title: Förslag till rådets direktiv om ändring av direktiv 70/524/EEG om fodertillsatser och direktiv 95/69/EG om villkor och föreskrifter för godkännande och registrering av vissa anläggningar och mellanhänder inom fodersektorn och om ändring av direktiven 70/524/EEG, 74/63/EEG, 79/373/EEG och 82/471/EEG

text: EUROPEISKA GEMENSKAPERNAS KOMMISSION Bryssel den 08. 04. 1998 KOM(1998) 216 slutlig 98/0131 (CNS) Förslag till RÅDETS DIREKTIV om ändring av direktiv 70/524/EEG om fodertillsatser och direktiv 95/69/EG om villkor och föreskrifter för godkännande och registrering av vissa anläggningar och mellanhänder inom fodersektorn och om ändring av direktiven 70/524/EEG, 74/63/EEG, 79/373/EEG och 82/471/EEG (framlagt av kommissionen) Motivering Enligt bestämmelserna i direktiv 70/524/EEG om fodertillsatser (artikel 6. 2)1 och direktiv 95/69/EG om villkor och föreskrifter för godkännande och registrering av vissa anläggningar och mellanhänder inom fodersektorn och om ändring av direktiven 70/524/EEG, 74/63/EEG, 79/373/EEG och 82/471/EEG (artikel 14)2 skall rådet på förslag av kommissionen fastställa storleken på de avgifter som tas ut för godkännande av vissa tillsatser och anläggningar. Under diskussioner med medlemsstaterna har det visat sig finnas stora åsiktsskillnader vad gäller fastställandet av bestämmelser för beräkning av avgifternas storlek. Detta beror dels på skillnaderna mellan olika medlemsstaters sätt att finansiera de berörda tjänsterna, dels på vilken betydelse som läggs i begreppet "allmännyttiga tjänster". Vissa medlemsstater anser att de berörda tjänsterna är i allmänhetens intresse och att de därför bör utföras utan avgift. Kontrollorganens särskilda struktur och nödvändigheten av att bevara deras självständighet har också lagts fram av vissa medlemsstater som argument mot fasta belopp för avgifterna. För övrigt kan tiden för och typen av tjänster kan variera avsevärt. Om man väljer fasta belopp bör dessa därför anpassas efter typen av godkännande och efter vilken grupp av tillsatser det kontrollerade ämnet tillhör. För enkelhetens skull, och för att följa proportionalitetsregeln, föreslår kommissionen att bestämmelserna i direktiv 70/524/EEG och direktiv 95/69/EG ändras så att rådet endast fastställer regler för beräkning av avgifterna men inte fastställer beloppen. Förslaget har ingen inverkan på Gemenskapens budget. Det är enbart baserat på Gemenskapens kompetens. 1 EGT L 270, 14. 12. 1970, s. 1, senast ändrat genom 2EGTL332,30. 12. 1995,s. 15. Förslag till RÅDETS DIREKTIV. /. /EG av den om ändring av direktiv 70/524/EEG om fodertillsatser och direktiv 95/69/EG om villkor och föreskrifter för godkännande och registrering av vissa anläggningar och mellanhänder inom fodersektorn och om ändring av direktiven 70/524/EEG, 74/63/EEG, 79/373/EEG och 82/471/EEG EUROPEISKA UNIONENS RÅD HAR ANTAGIT DETTA DIREKTIV med beaktande av Fördraget om upprättandet av Europeiska gemenskapen, särskilt artikel 43 i detta, med beaktande av kommissionens förslag1, med beaktande av Europaparlamentets yttrande2, med beaktande av Ekonomiska och sociala kommitténs yttrande3, och med beaktande av följande: I artikel 14 i rådets direktiv 95/69/EG av den 22 december 1995 om villkor och föreskrifter för godkännande och registrering av vissa anläggningar och mellanhänder inom fodersektorn och om ändring av direktiven 70/524/EEG, 74/63/EEG, 79/373/EEG och 82/471/EEG4, föreskrivs att rådet skall fastställa storleken på de avgifter som skall tas ut för godkännande av vissa anläggningar och mellanhänder. 1 2 3 4 EGT. EGT. EGT. EGT L 332, 30. 12. 1995, s. 15. I artikel 6 i rådets direktiv 70/524/EEG av den 23 november 1970 om fodertillsatser5, senast ändrat genom direktiv 97/72/EG, föreskrivs att den medlemsstat som fungerar som rapportör får ta ut en avgift för att undersöka akter med dokumentation i samband med registrering på gemenskapsnivå av tillsatser i foder. Avgiftens storlek fastställs av rådet. En undersökning av hur dessa tjänster finansieras i olika medlemsstater har visat att ett fastställande av avgifternas storlek på gemenskapsnivå skulle utgöra ett alltför omfattande ingrepp i de befintliga systemen för medlemsstaternas uttag av avgifter. De kostnader som olika medlemsstater har i samband med tillhandahållandet av dessa tjänster varierar dessutom starkt, framför allt pä grund av de stora skillnaderna i arbetskostnader. För att undvika att konkurrensen snedvrids bör det i alla fall föreskrivas att rådet fattar beslut om harmoniserade bestämmelser för beräkningen av avgiftsnivåer. De relevanta bestämmelserna i direktiven 70/524/EEG och 95/69/EG bör ändras i enlighet med detta. HÄRIGENOM FÖRESKRIVS FÖLJANDE. Artikel 1 1. Artikel 6. 2 i direktiv 70/524/EEG skall ändras på följande sätt: "Rådet skall före den 1 oktober 1999 med kvalificerad majoritet och på förslag från kommissionen anta bestämmelser för beräkningen av storleken på de avgifter som avses i punkt 1. " 5 EGTL270, 14. 12. 1970, s. 1. 2. Artikel 14 i direktiv 95/69/EG skall ändras på följande sätt: "Rådet skall före den 1 april 1998 med kvalificerad majoritet och på förslag från kommissionen anta bestämmelser för beräkningen av storleken på de avgifter som skall tas ut för godkännande av anläggningar och mellanhänder. " Artikel 2 1. Medlemsstaterna skall sätta i kraft de lagar och andra författningar som är nödvändiga för att följa detta direktiv senast den [31 mars 1998]. De skall genast underrätta kommissionen om detta. När en medlemsstat antar dessa bestämmelser skall de innehålla en hänvisning till detta direktiv eller åtföljas av en sådan hänvisning när de offentliggörs. Närmare föreskrifter om hur hänvisningen skall göras skall varje medlemsstat själv utfärda. 2. Medlemsstaterna skall underrätta kommissionen om de viktigaste nationella bestämmelser som de antar inom det område som omfattas av detta direktiv Artikel 3 Detta direktiv träder i kraft den tjugonde dagen efter det att det har offentliggjorts i Europeiska gemenskapernas officiella tidning. Artikel 4 Detta direktiv riktar sig till medlemsstaterna. Utfärdat i den På rådets vägnar ISSN 1024-4506 KOM(98) 216 slutlig DOKUMENT SV 03 09 15 05 Katalognummer : CB-CO-98-233-SV-C ISBN 92-78-33114-7 Byrån för Europeiska gemenskapernas officiella publikationer L-2985 Luxemburg


title: 98/283/EG: Beschikking van de Commissie van 8 april 1998 houdende wijziging van Beschikking 92/469/EEG tot toelating van methoden voor de indeling van geslachte varkens in Denemarken (Slechts de tekst in de Deense taal is authentiek)

eurovoc_concepts:
Denmark
carcase
classification
meat processing industry
swine

formats: html pdf print

text: L 128/68 NL Publicatieblad van de Europese Gemeenschappen 30. 4. 98 II (Besluiten waarvan de publicatie niet voorwaarde is voor de toepassing) COMMISSIE BESCHIKKING VAN DE COMMISSIE van 8 april 1998 houdende w¶ziging van Beschikking 92/469/EEG tot toelating van methoden voor de indeling van geslachte varkens in Denemarken (Slechts de tekst in de Deense taal is authentiek) (98/283/EG) DE COMMISSIE VAN DE EUROPESE GEMEENSCHAPPEN, Overwegende dat de in deze beschikking vervatte maatre- gelen in overeenstemming z¶n met het advies van het Comit(cid:130) van beheer voor varkensvlees, Gelet op het Verdrag tot oprichting van de Europese Gemeenschap, Gelet op Verordening (EEG) nr. 3220/84 van de Raad van 13 november 1984 tot vaststelling van het communautaire indelingsschema voor geslachte varkens (1), laatstel¶k gew¶zigd b¶ Verordening (EG) nr. 3513/93 (2), en met name op artikel 5, lid 2, Overwegende dat de Commissie b¶ Beschikking 92/ 469/EEG (3), laatstel¶k gew¶zigd b¶ Beschikking 96/551/ EG (4), verschillende methoden voor de indeling van geslachte varkens in Denemarken heeft goedgekeurd; Overwegende dat b¶ de toepassing van de b¶ de laatste w¶ziging van Beschikking 92/469/EEG ten behoeve van de „Unifom-methode” ingevoerde nieuwe formule voor de berekening van het magervleesaandeel van geslachte dieren is gebleken dat deze formule bepaalde gebreken vertoont wat de precisie van de schattingen betreft; dat derhalve moet worden toegestaan dat een gecorrigeerde formule wordt gebruikt; HEEFT DE VOLGENDE BESCHIKKING GEGEVEN: Artikel 1 De formule in deel 3, punt 3, van de b¶lage b¶ Beschik- king 92/469/EEG wordt vervangen door: „yˆ = 68,386166 – 0,1240656 x1 – 0,8717984 x2 + ”. 0,1088299 x3 Artikel 2 Deze beschikking is gericht tot het Koninkr¶k Dene- marken. Gedaan te Brussel, 8 april 1998. Voor de Commissie Franz FISCHLER Lid van de Commissie (1) PB L 301 van 20. 11. 1984, blz. 1. (2) PB L 320 van 22. 12. 1993, blz. 5. (3) PB L 265 van 11. 9. 1992, blz. 39. (4) PB L 236 van 18. 9. 1996, blz. 49


title: ENERGIE : monatliche Statistiken. 3/1998.,ENERGY : monthly statistics. 3/1998.,ÉNERGIE : statistiques mensuelles. 3/1998.

