k model - Defines the network structure and capacity requirements based on market growth forecasts and operator network strategy. It estimates the network infras- tructure required for a scenario. Determines the cost for each network element applying generic pricing. 6. Financial model - Defines the financial result for the business strategy. Defines the revenues, business and network capital and operational expenditure for the business strategies per scenario. See Figure 4.35. End user Application model Market model Telecom business Network Financial model Figure 4.35 Structure of a computer program, which is adding application, market and financial models to the basic triangle Understanding Changing Telecommunications - Building a Successful Telecom Business Business case development Operating expense Revenue Financial modelling Capital expenditure Tools Figure 4.36 Revenue 4.6 REVENUE Equipped with tools let us now look at the main parts of business case development starting with revenue. See Figure 4.36. The last part on financial modelling is treated in Appendix 2. 4.6.1 WHERE IS THE MONEY? Since the end user is the main final financing source for new investments etc., the potential revenue from end users is crucial. A common expression is ARPU (average revenue per user). Whether the overall portion of money allocated to communication will increase or not is under debate. The Swedish investment bank Carnegie, for example, calculates a doubling of mobile communication services as a percentage of the GDP during the next 10 years. The development in Sweden has shown an increase per household from 2000 SEK a year in 1992 to 5820 SEK in 2001. This includes fixed telephony, mobile telephony and Internet services. In the UK ARPU decreased during the period 1998-2001 as well as revenue per minute. The data ARPU was not able to counteract this decrease as was expected only a couple of years ago. So, here we see the main challenges, to defend voice ARPU and increase revenues from messaging and mobile Internet. A key f