(Reference)Outline of Rules for Category I Designated Telecommunications Facilities Interconnection Accounting

Purpose

The purpose of these Accounting Regulations is to specify the accounting methods used for interconnection to Category I designated telecommunications facilities and to clarify revenues and expenses, etc., concerning this interconnection, thereby contributing to the calculation of appropriate interconnection charges.

*With respect to the expenses of telecommunications facilities that are attributed to the Category I Designated Facilities Management Business, data are totaled and classified per equipment category unit, such as switches and transmission lines, in order to provide a basis for calculating interconnection charges for each unbundled element.

Regulations

The accounting procedures adopted by telecommunications carriers that install Category I designated facilities are separated into the business to manage and operate Category I designated telecommunications telecommunications facilities (Category I Designated Facilities Management Business) and the business to use such facilities to provide service to users (Category I Designated Facilities Usage Business), and the Category I Designated Facilities Management Business provides these facilities to the Category I Designated Facilities Usage Business and other carriers on equal conditions.

Statements Included

	Statement	Description
1	Profit and Loss	Profit (loss) of the Category I Designated Facilities Management Business and Category I Designated Facilities Usage Business
2	Statement of Mean Capital Employed and Rate of Return	Mean capital employed (rate base) by the Category I Designated Facilities Management Business and Category I Designated Facilities Usage Business, and the rate of return on that employed by the Management Business (pre-tax basis)
3	Detailed Statement of Fixed Asset Attribution	Breakdown of fixed assets attributed to the Category I Designated Facilities Management Business and the Category I Designated Facilities Usage Business 3-2 sets forth the breakdown of general category I designated facilities. Optical Subscriber Lines and Optical Main Distribution Frames are listed by prefecture.
4	Detailed Statement of Expenses by Equipment Category	Breakdown of expenses by equipment category for the Category I Designated Facilities Management Business and the Category I Designated Facilities Usage Business 4-2 sets forth the breakdown of general category I designated facilities. Optical Subscriber Lines and Optical Main Distribution Frames are listed by prefecture.

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