Section 33 in International Telecommunication Cable Landing Stations Access Facilitation Charges and Co-location Charges Regulations, 2012
33. Before analyzing the comments of stakeholders, there is a need to understand the significance of factor of 2.6 in this costing exercise. It may be recalled that on the basis of the discussions with all the stakeholders including these two OCLSs, a network was designed which can provide total 60G capacity to the access seekers through the various capacity interfaces(STM-1, STM-4, STM-16, STM-64), as per the existing demand and demand projections. The total cost of such a designed network was calculated. Now, the question is how to allocate the cost to different capacities i.e. STM-1, STM-4, STM-16 and STM-64. One should appreciate that conversion factor does not affect admissibility of the cost, it comes only in the recovery part of the cost and that too recovery through various capacities, keeping the total cost for recovery intact. Now, one simple approach could be to take a factor between two capacities as per the technical capacity of the interface. For example, STM-4 has a capacity of 4 STM-1s and therefore charges for the STM-4 should be 4 times that of the STM-1. If a factor of 4 is taken then the underlying assumption is that the cost attributable to STM-4 is 4 times that of STM-1, which may not be correct as cost is not linear to the capacity. This does not practically happen. Cost of 4 inches pipe is not 4 times that of the pipe of 1 inch as the cost is not a linear function of the capacity. Therefore, it is incorrect on the part of these two OCLSs to argue that conversion factor should be 4 and there is no benefit of economies of scale.
