Contents

Chapter 1 The draft Direction and the Director’s conclusions

Direction on charges for Power at BT exchanges

Annex A Power supply at Co-mingled facilities

Annex B Glossary

Annex C Assessment of responses received and conclusions reached

Summary

Background

S.1 Following a Direction issued on 10 October 2001 by the Director General of Telecommunications (‘the Director’), BT is required to meet any request from an LLU operator (LLUO) for Co-mingling other than where it would be impracticable on technical grounds, or would directly and necessarily impair the integrity of any Applicable System run under the BT Licence.

S.2 BT’s published price list, revised to include Co-mingling products following the Direction of 10 October 2001, offers the provision of AC mains-voltage power by BT (‘Power’), including essential systems supply (ESS). ESS is a means of providing emergency AC mains-voltage power in BT’s operational estate under mains power outage conditions. It does not include the unit charges for electricity actually used by the LLUO while the power facility is in place (these are addressed elsewhere in BT’s price lists).

 

S.3 In February 2002 the Director initiated a complaint-based investigation into the charges published by BT for Power. A resulting consultation and draft Direction (Local loop unbundling: Co-mingling – Draft direction on charges for ESS power at BT exchanges, 5 November 2002, referred to as the ‘draft Direction’ in this document) set out the Director’s view that the charges by BT for Power should take the form of an annual rental charge based on the costs faced by BT at its top 958 exchanges.

 

S.4 The draft Direction noted that costs for Power can be separated into three discrete elements: ESS supply, non-ESS supply and ASS final AC distribution (see Annex A). The draft Direction proposed charges based on annual rental for each of these. The Director also proposed that BT provides financial returns to demonstrate that it charges for power on a cost-oriented basis.

Effect of the Direction

S.5 Taking into account responses received to the draft Direction, the Director has directed that BT sets the following charges for each of the three elements that make up power:

1.ESS supply: £148.71 per kW per annum;
2.Non ESS supply: £11.86 per kW per annum; and
3.ASS final AC distribution: £318.32 per annum for each increment of 10kW per Co-mingling facility.

S.6 These prices replace the single charge for ESS power currently in BT’s published price list, and are subject to reductions in accordance with a reduced return on capital to be employed from 1 July 2003.

Chapter 1

Responses to the draft Direction and the Director’s conclusions

Background

1.1 BT is required by Article 3(2) of EC Regulation No.2887 / 2000 on unbundled access to the local loop (‘the Regulation’) to meet reasonable requests from beneficiaries (see note one below) for unbundled access to its local loops and related facilities. Under Article 3(2) of the Regulation, notified operators such as BT are also required to provide facilities equivalent to those provided for its own services or to their associated companies, with the same conditions and timescales. Under Article 3(3) of the Regulation, prices for unbundled access to the local loop and related facilities are required to be set on the basis of cost orientation.

1.2 Co-mingling is a form of physical co-location where an LLUO’s equipment is fitted and operated in an area within a BT exchange where BT could or does house its own equipment, without a permanent barrier between them. This differs from other physical co-location arrangements (‘hostel’, ‘mini-hostel’ and ‘bespoke’ products), which require LLUOs to have equipment housed in a separate room partitioned off from the rest of the exchange.

1.3 On 10 October 2001, BT was directed to meet any request from an LLUO for Co-mingling (see Annex B to this document for definition), other than where it would be impracticable on technical grounds, or would directly and necessarily impair the integrity of any Applicable System run under the BT Licence.

1.4 BT published revised price lists which included Co-mingling (available at www.btinterconnect.com), taking effect from 25 January 2002.

The draft Direction

1.5 On 1 February 2002, the Director received a complaint from Bulldog Communications Limited (‘Bulldog’), arguing that some of the charges set by BT for Co-mingling were not cost-orientated and did not provide parity for LLUOs competing with BT.

1.6 Among the five charges highlighted by Bulldog was electrical provisioning, including the facility to generate emergency AC mains-voltage power (essential services supply, or ESS). The other issues were resolved by commercial negotiation.

