y different. The watershed years of 2001 and 2002 with dozens of failures in the telecom sector, including CLECs (GST and ICG), RLECs (Telergy and Winstar), fiber IXCs (360Networks), ELECs (Yipes), and ISPs (PSI Net and Exodus), and the dot-com space corroborate the position that it takes quite a long time to turn EBITDA and net income positive. A highly skilled telecom team might achieve that in three years. The CLECs were fond of perturbing the textbook definition of gross margin (revenues minus all expenses with the single exception of sales, general, and administrative [SGA]), and always claimed a gross margin of around Table 1-4 Advocacy White Paper from a Very Reputable Source Pro Forma Income Statement (Deployment in 10 Cities) Revenues $129,700,000 $265,100,000 $409,500,000 $594,800,000 $717,400,000 Expense items OAM&P ($38,900,000) ($79,500,000) ($122,800,000) ($178,400,000) ($215,200,000) Sales and marketing ($36,300,000) ($55,700,000) ($71,700,000) ($104,100,000) ($125,500,000) General and administrative ($15,600,000) ($23,900,000) ($30,700,000) ($44,600,000) ($53,800,000) Leased fiber ($17,300,000) ($34,800,000) ($50,800,000) ($72,400,000) ($81,900,000) Building lease ($5,500,000) ($9,700,000) ($12,100,000) ($16,000,000) ($16,000,000) Total expenses ($113,600,000) ($203,500,000) ($288,100,000) ($415,600,000) ($492,500,000) EBITDA $16,200,000 $61,600,000 $121,400,000 $179,200,000 $225,000,000 Depreciation/amortization $11,400,000 ($15,600,000) ($21,100,000) ($30,700,000) ($39,100,000) $4,800,000 $46,000,000 $100,200,000 $148,500,000 $185,800,000 Interest ($1,700,000) ($1,900,000) ($2,200,000) ($2,900,000) ($3,200,000) Taxes ($1,900,000) ($18,400,000) ($40,100,000) ($59,400,000) ($74,300,000) Net income $1,200,000 $25,700,000 $57,900,000 $86,200,000 $108,300,000 Operating cash flow $12,600,000 $41,300,000 $79,100,000 $116,900,000 $147,500,000 Capital ($57,100,000) ($20,700,000) ($27,900,000) ($47,900,000) ($42,000,000) Net cash flow ($44,500,000) $20,500,000 $51,200,000 $69,000,000 $105,400,000 Discount