4. Phases in ANACOM’s cost allocation methodology
The allocation of costs follows mainly two phases:
a) Phase 1: Analysis and allocation of accounting costs related to ANACOM’s processes/activities, regulation areas, and external entities1.
b) Phase 2: Allocation of costs to the different types of activity according to the actions underlying Article 105 of Law 5/2004 (ECL) and the actions specified in Article 44(1)(2) of Law 17/2012 (PSL), as well as to the types related to the other sectors regulated by ANACOM, namely the infrastructure sector (ITED and ITUR), the equipment sector, and the information society.
Figure 2: Phases in ANACOM’s cost allocation Methodology
4.1. Phase 1 – Analysis and allocation of accounting costs to ANACOM processes/activities
To start with, costs are grouped by type (pool) and by department according to the following classification:
a) Direct resources – expenses directly related to regulation services, through a cause-effect relationship.
b) Indirect/common costs – costs devoid of any direct relationship with regulation services.
c) Cooperation and levy costs – specific ANACOM cooperation and representation expenses.
Next, costs are allocated to processes/activities directly or by means of criteria that represent a cause-effect relationship between the respective nature of the cost and the process(es) it supports.
As an example, the sequence of movements to classify costs is summarised below:
d) Grouping of total accounting costs by type and by department.
e) Classification of costs according to the structure of work processes in force, regulated and non-regulated areas (services), and external entities. Analysis and allocation of costs to processes2/services and cost objects/external entities of ANACOM3.
f) Personnel costs4 are directly allocated to ANACOM’s processes/services and cost objects/external entities, according to the report made by all employees via a computer application “Working Hours Report - Reporte de Horas de Trabalho (RHT)”
g) Expenditure on travelling abroad, trips within the country, advertising, specialised works, fees, training, documentation, meetings, sponsorships are directly related to processes/services/customers, based on rational relationships, without prejudice to a portion with a non-relevant part being distributed according to the Man-Hours (MH) criterion.
h) Expenditure on electricity, water, air-conditioning, rental of the head office building, property insurance, lifts, cleaning services, surveillance and security are regarded as structural costs and are distributed according to the m2 used by each department. All other operating expenses, notably those related to procurement, reprography, and communications are distributed among all departments according to their consumption5.
i) Costs related to cooperation and contributions/levies6 are distributed according to the nature of the activity7.
j) Depreciation and amortisation costs, with a significant value, are associated with the work processes related to computer equipment, software and hardware8, while the rest is distributed by MH.
k) Provisions are allocated to the several types of activity, according to the kind of provision9.
l) Other expenses, where there is no cause-effect relationship, are distributed according to the relative cost or MH.
It is important to stress that a portion of the work processes, such as “Planning and Control”, “Financial System”, “General Services” and “Human Resources” do not have a direct relationship with a specific regulation area since they cut across all areas10. For this reason, costs related to these work processes are redistributed to all operational processes, based on relative cost or MH criteria.
4.2. Phase 2 – Allocation of costs to regulation sectors
In order to guarantee the correct allocation of accounting costs by each regulation sector, both in the area of electronic communications, through the action set out in Article 105(1) of Law 5/2004, and in the area of the postal sector through the actions set out in Article 44(1)(2) of the PSL, a process was developed to enable that distribution and which is identified as “type of activity”.
The type of activity is identified according to a work process/regulated area (service)/external entity combination11. Each type of activity corresponds to a given set of combinations12.
The allocation of costs related to each type of activity respects the following process:
a) Identification of the amount of direct costs by type of activity bloc (spectrum management activities, numbering management activities, regulation activities and others).
To sum up, the costs determined for the Electronic Communications Sector are distributed by the acts defined in Article 105(1)(a) to (d) of the Electronic Communications Law, and the costs determined for the Postal sector are distributed by the actions defined in Article 44(1)(2) of the Postal Services Law.
b) Distribution of the amount of common costs (accounting costs of a common nature) and cooperation/levy costs by regulation blocs, considering one of the following options as a distribution criterion, taking into account the type of common or cooperation cost:
i ) Direct allocation to the corresponding type of activity bloc through the cause-effect relationship.
ii ) Proportion of costs directly related to each type of activity bloc.
iii ) Proportion of MH directly allocated to each type of activity bloc.
c) Subsequently, and after determining the costs by each type of activity bloc, the costs allocated to “all activities” of regulation are distributed among the following regulation sectors:
i) Electronic Communications Sector,
ii) Postal Sector,
iii) Other sectors outside the scope of the Electronic Communications Law and the Postal Services Law.