eurovoc_concepts:
coal
electrical energy
hydrocarbon
statistics


title: PREGUNTA ESCRITA n. 1107/98 del Panayotis LAMBRIAS a la Comisión. Aceleración del procedimiento de examen de los asuntos de incumplimiento del Derecho comunitario

eurovoc_concepts: conciliation procedure (part of ordinary legislative procedure)

text: 22. 12. 98 ES Diario Oficial de las Comunidades Europead C 402/75 (98/C 402/092) PREGUNTA ESCRITA E-1107/98 de Panayotis Lambrias (PPE) a la Comisi(cid:243)n (8 de abril de 1998) Asunto: Aceleraci(cid:243)n del procedimiento de examen de los asuntos de incumplimiento del Derecho comunitario El Parlamento Europeo, algunas organizaciones profesionales y organizaciones no gubernamentales han pedido a la Comisi(cid:243)n que acelere el estudio de los casos de incumplimiento del Derecho comunitario. A pesar de las medidas que hasta el momento ha adoptado la Comisi(cid:243)n, el ritmo de tramitaci(cid:243)n es insatisfactorio lo que ha provocado peticiones leg(cid:237)timas de indemnizaci(cid:243)n de las partes afectadas. ¿Puede indicar la Comisi(cid:243)n quØ medidas tiene intenci(cid:243)n de adoptar para: 1. 2. limitar a un periodo de tiempo concreto el procedimiento de conciliaci(cid:243)n con el Estado miembro supuestamente culpable de infracci(cid:243)n antes de que se empiece a aplicar el art(cid:237)culo 169 del Tratado UE; y establecer claramente el plazo mÆximo para la respuesta o reacci(cid:243)n del Estado miembro tras el env(cid:237)o de la carta de emplazamiento, el dictamen motivado o la notificaci(cid:243)n del recurso al Tribunal de Justicia Europeo? Respuesta dada por el Sr. Santer en nombre de la Comisi(cid:243)n (15 de mayo 1998) La Comisi(cid:243)n considera prioritaria su misi(cid:243)n de guardiana de los Tratados y hace todo lo posible la mejorar el funcionamiento del procedimiento previsto por el art(cid:237)culo 169 del Tratado CE. Tal y como se indica en XIV Informe sobre el control de la aplicaci(cid:243)n del Derecho Comunitario (1), ha establecido una serie de medidas internas para acelerar el procedimiento de infracci(cid:243)n previsto por el art(cid:237)culo 169. As(cid:237) cuando la Comisi(cid:243)n recibe una queja trata de tomar una decisi(cid:243)n sobre el fondo, es decir, el env(cid:237)o de notificaci(cid:243)n o cierre del expediente, en el plazo de un aæo. Para respetar este plazo ha reducido drÆsticamente el intercambio de correspondencia preliminar con el Estado miembro, antes de la apertura del procedimiento de infracci(cid:243)n. Se procura tambiØn evitar que las reuniones de conciliaci(cid:243)n con los Estados miembros no sirvan para demorar el procedimiento. Como se indicarÆ en el XV Informe sobre el control de la aplicaci(cid:243)n del Derecho Comunitario, que se presentarÆ en breve al Parlamento, estas medidas han llevado a una aceleraci(cid:243)n de la tramitaci(cid:243)n de los asuntos. Por otra parte, la Comisi(cid:243)n concede, en principio, un plazo de dos meses en sus env(cid:237)os de notificaci(cid:243)n. Un dictamen motivado no concede un plazo de respuesta al Estado miembro pero prevØ un periodo en el que se le pide que ponga fin a la infracci(cid:243)n constatada. En los casos urgentes, este plazo es de un mes e incluso 15 d(cid:237)as. En la prÆctica la Comisi(cid:243)n aplica cada vez mÆs estrictamente este plazo. (1) COM(97)299 final. (98/C 402/093) PREGUNTA ESCRITA E-1115/98 de Hartmut Nassauer (PPE) a la Comisi(cid:243)n (8 de abril de 1998) Asunto: Partida presupuestaria B-4113 › Programa de integraci(cid:243)n para los refugiados; Informe sobre la ejecuci(cid:243)n y selecci(cid:243)n de proyectos en 1997, Anexo I: relaci(cid:243)n de los proyectos subvencionados En el Anexo I del Informe sobre la ejecuci(cid:243)n y selecci(cid:243)n de proyectos en 1997 en relaci(cid:243)n con la partida presupuestaria B-4113 (Programa de integraci(cid:243)n para los refugiados) se presenta una relaci(cid:243)n de los proyectos elegidos para subvenci(cid:243)n en 1997. La relaci(cid:243)n de los proyectos 10 a 24 de los seleccionados en Alemania motiva las siguientes preguntas: ¿QuØ importes se han pagado para los distintos proyectos? ¿A quØ se ha destinado cada una de las subvenciones?


title: 98/284/CE: Decisione della Commissione dell'8 aprile 1998 che modifica la decisione 87/293/CEE relativa all'autorizzazione di metodi di classificazione delle carcasse di suino in Irlanda (Il testo in lingua inglese è il solo facente fede)

eurovoc_concepts:
Ireland
carcase
classification
meat processing industry
swine

text: 30. 4. 98 IT Gazzetta ufficiale delle Comunit(cid:133) europee L 128/69 DECISIONE DELLA COMMISSIONE dell’8 aprile 1998 che modifica la decisione 87/293/CEE relativa all’autorizzazione di metodi di classificazione delle carcasse di suino in Irlanda (Il testo in lingua inglese (cid:138) il solo facente fede) (98/284/CE) LA COMMISSIONE DELLE COMUNIT(cid:211) EUROPEE, HA ADOTTATO LA PRESENTE DECISIONE: visto il trattato che istituisce la Comunit(cid:133) europea, Articolo 1 visto il regolamento (CEE) n. 3220/84 del Consiglio, del 13 novembre 1984, che determina la tabella comunitaria di classificazione delle carcsse di suino (1), modificato da ultimo dal regolamento (CE) n. 3513/93 (2), in particolare l’articolo 5, paragrafo 2, considerando che con la decisione 87/293/CEE (3), modi- ficata da ultimo dalla decisione 94/362/CE (4) la Commis- sione ha autorizzato dei metodi di classificazione delle carcasse di suino in Irlanda; considerando che il governo irlandese ha chiesto alla Commissione di autorizzare l’applicazione di nuove formule per il calcolo del tenore di carne magra della carcassa nel quadro dei metodi di classificazione previsti dalla decisione 87/293/CEE; considerando che le misure previste dalla presente deci- sione sono conformi al parere del comitato di gestione per le carni suine, La decisione 87/293/CEE (cid:138) modificata come segue: 1) La formula di cui al punto 3 della parte 1 dell’allegato I (cid:138) sostituita dalla seguente: «yˆ = 60,91 – 0,839 x1 ». + 0,150 x 2 2) La formula di cui al punto 3 della parte 2 dell’allegato I (cid:138) sostituita dalla seguente: «yˆ = 60,30 – 0,847 x1 +0,147 x 2 ». Articolo 2 L’Irlanda (cid:138) destinataria della presente decisione. Fatto a Bruxelles, l’8 aprile 1998. Per la Commissione Franz FISCHLER Membro della Commissione (1) GU L 301 del 20. 11. 1984, pag. 1. (2) GU L 320 del 22. 12. 1993, pag. 5. (3) GU L 146 del 6. 6. 1987, pag. 66. (4) GU L 159 del 28. 6. 1994, pag. 61


title: 98/322/EC: Commission Recommendation of 8 April 1998 on interconnection in a liberalised telecommunications market (Part 2 - Accounting separation and cost accounting) (Text with EEA relevance)

eurovoc_concepts:
accounting system
liberalisation of the market
systems interconnection
telecommunications
telephone charges
transmission network

