Allocation of Competitive Loss to the Wire Center

1
Allocation of Competitive Loss to the Wire Center

• Ronald D. Luginbill
• Ameritech Corporation
• For the ICFC, June 10, 1998

2
Background of our 1998 Planning Process for
Switched Access Lines

• Corporate requires that the forecast be separated
  into a base view and competitive overlay at the 5
  State total level only.
• The base view is a trend view that incorporates
  the 4 Ps assuming no further competition. This
  is required at the Ameritech geographic level
  only.
• The competitive overlay is estimated by the
  process described next by state.
• The base view and competitive view is added
  together to obtain the net view.

3
Competitive Overlay Estimate at the Ameritech
Level

• Corporate with the help of our wholesale business
  unit defined the competition assumptions by state
  by Business Unit.
• The Retail Business Units estimated the loss by
  state.
• The Wholesale Unit determine how much of the loss
  was resale , unbundled loops, and complete
  by-pass by state.

4
The Problem How to Spread the Competition to the
Wire Center for Capital Budgeting?

• The estimate of competition line loss is at state
  level.
• The Business Units know as much as or as little
  as Network (including Local Area Forecasters)
  does.
• The estimated competition for the most part had
  not occurred.
• If we overbuild, we could strand capital. If we
  under build, we have held orders.

5
Plan of Action

• Develop forecasts of base trend switched access
  line gain at the wire center via traditional
  methods tied to the Ameritech trend forecast
• Develop a competitive scoring model to be used to
  allocate losses to the wire center
• Use the same scoring model to spread the
  unbundled loops to wire centers
• Add the trend and competitive overlay for the
  switch. Add unbundled loops to the total for
  Outside Plant

6
Competitive Scoring Model

• Theory was to determine potential for competition
  for each wire center and allocate the loss to
  those specific geographic areas.
• Decided to gather all possible information at the
  wire center that suggested competition
• We found the following
• Resale Unbundled loops
• Colocation EOI Trunks
• Internal Studies of Competitors Networks

7
Competitive Scoring Model

• A five element weighted model balancing
• Unbundled loops in each WCs divided by the median
  of those WCs having a loop
• The number of firms in a WC with fiber presence
• The number of firms with colocation
• EOI direct trunks divided by the median of those
  WCs having EOI direct trunks
• EOI tandem trunks allocated to those WCs having a
  fiber or colocation presence divided by the median

8
Final Allocation

• Add the components together and obtain a final
  wire center competitive score
• Allocate the losses the wire center using the WC
  score as a percent of the total score
• Evaluate final loss data and the final wire
  center forecast
• Budget with the data

9
Total Weighting
10
Next Steps

• Track the data! Unfortunately (or fortunately)
  competition slowed per court proceedings
• Begin to trend forecast loops and mix with or
  combine into the scoring model.
• Spread the fiber studies to more wire centers and
  update current studies.