TELECOM REGULATORY AUTHORITY OF INDIA

NOTIFICATION

New Delhi, the 28th December, 2001

F. No. 311-6/2001-TRAI (Econ.).— In exercise of the powers conferred upon it under Section 36 read with

clauses (ii), (iii) and (iv) of Sub-section (b) or Section 11 (1) of the Telecom Regulatory Authority of India Act, 1997 as

amended by TRAI (Amendment) Act, 2000, to ensure effective Interconnection between different Service Providers and

to regulate arrangements amongst Service Providers of sharing their revenue derived from providing Telecommunication

Services, the Telecom Regularory Authority of India hereby makes the following Regulation.

THE GAZETTE OF INDIA; EXTRAORDINARY

I PANT If I—SEC. 41

THE TELECOMMUNICATION INTERCONNECTION (PORT CHARGES)

REGULATION 2001

(6 of 2001)

Section I

Title, Extent and Commencement

Short title, extent and commencement:

(i)

This Regulation shall be called "The Telecommunication Interconnection

(Port Charges) Regulation 2001." (The Regulation).

(ii)

This Regulation pertains to the Port charges payable by the

Interconnection Seeker to the Interconnection Provider for terminating the

interconnection links on the Network Interface of the Interconnection

Provider.

(Hi)

In this Regulation, a "Port" means a place of termination on a Switch/

distribution frame to provide a point of access or interconnection for

ingress and egress of traffic between the two Interconnecting Networks.

The bandwidth of the Port shall be 2.048 Megabits per second.

(iv)

The Regulation shall be deemed to have come into force with effect from

date of notification in official Gazette.

(v)

This Regulation shall regulate Port charges as detailed herein including

those in Schedule.I.

Section II

Applicability

Unless the context otherwise requires, all the definitions as provided under

Section II and the Regulations under Section(s) III and IV of "The

Telecommunication Interconnection (Charges & Revenue Sharing) Regulation,

2001" notified on 14.12.2001, will be applicable to this Regulation.

Section III

Reporting Requirement

All Service Providers shall comply with the Reporting Requirement in respect of

Port charges specified under this Regulation, as also all subsequent changes.

(ii)

Where a port charge below the ceiling notified herein is to be implemented, the

Service Provider may implement the proposed port charges after the mandatory

notice period of 45 working days, unless the Authority within such period directs

otherwise.

(Hi)

Port charges whenever implemented as per Schedule I herein, shall be reported to

the Authority within 45 days of their implementation,

(iv)

When an Interconnection Provider informs the Interconnection Seeker that it

cannot provide the Ports as sought for by the latter, the Interconnection Seeker

within 45 days of being so informed, may approach the Authority tor seeking its

intervention,

(v)

No service provider shall alter any Port charge, or any part thereof, without

complying with the Reporting Requirement.

Section IV

Review

(i)

The Authority may, from time to time, review and modify Port charges,

(ii)

The Authority may also at any time, on reference from any affected party, and for

good and sufficient reasons, review and modify the Port charges.

Section V

Explanatory Memorandum

This Regulation contains at Annexe A, an Explanatory Memorandum to provide

the background and reasons for issuing this Regulation.

Section VI

Interpretation

In case of dispute regarding interpretation of any of the provisions of this Regulation,

the decision of the Authority shall be final and binding.

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART DI—SEC. 41

SCHEDULE I

PORT CHARGES

jTEM

(1)

Date

Implementation

(2) Coveraa*»

(31 'Port' Charaes

coverina

all

switches

'PORT CHARGES

28.12.2001

Charges for 'Ports' provided £>»/ service providers (other than the

Port charges for internet, which are specified in Schedule V! of

the Telecommunication Tariff order 1999).

No. of 'Ports'

1 to 16 PCMs

17to32PCMs

33 to 64 PCMs

65 to 128 PCMs

129 to 256 PCMs

'Port' Charges in Rs.

N*55,000

8,80,000 + (N-ie)*30,000

13,60,000 + (N-32)*20,000

20,00,000+ (N-64)* 15,000

29,60,000 -i- (N-128)"14,000

Notes:

(1) The above Rates are Ceiling Rates and Service Providers are permitted

alternative lower charges.

(2) N refers to the number of 'ports' demanded by the Interconnection Seeker

within the capacity ranges under the column 'No. of Ports'.

