DATE
17 March 2004
Hybrid model inquiry log
Version 1.2
Table of contents
Introduction ......................................................................................................................... 1
1
Inquiry # 1 – 9 January 2004 ....................................................................... 2
2
Inquiry # 2 – 21 January 2004 .................................................................... 4
3
Inquiry # 3 – 3 February 2004 ....................................................................10
4
Inquiry # 4 – 6 February 2004 ....................................................................14
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Introduction
This Inquiry log documents inquires to the hybrid models that are concerned with
modelling errors and clarifying questions during the period: 1 January 2004 to 29
February 2004.
PTS considers the Hybrid Model per 19 December 2003 as fixed. Therefore, comments
submitted afterwards will not lead to any changes in the Hybrid Model. However, PTS
intends to update and review the model this autumn. Operators will then be able to
comment on the model. After this consultation an updated Hybrid Model for 2005 will
be issued in December 2004.
The inquiries are made anonymous and slightly re-edited to fit into the general structure
of the document.
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1
Inquiry # 1 – 9 January 2004
Inquiry 1.1
The final model has not been updated to reflect last minute changes to the core model.
When opening the model running the macro a different result is obtained than the final
result on PTS website.
Response:
After having verified and checked the audit path of the latest iterations of the hybrid
model, no inconsistencies or errors have been found. However, due to camouflaging of
some input parameters, the final result presented in the public version of model on the
PTS website differs slightly (less than +/- 0.1%) from the result obtained when running
the model. It should also be noted that this update or camouflage does not correspond
to any change in the actual price setting, which is based on the original data and not the
camouflaged data.
It has previously been noted that irregularities in the results may be caused by using an
older version of MS Excel. As noted in the introductory message to the model, the
model was created using MS Excel 2000. Proper functionality can therefore not be
guaranteed if older versions of Microsoft Excel are used.
Action:
None
Inquiry 1.2
In the consultation response PTS note that the model has been modified so the service
raw copper only includes elements up to and including the MDF. This is not apparent in
the model. In the consolidation the model network elements ‘Acc. Fibre’ and ‘Acc.
DeMux’ are allocated to the services 2 and 4 wire raw copper.
Response:
The calculation for raw copper costs covers the costs from the core/access boundary up
to (and including) the MDF. The model has been updated to reflect this calculation
principle, as the cost of the access network between the original RSSs and RSMs are
now allocated to core services and not access services.
Some part access network (even if it is “raw copper” in the real world) has been
modelled using fibre, where this is a cheaper alternative: e.g. access to islands or when
combined with fibre cables form other services. The costs have subsequently been
proportionally allocated between the relevant services. This explains why the sheets
I_Consolidation/I_Parameters contain references to network elements ‘Acc. Fibre from
Core’, ‘Acc. SDH other’, ‘Acc. FAM’ and ‘Acc. DeMux’.
It should be noted that the only viable alternative to this approach is to model a 100%
copper network. This is a more expensive solution, why it has been discarded.
Action:
This will be made clear in the updated model documentation.
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Inquiry 1.3
The costs of network elements ‘Acc. NTP, POTS, ISDN2, xDSL, ISDN30’ still form
part of the raw copper service. These costs should not be included.
Response:
NTP costs do not form part of the unbundled access service costs. The model was
originally implemented to have the NTP costs expensed or annualised into the “raw
copper” subscription costs. This flexibility has been maintained in the generic model
used for the hybrid model. However, in line with the current cost allocation principle,
the NTP costs in the hybrid model are expensed and do not contribute to the annual
“raw copper” costs, nor are they included in the installation costs.
Action:
None
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2
Inquiry # 2 – 21 January 2004
Inquiry 2.1
There seems to be inconsistencies with regard to the number of nodes used in the
model. For example:

In the model documentation PTS state that the number of sites in the model is
7,384. There are, however, more nodes: 7,528. The reason seems to be that all TS
except one is co-located with an LE and all LEs are assumed to be co-located with
an RSS. The number of RSS and indirect costs such as power, cooling etc. should
therefore be reduced to reflect that 133 RSS are co-located with a LE or LE and TS