text: L 141/6 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98 II (Acts whose publication is not obligatory) COMMISSION COMMISSION RECOMMENDATION of 8 April 1998 on interconnection in a liberalised telecommunications market (Part 2 — Accounting separation and cost accounting) (Text with EEA relevance) (98/322/EC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Directive 97/33/EC of the European Parliament and of the Council of 30 June 1997 on inter- connection in telecommunications with regard to en- suring universal service and interoperability through the application of the principles of open network provision (ONP) (1), and in particular Article 7(5) thereof, Whereas Directive 97/33/EC gives national regulatory authorities for telecommunications (NRAs) an important role in securing adequate interconnection of networks, in accordance with Community law, taking into account recommendations laid down by the Commission so as to facilitate the development of a genuine European home market; whereas, in particular, Article 7(5) of Directive 97/33/EC requires the Commission to draw up recom- mendations on cost accounting systems and accounting separation; Whereas Article 7(2) of Directive 97/33/EC requires that certain organisations notified by their NRA as having significant market power (hereinafter referred to as ‘noti- fied operators’) should follow the principles of trans- parency and cost orientation for interconnection charges; Whereas Article 8(2) of Directive 97/33/EC requires noti- fied operators to keep separate accounts for, on the one their activities hand, related to interconnection — covering both interconnection services provided internally and interconnection services provided to others — and, on the other hand, other activities, so as to identify all elements of cost and revenue, with the basis of their calculation and the detailed attribution methods used, related to their interconnection activity, including an itemised breakdown of fixed asset and structural costs; the Commission in its Whereas recommendation 98/195/EC of 8 January 1998 (2) on interconnection in a liberalised telecommunications market (Part 1 — Inter- connection pricing) considers that the most appropriate approach to interconnection pricing is one based on forward-looking long-run average incremental costs, since this is the most compatible with a competitive market; whereas this approach does not preclude the use of justi- fied ‘mark-ups’ as a means of recovering such forward- looking joint and common costs of an efficient operator as would arise under competitive conditions; incremental long-run average Whereas an approach to interconnection pricing based on costs forward-looking entails an accounting system based on current costs rather than historic costs; whereas the Commission has recom- mended Member States (in the recommendation of 8 January 1998) to set deadlines for the implementation by their notified operators of new accounting systems based on activity based costing; whereas although the bottom-up (1) OJ L 199, 26. 7. 1997, p. 32. (2) OJ L 73, 12. 3. 1998, p. 42. 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/7 economic/engineering models are becoming highly sophisticated, they are as yet imperfect, and thus recon- ciliation of top-down and bottom-up approaches is ad- vised for the foreseeable future; whereas, in particular, transparency is required in respect of cost-accounting of operators providing both fixed networks and mobile telecommunication networks; Whereas Article 7(5) of Directive 97/33/EC requires NRAs to ensure that a description of the cost-accounting system, showing the main categories under which costs are grouped and the rules used for the allocation of costs to interconnection, is made available on request to in- terested parties; whereas allocation methods need to be displayed at a level of detail that makes clear the relation- ship between costs and charges of networks components and services (that is to say, usage factors); whereas the basis on which unattributable costs have been allocated between different accounts also needs to be provided; whereas compliance with the cost accounting system has to be verified by the national regulatory authority or some other competent body, independent of the telecommun- ications organisation and approved by the NRA; whereas a financial statement concerning compliance has to be published annually; Whereas Articles 12(1) and 13(1) of Directive 95/62/EC of the European Parliament and of the Council of 13 December 1995 on the application of open network provision (ONP) to voice telephony (1) requires tariffs for use of the fixed public telephone network and the voice telephony service to follow the basic principles of cost orientation and transparency, including the implementa- tion by notified operators of a suitable cost accounting system for this purpose; whereas contributions by inter- connected-parties to ‘access deficit’ type schemes are only permissible when tariff constraints are imposed by NRAs on the grounds of affordability and accessibility of tele- phone service in accordance with Article 12(2) of Dir- ective 95/62/EC; whereas the Commission, in its com- munication of 27 November 1996 on assessment criteria for national schemes for the costing and financing of universal service in telecommunications and guidelines for the Member States on operation of such schemes (2), believes that such schemes should disappear by 1 January 2000; services (5) telecommunications Whereas Article 2 of Commission Directive 95/51/EC of 18 October 1995 amending Directive 90/388/EEC with regard to the abolition of the restrictions on the use of cable television networks for the provision of already liberalised requires Member States to ensure accounting transparency and to prevent discriminatory behaviour where an operator having an exclusive right to provide public telecommun- ications network infrastructure also provides cable TV network infrastructure, and in particular to ensure the separation of financial accounts as concerns the provision of each network and its activity as provider of telecom- munication services; whereas under Article 8(1) of Dir- ective 97/33/EC notified operators which have special or exclusive rights for the provision of services in other sectors (cable or satellite TV broadcasting) are required to keep separate accounts of telecommunication activities and the others, to the extent that would be required if the telecommunications activities in question were carried out by legally independent companies or to have structural separation of telecommunication activities and other activities. public providing Whereas Article 8(3) of Directive 97/33/EC requires organisations telecommunications networks and/or publicly available telecommunication services to supply financial information to their NRA promptly on request and to the level of detail required; whereas NRAs may publish such information as would contribute to an open and competitive market, while taking account of considerations of commercial confiden- tiality; Whereas the application of the principles of this recom- the mendation is without prejudice to the duty of Member States and of undertakings to comply fully with the Community competition rules, taking account of the specific positions set out in the communication from the Commission on the application of the competition rules to access agreements in the telecommunications sector (6); Whereas Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecommunica- tions services (3), as amended by Directive 96/2/EC (4), requires Member States to ensure effective competition between operators competing in the relevant markets; Whereas the advisory committee set up by Article 9(1) of Council Directive 90/387/EEC (7) (‘the ONP Committee’) has given broad support to the principles contained in this recommendation, and the Commission has taken utmost account of the views expressed, (1) OJ L 321, 30. 12. 1995, p. 6. (2) COM(96) 608. (3) OJ L 192, 24. 7. 1990, p. 10. (4) OJ L 20, 26. 1. 1996, p. 59. (5) OJ L 256, 26. 10. 1995, p. 49. (6) OJ C 76, 11. 3. 1997, p. 9. (7) OJ L 192, 24. 7. 1990, p. 1. L 141/8 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98 MAKES THE FOLLOWING RECOMMENDATION: 1. This recommendation concerns the implementation of accounting separation and cost accounting systems by operators designated by their NRA as having significant market power (hereinafter referred as ‘noti- in accordance with Article 8(2) of fied operators’) Directive 97/33/EC for implementation of intercon- nection obligations, with particular regard to the prin- ciples of transparency and cost orientation. Further disaggregated accounts within these broad business lines may be considered appropriate by NRAs, regard being had to transparency and compet- itive requirements demanded by national or Com- munity law (such as mobile, cable TV or international activities). 3. It is recommended that the allocation of costs, capital employed and revenue be done in accordance with the principle of cost causation (such as activity-based costing (ABC)). The purpose of accounting separation is to provide an analysis of information derived from the accounting records to reflect as closely as possible the per- formance of parts of they had operated as separate businesses. the business as if The costing system of the notified operators need to be sufficiently detailed to permit — as far as possible — the allocation of costs to unbundled network components, in particular to determine the cost of unbundled interconnection services. 2. It is recommended that NRAs require from their notified operators the disaggregation of their oper- ating costs, capital employed and revenues, into at least the following broad business lines: A well defined cost-allocation system will enable at least 90 % of the costs to be allocated on the basis of direct or indirect cost-causation (2). Core network (switched infrastructure) The core network covers the provision of intercon- nection services, transit services and carrier’s carrier services. Local access network (local loop infrastructure) The local access network covers the provision of connections to the telephony network (1). Retail The retail business covers the activities mainly related fixed telephony to the commercial provision of services and leased lines to end users. Separate accounts may be prepared for each activity within retail that is subject to regulation (such as leased lines or telephony). Other activities ‘Other activities’ covers other activities provided by the notified operator which may include unregulated activities as well as other type of regulated activities. Accounts for regulated and unregulated activities need to be kept separate. Section 1 of the Annex defines the scope of each business. Transfer charges between businesses are identified in Section 2. (1) This will include those components of the network which are not traffic sensitive and are dedicated to a particular customer including, for example, the local loops and the line cards and ports located at concentrators and/or exchanges. It is recommended that unattributable costs (the cost which can only be attributed on an arbitrary basis) be clearly identified in a specific account and be the subject of a specific treatment by the NRA (that is, they should be distributed according to the rules determined by each Member State, in accordance with the Community’s competition rules and in compliance with the principles of transparency and proportionality). It is recommended that the NRA undertakes a public consultation with market players on the adoption of sound allocation methods and on the specific treat- ment to be given to unattributable costs. Section 3 of the Annex outlines the recommended principles for allocating costs, capital employed and revenues when preparing separate accounts. Section 4 of the Annex provides guidance on the application of those principles to the calculation of operating costs, including depreciation; Section 5 does the same for the cost of capital and capital employed, and Section 6 on revenues. 4. In the recommendation of 8 January 1998, NRAs were recommended to set deadlines for their notified operators’ implementation of new cost accounting systems based on current costs. (2) Directly attributable costs are those costs that can be directly and unambiguously related to a product or service. Indirectly attributable costs are those costs that can be apportioned to products or services on a measured non-arbitrary basis based on the relationship of the costs with directly attributable costs (i. e. using usage factors for each consuming shared resources). 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/9 7. It is relevant recommended that NRAs make accounting information from notified operators av- ailable on request to interested parties at a sufficient level of detail to ensure that there has been no undue services discrimination between the provision of internally and those provided externally, and to enable the average costs of unbundled interconnec- tion services to be identified. respect, the publication by the notified In this operator of statements sufficiently detailed cost showing the average cost of network components will increase transparency and raise confidence on the part of competitors, that there are no anti-competitive cross-subsidies. This is considered to be particularly important for cross-border interconnection services and international activities. to finance universal In addition, for those Member States that operate service obligations schemes and/or access deficit contributions, it is also recom- mended that NRAs make available sufficient ac- counting information from notified operators to there is no discrimination between ensure that charges levied on other operators and those levied (implicitly) internally. 