TRA to develop bottom-up cost models
Manama, December 14, 2011
Bahrain Telecommunications Regulatory Authority (TRA) will develop the bottom-up cost models for fixed access, fixed core and mobile networks to get a better understanding of the cost of providing telecoms services in the Kingdom.
The TRA's move to the next phase comes following public consultation and issue of its Final Position Paper on the development, implementation and use of bottom-up cost models.
The Kingdom's telecoms regulator said it hopes to finalise the bottom-up models by the middle of next year.
Bottom-up models use engineering rules combined with detailed costing and operational data to build efficient telecommunications networks, thereby identifying all components of the networks necessary to produce the required services, said the TRA in a statement.
This approach contrasts with “top-down” models which instead derive the cost of services based on operators’ historical accounting information. Bottom-up models better reflect the economic cost of services, it added.
Commenting on the move, TRA general director Mohamed Hamad Bubashait said, “The development and use of bottom-up cost models will complement existing regulatory instruments in determining the fair and reasonable cost of retail and wholesale telecommunications services in Bahrain."
"It will also help TRA and operators to gain a better understanding of the cost structure and the cost drivers of services," he noted.
Bubashaitwent pointed out that having this additional tool in place will help TRA in reviewing wholesale and retail prices to ensure that they meet legal requirements.
"From a regulator’s perspective, the use of bottom-up models allows for greater transparency," said the TRA official.
"They enable sensitivity analysis ofkey variables. Such models canalsobe useful to assess the cost of new investments (such as new fibre deployments) or to set cost efficiency targets," he added.-TradeArabia News Service
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