of potential subscribers grows Figure 3.19 Telephony platform and its virtuous cycle growth as directory assistance, information on weather, stock, horoscope, and SO on were provided mostly through the incumbent operator. Anyhow, the content and services constituted a very small portion of an operator's revenue. In summary, the telephone operator was generally a vertically integrated company providing all the services a subscriber needed for over a century after the invention of telephony (Figure 3.18). As noted in Chapter 2, telephony operators also created and controlled a platform- mediated network, which grew as the number of subscribers increased and more manufac- turers entered the market. The growth in the number of subscribers reduced the per subscriber fixed cost of network roll-out. It further helped attract more third-party manufacturers and investment in research and development (R&D) to enhance the efficiency and quality of the networks, as illustrated in Figure 3.19. The increase in the number of manufacturers had the added impact of extra investment in R&D of new technologies and products. The reduction Broadband Telecommunications Technologies and Management in cost per circuit shown in Table 3.1 is partly explained by this global R&D effort by both the operator and manufacturers. Capital Expenditure Most of the operator cost structure was the initial capital expenditure associated with the roll out of the infrastructure. Customer premises needed to be wired and connected to an exchange, switches needed to be put in place and exchanges need to be connected with each other. All these required significant investment. Furthermore, early networks used telegraph poles and overhead wires to connect customer premises to the local exchange. As the number of sub- scribers grew this became impractical as Figure 3.20 illustrates. Telephone companies had to build underground ducts to house these copper wires as a significant capital outlay. Further capital expenditure was required for automatic network switch