO681 Broadband backhaul circuits CO483 Flexible Bandwidth Services CO483 Flexible Bandwidth Services CO484 Ethernet main links CO484 Ethernet main links CO485 Ethernet electronics CO485 Ethernet electronics CO495 IP Switch transmission CO495 IP Switch transmission CO506 SG&A partial private circuits CO506 SG&A partial private circuits CO512 Product management policy & planning CO512 Product management policy & planning CO552 OR PPCs 34/45 Mbit/s Local Ends CELA CO552 OR PPCs 34/45 Mbit/s Local Ends CELA CO555 OR PPCs 140/155Mbit/s Local Ends CELA CO555 PPCs 140/155 Mbit/s Local Ends CELA CO556 PPCs 34/45Mbit/s Trunk CELA CO374 PC rental 34Mbit/s link per km trunk CO557 PPCs 140/155Mbit/s Trunk CELA CO376 PC rental 140Mbit/s link per km trunk CO583 SG&A Wholesale residual CO583 SG&A Wholesale residual CO584 SG&A Wholesale other CO584 SG&A Wholesale other CO585 SG&A downstream residual CO585 SG&A downstream residual CO586 SG&A Interconnect CO586 SG&A Interconnect CO609 SG&A Broadband CO609 SG&A Broadband CO657 Framestream switches CO657 Framestream switches CO658 Inter Framestream switch transmission CO658 Inter Framestream switch transmission CO667 IP International peering CO667 IP International peering CO668 IP Network management CO668 IP Network management CO669 IP Network Dial IP CO669 IP Network Dial IP CO670 IP Network Fixed Access CO670 IP Network Fixed Access CO671 IP Network VPN CO671 IP Network VPN CO672 IP Network broadband CO672 IP Network broadband CO673 IP Network BT intranet CO673 IP Network BT intranet CO674 IP core node equipment CO674 IP core node equipment CO675 IP VOIP platform CO675 IP VOIP platform CO678 SIP Servers CO678 SIP Servers CO681 Broadband backhaul circuits CO681 Broadband backhaul circuits CO682 OR BT central circuits CO682 OR BT central circuits CO683 OR SP access links CO683 OR SP access links CO684 Broadband Virtual Paths CO681 Broadband backhaul circuits CO732 Number Portability set-up costs CO732 Number Portability set-up costs 244

245 CO772 OR systems & development - Ethernet CO450 Wholesale & LAN extension services fibre etc CO823 BT Own Use PC provision CO823 BT Own Use PC provision CO911 National operator assistance CO911 National operator assistance CO912 International operator assistance CO912 International operator assistance CO919 Emergency operator assistance (999) CO919 Emergency operator assistance (999) CO927 Directory enquiries non chargeable CO927 Directory enquiries non chargeable CO928 DQ Number Information Network CO928 DQ Number Information Network CO941 National OA non chargeable CO941 National OA non chargeable CO942 Emergency OA (999) non chargeable CO942 Emergency OA (999) non chargeable CO943 Payphones operator assistance non chargeable CO943 Payphones operator assistance non chargeable CO989 Special Fault Investigation CO989 Special Fault Investigation CP371 Protected path 2Mbit/s distribution CO474 Third Party Equipment PC CP372 Protected Path PC rental 2Mbit/s link per km trunk CO474 Third Party Equipment PC CP373 Protected path 34Mbit/s distribution CO474 Third Party Equipment PC CP374 Protected Path PC rental 34Mbit/s link per km trunk CO474 Third Party Equipment PC CP375 Protected path 140Mbit/s distribution CO474 Third Party Equipment PC Protected Path PC rental 140Mbit/s link per km CP376 trunk CO474 Third Party Equipment PC CP383 Protected path 2Mbit/s link CO474 Third Party Equipment PC CP385 Protected path 34Mbit/s link CO474 Third Party Equipment PC CP388 Protected path 140Mbit/s link CO474 Third Party Equipment PC Protected Path 2Mbit/s and above PC link CP413 connection CO474 Third Party Equipment PC CP434 Protected path 34Mbit/s local end CO474 Third Party Equipment PC CP436 Protected path 140Mbit/s local end CO474 Third Party Equipment PC CP438 Protected Path PC rental 2Mbit/s local end copper CO474 Third Party Equipment PC CP439 Protected path 2Mbit/s local end CO474 Third Party Equipment PC CP502 Sales product management CP502 Sales product management CPE105 POH LE adjust CSH debit CO379 Point of Handover electronics CPE106 POH LE adjust CSI debit CO379 Point of Handover electronics CPE432 POH adjust credit PPC 64Kbits/s LE CO432 PC rentals 64Kbit/s local end CPE434 POH adjust credit PPC 34Mbit/s LE CO434 PC rentals 34Mbit/s local end CPE438 POH adjust credit PPC 2Mbit/s Copper LE CO438 PC rentals 2Mbit/s local end copper CPE439 POH adjust credit PPC 2Mbit/s Fibre LE CO439 PC rentals 2Mbit/s local end fibre CR118 ADSL connections CO118 ADSL Connections CO118 CR136 SDSL connections CO136 SDSL Connections CO136 CR187 Broadband line testing systems CO187 LLU/BB Line Testing Systems CO187 CR188 DSLAM overheads CO188 DSLAM (capital / maintenance) CO188 CR189 DSLAM capital / maintenance CO188 DSLAM (capital / maintenance) CO188 CR369 Advanced Switching Unit Links CO369 ASU links CR371 PC rental 2Mbit/s link per km distribution CO371 PC rental 2Mbit/s link per km distribution CR373 PC rental 34Mbit/s link per km distribution CO373 PC rental 34Mbit/s link per km distribution CR375 PC rental 140Mbit/s link per km distribution CO375 PC rental 140Mbit/s link per km distribution CR377 WH PC Rental 622Mbit/s link per km distribution CO377 PC rental 622Mbit/s link per km distribution CR381 PC rental 64Kbit/s link CO381 PC rental 64Kbit/s link CR383 PC rentals 2Mbit/s link CO383 PC rental 2Mbit/s link 245

246 CR385 PC rentals 34Mbit/s link CO385 PC rental 34Mbit/s link CR387 WH PC Rental 622Mbit/s link CO387 PC rental 622Mbit/s link CR388 PC rentals 140Mbit/s link CO388 PC rental 140Mbit/s link CR391 PC rental 64Kbit/s link per km transmission CO391 PC rental 64Kbit/s link per km transmission CR446 Public payhone kiosks CO446 Public payphones operations CR453 Interconnect 2Mbit/s connection CO453 Interconnect 2Mbit/s connection CR469 Intra Building Circuit (IBC) connection CO469 Intra Building Circuit (IBC) connection CR470 Intra Building Circuit (IBC) rental CO470 Intra Building Circuit (IBC) rental CR550 PC rentals 34Mbit/s link WECLA CO550 PPCs 34/45 Mbit/s Link WECLA CR551 PC rentals 34Mbit/s distribution WECLA CO551 PPCs 34/45 Mbit/s Distribution WECLA CR553 PC rentals 140Mbit/s link WECLA CO553 PPCs 140/155 Mbit/s Link WECLA CR554 PC rentals 140Mbit/s distribution WECLA CO554 PPCs 140/155 Mbit/s Distribution WECLA CR781 WH SMDS CO781 SMDS CO781 CT134 Co-mingling power & vent CT134 Co-mingling power & vent CT454 Backhaul Network Services rental CT454 Backhaul Network Services rental CT455 BES BNS traded CO485 Ethernet electronics CW609 Ethernet Access Direct Fibre CO450 Wholesale & LAN extension services fibre etc CW610 Ethernet Access Direct Rental - External CO450 Wholesale & LAN extension services fibre etc CW611 Other Ethernet Rentals - External CO450 Wholesale & LAN extension services fibre etc CW612 Ethernet Access Direct Connection - External CO485 Ethernet electronics CW613 Other Ethernet Connection - External CO485 Ethernet electronics CW614 Ethernet Backhaul Direct Rental - External CN013 21CN Backhaul Link & Length CW615 Ethernet Backhaul Direct Connection - External CN013 21CN Backhaul Link & Length CW616 Ethernet Access Direct Rental - Internal CO450 Wholesale & LAN extension services fibre etc CW617 Other Ethernet rentals - internal CO450 Wholesale & LAN extension services fibre etc CW618 Ethernet Access Direct Connection - Internal CO485 Ethernet electronics CW619 Other Ethernet new provides - internal CO485 Ethernet electronics CW620 Oth Ethernet Services more than 1Gbit/s rental CO450 Wholesale & LAN extension services fibre etc CW621 Oth Ethernet Services more than 1Gbit/s conn CO485 Ethernet electronics CX139 WH Local Loop Unbundling systems development CL139 Local Loop Unbundling systems development CX160 WH Routing & records CL160 Routing & records CX161 WH MDF Hardware jumpering CL161 MDF Hardware jumpering CX170 Wholesale Internal LLU Tie Cables CL170 Internal LLU Tie Cables CX171 WH E-side copper capital CL171 E-side copper capital CX172 WH E-side copper current CL172 E-side copper current CX173 WH D side copper capital CL173 D-side copper capital CX174 WH D-side copper current CL174 D-side copper current CX175 WH Local exchanges general frames capital CL175 Local exchanges general frames equipment CX176 WH Local exchanges general frames current CL176 Local exchanges general frames maintenance CX178 WH Dropwire capital & PSTN NTE CL178 Dropwire capital & PSTN NTE CX180 WH Residential PSTN drop maintenance CL180 Analogue line drop maintenance CX325 WH Remote - local transmission link CO325 Remote - local transmission link CX326 WH Remote - local transmission length CO326 Remote - local transmission length CX330 WH Local - tandem transmission link CO330 Local - tandem transmission link CX340 WH Local - tandem transmission length CO340 Local - tandem transmission length 246

247 CX411 WH Analogue PC link connection cct prov CO411 OR Analogue PC link connection cct prov WH 2Mbit/s and above PC link connection cct CX413 provision CO413 2Mbit/s and above PC link connection cct provision CX417 WH 64Kbit/s PC link connection cct provision CO417 64Kbit/s PC link connection cct provision CX418 WH 64Kbit/s PC link connection cct rearrange CO418 OR PC rearrangement 64Kbit/s CX421 WH Analogue PC installation CO421 OR Analogue PC installation CX431 WH PC Rental Analogue link local end CO431 OR PC Rental Analogue local end CX432 WH PC rental 64Kbit/s link local end CO432 PC rentals 64Kbit/s local end CX434 WH PC rental 34Mbit/s link local end CO434 PC rentals 34Mbit/s local end CX436 WH PC rental 140Mbit/s link local end CO436 PC rentals 140Mbit/s local end CX437 WH PC rental 622Mbit/s link local end CO437 OR PC rental 622Mbit/s link local end CX438 WH PC rental 2Mbit/s local end copper CO438 PC rentals 2Mbit/s local end copper CX439 WH PC rental 2Mbit/s local end fibre CO439 PC rentals 2Mbit/s local end fibre CX452 WH Interconnect local end rental 2Mbit/s CO452 Interconnect local end rental 2Mbit/s CX458 WH I/C Extension Circuits (IEC) 2Mbit/s link CO458 Interconnect Extension Circuits (IEC) 2Mbit/s link CX459 WH Cust Sited Interconnect cct (CSI) 2Mbit/s link CO459 Customer Sited Interconnect cct (CSI) 2Mbit/s link CX460 WH Nominated In Span I/Connect circts (ISI) transn CO460 Nominated In Span I/Connect cct (ISI) transmission CX462 WH Private Circuit customer premises CO462 OR Private Circuit customer premises CX463 WH Private Circuit testing CO463 OR Private Circuit testing CX466 WH I/Connect Extension Circuits (IEC) 2Mbit/s per km CO466 Interconnect Extension Circuits (IEC) 2Mbit/s per km CX467 WH Cust Sited Interconnect cct (CSI) 2Mbit/s per km CO467 Customer Sited Interconnect cct (CSI) 2Mbit/s per km CX468 WH In Span I/Connect circuits (ISI) transmission CO468 In Span Interconnect circuits (ISI) transmission CX484 WH Ethernet main links CO484 Ethernet main links CX501 WH Service centres - Provision CL501 Service centres - Provision CX502 WH Sales product management CP502 Sales product management CX503 WH Service centres - Assurance CL503 Service centres - Assurance CX552 WS PPCs 34/45 Mbit/s Local Ends WECLA CO552 OR PPCs 34/45 Mbit/s Local Ends WECLA CX555 WS PPCs 140/155 Mbit/s Local Ends WECLA CO555 PPCs 140/155 Mbit/s Local Ends WECLA CX571 WS Service Centre - Provision WLR ISDN30 CL501 Service centres - Provision CX572 WS Service Centre - Provision LLU CL501 Service centres - Provision CX577 WS Service Centre - Assurance LLU CL503 Service centres - Assurance CX681 WH Broadband backhaul circuits CO681 Broadband backhaul circuits CX682 WH BT central circuits CO682 OR BT central circuits CX683 WH SP access links CO683 OR SP access links CX732 Wholesale Number Portability set-up costs CO732 Number Portability set-up costs CX880 WH Low band SDSL card CN001 Access Cards (other services) CX975 WBA Other Residual CO672 IP Network broadband CY118 OR ADSL Connections CO118 ADSL Connections CO118 CY139 Local Loop Unbundling systems development CL139 Local Loop Unbundling systems development CY160 Routing & records CL160 Routing & records CY161 MDF Hardware jumpering CL161 MDF Hardware jumpering CY502 Sales product management CP502 Sales product management CY572 OR Service Centre - Provision WLR LLU CL501 Service centres - Provision CZ252B OR residual elimination CZ252B OR residual elimination 247

248 CZ252N WH residual elimination CZ252N WH residual elimination CZ900 Openreach Internal Trades CZ900 Openreach Internal Trades 248

249 7.8 Equivalence of Input Charges to WBA Markets As a result of the June 2011 Ofcom Statement Changes to BT and KCOM s regulatory and financial reporting 2010/11 update, BT is required to report separately on certain Openreach charges for the WBA Markets. These Openreach charges are required be reported on Equivalence of Input (EOI) basis. In ASPIRE, a set of cost components are used by WBA services. These components are split into 2 categories: a) Costs and capital employed by Openreach. b) Costs and capital employed by non-openreach Lines of business. This covers charges directly from divisions such as BT Wholesale and BT TSO. The EOI methodology replaces certain underlying Openreach component costs and capital employed apportioned to WBA services with charges based on EOI prices. The notional creditors relating to these components, however, are not replaced with an EOI charge. This is because the notional creditor represents the amount owed by BT Wholesale to BT Openreach for EOI services and therefore still needs to be reported. The component costs that the EOI charges replace in the WBA markets are: CF118 CF187 CF188 CL139 CL161 CL162 CL170 CL172 CL174 CL175 CL176 CL572 CL577 CN856 CO989 CP502 Component OR ADSL Connections MPF line testing systems OR DSLAM (capital / maintenance) Local Loop Unbundling systems development MDF Hardware jumpering Software jumpering Internal tie cables E-side copper current D-side copper current Local exchanges general frames equipment Local exchanges general frames maintenance OR Service Centre - Provision LLU OR Service Centre - Assurance LLU MSAN-Metro BRAS Broadband Link Special Fault Investigation Sales product management The approach employed to generate EOI charges is to identify the Openreach services used as an input for the WBA services. Volumes of these services used for WBA are established. The most appropriate market volume driver available is identified based on either BT Openreach or BT Wholesale data. Weighted average EOI prices are applied to these volumes to get the total charges. The charges are allocated to services within each of the geographic markets with the best available volume driver. SMPF connections The weighted average SMPF connection charge from Openreach is multiplied by the BT Wholesale end user connection volumes for each of WBA market 1 and market 2. The volumes include IPstream, Datastream and Wholesale Broadband Connect (WBC). These charges are pointed to the following published WBA services in each of market 1 and market 2: Internal End Users Connections. External End Users Connections. SMPF rentals The weighted average SMPF rental charge from Openreach is multiplied by the BT Wholesale end user rental service volumes for each of WBA market 1 and market 2. The volumes include IPstream, Datastream and WBC. These charges are 249

