ITU-T D.140
TELECOMMUNICATION (09/95)
STANDARDIZATION SECTOR
OF ITU
CHARGING AND ACCOUNTING
IN INTERNATIONAL TELECOMMUNICATION
SERVICES
ACCOUNTING RATE PRINCIPLES
FOR INTERNATIONAL TELEPHONE
SERVICES
ITU-T Recommendation D.140
(Previously "CCITT Recommendation")
FOREWORD
The ITU-T (Telecommunication Standardization
Sector) is a permanent organ of the International
Telecommunication Union (ITU). The ITU-T is responsible for
studying technical, operating and tariff questions and issuing
Recommendations on them with a view to standardizing
telecommunications on a worldwide basis.
The World Telecommunication Standardization
Conference (WTSC), which meets every four years, establishes the
topics for study by the ITU-T Study Groups which, in their turn,
produce Recommendations on these topics.
The approval of Recommendations by the Members
of the ITU-T is covered by the procedure laid down in WTSC
Resolution No. 1 (Helsinki, March 1-12, 1993).
ITU-T Recommendation D.140 was revised by ITU-T
Study Group 3 (1993-1996) and was approved under the WTSC
Resolution No. 1 procedure on the 28th of September 1995.
___________________
NOTE
In this Recommendation, the expression
"Administration" is used for conciseness to indicate
both a telecommunication administration and a recognized
operating agency.
ã ITU 1996
All rights reserved. No part of this
publication may be reproduced or utilized in any form or by any
means, electronic or mechanical, including photocopying and
microfilm, without permission in writing from the ITU.
CONTENTS
Recommendation
D.140 (09/95)
Page
Recommendation D.140
Recommendation D.140 (09/95)
ACCOUNTING RATE PRINCIPLES
FOR INTERNATIONAL
TELEPHONE SERVICES
(Geneva, 1992; revised in
1995)
The ITU-T,
bearing in mind
(a) that the International Telecommunication
Regulations indicate that Administrations shall by mutual
agreement establish and revise accounting rates to be applied
between them, taking into account the Recommendations of the
ITUT and trends in the cost of providing the telecommunication
services;
(b) that the costs incurred in providing
telecommunication services, although based on the same
components, may have a different impact depending on the
country's development status which, in turn, may affect the
quality of international services;
(c) that one of the purposes of the ITU, is to
foster collaboration among its Members with a view to the
establishment of rates at levels as low as possible consistent
with an efficient service,
considering
(a) that Administrations should endeavour to
lower the provisioning costs of international telephone services;
(b) that Administrations should strive to offer
customers high quality international telephone services at the
lowest possible prices;
(c) that too great a dissymmetry between the
charges applicable in each direction of the same relation may
contribute to the distortion of the balance of traffic and
encourage the retention of high accounting rates;
(d) that the remuneration for the use of
telecommunication facilities made available to Administrations
should cover the costs incurred in providing those facilities,
such as:
- network costs;
- financial costs;
- overheads;
(e) that costs depend on many factors which
vary by country;
(f) that international telephone networks
should be used in an efficient way;
(g) that demand for international telephone
services should be stimulated;
(h) that some accounting rates have not kept
pace with the recent cost trends and are therefore too high;
(i) that accounting rates that are not
cost-orientated may encourage inefficient routings;
(j) that the existing accounting procedures
contained in the D-Series Recommendations continue to provide
Administrations with efficient and flexible processes,
recommends
that the following principles be applied when
establishing or revising accounting rates for international
telephone services:
1 accounting rates for international
telephone services should be cost-orientated and should take into
account relevant cost trends;
2 each Administration should apply the
above principle to all relations on a non-discriminatory basis;
3 Administrations should seek to achieve
cost-orientated accounting rates in an expeditious manner,
recognizing that this may need to be implemented on a scheduled
basis where the level of reduction required is significant. In
the event of scheduling, Administrations should aim to agree
staged reductions over a period normally of one to five years.
However, the actual length of the period of implementation may
depend on the extent of reductions agreed and/or the difference
in the development of the countries concerned,
further recommends
4 that Administrations should
periodically review accounting rates to ensure that they continue
to reflect current cost trends;
5 that information relative to
accounting rates for the international automatic telephone
service should be made available on a voluntary basis to the
Director of TSB in an aggregated format, in accordance with the
guidelines set out in Annex B, to assist ITU-T studies into
accounting rate movements.
Annex A contains guidelines for the cost
elements to be taken into account when determining international
telephone accounting rates.
Annex B contains guidelines concerning the
provision of information relating to accounting rates for the
international automatic telephone service.
Annex C contains guidelines for bilateral
negotiation of accounting rates in the international telephone
service.
Annex A
Guidelines for the cost elements to be taken into account
when determining accounting rates and accounting rate shares
for the international telephone service
(This annex forms an integral
part of this Recommendation)
Introduction
These guidelines identify the main cost
elements to be used when establishing or revising cost-oriented
accounting rates and accounting rate shares for the international
telephone service.
A.1 Network elements
The network elements used to provide the
international telephone services are generally classified as
follows:
- international transmission facilities;
- international switching facilities;
- national extension.
A.1.1 International transmission facilities
The international transmission facilities consist of
international terrestrial transmission or international submarine
cables, or international satellite transmission or a combination
of these.
These facilities include links between earth stations or cable
landing stations and the international switching facilities.
A.1.2 International switching facilities
These facilities consist of international switching centres
and their associated transmission and signalling equipment.
A.1.3 National extension
The national extension, used for international telephone
traffic, consists of national exchanges, national transmission
facilities and, if appropriate and identified under a bilateral
or multilateral agreement, the local loop.
A.2 Related costs
The related costs are those identified in
accordance with generally accepted accounting practices and are
divided into:
- direct costs;
- indirect or common costs.
