【正文】 ework of contractual relationship between legal entities ? Header (Contractual parties, Type of contract, Date, Signatures) ? Legal issues (Liability, jurisdiction to be applied) ? Timeline (Duration of contracts, frequency of changes) ? Procedures (Escalation, payment terms and process, etc.) ? Confidentiality ? Reference of additional documents Governance rules _________________________ _________________________ _________________________ Governance principles apply to a set or all services between two parties ? SourcingFreedom (Permission/ban to source from third parties) ? Riskprotection (Investment/Exit decisions, volume and price mitments) ? Pricingmethod (Cost based vs. Market based, basis of calculation) Servicespecific agreements between two parties ? Service description (Service elements, delivery processes, service level/QoS, penalties, controlling processes) ? Volume (Expected volume, minimum/maximum limits) ? Price (Unit price, price differentiation, discounts) Service agreements Voice Services VAS Data Services ... SWSWP6320201123FRBRS 10 GOVERNANCE RULES AS KEY ELEMENTS OF VALUE FLOW AGREEMENTS Elements of value flow agreements ? General terms and conditions ? Governance rules –Sourcingfreedom –Risk protection –Pricing method ? Service agreements –Service description –Volume –Price GovernanceIssues Sourcingfreedom Riskprotection Pricingmethod ? Is there an obligation for the Receiving Unit to source internally? ? Is there an obligation for the Sending Unit to offer a service? ? How is the investment risk for new services split between Sending and Receiving Unit? ? Who finances exit costs of a service? ? Who carries the market risk of uncertain demand? ? What methodology should be used to set interpany prices? –Market based pricing –Cost based pricing ? How should prices be differentiated (volume discounts, day/night tariffs, fixed/variable cost)? Sending unit Receiving unit SWSWP6320201123FRBRS 11 1. Structure and value flows of disaggregated incumbent telcos 2. Principles for designing value flows in disaggregated telcos 3. Example of Network Cost Allocation Mechanisms CONTENT SWSWP6320201123FRBRS 12 Common infrastructure platform provides multiple services over a shared infrastructure… Note: Voice and data access overlap, narrowband inter (a data service) can be provided over a circuit switched work while voice can be provided through a VPN Source: McKinsey analysis INFRASTRUCTURE AND FUNCTIONS TO PROVIDE SERVICES Regional backbone Core backbone Voice access Data access Voice switch Data switch/ router Broadcast Video access IT/ OSS Business Processes (opex, capitalized opex, overheads, other) Voice Data Video Carrier Business Residential ? ? ? ? ? ? ? ILLUSTRATIVE SWSWP6320201123FRBRS 13 IMPLEMENTATION PROCESS FOR ABC Definition of core processes Division of core processes into subprocesses Allocation of costs to subprocesses Calculation of product costs using cost driver logic Core processes Process hierarchy Core process Cost centers Subprocesses Core process Subprocesses Objects of reference Products Use of cost drivers Preparation phase Calculation phase (recurring data collection and calculation) Source: McKinsey Sales Service Marketing SWSWP6320201123FRBRS 14 Funktionsweise der verwendeten Vollkostenrechnung (vereinfacht) * Auf Basis der Rezeptur wird f252。se – ILV NWS/WS – Sekund228。gern 14 Rapportierung an Kostentr228。glich Achievable Cost Targets, ACT (in Mio. CHF ) WS, EC, CC ? Ziel ist EBIT Maximierung –Prim228。sse (nur Betrieb) mit Unterdeckungsziel KONZEPTIONELL Unterdeckungs ziel NWS Target Costs f252。ssen auch Kostenunterdeckungsziel NWS decken A1 Quelle: KLWorkshop 25./ SWSWP6320201123FRBRS 17 Both costs to serve and potential revenue generation are a function of a customer?s usage pattern. For cost allocation purposes, a number of different models exist, mostly applied for circuit switched works* APPROACHES TO ALLOCATE COSTS BETWEEN DIFFERENT USERS Model description Costing models based on technical data Allocation based on usage time Allocation based on installed capacity ? Cost allocation proportioned to total usage over the whole day ? Cost allocation proportional to usage in defined peakperiods ? Determine perminute cost of different “workslices” as cost of capacityslice divided by actually used time. Then, determine costs per time slot as average from all used “capacity slices” Constant perminute rate Peakperiod models SLICEmodel Strict peakload model SCG (“Shareconsolidationgain”) models Model type Basis of cost allocation ? Cost allocation based only on relative usage at absolute peak time ? Costing for each user based on his standalone costs. Then, consolidation gains are distributed as a ?rebate? to different users, . in proportion to the difference between individual standalone and incremental cost REPRESENTATIVE EXAMPLES * Note that at the core, most backbones are already packet switched works and so capacity costin