250 pointed to the following published services for market 1 and 2: External Datastream End user access Rental. Internal IPstream Connect End user access Rental. External IPstream Connect End user access Rental. Internal Ancillary Charges and Other. SMPF ceases The weighted average SMPF cease charge from Openreach is multiplied by the BT Wholesale end user cease volumes for each of WBA market 1 and market 2. The volumes include IPStream, Datastream and WBC. These charges are pointed to the following published services for market 1 and 2. Internal Ancillary Charges and Other. External Ancillary Charges and Other. Special Faults Investigation (SFI) A weighted average SFI charge is calculated from the total BT Openreach SFI volumes and prices. The volumes include SFIs for IPstream, Datastream and WBC. The BT Openreach volumes are based on the number of SFI1s and SFI2 modules. Volumes by geographic market are obtained from BT Wholesale. The BT Wholesale volumes are counted by total SFI jobs and not SFI modules. i.e. 1 SFI job may involve 1 or more SFI modules. The BT Wholesale SFI job volumes are factored to align to the BT Openreach SFI module volumes. The factored BT Wholesale volumes are then used to allocate the EOI charges to market 1 and 2. The SFIs volumes are split into 2 categories (1) those SFIs for which BT Wholesale make a charge and (2) those SFIs that are not charged for. (1) For those SFIs that BT Wholesale charges for, the weighted average Openreach EOI SFI charge is multiplied by the volume of SFIs charged for by BT Wholesale. These charges are pointed to the following published services for market 1 and 2: Internal Ancillary Charges and Other. External Ancillary Charges and Other. (2) For those SFIs that BT Wholesale does not charge for, the weighted average Openreach SFI charge is multiplied by the volume of non-charged SFIs. The volume of non-charged SFIs are split by service based on BT Wholesale end user rental volumes for IPstream, Datastream and WBC. These charges are pointed to the following published services for market 1 and market 2: External Datastream End User Rentals. External IPStream Connect End User Rentals. Internal IPStream Connect End User. Internal Ancillary Charges and Other. Broadband Circuit Regrades (from IPStream and Datastream to Wholesale Broadband Connect) The weighted average Openreach charge multiplied by the volume of Regrades for market 1 and market 2. These charges are pointed to the following published services for market 1 and market 2: Internal Ancillary Charges and Other. External Ancillary Charges and Other. Broadband Conversions (used for the rationalisation of DSLAMs) Total Openreach charges are calculated by multiplying the BT Openreach volume of conversions by the weighted average Openreach EOI price. The total Openreach charge is then apportioned to WBA market based on the total number of IPStream and Datastream BT Wholesale end user rental volumes. These charges are pointed to the following reported services for market 1 and market 2: External Datastream End User Rentals. External IPstream Connect End User Rentals. Internal IPstream Connect End User. Internal Ancillary Charges and Other. Tie Cables (e.g. for wiring HDF to DSLAMs / MSANs) The Openreach charges are calculated by multiplying the BT Openreach volume of tie cable by the weighted Openreach EOI price. This is done for each tie cable type and then aggregated to get a total charge. The charges are then allocated to 250

251 Market 1 and Market 2 based on total BT Wholesale end user rental volumes for IPstream, Datastream and WBC. These charges are pointed to the following reported services for market 1 and market 2: External Datastream End User Rentals. External IPstream Connect End User Rentals. Internal IPstream Connect End User. Internal Ancillary Charges and Other. SMPF expedite The Openreach charges are calculated by multiplying the BT Openreach volume of expedited installed SMPF lines by the weighted Openreach EOI price. The charges are then allocated to WBA market/service based on total BT Wholesale end user connection volumes. These charges are pointed to the following reported services for market 1 and market 2: Internal Ancillary Charges and Other. External Ancillary Charges and Other. Migrations (CP to CP) The weighted average Openreach EOI price is multiplied by the number of migrations for both market 1 and market 2: Internal Ancillary Charges and Other. External Ancillary Charges and Other. SMPF Enhanced care Total Openreach charges are calculated by multiplying the BT Openreach volume of SMPF Enhanced Care lines by the weighted Openreach EOI price. The total Openreach charge is then apportioned to market 1 and market 2 based on the total BT Wholesale end user rental volumes for IPstream, Datastream and WBC. These charges are pointed to the following reported services for market 1 and market 2: Internal Ancillary Charges and Other. External Ancillary Charges and Other. Broadband Boost The weighted average Openreach EOI price is multiplied by the number of migrations for both market 1 and market 2 (The average charge is not published but is based on daily rate based cost of a BT Converged engineer and the average number job completed): Internal Ancillary Charges and Other. External Ancillary Charges and Other. The EOI costs for the Internal Ancillary Charges and Other and External Ancillary Charges and Other services are reported in the total costs for market 1 and market 2 within Annex 11 of the Current Cost Financial Statements. These costs, however, are not reported at the service level on a unit basis because they are comprised of a mixture of services that do not have common volume measure. 251

252 8 Data Sources Summary list of Data Sources: AIM GL OMC Amethyst Geneva/Avalon OMP ARSCC GNCM ORBIT ARTISAN GLOSSI ORGS ASC GT-X PACS ASPIRE HORIZON Pathfinder ASSURE IBIS Payphones Data Warehouse ATLAS ibuy PCNBS BT Design Billing System ICARUS PIBS CAMERA IIDA PIRM CARDVU INCA PRAVAT CARISMAN INS Powerhouse CC-MIS IXBS PULSE CDS JRMIS RIDE SDW CID LLCS SCARS CISL LLFN SPG COSMOSS LoP List Siebel CSCS LRIC SMART CSS MEDIATOR SWIFT CTCS Merlin TEM CWSS Metro Node/I-Node/MSAN Node TITAN DESS MSIP TXD-OP DSR NCDB WCR EASI NEMOS-DR Willow EBC NetView Work Manager EM Nexus EXPRES NIMS FastVPlan NJR FAR NRS Featurenet NCAS GALILEO NUNCAS 252

253 AIM (Analysis and Inventory Module) Collects detailed engineering data from the 5620 Network Manager, the 5620 Stats Collector, and major Alcatel Core and Edge Switching Products. Amethyst Amethyst is the web application which provides aged debt & net cash analysis. It uses debt and credit information from various billing platforms & financial systems across all lines of business within BT for both the UK and the rest of the world. This information is then consolidated to provide analytical reports on a customer s debt, credit profile, on a weekly or monthly basis and gives visibility on net cash positions for each customer. This supports the cash flow management strategies. In Amethyst data level access security is provided for each group (Openreach, RoBT, BT Group) depending on the access rules for the corresponding users; access approval is controlled by Line manager & System Owner. ARSCC (Administration of Repair Service Controls by Computer) ARSCC Clear codes and activity codes system. An example of Clear code: Fault not found code 151, 152; and of activity codes. Time with Supervisor (TWS) code, General Activities (GA) code. ARTISAN (Automated Reporting and Target Investment System for the Access Network) ARTISAN is a multi-functional application which encompasses a number of work areas, including: Fault Volume Reduction reports which allow the user to identify fault prone network, assess the work required to resolve the issue, generate a proactive uplift task and dispatch to the relevant resource for execution. Allow the Planning community to monitor their return on investment (Post Execution Monitoring). To interrogate individual circuits to assess the likelihood of a fault based on historic line test results (overnight routing) / historical faults (utilisation of Customer Diagnostic Tool / Bloodhound functionality). Access Capital Repair to generate Cable Length Renewals as a result of a Customer reported fault where we cannot provide service due to no spare capacity. Record observed defects in the access network (using the A1024 process) including safety and non-safety defects. Identify / dispatch safety related defects to external suppliers for resolution (e.g. broken Joint Box cover / Low Wire). Provides an interface to the Manage Hazard and Warnings (which allows MHW to display information relating to potential hazards to the external work force). Record where CPs have access to Poles allowing them to connect their network to Openreach plant. Act as a data repository for Poling information (maintain a record of the Pole population) enabling the Pole Test community to execute their testing regime. ASC (Automated Supply Chain) ASC is the name given by BT to the AmSOFT system and its interfaces. The ASC primary functions include: stores purchasing, order management, stock control, accounting systems and foreign currency invoices. The ASC procurement matching module is used to authorise invoices. The accounting arrangements for the payment of foreign currency invoices are described in Group Accounting Manual (GAM). ASPIRE (Accounting Separation Product and Integrated Environment) ASPIRE is a regulatory reporting system used to perform the fully allocated cost attribution for Accounting Separation (AS). The ASPIRE system apportions/allocates all costs ledgered on our General Ledger (GL) to BT s regulatory markets and services. This is explained in detail in section 2 and 3 of the DAM. ASSURE (Accounting Separation SecUre Repository Environment) ASSURE is an Oracle platform based system. Its main function is to deal with the validation of data ready for submission to ASPIRE for processing. ATLAS ATLAS is a sub-ledger for IXBSng - UK, holding authorised billed amounts (both Accounts Payable (AP) and Accounts Receivable (AR)) for 253

254 international voice products, by carrier and allowing them to be allocated to Receipts and Payments. BT Design Billing System The BT Design Billing System provides details of projects/ programmes of work. Development - BT TSO prepare a work package agreement, with details of the development work to be completed and the charges to be raised. This is agreed both operationally and financially by the Market Unit (MU). TSO enters the details of these charges on to an internal system called BCAT (Business Case Analysis Tool). The charges are agreed monthly on BCAT by MU finance. Support and maintenance - This charge cover the costs of providing support and maintenance of BT internal systems. The MUs agree with TSO which systems will be maintained and what cover i.e. 24/7 or just working hours 5 days a week. The annual charge is agreed for all the system to be maintained and supporting work done on behalf of all BT. This is reviewed if any systems are ceased or new system implemented. Overheads and other fixed charges - Annual agreed charges to cover all BT overheads for supporting development work called Development Non Volume another trade is overheads etc. CAMERA (Campaign Management Evaluation and Reporting on AXSYS) CAMERA is BT's multimedia tool enabling Marketing, Marketing Finance and external agencies to work simply and effectively together online and in real time. Users manage the financial and procurement aspects of campaign activity and have instant and easy access to: Briefs. Status reports. Presentations. Audio and video files. A library of marketing material, both of current activities and earlier campaigns. The process works as follows: CAMERA Actions Brief and Budget and Purchase Requisition Process/Flow NON CAMERA actions FEC Campaign Managers Supplier Managers Supplier Invoices/Accounts Payable Create Budget Structure for the year includes: budget, signatories, GL code and OU Code Sign off Business cases allocated to products and services and give a Case No Raise the Brief & Budget (B&B) via Camera- Select appropriate budge criteria, Case No, and Value Authorise B&B Reference to Case No and Value FEC given to PR check for appropriateness against budget Raise Purchase Requisition (PR) against authorised budgets, based on detailed estimate from supplier < 1k > 1k PR & estimate received for checking for appropriate procurement process i.e. tender, negotiate etc Estimate forwarded to Specifier PO received for work to commence Detailed Purchase Order (PO) raised Invoice sent for work completed Invoice validated against the PO and scanned into CAMERA Accrual reports done at the end of each month based on commitments made to supplies i.e. PO s raised Invoice checked and authorised confirming receipt of Goods and Services Payment received Authorised invoices forwarded to Accounts payable in Manchester for payment Camera_Diagram1_ Author: Simon Smales Issue v10. Date: Dec8, 2003 Finance modifies the Program details on CAMERA. 254

255 Finance modifies the Business Case details on CAMERA. The Campaign Manager submits electronically the modified brief and budget to Finance. Finance re-authorise the campaign, as the campaign status changes automatically to "Unauthorised" if the budget is being increased. CARDVU (Charging and Routing Data Verification Utility) CARDVU is a centralised tool which automatically checks all types of digital exchange charging and routing data against a national reference source (NCDB). CARDVU is one of the key systems in obtaining metering approval from BABT for BT s pricing of calls made by customers. In addition, CARDVU verifies the exchange data which causes INCA records to be generated. The INCA system is expanding to cope with the volume of business as more interconnections with other Network Operators are implemented. This revenue is dependent upon manually entered data on exchanges being correct and CARDVU ensures this through its automatic verification against the INCA Routing Reference Model. CARISMAN (Calls And Reliability Information System for Managing and Analysing the Network) The main purpose of CARISMAN is to provide support to the Network Performance Management, Capacity Management and Interconnect Operations functions within BT. CARISMAN is a key reporting system for BT s 20C and 21C Public Switched Telephone Network (PSTN) call performance measurement. It collects daily call sample data extracts from the TXD-OP and FusionWorks systems which it holds as base data and also summarises network call performance measures for use within and outside BT. CARISMAN enables reporting and in depth analysis of network performance measures (mainly telephony). CARISMAN data in: 20C PSTN Exchange source stats data collected daily via MEDIATOR (BDS). 21C PSTN Exchange source stats data collected daily via FusionWorks (FTP). CISA extract of OLO number ranges weekly via TXD-OP (FTP). EXPRES monthly extract of exchange details and Processor to Concentrator (FTP). NEMOS-DR monthly extract of network routes (FTP). CDS monthly extract of working lines per Zone (FTP). TXD-OP monthly missing hours files (FTP). ISS weekly extract of Other Communications Providers network routes (FTP). CARISMAN data out: epi monthly results file (FTP). NetView weekly and monthly results files (FTP). CC-MIS (Call Centre Management Information System) This is a management system for Operator Assistance calls. CC-MIS obtains data from the Lucent 5ESS switches in Operator Assistance centres (100/999) from around the country. Information captured includes: number of calls in a queue, time taken to answer, call distribution and performance management. The source of information for Directory Assistance products is the CDS system (Central Data Store). CDS (Central Data Store) CDS is a large Quality Of Service (QoS) data warehouse. It is accessed either through Business Objects (BO) or through a web front end. The CDS warehouse contains volume data for Public Switched Telephone Network (PSTN) and Private Circuits. CDS receives volume data relating to Public Switched Telephone Network (PSTN) from Customer Service System (CSS), and it receives volume data relating to Private Circuits from Customer Oriented System for the Management Of Special Services (COSMOSS). CID (Central Information Database) This system is both a comprehensive data warehouse of financial and non-financial data at General Ledger (GL) level, volumes and a suite of application software, which enables management information to be extracted. The applications run on the system and service the needs of Group and Divisional financial analysts, field operational managers and business planners. CISL (Common Intelligent Service Layer) This platform provides usage statistics by call type, which are used for cost apportionment from CISL Plant Group to components. 255

256 This data source is also used for SPR cost allocations. SPRs are the Signalling Equipment sited between the PSTN and the CISL. COSMOSS (Customer Oriented System for the Management Of Special Services) COSMOSS is a database used for the provision of Private Services. This includes the provision of Partial Private Circuits sold to Other Communication Providers (OCPs). It is used for new orders, re-arrangements and ceases. It acts as a 'Front End' and generates activities for the various groups involved in providing a Private Circuit. It includes Working System Size (WSS) for costing purposes and Revenue System Size (RSS) for revenue purposes. Reports generated from this system include working system sizes by circuit type (Kilostream and Megastream etc.). An adjustment is made to the Kilostream N volumes. Copper depreciation costs, obtained from the Life of Plant (LoP) List, are adjusted where two pairs are used to supply Kilostream N (exchange lines only use one copper pair, therefore any Product using two copper pairs will get a higher amount apportioned to it). Once this adjustment is made, data from COSMOSS is fed into CDS and MIS, where the data is checked and then loaded into ASPIRE. CSCS (Call Statistics Centralisation System) CSCS is a dynamic and flexible 24x7 Management Information System which processes raw data in the form of priced call records collected from BT billing systems. It derives additional data fields, summarises the data and feeds it into an Oracle database. CSCS is used for reporting information about the calls made by customers using BT fixed lines (post & pre-payment) and BT Mobility offerings. The information relates to those calls that are paid for by the renter of the line and reports the number of calls, the summed call durations and summed revenues of those calls (before bulk usage discounts have been applied). It is not primarily intended to provide data on individual customers, but summarised data for specific groups of customers (e.g. Business, Residential, those with common discount options, Geographic Area). These groupings are based either on the calling line identity (CLI) or on codes supplied in the call record from upstream systems. This provides an almost immediate view of call revenue & volumes, which enables accurate and timely income accounting to be maintained and provides a ready analysis of volume activity. Where data supplies are less timely, the window for receipt of call records is kept open longer (e.g. Mobility). The exception to this is when the first day of the month falls on a working day, in which case the results for the final day of each calendar month must be available by WD1 of the following month (instead of the normal WD2). This is to enable the full month out-turns for the previous month to be posted to the General Ledger (GL) on WD1. On average, CSCS processes around 50m call records per day, with summarised details of 18bn calls, worth around 1.5bn of annual revenue to BT, stored in the database. CSCS is interrogated directly using Business Objects and is used as a data source for: Financial Turnover (Revenue) Reporting in the GL Regulatory reporting of volumes & costs/revenue Tracking overall business performance against budgets Tracking performance & impact of marketing campaigns and activity (inc. advertising) Forecasting volume and revenues for budget & target setting Management Reporting Pricing of calls judging impact/likely impact of changes Measuring Price Elasticity Tracking performance of new products e.g. BT Mobility, Broadband Voice, BT Communicator CSCS provides direct feeds to the following systems with Call Revenue and Volume data: the GL (via iota) (Enterprise Code Extract, Earned Revenue Cube) Powerhouse ICIP/CCBA There are currently seventeen separate databases populated by daily process Runs: CSS PSTN (chargeable calls dialled from BT fixed PSTN & ISDN post-payment lines and Coinbox lines (excluding Freephone)). Data derived from priced call records from Service Domain Processor (SDP). Operator Assistance Calls (calls originated from BT and some OLO fixed lines). Data derived from priced call records from Operator Assistance Flexible Charging (OAFC) system via Cashless Services Platform (CSP). Select Services (special facility calls from BT fixed lines e.g. 1471, Call Divert). Data derived from RT29 and RT22 records from SDP. 256