8. These accounting guidelines are concerned with regu- latory reporting and they are not intended as a re- placement for any statutory financial reporting that may be required in the Member State. 9. This recommendation will be reviewed by the Commission by 31 July 1999 at the latest. 10. This recommendation is addressed to the Member States. Done at Brussels, 8 April 1998. For the Commission Martin BANGEMANN Member of the Commission It is recommended that the methodology and criteria for the evaluation of network assets at current value is fixed by the NRA after a public consultation with market players. Evaluation of network assets at forward-looking or current value of an efficient operator, that is, at the value that would prevail if the market were vigorously competitive, is a key element of the ‘current cost (CCA) methodology. This requires that accounting’ the depreciation charges included in the operating costs be calculated on the basis of current valuations of equivalent assets, and consequently the reporting on the capital employed also needs to be on a current cost basis. The Appendix of the Annex provides guidance on modern asset valuation and current cost adjustment methodologies. 5. With regard to the derivation of interconnection pricing, NRAs may require efficiency factors to be applied in recognition of the fact that the use of CCA values for the network may not fully reflect the costs of an efficient operator (1). To this end the ‘best prac- tice interconnection charges’ as provided in the recommendation of 8 January 1998 constitute a suitable point of reference. 6. It is recommended that operators required to report accounting separation provide a profit and loss state- ment and balance sheet for each of the separate busi- nesses. Transfer charges or purchases between busi- nesses need to be clearly identified. The recommended content and formats of the finan- cial regulatory reports to be provided by the notifed operators are indicated in Section 7 of the Annex. For consistency, it is recommended that the financial reports of these separate regulatory accounts be consolidated into a profit and loss statement and a balance sheet for the company as a whole. A recon- ciliation of the separate regulatory accounts to the statutory accounts of the operator is also suggested. (1) Some of the assets may be in excess of requirements or net- work architecture may be sub-optimal. Implementation of a bottom-up economic/engineering model will help provide in- formation about these inefficiencies. L 141/10 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98 ANNEX GUIDELINES ON IMPLEMENTING ACCOUNTING SEPARATION 1. Accounting separation 1. 1. Local access network Local access network provides connections to the core networks. The accounts for the local access network business will include the costs and capital employed associated with providing and maintaining these connections. For accounting separation, the local access network business will include all the customer-dedicated com- ponents of the network including, for example, the line cards and ports located at concentrators and/or exchanges. The core network business will include all other network components. Customer line rental will be a service provided by the retail business. The revenue from line rental provided to end users will therefore be recorded against retail. However, line rental revenue from unbundled local loops where these are made available to other market players will need to be assigned to local access network business. Thus, the cost of providing customer lines will initially be recorded against the local access network business and there will need to be a transfer of costs to retail in order to match revenues with their associated costs. The costs transferred to retail should be net of any possible local access revenue such as line rental revenue from other market players or access deficit contributions (see Section 2. 2). 1. 2. Core network The core network business provides a range of wholesale interconnection services internally and externally in order to allow the customer of one operaor to communicate with customers of the same or another operator, or to access services provided by another operator. These services include the switching and conveyance of calls. In addition, the core network business may provide other services to operators, such as engineering services related to the development and maintenance of private networks and to the development of com- petition (e. g. number portability and carrier selection). The accounts for the core network business will include the costs, revenues and capital employed associated with the provision of these services. The revenues of the core network business will derive principally from the sale of interconnection services to the retail business and to other operators. If national regulation permits wholesale provision of transmission circuits, the associated revenues should be booked to the core network business. 1. 3. Retail The retail business includes all those activities involving the selling of telephony services to end-users, in- cluding line rental, leased lines, calls, payphones and the provision of directory information. The accounts for the retail business will include the costs, revenues and capital employed associated with the provision of these services to end users. The costs allocated to retail will include transfer charges related to the use of network resources or services provided by local access network and the core network businesses, and the marketing and billing costs associated with the provision of end user services. NRAs will need to consider the extent to which the retail accounts should be further disaggregated to distin- guish between the costs and revenues of individual services taking into account the transparency require- ments of national and Community law. Separate accounts should be prepared for each activity within retail that is subject to regulation. It would not, however, be appropriate to require separate accounts to be prepared for activities that are not subject to regulatory control (1). (1) In principle, the extent to which separate accounts are prepared for individual retail activities may be expected to diminish over time as the provision of services becomes more competitive. 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/11 1. 4. Other activities Incumbent operators typically provide a wide range of other services including the rental, repair and main- tenance of customer equipment. In addition, they may have interests in non-telecommunications activities (e. g. TV broadcasting). For the purposes of accounting separation, the costs, revenues and capital employed associated with these activities will be separately identified. NRAs may consider that individual accounts should be prepared for some of these additional activities. This may be especially relevant for those incumbent operators that do not operate their mobile activities as sep- arate businesses. It will be up to individual NRAs to specify the extent to which separate accounts for these activities will be prepared taking into account the transparency requirements of national and Community law. 2. Transfer charges This section of the guidelines sets out the principles to be applied by operators in order to take account of the costs of products or services that are used internally. A system of transfer charges should apply to services and products provided from one business (for example, local access network, core network and retail) to another. There should be a clear rationale for the transfer charges used and each charge should be supportable. Charges should be non-discriminatory and, as discussed in Section 7, there should be transparency of transfer charges in the separate accounts. 2. 1. Measuring internal usage The transfer charges for internal usage should be determined as the product of usage and unit charges. The charge for internal usage should be equivalent to the charge that would be levied if the product or service were sold externally rather than internally. For accounting separation purposes, it should be assumed that an operator’s retail business pays the same interconnection charge for the same service. 2. 2. Access deficit contributions and universal service contributions The Interconnection Directive requires charges for interconnection to be separated from charges related to universal service, including any charges imposed as a result of operators being prevented by NRAs from rebalancing tariffs (i. e. access deficit contributions or ADCs). The Commission has indicated that tariff re- balancing should be completed by 1 January 2000 except in those Member States which have been granted an additional implementation period in accordance with the Full Competition Directive (1). In those Member States that operate access deficit schemes, ADCs should be assigned to the local access network business. ADCs would be recovered from other operators and from the retail business. There should be no discrimination between ADCs charged to retail and ADCs charged to other operators. In those Member States that operate schemes to finance universal service obligations, any contributions — both by other operators and internally — should be separately identified in the accounts. As with ADCs, there should be no discrimination between universal service contributions charged to other operators and contributions charged internally. 3. Principles of cost allocation This section sets out the principles that should be followed in order to allocate costs, capital employed and revenues for the purposes of preparing separate accounts. The application of these principles to operating costs, capital employed and revenues is considered in more detail in Sections 4, 5 and 6 respectively. (1) Source: Communication from the Commission on assessment criteria for national schemes for the costing of universal service in telecommunications and guidelines for the Member States on operation of such schemes, COM(96) 608 final, Brussels, 11 November 1996. L 141/12 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98 These principles may also be relevant to the determination of interconnection charges for unbundled inter- connection services, for which purposes the costing systems of operators will need to be sufficiently detailed to permit — as far as possible — the allocation of costs to unbundled network components. There are, however, a number of additional factors — such as the relevance of costs — that may need to be taken into account when determining charges for specific interconnection services (1). These issues are outside the scope of these guidelines. 3. 1. Principles Accounting separation should be based on the principle of causation: that is, costs (2) and revenues should be allocated to those services or products that cause those costs or revenues to arise. This requires the imple- mentation of appropriate and detailed cost allocation methodologies. In practice, this requires that operators: — review each item of cost, capital employed and revenue, — establish the driver that caused each item to arise, and — use the driver to allocate each item to individual businesses. All allocations may be subject to review by NRAs. Each item of cost and revenue must be allocated to the products and services provided by operators. In the case of revenue, it is anticipated that most, if not all, revenues can be allocated directly to those products or services to which they are related. This is not the case for costs, however, because a relatively high proportion of the costs of operators is shared between different products and services. 3. 2. The methodology for the cost allocation process Figure 1 illustrates a typical cost allocation process. It should be noted that actual allocation processes may vary depending on the entity’s organisational structure and the way(s) in which financial/operating data are captured, and will be considerably more complex and involved than Figure 1 implies. It is important to note, however, that the ultimate aim of allocating costs is the same. The process starts from information and data captured by the general ledger or other costing or financial systems operated by the company. The costing information held by these systems may be divided between operating costs, capital costs and accounting entries such as depreciation. Costs may be attributed either directly to services or to cost pools called network components, related func- tions or other functions. These are defined as follows: Services These are the costs that can be directly identified with particular service. For these purposes, the term ‘service’ refers both to end-user services (e. g. the provision of payphones) and intermediate services (e. g. network services). Network components This pool contains the costs relating to the various components of transmission, switching and other network plant and systems. The costs will be in respect of network components that cannot be attributed directly to a particular service as they are utilised in the provision of a number of services. Related functions This pool contains the costs of functions necessary for the provision of services to the customer such as billing, maintenance, and customer services. Other functions This pool contains the costs of functions that are not related to the provision of particular services but are an important part of the operations of the company. Examples of such costs include planning, personnel and general finance. (1) The nature of which may be expected to change over time in response to changing market requirements. (2) Including operating and capital costs. 