1.7 The Director was concerned that the level of the charges proposed by BT raised questions regarding cost orientation. The Director was also concerned about the pricing structure proposed by BT, as it required LLUOs to pay significant up front charges for common exchange infrastructure and equipment that have a useful life of many years.

1.8 On 5 November 2002 the Director published a consultation and draft Direction on charges for power at Co-mingled facilities (Local loop unbundling: Co-mingling – Draft direction on charges for ESS power at BT exchanges, referred to in this document as ‘the draft Direction’).

1.9 The draft Direction proposed revised charges for the three discrete elements of power supply and asked for comments on the charges and basis for calculation.

1.10 The draft Direction also proposed that BT should be required to provide financial returns to demonstrate that it charges for Power on a cost-oriented and non-discriminatory basis.

The Direction

1.11 In the light of responses received to the draft Direction (see Annex C) the Director has directed the following.

Separate charges for the three discrete elements of Power

1.12 Power supplied to co-located facilities can be split into three discrete elements: generator back-up (ESS), in-building AC distribution (‘non-ESS’) and ASS final AC distribution (see Annex A). If an LLUO requires a generator back-up supply then it will need to purchase all three of these elements. However, if an LLUO does not require a generator back-up supply then it only needs to purchase the non-ESS and ASS final AC distribution elements.

1.13 Although non-ESS and ASS final AC distribution are required regardless of the detailed requirements, it is not possible to consolidate these elements as they are necessarily offered in different denominations. For example, non-ESS is offered in units of 1 kW, whereas the ASS final AC distribution is capable of handling up to 10 kW. An operator could therefore have anywhere between one and 10 non-ESS units per ASS final AC distribution. It is therefore necessary to keep the charges for each of these elements separate.

1.14 The Director therefore directs that BT offers separate charges for each of these three elements.

Basis for calculating charges

1.15 As set out in paragraphs 32 and 33 of his consultation, the Director has used the data provided to him by BT. This data sets out BT's up front per kW supply costs for ESS supply, non-ESS supply and ASS final AC distribution, plus annual per kW service costs for ESS supply and non-ESS supply. The data also advised the Director of the per kW fuel costs for ESS supply.

1.16 While the service costs and fuel costs are annual, the Director has translated the up front supply costs into an annual charge. The Director has calculated these charges based on the recovery of the present value of the relevant assets over their economic lifetime (referred to in the consultation and this statement as ‘amortised’ costs). This is discussed in more detail in paragraphs 1.22-1.29 below.

1.17 As discussed in paragraph 52 of the consultation, in calculating charges the Director has also applied a return of capital to the amortised costs. The rates of return on capital are discussed in paragraphs 1.30-1.32 below.

Sample size used for calculating charges

1.18 In its response to the draft Direction BT argued that the sample of 958 exchanges proposed by the Director may be insufficient to capture a representative profile of the sites chosen by LLUOs. BT proposed a figure of 2387 sites, which includes all but the smallest category of emergency generator used in the BT estate.

1.19 The Director initially proposed that costs for Power at Co-mingled facilities should be calculated using a sample of the top 600 sites by generator size as the Director believed that this would capture the majority of orders for unbundled local loops. The draft Direction proposed a revised sample size of 958, which includes all the sites with engine types used by the top 600 sites by generator size plus all sites using the next generator size down.

1.20 The Director remains of the view that LLUOs are likely to concentrate their orders on exchanges with the largest numbers of potential customers and expects this trend to continue for the foreseeable future. BT’s own roll-out of ADSL would appear to be consistent with this view. Target sites would be the larger exchanges using larger generators. Including smaller sites in the calculation of charges for power could therefore skew costs to create average charges for co-location higher than should be incurred on a co-location site weighted average and cost-oriented basis.

1.21 In directing final charges the Director has therefore used a sample of the top 958 exchanges by generator size.

Amortisation of charges for ASS final AC distribution

1.22 The recovery of LLU costs, including the cost of ASS final AC distribution, is currently based on the principle of cost recovery relating to cost causation.

1.23 In its response to the draft Direction BT argued that the charge for ASS final AC distribution should be recovered as an upfront charge as this is how BT recovers costs through its own businesses.

