Determination of tariffs on telecommunication services based on modeling the cost of their providing: methodological and practical aspects of application
Determination of tariffs on telecommunication services based on modeling the cost of their providing: methodological and practical aspects of application

Summary/Abstract: The article deals with the main methodological and practical aspects of determination and application tariffs on telecommunication services by using the method developed by the authors. Its core is a model of service delivery (conceptual model), which allows to exclude from the calculation those elements of the existing provider’s network which, for various reasons, are not involved in the implementation of the planned range and volume of services provided to the estimated tariff duration (the evolution of the network as a result of equipment modernisation, a change of nomenclature and structure of the provided services, etc.) and based on a simulation model of determination of operating costs volume. The content of the article is the answer to a series of questions and suggestions that arise from employees and economic services telecommunication operators dealing with the tariffs determination, as well as regulators in different countries, during the discussion of the proposed method. These include a detailed description of key provisions of the construction and usage of the conceptual and simulation models, composition and characteristics of the initial data used in the construction of models, description of the principal advantages of the proposed method when compared to other existing methods and the most common analogues used in the current time, namely: the costs determined by the LRIC method and related to the semi-fixed costs were 2.25 times lower than the determined actual costs; the proposed method of determination of tariffs on telecommunication services enables us to exclude from our calculation those elements in the provider’s existing network which, due to various factors, are not involved in the implementation of the planned range and volume of services for the intended tariff period; the proposed method takes into account investment costs for the development of networks and/or services for the planned period and profit; it enables us to avoid the separate cost accounting method and to eliminate the deficiencies of the Historical Costs and Long-Run Incremental Cost, which allows significantly reducing the amount of work required for tariff determination and increasing their validity.

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