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/13 As noted, there are a series of steps which allocate cost pools in a tiered approach to eventually allocate costs to services. These step allocations are performed using appropriate drivers. Each step is summarised below: Step 1 The allocation of other functions across related functions, network elements and services. Step 2 The allocation of the related function costs to services and the network elements. Step 3 The allocation of network components to services. Step 4 The grouping of services into businesses (as defined for the purposes of accounting separation). Each of the allocation steps illustrated above could involve a number of detailed sub-steps, particularly if the initial capture of cost information is at an aggregated level. Where it is possible to perform an allocation via a number of direct or indirect attributions this is preferable to allocation through a single arbitrary step. L 141/14 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98 Figure 1 A typical cost allocation process Operating costs Capital costs Accounting entries e. g. depreciation DATA CAPTURE ALLOCATION Services Network components Related functions Other functions STEP 1 ALLOCATION OF COSTS OF OTHER FUNCTIONS Services Network components Related functions STEP 2 ALLOCATION OF COSTS OF RELATED FUNCTIONS Services Network components STEP 3 ALLOCATION OF COSTS OF NETWORK COMPONENTS Services STEP 4 ALLOCATION OF COSTS OF SERVICES Businesses 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/15 It is anticipated that telecommunications operators will need to use sampling techniques and periodic activity reviews in order to allocate costs (including capital costs) to the services that they provide and, subsequently to the businesses defined for the purposes of accounting separation. For example, periodic analysis of the tasks undertaken by staff in customer call centres may be used to determine the amount of time spent by those staff on different tasks. This information may then be used to allocate — either directly or indirectly — the costs associated with the staff to the services provided by the operator. 4. Operating costs This section of the guidelines considers the application of the principles described in Section 3 to the oper- ating costs, including depreciation, of operators. Application to operating costs The cost allocation process outlined in the previous section relates, in principle, to both operating and capital costs. Table 4. 1 below provides a summary of possible allocation and attribution methods for oper- ating costs under the following headings: — depreciation, — provision, installation and maintenance costs, — network planning and development costs, — network management costs, — marketing and sales costs, — billing and collection costs, — operator services costs, — directory services costs, — payments to other operators, and — support costs. These headings are purely illustrative and are not intended to reflect the way in which operators are expected to record costs. They are intended to provide high-level guidance only. Individual operators will need to develop cost allocation procedures specific to the way in which they currently capture and record costs, and to refine these over time, as appropriate. The final column of Table 4. 1 provides an indication of the principal businesses to which it might be expected that the majority of the operating costs in question would be allocated. L 141/16 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98. 1 4. e l b a T ) 1 ( s t s o c g n i t a r e p o g n i t a c o l l a f o s d o h t e M s s e c c a l a c o l , k r o w t e n e r o C r o d e l l a t s n i t n a l p e h t f o s i s a b e h t n o t n a l p r e h t o / s t n e n o p m o c k r o w t e n o t t c e r i D - n i a m d n a t c a r t n o c , n o i t a l l a t s n I k r o w t e n e l b i s s o p e r e h w d e n i a t n i a m s t s o c e c n a n e t s s e c c a l a c o l , k r o w t e n e r o C d e s a b e t a c o l l a e s i w r e h t o ; e l b i s s o p e r e h w t n a l p r e h t o / s t n e n o p m o c k r o w t e n o t t c e r i D s t s o c l l o r y a P f o n o i t a l l a t s n i d n a n o i s i v o r P k r o w t e n k r o w n o i t a l l a t s n i t u o g n i y r r a c t n e p s e m i t e h t n o t n e m p i u q e k r o w t e n s s e c c a l a c o l , k r o w t e n e r o C e l b i s s o p e r e h w t n a l p r e h t o / s t n e n o p m o c k r o w t e n o t t c e r i D s t s o c r e h t O k r o w t e n k r o w n o i t a l l a t s n i t u o g n i y r r a c t n e p s e m i t e h t n o s s e c c a l a c o l , k r o w t e n e r o C d e s a b e t a c o l l a e s i w r e h t o ; e l b i s s o p e r e h w t n a l p r e h t o / s t n e n o p m o c k r o w t e n o t t c e r i D s t s o c l l o r y a P s t s o c r i a p e r d n a e c n a n e t n i a M s s e c c a l a c o l , k r o w t e n e r o C e l b i s s o p e r e h w t n a l p r e h t o / s t n e n o p m o c k r o w t e n o t t c e r i D s t s o c l a n r e t x e d n a l l o r y a P - p o l e v e d d n a g n i n n a l p k r o w t e N k r o w t e n s t s o c t n e m k r o w t e n e l b i s s o p e r e h w s s e c c a l a c o l , k r o w t e n e r o C , d e g a n a m t n a l p e h t f o s i s a b e h t n o t n a l p r e h t o / s t n e n o p m o c k r o w t e n o t e t a c o l l A s t s o c r e h t O k r o w t e n t n a l p f o e p y t h c a e e g a n a m o t s s e c c a l a c o l , k r o w t e n e r o C f f a t s y b t n e p s e m i t e h t f o s i s a b e h t n o t n a l p r e h t o / s t n e n o p m o c k r o w t e n o t e t a c o l l A s t s o c l l o r y a P s t s o c t n e m e g a n a m k r o w t e N ) 5 n o i t c e S e e s ( s e t a l e r t i h c i h w l l A o t s t e s s a d e x i f e h t f o n o i t a c o l l a e h t w o l l o f d l u o h s n o i t a i c e r p e d f o n o i t a c o l l a e h T n o i t a i c e r p e D n o i t a i c e r p e D s e i t i v i t c a r e h t O ’ s e i t i v i t c a r e h t O ‘ i n h t i w s e c i v r e s t n e m p i u q e r e m o t s u c o t e t a c o l l A t n e m p i u q e f o s e l a s f o t s o C e m i t r u o b a l n o d e s a b l i a t e R s t c u d o r p n e e w t e b e t a c o l l a e s i w r e h t o ; e l b i s s o p e r e h w s e c i v r e s d n a s t c u d o r p o t t c e r i D l l o r y a P s t s o c s e l a s d n a g n i t e k r a M l a p i c n i r P s e s s e n i s u b n o i t a c o l l a f o d o h t e M n o i t p i r c s e D y r o g e t a C t s o c g n i t a r e p o f o l i a t e R e r e h w s t s o c e s o h t r o f , e s i w r e h t O. e l b i s s o p e r e h w s e c i v r e s d n a s t c u d o r p o t t c e r i D e h t o t d e t u b i r t t a e b d l u o h s t s o c , d e t o m o r p r o d e t e k r a m g n i e b e r a s e c i v r e s e l p i t l u m s i s a b e l b a n o s a e r a n o s e c i v r e s d e t a l e r h c r a e s e r t e k r a M s e e f s r o t u b i r t s i D s t s o c r e h t O s n o i t o m o r P y t i c i l b u P e r o c o t s t s o c e m o s ( l i a t e R s t c u d o r p n e e w t e b e t a c o l l a e s i w r e h t o ; e l b i s s o p e r e h w s e c i v r e s d n a s t c u d o r p o t t c e r i D g n i d u l c n i ( s t s o c g n i l l i b r e h t O ) k r o w t e n ) d e c u d o r p s l l i b f o r e b m u n. g e ( e g a s u n o d e s a b ) s t b e d d a b ) k r o w t e n e m i t r u o b a l n o d e s a b s t c u d o r p e r o c o t s t s o c e m o s ( l i a t e R n e e w t e b d e t a c o l l a e s i w r e h t o ; e l b i s s o p e r e h w s e c i v r e s d n a s t c u d o r p o t t c e r i D s t s o c l l o r y a P s t s o c n o i t c e l l o c d n a g n i l l i B 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/17 l a p i c n i r P s e s s e n i s u b n o i t a c o l l a f o d o h t e M n o i t p i r c s e D y r o g e t a C t s o c g n i t a r e p o f o l i a t e R l a r e v e s r o f s k s a t t u o y r r a c t a h t f f a t s f o s t s o c e h T. e l b i s s o p e r e h w s e c i v r e s o t t c e r i D e m i t n o d e s a b s e c i v r e s r o t a r e p o d e t a l e r e h t o t d e t a c o l l a e b d l u o h s s e c i v r e s r o t a r e p o s k s a t t n e r e f f i d n o t n e p s s t s o c l l o r y a P s t s o c s e c i v r e s r o t a r e p O l i a t e R l i a t e R l i a t e R s e c i v r e s d n a s t c u d o r p o t t c e r i D n o i t c e n n o c r e t n i r o f s t n e m y a P s t n e m e e r g a s e c i v r e s d n a s t c u d o r p o t t c e r i D s t s o c r e h t o d n a l l o r y a P s t s o c s e c i v r e s y r o t c e r i D s e c i v r e s d n a s t c u d o r p o t t c e r i D g n i o g t u o r o f s t n e m y a p - t u O c i f f a r t l a n o i t a n r e t n i s r o t a r e p o r e h t o o t s t n e m y a P f f a t s R H f o s t s o c l l o r y a p e h t s a s i s a b e m a s e h t g n i s u d e t a c o l l a d n a n o i t c n u f l l A R H e h t y b n e e s r e v o e r a t a h t f f a t s e h t o t d e t a c o l l a e b d l u o h s s t s o c n o i t c n u f R H s t s o c n o i t c n u f s e c r u o s e r n a m u H s t s o c t r o p p u S l l A l l A l l A e b n e h t n a c s n o i t a c i l p p a o t d e t a c o l l a s t s o C. n o i t a c i l p p a h c a e t r o p p u s o t s r e t u p m o c t r o p p u s y e h t t a h t s e c i v r e s d n a s t c u d o r p e s o h t o t d e t u b i r t t a e h t f o e s u e h t f o s i s a b e h t n o r o t a r e p o e h t y b n u r s n o i t a c i l p p a e h t o t e t a c o l l A s t s o c T I / g n i t u p m o c l a r e n e G ) 5 n o i t c e S e e s ( s g n i d l i u b d n a d n a l s a y a w e m a s e h t n i d e t a c o l l a e b d l u o h s s t s o C t n e r d n a s t s o c g n i d l i u B y l g n i d r o c c a e t a c o l l a s s e n i s u b r o e c i v r e s , t c u d o r p a o t y l l a c i f i c e p s d e t a l e r f I e c i f f o d a e h r e h t o d n a e c n a n i F s n o i t c n u f t r o p p u s. s A R N y b y l e t a r a p e s d e r e d i s n o c t n e m t a e r t r i e h t d n a s r o t a r e p o y b d e i f i t n e d i e b d l u o h s s t s o c e l b a t u b i r t t a n u l a u d i s e R ) 1 ( L 141/18 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98 5. The cost of capital and capital employed Article 7(2) of the Interconnection Directive requires that charges for interconnection be cost-oriented, in- cluding a reasonable return on investment. The determinants of the level of this return are: — the cost of capital, and — a capital value. The calculation and setting of a cost of capital for the purpose of setting interconnection charges is outside the scope of these guidelines. However, there must be consistency between the measure of capital employed on which the cost of capital is based and the measure of capital employed reported in the separate accounts required by the Interconnection Directive. This will enable comparison of the actual percentage returns earned by operators from their regulated activities such as interconnection with the cost of capital allowed by NRAs when reviewing charges for these activities. The need for consistency, and the implications of this for the allocation of items of capital employed, are the focus of this section. 5. 1. Cost of capital The cost of capital of operators should reflect the opportunity cost of funds invested in network components and other related assets. It conventionally reflects the following: — the (weighted) average cost of debt for the different forms of debt held by each operator, — the cost of equity as measured by the returns that shareholders require in order to invest in the network given the associated risks, and — the values of debt and equity. This information can then be used to determine the weighted average cost of capital (WACC) using the following formula: WACC = re. E/(D+E) + rd. D/(D+E) where re is the cost of equity, rd is the cost of debt, E is the total value of equity and D is the total value of interest-bearing debt. The calculation of the WACC for an individual operator in total would be relatively straightforward — notwithstanding that there is scope for discussion about the precise derivation and value of inputs into the WACC formulae. However, NRAs may need to consider whether application of the global cost of capital represented by the WACC is appropriate for the regulated activities of operators. If so, the WACC in total could be used for the purpose of determining interconnection charges. Otherwise, NRAs may take into account that different risks premiums normally apply to different activities, which could be reflected in different costs of equity ‘re’ (1), even if the financial structure is the same. If so, there could be a different WACC for each business line or disaggregated activity such as mobile, cable TV or international services. 5. 2. The WACC and capital value The WACC must be applied to a capital value for network components and other related assets in order to determine the return that needs to be recovered through interconnection charges. While it may be easy to identify the values of debt and equity for an operator as a whole, it is not easy to do so for each of its con- stituent activities. This is because decisions about debt finance are largely corporate decisions determined by (1) Financial economics, and actual investor behaviour, teach that the cost of equity ‘re’ is equal to the cost of risk-free debt plus a risk premium depending on the underlying activity and on the financial market used. Activities with higher com- petition usually carry higher risk. The cost of debt ‘rd’ also varies between activities between companies, but — for a given financial market — not as much as the cost of equity ‘re’. As for the capital structure (E and D), it should also reflect the balance sheet of each main activity. Where there is only one main balance sheet for several activities, it is acceptable to assume the same capital structure for these activities. In this context, the cost of debt ‘rd’ can normally be assumed the same for all activities, unless they have markedly different balance sheets. 