1. Operation of vDLE concept Revised C&W proposal

2. Background C&W continue to believe that in the “virtualised” situation CPs should pay connection & rental charges as if they would have in the “actual” situation. Our proposal has been amended to reflect industry feedback –Concerns around complexity –Concerns around wishing to allow for overflow

3. Proposal In the situation where a DLE is closed, all payments will be based upon virtualised concept –No port rentals on actual ports will be paid, and with one exception this will also include no port rentals on actual NGS capacity Number of virtual ports to be paid for at vDLEs and the NGS to be calculated according to measured monthly traffic –By reference to Table – see next slide

4. Port Requirement Table

5. Assumptions in Table Derivation Minutes  Erlangs –9 network busy hours per day –5 days a week –Total weekend traffic = approx 20% total weekday traffic –4.33 weeks/month –5% overhead allowed for discrepancies to the above assumptions, differing month-lengths etc Erlang  Port Requirements –Standard TC4 dimensioning tables

6. Worked Example A 250k mins B 450k mins C 650k mins D 750k mins NGS OLO transit 300k mins Total actual traffic = 2.4M mins i.e. approx 160e Actual ports = 7xE1 CP C&D are connected by vDLE, A&B are not vPort/VIEC requirements: A – not applicable B – not applicable C – 650k = 2 x E1 D – 750k = 3 x E1 NGS – (250k+450k+300k) = 1M = 3 x E1 CP does not pay for the 7xE1 actually used on NGS route as they are paying for all virtual capacity (including NGS) Exception : if CP consistently over-dimensions NGS route (e.g. has 9xE1) they would pay the additional actual port rentals

7. What if traffic exceeds capacity? Once per ACO period, measure traffic actually carried versus the vDLE capacity agreed If capacity is insufficient, CP to have two options; –Option 1 : right-size route CP pays for ports required retrospectively To discourage routine under-dimensioning, 50% penalty to be paid on these ports –E.g. if 2 additional virtual ports were required, for retrospection period 3 ports will be charged for, but thereafter the penalty would not apply –Option 2 : pay for overflow CP pays for any additional minutes over those allowed in Table at ST daytime rate Overflow assumed to be same in all months –ie measurement would only take place every 4 months, so all 4 months would have same surcharge applied Accounting on bulk basis (e.g. “50k mins overflow = £52 surcharge payable”) rather than on call by call –No impact into core EBC charging For avoidance of doubt both options would be available to CPs

8. What about during the transition period? Given BT may adopt a pepper-pot approach to migration, what about locations where there is a mixture of migrated/non-migrated nodes? –Eg at a given time during migration in example A and C could be migrated but not B and D C&W propose to treat the location as migrated and pay as per virtualised rules once the first CP-connected DLE has been migrated in an area –This is necessary because it is complex to mix virtual and actual capacity charging –From this point, actual capacity charges to outstanding DLEs would not be levied Eg D would be charged on a virtual basis, regardless of physical capacity still being in place

9. Why aren’t other options acceptable to C&W? Partitioned routes –Extremely inefficient for C&W, particularly as multiple C&W nodes are interconnected to each BT node Simple “divide minutes by xxx to get number of E1s” –This does not take account of dimensioning efficiency Eg a 5xE1 route will carry 6.2 times as much traffic as a 1xE1 route – simplistic formula would assume 5 times! As C&W’s routes are large, this approach would require approx 30% more virtual ports than actual ports used today Call by call accounting in EBC –Would require changes to EBC itself rather than (reasonably) simple periodic reconciliation