1. Geographic De-averaging
Alan Mitford-Taylor

2. What is geographical de-averaging and why is it an issue
De-averaging is the application of different charges to the same service based on geographical location
This is generally done to reflect significant differences in underlying cost structures, for example in this case cable lengths, end user densities and support costs.
The draft Sub-loop STD proposes that the cabinet de–averaging determined by the classification of the parent exchange.
Chorus believes the classification of the cabinet should be based on the cabinet

3. Why not use the same classification for cabinets as their parent exchange
The draft STD proposes that the de-averaging of cabinets and Sub-loops be determined by the parent exchange
Parent exchange will change over time with move to the NGN architecture meaning less exchanges in the new architecture, which will distort urban verses non-urban split
For UCLL the de-averaging level of MPF and co-location products was determined using a best fit of exchange areas to mesh block data
The same method should be used for Sub-loop using the best fit of cabinet areas to mesh block data

4. Existing cabinets classified by today's parent exchange
Cabinets
Lines
All
xDSL
passive
Urban
5,898
991
4,907
1,031,251
53%
45%
56%
72%
Non-urban
5,130
1,210
3,928
408,340
47%
55%
44%
28%
Total
11,036
2,201
8,835
1,439,591
Use of Mesh blocks give a good match to national average when compared at lines level, not such a good match at cabinet level because most passive cabinets are non-urban and first cabinets to be commissioned are urban.

5. Existing cabinets classified on their location
Cabinets
Lines
All
xDSL
passive
Urban
5,587
883
4,704
1,051,040
51%
40%
53%
73%
Non-urban
5,449
1,318
4,131
388,551
49%
60%
47%
27%
Total
11,036
2,201
8,835
1,439,591
Use of Mesh blocks give a good match to national average when compared at lines level, not such a good match at cabinet level because most passive cabinets are non-urban and first cabinets to be commissioned are urban.

6. What is de-averaging proposal
The draft STD proposes that the de-averaging of cabinets and Sub-loops be determined by the parent exchange but this will make most urban over time
We believe same method should be used for Sub-loop using the best fit of cabinet areas to mesh block data as was used the determine the UCLL the de-averaging level of MPF and co-location products
This change makes a 1% change in the urban verses non-urban lines split today but will be stable over time.