An Economic Evaluation of Network Cost Models
7 August 2000
By Dr. William Taylor with Charles Zarkadas, Dr. Timothy Tardiff, and Jaime D'Almeida
The purpose of this paper is twofold. First, it explains the economic principles underlying two cost models licensed by Telcordia - the Switching Cost Information System (SCIS) and the Common Channel Signaling Cost Information System (CCSCIS). Second, it demonstrates that these models are consistent with the rules and principles used by regulators to determine the costs associated with network elements and interconnection.
Despite the FCC's recent expression of concern, the fundamental concepts underlying these models have not changed; nor have the regulatory conditions that led regulators to adopt Long Run Incremental Cost (LRIC) approaches to calculating costs. SCIS and CCSCIS today are the same flexible models that have been endorsed and used extensively by regulators and RBOC's; they are still relevant, effective, and readily verified.