1.24 For the purposes of this Direction, the Director believes that when considering the timing of cost recovery for ASS final AC distribution, the further principle of cost recovery relating to effective competition is particularly relevant. The timing of cost recovery should not undermine or weaken the pressures for effective competition.

1.25 The Director believes that upfront cost recovery of assets with economic lives of 15 or 20 years (see paragraph 1.29 below) is likely to impose an unduly large set-up cost on LLUOs establishing Co-mingling facilities that would act to undermine or weaken the pressures for effective competition.

1.26 In order to provide a competitively neutral timing of ASS final AC distribution cost recovery, the Director therefore considers that BT should amortise the charges. In this context, when the Director refers to the amortisation of the relevant assets he means the setting of annual charges designed to recover the present value of the assets (including BT's regulated cost of capital) over their economic lifetime.

1.27 As it is likely that any undepreciated ASS final AC distribution capital investments can be largely reused by BT or other LLUOs, individual LLUOs should only be liable to annual contract terms enabling BT to recover the appropriate annual charge over the economic lifetime of the assets.

1.28 While this timing of cost recovery exposes BT to some risk that not all of its costs will be recovered at all exchanges, the Director is of the view that this theoretical risk has to be balanced against the principle of effective competition.

Cost recovery path

1.29 The Director has amortised charges over the economic life of the assets according to BT’s standard useful asset lifetimes, ie 20 years for generators and 15 years for cabling infrastructure.

1.30 The price of unbundled local loops was initially set to allow a return on capital of 14.5% in the first year, falling to 12.5% (the standard regulatory rate of return at that time) over a four year period following the introduction of LLU. The standard regulatory return was revised to 13.5% in the Director’s last Network Charge Control (see Proposals for Network Charge and Retail Price Controls from 2001, February 2001).

1.31 The appropriate glide path to be applied to BT’s ROCE relating to its charges for the provision of power at Co-mingled facilities would therefore start at 14.5% and fall to 13.5%, in accordance with the timescale originally agreed. As the first year of this process ended on 30 June 2002, prices for the three products in question are set based on an initial return on capital of 14%. This rate will fall to 13.5% on 1 July 2003.

1.32 The final charges differ from those proposed in the consultation as they have been recalculated on the basis of the revised ROCE glide path described in paragraph 1.31 above. However the Director does not consider that there is a material difference between the two sets of charges.

1.33 The Director therefore directs that charges for the three elements of Power are set as follows:

1.34 From 1 July 2003 (see paragraph 1.31 above) charges will fall in accordance with the revised ROCE of 13.5%. The charges will be:

1.35 The Director is of the view that BT should be able to demonstrate that it charges itself for the use of services on a non-discriminatory basis. Where BT uses power for its own activities, these activities should incur an equivalent charge to that being charged to LLUOs.

Extension of Power supply charges to other forms of co-location

1.36 In its response, Bulldog argues that the principles of Power provision to LLUO hostels and LLUO Co-mingling are identical and that charges should therefore be aligned in accordance with the principle of non-discrimination. Without fettering his discretion should any dispute in this area be referred to him, the Director agrees with this general principle.

Upgrading Power supply

1.37 In its response, Bulldog notes that the cost of providing ASS final AC distribution is largely independent of the Power supply provisioned up to the first 10 kW. In principle, and without fettering his discretion to act differently in different circumstances, the Director supports Bulldog’s view that LLUOs should not incur any additional charge for upgrading Power supply to 10 kW in these circumstances, other than the increments for non-ESS and ESS supply.

1.38 LLUOs taking advantage of this opportunity to upgrade their Power supplies to 10 kW could however also be subject to technical concerns associated with heat dissipation

Notes:

1. 'Beneficiary' means a third party duly authorised in accordance with Directive 97/13/EC or entitled to provide communications services under national legislation; and which is eligible for unbundled access to a local loop. In the UK, beneficiaries are network operators (other than BT ) with Annex II status

Direction on charges for power at BT exchanges

Direction made under Article 4(2)(a) and (b) and Article 4(3) of Regulation (EC) 2887/2000 on unbundled access to the local loop and under paragraphs 17 and 19 of Condition 83 of the public telecommunications licence granted to British Telecommunications plc pursuant to section 7 of the Telecommunications Act 1984

1. The Secretary of State granted to British Telecommunications on 22 June 1984 a licence (the "BT Licence") under Section 7 of the Telecommunications Act 1984 (the "Act") for the running of the telecommunication systems specified in Annex A to the BT Licence (the "Applicable Systems").