The hybrid model includes 7,384 scorched node sites – a significantly higher amount
than in the top-down model.
.
Response:
There is no discrepancy or inconsistency between the number of nodes in the model
and the documentation. The misunderstanding is likely to be caused by the use of the
word “node”.
The “modified scorched node principle” implies that the number of physical sites,
populated with equipment should remain the same as in the existing network. Thus, a
node in this sense means solely one geographical site in the hybrid model. However, in
the model one physical location or site may contain a number of nodes i.e. a LE and a
RSS. The node-number in the model may therefore not resemble the number of sites in
the real network.
With regard to the economies of scale due to co-location of nodes at the same site, this
is implicitly taken into account in the unit costs for indirect equipment costs. For
example, the unit cost of power supply units for LE has been reduced marginally to take
account of the co-location with RSS.
PTS doubts that number of nodes in the Top Down model really reflects the number of
scorched nodes (nodes with unique site coordinates and number of lines). PTS has tried
to obtain this specific information from TeliaSonera in order to derive geotypes but
have been told that this information is not available. PTS has instead received a file
from TeliaSonera containing sites and coordinates and another file containing number
of lines per site and matched these together. This work resulted in 7384 scorched nodes.
Action:
None
Inquiry 2.2
The model (e.g. the routing table) has not been updated or changed to reflect the
increase in the number of directly connected subscribers to the LE; this number has
been increased to 35% in version 1.2.
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Response:
The final version of the bottom-up model used a very low figure of around 6% which
PTS considered to be unrealistic. Based on TeliaSonera data PTS estimated the figure
to be 36% and discussed the issue with TeliaSonera who suggested a figure of 38%. This
was the figure used in the 1st Public Version of the Hybrid Model.
The current version of the Hybrid Model uses a figure of 35% as noted in the inquiry.
The figure of 35% is calculated by taking the earlier figure of 38% and adjusting this for
the change in the number of local exchanges. The basis of the calculation is shown in
AF-AH (Rows 1-5) of I_Route_Table.
Action:
None
Inquiry 2.3
The changed principles for calculating the Functional Area (FA) costs (incl. Common
Non-network Costs) from the bottom-up model to the hybrid model has not been
communicated and discussed adequately. This also implies, among others, that PTS in
general has rejected the calculating principle and values for FA costs, as suggested
during the consultation process.
For example:
1. Corporate Overheads in the hybrid model have been increased from 10 MSEK to
225 MSEK compared to version 1.1
2. The distribution of IC costs between access and core has been changed from 10/90
to 5/95 from version 1.1 to 1.2.
3. Non-pay costs have been inserted in categories that previously were zero.
4. Previously in version 1.1 it was stated in comments that 297 MSEK for “areas
relating to one-off works – access implementation” were retail costs (cf. v 1.1,
Consolidation/I_FA_Costs; cell K112:”PTS: These costs relate to the installation
costs of PSTN.”). In version 1.2 there are still 100 MSEK allocated to wholesale.
Response:
PTS acknowledge that the explanations provided for the change in calculating principles
and the specific values used for the FA cost categories are rather high-level in nature.
However, the calculation method for FA costs has been changed to more adequately
represent the costs of a modern, efficient Swedish SMP operator. In particular, PTS has
received coherent costing information from TeliaSonera, allocated to the specified FA
cost categories. This information has been used as point of departure for the FA costs
in the hybrid model and as such resulted in a number of changes in the allocations
between the different FA categories.
However, a number of necessary adjustments to the TeliaSonera data were undertaken
in order match correctly the modelled network:

The switching costs have been reduced to compensate for the enhanced cost
efficiency of the Ericsson engine.
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
An aggregated reduction factor on transmission costs has been used to ensure that
input values only contain PSTN-costs and match the actual transmission network
(the applied ring structures).

Retail costing has been removed from all costing elements, ensuring the correct
input values are used in the model.

