Parameter and revenue inputs to CLEC model
Vintage Groups:Q1Q2Q3Q4Q5Q6Q7Q8Q9Q10Q11Q12
Large colos opened/Q, per region22222111000
Small colos opened/Q, per region01122210010
New regions opened, by quarter10001000100
Cumulative regions in service11112222333
Two methods are available for specifying the takeup of loop-based offerings in large and small collocations
Select method 1 or 2:2
Method 1:  PercentagesThis method computes lines as percentages of given total office sizes
(inactive)Per region:
avg loops per large office:900at stasis
avg loops per small office:250
Business user % of total loops55%residential:45%
Prices: (inflators applied later)Price/MONRCTakeRateShared%per LgColoperSmColo% of res:% of bus:
Residential POTS only$                           35$                         5030%0%121.533.75% of loops with POTS:72.8%70.0%75.0%
Residential DSL only$                           42$                         5030%90%121.533.75% of loops with DSL:59.0%
Residential POTS + DSL$                           65$                         5040%0%16245
add to 100% of resi loops:100%27.0%405112.5
Business POTS only$                           50$                      10050%0%247.568.75% of DSL loops bus:46.6%
Business DSL only$                           65$                      10025%50%123.7534.375% of DSL loops resi:53.4%
Business POTS + DSL$                        100$                      10025%0%123.7534.375Avg DSL data rate:20.39
add to 100% of business single loops, not T1s:100%12.5%495137.5DSL users/DS175.33
computed for Method 1:Percent of total loops shared:19.0%
ARPU for loop services$                     58.53$                   77.50
Residential ARPU$                     49.10$                   50.00
Business loop ARPU$                     66.25$                100.00
Method 2: Absolute quantitiesThis method computes percentages based on given sales of each loop-based offering
ActivePer LgColoPerSmColoShared %LTotMRCLTotNRCSTotMRCSTotNRC
Residential POTS only$                           35$                         50120350%4200600012251750% of loops with POTS:72.7%
Residential DSL only$                           42$                         501203590%5040600014701750% of res:% of bus:
Residential POTS + DSL$                           65$                         50160450%1040080002925225069.9%74.9%
Res total:400115196402000056205750% of loops with DSL:59.1%
250650%125002500032506500Total res lines in plan:19395
Business DSL only$                           65$                      1001253550%81251250022753500Total bus lines in plan:23988
Business POTS + DSL$                        100$                      100125360%125001250036003600Total lines in plan:43383
Bus total:5001363312550000912513600% of DSL loops bus:47.1%
Total90025152765700001474519350% of DSL loops resi:52.9%
Colos in plan:3933Avg DSL data rate:20.49
Total lines in colo:35100828320578352730000486585638550DSL Users/DS174.98
% of lines by CO size:80.9%19.1%Total lines with DSL:25653
computed for Method 2:shared loops:6650161719.1%% of total loops res
ARPU for loop services$                     58.65$                   77.65
Residential ARPU$                     49.05$                   50.00
Business ARPU$                     66.41$                100.00
% of loops with POTS:72.7%% of res:69.9%% of bus:74.9%
% of loops with DSL:59.1%
Average number of data users/DS175.0
Percent of total loops shared:19.1%
Loops per large collocation900
Loops per small collocation251
% of total lines residential44.7%
% of total lines business55.3%
Using selected method:
ARPU for loop services$                     58.65$                   77.65
Residential ARPU$                     49.05$                   50.00
Business ARPU$                     66.41$                100.00
Measured business local rate/min$                         -use 0 for flat rate business service
Bus. T1 PBX/PRI/CT1 in region70initial model: sold as EELs across region, not tied to colos
SP-shared EELs in region60initial model: not tied to colos; 50% V 50% data% of T1s shared46%
Business T1 PBX/PRI/CT1 price$                        700$                      500
SP-shared EEL V+D price$                        700$                      800
"Average across the quarter"Stasis
