Convergence ©1996 Deloitte and Touche

by Robin Gaster & Carol Martin, Deloitte and Touche, January, 1996

What Is Convergence?

Convergence can be defined as the merger of telecommunications, computing, consumer electronics and media related (all facets of information, news and entertainment) technologies and markets to deliver next generation applications to consumers and businesses.

The drivers of convergence can be summarized as follows:

Digital technology is ultimately responsible for convergence because it allows many types of information such as voice, video, data, and text to be processed, transmitted and stored together, achieving economies of scale and enabling the provision of new services on existing media. Optical fiber has enabled communication improvements to keep pace with the rapid bandwidth transmission demands that result from this trend. Computing, communication, and storage technologies are converging in the sense that they often can be substituted for one another. For example, with enough communication capacity to send large amounts of data quickly, an application requires less local computing capacity if the data can be processed remotely with a faster computer. Telephone switching systems are evolving to include more computer software features.

Today, personal computers and modems are being designed to handle much higher bandwidth, allowing a user to interact with news, information and entertainment content. As these improvements continue, consumers and business users will keep pace and will continue to demand increased bandwidth to enable them to access a broad range of services such as telephony over cable TV networks, video-on-demand and wireless video and data services.

Three sets of key price/performance ratios have fallen precipitously in recent years: computing power; storage capacity, with the advent of large, inexpensive hard drives and CD-ROMs; and communications capacity with the seemingly unlimited bandwidth of fiber and the additional bandwidth available through satellite and new compression technologies. In the last four years, the cost of processing, storing, and distributing digital information has declined from $1.00 a megabyte to $0.25 a megabyte.

Deregulation, in the form of the Telecommunications Act of 1996 sweeps away regulatory barriers that prevent telephone, cable, broadcast, and other communications companies from entering each other's markets.

As these factors play out, industry players are beginning to see that their industry-specific skills can, with the right strategy, be leveraged across a much wider marketplace. As a result, companies involved in broadcasting, cable television, media, telecommunications, computer software and hardware have been rapidly merging, forming joint ventures or creating partnerships across industry lines.

Historical and Emerging Trends

The power of information and communications technology is exploding. The same computing power (one million instructions per second or MIP) that cost $800,000 in 1975 is available today on one microchip for less than $14. It is now possible to create almost any information in digital electronic form. Most of the information which people now use every day has been stored or processed by a computer at some time since it was created. Personal computers are not only a staple in the office, but are increasingly viewed as a necessity in the home by those who can afford them. It is estimated that by the year 2000, over 50% of all U. S. households will have at least one personal computer. Music is digitally recorded, movies edited on computer, photographs electronically scanned and retouched.

The Internet, which connected 6,000 computers in 1985, now connects more than 6 million computers and 30 million users worldwide. At current rates, the number of users is doubling every year. In his book, The Road Ahead, Bill Gates predicts that "Now that computing is astoundingly inexpensive and computers inhabit every part of our lives, we stand at the brink of another revolution. This one will involve unprecedented inexpensive communication; all the computers will join together to communicate with us and for us. Interconnected globally, they will form a network, which is being called the information highway."

Emerging behavior seems to bear out Mr. Gates' predictions. The PC consumers purchased for their home is no longer just for word processing or simple spreadsheets. Consumers are becoming more sophisticated with expanded ability to access information, obtain news, perform research, bank, play games on line and chat in forums with others who share their interests. As shown in the Gallup survey below, a substantial number of the adults surveyed view interactive services and entertainment at home as important and would use them.

Killer Applications

Much early discussion of the information superhighway revolved around the search for the "killer application: the one application that will bring users flocking to the information superhighway, just as Lotus 1-2-3 did for PCs and PacMan did for video arcades. That search has been largely unsuccessful. Still, Table 1 below illustrates that even without a "killer application," there will be plenty of opportunities. Some portion of the revenue from markets such as advertising, catalog shopping, video rental, theater box office and television and print news will be shifted to interactive media.