The staff allocations have been reduced in accordance with the comments from
Tele2 (and other Benchmarks).
This validity of this method is further justified by the report fro TCG Cepro (2003-1008) on “Produktivitet I TeliaSonera Sveriges fasta nät”, stating
“Slutsatsen är således att verksamheten i TSS’s fasta telenät bedrivits med högsta möjliga
totalproduktivitet under början av 2000-talet, och att den har förbättrats kraftigt från år 2000 till år
2001.”
The updated numbers therefore represent a coherent set of values for the cost
categories (thus avoiding methodological errors like double counting).
For more information, please refer to the explanatory note on the FA costs below.
With regard to the specific points raised in the inquiry the following may be stated:
1. Corporate Overheads in the hybrid model have been increased from 53 MSEK (not
10 MSEK as claimed by the questioner) to 225 MSEK compared with the draft
hybrid model to ensure consistency. As stated above, the updated data uses a
different categorization of cost categories.
2. The distribution of IC costs between access and core was originally set 10/90 based
on international experience. However, due to a review of demand data provided by
Hybrid model, this split was changed to 5/95.
3. Non-pay costs have been inserted in categories that previously were zero, since data
from TeliaSonera has been used that has a different categorization.
4. The comment has been slightly misleading, as it should read retail (PSTN costs) and
wholesale costs. The updated versions only the wholesale part.
Action:
None
Inquiry 2.4
Customer oriented costs, such as billing etc. are presently allocated as IC specific costs.
These should be allocated in the same way as other overhead costs.
Response:
Since these costs are specifically related to access and interconnection services they
should only be shared by these services. Hence they are allocated as IC specific costs in
the hybrid model.
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Action:
None
Inquiry 2.5
It is noted that the uppräkningsfaktorer for among others Emergency Calls are unchanged,
though they should have been updated in accordance with new data from TeliaSonera.
Response:
It is correct that the uppräkningsfaktorer have been updated in accordance with the new
data from TeliaSonera. However, PTS has not received any updates for Emergency
Calls, as these data are not available.
Action:
None
Inquiry 2.6
The bottom-up model specification should be made public on PTS website.
Response:
Agreed
Action:
The bottom up model specification is published below.
Inquiry 2.7
Busy Hour (BH) should differ from service to service.
Further, it is incorrect to add the BHe values to achieve a worst-case network capacity
demand used to dimension the network. In practice, the BHe or peak value is 6 to 8%
smaller than the summarised peak value for all the services.
Response:
It is correct that the aggregated BHe should be lower than the summarised BHe values
from each service. Timing variations from service to service for the BHe occurrence
causes this difference and the exact value is determined by the specific timing profile for
the services, supported by the network.
To handle this issue, the model was specifically designed to cope with different BHe
values for each service. However, when populating the model with data, PTS did not
receive data to support any variation in the BHe pattern. The data was not available,
according to TeliaSonera.
We have also noted that along with this inquiry, data was provided, showing the specific
BHe variations for the services supported by the operator. However, PTS is reluctant at
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this stage to implement any changes to the busy hour dimensioning without a consistent
and coherent data set for the traffic pattern of the SMP operator. In particular, the
customer profile of entrants will typically differ from that of TeliaSonera, why the
service pattern differs, and we may introduce a methodological error in the network
dimensioning. The proportion of yearly traffic in the dimensioned week may also differ
between their networks and that of TeliaSonera.
Action:
PTS will continue to investigate this matter further PTS may update the model at the
