mmetrical. When each carrier's originations and terminations are balanced and the pattern of calls is evenly distributed across the customer base, bill-and-keep is efficient even if the total traffic generated by one carrier is much larger than the total traffic generated Networks in Telecommunications by the other. The point is most easily understood through the following exam- ple. Suppose that two local networks operate in the same area, with the incum- bent carrier serving ninety customers and the new entrant serving ten customers. Each customer makes ten calls randomly distributed throughout the entire cus- tomer base. One would expect the customers of the dominant carrier to initiate 900 calls. Ninety percent (or 810) of those calls would terminate on the incum- bent's network, whereas ten percent (90) would terminate on the new entrant's network. At the same time, one would expect the new entrant's customers to place 100 calls, ten percent (10) of which would terminate on the new entrant's net- work and ninety percent (90) of which would terminate on the dominant carrier's network. Thus, if originations and terminations are symmetric and randomly dis- tributed, 90 calls would pass from the incumbent's network to the new entrant's network, and the same number of calls would pass in the other direction. Under these circumstances, metering actual usage would provide no economic benefits even though the total traffic handed by each network would be far from balanced. As noted above, GTE and Pacific Bell interconnected on a bill-and-keep basis when serving adjacent neighborhoods in Los Angeles despite the fact that the size of their customer bases was far from symmetrical. The implication is that the transac- tion cost economies associated with avoiding metering costs outweighed what little benefit would have resulted from a more accurate accounting for the actual traffic flows. Note that a far different situation holds if the distribution of calls is not random. In addition, the symmetry of terminations and or