2. By virtue of Section 109 of and paragraph 20 of Schedule 5 to the Act, the BT Licence has effect as if granted to British Telecommunication plc ("BT").

3. Condition 83 (the "Condition") of the BT Licence obliges BT to make available access to its local lines to consumers, space in its exchanges, use of certain circuits and reasonably necessary ancillary facilities so that other licensed operators having interconnection rights under the Interconnection Directive and the regulations made under it ("OLOs" or "Operators") can provide telecommunications services (including ADSL services) over those lines. The process is known as local loop unbundling.

4. Paragraph 17 of the Condition provides that BT shall provide Access Network Facilities at a charge or charges to be agreed between the parties, or in default of agreement, to be determined by the Director.

5. Paragraph 19 of the Condition requires BT to secure that the offer of an agreement to provide any of the Access Network Facilities under the Condition contains only terms and conditions which are reasonable.

6. On 18th December 2000 the European Parliament and the Council adopted a regulation in unbundled access to the local loop (EC/2887/2000) (the "EC Regulation")

7. Article 3(1) of the EC Regulation requires notified operators (as defined in the EC Regulation and of which BT is one) to publish from 31 December 2000 and keep updated, a reference offer for unbundled access to their local loops and related facilities, on terms set out in the EC Regulation. The reference offer for unbundled access to local loops run by BT is known as the Access Network Facilities Agreement ("ANF Agreement") which, for the purposes of this Direction means the relevant parts of BT’s price lists

8. Article 3(2) of the EC Regulation requires BT to meet reasonable requests from beneficiaries for unbundled access to the local loop and related facilities under transparent, fair and non-discriminatory conditions. Article 3(3) of the EC Regulation requires BT to charge prices for unbundled access to the local loop and related facilities set on the basis of cost orientation. One such related facility is the provision of infrastructure within a BT exchange that relays power to a Co-mingling facility, including the means to provide standby power.

9. Article 4(1) of the EC Regulation requires national regulatory authorities in each member state (which in the UK is the Director General of Telecommunications – the "Director") to ensure that charging for unbundled access to the local loop fosters fair and sustainable competition.

10. Article 4(2) of the EC Regulation gives the national regulatory authorities in each member state the power to impose changes where justified on the reference offer for unbundled access to the local loop and related facilities and require notified operators to supply information relevant for the implementation of the EC Regulation

11. Article 4(3) of the EC Regulation permits the national regulatory authority to intervene on its own initiative where justified in order to ensure non-discrimination, fair competition, economic efficiency and maximum benefit for end-users.

12. It is appropriate that this Direction be based on the Director’s powers under both the EC Regulation and the Condition.

13. In a letter dated 30^th January 2002, Bulldog Communications Ltd ("Bulldog") complained to the Director that prices for certain elements of Co-mingling were too high. Bulldog requested that the Director investigated five specific cost components listed in the BT carrier price lists to take effect from 25 January 2002:

1) Electrical provisioning including the provision of standby power ("ESS");
2) The provision of cooling to a Co-mingled space ("cooling");
3) The Ancillary Service Structure ("ASS");
4) The Co-mingling set up fee; and
5) BT Assisted Site Delivery Service ("BASIS").

14. The Director investigated the complaint and reached a conclusion on four of the five elements, namely cooling, ASS, the Co-mingling set up fee and BASIS. These conclusions were communicated to both Bulldog and BT in letters dated 18 June 2002, in light of which BT revised its carrier price lists. However, the Director was not satisfied that he could conclude on ESS and extended his investigation to review the charges set by BT for its provision.