257 Avalon (Consumer chargeable calls dialled from BT fixed PSTN & ISDN post-payment lines, BT Charge card and BT Text (excluding Freephone)). Data derived from priced call records from Geneva via the GIB (Geneva Information for Business). Avalon Network Features (special facility calls from BT fixed lines e.g. 1471, Call Divert). Data derived from RT29 records from Geneva via the GIB. Avalon Late Data Consumer data received too late to be included as current data in the main Avalon table. Avalon Operator (calls originated from BT). Data derived from priced call records from Geneva via the GIB. Avalon Late Operator Consumer operator data received too late to be included as current data in the main Operator data table. Avalon Migrated Unbilled CDRs for Billing Accounts that have migrated from CSS to Avalon. Antillia (Business chargeable calls dialled from BT fixed post-payment lines, BT Charge card and BT Text (excluding Freephone)). Data derived from priced call records from Geneva via the GIB. Antillia Network Features (special facility calls from BT fixed lines e.g. 1471, Call Divert). Data derived from RT29 records from Geneva via the GIB. Antillia Late Data Business data received too late to be included as current data in the main Antillia table. Antillia Migrated Unbilled CDRs for Billing Accounts that have migrated from CSS to Antillia. Antillia Operator (calls originated from BT). Data derived from priced call records from Geneva via the GIB. Antillia Late Operator Business operator data received too late to be included as current data in the main Operator data table. Business Mobility calls priced on DISE3G (from MDS). Consumer Mobility calls from Geneva via the GIB. Data is analysed by various dimensions and is held for 90 days (daily and hourly data) and 18 months (monthly). The primary dimensions of the data that are of interest are: Who made the calls? E.G. Business Customers, Residential Customers, Trading Unit (customers grouped according to the Account Management teams in BT). What type of connection was used? e.g. PSTN, ISDN, PCO, RCB, Home Highway, Business Highway, GPRS, GSM What type of call? Local and National (Geographic & Non-Geographic), International, Internet Geographic analysis in terms of where callers are making their calls from is available at Exchange (NNI), CSS District and Zone level, for PSTN. Geographic analysis of International calls destinations is available by country and in most cases can be further separated by calls terminating on fixed lines and those that terminate on International Mobiles. CSS (Customer Service Systems) CSS manages all aspects of Customer Service on the Public Switched Telephone Network (PSTN), from order capture and Job Management, fault handling, work management and billing. CSS deals with engineering time through National Job Recording (NJR) system. CSS also supports network management, call itemisation, Issue Handling and line testing. The CSS headquarters system allows national changes (e.g. new Products) to be configured in a uniform, speedy and cost effective manner. The diagram below provides a CSS Overview: 257

258 CSS Overview Simplified View Appointment Details Customer Account Call Data Contract What The Customer Sees Customer Queries Order Handling Customer Fault Report Contact Handling Reminders Billing Receipts Customer Order SM I/F CSS Customer Data Receipting Centre Switch Manager Network Data Network Systems Job Manager Repair Handling Accounting and Statistical Information What BT Sees MIS Work Manager Works Instructions Directories Marketing Information Line Test CSS Overview CTCS (Core Transmission Circuit costing System) CTCS is set out by the following sections: Contents 01) Purpose of CTCS 02) Key information required to understand CTCS process 03) CTCS Inputs 04) CTCS Process 05) CTCS Outputs 06) Access Database Inputs 07) Access Database Process 08) Access Database Output 09) Component to Product Apportionment 10) Use of CTCS for other apportionments 11) Route to Radial 12) Trunk and Distribution 13) WECLA (West East and Central London Area) 14) CTCS Glossary CTCS - Overview BT s Core Transmission network is primarily made up of Electronics (Plesiochronous Digital Hierarchy (PDH) and Synchronous Digital Hierarchy (SDH)), Cable and Duct. Combinations of these assets (i.e. two units of electronics joined by fibre and duct) make up what is known as a bearer. See diagram below. 258

259 The bearers within the network carry numerous circuits which relate to several different products and bandwidths. CTCS is used as the volume source to record all network entities (i.e. the individual assets), bearers and circuits so that costs can be apportioned in an objective manner. This enables product managers to get a view of their costs and to find out exactly how these have been driven according to volumes, bandwidth and utilisation of the network. Duct and Cable Duct connects BT s Network sites with each other and with customers premises. Both Access and Core Transmission cables run through this duct network with access cables primarily connecting the customer to the local exchange and Core cables primarily interconnecting Network sites. A cable infrastructure interconnects BT core transmission, access and switching/routing assets. The Integrated Network Systems (INS) network management system differentiates Core Transmission from Access cables, and within those two groups, the type of cable used e.g. metal, fibre, e-side (from the exchange to the customer point) and d-side (from the customer point to the network terminating equipment (e.g. phone socket). PDH The PDH was introduced in BT s Core Transmission network during the 1970 s, as primary 2Mbit/s line systems began to saturate the core network. PDH was developed as a way to multiplex 2Mbit/s traffic to higher order capacity through a set of transmission hierarchies. However, due to the limitations of the PDH technology several multiplexers are required at each point in which circuits are required to move up the bandwidth scale. This results in multiplex mountains as illustrated below: LTE LTE CTCS_PDH Access to an individual 2Mbit/s circuit is impossible without undergoing a long de-multiplexing process. For this reason PDH is considered 259

260 as an end-to-end technology: it does not support adding and dropping circuits at intermediary stages as allowed in SDH line systems. The PDH platform provided an initial Bearer System functionality within the core network. A bearer system transports circuits of various bit rates, between two geographic points. A circuit is likely to require several bearers to cover the distance from origin to destination. Therefore a 2Mbit/s circuit between London and Brighton may travel on an 8Mbit/s bearer between London and Croydon, then on a 140Mbit/s bearer Croydon and Gatwick, and finally on an 8Mbit/s bearer between Gatwick and Brighton. Five circuit rates can be carried over PDH line systems: DS-1 (2Mbit/s), DS-2 (8Mbit/s), DS-3 (34Mbit/s), DS-4 (140Mbit/s) and DS-5 (565Mbit/s). Those rates are obtained by successive multiplexing as shown on above. SDH - SDH technology was included to BT s Core Transmission Platform in the late 1980 s as a way to provide reliable and cost effective transmission services to the end-customer. A circuit is likely to require several bearers to cover the distance from origin to destination. Therefore a 2Mbit/s circuit between London and Brighton may travel on an STM-1 bearer at 155Mbit/s between London and Croydon, then on an STM-16 bearer at 2.5Gbit/s between Croydon and Gatwick, and finally on an STM-1 bearer between Gatwick and Brighton. SDH offers a number of benefits: Minimum number of breakdowns: - Rapid restoration of service - Separation of circuits - Rapid circuit configuration Cost effectiveness: - Fewer number of components, - Interchange ability of components amongst suppliers. Compatibility with previous PDH technology and with Other Communication Providers (OCPs) Transmission networks. These reasons compelled BT to choose SDH as its main Core Transmission technology. It must however be noted that the PDH architecture is still dominant for capacity provision to the Public Switched Telephone Network (PSTN) platform. The SDH Network is organised into a number of different tiers. Tier 0 Tier 1 Supercell Tier 2 Cross-connect Add-drop mux Tier 3 Tier 4 CTCS_SDH Tier 1 Trunk Network connecting about 30 nodes covering Britain. Transmission Links are STM-16 (2.48Gbit/s) and STM-64 (10Gbit/s). Traffic is groomed by Digital Cross Connects (DXCs) for onward transmission and allows incoming signals to be terminated on a node. Tier 2 Regional Network connecting in a ring a number of ADMs. Two configurations are available: Cell 450 nodes in Britain - and Supercell 80 nodes. Tier 3 Smaller rings that may be necessary to interconnect the Access Network to the Tiers 2. Tier 4 SDH access. The ADM is located in customer premises. Tier 0 refers to the international network infrastructure. Since 1999, BT has had a network build of SDH technologies at higher bandwidths as an overlay to the basic network shown above. These include the MSH and UBB networks. The Marconi Synchronous Hierarchy (MSH) is a type of SDH equipment in the network. The Marconi Synchronous Hierarchy (MSH) 260

261 network is used to deliver the Multi-Service Intranet Platform (MSIP) and other broadband services while supporting processes will be kept as similar to existing SDH processes as possible. Most circuits on the MSH network are at 155Mbit/s. The later Ultra Broadband (UBB) supports bit rates of 2.4Gbit/s and 10Gbit/s. 1. Purpose of CTCS CTCS is an Oracle database that records all Transmission network elements, bearers and circuits and uses this information to provide apportionments for Accounting Separation purposes. The overall objective of the CTCS process is to provide data to enable apportionments of costs from Class Of Work (CoW) to Plant Group, Plant Group to Component and Component to Products. The following diagram represents the end to end CTCS process. The key steps which are described in this section are as follows: CTCS Inputs CTCS Process CTCS Outputs Access Database Inputs Access Database Process Access Database Outputs Component to Product Apportionment Planning Assignment and Configuration System (PACS) Integrated Network System (INS) Product Tagging Usage Factors CTCS Process Access Database Data Feeds from Offline Models LTXN Apportionment s DTNACSP AG129 LTME DTTM CTCS_EndToEndProcess CTCS derives all the core transmission apportionments. This principally involves Duct and cable assets and operating costs which are later apportioned over core transmission plant groups and subsequently over core transmission components. 2) Key information required to understand CTCS process In order to understand the CTCS, it is vital to understand several key words which are used repeatedly in the following sections: Element/Network Element This can refer to any type of asset or grouping of assets in the Core Transmission network, but will usually refer to either a Circuit, a Bearer (as explained above) or an individual asset (e.g. electronics). It is the relationship between these items which allows for apportionment from Class Of Work (CoW) and Plant Group (groupings of assets) to Components (Bearers) and Product (Circuits). 3) CTCS Inputs 261

262 Diagram: Overview of CTCS inputs Integrated Network System (INS) INS is an operational system which also feeds data into Core Transmission Circuit costing System (CTCS). The database records information on BT's Core Transmission Network. It also holds locations of operational buildings and record of the digital connections between these buildings and interconnection points between various cables and circuits. It also holds information on the capacity utilisation of bearers within the BT Network. This information is used to enable engineers to plan and route new circuits through the network. A snapshot of the network at Period 6 (mid-point of the financial year) is uploaded into CTCS, containing the following information: 262

263 PACS (Planning Assignment and Configuration System) PACs is an operational database. It contains an inventory of the equipment used in the Synchronous Digital Hierarchy (SDH) Network (including Access SDH). Network planners use PACS as an operational tool, to assist in the effective provision of new circuits across the SDH Network. This system supports the planning of the SDH Network. It provides support for orders to be entered manually or via an interface called, 'Service Solution Design.' These orders can then be configured and routed across the SDH Network. A snapshot of the network at Period 6 (mid-point of the financial year) is uploaded into Core Transmission Circuit costing System (CTCS), containing the following information: 263

264 Product Tagging Product Tagging is a further input to Core Transmission Circuit costing System (CTCS) and is carried out in a separate database. This includes the following information related to circuits: Individual Circuit identifier A and B end 1141 code (sourced from COSMOSS) Platform Product Circuit ID and Platform information is extracted from INS and PACS above. Information from COSMOSS is downloaded and used to provide the A and B ends of each circuit. A series of 60 queries are run to identify the product to which the circuit should be linked, this is mostly based upon information that is available from the individual circuit identifier (for example Megastream products will be identified by the prefix MXUK). Product tagging does not influence apportionments of cost from Class Of Work (CoW) to Plant Group or from Plant Group to component. However, these are used in the final apportionment of components to products (see later section for detail). Usage Factors The final input to CTCS relates to usage factors. These are required in order to correctly weight the many different variations of circuit bandwidths that can utilise bearers and bearers that hit network elements. Examples of the tables which are fed into CTCS can be seen below: Synchronous Digital Hierarchy (SDH) Circuit to Bearer Relationships As an example, it can be seen that 1008 E1 (2Mbit/s) circuits can use a single S16 (or STM-16) bearer. 4) CTCS Process The process by which CTCS creates the necessary data for apportionment can be summarised in the diagram below. This highlights the introduction of several tables which are described in greater detail on the next page. Diagram: Overview of CTCS Process 264

265 Origin Network Element All elements of network and their relationship with each other sourced from INS/ PACS data Destination NE List More detailed version of Network Element table NE List More detailed version of Network Element Table End to End Circuits List of all circuits created from INS/PACS data The Translation Table Transates elements into Entities The Translation Table Translates elements into Entities The Relationship Table Provides volume for each Entity relationship Output to Access Database CTCS_Process Network Element Table Circuit no A-End NETWORK ELEMENT CODE A 1141 A A 1141 B B-End NETWORK ELEMENT CODE BL/DA-PR/UG 2809 JDD BL BL SSS SSS BL/B PR/E SNE SSS BL/B PR/E SNE CTCS_NetworkElementTable Data from the Network Element table is as shown above. This illustrates the fact that the circuit BL/DA-PR/UG 2809 JDD uses the bearer SSS In turn, this bearer uses two network elements, SNE and SNE However, this does not provide sufficient information to know exactly what assets are being used and how this fits into the appropriate Plant Group or Component. Two tables, End to end circuits and NE List are used to find the Brick Type for the circuit and its components retrospectively. The Brick type is a code that identifies the details of the element by the following six properties: Brick code the type of element i.e. a circuit (CT), bearer (BE) Brick sector where the element sits in the network i.e. tier, core or local Brick sub code further identifies the type of element i.e. identifies cable as fibre or copper, a mux type etc. Brick bit rate the speed of the element Brick usage identifies if in service for Plesiochronous Digital Hierarchy (PDH) circuits only Brick product the product that the circuit is assigned to End To End Circuits Table By using the End to End circuit table, further data relating to this circuit can be obtained: 265

266 Circuit No A-End NETWORK ELEMENT CODE A1141 B1141 Radial Length Circuit Length Brick Type Brick Code Brick Bitrate Brick Product Platform BL/DA-PR/ UG 2809 JDD BL BL CT///E1// LPF CT E1 LPF SDH CTCS_EndToEndCircuitTable Circuit No A-End NETWORK ELEMENT CODE A1141 B1141 Radial Length Circuit Length Brick Type Brick Code Brick Bitrate Brick Product Platform BL/DA-PR/ UG 2809 JDD BL BL CT///E1// LPF CT E1 LPF SDH CTCS_EndToEndCircuitTable However, the key item of information is the Brick Type, this element is therefore identified as a 2Mbit/s (E1) circuit (CT) which relates to the product LPF (LPF). The appropriate brick codes relating to the bearer and elements can be obtained from the Network Elements (NE) List table which expands upon the data given in the Network Elements (NE) table. Network Elements (NE) List Table Network Element No Network Element code A1141 B1141 Radial Length Platform Cable Length Brick Code Brick Sub-code Brick Sector Brick Bitrate Brick Product Brick Type BL/DA-PR/UG 2809 JDD BL BL SDH CT E1 LPF CT///E1//LPF SSS BL/B PR/E 27/216 SDH 52 BE 2 S16 BE/2//S16// SNE PR/E SDH MU SDH 2 S16 MU/2/SDH/ S16// SNE BL/B SDH MU SDH 2 S16 MU/2/SDH/ S16// CTCS_BrickTypes From the data illustrated above, brick types have now been identified for the circuit, bearer and elements (far right column). The three elements of the circuit are: One Bearer in Tier 2 with a bit rate of STM-16 BE/2//S16// and two multiplexers in Tier 2 Synchronous Digital Hierarchy (SDH) with a bit rate of STM-16 MU/2/SDH/S16//. Accounting Separation (AS) Translation The brick types can then be used in order to link the network elements to a particular Accounting Separation (AS) Building Block/Plant Group or Cost Pool/Component as shown below: Platform Brick Type Entity Code Entity Flag DT Flag Driver Code AS Component SDH MU/2/SDH/S16// NZ01111 Y D N/A SDH BE/2//S16// NN01127 Y D D PG325T SDH CT///E1//LPF NR14651 Y D CO330 CTCS_ASElement 5) CTCS Output Private Circuit volumes are now Revenue System Size (RSS), where they were previously Working System Size (WSS). This is achieved by cross-referencing CTCS with COSMOSS (which feeds into the billing system) and omitting circuits that are not billed for. Circuit lengths are calculated by the radial distance between the Last Serving Exchange (LSEs). This distance is apportioned to Trunk and Distribution based 266

