【正文】 eement reached ? From negotiation to implementation usually takes 23 weeks ? Takes 46 month to plete negotiation ? Issues: local CT branch attempted to curtail CNC by forbidding connections of multiple lines at CNC level ? Resolution: resort to regulatory provision to reach IP phone interconnect agreement push off multiple line issue as future negotiation agenda BACKUP 21 4503405Interim14Dec99TZDgxSHI 管理人網(wǎng) 免費(fèi)海量下載 TERMINATION SETTLEMENT MAY REDUCE CNC MARGIN (I) Current Likely scenarios for Y2021 End user ? Customer pays local PTA for PSTN usage ? . RMB every 3 min to PTA ? No settlement paid by CNC to PTA ? Customer pays local PTA for PSTN usage ? . RMB every 3 min to PTA ? No settlement paid by CNC to PTA ? CNC pays PTA for both origination and termination ? CNC charges customer IPphone carrier rate ? . RMB to CNC (debit from prepaid IP phone card) ? CNC charges customer IPphone carrier rate ? . RMB ? Per minute IP rate 165。? otherwise CNC see margin reducing ? No settlement ? No settlement ? No settlement CNC CNC End user PTA Switch SH PSTN Switch CNC backbone(1) Switch Switch BJ PSTN PTA Transmission (paid by CNC) Fees: 1 2 Transmission (paid by CNC) Note 1: Currently leased from CT. Own backbone by July 2021 Example Inter connection Backup 22 4503405Interim14Dec99TZDgxSHI 管理人網(wǎng) 免費(fèi)海量下載 TERMINATION SETTLEMENT MAY REDUCE CNC MARGIN (II) Example: National Long Distance Backup 0 . 3 0 . 3 0 . 30 . 1 60 . 0 6 0 . 0 60 . 1 40 . 1 4CNC pays PTA CNC pays PTA Keep IPphone price the same Customer pays PTA(1) IPphone price Customer pays PTA IPphone price New IPphone price Current IPphone Trial Stage scenario: no settlement CNC Alternative I CNC Alternative II Possible scenario for 2021: no settlement 1 RMB/min Note 1: PTA charges customer on 3 minute units, per 3 min. Calculation for this example uses average per minute rate of , assuming customer calls long enough duration. Source: BJ PTA Possible scenario for 2021: settlement rate for both origination and termination ends 2 ? Increase IP price to cover settlement cost ? Customer doesn?t pay PTA but perceive IPphone price increase ? CNC maintain current IPphone revenue ? Keep IP price same ? Customer doesn?t pay PTA nor perceive IPphone price increase ? CNC pays PTA out of IPphone ine ? CNC revenue = 54% of current IPphone revenue ? CNC retains 100% of IPphone price as revenue ? CNC retains 100% of IPphone price as revenue The economics. CNC would lobby for new settlement rate specific to IPphone economics 23 4503405Interim14Dec99TZDgxSHI 管理人網(wǎng) 免費(fèi)海量下載 KEY PRICING REGULATION ISSUES AND IMPLICATION TO CNC Key Issues Assumptions Implication to CNC ? Regulation follows costbased pricing guideline ? Carriers obliged to publish accounting data assisting pricing regulation ? Price floor specified for incumbent ? New entrant has flexible price range around incumbent rate ? Local, NLD, IDD, wireless, satellite ? National leased lines ? Price Bureau within each provincial government sets prices according to local standard of living and inflation rates ? Local PTAs will have autonomy ? Since local works have been built by local PTA investments, local PTA has strong influence on local price levels General pricing rules Differential Treatment Central control Local control / Geographic practice ? Usually high initial CNC cost position due to leasing access and settlement ? Short term uncertainty in price based petitiveness ? Some flexibility in pricing of CNC product offering ? Advantageous long term petition capability over incumbent ? Clarity in pricing is favorable to CNC ? But limits CNC pricing flexibility ? Disadvantageous local price based petitive position in some geographies ? Varied cost structure across geographies plicates product management process, difficult for CNC to have consistent pricing, and hence, image. 24 4503405Interim14Dec99TZDgxSHI 管理人網(wǎng) 免費(fèi)海量下載 LEASED LINE COST HIGHEST AMONG INTERCONNECT COSTS Approximately RMB 134K/month to Link up One City Item Cost per month (in RMB1,000) Leased line to local PTA ? Capacity: 2 M bps ? Number of channels: 30 Domestic LD transport(1) Total for connecting up one city Leased line to international gateway ? E1 capacity Total for IDD from one city 9 100150 109 159 ??134 average 320 454 average (1) Before CNC backbone construction pletes, bandwidth for this segment is leased from China Tele Backup 25 4503405Interim14Dec99TZDgxSHI 管理人網(wǎng) 免費(fèi)海量下載 ROW AND ISSUES RELATED TO BULIDING LOCAL LOOP Key Issues Assumptions Implication to CNC ? Theoretically, CNC can assume privileged access to public resources, . bridges and roads ? There is no specific definition of ROW in most localities ? In practice, there?s no free access ? On time fee charged for digging as high as RMB 20K per km reimbursement to local municipalities ? Labor account for 510% of total cost ? Conduits in bridges and mercial buildings owned by municipal governments ? Conduits in residential area largely owned by CT ? Conduit access auctioned by local government when building pletes ? Once auctioned, additional conduits can not be easily added for 45 years Utility privilege Access fees and cost Ownership amp。 control Scheduling ? Theoretical utility privilege does