A.2.1 Direct costs
These are:
- investment costs, i.e. depreciation, interest expenses on
loans and a reasonable return on equity;
- operation and maintenance costs;
- rental and lease costs of telecommunications facilities
including direct transit leasing costs where applicable;
- switched transit costs where applicable;
- cost of access to national or local networks, if applicable;
- directly attributable research and development costs.
A.2.2 Indirect or common costs
These costs cannot be solely attributed to the international
telephone service and thus must be allocated. They may be related
to:
- general administration (e.g. head office expenses,
overheads, training, etc.);
- management systems (e.g. accounting systems);
- other research and development;
- appropriate taxes (or equivalent).
A.3 Other related costs
Other costs may qualify for inclusion by
bilateral agreement.
Annex B
Guidelines regarding the provision of information relating
to accounting rates for the international
automatic telephone service
(This annex forms an integral
part of this Recommendation)
B.1 Information relating to accounting
rates for the international automatic telephone accounting rates
will be requested from Administrations by means of a
circular-letter sent by the TSB Director.
B.2 Administrations should provide on a
voluntary basis the information requested to the TSB Director in
the format in Appendix I for the reference dates January 1988 and
1992. The same information will subsequently be requested on an
annual basis.
B.3 Alternatively, Administrations could
provide the information to the Director of TSB as an average
annual global accounting rate percentage movement on a yearly
basis as illustrated in Appendix II, starting with year
1988.
Appendix I
(to Annex B of Recommendation D.140)
FIGURE 1/D.140...[D01] = 3 CM
Appendix II
(to Annex B of Recommendation D.140)
Global accounting rate percentage movement
This information will be shown as an average
annual accounting rate percentage movement.
This average percentage movement should be
weighted by the traffic destined to each country on a global
basis, starting with the year 1988.
Illustration of the formula to be used to
calculate the average accounting rate percentage movement
(var % t)
Example
For example, if an Administration has three
relations
where:
t is the weighted average accounting
rates;
t1 is the accounting rates related to T1 and so on;
T1 is the outgoing traffic related to Administration 1 and
so on;
Tt is the total outgoing traffic;
var % t is the variation percentage.
Annex C
Guidelines for bilateral negotiation of accounting rates and
accounting rate shares
in the international telephone service
(This annex forms an integral
part of this Recommendation)
C.1 Introduction
This annex contains the guidelines to be used
in bilateral negotiations to establish and revise accounting
rates and accounting rate shares orientated to individual
parties'costs,
given:
- Recommendation D.150 (New system in accounting in
international telephony);
- Recommendation D.155 (Guiding principles governing
apportionment of accounting rates in intercontinental telephone
relations);
- Supplement 1 (Cost and tariff study method);
- Supplement 2 (Method for carrying out a cost price study by
Regional Tariff Groups).
C.2 General guidelines
C.2.1 Accounting rates and accounting
rate shares are established and revised through bilateral
agreement.
C.2.2 The related costs for network
elements, as specified in Annex A, should be calculated by each
Administration before any bilateral negotiation.
C.2.3 When negotiating on a bilateral
basis the establishment or revision of the level of the
accounting rates and accounting rate shares in a particular
relation, the Administrations concerned should, as far as
possible, agree on the approach to be used.
C.2.4 In the establishment or revision
of accounting rates and accounting rate shares, due account
should be taken of the impact of, among other things:
- changes in technology, the nature of the
transmission routes used (land cables, submarine cables,
satellite links), economies of scale and agreed routings;
- completion ratios recorded on international
circuits;
- trends in the volume of incoming and outgoing
traffic;
- changes in unit costs, if any, due to the
provision of other telephony based service applications (e.g.
free phone, country direct, charge cards);
- differences in costs between countries.
C.2.5 Negotiations on the revision of
accounting rates and accounting rate shares should be conducted
periodically, for example on an annual basis.
C.2.6 Cost information presented by
Administrations is of a confidential nature when identified as
such by either of the parties.
C.3 Approaches
The following describes some possible
approaches in which negotiation could be conducted:
C.3.1 Approach 11)
C.3.1.1 Party A and Party B each
independently conduct its own cost study using its own cost model
to determine, in accordance with Annex A, its transmission,
switching and national extension costs.
C.3.1.2 As a variation, both parties may
agree to use the same reference values for any of the network
elements and if appropriate, some cost elements contained in
Annex A.
C.3.1.3 To the extent possible, factors
affecting cost movement should be identified, e.g. the
introduction of circuit multiplication equipment, traffic growth,
etc.
C.3.1.4 From the above results, each
could establish and then agree a target cost-orientated
accounting rate and accounting rate shares. The period over which
the target is to be achieved should also be agreed.
C.3.1.5 Where the two parties cannot
agree a target rate, they should aim nevertheless to reach an
agreement for a rate adjustment, staged if appropriate, taking
due account of the trend in rate movements (e.g. established via
Approach 2 below).
C.3.2 Approach 2
C.3.2.1 In the absence of the necessary cost data for
use of Approach 1, Party A and Party B may compare the accounting
rate movement for their relation with:
a) underlying trends developed using historical cost data;
and/or
b) accounting rate movement trends either:
- globally, assisted for example by the results of the
questionnaire associated with Annex B; or
- regionally, by examining the movement in the various
rates/values contained in the regional Recommendations of the
D-series; or
- using respective achievements of rate movements in other
relations (for example in the same region).
C.3.2.2 From the above cost and/or accounting rate
trends, each party could establish and then agree upon a target
accounting rate and accounting rate shares. The period over which
the target is to be achieved should also be agreed.
C.3.2.3 Where the two parties cannot agree upon a
target rate, they should aim nevertheless to reach an agreement
for a rate adjustment, staged if appropriate.
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