Accounting and Pricing for the Telecommunications Industry: An Operational Approach

Abstract

This paper tackles the problem of the creation and use of information by a firm managing telecommunications networks with particular reference to costs and their connection to price and investment strategies. This problem is generally addressed by means of production and cost analysis models that are basically identical to those used in manufacturing industry and which, therefore, are structurally incapable of identifying many of the characteristics specific to the production of network services. I describe a representational model of network service production activities which, by incorporating crucial features of the telecommunications sector from the start, is a good tool to organize and keep an accounting record of these activities. Moreover, the paper shows the implications of the model concerning the pricing of final and intermediate services and stresses the theoretical limits of the main price determination models in the literature. The implications of the analysis performed pave the way for a new approach to the study of telecommunications scenarios. Copyright 2001 by Oxford University Press.