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/19 a number of factors, such as historical borrowing facilities and tax planning considerations. Hence, the debt position of the corporation may not relate specifically to the funding requirements of individual activities. An alternative approach to determining the capital value for regulated activities (such as interconnection) is therefore required. One approach is provided by the following balance sheet identity: Shareholders’ funds (i. e. equity) + debt = net assets excluding debt (1). It follows that the capital values of regulated activities can be determined by apportioning net assets or capital employed. This apportionment should be carried out on a causal basis and under current valuation methodologies. 5. 3. Capital employed Table 5. 1 provides a summary of possible allocation methods for different items of capital employed, together with an indication of the principal businesses to which it might be expected that the majority of each item would be allocated. The application of these and, as appropriate, other methods will determine the capital values of different regulated activities, including interconnection. The table is not intended to be an exhaustive list of items that might be classified as capital employed nor of the methods for allocating them to different activities. (1) That is, fixed assets + current assets – creditors (excluding debt) provisions. L 141/20 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98 s e s s e n i s u b l a p i c n i r P n o i t a c o l l a f o d o h t e M n o i t p i r c s e D. 1 5. e l b a T ) 1 ( d e y o l p m e l a t i p a c g n i t a c o l l a f o s d o h t e M d n a s t e s s a f o y r o g e t a C s e i t i l i b a i l s t e s s a e l b i g n a T t n a l p y r a m i r P s e i t i v i t c a r e h t o , k r o w t e n e r o C o t r o n o i t a l u g e r y b d e r i u q e r / e t a i r p o r p p a e r e h w s t n e n o p m o c k r o w t e n e r o c o t t c e r i D l a i c e p s r o f t n e m p i u q e g n i h c t i w S g n i h c t i w s n o i s s i m s n a r t a t a d. g e. — s k r o w t e n r e h t o y b d e d i v o r p s e c i v r e s c i f i c e p s e h t s k r o w t e n s e c i v r e s s e c i v r e s n o i s s i m s n a r t a t a d o t y l t c e r i d d e t a c o l l a e b d l u o h s t n e m p i u q e t n e m p i u q e e h t f o e s u e h t f o s i s a b e h t n o s t n e n o p m o c k r o w t e n k r o w t e n e r o C g n i h c t i w s r e h t o o t e t a c o l l a e s i w r e h t o , e l b i s s o p e r e h w s e c i v r e s k r o w t e n o t t c e r i D t n e m p i u q e g n i h c t i w s r e h t O k r o w t e n e r o C s d n o c e s n o d e s a b e t a c o l l a e s i w r e h t o , e l b i s s o p e r e h w s t n e n o p m o c k r o w t e n o t t c e r i D t n e m p i u q e g n i h c t i w s m e d n a T e s u f o k r o w t e n e r o C s d n o c e s n o d e s a b e t a c o l l a e s i w r e h t o , e l b i s s o p e r e h w s t n e n o p m o c k r o w t e n o t t c e r i D - p i u q e i g n h c t i w s l a n o i t a n r e t n I e s u f o t n e m ) k r o w t e n s s e c c a t n a v e l e r e h t f o s i s a b e h t n o s t n e n o p m o c k r o w t e n o t d n a s e c i v r e s k r o w t e n s s e c c a - d e d s t r a p e h t f o d n a s e n i l r e m o t s u c e d i v o r p o t d e t a c i d e d t n e m p i u q e e h t f o t s o c e b n a c s t n e n o p m o c k r o w t e n h c t i w s l a c o L. y l e v i t c e p s e r , c i f f a r t h c t i w s o t d e t a c i e s u f o s d n o c e s n o d e s a b s e c i v r e s d n a s t c u d o r p o t d e t a c o l l a l a c o l o t s t s o c e m o s ( k r o w t e n e r o C l a c o l o t e t a c o l l a e s i w r e h t O. e l b i s s o p e r e h w s t n e n o p m o c k r o w t e n r o s s e c c a o t t c e r i D t n e m p i u q e g n i h c t i w s l a c o L t n e m p i u q e g n i h c t i w S k r o w t e n s e c i v r e s t n e r e f f i d e d i v o r p o t d e s u e l b a c f o t n u o m a e h t n o d e s a b s t n e n o p m o c e r o C , k r o w t e n s s e c c a l a c o L o t e t a c o l l a e s i w r e h t o , e l b i s s o p e r e h w s t n e n o p m o c k r o w t e n r o s s e c c a o t t c e r i D e r i w d n a e l b a C k r o w t e n s s e c c a l a c o L - p i u q e s s e c c a N D S I e l b a i f i t n e d i y l e t a r a p e s. g e ( e l b i s s o p e r e h w s t c u d o r p o t e g a s u e n i l n o d e s a b s e c i v r e s s s e c c a n e e w t e b e t a c o l l a e s i w r e h t o t c e r i D , ) t n e m t n e m p i u q e p o o l l a c o L k r o w t e n e r o C e h t n o d e s a b e t a c o l l a e s i w r e h t o , e l b i s s o p e r e h w s t n e n o p m o c k r o w t e n o t t c e r i D t n e m p i u q e e t i l l e t a s d n a o i d a R s l e n n a h c f o e g a s u k r o w t e n e r o C e h t n o d e s a b e t a c o l l a e s i w r e h t o , e l b i s s o p e r e h w s t n e n o p m o c k r o w t e n o t t c e r i D n o i s s i m s n a r t e v i t i s n e s - c i f f a r T t n e m p i u q e n o i s s i m s n a r T s t i u c r i c f o e g a s u t n e m p i u q e 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/21 k r o w t e n e r i w d n a e l b a c s a y a w e m a s e h t n i s t c u d o r p e r o C , k r o w t e n s s e c c a l a c o L o t d e t a c o l l a d n a s t r o p p u s t i t a h t e r i w d n a e l b a c e h t o t d e t a c o l l a e b n a c g n i t c u D g n i t c u D e r o c , k r o w t e n s s e c c a l a c o L k r o w t e n o t o t d e t a c o l l a e b n e h t d l u o h s s t e s s A. r u o h r e p s t t a w o l i k s p u o r g t n a l p y r a m i r p t n a v e l e r e h t s a. g e. y a w — t n a l p h c a e t r o p p u s e m a s e h t n i s t c u d o r p t n e m p i u q e r e w o p f o e s u e h t f o s i s a b e h t n o s p u o r g t n a l p y r a m i r p o t e t a c o l l A t n e m p i u q e r e w o P , s e g n a h c x e l a c o l l o r t n o c o t t n e p s e m i t. g e. — t n a l p h c a e t r o p p u s o t s m e t s y s e h t f o o t d e t u b i r t t a e b d l u o h s t s o C. s e g n a h c x e l a n o i t a n r e t n i d n a s e g n a h c x e m e d n a t p u o r g t n a l p y r a m i r p d e t a l e r e h t s a y a w e m a s e h t n i s e c i v r e s d n a s t c u d o r p k r o w t e n e r o C e s u e h t f o s i s a b e h t n o d e d i v o r p s k r o w t e n t n e r e f f i d e h t f o t n a l p y r a m i r p o t e t a c o l l A s m e t s y s t n e m e g a n a m k r o w t e N k r o w t e n e r o C — k r o w t e n e h t y b d e d i v o r p s e c i v r e s N D S I - n o n / N T S P - n o n c i f i c e p s e h t o t t c e r i D r o f t n e m p i u q e n o i s s i m s n a r T s e c i v r e s n o i s s i m s n a r t a t a d o t d e t a c o l l a y l t c e r i d t n e m p i u q e n o i s s i m s n a r t a t a d. g e. s k r o w t e n s e c i v e s l a i c e p s k r o w t e n e r o C e g a s u n o d e s a b e t a c o l l a e s i w r e h t o , e l b i s s o p e r e h w s t n e n o p m o c k r o w t e n o t t c e r i D e l b a c e n i r a m b u s / l a n o i t a n r e t n I s e s s e n i s u b l a p i c n i r P n o i t a c o l l a f o d o h t e M n o i t p i r c s e D d n a s t e s s a f o y r o g e t a C s e i t i l i b a i l s e i t i v i t c a r e h t O l i a t e R t n e m p i u q e s k r o w t e n t n e g i l l e t n i — t n e m p i u q e n o i s s i m s n a r t a t a d — t n e m p i u q e a i d e m i t l u m — s e c i v r e s d n a s t c u d o r p o t t c e r i D t n e m p i u q e s e s i m e r p r e m o t s u C e c i v r e s o t t c e r i D d e t a l e r d n a s e n o h p y a p c i l b u P t n e m p i u q e s e i t i v i t c a r e h t O : e d u l c n i y a m s e l p m a x E. s e c i v r e s t n a v e l e r e h t o t y l t c e r i d d e t a c o l l a k r o w t e n e r o C e b d l u o h s e c i v r e s c i f i c e p s e n o e d i v o r p o t y l e l o s d e s u s i t a h t t n e m p i u q e d n a t n a l P t n a l p k r o w t e n l a i c e p S s t e s s a k r o w t e n y r a m i r p r e h t O t n a l p t r o p p u S e b n e h t n a c s n o i t a c i l p p a o t d e t a c o l l a s t s o C. n o i t a c i l p p a h c a e t r o p p u s o t s r e t u p m o c t r o p p u s y e h t t a h t s e c i v r e s d n a s t c u d o r p e s o h t o t d e t u b i r t t a l l A e h t f o e s u e h t f o s i s a b e h t n o r o t a r e p o e h t y b n u r s n o i t a c i l p p a e h t o t e t a c o l l A s r e t u p m o c l a r e n e G l l A l l A e g a s u n o d e s a b s t n e n o p m o c k r o w t e n d n a s t c u d o r p e h t o t e t a c o l l A s e l c i h e v r o t o M e g a s u n o d e s a b s t n e n o p m o c k r o w t e n d n a s t c u d o r p e h t o t e t a c o l l A t n e m p i u q e e c i f f o d n a e r u t i n r u F t n e n o p m o c k r o w t e n r o e c i v r e s , t c u d o r p h c a e t r o p p u s o t ) e c a p s r o o l f. e. i ( d e i p u c c o l l A e c a p s e h t f o s i s a b e h t n o s t n e n o p m o c k r o w t e n d n a s e c i v r e s , s t c u d o r p o t e t a c o l l A s g n i d l i u b d n a d n a L s t e s s a d e x i f k r o w t e n - n o N L 141/22 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98 s e s s e n i s u b l a p i c n i r P n o i t a c o l l a f o d o h t e M n o i t p i r c s e D d n a s t e s s a f o y r o g e t a C s e i t i l i b a i l A R N e h t h t i w d e e r g a e b o t , s i s a b y r a r t i b r a n a n o d e t a c o l l a e b l l A o t d e e n l l i w s t e s s a e l b a t u b i r t t a n u r o l a u d i s e r y n A. e l b i s s o p e r e h w s t c u d o r p o t t c e r i D s t e s s a d e x i f e l b i g n a t n I s t e s s a d e x i f e l b i g n a t n I : s t n e m t s e v n i t e s s a d e x i F l a t i p a c g n i k r o W s e i t i v i t c a r e h t O s e i t i v i t c a r e h t O ’ s e i t i v i t c a r e h t O ‘ o t t c e r i D s t n e m t s e v n i l a i c n a n i f e r u P ’ s e i t i v i t c a r e h t O ‘ o t t c e r i D - v i t c a d e t a l e r n u n i s t n e m t s e v n I s e i t i l l A d e s a b e t a c o l l a e s i w r e h t o , d e t a l e r e r a s t n e m t s e v n i e h t h c i h w o t e c i v r e s e h t o t t c e r i D s t n e m t s e v n i r e h t O e g a s u n o l l A l a n o i t a r e p o e h t n o d e s a b e t a c o l l a e s i w r e h t o , e l b i s s o p e r e h w s e s s e n i s u b o t t c e r i D - n i ( s t n e m t s e v n i m r e t - t r o h S s s e n i s u b h c a e f o s t n e m e r i u q e r n i d n a k n a b t a h s a c g n i d u l c l l A l l A l l A m e t s y s g n i l l i b n o d e s a b s e c i v r e s d n a s t c u d o r p o t d e t a c o l l a e b y a m s r o t b e d e d a r T n a n o d e t a c o l l a e b o t d e e n l l i w s e c n a l a b e l b a t u b i r t t a n U. e l b i s s o p e r e h w n o i t a m r o f n i A R N e h t h t i w d e e r g a e b o t , s i s a b y r a r t i b r a s e c i v r e s d n a s t c u d o r p o t y l t c e r i d d e t a c o l l a e b d l u o h s s k c o t S s e l b a v i e c e r / s r o t b e d e d a r T ) d n a h s k c o t S f i o t s e c i v r e s d n a s t c u d o r p o t d e n o i t r o p p a e b d l u o h s s e l b a v i e c e r / s r o t b e d r e h t O , s i s a b y r a r t i b r a n a n o d e t a c o l l a e b o t d e e n l l i w s e c n a l a b e l b a t u b i r t t a n U. e l b i s s o p s e l b a v i e c e r / s r o t b e d r e h t O A R N e h t h t i w d e e r g a e b l l A. e l b i s s o p f i s e c i v r e s d n a s t c u d o r p o t y l t c e r i d d e t a c o l l a e b d l u o h s s r o t i d e r c e d a r T e b o t , s i s a b y r a r t i b r a n a n o d e t a c o l l a e b o t d e e n l l i w s r o t i d e r c e d a r t e l b a t u b i r t t a n U s r o t i d e r c e d a r T A R N e h t h t i w d e e r g a l l A l l A t n u o c c a o t n i n e k a t e b d l u o h s s e i t i l i b a i l e g a r e v a d a e t s n I. d e r i u q e r n o i t a c o l l a o N - i v i d d n a n o i t a x a t r o f s e i t i l i b a i L - t r o h S ‘ e e s ( s s e n i s u b h c a e f o s t n e m e r i u q e r h s a c l a n o i t a r e p o e h t g n i r e d i s n o c n e h w s d n e d ) ’ s t n e m t s e v n i m r e t n o i t s e u q n i s n o i s i v o r p e h t o t e s i r e v i g t a h t s e i t i v i t c a e h t o t t c e r i D s n o i s i v o r p m r e t g n o L. s A R N y b y l e t a r a p e s d e r e d i s n o c t n e m t a e r t r i e h t d n a s r o t a r e p o y b d e i f i t n e d i y l l a c i f i c e p s e b d l u o h s s t s o c e l b a t u b i r t t a n u l a u d i s e R ) 1 ( 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/23 For price-setting purposes, NRAs and operators will be concerned with average capital employed during any period rather than with capital employed at a single point in time such as the financial year end. This is because a ‘snap-shot’ at any point in time may not be representative of the average level of capital employed by operators. Specifically, working capital balances at a single point in time may not be representative of average working capital requirements over an extended period. The separate accounts of operators should therefore show average capital employed, rather than year-end balances (see Section 7). 