Cisco CloudCenter: Get the Hybrid IT Advantage

Total Element Long Run Incremental Cost (TELRIC)

Definition - What does Total Element Long Run Incremental Cost (TELRIC) mean?

Total element long run incremental cost (TELRIC) is a common measure applied by telecommunications regulators in some jurisdictions to set access prices with the help of cost-based measures. In the United States, the Federal Communications Commission (FCC) provides a price ceiling to ensure that incumbent local exchange carriers (ILECs) charge competitive local exchange carriers a fair price for interconnection and co-location.

The FCC used the term TELRIC for the first time when it interpreted TELRIC's role under the 1996 Telecommunications Act. This particular act was predicated on a higher level of unbundling by ILECs. Therefore, the act was centered on the idea that ILECs would have to lease components of the local telephone network to prospective competitors. Such competitors would then expect to blend these components together, possibly using their own elements to offer appropriate services to end users.

Techopedia explains Total Element Long Run Incremental Cost (TELRIC)

The total element long run incremental cost strategy presents some significant characteristics to determine pricing for telecommunications services and network elements:

  • Costs determined according to TELRIC principles are incremental. TELRIC research consists of costs that are incurred only with respect to that element or service. The service alone justifies the costs, and the costs would not have been incurred if the service was not introduced.
  • Costs recognized using a TELRIC analysis are forward-looking. The historical as well as embedded costs get ignored in support of the most affordable costs incurred by means of the presently available technology, whose cost could be realistically predicted according to the available data.
  • The forward-looking costs discovered in TELRIC research are long-run costs. Over time, the plants and equipments should be replaced with the most efficient and economical equipment available.
  • TELRIC studies recognize both volume-insensitive and volume-sensitive costs. Volume-sensitive costs refer to costs that fluctuate with variations in a service demand or functionality, such as switching costs. Volume insensitive costs refer to costs that do not fluctuate as per variations in the level of demand, such as the right-to-use fees for switch software.
Share this:

Connect with us

Email Newsletter

Join thousands of others with our weekly newsletter

The 4th Era of IT Infrastructure: Superconverged Systems
The 4th Era of IT Infrastructure: Superconverged Systems:
Learn the benefits and limitations of the 3 generations of IT infrastructure – siloed, converged and hyperconverged – and discover how the 4th...
Approaches and Benefits of Network Virtualization
Approaches and Benefits of Network Virtualization:
Businesses today aspire to achieve a software-defined datacenter (SDDC) to enhance business agility and reduce operational complexity. However, the...
Free E-Book: Public Cloud Guide
Free E-Book: Public Cloud Guide:
This white paper is for leaders of Operations, Engineering, or Infrastructure teams who are creating or executing an IT roadmap.
Free Tool: Virtual Health Monitor
Free Tool: Virtual Health Monitor:
Virtual Health Monitor is a free virtualization monitoring and reporting tool for VMware, Hyper-V, RHEV, and XenServer environments.
Free 30 Day Trial – Turbonomic
Free 30 Day Trial – Turbonomic:
Turbonomic delivers an autonomic platform where virtual and cloud environments self-manage in real-time to assure application performance.