267 on the ratio of the distance from LSEs to Parent Tier 1 Exchanges and the distance between Parent Tier 1 Exchanges, in-line with billing. 6) CTCS - Access Database Inputs The objective of the Access database is to allow some key adjustments to be made to the output CTCS data. The inputs to the Access database are as shown below: Diagram: Overview of CTCS Access Database Inputs Fixed Percentage Adjustments A small number of off-line apportionments have to be calculated and input to the database. These relate to a number of PDH asset policy codes, i.e. CF14, CF56 and CF64 which cover Plesiochronous Digital Hierarchy (PDH) Optical Repeater Equipment. Fixed percentages are also calculated offline for the following Synchronous Digital Hierarchy (SDH) Classes of Work (CoW): SDHC Customer Add-drop Multiplexers (ADMs) SDHA Exchange Add-drop Multiplexer (ADMs) SDHX Cross-Connects. SDHK/SDHL Line Terminating Equipment SDHP Marconi Synchronous Hierarchy (MSH) assets All of the above are termed Fixed Percentage apportionments in the database as they are not generated by the database itself (compared with Driver Based (DB) and Usage Factor (UF) based apportionments that are calculated in the database based on volumes of drivers or factored volumes of drivers as described later in the document). The Fixed Percentage apportionments for Synchronous Digital Hierarchy (SDH) asset policy codes SDHA and SDHC, for example, are calculated by apportioning the Period 6 depreciation based on the volumes and relative costs of SMA-1, SMA-4 and SMA-16 ADMs. The calculations for the apportionment of these SDH Classes Of Work (CoW) to Plant Groups (PGs) are based on Period 6 depreciation and volumes of Add-drop Multiplexer (ADM) equipment. 7) Access Database Process The Access database sorts the data from the CTCS output and adjustments into a series of tables in order to produce the final Class Of Work (CoW) to Plant Group and Plant Group to Component apportionments. Summary of Input files required: CTCS factored hits file detailing hits and cable distance. CTCS element count file. Direct fibre distance. LoP List P6. SDH equipment prices. CTCS factored hits match the Plant Group to a specific network element and then gives a count of the number of pieces of equipment and thus a usage factor. 267

268 The raw file looks like this: The Equipment count file is a lookup of all the network equipment and is based on the following criteria: Number of entries of Bearer. Tiers and Type of Tier. MSH Equipment count. SDH equipment count. PDH equipment count. Tier 4 equipment count. Radio Links. Direct fibre and its associated Km are obtained directly from CTCS. LoP List. This is an extract from the asset register which details the individual CoW class of work and its associated policy code. The policy code and its description is a unique identifier which is used to feed the access database as it will detail the individual network elements under each CoW. The asset register holds the depreciation for each CoW and asset policy code which is then used within the access database and mapped to CTCS. The data is extracted at P6. The example extract below is based on the SDH CoW and demonstrates the level of granularity that the LoP List holds, the lower level descriptions and the YTD Depreciation. The access data bases use this information along with CTCS to map costs. The CoW to plant group table lists all the transmission asset policy codes and indicates which plant groups they should be mapped to. Details are also given of the driver used for the allocation. The following drivers have been used to allocate asset policy codes: 268

269 Factored hits on 1/16 LTEs Factored hits on 1/4 LTEs Factored hits on 140/565 Mux Factored hits on 2/34 Mux Factored hits on 2/8 Mux Factored hits on 34/140 Mux Factored hits on 8/34 Mux Factored hits on broadband kit Factored hits on cross connects 4/4 Factored hits on customer located ADM STM-1 Factored hits on customer located ADM STM-16 Factored hits on customer located ADM STM-4 Factored hits on exchange located ADM STM-1 Factored hits on exchange located ADM STM-16 Factored hits on exchange located ADM STM-4 Factored hits on MSH51-Customer sited Factored hits on MSH51-exchange sited Factored hits on MSH64-customer sited Factored hits on MSH64-exchange sited CTCS_Inputs_Table5AssetPolicyCodes Indirect Length of all cable types Length of fibre cable Length of transverse screen cable No of 140mb radio links No of 34mb radio links No of 4/1 No of 8mb radio links No of PDH LS Metallic 140MBits/s No of PDH LS Metallic 2MBits/s No of PDH LS Metallic 34MBits/s No of PDH LS Optical 140MBits/s No of PDH LS Optical 2MBits/s No of PDH LS Optical 34MBits/s No of PDH LS Optical 565MBits/s No of PDH LS Optical 8MBits/s Notional hits-all allocated to one plant group Total no of muxes Use length of analogue circuits Factored Hits Most of the SDH equipment is allocated to plant groups using factored hits. This is essentially where a bearer type hits a particular piece of equipment. The hit is factored to take into account the capacity of the bearer, so that higher capacity bearers pick up a large proportion of costs. Distance of cable Cable asset policy codes are allocated using distance of cable by bearer type and Tier. No of. Most of the PDH kit is allocated using the no of each type of kit. A separate plant group has been set up for each PDH kit type, so the driver is used to allocate 100% to that particular plant group. Other drivers-sub drivers A number of asset policy codes require a collective base to allocate. These are: - Length of all cable types - Total no of muxes Indirect Indirect drivers are assigned to those policy codes which cannot be allocated directly. These are normally miscellaneous lines on the LoP List. Indirect asset policy codes are allocated to plant group based on the allocation of direct driver based codes. Once all the information that is required is feed into the access database we can then start to process it. The extract below is an example of the translation tables highlighting the CoW, its description or policy code, what the driver is, for example factored hits, what category it s allocated to i.e. Plant Groups. 269

270 8) CTCS - Access Database Outputs As noted above, the Relation Table is the key output from the Access Database as this provides the detail of all apportionments between entities (i.e. Class Of Work (CoW) to Plant Group and Plant Group to Component). However, another step is required in order to finalise the process by apportioning Components to Products. 9) CTCS - Component to Product Apportionments There are three key data sources for the final stage of Core Transmission apportionments: CTCS for Private Circuit apportionments Call volumes from Powerhouse for Public Switched Telephone Network (PSTN) apportionments Powerhouse for Local End apportionments In the case of Private Circuit apportionments, CTCS summarises the detail of the End to End Circuits to record the overall volume and length of circuits (see CTCS process). Link based components will use circuit volumes while length based components will be based on circuit length data extracted from the table. 10) Use of CTCS for other apportionments CTCS data is also used to provide other bases including: 270

271 11) Route to Radial In the Wholesale SMP markets that make up Partial Private Circuit (PPC) and leased line services (Traditional Interface Symmetric Broadband Origination Markets and the Wholesale Trunk Market) the bearers and all associated trunk and transmission services are now reported in radial km. The underlying PPC and leased line costing system (CTCS) is now able to replicate the actual billing process which calculates a theoretical radial distance of circuits. This radial distance is applied to the cost of these circuits (which is based on the actual length or route of the circuit) to give a unit cost on a radial basis. This change brings the market definition on pricing and regulatory costing methods into alignment and allows for greater transparency of the regulatory charges with the actual radial price billed. This was implemented in the regulatory accounts for 2005/06 as described in page 20 of the Regulatory Financial Review of the Current Cost Financial Statements for The example table below shows an extract from CTCS for CO372 2Mbit/s Trunk per Km and identifies the difference in reporting route vs. radial by Product. Prior to the 2006 Financial Statements the price shown in the Regulatory Accounts was adjusted by a factor ( the route to radial factor ) to adjust the billed radial price to a route basis to align with a unit cost that was shown on a route basis. The 2006 Financial Statements adopted the change described above and shows both price and cost information on a radial basis. 271

272 12) Trunk and Distribution Following an Ofcom investigation into PPC Trunk charges, BT has revised the cost allocation for PPC trunk segments which fall into the Wholesale Trunk market and terminating charges which fall into the Traditional Interface Symmetric Broadband Origination (TISBO) markets. Cost apportionments from the underlying circuit costing system (CTCS) are now in line with the pricing of trunk segments i.e. parent Tier 1 nodes. This methodology was implemented in the 2006/07 Regulatory Accounts and apportions the costs to distribution and trunk components using circuit s route length split by the radial trunk to distribution ratio. This ratio is applied to the main and standby paths independently. The diagram below gives a general overall view of the new methodology and of how circuits are to be split. 272

273 Circuit split is achieved by the following 3 steps: Calculate the radial Distribution and Trunk ratio. Apply the ratio to the main and standby paths. Identify elements of the circuit as Distribution and Trunk. Details of these steps are explained below. Calculate the radial Distribution and Trunk ratio The radial Distribution distance is attained by taking the straight line distance from the Last Serving Exchange to its Parent Node at each end of the circuit. If the Last Serving Exchange is a Parent Node this distance will be zero. The radial Trunk distance is attained by taking the straight line distance between the Parent Nodes. If the Last Serving Exchange at both ends of the circuit shares the same Parent Node this distance will be zero. Note: - The circuit does not have to pass through the Parent Node. This is a theoretical shortest path for the circuit. With these two distances, ratios are calculated to determine what proportion of the circuit is to be identified as Distribution and Trunk. A end LSE A end Parent B end Parent B end LSE CTCS_RatioCalculation 3 km 40 km 7 km Radial Distribution = 10 (3+7) Radial Trunk = 40 Total = 50 Distribution ratio = 10/50 = 0.2 Trunk ratio = 40/50 = 0.8 Apply the ratio to the main and standby paths The Distribution and Trunk ratios are then applied to both the circuits main and standby paths independently to calculate the required route lengths for Distribution and Trunk. 273

274 Applying the 0.2 and 0.8 ratios to this circuit will give the following results: Diagram 3 A end Parent Main Path 70 km B end Parent CTCS_02and08Ratios Standby Path Main Distribution = 70km x 0.2 = 14km Main Trunk = 70km x 0.8 = 56km Standby Distribution = 90km x 0.2 = 18km Standby Trunk = 90km x 0.8 = 72km Identify elements of the circuit as Distribution and Trunk Bearers and Line Systems are grouped into hierarchical Tier Levels based on their platform, tier and bit rate. The grouping is shown it the table below: Diagram 4 CTCS_BearerandLineSystemTiers SDH Tier 1 PDH 140/566 SDH Tier 1.5 SDH Tier 2 SDH Tier 3 PDH sub 140 SDH Tier 4 Level 1 Level 2 Level 3 Level 4 Level 5 The Bearers and Line Systems length is exhausted to the Trunk component, starting at the top level and working down until the Trunk distance is achieved. This can be either whole Bearers/Line Systems or a proportion of their length. The remaining Bearers/Line Systems length is then apportioned to the Distribution component. This will add up to the correct Distribution length. If the main path of the circuit consisted of the Bearer and Line System shown in the diagram below, using the ratio and distances calculated previously the split would be as follows: 274

275 Diagram 5 A end Parent B end Parent 2Mbit 2 km PDH 140 Mbit 8 km Tier 1 bearer Tier 2 bearer SDH 40km 140 Mbit Line system 8km 14km Tier 1 40 km 8km Tier 2 14 km Tier 3 6 km Trunk 56km Tier 3 bearer 6km 2 Mbit Line system 2km 12km Dist 14km CTCS_BearerandLineRatioandDistances Tier 1 Bearers and 140Mbit/s Line Systems will be identified as Trunk. Tier2/3 Bearers will be split between Trunk and Distribution. 2Mbit/s Line Systems will be identified as Distribution. Both the Length and Link (volume) element of the Bearers are apportioned by the same amount i.e. if 40% of a Bearer s length is identified as Trunk a volume of 0.4 will be used for the volume. This methodology is then applied to the standby path using the same ratios. 13) WECLA (West East Central London Area) The Business Connectivity Market Review (BCMR) conducted by Ofcom determined that two of the TISBO markets (TISBO above 8Mbit/s and up to 45Mbit/s and TISBO above 45Mbit/s and up to 155Mbit/s) under a new geographic area were now competitive and no overall Communication Provider had Significant Market Power, the area defined is known as WECLA. 3 rd Party Customer SDH Transmission Network CP Network LSE Tier 1 Node Tier 1 Node POC / LSE Local End Distribution Distribution Point of Handover / Local end Trunk 3 rd Party Customer SDH Transmission Network CP Network SMP TISBO Markets LSE Tier 1 Node Tier 1 Node POC / LSE Local End Distribution Distribution Point of Handover / Local end Trunk CP Network SDH Transmission Network 3 rd Party Customer Non SMP Central and East London Area POC/ Tier 1 LSE Node Point of handover / Distribution Local end Tier 1 POC / Node LSE Distribution Local end Key Local End Distribution Trunk Point of Handover Ofcom defined WECLA within the BCMR and identified the London areas by postcodes. Ofcom separately provided a further definition of WECLA and in particular what elements of a circuit (Link, Distribution, Trunk and Local End) should be excluded and pointed to WECLA and which ones remain as TISBO. 275

276 14) CTCS - Glossary ADM - Add-Drop Multiplexers. Key item of Synchronous Digital Hierarchy (SDH) electronics which allows the circuits of varying bandwidth to be multiplied up to utilise more efficient high bandwidth bearers. COSMOSS - Customer Oriented System for the Management of Special Services (Private Circuits). CTCS - Core Transmission Circuit costing System. INS - Integrated Network Systems Computer System for BT's Plesiochronous Digital Hierarchy (PDH) Network, containing cable and Plesiochronous Digital Hierarchy (PDH) equipment records. MSH - Marconi Synchronous Hierarchy. High bandwidth Transmission Network. NDS - Network Decision Support. Tool used to extract data from INS. OCP - Other Communications Provider (e.g. Vodafone). PACS - Planning Assignment and Configuration System. PDH -Plesiochronous Digital Hierarchy PDH was the initial structure for organising the hierarchy or possible bit rates in synchronous time-division multiplexing. Now superseded by Synchronous Digital Hierarchy (SDH). SDH - Synchronous Digital Hierarchy. STM - Synchronous Transport Module. Measurement of Transmission bit rate Where n = 1, 4, 16, 64, i.e. 155, 622Mbit/s, 2.5, 10Gbit/s. UBB - Ultra Broadband Network. CWSS (Copper Wideband Serving Section) BT s bespoke copper based bearer between customer s equipment and the network. Typically carries Kilostream over high-speed DSL (HDSL). DESS (Digital Exchange SubSystem) DESS is a key system used for Data Management of System X exchanges. It supports the data on load, download and manipulation of exchange software. DESS is the key system for download, manipulation and upload of System X Exchange Data allowing new equipment and rearrangements to be implemented on the narrow band network. Data used by DESS originates from BT UK network of System-X exchanges serving the UK Public Switched Telephone Network (PSTN). Data is downloaded in the form of binary system dumps, and is de-compiled on the DESS system into ASCII format. DESS provides data to CARDVU allowing System X exchange data to be viewed and validated. DESS is a key feed to Network Audit Charging Validation. DSR (Duct Space Records Survey) The DSR is a standard record of the use of ducts. The DSR provides a record of cables within a duct section (i.e. between two manholes). The high cost of providing ducts demands that this record is kept up-to-date. The DSR is used in-conjunction with the Duct plan. Each length of duct on the Duct Plan is given a serial number. The DSR shows a cross-section of the duct on a particular length (or a number of lengths with the same formation). This is a survey based on DSR paper records, held at drawing offices. The survey splits duct into: Access Fibre. Access Copper. Core Transmission. EASI (Exchange And Station Information) EASI is a subsystem of Integrated Network Systems (INS). It is the master source of 1141 codes used by all design, assignment and order handling systems. It holds the Exchange/system types which are used in Planning Assignment and Configuration System (PACS) for planning equipment and in Service Solution Design (SSD) for taking in orders that need to terminate on certain switch types. EBC (Element Based Conveyance) EBC is a mechanism that measures BT network usage by Communications Providers (CPs). It is one of the factors that affect the final price of certain calls and a matrix is used by BT to calculate the appropriate network usage charges. The EBC matrix is also provided, along with other supporting files, to CPs allowing them to verify the bills from BT Wholesale and to correctly charge for certain calls on their invoices to BT. EBC types of call have a charge dependent on the optimum use of the BT Network to carry or terminate a call. The network use is defined as the optimal exchange connectivity path a call can take and, within that, the shortest distance between the trunk exchanges in that 276