Takeup rate:  Small collocations5%15%22%31%40%50%60%70%80%90%100%100%
Takeup rate:  Large collocations5%15%22%31%40%50%60%70%80%90%100%100%
Takeup rate:  PRI/T1 PBX, Shared2%10%20%35%45%55%70%80%90%95%97%100%
Small colo:  Loops in svc by quarter13385578100126151176201226251
Lg colo:  Loops in svc by quarter45135198279360450540630720810900
T1 PBX/RAS ckts by quarter17142532394956636768
SP-shared V+D T1s by quarter16122127334248545758
Churn rate/year20%
Minutes of uselocal outlocal intoll outtoll inTraffic calculations:
Average IXC access MOU rate0.0100.010MOU/moMOU/BHrBHErlangsCCS/DS0
Average residential line MOU/mo60050012010013206.60.113.96
Average business line MOU/mo10001100300250265013.250.2208337.95
Average all V loops MOU/mo821.1741927831.761289219.528387182.94032222055.40410.2770210.1712846.166213
Average PRI/T1 line MOU/mo40,00050,0004000300097000533.50.37048613.3375
Average Shared-T1 MOU/mo15,00015,00025001500340001870.1298614.675
Price/minute of resold toll$                       0.07gross margin:$             0.04
% of resi V subs taking resold toll75%Loops/region:14461
% of bus V subs taking resold toll50%outin
% of resi subs in toto taking toll52%62.9234339Loop local MOU/region:1187500012028100
% of bus subs in toto taking toll37%112.293647PRI locMOU/region:28000003000000
% of PRI/T1 subs taking resold toll50%Shared-T1 locMOU/region900000900000
ARPU (loop) on resold toll$                       6.32Wholesale toll:$             3.16average loop1558946115928100
ARPU (loop) on access$                       2.96
ARPU PRI/T1 on resold toll+access$                  210.00$          70.00
ARPU Shared-T1 on resold toll+acc$                  127.50
Percentage of traffic outbound49%inbound:51%
Network Parameters:
Busy hour loop traffic %/month0.50%imts/line0.009277866
GR303 ratio:5.06gr303/line0.0090
Busy hour T1 traffic %/month0.55%
MT fill margin (ch/Erlang)1.3
MTs per T1/PRI trunk0.482
MTs per Voice/data ISP-shared T10.169
MTs per GR3031.03
Avg. Resi DSL kbps12
Avg Business DSL kbps30
Gross Rack Units/colo rack42
Per rack common eq. RU4
Rack units/small DLC5
Rack units/Large DLC12
Core managers per region4
Lines per additional core manager2500
PRI/T1s per add'l core manager500
Headquarters core managers4
Lines per craft employee500
Lines per office employee1000
PRI/T1s per craft employee100
PRI/T1s per office employee200
Trucks per craft employee0.6
Model T1/PRI as EELs not colo?1not yet turned on; this version assumes yes [1]
Percent of large colos "urban"50%
Percent of large colos "suburban"50%
Percent of large colos "rural"0%
These must add to 100%100%
Percent of small colos "urban"20%
Percent of small colos "suburban"50%
Percent of small colos "rural"30%
These must add to 100%100%
Residential rate inflator /quarter0.75%
Business rate inflator/quarter-0.50%
T1/PRI rate inflator/quarter-0.50%
Long dist./access inflator/quarter-1.00%applies to both wholesale (cost) and retail (price)
Cost inputs to CLEC modelvariables in blue
LEC-related charges:MonthlyNRC
Collocation, per rack$             100.00$      7,500.00
Collocation power, per peak Amp$               20.00$                -
UNE loop, analog/urban$               12.00$            75.00
UNE loop, analog/suburban$               15.00$            75.00
UNE loop, analog/rural$               18.00$            75.00
Average loop, large colos$               13.50$            75.00
Average loop, small colos$               15.30$            75.00
UNE HFS - shared loop$                  1.00$            50.00
UNE DS1 loop$             100.00$         250.00MRC
Dedicated transport - DS1 /fixed$             100.00$         200.00$           110Avg. T1 EEL:$  210.00MRC
Dedicated transport - DS1/per mile$                  0.50$                -T1 EEL NRC adder$  100.00EEL total:$  550.00NRC
Dedicated transport - DS3 /fixed$             950.00$         200.00$       1,050Breakeven DS1s:10
Dedicated transport - DS3/per mile$                  5.00$                -Average miles:20
MT average$             250.00$         500.00
SS7 per A-linkpair$         1,500.00$      2,000.00
Entrance Facility$             250.00$      1,000.00
UNE M10 mux$             200.00$         200.00
UNE M13 mux$             200.00$         200.00
per minute