15. The Director decided to investigate both whether the charges set by BT for ESS were cost-oriented and whether setting the charges as an upfront fee is fair and reasonable for the purposes of Article 3(2) of the EC Regulation.

16. The course of the investigation and its findings are set out in the explanatory document accompanying this Direction. For the reasons given in that document, the Director is of the view that charges for ESS based on an upfront fee are not fair and reasonable for the purposes of the EC Regulation as they create significant set-up facing LLUOs which would act to undermine or weaken the pressures for effective competition. The Director has therefore concluded that he is justified to intervene to impose changes to BT’s published prices in the ANF Agreement for ESS, to convert them to a rental basis, in order to ensure fair competition, economic efficiency and maximum benefit to end users.

THEREFORE

Pursuant to Article 4(2)(a) and (b) and Article 4(3) of Regulation (EC) 2887/2000 and to Condition 83 paragraphs 17 and 19 of the public telecommunications licence granted to British Telecommunications plc under section 7 of the Telecommunications Act 1984, the Director General of Telecommunications makes the following Direction;

1) BT shall offer ESS as three separate elements:

a) ESS supply;
b) Non-ESS supply; and
c) ASS final AC distribution.

2) Where requested by an LLUO, the three elements listed in Paragraph (1) shall be offered either individually or in combination, singularly or in multiple, as is necessary to meet the needs of the LLUO for a given facility.

3) Charges for ESS shall be cost-oriented and offered on a rental basis. These charges are to be set in line with the applicable return on capital employed ("ROCE") in the Network Charge Control set by the Director. The rates of ROCE to be employed are:

i) From 1 July 2002 to 30 June 2003 - 14%;
ii) From 1 July 2003 - 13.5%

4) On the basis of data provided to the Director, charges are to be set at the following rates:

I. Until 1 July 2003

a) ESS supply – £148.71 per kW per annum;
b) Non ESS supply – £11.86 per kW per annum; and
c) ASS final AC distribution – £318.32 per annum for each increment of 10kW required by the LLUO.

II. From 1 July 2003

d) ESS supply - £145.28 per kW per annum;
e) Non-ESS supply - £11.69 per kW per annum;
f) ASS final AC distribution - £311.02 per annum for each increment of 10kW required by the LLUO.

5) BT shall, within 28 days of the date of publication of this Direction, publish:

a) revised price lists to reflect the charges set out in this Direction;
b) a full product description of each of the elements listed in Paragraph (1) to be made available for inspection by LLUOs.

6) The description published pursuant to paragraph (4) b) shall be consistent with the terms defined in this Direction and with descriptions furnished to the Director during his investigation of ESS.

7) For the avoidance of doubt, Head 5 of the Annex to the ANF Determination shall apply to any dispute as to whether paragraphs 2(a) or (b) apply in respect of any request for ESS on the basis outlined in this Direction.

8) For the purposes of this Direction

a)"ESS", "ESS supply", "non-ESS supply" and "ASS final AC distribution" shall have the meanings given to them in Annex B to this Direction;
b) the terms defined or described in the recitals to this Direction shall have the meaning so defined or described;
c) all other words or expressions used in this Direction shall have the same meaning as in the EC Regulation and the BT Licence as appropriate;
d) paragraph 4 of the BT Licence shall, with the necessary changes, apply to this Direction as it applies to the BT Licence.

9) This Direction shall come into force 28 days after the date of its publication.

Chris Kenny
Director of Compliance

A person duly authorised by the Director General under paragraph 8 of Schedule 1 to the Telecommunications Act 1984.

25 February 2003

Annex A

Power supply at Co-mingled facilities

A.1 In order to supply power to a Co-mingling facility, electricity is taken into the exchange at the AC Head and then distributed via cabling / wiring across the exchange to the Co-mingling facility. In doing so, the Co-mingling facility can also be connected to a backup diesel-engine generator. The generator is designed to provide power should there be a failure in the provision of electricity from the national grid. This facility is known as essential services supply (ESS).

A.2 Power supply to Co-mingled facilities can be split into three discrete elements: non-ESS supply, ESS supply and ASS final AC distribution (see Figure 1 below).

