the component available while it is a functioning part of the network (so called make-ready costs), and (3) the impact of providing access to the component's services on total costs. The first two types of costs are more readily identified than the third type of costs, because of the complexity of network design. The cost of network elements such as switching, transmission links, loops, and network signaling is subsumed in the total cost function. They are interconnected in the network planning functions that underlie the engineering design of networks. Networks in Telecommunications Furthermore, the optimal combination and configuration of network elements are represented by the economic production function. Finally, the best mix of network components to achieve a given mix of network services is contained in the minimum expenditure that underlies the cost function. Finding the effect of inputs on the total costs of the network would require untangling these three planning stages associated with engineering specification, the production function, and the cost function. As noted, a fundamental change takes place after network elements are incorpo- rated into a functioning network. To represent the forward-looking costs of network elements accurately requires a redefinition of the firm's production function and cost function before the fundamental change takes place. The long-run cost function requires all inputs to be variable. Consider the situation in which a firm correctly anticipates that regulators will require it to make unbundled network elements available. Generally, because the elements are provided only as part of the network, it is not the element itself that is provided, only the services of that element. The network firm may be called upon only to provide a portion of these services. To make these ideas clear, suppose that q represents the vector of services of network elements to be provided to competitors and let Q be the vector of outputs pro- vided to the firm's customers. Then a new augmented pr