ANNEXE.-^

EXPLANATORY MEMORANDUM

With the induction of new Basic and National Long Distance

Operators in the Indian Telecommunication Network, a Multi-

Operator environment has emerged and therefore, the Authority

decided to undertake a review exercise relating to charging of

'ports'. The charges for 'ports' specified in this Regulation are a

result of such a review. In the course of this review, the Authority

has taken into account the inputs received from operators including

the incumbent, who is the main supplier of 'ports' at present.

The new entrants have been representing to the Authority that there

was a reluctance on the part of the incumbent to supply 'ports' at

the prices specified by the Authority in the past. It was also

represented by the incumbent that the prevailing charges had an

•anomaly in that they encouraged the Interconnection Seeker to

place more than the justified demand for 'ports', because the annual

'post' charges for 8 'ports' were of the same order as that for 33

'ports'.

It, thus, transpired that the 'port' charges needed to be

re-evaluated and the existing anomaly corrected, so that there is no

economic disincentive for supplying the 'ports'.

When a set of 'ports' or Digital Trunk Interfaces (DTIs) are added in

an existing Switching System, the Directly Attributable Incremental

Costs (DAIC) are not only of the 'port' tejminals, but also of other

elements such as associated CCS7 Signalling Equipment,

Processor, Switching Matrix etc. In this review, all such significant

associated costs have been computed as overhead in the various

'port' slabs. These common costs have been found to be a step

function which varies over a range of 'port' sizes, in this review,

cost data for various types of Switching Systems and components

thereof, which are directly attributable to the termination of a E1

link on a Switching node, were collected and a weighted average

was compiited. Other costs e.g. costs in respect of Network

Management, Operations and Maintenance Centre (OMC), Fault

Managsmert System, etc., have been excluded, as these are not

directly attributable Jo the Interconnection.

in this review, the number of slabs for 'port' charges have been

increased to five, based on the costs of common control and

Switching matrix which are observed to vary in five steps

corresponding to five slabs of 'port' charges.

Based on the cost data supplied by the Operators for the Switching

Systems in the Network, costs have been worked out for the

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART ITI--SEC4]

various configurations. To these costs, overheads @ 10%

representing freight, storage and installation costs, have been

added. For arriving at the Annual Recurring Expenditure (ARE), a

rate of 22% has been applied to the capital cost so worked out. The

'port¹ charges, which are in the nature of annual rentals, have been

equated to the ARE so computed.

The Authority has considered the point made by network operators

that due to provision of an Interconnection 'port' and consequent

traffic flow, capacity enhancement would be required at other nodes

as also in the interconnecting links for smooth flow of traffic across

the network. However, the Authority is of the view that the cost of

downstream augmentation of the network resources should be

recovered from the usage charges of network elements involved in

call carriage. The underlying principle is that all costs are to be

recovered and that no cost elements should be double counted.

To remove the anomaly in the earlier exercise on 'port' charges, the

following algorithm has been employed to determine the charges in

the five ranges indicated in Schedule I.

(i)

For up to 16 'ports', a per 'port' charge of Rs. Xi is specified.

(ii)

For 'ports' between 17 and 32 PCMs, the charge will be

16Xi + (N-16) X2, where X2 corresponds to the average cost

for the capacity slab going upto 32 PCMs and XT is for the

capacity slab 1 to 16 PCMs.

(iii)

For 'ports' between 33 and 64 PCMs, the charge will be

I6X1 + 16X2 + (N-32) X3, where X3 corresponds to the

average cost for the capacity slab 33 to 64 PCMs.

(iv)

For 'ports' between 65 and 128 PCMs, the charge will be

16Xi + 16X2 + 32 X3 + (N-64) X4, where X*, corresponds to

the average cost for the capacity slab 65 PCMs to 128

PCMs.

(v)

For 'ports' above 128 PCMs, the charge will be

I6X1 +

16X2 + 32 Xo + 64 X4 + (N-128) X5, where X5 corresponds to

the average cost for the capacity above 128 PCMs.

By Order,

DR HARSHA VARDHANA SINGH, Secy.-cum-Pnncipal Advisor

[No. ADVT/III/IV/Exty./H2/20011

Printed by ha Manager, Qwt. of India Press, Ring Road, Mayapurl, New Delhi-110064

and Publtahod by the Conlroller ol Publications, Delhl-110064 — 2001