Costing Methodology for Next Generation Networks


Costing Methodology for Next Generation Networks

This paper discusses the general concept of costing for telecommunications services, the challenges faced by operators and regulations with the introduction of Next Generation Networks (NGNs), as well as the implications of NGN on traditional costing methods.

Legacy, circuit-switched telecommunications networks and the newer, packet-switched networks have traditionally occupied different spaces within organisations, with the former used for voice traffic and the latter for data. While they do share tasks, they perform, for the most part, discrete functions.

But as the telecommunications ecosystem continues to develop rapidly and in particular, shift towards Internet Protocol (IP)-centric solutions for voice and video, there is now a greater need than ever for the deployment of NGNs. NGNs, which are packet-switched and IP-based, are able to support the convergence of previously distinct applications, mirroring the end user experience of converged devices and services. In the meantime, however, as operators begin work on the mammoth task of building the new networks, they will have to contend with maintaining these hybrid networks until the evolution is complete.

As the telecommunications industry continues to advance at breakneck speed, its costing methodologies will need to keep up. Originally designed based on the properties of legacy networks, price regulations for monopolistic services have generally utilised cost models adopting various costing methodologies. The increasing deployment of IP-based fixed and mobile infrastructure in combination with the still unanswered search for data monetisation have intensified the pressure on the industry to review its costing methodologies for both regulatory and commercial cost analyses. 

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