Ancom - Costuri format analogic

Cost-orientation of the tariffs for the analogue broadcasting transmission services

Following the competition analysis of the market for services of analogue transmission, by means of terrestrial radioelectric systems, of public television and radio programmes (Decision 154/2009), The National Broadcasting Company S.A. (SNR) was designated as an operator with significant market power (Decision 169/2009). Thus, this company was imposed the obligation of tariff control, including that of cost-orientation of the tariffs for the transmission services in the respective market.

Additional data and information on the market identification and analysis, as well as the imposed remedies are available in the Explanatory memorandum and in the Summary of comments to the draft decisions presented during the Consultative Council of 15 January 2009, as well as in the Endorsement Report of the above-mentioned decisions.

Thus, the obligation of tariff cost-orientation imposed on SNR by Decision 169/2009 provides:

cost-oriented tariffs will be determined based on a costing model, by means of the fully-allocated costs method, using as a cost standard the historical costs;
the rules for SNR’s establishing and implementing the costing model are provided in a Regulation adopted by the Authority;
the maximum term for establishing and implementing the costing model is 1 year from the adoption date of the Regulation;
where the model developed by SNR does not observe the Regulation or is not adopted within the term provided in the decision, the tariffs will be established by the Authority, based on a benchmark, through comparison to tariffs charged for similar services on comparable markets;
as a transitional measure, until the implementation of the cost-orientation obligation, SNR can raise the tariffs charged for the services for which it has been designated as having significant market power only once, and only upon the Authority’s prior agreement.

The Regulation on establishing a costing model based on the fully-allocated costs method

In drawing up the Regulation on SNR’s establishing a costing model based on the fully-allocated costs method, the Authority took into account – on the one hand – SNR’ activity specificities, and – on the other hand – the necessity of applying principles and methodologies in accordance with the community practice and legislation in the field of cost calculation, especially with the European Commission Recommendation 2005/698/CE on accounting separation systems and cost accounting systems in line with the regulatory framework for electronic communications and with the ERG Common Position no. (05) 29 on the instructions for implementing this recommendation.

The Authority adopted this Regulation at the beginning of 2010 (Decision 178/2010), its provisions referring to:

developing the model in accordance with the following principles: the principle of causality, the principle of objectivity, the principle of the consistency of accounting treatment and the principle of transparency;
the cost categories included in the calculation and their treatment;
the principles and methodologies for identifying and selecting cost inductors;
principles of allocation for the directly and indirectly attributable cost, as well as for the non-attributable costs;
types of modelled services;
ways of implementing accounting at historical costs;

further details on auditing, the presentation manner, etc.

Additional details and information on the Regulation on establishing a costing model are available in the Explanatory memorandum and in the Summary of comments to the draft decision presented in the Consultative Council of 3 December 2009, as well as in the Endorsement report of the above-mentioned decision.

Following the Authority’s adoption of the Regulation, SNR has the obligation to develop and implement the costing model for the year 2010 and to make it available to the Authority together with the corresponding documentation until 1 June 2011. The model will be reconciled with the annual financial statements drawn up in accordance with the financial-accounting legislation in force.

Subsequently, SNR will implement the costing model on a yearly basis, for each financial exercise, and will present it to the Authority within 60 days from the date of publishing the financial statements regulated by the financial-accounting legislation.

The methodology for establishing a costing model, based on the fully allocated costs method is available for consultation here, while the audit report on the costing model is available, in Romanian, here.

SNR regulated tariffs

According to the decision for imposing obligations on the operator with significant market power, until the establishment and implementation of the costing model based on which cost-oriented tariffs will be established, SNR can raise the tariffs for the regulated services only once, upon the Authority’s prior approval, such raise being limited to reflect an adjustment to the inflation rate.

Thus, in January 2010, SNR transmitted ANCOM a request for the approval of a raise of the regulated tariffs, the main reason invoked being the inflation pressure on the costs of the respective services. Following SNR’s request and based on the additional information sent, ANCOM partially approved the request for raising the regulated tariffs, and in view of cost-orienting the tariffs by implementing the costing model, the Authority issued a series of recommendations regarding the cost allocation and structuring manner use for establishing the tariffs for the regulated services.

The document for the approval of the raise of SNR’s regulated tariffs, as well as the new maximum tariffs that the operator may charge until the cost-orientation pursuant to Decision 178/2010, are available here.