If we were not to model revenue and cost, it would be even more difficult to make investment decisions beneficial to shareholders. Such modelling gives an opportunity to run what if scenarios before committing to a decision. Let's examine further.
It is no doubt due to the ubiquitous state-controlled telecommunications monopolies of the past that the tracking of costs in telecommunications companies has historically lagged behind other industries. In the car industry, the costs incurred in manufacturing a car are known to the smallest component. The cost base of a car is thus known to a high degree of accuracy, to within a few pounds. This kind of accuracy is the envy of the telecommunications industry and is a goal it is achieving.
It is not just the capital costs that need to be tracked. A car, once sold, becomes the owner's responsibility. The owner will need to maintain it, fill it full of petrol, service it and so on. The costs involved in running the car are no longer the responsibility of the car manufacturer. Networks, however, are invariably built and run by the telecommunications operator and so the responsibility for funding the cost of running the network is not transferred to a third party. In costing a network properly, the costs involved in running the network, the depreciation of the network assets, the utilities, accommodation, maintenance, people costs, etc, in short the operational costs of the network, need to be assessed...
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