Cost calculation method approved - UKE

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Cost calculation method approved

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The President of URTiP has approved an instruction on the regulatory accounting and a description of cost calculation for services provided by TP S.A.

The regulatory accounting and cost calculation for provided services are one of the most important regulatory instruments. Their proper application will enable effective decision making which supports the development of competition and affects the level of charges in settlements between TP S.A. and the remaining operators as well as the level of prices paid by end users.

In its decision of 7 March 2005 the President of the Office of Telecommunications and Post Regulation approved:

  • an instruction on the identification and attribution of assets and liabilities, revenues and costs to regulated types of activity for the year 2004;
  • a description of forward looking fully allocated cost calculation for universal service and telecommunications lines leased to end users for 2005;
  • a description of cost calculation for services resulting from interconnection agreements for 2005;
  • a description of cost calculation for telecommunications lines leased to operators for 2005;
  • a description of cost calculation for access to the local loop and associated facilities for 2005

submitted by Telekomunikacja Polska S.A.

The Telecommunications law states that the regulatory accounting should be run separately for each of the three basic activities within the scope of access network, transport network and retail activities. TP S.A. additionally divided retail activities into: activities related to access (connection and subscription), local calls, long distance calls, international calls, calls to mobile, calls to Internet and activities related to public pay phones, leased lines, directory enquiry service and other calls.

The decision was given the clause of immediate effect since the absence of defined cost calculation principles may have a negative impact on the further liberalisation of the market.

The introduction of the regulatory accounting may support the President of URTiP in ensuring transparency with respect to settlements applied by TP S.A. towards external entities as well as within its own company. It should also prevent unfair cross subsidising, i.e. financing uneconomic services from revenues from economic services.

In addition to the regulatory accounting, TP S.A. has an obligation to calculate costs separately for particular telecommunications services. Thanks to cost calculation results, end users will be able to assess whether or not services provided by TP S.A. comprise unjustified monopolistic rent. Alternative operators will be able to find out whether interconnection charges correspond to the cost of service provision and the President of URTiP will be able to assess the level of interconnection rates included in TP S.A.’s reference offers. For potential investors or market entrants regulatory accounting reports and cost calculation results will enable the assessment of their own investment projects.

Both the regulatory accounting and cost calculation will be subject to an annual verification by the President of URTiP on the basis of reports, instruction updates and cost calculation updates submitted by TP S.A. This year TP S.A. should present its cost calculation results and regulatory accounting reports for the year 2004 which will be submitted to audit by a chartered accountant. The chartered accountant shall be appointed by the President of URTiP and the costs of audit shall be incurred by TP S.A.

The Polish Chamber of Commerce for Electronics and Telecommunications (KIGEiT) representing telecommunications undertakings participated as a party in the work on draft documents submitted by TP S.A.

In the course of administrative proceedings the President of URTiP relied on the assistance and opinions from the Institute of Telecommunications and Information Technologies in Poznan and Ovum Holdings Limited in Great Britain with respect to the analysis of cost calculation methodologies for telecommunications services and the regulatory accounting.

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