M

		M/S National Technical Research Ogranisation , NEW DELHI
Calculation as per old policy
				Rs
		Cost of new cable to be laid		6300000.00
		Cost of STM-1with 21 E1's		1347830.00
		Total Cost		7647830.00
		Cash		0.00	A
		Store		7647830.00	B
				7647830.00	C
	1	Freight Charges 2%		152956.60	D
				7800786.60	E
	2	Establ.charges 10% on E		780078.66	F
				8580865.26	G
	3	Store Keeping on "B" 5 %		382391.50	H
				8963256.76	I
	4	Escalation Charges 30% on "I"		2688977.03	J
				11652233.79	K
	5	Profit Margin 10% on K		1165223.38	L
		Estimated Capital Cost		12817457.17	M
		R&G Charges @ 28.6% on M		3665792.75
		Dark Fibre @Rs2.23lakh/KM/Anuum for 1.5 KM		334500.00
		Total R&G rental per annum		4000292.75
		Total rental recovery in ten years		40002927.50
Calculation as per New policy
		Cash		0.00	P
		Store		7647830.00	Q
		Total Cost(P+Q)		7647830.00	R
		Estimate considering NPA 25%		9559787.50	S
		Dark Fibre @Rs2.23lakh/KM/Anuum for 1.5 KM		334500.00	T
		Dark Fibre rental for five yrs( T X 5 )		1672500.00	U
		Total Estimated Cost(S+U)		11232287.50	V
		R&G rental per annum	% recovery
			of "V"
		First year	30.00	3369686.25
		Second year	20.00	2246457.50
		Third year	20.00	2246457.50
		Fourth year	15.00	1684843.13
		Fifth year	15.00	1684843.13
		Total rental recovery in five years		11232287.50

New R & G Policy 2007

Many corporate customers these days are asking 2 mbps and other high capacity circuits on OFC due to their stringent requirement of better quality data transmission and fault free service with very high reliability. For this purpose, it is felt that the existing R & G terms and conditions are very complicated and do not seem to be very attractive to the customers. Because these days in view of the prevailing competitive environment, the customers are not willing to give commitment for a longer period of 10 years (as mandated in the existing R&G Policy) but would prefer a shorter period of say about 5 years. This is all the more preferred in view of the fast changing tariffs and equally fast changing requirement of bandwidth due to growing needs.

In view of the above facts, it is felt that the existing R & G conditions need to be revised and the new R & G terms and conditions should be framed, keeping in view the competitive environment. The existing R & G terms and conditions applicable to the present customers will remain same and revised instructions proposed herein will be applicable for prospective customers only.

1. This R & G Policy will be known as “New R & G Policy 2007”.

2. This policy is proposed to be based on the basis of recovery of actual cost to MTNL which is proposed to be done in a period of 5 years. The proposal for charging only the actual cost has been put forth since even the existing policy of the MTNL is to provide bulk circuits to customers on OFC in order to provide high reliability and attract high volume customers with bulk requirements even when we are laying OFC and equipment on our own cost. Besides in order to increase the reach of our OFC network, MTNL is constantly endeavoring to lay OF cables in fresh locations and it is felt that even if a cable is laid on R&G basis it can very well be utilized for other MTNL needs in future. Also, due to this proposal, it is felt that the R&G policy will become highly attractive to the customers.

3. The new R & G policy can provide graded recovery of the cost from the customer. The idea behind graded recovery is that we should recover up to 50% of the expenditure incurred in first two years and up to 70% in first three years period. The following slab is proposed:

Year	I yr	II yr	III yr	IV yr	V yr
% Recovery	30	20	20	15	15

However as intimated by DGM(TRA) since the differential slab is not possible to be implemented in the present billing system, flat 20 % charges per year may be recovered till such arrangement is made available in the upcoming convergence billing system.

4. Procedure to be followed and charges to be taken

i) Commercial unit will first take cost particulars from media planning unit after receipt of demand/request from the subscriber.

ii) Media planning will provide detailed cost particulars on the basis of which commercial will issue provisional demand note. In case of involvement of dark fiber, it will be charged as per existing rates i.e.@ Rs 2.23 lakhs /KM/annum. No establishment, freight, store keeping and other such charges, (which were taken as per the old R & G policy), will be included to prepare the demand note.

iii) Transmission Unit will provide actual cost to commercial Unit (under intimation to Media Planning Unit) after commissioning of the work on which actual billing will be done.

iv) An undertaking will be taken from the customer on Rs 20=00 non judicial stamp paper as per annex-1, as is being done in the present R&G policy on similar terms and conditions subject to modifications as already proposed above.

5. If customer desires additional circuit on the same R & G system, it is proposed that incentive should be given to the costumers, the quantum for which can be decided by the tariff committee from time to time as per the prevailing competitive scenario.

6. After the R&G period of five years is over, it is proposed that we may charge 1% of the total cost to MTNL as maintenance cost from 6th year onwards, if customers want to continue with the same arrangement.

7. Premature surrender: Full charges of the remaining period will be collected upfront.

8. Shifting: During the currency of the R & G contract as per the new policy, if a customer asks for shifting from one place to another, the same should be allowed if the customers agrees to pay upfront the charges incurred for providing OFC and system at the new location or the customer agrees to pay the pending recovery for the existing locations and signs further agreement for another 5 years for the new location.

9. Presently wherever required, old PDH is replaced by SDH if performance of old PDH system is not up to the mark, same policy will continue.

10. Presently there is no policy to provide dark fiber on temporary / short duration basis, same policy will continue. The fiber is a scare resourse; it is not advisable to give dark fiber on rental basis. However once DWDM system is installed, we can rent out lambdas for which a separate policy may be formulated.

LETTER OF UNDERTAKING