The term economics is generally understood to mean sound management. This is associated with openness, good faith, accurate figures and integrity in company accounts, with transparency ensured through satisfactory standards of good practice in relation to investors and the clients who have placed their trust in an organization’s managers.

Network economics focuses on rational planning, which aims to implement only what is necessary and to provide, in the most effective way possible, universal access to the means of communication best suited to the required purposes. It is clear that this definition largely ignores understandings of what is considered necessary and what could be expensive.

Similarly, a country’s economy is the result of an organizational structure in which efficiency is linked to clear objectives. For example, reducing the prices of sought-after industrial goods can encourage the mass export of those products to the international market. For a country’s trading to be assessed positively, it should meet the subjective standards that it seeks to achieve. These may include improving the standard of living of its citizens, repaying the national debt, full employment and making culture and leisure available to everyone.

Without establishing strict rules on the maximum rate of debt or its repayment time, comparing the economic situations of nearby countries may be used to justify the trends observed in balance sheets. To make such comparisons, indexes and suitable, stable metrics are necessary, although economic experts continue to disagree strongly on this issue.

On a technical level, the key criteria required by networks as a priority relate to quality of service, confidentiality and communications security. These criteria affect the economies of telecommunications networks, which may themselves be viewed in different ways if each partner has their own opinions:

• – the first area concerns the network operator, which must respond to customer demands with the technology at its disposal. With the assistance of manufacturers who define the development and production of equipment, the operator is responsible for its installation and operation throughout the national network, as well as for selling communications services to professional and residential users. The company, while providing services to its clients, must make a profit that allows it to finance future investments and development and research work;
• – the second area concerns network users and whether the services and applications offered by operators truly respond to their needs, taking into account the money spent.

Do each of the two parties, operator and customers, receive what they are entitled to from this exchange of services? There are several questions that can be used as examples to illustrate this issue. Is ISDN, with its two available interfaces, properly suited to the requirements of all companies? Why has frame relay undergone such an important development in the American banking sector in particular and why has its operating life been so brief? Has ATM technology, as logical as it appeared to network experts, been an essential improvement to business services? And is the Internet, as popular and rich in applications as it has become, satisfactory to the range of mobile and fixed users in towns and rural areas?

Internet technology offers bidirectional digital connections of varying speeds between users of all forms of connection, be it sound, text or multimedia. For all that, its implementation presents a certain number of economic difficulties for the network operator. Is the operator properly remunerated for its efforts in this area? Are the regulations underpinning the introduction of competition to the communications market wellsuited to managing such complex digital technology?

For almost three centuries, noted authors have posited a number of economic theories. The expression “political economics” (“EcoPo”, for French-speaking students, from “économie politique”) raises the idea of specific strategic principles or theoretical “natural laws”, able to facilitate the management of goods and services production, which itself requires the involvement of political authorities. The economics of telecommunications networks has developed alongside our society. If there are unmistakable connections between real parameters, developments in network technology should now allow them to emerge in a logical, clear and lasting way.

This work does not to attempt to lay the foundations for a theory specifically geared toward the economics of tomorrow’s communications networks. On the contrary, this book presents a simplified picture of the principal elements of the economics of a network today, intended to be accessible to ordinary technicians, taking into account experiences they acquire in the field. The major elements associated with network economics that affect the quality of services and the profitability of investments are listed, step by step, accompanied by references to recent economic works. In order to discuss the effect of costs on the suitability of services offered by communications networks, this book is organized into the following five chapters:

• – Chapter 1, based on the history of European networks, focuses on aspects related to building a national network.
• – Chapter 2 focuses on the structures and architecture of a network.
• – Chapter 3 discusses the general themes of regulation and tariff principles, including the latest developments.
• – Chapter 4 is dedicated to supply and demand from the perspectives of professional and residential users and network operators.
• – Chapter 5 brings together different aspects of the present situations of networks and the effect of the Internet on the economy.

In conclusion, the reader will find an overview of the most significant issues likely to influence the economics of communications networks as they are today.

Daniel BATTU
July 2016