Network operation cost model to achieve efficient operation and improving cost competitiveness

In today's competitive environment, for telecom service providers, estimating the cost for providing their services is becoming increasingly important. Moreover, cost estimation in the telecommunication industry becomes more difficult because of increasing indirect cost upon digital convergence, expanding multipurpose facilities, complexity of service product, etc. Nevertheless, not much seem to have done in improving estimation methodology of the cost of telecommunication operations. As a result, the quality of cost information on network operations and network facilities has deteriorated and now even decision makers in the industry dismiss the information. Recently, Telco companies have more concerned about network OPEX (operation expenditure) for their profitability and cost competitiveness which is essential for the company's survival. In this paper, we study the general network cost methodology of network facilities and operations. Especially, we suggest the new cost estimation method and procedure by applying ABC (Activity-Based Costing) method in the network operations to deal with the issue on network OPEX and cost reduction. And we explain how this method can estimate the operation cost more accurately and precisely than other previous methods and how this can help to analyze the cause of cost expenses and to establish the strategy and plan to improve the operational process and to reduce the operational cost. We also suggest several useful use-cases of the suggested cost estimation method and describe expected effects.