Typical cost structure

Large organisations’ telecommunications costs generally conform to this structure:

Cost Structure


  • 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