5. 4. The need for consistency in the treatment of working capital Table 5. 1 proposes one approach to the treatment of working capital in the calculation of capital employed. There are, however, other approaches which may be equally valid. In practice, there are two principles that ought to be applied when considering the treatment of individual items of working capital for the purposes of separate accounting (1). They are as follows: — there should be consistency between the treatment of assets and their associated costs and revenues, and — inclusion or exclusion of individual items ought, in principle, to have a corresponding impact on the WACC. These two effects (i. e. the decision to include or exclude items and the corresponding adjustment to the WACC) offset each other in terms of their overall effect on the absolute return required by operators. 6. Revenue Section 3 set out some principles for the allocation and attribution of costs and revenues to the products and services offered by operators. In this section the application of these principles to revenue is considered. 6. 1. Revenue from core telephony activities It is expected that revenues from the provision of core telephony products and services can be directly allocated to the products and services to which they relate based on accounting records and billing system information. In those cases where direct allocation based on accounting records or billing system data is not possible, revenues should be attributed on the basis of causation. The allocation of revenues from core telephony services between local access network, core network and retail for a fixed telephone network is summarised below (2). Connection charges Charges for establishing new connections to the fixed telephone network (other than for establishing a point of interconnect — see interconnection charges below) should be assigned to retail. Customer line rental charges Line rental charges should be assigned to retail. Revenues from leased lines Revenue from leased lines should be allocated to retail. Revenues from line rental to other operators Where provided to other market players, revenue from line rental of unbundled local loops should be assigned to local access network. Access deficit contributions In those Member States that operate access deficit schemes, access deficit contibutions should be allocated to local access network. (1) The Arthur Andersen report on accounting separation in the context of ONP provides further guidance on the applica- tion of these principles to the treatment of fixed asset investments, short-term investments, long-term provisions, and lia- bilities for taxation and dividends. These are potentially contentious areas which must be seen in the context of sound ac- counting practices within each Member State and, therefore, they are outside the scope of these guidelines. (2) The same principles can be applied by analogy to other networks. L 141/24 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98 Universal service contributions In those Member States that operate schemes to finance universal service obligations, contributions from other operators should be allocated to retail. In addition, there should be an explanatory note to the accounts demonstrating that there is no discrimination between the contributions charged to other operators and those charged (implicitly) internally. Interconnection charges Interconnection charges, including the one-off costs of establishing a point of interconnect and volume- related charges, should be allocated to core network. Call charges Revenue from call charges should be allocated to the appropriate service within the retail business. Equipment rentals and sales Revenue from the rental and sale of equipment such as telephones and facsimile machines should be allocated to the appropriate services within ‘other activities’. Revenue from advertising in directories Revenue received from advertising in directories should be allocated to a directory services account in ‘other activities’. Engineering services/consultancy Revenue from engineering services/consultancy other than for interconnection should be allocated to ‘other activities’. 6. 2. Other revenue Operators may also generate income from non-telephony services. In accordance with the principle of causa- tion these should be allocated to the activities to which they relate. One example would be revenue from sub-letting parts of properties used by the core telephony businesses, the revenue from which could be treated in a number of ways. Options include: — treating the revenue as revenues for the business sub-letting the accommodation, and — recording the revenue under ‘other activities’. No one approach is necessarily better than the others that may be available. However, it is important that the revenues from non-core activities and the costs associated with them are treated consistently. Failure to do so would lead to the profits of one business being understated and the profits of another overstated. Income from fixed asset investments Income from fixed asset investments should be allocated in the same way as the investments to which they relate. Given the approach adopted in Section 5 to the allocation of pure financial investments and invest- ments in unrelated activities the income from these investments would be allocated to ‘other activities’. Income from fixed asset investments should only be allocated to local access network, core network or retail if the related investments are allocated in this way. Income from short-term investments The same principles apply to income received from short-term investments. The income should be allocated to the business to which the associated investment is allocated. 7. Reporting requirements This section of the guidelines sets out the information that operators should prepare for the purposes of accounting separation and consider the extent to which it should be published. 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/25 7. 1. Suggested accounts Separate accounts for the local access network, core network and retail activities of operators should be prepared with information relating to ‘Other activities’ summarised in a single set of accounts (1). The following information should be prepared for each set of accounts: — a profit and loss statement, and — balance sheet information in a form that is consistent with the measure of capital employed used for price-setting purposes. Operator’s retail activities include both regulated and unregulated activities. Separate accounts for each regu- lated activity should be prepared. NRAs will need to determine the retail activities for which separate accounts should be prepared taking into account the transparency requirements of national and Community law. It would not be appropriate to require operators to reveal detailed financial information about their unregu- lated activities that they would not otherwise be required to reveal for statutory reporting purposes. Such information may be regarded as commercially confidential. Information relating to such activities should instead be shown in total and reported as ‘retail — other activities’. 7. 2. Content of reports A suggested profit and loss account and balance sheet for core network for the purposes of accounting separation are shown in Figure 7. 1 at the end of this section. Suggested formats for local access network, retail and other activities are shown in Figures 7. 2, 7. 3 and 7. 4 respectively. All accounts should make explicit any transfer charges to or from other businesses. For example, charges paid by the operator’s own retail activity for interconnection services should be clearly shown as a cost in the retail accounts and as a revenue item in the core network accounts. The accounts should also make explicit any differences between the costs allocated to different activities by the operator and the costs that the NRA allowed for the purpose of determining charges. This will provide transparency about the extent of costs excluded by the NRA for charging purposes and about the reasons for their exclusion. 7. 3. Basis of the preparation Separate accounts should be prepared on a current cost basis. The Appendix provides guidance on the ap- plication of current cost accounting concepts. 7. 4. Audit requirements As set out in Article 8 of the Interconnection Directive, the separate accounts prepared by operators must be subject to independent audit in accordance with the relevant rules of national legislation. 7. 5. Other information The following information should also be prepared as part of accounting separation: — a statement of accounting policies used in the preparation of the accounts, — a reconciliation of the separate accounts to the statutory accounts of the operator, (1) If, as discussed in Section 1, NRAs require that separate sets of accounts should be prepared for certain ‘other activities’, reports should also be prepared for these. This would reduce the scope of activities included in the ‘other activities’ ac- counts. L 141/26 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98 — a matrix summarising the total transfer charges between different accounts. This matrix will make explicit the total charges from, for example, core network to retail and will be an input into the reconciliation of the separate accounts to the statutory accounts, — a statement describing the basis on which unattributable costs have been allocated between different accounts (1), — information about the cost allocation methodologies employed in order to prepare separate accounts. This should be at a level of detail that makes clear the relationship between costs and interconnection charges, — a statement showing the average cost of network components, and — in those Member States that operate schemes to finance universal service obligations, an explanatory note demonstrating that there is no discrimination between charges level on other operators and those levied (implicitly) internally. The format in which the above information should be presented is for operators to determine in consultation with their NRA. The Interconnection Directive also requires that operators provide interconnection to other operators under the same terms and conditions as they provide for their own services (i. e. internally) or those of their sub- sidiaries or partners. For these purposes, operators will need to provide information to their NRA demonstra- ting that there has been no undue discrimination between the provision of services internally and those provided externally. It is for each NRA to consider how this information should be provided and the process by which such information will be validated. 7. 6. Publication of information Publication of information required in the Interconnection Directive serves a number of purposes including the following: — makes transparent the relationship between interconnection charges and costs, — provides transparency about the interconnection charges paid by the operator’s own Retail activities and assurance that there was no undue discrimination between internal and external provision of intercon- nection services, and — helps to establish confidence in the interconnection regime. NRAs should encourage publication of as much of the above information as possible. Information that is proven to be commercially confidential should not be published. There will inevitably be changes in the cost allocation methods used by operators, particularly for those operators that have not historically been required to prepare separate accounts. Accordingly, NRAs should consider the extent to which the above information is published in the first year after adoption of the Inter- connection Directive. The cost allocation methodologies employed by operators should be published im- mediately. (1) Best practice is to allocate unattributable costs in the ex post financial reports in the same way as they were allocated for the purposes of price setting. 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/27 Figure 7. 1. Suggested reporting formats for the core network business (a) Profit and loss Turnover from retail from other operators Total turnover Operating costs CCA adjustments Total operating costs Return Current year Prior year (cid:29)1 (cid:29)2 (cid:29)3 =(cid:29)1 –(cid:29)2 The calculation of the return must be consistent with the basis on which the cost of capital is calculated. Therefore, if — as envisaged in the main body of the guidelines — a pre-tax and pre-interest WACC is used, the return shown in the accounts should be equivalent to profit before interest and tax. (b) Balance sheet information Current year Prior year Fixed assets Tangible fixed assets Intangible fixed assets Investments Total fixed assets Current assets Stocks Debtors Investments Cash at bank and in hand Total current assets Creditors Provisions charges for liabilities and Mean capital employed (cid:29)1 (cid:29)2 (cid:29)3 (cid:29)4 (cid:29)5 =(cid:29)1 +(cid:29)2 –(cid:29)3 –(cid:29)4 All entries in the ‘balance sheet’ should be prepared on a current cost basis. They should be average values for the year to which they relate. Where possible and material the average values shown should be weighted averages. If information is not available, a simple average of opening and closing balances may initially be used. L 141/28 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98 (c) Return on capital employed Return Mean capital employed Return on mean capital employed (%) Current year Prior year (cid:29)1 (cid:29)2 (cid:29)3 =(cid:29)1 /(cid:29)2 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/29 Figure 7. 