Tariffs and pricing
Tariff regulation for telecom
Telecom Regulatory Authorities consider it important for consumer and business tariffs to be fair and transparent. Tariffs charged by telecom providers with (near) monopoly positions are required by regulators to provide an insight in the methods they apply to set there tariffs, whereby due attention is paid to the avoidance of excessive profits; and that no misuse is made of their dominant market position.
In order to carry out this task, complex cost models have been developed. A well-defined model is based on the Fully Allocated Costs (FAC) method. Telecom providers may set tariffs to offset the costs calculated through this model, whereto a reasonable profit margin is added. On an annual basis, providers need to compile and submit their FAC-data. It is imperative that this is handled accurately, as the provided information has a direct ramification for the tariffs that they are permitted to apply, and consequently for the profitability and continuity of the company as a whole.
The request from UTS en Uniqa
UTS Curacao and its subsidiary Uniqa in Suriname have requested NTCS to assist –on a regular basis- with the compilation of data required by the regulator; in particular with regard to the FAC model. In general, they require our advice to determine the best strategy vis-à-vis the national regulators: i.e. BT&P on Curacao and TAS in Suriname. This requires specialised expertise that these companies do not possess; and do not wish to retain on a permanent basis, as it usually is required only once a year.
The approach of NTCS
The methodology applied to fill out the FAC-models requires knowledge of the telecom industry, as well as experience in complex financial modelling. NTCS has Jaap Rouwé to its disposal as expert in this field. Jaap has extensive experience in the Dutch telecom industry; and extensive experience in costs analysis, interconnect agreements, cost models including the annual reporting to the ACM (the successor of OPTA). NTCS has been able to provide Jaaps expertise for various clients worldwide.
Jaap travels from time to time to Curacao and Suriname to analyse the cost structures of Uniqa and UTS. In the process, he facilitates transfer of knowledge; and trains employees in the application of the FAC models, whilst instructing them in optimum ways of reporting accurately but tactically to the regulators.
Results for UTS en Uniqa
With the assistance of Jaap UTS and Uniqa have been able to compile and submit the required FAC data; with the assurance that this was done in a professional manner.
“With the help of NTCS we have been able to up hold the close scrutiny of the regulator TAS without any problems.”Vijendra Annand-Sing (CFO Uniqa)
“Being a small operator, it is difficult to maintain adequate competences and experience in the field of cost accounting. I am pleased to be of assistance.”Jaap Rouwé (NTCS)