A.3 Non-ESS supply concerns the AC Head connection to the external power source (the National Grid) and subsequent relaying of this power to a local point of power distribution within the exchange nearest to the Co-mingling facility – the ‘floor distribution fuse board’ (‘FDFB’ in figure 1 below).

Figure 1: Illustration of power distribution concepts

A.4 The non-ESS supply is routed directly to the FDFB. The ESS supply can be added to provide a back-up facility that would generate power in the event of a power cut from the National Grid. ESS supply is typically provided by means of diesel-fuelled generators.

A.5 The ASS final AC distribution is the localised distribution of power from the floor distribution fuse board to the Co-mingling facility, via an ASS fuse board.

Annex B

Glossary

ASS (Ancillary Services Structure): A BT-provided frame designed to house an LLU operator’s Co-mingling equipment.

ASS final AC distribution: The in-building mains distribution supply from a floor distribution fuse board (the local point of power distribution within an MDF site) to the fuse board of an operator’s ASS (see Annex A above).

Co-location: the provision of physical space and technical facilities necessary to reasonably accommodate and connect the relevant equipment of a beneficiary, as defined in the EC Regulation.

Co-mingling: defined in the Direction on co-mingling (October 2001) as:

"a co-location option (as that term is defined in Article 2 (h) and Section B of the Annex to the EC Regulation) having the following characteristics:

a) the Operator’s relevant equipment (including in particular any DSLAMs) is situated in an area of the MDF site which;

• is a single undivided space;
• is suitable (or would be suitable if Site Clearance were carried out) for the location of BT equipment for a Relevant Purpose;
• after proper performance by BT of its contractual obligations under the ANF Agreement, would permit the normal operation of OLO Equipment; and if so requested by the Operator, is not unreasonably distant from such Relevant Equipment;
  
  b) no permanent physical partition is erected in the Relevant Space between the OLO Equipment and the Relevant Equipment; and
  c) the OLO Equipment is neither owned nor run by BT or by any person acting on BT's behalf.

ESS supply: The provision of AC mains-voltage standby power, supplied in the event of mains power outage conditions. Typically a diesel-fuelled generator and associated distribution infrastructure (see Annex A).

Non-ESS supply: The in-building AC distribution to the ASS final AC distribution, ie AC mains power. Typically encompasses the cabling connecting a local point of power distribution within an MDF site with the main supply of power to the MDF site.

Power: The provision of AC mains-voltage power in BT’s operational estate. Consists of three distinct elements: ESS supply, Non-ESS supply and ASS final AC distribution.

Annex C

Assessment of responses received and conclusions reached

C.1 This section summarises the responses received on the draft Direction and the Director’s views. Responses were received from BT, Bulldog, EdNet and Kingston Communications.

Terms and definitions used in the draft Direction

BT’s comments

C.2 BT requested that certain references in the document to ‘ESS power’ should be amended to ‘power’, as the draft Direction concerned not only ESS power but also non-ESS power and ASS final AC distribution.

C.3 BT commented that references to the ‘top XXX sites’ should be defined in more detail to avoid confusion.

C.4 BT commented that certain definitions appearing in the Glossary should be amended for clarity.

The Director’s response

C.5 The Director has incorporated BT’s proposed amendments into its final Direction as appropriate.

Sample size

BT’s comments

C.6 BT comments that 60 per cent of orders for unbundled loops are for the top 600 sites by generator size and not two-thirds of orders as stated in the draft Direction.

C.7 BT requests that the sample size be increased to include the top 1439 sites by generator size, rather than the sample size of 958 (the top 958 sites by generator size) proposed by the Director (which covers 23 of the 28 generator categories used by BT). Including the next level of power provision would widen the sample to 1439 sites and ensure that the sample pool is representative of the sites being chosen by LLUOs.

C.8 BT disagrees with the Director’s assumption that in the future, operators will not necessarily expand into those areas with the largest number of potential customers and believes that they may in fact target smaller exchanges for strategic or operational reasons, for example to achieve complete coverage of a particular area.