277 path. A connectivity path is based on the shortest distance between the exchanges, which lie along the path of a call between origination and termination. EBC charging applies to various call types, such as a call terminating on, transiting or in some cases leaving the BT Network. EBC Data Sources National Charging Database (NCDB). Network Records System (NRS). Routing Reference Model (RRM). Point Code Information System (PCIS). Routing Plan Database (RPD). EM (Element Manager) Each telecommunication equipment vendor has their own EM system based on agreed industrial standards. The Alcatel 5620 EM is a scalable network management solution. It provides the network operator with a full range of configuration capabilities on multitechnology networks. The system holds the volumes of cards/ports that come from the NEI (Network Element Inventory) and AIM (Analysis and Inventory Module) supplied from the EM database. Card prices are supplied by BT Wholesale. Traffic and service parameters on frame relay, ATM, X.25, SONET/SDH and ISDN links and paths can be configured through a point-andclick graphical user interface. The element manager provided the following benefits: Reduced time to market for integration development and new service introduction. This facilitates reduced cost of operations by flow-through provisioning. It also facilitates reduced maintenance cost by aggregating all fault and performance data in systems dedicated to correlation, root cause analysis, and pre-emptive maintenance. Integrated operational support systems enable faster service creation and higher revenues by service differentiation and shorter time to market with new services. Provides capability so that the management activities can be tailored by customizing or restricting views of the network for different operators. Reduced integration development cost. Reduced cost of operational support systems ownership. Improved operational support for the end customers. EXPRES (Exchange Planning and Review System) EXPRES is a system used for capacity planning in BT s Local Exchange Network. It provides an inventory of 'capacity in service' available in the Voice Network also known as the Public Switched Telephone Network (PSTN). The system uses this information to forecast future capacity requirements. It also links to an equipment-ordering programme for our suppliers. EXPRES is extensively used to provide regular switch network data for reports and briefings together with data for key reports to Ofcom and other Communication Providers (CPs). Additionally it is used throughout the business, particularly within planning offices, to provide management statistics and data on the works programme and asset utilisation. It is the definitive source for Network Nodal Identifier (NNI) codes. EXPRES contains details of the hierarchy of the Voice Network. e.g. which Local exchanges are linked to which Tandem exchanges If BT decides to re-parent a Local Exchange, other CPs must be told to enable their traffic to be re-routed. EXPRES produces the relevant reports for the other CPs. Within ASPIRE, EXPRES data is used to ascertain the number of lines served by specific types of exchange. It is used in combination with Powerhouse. ASPIRE uses Powerhouse data to obtain the number of exchange lines. EXPRES data will tell us the particular type of exchange, from which these lines are served. The raw data from both these systems is put into a builder file and then uploaded into ASPIRE. FastVPlan Tracking and Modelling application used for Capacity Managing for BT Wholesale Broadband Digital Subscriber Line Access Multiplexer (DSLAM) platform. 277

278 FAR The Fixed Asset Registar is the internal list of all of BT s fixed assets. The FAR team have the job of maintaining and registering BT's assets on its Fixed Asset Register. Featurenet Featurenet is a BT virtual private service for the transmission of voice, facsimile and voice band data either between sites or from site to locations not connected to the service. GALILEO A fault reporting Management Information System (MIS) which feeds off Customer Service Systems (CSS). GALILEO is used by the BT Wholesale and Retail by providing online access over the BT Intranet. GL (General Ledger) The GL is the capital element of a company s financial records. Every financial transaction flows through the GL. The records remain as a permanent track of the history of all financial transactions in the company. Geneva/Avalon Avalon is the name of the Geneva/IRB BT Retail instance being used to bill for a multitude of products. Deployment Date: 31/08/2006 SPDS50937 SPD Approved Date 24/01/2011 The Infinys Rating and Billing (IRB) Billing platform uses an "off the shelf" billing system supplied by Convergys based in Cambridge, UK. The system has been built on the core Geneva platform with a number of Pre & Post processors and interfacing systems. Products billed include PSTN, Featurenet, BT Mobile (consumer), Openworld products (narrowband and broadband), Wireless Broadband (Openzone), Corporate Broadband (Internet Tele Worker) and a number of other small product sets. GNCM (Global Network Cost Model) The GNCM is a network centric model which allocates the Global Network Operating Costs and Depreciation budgets incurred by the Global (non-uk Global Services) network infrastructure to BT Global Services products. This does not include the Infonet platform and Italy. All costs are initially allocated to Network platforms and in the case of the IDD Product, this is the Global Carrier Voice (NICs) Platform. The Satellite costs are allocated based on capacity utilisation. The Subsea costs are allocated using cost allocation keys fed from the inventory of leased circuits and their costs, giving annual recurring cost by platform of international circuits and then weighted based on the amount of NICs trunks capacity (which is carried over the UK Backhaul network and is provided by the Global Transport Planners). GLOSSI (Global Support System for Invoicing) GLOSSI is a global billing system offering multi-lingual invoices and reports and flexible multi-currency tariffing, pricing and reporting. The system captures all information required for billing - including customer data, service and product data and tariff data - via a GUI front end. The system can stand-alone or use feeds from other systems to do initial and on-going data build. GT-X GT-X is a call handler system and data capture (CRM) tool. The system allows calls (inbound and outbound) from a dialler to be processed by an agent in a contact centre. Currently only outbound calls are being run from GT-X. Agents receive calls using Graham Technology software (GT-X), which runs on UNIX, on application servers. Around 40 agents can be allocated to each application server. The GT-X client is thin and code is held on the Oracle database within GT-X delivered tables. There are also a number of database servers. GT-X is used to run call centre scripts that enable agents to view customer information and record data gathered on a call. The application interacts with UNIX processes called Service Objects which allow GT-X to interface with external systems and databases. GT-X campaigns are used for acquisition and retention, sales and billing in both business and consumer areas. HORIZON This database holds detailed records for BT s properties (e.g. tenure, ownership and floor areas). This system contains data on the BT Estate (both office and operational). It holds data such as the Net Internal Area (this is the floor space that is billable) and Gross Internal Area (floor space that isn t billable). It records, at Organisation Unit Code (OUC) level, who actually 278

279 occupies the floor space so that a particular OUC can be billed for usage. The occupancy details on the database contain the footprints of the equipment. This helps to establish the occupancy split between the specialised, the general purpose or both for each property on the system. HORIZON is managed and owned by Telereal Trillium who is BT s outsourced agents for estate management. IBIS (International Private Leased Circuit Billing Information System) IBIS is the billing and information system for International Private Leased Circuit (IPLC) Product line. This system generates bills on a quarterly basis and handles accounts receivables with Sales Ledger reporting. This system contains customer data, such as their billing address, account number and all IPLCs, by circuit identifier, rented by that particular customer. ibuy ibuy provides a simple, consistent process and a single tool through which all goods and services will be purchased. ibuy enables the purchase goods or services directly, or vial a link (from ibuy) to an existing ordering tool. ICARUS (International Circuit Allocation Record Update System) ICARUS is an inventory and order entry system. It is dedicated to the International circuits originated / terminated in the UK ( IPC ) transiting through the UK ( Hubbing circuits). Particular cases to the International Private Circuits (IPC) are the circuits that terminate on BT network but outside the UK. It contains capacity and usage data on BT s International Transmission Network. It holds data on cables between exchanges that are based in various countries around the world. This system also contains routing details for these circuits. International Circuit Provisioning teams use this system to install new circuits. It is also used for maintenance purposes i.e. re-routing circuits. The diagram below provides an ICARUS Overview. IIDA (Inland and International Directory Assistance) IIDA, or directory enquiries, is a phone service used to find out a specific telephone number and/or address of a residence, business, or government entity. 279

280 INCA (Inter Network Call Accounting) This system is used to record calls that leave/arrive from/to the BT Network via an Interconnect with an Other Communications Provider (OCP). The records are from some 900+ exchanges and arrive via a mediator. The types of calls are: Originating on the BT Network, terminating on an Other Communication Provider (OCP) Network (BT makes a Payment to Other Communication Provider (POCP) for terminating the call). Originating on an OCP Network, terminating on the BT Network (BT receives a Receipt from Other Communication Provider (ROCP). Originating (0800/0808, IA/CPS) on the BT Network, terminating on an Other Communication Provider (OCP) Network (BT receives a Receipt from Other Communication Provider (ROCP)). Originating (0800/0808, IA/CPS) on an OCP Network, terminating on the BT Network (BT makes a Payment to Other Communication Provider (POCP)). Transit Traffic where calls originate and terminate on OCPs Network. The BT Network is used to carry traffic between these two networks. When a customer makes a call that passes between BT and another operator s network the details of that calls are collected at the exchange that forms the interconnection point between them. The Streamer takes all the interconnect call records from MEDIATOR which has polled the exchanges for this data. The Streamer then validates these calls against a model of the network routing information. Files are then created from these validated records and these are streamed into the Company system for consolidation into summary tables. The Company system individually charges each call using the information provided by the contract that BT has with each other operator. The pricing reference data is maintained using a graphical user interface. Data used for charging is provided by EBC and NCDB. INCA is the charging engine within the overall GenIUS (Geneva Integrated Universal System) used to pass on charging data to the pricing engine, Geneva, to bill OCPs for their telephony traffic, carried over the BT Network. INCA is able to apply charging data for the proportion of the BT Network used to transport an interconnect call. INCA is also used extensively to check bills received from OCPs. Maps the INCA data to Regulatory Products. Converts individual call detail records into amalgamated buckets of data (summarised) dependent on EBC band, time of day etc. and sorts this data into relevant OCP files. Checks products that use basic and advanced features of the Derived Services Network (Basic Products are Freephone, Low Call 0845, 0870, speaking clock. Advanced Products are Televoting, Mid Call Diversion and Non Geographic Number Portability). Data is summarised and incorporated with Geneva data to add pricing data and to produce invoices. INS (Integrated Network Systems) INS is the family name for the architecture encompassing a group of mainframe subsystems supporting Plesiochronous Digital Hierarchy (PDH) core network planning and utilisation processes. These processes manage the assignment of BT's core and wideband network and transmission equipment areas. It is one of the major Operation Support Systems (OSS) within BT for (PDH) plus the analogue network and holds all data for Cables (Fibre and Copper - non Customer Service System (CSS)), Radio, Bearers, Switch, Equipment and Private Services and is one of the largest online data systems in Europe. It underpins network technologies and topologies such as Ultra Broadband (UBB), Wavelength Division Multiplexing (WDM), Synchronous Digital Hierarchy (SDH), Internet Protocol (IP), PDH, Kilostream and high bit rate services. It also records the inter exchange network for Public Switched Telephone Network (PSTN) and Featurenet. It fully supports the three main business processes of Provision, Build and Repair. INS is essentially a data warehouse and is a representation of physical bearers and equipment for logical solutions. It provides end to end routing design and solutions across network platforms for public, private and network services, 20CN and 21CN. It also provides a level of resilience checking. IXBS NG (Interconnect Bureau Service New Generation) A system that gives hourly traffic utilisation on a route basis. JRMIS (Job Recording Management Information Systems) This system contains job recording data for field engineers and is used to monitor engineering time. The system receives Engineers Unauthorised and Authorised time booking data and job information from various feeder systems, processes it and produces various reports and extracts. The reports and extracts are used by various lines of business. 280

281 LLCS (Local Line Costing Study) This is normally conducted annually and is valued using current equipment costs and installation prices. This LLCS covers ducts that contain at least one local cable. LLFN (London Local Fibre Network) The LLFN is an analogue private circuit overlay platform providing services to major customers, with an enhanced service wrap within the 0207 and 0208 areas of London only. The platform is now over 20 years old and primarily is based on PDH technology but is now making more use of SDH. There are various bespoke systems that support the platform along with a raft of BAU systems for order/faults management. LoP List (Life of Plant List) LOP List details the Capital Fixed Assets for BT TSO & Openreach on a monthly basis, and is made available to users on a request only basis. It shows details of registered assets down to Policy Code level; Work in Progress, Backlog Registrations and Accounting Adjustments at CoW level. The totals should reconcile with the Fixed Assets figures in the published Balance Sheet. LOP List was first produced in financial year 1996/97. The LOP List is loaded into SharePoint where access permission is granted through the Fixed Assets Manager. Asset Policy Codes (APC's) can be created / deleted during any financial year depending on demands/decline of technology. New assets and current assets depreciating would obviously be a change in the year and write-offs which occur from building closure: assets that have no use etc. will change also. The Book life of the assets may change dependent on the Asset Life Review (ALR) which is proposed by BT Group Regulatory Finance. This is an excel spreadsheet that contains Class of Work (CoW) information by Asset Policy Code for the assets belonging to BT Wholesale or Openreach. This excel spreadsheet is prepared on a quarterly basis by the BT Group Fixed Assets team. The LoP List is loaded into Livelink where access permission is granted through the Fixed Assets Manager. In Regulatory Reporting, the information on the excel spreadsheet is used in base preparation. The inputs to the excel spreadsheet is from the Oracle Fixed Assets Register and Central Information Database (CID) Work In Progress report. Long Run Incremental Cost (LRIC) model for Main Exchanges A method of cost analysis based on an economic concept which separates costs of a specific increment of business activity from the overall costs of the business with the advantage of enabling the business to identify the separable costs of providing certain services, and thus to inform decisions as to the pricing of those services. The model dimensions the optimum network configuration for Main Exchanges using a Modern Equivalent Asset (MEA) of Next Generation Switches for both the MDX (System X Main Exchanges) and NGSC (Next Generation Switch) CoWs. Using feeds from EXPRES, NRS and the Switch Deployment Plan the cost of each unit is valued individually and the total value of the individual building blocks are mapped against a matrix to provide the fraction of cost pertinent to Main Exchange Call Set-Up and Main Exchange Call Duration. MEDIATOR Mediator has replaced Network Mediation Processor (NMP) as the data collection system, polling the majority of BT s Network Elements. It interfaces with a variety of Billing and Management Information systems and provides a billing data feed for Wholesale, Retail and Global Services. MEDIATOR collects the majority of BT s billing and other data streams from all network elements (other than 21CN) and, after transformation, makes the data available for collection by other downstream billing platform components such as the Service Domain Processor (SDP), where the call records are priced prior to subsequent transfer to Customer Service System (CSS). The system components, collectively known as MEDIATOR, comprises of: Unix Mediation Engines (ME). A Windows server known as the Mediation Control Centre. X25 network access nodes (MegaPACs). Automatic backup and restore capability (Net backup). UNIX tape server for the input of exchange data in case of data communications network failure. Merlin Performance Management Merlin Performance Management provides a strategic Business Intelligence Reporting Platform for Customer Contact Centres within BT Retail and is used to record call statistics within the Centres. 281

282 The reports from Merlin are vital at senior management level to provide visibility of the previous day's performance in each of the main business units (Business, Consumer Sales, Customer Service, etc.). The results on the reports will then drive key decisions on the immediate focus for each of these areas for the forthcoming day. These reports also provide Key Performance Indicator (KPI) data at agent level which provide a mechanism for relevant comparison of performance and improvement purposes which can then be used to drive performance improvement plans. Metro Node/I-Node/MSAN Node cost model Contains the various building blocks of the Metro Node, I-Node and MSAN (Multi Service Access Node) derived from the unit prices and overall projected spend on the items. MSIP (Multi Service Intranet Platform) MSIP currently* consists of two sub-platforms delivering ATM, Frame Relay and Ethernet connectivity in the UK. The sub-platforms are integrated together to offer customer accesses at speeds from 64kbps to 622Mbps. Full automated provisioning of PVCs for the Cisco BPX and Alcatel sub-nets is standard with a minimum bandwidth of 4kbps. The BT Alcatel-Lucent ATM network supports the national 20C BT Broadband backhaul infrastructure (carrying the IPstream & Datastream products) as well as the Cellstream, Framestream and Megastream Ethernet customer products along with backhaul trunking for Dial IP, IP VPN, 21 DCN and a number of other products and services. The network is based on a tiered hierarchy of ATM switches (7470, 7670RSP & 7670 ESE) using STM1, STM4 and STM16 SDH trunks. The Network provides customer connectivity at sub E1 Frame, E1 ATM, E1 Frame, E3 ATM, E3 Frame, STM1, STM4, 10/100 BaseT Ethernet and GigE Ethernet. *The Cisco BPX/MGX platform provides BTs national Framestream Service. The network comprises of Cisco BPX ATM switch nodes interconnected by STM1 core trunks and Cisco MGX nodes associated with the BPXs to provide E1 and Sub E1 ports for customer access. Interworking trunks to the Alcatel ATM Network provide Cell/Frame services and Frame Relay Gateways to the IPVPN network provide IP enabled services. Framestream Network: 81 Nodes with 49 Core links ** **NB the UK CISCO Framestream platform went unsupported in Sep 2011 and is at the very latest stages of closure with all remaining users off by July Age of Network: ATM Network-1995, Framestream Network Platform Details: ATM Network: 508 switches with 6766 Core links, 1568GBt/s Physical Core capacity (2453GBit/s effective). Ownership: The Platform is owned by BT Global Services and is operated and managed on their behalf by BT Operate and BT Innovate & Design. NCDB (National Charging Database) This system holds reference data by which voice calls are charged. The reference data is used to generate a charge for a particular call. When a call is made, the local telephone exchange generates a call record. The originating number and receiving number are then cross-referenced against the NCDB so that a charge for the call can be calculated. NEMOS-DR (NEtwork MOdelling System Data Repository) The system contains the route performance information for Network Capacity management. The basic data needed in order to perform the network route capacity management function is information about a route's busy hour performance and loading, in terms of traffic, calls offered, carried and lost, together with an indication of the capacity available. The data requirements are very similar to those for real time network management and so NEMOS-DR makes use of the large amount of data collected by TrafficHawk - the Network Traffic Management System (contains raw unprocessed call data). TrafficHawk collects data from all monitored exchanges every five minutes and the Network Managers use it to monitor and identify network problems and take short term corrective action as necessary. TrafficHawk combines the relevant data from three to five minute periods and transmits a file to NEMOS-DR every fifteen minutes. The collected data is then grouped into Day, Afternoon, Evening and Night periods within which busy-hours are identified. This data enables the Network teams to manage the Public Switched Telephone Network (PSTN). NetView NetView is a Business Intelligence Reporting system produced and managed by the Openreach Business Intelligence team. This system provides reporting and analytical capabilities across a wide set of standard Openreach measures. 282