2. Suggested reporting formats for the local access network business (a) Profit and loss Current year Prior year Turnover Transfer charges to retail From other operators (if any) Total turnover Operating costs CCA adjustments Total operating costs Return (excluding ADCs, if any) ADCs (if any) from other operators from retail Total ADCs Return (including ADCs, if any) (b) Balance sheet information As for core network. (c) Return on capital employed As for core network. (cid:29)1 (cid:29)2 (cid:29)3 =(cid:29)1 –(cid:29)2 (cid:29)4 (cid:29)5 =(cid:29)3 +(cid:29)4 L 141/30 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98 Figure 7. 3. Suggested reporting formats for the retail business Current year Prior year (a) Profit and loss Turnover: Connection charges Rental charges Call charges Other turnover Total turnover Operating costs: Operating costs specific to retail Transfer charges from core network Transfer charge from local access network ADCs paid to local access network (if any) CCA adjustments Total operating costs Return (excluding universal service contributions, if any) Universal service contributions from other oper- ators (if any) (1) Return (including universal service contributions, if any) The same formats would apply to separate regulated activities within retail. (b) Balance sheet information As for core network. (c) Return on capital employed As for core network. (cid:29)1 (cid:29)2 (cid:29)3 =(cid:29)1 –(cid:29)2 (cid:29)4 (cid:29)5 =(cid:29)3 +(cid:29)4 (1) Universal service contributions applied internally would net off to zero and are therefore not shown in the profit and loss for retail. 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/31 Figure 7. 4. Suggested reporting formats for ‘other activities’ Current year Prior year (a) Profit and loss Turnover Operating costs Return (cid:29)1 (cid:29)2 (cid:29)3 =(cid:29)1 –(cid:29)2 As discussed in the main body of the guidelines there may be a case for disaggregating ‘other activities’ in order to provide greater transparency of the performance of specific activities. It will be up to indi- vidual NRAs to specify the extent to which separate accounts for these activities will be prepared. (b) Balance sheet information As for core network. (c) Return on capital employed As for core network. L 141/32 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98 Appendix Current cost accounting 1. Calculation of current cost asset values A key element of the current cost methodology is the valuation of assets. Assets could be valued according to the following considerations and decision rules: Net replacement cost The net replacement cost is the cost of replacing the asset with another asset of similar characteristics and age. A key element of this formula is the calculation of the replacement cost of the asset. Replacement cost can simply be the cost today of replacing the asset with an identical one. However, when technology is changing rapidly, the existing asset may no longer be replaceable (e. g. it is no longer manufactured). In this case it is necessary to calculate the modern equivalent asset (‘MEA’) value which is the value of an asset with the same level of capacity and functionality as the existing asset. The issues relating to the calculation of MEA values for telecommunications operators are considered further below. Deprival value Deprival value (‘DV’) represents the recoverable value of the asset to the organisation; that is, the higher of the economic value the asset is likely to generate or the net realisable value (‘NRV’) of the asset if it were sold. Economic value Economic value (‘EV’) is a measure of the value of an asset based on the net present value of future cash flows. The valuation rules can be summarised as follows: — if EV ; NRV, the company will keep the asset in its current use, — if NRV ; EV, the company will sell the asset now as the proceeds from the sale would exceed the economic value that it would be expected to generate from its continued use. Therefore the deprival value or recoverable amount of the asset is the higher of EV and NRV. The current cost therefore is the lower of its deprival value and the net replacement cost. That is, the lower of the amount the company could recover from the asset and the cost to the company to replace the asset with an identical one. 2. Modern equivalent asset valuation issues The adoption of CCA methodologies in telecommunications is complicated by the rate of technological change in the industry. This has implications in both identifying suitable replacement costs for old techno- logy assets and ensuring the assets exhibit the same levels of functionality and capability. Examples of technological issues for telecommunications operators include: — copper versus fibre cables, — analogue versus digital switches, and — PDH transmission technology versus SDH technology. The new technologies are usually far superior to the old technologies in terms of functionality and efficiency. However, since MEA values are required to reflect assets of equivalent capacity and functionality, it is neces- sary to make adjustments to the current purchase price and also the related operating costs — for example, the new asset may require less maintenance. 3. Current cost accounting adjustments There are two alternative approaches to CCA. The approaches differ in their approach to ‘capital main- tenance’. That is, the manner in which the capital of the company is viewed when determining profit. 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/33 Capital can either be viewed in operational terms (i. e. as the company’s capacity to produce goods and services) or in financial terms (i. e. as the value of shareholder’s equity interest). These are known as operating capital maintenance and financial capital maintenance concepts respectively: — operating capital maintenance (‘OCM’) considers the operating capability of the company. Proponents of OCM assert that capital maintenance under this approach requires the company to have as much oper- ating capability — or productive capacity — at the end of the period as at the beginning (1), — financial capital maintenance (‘FCM’) considers the financial capital of the company is maintained in current price terms. Capital is assumed to be maintained if shareholders’ funds at the end of the period are maintained in real terms at the same level as at the beginning of the period (2). 3. 1. The main adjustments under OCM As set out above, this concept is concerned with the maintenance of the productive capacity of the operator. One of the signification adjustments relates to the revaluation of fixed assets to current cost. Due to this revaluation additional adjustments are then required to restate depreciation amounts. These are identified below. Revaluation of fixed assets Under OCM the gross book value of assets is revalued to take account of specific price changes in the price of assets and changes in technology. One way of calculating the current cost of assets is to apply specific price indices to the existing gross book value of assets. These may be derived from the company’s procurement department. Alternatively, modern equivalent asset (‘MEA’) valuation methods may be used. These base the value of assets on the current cost of modern equivalent assets subject to cost ‘abatements’. These abatements are discussed further below. Supplementary depreciation The depreciation charge for the year is calculated on the basis of the new asset valuations. This ensures that the current cost of fixed assets consumed during the year is charged against revenue. For each asset, or group of assets, the OCM depreciation charge — assuming straight line depreciation — can be derived by dividing the gross replacement cost by asset life. Supplementary depreciation is the difference between historical cost depreciation and current cost depreci- ation charge. It may be positive or negative depending on whether the value of assets is rising or falling. It is a charge against profits in the profit and loss account. Illustration of these concepts The tables below illustrate the above concepts for an asset purchased for ECU 10 000. The assumed life of the asset is four years. For simplicity, it is assumed that the asset is depreciated on a straight line basis. In Table 1 it is assumed that the cost of replacing the asset falls by 10 % per annum. Table 2, on the other hand, assumes that the cost of replacement increases by 5 % per annum. Table 1 Replacement cost falling by 10 % per annum Depreciation Year Current Cost Current cost Historical Supplementary Cumulative ‘Required’ Backlog 0 1 2 3 4 10 000 9 000 8 100 7 290 6 561 2 250,00 2 500,00 2 025,00 2 500,00 1 822,50 2 500,00 1 640,25 2 500,00 (250,00) (475,00) (677,50) (859,75) 2 250,00 2 250,00 Nil 4 275,00 4 050,00 5 872,50 5 467,50 7 107,75 6 561,00 (225,00) (405,00) (546,75) (1) In efficient terms and in a long-run approach. (2) For the capital as employed by an efficient operator. L 141/34 ‹ EN ‹ Official Journal of the European Communities 13. 5. 98 Table 2 Replacement cost rising by 5 % per annum Year Current Cost Current cost Historical Supplementary Cumulative ‘Required’ Backlog Depreciation 0 1 2 3 4 10 000,00 10 500,00 2 625,00 2 500,00 125,00 2 625,00 2 625,00 Nil 11 025,00 2 756,25 2 500,00 256,25 5 381,25 5 512,50 131,25 11 576,25 2 894,06 2 500,00 394,06 8 406,56 8 682,19 275,63 12 155,06 3 038,77 2 500,00 538,77 11 720,96 12 155,06 434,10 Derivation/explanation: — current cost is the gross replacement cost of the asset, — current cost depreciation is derived as the gross replacement cost divided by the asset life, — historical cost depreciation is the original acquisition cost divided by the asset life, — supplementary depreciation is the additional depreciation charged as a result of revaluing the asset (it can also be derived as current cost depreciation less historical cost depreciation), — cumulative depreciation is the sum of cumulative current cost depreciation as at the end of the previous period, backlog depreciation for the previous period and current cost depreciation for the current period. This is equivalent to required depreciation at the end of the previous plus current cost depreciation for the current period, — ‘Required’ depreciation is the cumulative depreciation that would have been charged given the current cost of the asset — put another way, it is the difference between the gross and net replacement cost of the asset, and — backlog depreciation is the difference between required depreciation and cumulative depreciation. 3. 2. Further adjustments under financial capital maintenance (FCM) Under FCM there are similar adjustments to be made as in the OCM concept concerning the revaluation of fixed assets and supplementary depreciation. However, under FCM some of the treatments in terms of profit and loss need to be further adjusted to take into account of holding gains or losses that arise due to the effect of asset-specific inflation on the current cost value of assets and the effect of general inflation on share- holders’ funds (1). 4. Which capital maintenance concept? The above discussion has set out the main adjustments required to historical cost accounts in order to derive current cost information using OCM and FCM. It has been included to reflect the fact that the transition to LRAIC from fully allocated historical costs as the basis for determining interconnection charges requires that assets are valued at their market value (or current cost). The use of current cost information is therefore a key aspect in helping to determine appropriate interconnection charges and special attention should be provided to the choice of capital maintenance as employed by an efficient operator (2). (1) The Arthur Andersen report on accounting separation in the context of ONP provides further guidance on the accoun- ting adjustments to be provided under financial maintenance concept. (2) Subject to the level of investment in assets being efficient. 13. 5. 98 ‹ EN ‹ Official Journal of the European Communities L 141/35 If OCM was used to determine charges, the revenue requirement (1) would be derived as the sum of operating costs, historical cost depreciation, supplementary depreciation and a return on net assets. Under FCM, the revenue requirement would be the sum of operating costs, historical cost depreciation, supplementary depre- ciation and a return on net assets less holding gains/losses plus the adjustment to shareholders’ funds. Required revenue therefore differs depending on the capital maintenance concept used. The use of the OCM concept may systematically incorporate insufficient or excess returns into the level of allowed revenue (depending, respectively, on whether asset-specific inflation was expected to be lower than or higher than general inflation). This is not a desirable feature of any regulatory regime, as it would not provide appropriate investment incentives. Therefore FCM is the preferred capital maintenance concept. (1) Defined as the level of revenue required in order to earn a reasonable return


title: SCHRIFTELIJKE VRAAG nr. 1104/98 van Panayotis LAMBRIAS aan de Commissie. Normalisering op het gebied van de elektronische handel

eurovoc_concepts:
electronic money
harmonisation of standards
information technology applications
international standard
international trade

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title: QUESTION ECRITE no 1116/98 de Franz LINSER à la Commission. Aides structurelles - Tyrol

eurovoc_concepts:
Austria
Structural Funds
economic and social cohesion
economic priority
eligible region
less-favoured region
rural region
urban area