next scheduled release.
Inquiry 2.8
According to the MRP the bottom-up model should be used as point of departure for
the hybrid model. However, the FA costs used in the hybrid model have taken as point
of departure the top-down model (stated in the consultation response) instead of the
bottom-up model. This is a serious departure from the original intentions in the MRP
and has not been justified.
Response:
During the reconciliation and hybrid modelling phase PTS analysed the FA costs used
in both models. Since the bottom-up FA costs were not sufficiently documented, PTS
opted to put more weight on the costs in the top-down model. Further, in order to
ensure a consistent dataset it was necessary to take top-down FA costs as point of
departure. PTS are of the view that this is approach will yield a more accurate result and
is in line with the intentions of the MRP.
Action:
None
Inquiry 2.9
From version 1.1 to version 1.2 of the hybrid model PTS has changed the cost
calculation of IC metro. IC metro is now the same as IC region although they are
different services.
Response:
Please refer the separate note on pricing (LRIC prismetod för grossistprodukter per den
5 februari 2004) where this issue is elaborated.
Action:
None
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Inquiry 2.10
In the consultation response Annex B it is stated that no non-PSTN costs are included
in the FA costs. However, in Annex A it is stated that some non-PSTN access costs are
included. Which is correct?
Response:
Due to the model design, the FA costs for core will only include PSTN costs, whereas
the non-PSTN costs at this stage are included in the access FA costs. This
inconsistency has been neutralised in the final version of the hybrid model.
Action:
None
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3
Inquiry # 3 – 3 February 2004
Inquiry 3.1
Are the modelled hubs between the RSS rings included in the length calculations of the
core network?
Response:
The inter-ring connections are part of the core network - see core model I_Design Rule,
section 7, Tandem to tandem. The modelled hubs between the RSS rings are thus
included in the length calculations of the core network.
Action:
None
Inquiry 3.2
One tandem node has been placed in each FX area. Cable lengths in the tandem to
tandem network have not been dimensioned for this.
Response:
The model assumes that there are 14 FX’s. The distance between these FX’s is shown in
Section 7.3 onwards of I_Design_Rules. The underlying assumptions are that there are
two rings in Southern Sweden; 1 ring in North Sweden and 2 links between South and
North Sweden. In addition, in Southern Sweden there are assumed to be 2 extra routes
between Ring 1 and Ring 2 to provide additional resilience for the back-up point to
point network (in addition, to rings at the inter-FX network it is also assumed that there
is a point to point network). In the case of Stockholm and Gothenburg it is assumed
that there are two FX’s in the cities concerned (although not at the same site).
The FX areas in the hybrid model are therefore differing slightly from those in
TeliaSoneras network. For example, the FX in Karlstad has been “transferred” to
Gothenburg, why Gothenburg (and Stockholm) have two FXs located in each city.
The distance between FX’s is worked out on the basis of crow’s flight distances
multiplied by 1.4 (dog’s walk/crow’s flight ratio). The core length is calculated
accordingly (10 km. between the two city exchanges). It is further assumed that this part
of the network is not shared with trench in other network layers.
Cable distances are based on trench length distances although a wastage factor is
included as well. In addition, in Southern Sweden a separate cable is used on the ring
and point-to-point networks.
No technical problems are foreseen (echo – channelling etc.) in connection with these
changes in the FX areas, as the catchment areas in Northern Sweden in TeliaSoneras
actual network are still larger than any of the FX areas in Southern Sweden.
Action:
None
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Inquiry 3.3
The number of nodes and the crow flight distances between them may be used to
estimate the total area covered in Sweden. As an approximation the formula may be
used:
2
2

