6.

For the purpose of this Recommendation, the definitions in Directives 2002/21/EC and 2002/19/EC and in Recommendation 2010/572/EU shall apply. The following definitions shall also apply: (a) ‘Bottom-up modelling approach’ means an approach that develops a cost model starting from the expected demand in terms of subscribers and traffic. It then models the efficient network required to meet the expected demand, and assesses the related costs using a theoretical network-engineering model, for the purpose of calculating the cost on the basis of an efficient network using the latest technology employed in large-scale networks. (b) ‘Common costs’ are shared costs for products or services produced jointly which are not attributable to any single product or service. (c) ‘Copper anchor’ is a cost oriented copper wholesale access product which constrains the NGA prices in such a way that NGA services will be priced in accordance with the consumers’ willingness to pay for the additional capacity and functionalities an NGA-based retail product can provide in comparison with a copper-based retail product. (d) ‘Current costs’ means the costs resulting from valuing an asset at its replacement cost, i.e. the cost of replacing it with either the same asset or another asset of similar performance characteristics, allowing for wear and tear and adjustments for efficiency. (e) ‘Depreciation methods’ are methods for allocating the value of an asset over the life of the asset, thus influencing the profile of the allowable earnings for the asset owner in any given period. (f) ‘Downstream costs’ are the costs of retail operations, including marketing, customer acquisition, billing, and other network costs, incurred in addition to those network costs already included in the wholesale access service. (g) ‘Equivalence of Inputs (EoI)’ means the provision of services and information to internal and third-party access seekers on the same terms and conditions, including price and quality of service levels, within the same time scales using the same systems and processes, and with the same degree of reliability and performance. EoI as defined here may apply to the access products and associated and ancillary services necessary for providing the ‘wholesale inputs’ to internal and third-party access seekers. (h) ‘Equivalence of Output (EoO)’ means the provision to access seekers of wholesale inputs comparable, in terms of functionality and price, to those the SMP operator provides internally to its own downstream businesses albeit using potentially different systems and processes. (i) ‘Incremental costs’ are costs that are directly associated with the production of a business increment, i.e. the additional cost of supplying a service over and above the situation where the service was not provided, assuming all other production activities remain unchanged. (j) ‘Key Performance Indicators (KPIs)’ are indicators that measure the level of performance in the provision of the relevant wholesale services. (k) ‘Long Run Incremental Costs (LRIC)’ means the incremental costs corresponding to a time horizon where all factors of production, including capital equipment, are variable in response to changes in demand due to changes in the volume or in the structure of production. Therefore all investments are considered as variable costs. (l) ‘Mark-up’ means the addition made to the incremental cost of a specific service in order to allocate and recover the common costs through allocation to all services for which those common costs are relevant. (m) ‘New retail offer’ means any new retail offer of services, including bundles of services, by an SMP operator based on already existing or new regulated ‘wholesale inputs’. (n) ‘NGA-based wholesale layer’ means a network layer at which access is granted to access seekers on an NGA-based network and where several ‘wholesale inputs’ can be provided. The wholesale access products offered on this network layer may consist of active inputs, for example bitstream over fibre, passive inputs, for example fibre unbundling in the ODF, in the cabinet, or at the concentration point or non-physical or virtual wholesale inputs offering equivalent functionalities to passive inputs. (o) ‘Non-reusable civil engineering assets’ are those legacy civil engineering assets that are used for the copper network but cannot be reused to accommodate an NGA network. (p) ‘Regulatory accounting value’ is the value of an asset as recorded in the audited regulatory accounts of an undertaking which considers actual utilisation and lifetimes of the assets, which are typically longer than those recorded in statutory accounts and which are more in line with technical lifetimes. (q) ‘Regulatory Asset Base (RAB)’ means the total capital value of the assets used to calculate the costs of the regulated services. (r) ‘Reusable civil engineering assets’ are those legacy civil engineering assets that are used for the copper network and can be reused to accommodate an NGA network. (s) ‘Service Level Agreements (SLAs)’ means commercial agreements under which the SMP operator is obliged to provide access to wholesale services with a specified level of quality. (t) ‘Service Level Guarantees (SLGs)’ form an integral part of SLAs and specify the level of compensation payable by the SMP operator if it provides wholesale services with a quality inferior to that specified in the SLA. (u) ‘Wholesale inputs’ means an access product required for access seekers to supply end-users with a broadband service on a retail market and consisting of an active or passive product or a virtual access product offering equivalent functionalities to a passive access product. Wholesale inputs can be provided over legacy copper network infrastructures or NGA-based infrastructures.