Reciprocal compensation0.0025
Unbundled tandem switching0.001not used in this version -- assumed built into recip or  not charged
Resold IXC MOU wholesale price0.035
Labor costs:Annually
Average HQ mgmt employee$          120,000
Average region mgmt employee$             75,000
Average technician$             45,000
Average back office$             40,000
Other opex:MonthlyNRC
Truck lease$                   500
Headquarters lease$               3,000
Billing cost per line - voice$                  1.00
Billing cost per line - DSL only$                  0.50BB cost/mo/sub
SP backbone $/Mbps$             500.00$       6.64
SP vertical charges/DSL sub$                  2.00$       8.64
Consulting+fitup/new region$         50,000
Marketing per region per quarter$             12,500
First qtr extra marketing per region$         25,000
R&D expense as % of revenues1.0%
Customer acquisition cost (loops)$100
Customer acquisition cost (T1s)$500
Per-line installation direct non-ILEC cost$            75.00
Per-T1 installation direct non-ILEC cost$         100.00
Corporate startup costs$       150,000
Per-region startup, legal costs$         25,000
Capex:Note most of these numbers are dummies; I do not have all the real prices
CO switch:
Price per base CO switch (w/ss7)$          120,000
Price per GR-303 port$               2,200
Price per DS-1 trunk port$               1,900
Price per PRI port$               2,100
Price for GR-303 capability$             50,000
Price for End Office feature set$             50,000DC power budget:
Price for CO w/features, GR303$          220,000Common Amps3
Price for small NG-DLC - base$               5,000cards/DLC:22Amps:7
Price for small DLC analog line card$                   600Lines/card6
Price for small DLC DSL line card$               1,800Lines/card6
Price for small DLC DS1 line card$                   450Lines/card1
Price for large NG-DLC - base$             40,000cards/DLC16Amps:15
Price for large DLC analog line card$               2,500lines/card32
Price for large DLC DSL line card$               2,000lines/card12
Price for large DLC DS1 line card$               2,000lines/card4
Price for large DLC DS3 line card$               3,000lines/card1
Price per IAD (T1/EEL)$               2,000
Price for hub DC power system$             50,000
Price for regional hub router/base$               5,000
Regional hub router/DS1 port$               1,000
Regional hub router/DS3 port$               5,000
Price per M13 in colo using DS3$               5,000Rack units:4Amps:4
Base price for DACS at region hub$             20,000
DACS DS1 port at hub$               1,000
DACS DS3 port at hub$             10,000
Data Processing capex: HQ$          100,000
Data processing capex: each region$             50,000
DP & sundry capex per employee$               3,000
Capex replacement % of prev. 4 yrs4.0%(quarterly)
Capex Inflation rate %/qtr-1.00%
Labor inflatiaon rate %/qtr0.75%
Opex (non-ILEC) inflation rate %/qrt0.33%
LEC inflation rate %/qtr0.25%
Corporate tax rate30%
Percent financed75%Assumes line-of-credit financing, not capital leases
Financing interest rate %/Qtr3.50%
Debt amortization - quarters20(sorry, not yet variable)
Capital depreciation - quarters16(sorry, not yet variable)
Color code for cash inputs:
Capital Expenditures
Operating Expenses
Cash Flow-843,302-722,187259,0442,226,0424,861,1415,894,2575,825,2035,589,9945,482,085
Net Income-1,387,694-2,105,665-2,230,677-469,102718,5144,071,6713,247,1413,163,7603,148,752
Net IRR18.6%
Cash flow IRR90.1%
An assumed interest rate of:15%
Provides an NPV of733,763
A terminal value mulitplier of5
Provides a terminal value of41,440,601
for a total net worth of42,174,364
458Headquarters + region DP capex$0$0$0$50,000$0$0$0$50,000$0$0
459Per-emp DP & sundry capex$33,000$3,000$9,000$24,000$15,000$15,000$21,000$39,000$30,000
460Colo-related capex (sm+lg)$111,000$150,550$172,950$297,300$445,100$554,350$588,800$821,950$891,450$1,020,300$
461Total growth capex pre-inflation$197,000$223,950$255,150$745,100$614,400$733,550$803,200$1,432,150$1,220,950$1,344,000$
462Capex inflator100.00%99.00%98.01%97.03%96.06%95.10%94.15%93.21%92.27%91.35%
463Growth capex w/inflation$197,000$221,711$250,073$722,970$590,190$697,599$756,197$1,334,857$1,126,625$1,227,767$