 Dn 
 Ds  
# N n  
 # N s  
   3.14 ,
 2 
 2  

where n = North Sweden, s = South Sweden, D = crow flight between nodes and #N =
number of nodes.
Using this formula the result is that 41% of the country is covered or 68% of the
modelled access area (excluding empty areas) in the access model. It is therefore
necessary to increase the crow flight distance used in the core model.
Response:
The formula above relies on the average crow flight distances squared. In order for the
area calculation to be reasonably correct using this formula, the distribution of crow
flights distances has to be reasonably even.
However, using the formula above on the actual crow flight distances (and not the
averaged values), the total area covered is substantially larger (~258.175 km2). The main
reason for this is the very uneven distribution of crow flight distances in North Sweden.
Note also that the calculation method for the catchments areas in the access model is
quite different, as seen from the summarised description below, which we have given as
a reference. (for details see Model Documentation V 1.3, A.4 Estimating the catchment area
of each zone ):
For each scorched node we need to estimate the size of the catchment area that it serves, so that it
can be assigned to a geotype (geotypes are based on number of lines per km2). These zone areas
were estimated for each zone, based on the following principle that Customers in general are
allocated to the nearest switch. The catchment area for a switch site will therefore typically share its
borders with 4-7 neighbouring switch sites.
The calculations were done as follows:
- Calculate the crow flight distance from each zone to its six nearest neighbours
- Calculate the size of the catchment area from these distances, as an area of a polygon with
corners, defined by the mean to each of the 6 neighbouring nodes.
The areas are thus calculated by two very different methods. One method is based upon
calculation of circular catchment areas (~258.175 km2)., where the diameter equals the
distance to the second nearest node. The other method is however based upon
calculations of polygon shaped catchment areas (~285.626 km2), determined by the
distances to the nearest node, the second nearest node etc. It is hardly unlike that the
outcome of these two different calculation methods should be identical. The calculated
circular catchment area should also be slightly smaller, as the covered areas are not
totally contiguous. This in contrast to the polygon shaped areas.
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Action:
None
Inquiry 3.4
When migrating from AXE to Engine it is necessary to increase the transmission
capacity. This is due to protocol conversions and because of an increase in the number
of signal links up to the tandem switch.
Response:
It is correct that the Engine concept has a slightly larger capacity demand on LX – FX
transmission links. However, as the signalling data is much smaller than the traffic data,
this has only a very marginal effect on the LX – FX transmission links. Further, as the
original dimensioning rules for the core network are very generous, this has no effect on
the capacity assessments for the transmission network.
Action:
None
Inquiry 3.5
The costs of support systems are not visible in the hybrid model.
Response:
The costs for support systems are included in the FA costs.
The costs for the Network support systems are allocated as the non-pay costs in the
maintenance cost category, being the most representative cost category for the actual
task. The costs for Configuration Management (or Network management) are included
in these costs, being an integral part of the network support system.
For more information, please refer to the explanatory note on the FA costs above.
Action:
None
Inquiry 3.6
The hybrid model includes three cost categories with a scrap value that cannot be
categorized as a building cost category (it is stated in the model documentation that the
only cost category with a scrap value is buildings). The cost categories are Manholes,
Jointing Board and Fiber Network Termination point.
Response:
Only buildings should have a scrap value. This implies that manholes, jointing boards
and fibre network termination points, which currently have scrap values in the hybrid
model (as the only other cost categories), should be discarded.
Action:
The hybrid model will be updated at the next planned release accordingly.
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Inquiry 3.7
PTS has previously stated that IC single transit does not use transmission capacity. This
is incorrect. Transmission capacity is used to terminate the service at the nearest POP.
Response:
Transmission capacity for delivering a call to the nearest POP has not been included in
the model. At the time of modelling these costs where considered to be marginal and
without influence on the final results. PTS still considers this to be the case.
Action:
This will be made clear in the updated version of the model documentation
Inquiry 3.8
An undocumented change has been found. In I_Design_Rules [J137:J148] a change in
the distribution of terrain types has been made compared to version 1.1 of the hybrid
model.
Response:
Changes to the terrain type for digging costs have not - by mistake - been documented
in the Change Log in the updated hybrid model documentation.
Action:
The hybrid model documentation has been updated and published on the web site
Since the digging cost also has changed between draft hybrid model and hybrid model
an updated set is enclosed below.
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4
Inquiry # 4 – 6 February 2004
Inquiry 4.1
According to I_Design_rules J10 there are 5,190 RSMs, where 1,442 belong to access.
According to the distribution in I_Switching_Costs N300, 100% of RSM belong to
access. According to the distribution in I_Switching_Costs N301 (0%), the demux will
always belong to core. No account is taken of the fact that 1442 of the nodes always
belong to access. Therefore, I_Switching_Costs N301 should be equal to 28%.
Response:
The issue stated above is related to the boundary issue already discussed in the model
documentation.
For the nodes, which originally contained an RSS, the boundary remains on that node.
This implies that all equipment and the transmission link to the RSS node in the LRIC
network should belong to core, as the boundary should not be moved (apart from the
64 kbits line card on the original node).
For the nodes, which originally only contained a RSM, the node, the transmission link
and the associated equipment to RSS node should consequently belong to access, as the
boundary originally was located at the RSS node. This is valid for 1442 number of
transmission links and associated equipment.
It is correct that the "original" 1442 pure Access RSM nodes should be allocated to
access, why the demarcation line between Access and Core is at the multiplexer of the
associated RSS. This implies that the Demux, being located between (but close to) the
RSS line card and RSM, logically belongs to the Access network. Thus, the 28% of the
MDF cost related to a Demux in I_Switching_Costs N301 should therefore as indicated
be allocated to access.
Following a re-examination of the distribution keys, PTS has become aware that RSM
and demux costs are not allocated correctly in table 8.1 in I_Switching_Costs. Like the
MDF cost related to the Demux the MDF cost related to a RSM should also be altered.
In version 1.2, 100% of the cost is allocated to access. However, since the demarcation
line between access and core is set with reference to the existing split in TeliaSonera’s
network cf. above, only 28% should be allocated to access – not 100%.
The same logic applies to the line card costs of RSM and Demux. The allocations in
Q300:S301 should therefore also be changed from the current 0 and 100% to a uniform
28%. The changes are summarised below:

2 Mbits and 128 kbits RSM line card; belongs to Access for 1442 pieces, the
remaining core.

2 Mbits Demux line card; belongs to Access for 1442 pieces, the remaining core.
Action:
The necessary corrections will be made in the next updated version of the model.
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