fixed costs of network set-up, and variable costs of lease, marketing, advertising Voice Communications Content and services layer Connectivity retail layer Infrastructure layer Subscriber/End-user Figure 3.23 VNOs' business layer and customer service. As the number of customers increases, more lines may be leased. With 40 leased lines, some 20 E of traffic may be supported, for a usage efficiency of 73%. Clearly, a larger customer base increases the efficiency of the business model. Many VNO businesses spent heavily to increase their customer base, through offering very competitive rates to the incumbent operator. Some other operators stayed small, but increased their usage efficiency through inferior grade of service (e.g. 90% usage efficiency is possible over 20 circuits if a blocking probability of 11% may be tolerated.) These VNOs offered inexpensive long distance calling for users who did not mind the inconvenience of lower quality. With the emergence of mobile telephony, the concept of mobile VNO (MVNO) has gained currency, with many MVNO companies re-selling voice and data services of incumbent network operators. VNO businesses are policy sensitive. Many countries have an incumbent infrastructure company, which also operates as a retail provider and can compete with the VNOs. An example is Telstra Australia. Should the lease price be variable, or subject to undue risks, a VNO could soon find itself at the mercy of the incumbent infrastructure owner. Regulators in most countries have strict guide- lines on how much an infrastructure owner may charge VNOs for accessing their network. In many places these charges are little more than the costs of operating the infrastructure. As the first real-time telecommunications system, telephony soon became a global success. The initial technological, business and policy issues and solutions were complex. These have continued to influence how these services are provided over nearly one and half centuries since the development of these systems. An overview of how teleph