software, hardware, and other fixed assets made during the course of a year. This is the way the information is typically made public, after it is spent. Table 13-3 shows both lines from our financial statement. Depreciation is generally not well understood by non-financial people; however, it isn't complicated conceptually or mathematically. Briefly, here's how it works: During the planning stage of a project, accounting makes a preliminary judgment about the life of the asset. This assessment determines the number of annual accounting periods over which the asset will be written off or depreciated. For example, equipment may be written off over 5 or 7 years, while software may be written off in 3 years or even expensed outright. As construction or implementation proceeds, there comes a time when the asset is placed into use. When this occurs, an expense amount equal to the value of the asset for that period is transferred TABLE 13-3 Current year Depreciation Capital Investment (4.8) (6.3) (6.8) (7.4) (7.6) (7.7) 13 TECHNOLOGY FORECASTING AND STRATEGIC PLANNING from the depreciation account to the cost section of the P&L. It becomes an expense item, reducing gross margin available as income before taxes. In other words, as long as there is sufficient revenue and gross margin, depreciation reduces the amount of income taxes paid. Mathematically, here's what happens by example: Let's say that an item cost $5000 and another $1000 to install and make ready for use. The total of $6000 is set up in an account whereby each month, for 120 months (the life of the asset), $100 is transferred from the asset account to the appropriate expense account. The entity's assets are reduced by $100, the monthly expense is charged, reducing gross margin subject to taxes. COMMUNICATIONS CAPITAL PLAN Remember that we are concerned most of all about what it takes to move content around. Essentially this involves the basic transport channel and supporting communications. In other words, moving the content requires some amount of bandwid