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Type of Activity: Costs allocated to sectors in the scope of Law 5/2004 |
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Declarations supporting Rights |
Regulation |
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Exercise of Activity - Regulation |
Regulation |
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Allocation of Rights of Use of Frequencies |
Regulation |
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Allocation of Rights of Use of Numbers and their Reservation |
Regulation - Numbering |
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Spectrum Management Activities |
Spectrum Management |
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Numbering Management Activities |
Numbering Management |
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Type of Activity: Costs allocated to sectors outside the scope of Law 5/2004 |
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Declarations supporting Rights13 |
Regulation |
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Exercise of Activity - Regulation14 |
Regulation |
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Amateur and CB records and certificates15 |
Spectrum Management |
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Allocation of Rights of Use of Numbers and their Reservation16 |
Regulation – Numbering |
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Spectrum Management Activities17 |
Spectrum Management |
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Numbering Management Activities18 |
Numbering Management |
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Costs not directly related to the regulation activity |
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Common Costs |
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Common Costs - Spectrum Management Activities |
Spectrum Management |
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Common Costs - Spectrum Management Activities - Services Law 5/2004 |
Spectrum Management |
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Common Costs - Spectrum Management Activities - Services not covered by Law 5/2004 |
Spectrum Management |
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Common Costs - Regulation Activities |
Regulation |
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Common Costs - Regulation Activities - Services Law 5/2004 |
Regulation |
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Common Costs - Regulation Activities - Services not covered by Law 5/2004 |
Regulation |
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Common Costs - Numbering Management Activities |
Numbering Management |
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Common Costs - Allocation of Rights of Use of Frequencies |
Regulation |
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Common Costs - Allocation of Rights of Use of Numbers and their Reservation |
Regulation – Numbering |
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Common Costs - Declarations supporting Rights |
Regulation |
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Common Costs - All activities - To distribute based on direct cost |
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Common Costs - All activities - To distribute based on MH |
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Common Costs - All activities - To distribute other cost objects |
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1 The external entities considered appear in several groups and their identification makes it possible to measure costs according to the classification presented in this document.
2 According to the Dictionary of Processes/Activities that supports the report of working hours of all ANACOM employees in the application “Report of Working Hours (RHT)” and the cost classification. The RHT application makes it possible to obtain ANACOM’s overall Man-Hours.
3 Combination process and/or service or cost object and/or external entity.
4 Except the costs related to the Christmas Party, Anniversary, and other personnel-related events, which are treated as common costs (nature Common Costs – All activities – Distribute other cost objects).
5 Being distributed to processes/services/external entities depending on the hours reported in each department (MH – Man-Hours in each department).
6 Always linked to the “Cooperation” process and to a particular external entity.
7 A portion of these costs is not related to the regulation activity. See, too, the Type of Activity list (Figure 3).
8 For instance: the amortisation of the SINCRER equipment (Integrated Remote Control System for Radio Stations) is associated with the “Spectrum Monitoring” sub-process and all radiocommunications services.
9 It may be shared based on the direct cost or MH system. Provisions for legal actions in progress accounted for in recent years have been regarded as regulation activity costs – Law 5/201, spectrum management activities – Law 5/2004 and regulation costs – Law 17/2012.
10 They are regarded as common processes.
11 Costs associated with certain external entities are not considered regulation costs.
12 According to the Dictionary of Processes/activities in use at ANACOM and which supports the costing system.
13 Declarations and Licences for the postal activity and records of audiotext and SVA (value added services) providers.
14 Postal services, ITED/ITUR, audiotext and SVA
15 Records and certificates associated with CB (citizen’s band) and to the amateur service.
16 Audiotext and premium services.
17 CB and amateur service.
18 Audiotext, SVA and premium services.
