4. OSS Costs
Oxera notes that at the conference there was considerable discussion about the appropriate level at which OSS costs should be set. In conjunction with the Commission they decided to use three values as follows
| Low | Zero |
| Central | […] |
| High | […] |
Oxera states that they allocated these costs over the life of the CBA and 250,000 lines, where this number represents an average number of DSL lines in the counterfactual.
Oxera also assumed that for all three cost levels the OSS system would be operated manually, and that this would continue until a sufficient volume of local loops is being unbundled to automate the process.
Comment
LLU allocation. Oxera does not explicitly state how they allocated the OSS establishment cost for option 1. For the purposes of this paper we assume that this cost should be spread over the forecast number of unbundled local loops and amortised over the life of the CBA.
Comment
Cost of manual operation. Oxera does not indicate how they dealt with the cost of manual intervention until sufficient volumes were achieved and automation was justified. We assume that this should be dealt with by suitable increase in the LLU initial connection fee.
Comment
LLU establishment cost. In Appendix A we discuss the impact that the introduction of LLU will have on Telecom's processes and supporting systems. We also include the non OSS establishment costs detailed in Paragraph 2. This discussion concludes that:
- The Oxera low value of zero is highly unlikely
- The Oxera high value of […] is unlikely.
For the purposes of this paper we have assumed the following two possible investment scenarios:
| Low | $5m |
| High | […] (i.e. equivalent to the "central" value used by Oxera) |
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