283 Nexus Nexus is a time recording and performance management system used by the sales force to introduce Sales Order details that the Order Entry team will review and, if wrong return to Sales team to complete. If everything is OK, an Order is introduced in the Order Entry And Delivery System. NIMS (Network Instruction Management System) The NIMS application serves the Openreach Planning, Programming and control communities. It is a sophisticated database tool which is used to programme, schedule, plan and execute work and to control and monitor progress throughout each phase of the job's life-cycle. It enables aspects of works planning, logistics control and overall project management to be co-ordinated and prioritised at national and task level. It assists in optimising capital resource, available time and work to meet business requirements. It is the data warehouse system for TCP and WFMT so is critical to the Network Engineering Journey (NEJ) and NGA both FTTC and FTTP. There are 4400 registered users of which 100 are concurrent at any one time. NJR (National Job Recording System) A BT system which collects, verifies, reconciles, authorises, collates and disseminates engineering time, allocation and overtime/allowances data for NewGrid grades within BT. NRS (Network Records System) NRS is the national system for the allocation/de-allocation and display of Public Switched Telephony Network (PSTN) 2Mb Switch Ports and related switch data. The information held by NRS is derived from PSTN switch data, which is refreshed regularly from System X, AXE10, NGS, Hybrid and Call Server switches. The received data is reconciled against the existing NRS data and any anomalies are raised as Reconcile Exceptions. During 2008 the functionality provided by NRMS (Network Routing and Modelling System) was subsumed into NRS. This functionality is referred to as NRS-NRMS and provides users with a graphical representation of the current routing structure of the network. Route Factors give a view of network component utilisation across BT s PSTN and meet requirements of the Communications Act They are also published in BT s annual accounts. Interfaces with other systems: DESS Network - Digital Exchange Support System. It contains print files (switch archive data) for System X exchanges. MMS and MNOSS Network - NGS hybrid switches use AXD/AXE processors. To get a feed from the AXD part of the processors MMS is used. NRS Polls MNOSS data from CSAM-D into NRS. NMP Network - Network Mediator Protocol. NRS print files of AXE10, NGS, HYBRID and Call Server (non-isml data) exchanges are received from NMP. APG40 Network - APG40 provides Call Server prints to NRS on daily basis (ISML data) NIO and RDB Network - NRS receives AXE hardware information from NIO interface in XML file format. ISML - Netconf Network - NRS Polls ISML data from CSAM-D into NRS. CTM Network - CTM provides CTM print to NRS. WOOSH GUI - WOOSH is the GUI of NRS. Fusion Work OSS - NRS polls print files from Fusion Works for CRAFT. Every Friday auto generated mail is dispatched to NRS Helpdesk detailing reconcile exception counts per switch type etc. Daily Report at 12:00 detailing switches breaking certain thresholds. From Release N (29/03/10), on the 14th of each month a script runs to produce Global Number Portability reports for System X, NGS and Hybrid switches and them to John McKeown. Monthly break down of Reconcile Exceptions by NNI, Rec Excep type etc. to NRS Helpdesk. Fast Alarm OSS - with 4 zipped CSV files is dispatched to concerned users whenever report is requested. NEMOS MT OSS - NEMOS-MT imports routing files for System X and AXE10 switches from NRS via Reports option (Appendix 24A) and ). CRAB (OTDB) OSS - Data related to circuits, termination details are provided to OTDB (One Truth Database) - NRS System Allocation tables weekly by FTP for Interconnect Inventory. (CRAB = Circuit Revenue Assurance Board). UII OSS - Unified Inventory Interface. NRS provides detail of specified tables to UII with help of Views. 283

284 EBC OSS - EBC is used to charge transit traffic. It creates a matrix with the POC (Point Of Connect) where the call leaves the BT network. The Exit POC s is provided by NRMS using the eplagent utility. NRMS A OSS - The NRMS network audit system referred to as NA provides a definitive view of the network to downstream systems. This view consists of nodes, links between nodes and traffic destination to decode structure. Information is received from the NRMS System, re-arranged and then fed out to OTIS. GUI access is provided for non-standard routes. CSAM N OSS - NRS provides PACS IP association detail for call server to CSAM-N via DB Link. PACS 20C OSS - NRS is used for 2M Routes and Circuit Allocations and needs information held in PACS (Planning Assignment and Configuration System) to allow ADM mapping during the allocation process. The PACS system delivers 2 CSV files to NRS through FTP, on a weekly basis for NGS and NGS-Hybrid switch allocations. ADM, DDF_1141 and Highband_port information is provided by PACS which are updated in the SYS_ALLOCATION and SYS_HY_ALLOCATION TABLES. PACS 21CN OSS - provides inventory and Activation notification to NRS (XML link to transfer PACS data to NRS). CSAM D OSS - CSAM provides various feeds to NRS. For example MNOSS, ISML etc. ANDES OSS - interrogates NRS (in_information_only = Y) or interrogates and auto-allocates on NRS. Jobs recorded in NRS s ANDES_Request_Log. NRS supplies allocation information to ANDES for MML generation and switch onload. ANDES cease jobs also update NRS making terminations "spare" on completion. (JDBC link to allow automation of 2Mb Switch termination allocation/deallocation and database link for Data Warehouse). NBI / MNOSS-CORBA / MMS and MNOSS (CSAM-D) OSS - This interface, known as the NorthBound Interface (NBI) is currently disabled following sys_hy_allocation data corruption problems. NGS Hybrid switches use AXD/AXE processors. To get a feed from the AXD part of the processors (board = ATM) MMS is used. NRS Polls MNOSS data from CSAM-D into NRS for NGS Hybrid ATM system data. Also, where a connection is made via one switch between two other switches, i.e. tunnelled, we cannot deduce from the AXE data which ports are in use. This information is derived with the help of NBI. BBCM Database link to allow BBCM a specified view of NRS data. In house graphical user interfaces (GUIs): 1 9 Query Module GUI Available on wooshnrs. On screen display determined by direct user input interrogation 2 0 Allocation Module GUI Available on wooshnrs. On screen display/input determined by direct user input for new/cease/ increase/decrease route/concentrator/hardware etc 2 1 Generate MML Module GUI Available on wooshnrs. On screen display/input determined by direct user input for new routes, route increase, route decrease and route cease 2 2 Report Module GUI Available on wooshnrs. On screen display determined by direct user input interrogation, CSV downloads etc 2 3 MicroEDMS module GUI Available on wooshnrs. On screen display determined by direct user input - interrogation 2 4 NRMS Module GUI Available on wooshnrs. On screen display determined by direct user input interrogation to display network mapping 2 5 NaDIA Module GUI Available on wooshnrs. On screen display determined by direct user input interrogation National Database for Information on AXE 2 6 Admin Module GUI Available on wooshnrs. On screen display/input determined by direct user input 2 7 Feedback Module GUI Available on wooshnrs. On screen display/input determined by direct user input 2 8 Documents Module GUI Available on wooshnrs. On screen display/download determined by direct user selection NRS.Diagram1 In house GUI see above. NRS has the following data flows with other systems: These are all included in the above list of interfaces. Interconnect Inventory (OTDB) NRS System Allocation tables weekly FTP. CSAM (ANDES) JDBC link to allow automation of 2Mb Switch termination allocation/de-allocation and database link for Data Warehouse. BBCM Database link to allow BBCM a specified view of NRS data. PACS XML link to transfer PACS data to NRS. MNOSS CORBA interface for receipt of NGS Hybrid ATM system data. 284

285 DESS For the collection of System X switch data. MEDIATOR For the collection of AXE 10, NGS and Hybrid switch data. 21CN Call Server and CTM for the collection of 21CN data. NCAS (Network Capacity Assignment System) NCAS provides the capacity calculations to determine if access capacity exists in the network to support Asymmetric Digital Subscriber Line (ADSL) Broadband connectivity. NCAS supports the following functions: 1 - Service Profile Definition - including connections within the ADSL network, connections within the core network, association of core connection groupings with the relevant Multiplexer (MUX). 2 - View ADSL model - using object attributes. 3 - Audit ADSL Network. 4 - Capacity Thresholding. 5 - List incomplete Service Provisions. 6 - Report Planning Failure Exceptions. 7 - Support for automated core VP build. 8 - Configure Service on request from SSD. NOTE: The two ADSL Element Managers (ADSLEMs), the Fujitsu FENS-AN and the Alcatel AWS, manage all aspects of the ADSL equipment. Both Element Managers support the building of planned equipment. The EM will auto-discover equipment when installed and download the appropriate configuration data to the network elements. The ADSLEMs will also support capacity management activities. They hold the data that will be required to monitor capacity utilisation and this information is passed to NCAS. NUNCAS New Network Capacity Assignment System (NUNCAS) provides the capacity calculations to determine if access capacity exists in the network to support Asymmetric Digital Subscriber Line (ADSL) Broadband connectivity. NUNCAS supports the following functions: 1 - Service Profile Definition - including connections within the ADSL network, connections within the core network, association of core connection groupings with the relevant Multiplexer (MUX). 2 - View ADSL model - using object attributes. 3 - Audit ADSL Network. 4 - Capacity Thresholding. 5 - List incomplete Service Provisions. 6 - Report Planning Failure Exceptions. 7 - Support for automated core VP build. 8 - Configure Service on request from SSD. NOTE: The two ADSL Element Managers (ADSLEMs), the Fujitsu FENS-AN and the Alcatel AWS, manage all aspects of the ADSL equipment. Both Element Managers support the building of planned equipment. The EM will auto-discover equipment when installed and download the appropriate configuration data to the network elements. The ADSLEMs will also support capacity management activities. They hold the data that will be required to monitor capacity utilisation and this information is passed to NCAS. OMC (Operation and Maintenance Centre) OMC supports the management of digital exchanges for all remote operations and maintenance. It provides a user-friendly interface between users and digital exchanges and provides a gateway to the exchange for the repair of exchange faults, receipt of faults and alarms from exchanges, holds spare exchange capacity information, and customer and exchange configuration information. OMC supports the management of digital exchanges, System X and AXE10 for all remote operations and maintenance. Additionally it hosts a UNIX Data Server (UDS). OMC provides a user-friendly interface between users and digital exchanges and a gateway to the exchange for the repair of exchange faults; receipt of faults and alarms from exchanges; holds spare exchange capacity information; customer and exchange configuration information (including the management of customer, route, routing and circuit data). On-line terminal access provides immediate response by the OMC/Exchange. 285

286 OMC users are varied and include maintenance, installation office, and sales and management duties. The OMC applications have been integrated into a single application serving both Trunk and Local exchanges. The operational OMC is based on COMPAC Alphaserver 8200 series machines acting as hosts, and Compac Alpha 1200 machines acting as Front End Processors (FEP's) all running Open VMS. The Alpha Servers access the ORACLE databases on a COMPAC Alphaserver 4100 series machine Unix (UDS) across the GDC LAN. The system is under constant development to provide for support products and services, new technologies and architectural evolution. OMP (Open Mediation Processor) The OMP is a file handling system. It converts records from the various systems formats belonging to other network operators (Other Administrations (OAs), Other Communication Providers (OCPs) and Foreign Post, Telegraph and Telephones (PTTs)) to a common format containing the Platform Independent Usage Record (PIUR) this being a marker on the call record that enables the call to be priced). It is a UNIX application that also acts as an intermediary between other applications such as Customer Service System (CSS), OCPs and International Billing. The OMP: Provides a configurable control program to deal with all file transfers to and from the system. Detects files arriving by other file transfer methods (e.g. CONNECT Direct), using a table containing a relationship between file specification and conversion program name. Uses discrete programs translate files as required to other formats. Records that cannot be translated will be written to error files in Platform Independent Usage Record (PIUR). OMP allows other network operators systems to interact by converting data to a common language. Ultimately it allows interconnect traffic data to be converted into a common format. ORBIT (OpenReach Business Information Toolset) To comply with the Telecoms Strategic Review (TSR), Openreach has developed a new data warehouse to capture and store management information and this warehouse is called ORBIT. The ORBIT data warehouse is the Key stone in the Openreach Management Information System (MIS) strategy. It performs the task of the central data store and information repository, holding both granular and aggregated data together with measures and business metrics. ORGS (Operator Report Generation System) - (now known as CC-MIS - Call Centre Management Information System) This is a management system for both Operator and Directory Assistance calls. ORGS obtains data from the Lucent 5ESS switches in Directory Assistance centres (118XXX) and Operator Assistance centres (100/999) from around the country. Information captured includes, number of calls in a queue, time taken to answer, call distribution and performance management. PACS (Planning Assignment and Configuration System) PACS has two prime functions: 20C Transmission (SDH/WDM) - Network Control Layer 21C Converged Core - Network Control Layer PACS provides network planners with the ability to plan, assign and remotely configure these networks. Pathfinder Pathfinder is just one element of ToPAZ. ToPAZ is the point of reference for the BT Group on Procurement Corporate Governance and is in six distinct sections as follows: The BT Group section contains our Purchasing Principles, Corporate Procurement Policy, and Chief Procurement Officer Reserved Powers. We are expected to operate to these Principles and meet the standards of professional integrity as set out in the Corporate Policy. Country specific procurement procedures contains information pertinent to the country in which they are working. Procurement Unit Specific contains detailed instructions for a particular procurement unit. These may be password protected as they only apply to specific operational areas. Operational units provide these and are responsible for their upkeep. Process Model - a top level map of the procurement process with links to electronic Pathfinder sections (via the section title bars). Best Practice procedures. Known as Pathfinder, this section uses a "road map" to navigate the procurement process, providing guidance, advice and best practice further information and also highlighting potential hazards. 286

287 Checklists/Templates/Tools - a quick access link to a variety of useful checklists, document templates and tools links. Payphones Data Warehouse The BT Payphones Data Warehouse holds details of all Street, Managed and Private BT Payphones. It is maintained using information extracted from the Customer Service System (CSS) and, in the case of the Street and Managed base, from data received directly from the payphones. PCNBS (Private Circuits New Billing Information System) The PCNBS was developed to provide a single, national billing service for UK retail private circuits, whilst at the same time extending the range and type of services and facilities offered. The system interfaces with systems such as Customer Oriented System for the Management of Special Services (COSMOSS), Customer Service System (CSS) and Computer Assisted Maintenance for Special Services (CAMSS). PCNBS is an all-purpose billing system that supports the following functionality - variable bill cycles and on demand billing, multiple level customer hierarchy supported by user friendly navigation interface, flexible discounting applicable to rentals, support for discounting schemes, support of separate Management Information System (MIS) for enhanced reporting facilities, support of finance requirements including copy/duplicate bills, support for variable printing. PCNBS data is also used by Powerhouse - a front end query tool that reports on revenues and volumes primarily for BT Retail. Retail private circuits are billed on a rental basis - the rental depends on the equipment provided at each end of the circuit(s), contract length and maintenance agreement. There is no usage charges associated with retail private circuits and therefore there is no need for an interface with the network. PCNBS holds the customer inventory data base. Product prices are supplied to PCNBS and COSMOSS from the Portfolio Database (PDB) for retail private circuit Products and the Product reference table for CPE Products - though customer specific prices may be created and stored on PCNBS. COSMOSS supports the order handling and provisioning process for private circuits and provides information to update the customer inventory on PCNBS. CAMSS provides details of service level agreement breaches for which a credit has to be given to the customer. Portfolio Database (PDB) supports the definition of retail private circuits type Products, customer focussed billing Products, and discounted Products handled by Customer Services System (CSS). It also cascades this information to those systems that need it. PIBS (Payphones Information Business Systems) This Management Information System (MIS) database. It contains data for each individual payphone by telephone number i.e. mechanism, kiosk, faults, and revenue and call data etc. This system holds inventory and revenue information on all payphones. It contains data on service routines, type of equipment, electronics fitted and payphone locations. It also captures the revenue generated. The database is updated from Central BT systems e.g. Customer Service System (CSS), engineering records and downloads from the individual payphones. PIRM (Power Inventory of Routine Manager) PIRM is owned by the Network Power and Cooling Unit within BT Operate which has responsibilities for planning, maintenance and setting of national policy for all aspects of BT s power and cooling infrastructure. This system holds an inventory of all the power equipment used within BT s exchanges. It also contains details on all Stand by, Air Conditioning (AC) and cooling systems. Its primary function is to act as a management tool to schedule the routine maintenance required for this category of equipment. The system has links to Work Manager (this system sends out work tasks to engineers). PIRM will tell Work Manager the type of equipment, what the maintenance routine is and the level of training the engineer must have. Power equipment can be identified and categorised by use. PIRM identifies if equipment is used specifically by a certain switch, e.g. System X or is used for general power purposes but excluding legacy plant. New DC Equipment should be connected to a fuse distribution board which will show which equipment it is serving. Legacy DC plant is also connected to DC distribution boards but the records as to which equipment is being served are very poor as they were not historically held on PIRM. PRAVAT (Product Reporting and Volumes Analysis Tool) The PRAVAT process a major part of the call volumes and does Fit for Purpose (Non-Core P&L, Balance Sheet, Component comparisons) calculations. 287

