Typical cost structure
Large organisations’ telecommunications costs generally conform to this structure:
Observations:
- The bulk of costs (~85%) are external—and therefore both visible and painless if reduced
- Carrier costs account for two-thirds of the overall costs—typically concentrated nationally with very few vendors who have high fixed and low variable costs
- Voice costs comprise about two-thirds of the carrier costs—and usually have great potential for both technical and commercial optimisation
- Line costs (i.e. capacity-based) are almost as significant as traffic costs (i.e. consumption-based)—their relative growth reflecting the prevalent strategy of ex-monopoly carriers to shift their revenues from consumption to more “sticky” capacity