The Director’s response

C.9 The Director accepts that 60 per cent of orders for unbundled loops are for the top 600 sites in terms of power, but notes that the figure of two-thirds appearing in the draft Direction was based on data received from BT.

C.10 The Director recognises that a certain proportion of orders are outside the top 600 sites by generator size and has already increased the sample size accordingly, to the pool of 958 proposed in the draft Direction, in order to capture a more representative pool of exchanges. The Director has therefore based final charges on a sample size of 958 sites as indicated in the draft Direction.

C.11 The Director remains of the view that LLUOs are likely to concentrate their orders on exchanges with the largest numbers of potential customers and expects this trend to continue for the foreseeable future. BT’s own roll-out of ADSL would appear to be consistent with this view. Target sites would be the larger exchanges using larger generators. Including smaller sites in the calculation of charges for power could therefore skew costs to create average charges for co-location higher than should be incurred on a co-location site weighted average and cost-oriented basis.

Amortisation of ASS final AC distribution charge

BT's comments

C.12 BT believes that the Director's proposal to recover costs through an amortised charge for ASS final AC distribution is inappropriate. BT claims that its own businesses pay an upfront capital charge for this service, which is then recovered from service providers through the ADSL line connection charge. BT proposes an equivalent model for charging LLUOs for the equivalent final AC distribution connection.

The Director’s response

C.13 The Director considers it appropriate to apply an amortised charge for ASS final AC distribution, for the reasons set out in Chapter 1 of this document.

C.14 The charge will be amortised on the same basis as charges for ESS power and non-ESS power, as detailed in Chapter 1 of this document.

C.15 The Director reserves the right to reconsider any of the charges, including ASS final AC distribution, at a later date.

Charging for different elements of power supply

BT’s comments

C.16 BT agrees that LLUOs do not necessarily require all three elements of power supply and has requested that the Director amend the Direction to state that "BT shall offer to supply power as required by a particular LLUO by means of an appropriate combination of the three discrete power elements".

The Director’s response

C.17 The Director has not amended the Direction as proposed by BT as the Direction as originally proposed already requires BT to offer the three elements separately or in combination.

Extension of Co-mingling charging principle to existing Co-mingling sites

Bulldog’s comments

C.18 The cost of providing ASS final AC distribution is largely independent of the power supply provisioned up to the first 10 kW. Bulldog believes that LLUOs should be permitted to upgrade power to existing Co-mingling sites that have been provisioned for less than 10kW without incurring any additional charge related to ASS final AC distribution.

The Director’s response

C.19 The Director considers, without fettering his discretion, that it is appropriate that BT should allow LLUOs to upgrade power at no extra charge under the circumstances outlined in paragraph 18 above. As Bulldog recognises, LLUOs could however be subject to increased rental charges for both ESS and non-ESS power supplies.

Retrospective application of charges

Bulldog’s comments

C.20 Bulldog requests that revised charges relating to power supply at BT exchanges should be applied retrospectively, as requested in Bulldog’s original Co-mingling pricing complaint of 30 January 2002. Bulldog recommends that retrospection be applied to 25 January 2002, the date when BT’s Co-mingling charges came into effect. Bulldog notes that it opted to proceed with its Co-mingling programme under the previous charging regime as it had a corporate obligation to do so. Bulldog’s view is supported EdNet.

The Director’s response

C.21 In accordance with the principle of legal certainty, the Director does not find it appropriate to require BT to revise charges for power supply to Co-mingled facilities on a retrospective.

Extension of Co-mingling power supply charges to hostels

Bulldog’s comments

C.22 Bulldog notes that the power is supplied to LLUO hostels and to Co-mingling facilities in the same way and that charging principles should therefore be aligned to ensure there is no discrimination between the two different forms of co-location. Further, Bulldog proposes that the charges should be applied retrospectively to the date of hostel handover. Bulldog’s response is supported by EdNet.

The Director’s response

C.23 In accordance with the principle of non-discrimination, and without fettering his discretion, the Director considers that BT’s charges for power supply to any co-location facility should be in line with revised charges with power supply at Co-mingled facilities.