288 Volumes are used to apportion Component costs to Products in ASPIRE. Call volumes data is supplied via spreadsheets, using as the delivery mechanism, or taken directly from the system that provides the necessary level of detail required for a correct categorization of the network traffic. Various BT sub-systems provide the source data used to populate Accounting Separations sub-products with the call handling times (minutes/ calls) and associated route factors. Where possible, source data is mapped directly to a single Accounting Separation sub-product. When the source data does not provide enough granularity for a direct mapping to a single sub-product, the volumes are pointed to a range of sub-products. The ranges generally represent various combinations of business and residential classes and local, national, mobile, ISDN 2 and ISDN 30 rates. Additional analysis is required to break down the ranges into sub-products, prior to ASPIRE processing. CSCS - Provides the bulk of the volumes used for Accounting Separations. The system provides source data for all calls that originate from a BT line. Enterprise codes in CSCS are mapped directly to individual sub-products. Processed data from CSCS is used to calculate a percentage ratio used to split the range of sub products for local, national, mobile and ISDN traffic. INBOUND - Provides source data for a comprehensive range of 'Advanced Call Routing' features, externally known as Telemarketing Services. The Product Package and Customer Class codes in INBOUND are mapped directly to individual sub-products. INCA - Provides source data for all interconnect calls across the BT Network. A combination of the Other License Operator (Alternate Network Operator) and Report Type determines the range of sub-products these volumes are pointed to in ASPIRE. CVTT - This system provides computation of data for all the values derived from CSCS, INBOUND and INCA and this data is fed into the ASPIRE processing system. Processed data from INBOUND is used to calculate a percentage ratio used to split the range of sub products for basic and advanced traffic. Route factors - The Call Volume data is non-factored. The route factor process provides source data after reformatting the group data by (Product, Prod, data_designator). RA route Factor codes in the Route Factors are mapped directly to individual sub-products. These data along with the Call volume data is used in the ASPIRE Processing. The Route Factor data is provided for the BT Network. IAG - Provides data for BT Own use. The source data is categorised for Pay and Computing Areas. Powerhouse Powerhouse is a reporting system for Product volumes i.e. number of calls over number of exchange lines by trading unit. It is a front-end query tool that interrogates raw data from other systems such as Call Statistics Centralisation System (CSCS), Private Circuits New Billing System (PCNBS) and Central Database System (CDS). Powerhouse reporting enables end users, primarily in BT Retail, Global, Openreach and Group, to report on volumes of calls, exchange lines and inbound services etc. The application has an Oracle database held on a UNIX server and comprises a number of summarised Online Analytical Processing (OLAP) databases (Oracle Express) built from data held in the relational database tables. Powerhouse comprises of a three tier architecture with NT-based web server at the top, NT-based ORACLE Express server in the middle and an existing UNIX machine hosting the ORACLE back end database on the third tier. PULSE (Processor Utilisation and Loading of Switch Equipment) PULSE is used to capture processor performance (equipment, traffic, calls and processor occupancy). The threshold/trend of this information is apportioned to give an indication to planning duties of exhaustion to trigger either a re-arrangement or extension to a particular switch. The information stored is also used to analyse configuration to resolve performance issues and monitor critical processor resources (e.g. Traffic Handling Magazines). Network capacity is key to the performance of our network. Critical resources need to be monitored and reported on so that BT provides the optimal network configuration, at least cost. BT also has a responsibility to show in its quarterly report the amount of network capacity that is in the network, PULSE is used to provide this information. RIDE SDW (Recorded Information Distribution Equipment) RIDE is a mass call termination platform playing pre-recorded announcements and capturing voice messages and data. The platform provides a wide range of services from speaking clock (Timeline) to call centre overflow, televotes and TV quiz show services and is capable of handling more than 200,000 calls per minute. The SDW (Statistics Data Warehouse) is specific to the RIDE platform and is utilised to capture call volumes. The system retains 3 months full data and a 2-year summary archive. SCARS (Sales Contribution Analysis Reporting System) SCARS is a management information system reporting revenue by Product, by customer, by month using a web based intuitive front end. In addition SCARS data feeds a number of other systems, these include: SCORS, MARK, BMW, CDMC, Amethyst, CXD, CIA, GOLD, SIMON, 288

289 RADAR, SABRE, ABC, CCAT, ICIP and JUPITER. SCARS was initiated in 1993/94 to enable the reporting of billed revenue for all BCD (Business Communication Division) and certain Non BCD revenue streams by Sales Account for all Global (Multi National Sales and Service) customers. Revenue data is received from over 90 different billing feeds. However, two things need to happen in order for revenue to appear on SCARS. Billing accounts need to be linked to a legal entity (LE). LE's need to be linked to Sales Accounts (SAC's) within C-CAT. This then enables the revenue data to be reported against the correct channel. Information is arranged on SCARS based on two hierarchies: Customer hierarchy - This is structured by: Channel - Sector - Segment - Sales Account - Legal Entity - Billing Account. Note that Channel, Sector, Segment, Segment and Sales account data is fed to SCARS from a customer reference database called C-CAT (Customer Channel Allocation Tool). Billing accounts are linked to legal entities using various key criteria to make the match, one of the most important being the billing account name. In the main, revenues are identified as two categories - CSS billed (Public Switched Telephony Network PSTN) and non-css billed (Non-PSTN). The CDMC links PSTN billing accounts and SCARS links Non- PSTN billing accounts. Product hierarchy - This is structured by: Revenue Stream - Revenue sub-stream - Product group - Product. This information is derived from the Product map used by BT management accounts. SCARS sits within BT Retail as our customers perform Marketing and Sales activities and it is our responsibility to provide business services to our customer base. SCARS data is supplied by a number of billing feed's which can be reconciled back to BT's financial system's and therefore, it is important to note that the data is not owned by SCARS but is under the ownership of our Internal Billing Suppliers. SPG (Service Provider Gateway) - Wholesale Calls and Access Service Outage Reporting System. It is the wholesale electronic gateway between Service Providers and various BT Operational Support Systems (OSSs) for Wholesale Calls and Access. Siebel Siebel Converge our Customer Relationship Management (CRM) application. It has been tailored to BT s own business processes and needs using customisable software produced by Siebel Systems. Siebel system provides data for activity surveys related to the sales channel that are used in the base calculations. SMART SMART is a telecom application providing a user-friendly front-end for call centre agents involved in customer care and support of residential and small business customers. It is Computer Telephony Integration (CTI) enabled and helps automate business processes, such as provision of telephony service, billing enquiries and fault repair. SMART is intended to enhance productivity of Customer Service Advisors (CSAs) by reducing the call handling time and entry errors with a user friendly interface and to improve revenue by enabling CSAs to sell to the customer at every opportunity. Currently SMART handles inbound calls made at number 150 and provides about 50% of the functionality of the Customer Services System (CSS) for the calls made at this number. It also handles calls made at number 151 for Repair handling. SMART regularly undergoes significant enhancements in its functionality. SWIFT This system is an integrated data warehouse used by BT Retail that holds customer details, billing and revenue data. It has been hitherto the single source of data for BT Retail Marketing. The database allows BT Retail to analyse all its Customer Service System (CSS) based customers For Siebel Oneview handled customers, the equivalent set of data is held in the SWIFT successor system, EDW (Enterprise Data Warehouse), and SWIFT exports all its data to that system. EDW went live during May 2007 with the commencement of Consumer mass migration from CSS to Siebel Oneview commenced late June 2007.The current feed from SWIFT to Accounting Separation should be reengineered to use EDW instead and the SWIFT feed switched off. When SWIFT is switched off, all the feeds from CSS systems will be diverted to EDW where the build of EDW has not already replicated these. SWIFT also supplies the data used by the Campaign Management Tool (CMT), used for targeting Consumer customer marketing campaigns and will be able to measure their effectiveness, by allowing pre and post campaign analysis. CMT was also replaced during 2007 by Siebel Marketing. TEM (Telephony over Passive Optical Network (TPON) Element Manager) This system holds records on the TPON Network. These are fibre cables between the local exchange and street cabinet or business customers premises. It holds data on the type of electronics installed, capacity used and available and circuit identifiers. It is used for maintenance and 289

290 providing new circuits on the TPON Network. TITAN (The Interbusiness Transfer Charging and Agreement Network) TITAN is the BT business-wide system for processing Interbusiness charges. It is an Oracle Financials package that has been customised to meet the requirements of the business. It allows for a consistent and controlled approach throughout the business in order to eliminate discrepancies and misbalances and to enable a business-wide net settlement of debts and balance agreement. It is BT Group Finance policy that all Interbusiness bills are processed via TITAN (in detail or in summary) and as such it is mandatory for all BT Core units, selfaccounting units and subsidiaries. It is designed so that transactions between them will always be in equilibrium. Each unit on TITAN is identified by its GFR (Group Finance Reporting) element number. Each GFR has a functional currency, which is the default currency, but bills may be issued in any of the currencies set up on the system. The functional currency for Core is Pounds Sterling. Each GFR also has a default method of settlement such as Next Period, Treasury etc. For every type of charge being raised via TITAN, a TCA (Transfer Charge Agreement) has to be in place. This is a formal agreement between the charge originator and receiver accepting the transfer of predetermined charges. Bills to be raised are input to the Accounts Receivable (AR) module by END User or his Representative and a corresponding entry is automatically generated by Batch process in the Accounts Payable (AP) module for the receiving unit. The two modules will always be in step, subject to batch processing times. Similarly, the Customer s AP payment entries are reflected in the Supplier s AR system. This ensures that both sets of books and therefore the complete set of BT s books are always in equilibrium. TITAN has its own General Ledger (GL) and there is a daily posting run to post AR and AP transactions to TITAN GL. TITAN GL has journal voucher facilities to enable the posting of Accruals/Prepayments. TXD-OP (Digital Exchange Output Processing) TXD-OP is a key system for Public Switched Telephone Network (PSTN) call performance measurement. It collects a systematic 1 in 300 sample of every call attempt from all PSTN exchange systems. Call records are extracted to the CARISMAN system where data is summarised to produce a variety of call performance measures for publication to Ofcom and for use within BT. TXD-OP call data also provides the basis for Accounting Separation (AS) information for Ofcom. This is to satisfy conditions within the Telecommunications Act 2003, with regard to the reporting of Separated Accounts and has important uses for other areas of the Business such as capacity planning, product management and marketing. Call data is held for a rolling 10 weeks. Approximately 95 million records are loaded each month into the TXD DB2 Tables. TXD-OP Data in: Exchange source stats data, collected via MEDIATOR (BDS) CISA extract of Other Licensed Operator (OLO) number ranges (FTP) EXPRES extract (FTP) NEMOS-DR extract (FTP) TXD-OP Data out: CARISMAN daily extracts. NEMOS-MT daily extracts (FTP) PULSE monthly extract (FTP) NEMOS-DR daily file (FTP) WCR WCR is a computer system for BT Wholesale. It is the Wholesale Customer Reporting System, Willow Willow is the main computer system for BT Fleet. The system holds data for all the vehicles in BT s motor transport fleet and non BT customers, including company cars. The Willow computer system is used to record details of all work carried out on BT and non BT vehicles and it includes the management of service schedules, repairs and legal compliance. 290

291 Work Manager Work Manager is the primary scheduling, allocation and dispatch system within Openreach to manage work. The system uses automated scheduling techniques to identify appropriate engineers to undertake work on the basis of skill, location and customer required by times. The system manages work for all the key regulated and non-regulated products. Work Manager also manages task closures from data recorded by the field engineers for receipt by Work Manager and upstream systems and subsequently Communication Providers. Overview Work Manager is the prime scheduling allocation dispatch and task management system for Openreach supporting approximately users primarily the OR mobile field engineering workforce. The automated Work Manager scheduling engine allocates work to suitable field engineers using the inbuilt Work Manager scheduling rules, work is subsequently dispatched to field engineers via an encrypted 3G/GPRS link to the field devices associated with the field engineers. The notification messages from the field engineers may implement one or more of the following: Task Closure to back end systems in near real time to avoid SLG payments. TRC information. ONT switch on. Work Manager supports a wide range of systems requiring work to be tasked to field engineers for most of the key OR products for the T2R and L2C journeys including WLR 3, NGA and SBS. Such systems are integrated to Work Manager using automated bi-directional interfaces where the interface data integrity/ accuracy is checked for each message from source system to Work Manager and Work Manager to destination systems using automated data checks at the Work Manager, middleware and source/destination system against a defined ICD and Interface Specification for each system interfaces. 291

292 Section 9- Line of Business Organisational Unit Codes (OUCs) Each Line of Business (LoB) in BT has their own Organisational Unit Code (OUC) to which their revenues and costs are booked on BT s general ledger. The top level code for each LoB is as follows: Top Level OUC B C E F G J K M T V W Y OPENREACH BT GROUP HEADQUARTERS CORPORATE ADJUSTMENTS BT CORPORATE SERVICES GROUP CONSOLIDATION UNITS BT GLOBAL SERVICES BT WHOLESALE BT RETAIL BT TECHNOLOGY, SERVICE & OPERATIONS GROUP ENGINEERING / SECURITY BT PROPERTY BUSINESS SERVICES 292

293 Section 10 - Glossary Term Notes AC Air Conditioning Plant cooling equipment ACG ACR ADM Accounting Control Group Accounting Change Request Add and Drop Multiplexor BT Group which meets monthly to approve all accounting changes Form which initiates an accounting or reporting change including requests for new GL8 codes Network device that brings different links together ADSL Asymmetric Digital Subscriber Line Broadband Line AIM Analysis & Inventory BT Data Source AISBO Alternative Interface Symmetric broadband origination Next generation connection interface such as Ethernet. Amsoft a.k.a. ASC BT National Stores system AS ASC ASDH ASPIRE ASSURE Accounting Separation Automated Supply Chain (originally American Software Corporation) Access Synchronos Digital Heirarchy Accounting Separation, Product Integration Reporting Environment Accounting Separation SecUre Repository Environment Separation of cost to products and services and internal businesses. Supply chain system. Used for stores purchasing, order management, stock control and stock accounting. Network devices that push high bandwidth services closer to the edge of the network Bespoke Oracle system used to produce BT's regulatory results BT developed Oracle application used to load, validate & transform ASPIRE tables prior to system runs ATM Asynchronos Transfer Mode Legacy TDM to transport voice and data. AVR Authomatic Voice Response Telephony platform that asks an end user for a response to questions. E.g press 1 to speak to an operator, press 2 to leave a message AXE-10 Ericsson TDM Voice switch Legacy TDM switch BEA Broadband Edge Aggregator Network node where other broadband communication providers connect to. 293

294 Term Notes BES BIFR BBIP BRAS BT1P C7 (SS7) CAM CAMERA C-CAT Backhaul Extension Service Business Insight Financial Reporting Broadband IP Broadband Remote Access Server General Ledger Platform Comité Consultatif International Téléphonique et Télégraphique (Signalling System No 7) Cost Allocation Model Campaign Management Evaluation and Reporting Customer to Channel Allocation Tool A carrier service link that connects from the MSAN to the BRAS platform. also known as Hyperion, Perform & HFM Generic term for referring to IP infrastructure and service for broadband services. Network node where broadband traffic from end users terminate and connects to the Internet. Platform which hosts all LoBs ledgers Also covers the e-journals application. Global voice signalling standard for voice communications Used to describe the LoB costing models which assign & apportion costs to Products & Services Used in Core BT units to allocate marketing budgets to marketing campaigns and manage and monitor the spend vs budget. This is used to record the Customer Hierarchies for larger customer, it is used to manage the hierarchies between related customers, allocating accounts to sales and service people. It is used to feed SACRS to correctly record revenues against Accounts, Customers and Sectors. CE Customer Edge Customer side equipment CCRN Command and Control Router Network Private network to manage internal network nodes. CCTV Closed Circuit Television Private Visual TV monitoring service CDR CDR Central Data Repository Call Data Record Database which provides common information to Hyperion Reporting & Planning cubes File produced when a telephone calls starts and ends. CDS Central Data Source BT Data Source CID Central Information Database see E-Reports 294

295 Term Notes Clarity CMA CMSAN CoA Colo COSMOSS CoRD CoS COS COW CP Clarity Change of Management Assignment Copper Multi Service Access Node Chart of Accounts Colocation Location Customer Oriented System of Management of Special Services Common Reference Data Change of Structure Cost of Sales Class of Work Communication Provider A system which collects, verifies, reconciles, authorises, collates and diseminates non-engineering and all non- UK time allocation and overtime / allowance data Use by eorg to transfer FTE to new reporting manager Broadband device where end user phone lines connect into the BT Network Used to record and report against all financial transactions Data Centre or telecoms facility where other communication providers all colocate BT Data Source This is used to store reference data for Core BT units and then to feed the financial reporting systems as required. A process used to create OUCs on eorg - controlled via the RDM team. A common abbreviation used for direct costs - used in the calculation of 'Gross Margin'. Activities (eg Maintenance & Construction) which identify the plant type or the product group/service being worked on. Usually identified as part of job/project set up Term to describe another telecoms service provider CPE Customer Premises Equipment Network device still on the customer site. CPL Carrier Price List Price list for carrier services CPS CRM CSCS Carrier Pre-Select Customer relationship management Call Statistics Centralisation System Service where customer determine which carrier to route calls over Generic term for managing customer interfaces. System used to produce call volume & revenue information from exchange call records 295

296 Term Notes CSS Customer Service Systems System used to update rental volume information to support customer billing CTCS Core Transmission Costing System BT Data Source CWSS Copper Wideband Servicing Section BT Data Source DACS Digital Access Cross Connect Device for connecting lines together DC DLE DMSU DP Data Centre Digital Local Exchange Digital Main Switching Unit Distribution Point Purpose built facility to house large scale computing infrastructure. Legacy TDM switch that is a small device that connects to local lines that connect to the home. Legacy TDM switch, that is a large device connecting to local smaller exchanges Point where the BT network connects to wider end points that terminate at end user homes. DQ Directory Enquiries Helpline fo finding phone numbers DSL Digital Subscriber Line Broadband line DSLAM Digital Subscriber Line Access Multiplexor Broadband device than sends the broadland IP down the telephony line DLE Digital Local Exchange Small exchange that is digital DLT DNS Digital Line Termination Domain Naming Service Position where digital phone lines are connected and terminated on the network. Method to convert numeric internet addresses into useable.co.uk,.org or.com etc names EAD Ethernet Access Direct Ethernet Access Services EBD EBITDA EFM Ethernet Backhaul Direct Earnings Before Interest, Taxes, Depreciation and Amortisation Ethernet First Mile Backhaul service that connect access nodes to the core network. A widely used measure of "controllable" profit roughly equating to operating profit excluding depreciation Ethernet services from customer site to the network. EIN Employee Identification Number Unique 9 digit multi purpose number assigned to each employee. Used to 296

297 Term Notes control access to reporting applications. ejv eorganisation E-journals eorganisation The on line input & & authorisation system for journal vouchers which are to be posted to the general ledger. People & asset management system. Holds details of OUC and assets assigned to people at EIN level. Commonly referred to as eorg. EM Element Manager BT Data Source e-reports essbase e-reports Essbase Ageing but dependable management reporting system previously known as CID. In the process of being phased out. Hyperion Cube System used for management reporting & planning ETG Engineering & Technical Grade A band of employee EU End User A consumer EUT EOI EPPCs ETL ETG EVOTAM End User Technology Equivalence of Inputs Ethernet Partial Private Circuits Extract, Transform & Load Engineering & Technical Grade Evolution Test Access Matrix Term to describe voice and data user services in BT All communication providers are treated as if they were the same as a BT internal company Links that are Ethernet based to link sites together to create a closed private network Generic process of data extraction, conversion & upload. In the Hyperion context the term is used specifically for the processes of extraction of raw ODC data, loading to a staging table, applying further processing and finally uploading to the CDR. This is a non-management grade within the business. It is often used with tiome recording systems to allocate hours to projects. Advanced Test Equipment to test the copper lines. FAC Fully Allocated Cost 100% apportionment on cost FER Front End Router Routers that provide an IP connection from one carrier to another. 297

298 Term Notes FMSAN FSE FTAM Fibre Multi Service Access Node Force Structure Element Frame Test Access Matrix Access electronics device, that is fibre ready to connect to the end user and also fibre back to the exchange. More commonly known as Force Types - For pay purposes people are classified into the following categories, known as Force Types Test Equipment that sits of the frame in the exchange FTE Full Time Employee Member of staff. FTP FTTC FTTP FTTx GAMMA GCS File Transfer Protocol Fibre to the cabinet Fibre to the premises Fibre to the (cabinet or home) Gamma Group Consolidation System Method of moving files between computers Optical fibre from the BT exchange to the cabinet Optical fibre from the BT exchange to the home. Optical fibre from the BT network to either the cabinet or home Unified management reporting systems (including Hyperion cubes) for BT Global Services The Hyperion HFM consolidation system which replaced Planmaster. Also known as GCS HFM and previously known as Thin Layer. GNCM Global Network Costing Model BT Data Source GEA GFP Generic Ethernet Access Global Finance Platform Ethernet access using the access fibre from a street cabinet The common Global Services platform which hosts the integrated Oracle financial applications for countries and entities that have been migrated. Progressively all Global Services entities are being migrated to this single platform. GL General Ledger BT Data Source GL8 code 8-digit General Ledger code Codes used in the Chart of Accounts for "core" BT units GLOSSI Global Support for Invoicing BT Data Source 298

299 Term Notes GPRS General Packet Radio Service Mobile data service GSM GS HFM HDF HFM IC IIE IN Group Special Mobile Global Services Hyperion Financial Management Hybrid Distribution Frame Hyperion Financial Management Interconnect Circuits Inter & Intra Eliminations Intelligent Network International Standard for 2 nd Generation mobile digital services Hyperion application used by Global Services for management reporting. Added frame in an exchange to connect consumer lines to the main telecoms nework. Hyperion application used for group consolidation (see GCS) and GS reporting (see GS HFM) Links that connect one carrier to another carrier (another term for point of handover) Module used to manage deals between BT trading entities to ensure that they are agreed by both parties Computer Platform that translates nongeographic numbers to geographic destinations. inet Information Network Internal Management Network. INS Integrated Network Systems BT Data Source IP IP Internet Protocol Intelligent Peripheral Packet network that moves information (Voice & Data) using the TCP/IP protocol Network system for giving routing information for telephone calls. IPL Internal Project Ledger Project s private ledger of accounts IPLC International Private Leased Circuit Line that connects 2 sites on a dedicated connection ISDN Integrated Services Digital Network Legacy Digital TDM line ISP ITC Internet Service Provider Inter-Tandem Conveyance Communication provider that enables end users connect to the internet. Transmission services that links carriers together who do have a direct link between them ITT Inter-Tandem Transit Transmission services that links carriers together who do have a direct link 299

300 Term Notes between them ITU International Telecommunications Union Executive agency of the United Nations that sets international telecommunications standards. IXBS NG Interconnect Bureau Service New Generation BT Data Source JRE Java Runtime Environment "Foundation" module component used to interface with Hyperion eg as a data input interface for eliminations, overlays & deals. JRMIS Job Recording Management Information System From JRMIS, a variety of reports are available covering many statistical aspects of the data entered via NJR. KMH Kilo Man Hours 1000 hours of manpower time LAN Local Area Network Office network LC LCC Line Card Local Cost Centre Piece of network equipment that connects into a slot on an network element A management entity to which only 'COSTS' are allocated. LDX System X local exchange TDM Legacy Voice Switch LDY System Y local exchange TDM Legacy Voice Switch LE Local Exchange The first exchange that a phone line connects to. LLCS Local Line Costing Study BT Data Source LLFN LLU London Local Fibre Network Local Loop Unbundling Dedicated optical network for business customers in London Ability to offer other carriers to access the BT local line. LRIC Long Run Incremental Cost BT Data Source LoB Line of Business Internal Subsidary Company LoP List Life of Plant List BT Data Source MDF Main Distribution Frame Static device in the BT exchange where all phone lines connect to the BT network. MISBO Multiple Interface Symmetric Broadband Origination Term to define services over 1Gb/s MNS Managed Network Services Where one carrier manages other carriers 300

301 Term Notes network and services to the end user MPLS MPF MSAN MSPE MMM Multi Protocol Label Switching Metalic Path Facility Mutliservice Access Node Multi Service Provider Edge Metadata Maintenance Module IP Network capable of carrying voice and data. Sometimes known as a coverged network. Copper line that can offer voice and broadband Next Generation Access device that sends broadband down the telephone lne. Network device that resides in the customer environment that can handle voice and data. Hyperion module which is used to maintain reporting hierarchies. MSIP Multi Service Intranet Platform BT Data Source NAS NBV Network Acces Server Net Book Value Computer platform authenticates users onto the network Calculation: [NBV = Gross Book Value minus the accumulated depreciation plus assets in course of build.] NEMOS-DR Network Modelling System Data Recovery BT Data Source NIMS NETA NGA NGS NIP Network Instruction Management System Non Engineering Time Apportionment Next Generation Access Next Generation Switch Network Intelligent Platform Used to plan & monitor network engineering & equipment jobs Employees (predominantly the nonengineering workforce) - must be designated Force Type 3 users on eorg. Replacement to copper connectivity to the home. Legacy TDM switch to work along side the System X and System Y devices. Computer platform that translates phon numbers NISM Network Inventory Spares Management BT Data Source NJR NOC National Job Recorders Network Operations Centre All people who record time using NJR - must be designated as a Force Type 1 user on eorg. Purpose built secure facility to monitor and manage a telecoms network. NRS Network Records System BT Data Source 301

302 Term Notes NTE Network Termination Equipment The B end of a connection NTT OA OAM OBI OBIEE OC National Transaltion Table Operator Services Overlays & Adjustments Oracle Business Intelligence Oracle Business Intelligence Enterprise Edition Optical Carrier This sits at the front end of the TP (Translation Process) and translates all 'feeder' transactions coming into the BT Ledgers. Telephony helpline information and services Hyperion module which manages the input of overlays & adjustments Oracle application used for transaction reporting The version of OBI implemted in BT to replace Microstrategy Generic term to refer to fibre optics carrying voice or data. OCP Other Communications Provider Another carrier to BT ODC ODF Oracle Data Centre Optical Distribution Frame Data warehouse which holds general ledger information and transaction detail from feeder systems Optical equivalent to a copper frame in an exchange building. OLAP Online analytical processing generic term OM Office Machines BT own use machines OMC Operations Maintainence Centre BT Data Source OR Openreach BT Access Company OSS OUC OVP Operational Support Systems Organisation Unit Code Over Voltage Protection Computer systems that manage the end to end network A management entity to which a number of employees are mapped. Also referred to as Cost Centre. Fuses that protect the copper network from a power surge from the access network. PACS Planning Assignment and Configuration System BT Data Source PaBX Private Automatic Branch Exchange Telephony Customer Premises Equipment that business use. 302

303 Term Notes PBX PC PCP Private Branch Exchange Private Circuits Primary Connection Point Telephony Customer Premises Equipment that business use. Business lines sold to connect sites together. A green cabinent where copper lines connect to the BT network. PDH Plesiochronos Digital Hierarchy Legacy transmission equipment PE Provider Edge Router that sits on the edge of the carrier network that links to the customer router PECN Public Electronic Communications Network National telecoms network P&L Profit & Loss Gain and Loss expenses POCP PFC PI POH POI POP Powerhouse Payments to Other Communications Providers Project Financial Control Purchase Intellligence Point of Handover Point of Interconnect Point of Presence Powerhouse Financial payments made to other phone companies. Oracle application used to monitor projects & programmes which feeds into the General Ledger & ODC OBI based reporting system for the ibuy procurement application. Where one carrier interconnects with another carrier. Handover point where one carrier connects to another carrier. A site where the network offers connectivity to end users. Oracle application used to hold audited product volume data for system size, new supply, takeovers & cessations PRAVAT Product Reporting and Volumes Analysis Tool BT Data Source PULSE Processor Utilisation and Loading of Switch BT Data Source PRI Primary Rate ISDN 2Mb/s ISDN lines that are delivering service at 64kbit s in digital format PSTN Public Switched Telephone Network Traitional legacy voice service RADIUS Remote Access Dial In User Service Username and Password Database that is used to authenticate users connecting to network service. RAFT Resource Analysis Flow Tool Decision support system hosted on the NIMS platform & used for resource 303

304 Term Notes forecasting & allocation. RCM RCU RDM RDS Release & Configuration Management Remote Concentrator Unit Reference Data Management Reference Data System Steria team dealing with software upgrade implementation Switch that grooms domestic lines into a local exchange BT team supporting Hyperion reporting hierarchy maintenance Oracle application used to control & maintain accounting & reporting reference data, driven from ACR changes RFS Regulatory Financial Statements BT regulatory financial numbers RIDE RTU SAU SCC SCP SFR SFI SIP SDH SHDS Recorded Information Distribution Equipment Regulatory Trading Unit Self Accounting Unit Standard Cost Centres Service Control Point Standard Financial Report Special Fault Investigation Session Initiation Protocol Synchronos Digital Hierarchy Short Haul Data Service BT network platform that gives call announcements. BT unit which acts as a trading interface between Openreach/BT Operate & the customer facing LoBs BT units which manage their own ledgers outside of "core" accounting systems This is a specialised usage of a 'Cost Centre' for Accounting purposes. This type of cost centre can only be set up using the ACR procedure. An Intelligent Network device that handles calls and gives intelligent routing information How General Ledger Codes are fed to create a general report. Openreach work to identify a complex network fault, requiring dedicated technical specialists Voice of IP method of voice communication on an IP network. Legacy optical transmission equipment sometimes known as as SONET Optical transport technology using dark fibre SDSL Symmetric Digital Subscriber Line Broadband that offers the same speed in both directions. (upstream and 304

305 Term Notes downstream) SG&A SLR Sales General & Admin Standard Labour Rate A classification of costs commonly referred to as overheads ie excluding direct costs a common labour costing method with common components (e.g. base pay, pension, NI ), set by grade and country SLRC Standard Labour Rate Costing System to cost labour hours SMDS SME Switched Megabit Data Service Small & Medium Enterprises Legacy data service for large bandwidth users. Smaller xxternal companies that are sold BT products and services SMP Significant Market Presence A business with influence in the market. SMPF SONET SPPL STARS STP Shared Metalic Path Facility. Synchronos Optical Network Service Provider Price List STARS Signalling Transfer Point Copper line that can offer voice from one communication provider and broadband from a different communication providor Legacy optical transmission equipment sometimes known as as SDH BT s price list for services and products for other communications providers to to purchase The Steria platform used for logging and managing queries raised with the integrated service desk. Network Node for controlling voice traffic routes Thin Layer Thin Layer The previous name for GCS HFM T&S Travel and Subsistence Staff expenses 21CN TAMS TDM TITAN TISBO 21 st Century Network Test Access Management System Time Division Multiplexing The Interbusiness Transfer Chanrge Agreement Network. Traditional Interface Symmetric broadband origination BT s new network to replace legacy and obsolete equipment. Line test device to test an end user phone and broadband line. Moving voice or data an a specific interval of time This is a computer system used for internal market charging by BT's divisions. Legacy connection interface 305

306 Term Notes TP TPON TRC URN UXD5 VAT VDM VDSL VIP VoIP VPN WAN WBA WBC WECLA WES WDM WLR Transaction Processor Telephony over a Passive Optical Network Time Related Charges Unique Reference Number Unit exchange Digital 5 Valued Added Tax Vendor Data Master Very High Bit Rate Digital Subsciber Line Voice Intelligent Peripheral Voice over IP Virtual Private Network Wide Area Network Wholesale Broadband Acess Wholesale Broadband Connect West East Central London Areas Wholesale Extension Service Wave Division Multiplexing Wholesale Line Rental Its function is to take financial and statistical feeds from disparate applications, both BT core and Non-Core (mostly Fleet), convert them to a common format, translate and validate them and then pass them on to ODC which is a downstream application. The incoming transactions may have just a Cow, or just a GL8 or may have neither and contain Fist Codes Optical delivery of residential telephone service over optical access Manpower time for field engineering services Another term used to describe the EIN, employee identification number Legacy TDM small exchange Government Tax on sales There is 1 Vendor Data Master for the UK which is a consolidation of a number of historic vendor mastering systems. High Speed Broadband such as NGA Intelligent network deivce that routes calls based on specific rules IP method to transport voice traffic. Closed network Network that connects remote sites. Broadband access service sold to carriers from BT Wholesale. Broadband service sold to carriers from BT Wholesale. High density of telecom services and carriers of choice. A carrier service that offers connectivity from an access node to a network node. Moving information using optical connectivity to use varying wavelengths Opportunity for other carriers to sell BT 306

307 Term Notes network products and services. YTD Year to Date For the past 12 months up up until now. 307

308 Appendix A: Key Destinations The attached table in the spreadsheet format gives the key destinations of each of the bases identified in the DAM 308

309 Appendix B: Sector Allocations The attached table in the spreadsheet format identifies the destintions or apportionment base applied to specfic F8 code / OUC combinations. The methodologies applied are described in sectiuons 4-7 of the DAM 309