The following list of services provides a basic synopsis of the types of services that are currently or expected to be offered:

Communications and Messaging. Communications and messaging services include:

• Personal Communications Services (PCS) - providing universal access numbers to locate an individual no matter where they are and route a call or communications request to them.
• E-Mail - in addition to current E-Mail services, the future includes document conferencing, E-Mail that includes audio, video or other multimedia data in place of or in addition to text.
• Video telephony - real time video telephony that relies on a broadband network
• Video conferencing

Entertainment. As a class of services, entertainment includes the following:

• Movies-current and archival motion pictures offered like pay per view of video cassette rentals.
• Television shows-recent or archival television shows
• Sporting events-real time or delayed coverage
• News reporting
• Music Videos
• Magazines/publishing
• The most commonly discussed entertainment service, video-on-demand, is the delivery of entertainment content such as movies and television shows including news and sporting events at the time a viewer wants to watch, rather than a fixed schedule. The range of material available should also expand rapidly.
• Home Shopping. Online shopping will consist of a range of services where consumers view advertising or catalog information and then choose to purchase the goods. At least a portion of the revenue from today's catalog shopping industry (estimated at $40 billion) is available. Virtually every product can be sold online if the application is well packaged and the appropriate encryption and security is in place.
• Advertising. Advertising on an interactive system has the potential to play the same role it has in other media-allowing the consumer to receive high cost services while paying little or nothing in direct fees. Advertising sponsorship has made mass market media such as TV and radio appear "free" to the consumers. Mass print media, newspapers and magazines, are also highly dependent on advertising and charge subscribers only a fraction of actual production and distribution costs. 1996 advertising revenue on the Internets World Wide Web is estimated at $10 million, but analysts believe it will grow to $2.2 billion by the year 2000.
• Games. The electronic games market is undergoing a fundamental shift away from dedicated game gear like Super Nintendo and Sega Genesis towards PC-based multimedia and online games. Interactive game services will include: will include: the ability to download games to dedicated game devices or multimedia PCs, online, real-time playing of games that include full-motion video & three dimensional graphics and multi player games that allow players to compete against each other online.

Education. Interactivity will support new types of educational material and will include:

• Distributed classrooms through real time videoconferencing
• Computer Based Teaching-Interactive multimedia courses that lead students through learning exercises
• Reference works and electronic books

Information Services. Available today through existing online services and the Internet, information services include financial information and analysis, news reporting, sports reporting, weather, special interest forums and chat rooms, vendor information and more. Multimedia delivered over a broadband network will provide high bandwidth access to existing information services, expanding the services to include live weather and news clips, video of news or sports footage, multimedia conference areas that use audio or video and more.

Transactional Services. Transactional services include:

• Home banking and bill paying
• Brokerage and financial services
• Travel services
• Event and concert ticket sales
• Medical monitoring, alarm and personal safety services
• Government services such a voting, tax filing and fee collections
• Ultimately, the best use of technology and the emerging applications will be to blur the distinctions between these different classes of services for the consumer. This will continue to bring about convergence as companies continue to see that their industry-specific skills can be leveraged across a much wider market place.

Key Factors Driving Convergence

Even though the drivers of convergence act together to force new behavior on the affected industries, each has emerged as the result of distinct and quite separate forces. Understanding convergence means understanding the separate drivers that are forcing these disparate and often competing industries together.

The key categories driving convergence are:

• technology
• bandwidth-on-demand enabling interactive access to quality information and entertainment
• declining price performance ratios of key products
• deregulation

A. Technology

Several new technologies are moving the world toward convergence.

Digitization. First and foremost, all of the affected industries have either shifted or are shifting from analog to digital standards. Digital information has several key advantages over analog:

• It affords easier integration of different types of information-voice video, music and text, for example-onto the same processing, communication and storage devices
• Computers and storage devices are virtually all digital
• Digital is generally a more efficient and more easily understood representation.
• Security is better because content can be more easily encrypted
• Digital information capacity is easier to quantify.
• Digital information allows different types of information to be reduced to a single, common denominator-the bit-and treated in a unified manner. For example, a CD-ROM may contain data, audio, and voice on the same disk. While it is possible to compress analog information, the capabilities are primitive compared to digital.
• Fiber. New communications technologies have vastly accelerated the ability of information industries to shift toward digital technologies. Fiber optic cable is the most desirable transport since it has high bandwidth and low distortion, both of which are useful for high quality transmission with far fewer amplifiers than required by copper or coax.
• Multimedia Computing. The operation of Moores Law-that the density of transistors on chips, and therefore the performance/price ratio of computers, doubles every 18 months-means that radically increasing computing power is available on the desktop for manipulating digital information. Digital and fiber optics have made it possible for the same equipment to transmit, manipulate, and receive virtually any kind of digital information. Because digital converts all kinds of communication into the same information packages, it becomes much easier to mix and match different forms of media. Personal computers today contain a rich collection of features that enable the user to make and receive telephone calls, fax, access E-Mail and online services and listen to CD's. Multimedia allows for a richer, more interesting entertainment experience and it will make interactive television, movies-on-demand, and video phones a reality. To offer the greatest range of applications, providers will often need the capabilities of several communications industries. For example, video-on-demand needs the bandwidth to the home of a cable provider as well as the two-way capability of a telephone network. As a result, most serious cable and telecommunications carriers must acquire technology and build networks that can support multimedia services.
• World Wide Web and the Internet. The explosive growth of the Web in 1995 marked the possible fusion of computing and communications. Critically, it challenged the dominance of existing platforms in both computing and telecommunications, while at the same time threatening to bypass or at least compete with considerable segments of the entertainment industry.

B. Bandwidth Demand

While bandwidth demand will result from numerous market factors and consumer expectations, some key business and lifestyle trends will result in the need for broadband services. The following factors will drive bandwidth demand:

• breadth of available service - consumers will subscribe to complex interactive delivery systems that provide many services.
• convenience - both residential and business customers will choose to use services based upon time savings and convenience of use.
• community - consumers will want content and services that are otherwise not available. In the Gallup consumer survey mentioned above, almost 60% responded that it would be most important to be able to access local bulletin boards and town meetings.
• quality - as new technology and interactive services become available, perceived quality must be at least equivalent to that provided today. Most consumers already operate at a minimal level of quality, i.e. cable outages and service efficiency, Internet response time. Improvements in that level will be needed as the marketplace expands.

Services provided by interactive broadband systems will include both those that mimic existing services and compete for existing consumer spending-such as basic and premium cable TV service, video games, software, videocassette rentals-as well as those that provide new value by exploiting interactivity to create new markets and new consumer spending. New services that will contribute to radically greater bandwidth demand include:

• Video-on-demand
• Interactive Shopping
• Games - both delivery and multi-player games
• Interactive Yellow Pages and Classified Advertising
• Education and Distance Learning
• Financial Services - brokerage and banking

C. Declining Price/Performance Ratios

Three sets of costs have fallen precipitously in recent years: computing power; storage capacity, with the advent of large, inexpensive hard drives and CD-ROMs; and communications capacity with the seemingly unlimited bandwidth of fiber and the additional bandwidth available through satellite and new compression technologies. In the last four years, the cost of processing, storing, and distributing digital information has declined from $1.00 a megabyte to $0.25 a megabyte.

Telecommunications costs have also declined with the widespread installation of fiber optic cables, which offer greater bandwidth and cost less than the older copper wires.

The next few years will determine the extent to which current trends are maintained or accelerated. According to a study conducted by the Electronic Industries Association, in 1995 the PC had penetrated approximately 35% of all U.S. households. There are estimates that over 50% of all households will have PCs by the end of the century. This growth can be attributed to a decline in price as well as the growing consumer demand to access online information.

Further radical expansion of the PC market will require an equally radical reduction in the price of the equipment. Along those lines, Oracle has recently demonstrated an experimental model of a "barebones" personal computer to sell for $500 in an effort to introduce network-centric computing to the masses. Unlike current computers, the new machine would have no disk drive. Most of the data and software the machine and its user would need will be in data bases accessible through a network.

There are still many unanswered questions remaining about the speed and extent to which the digital revolution will be brought to every home and business in America. However, it is clear that the cost of digital delivery has fallen rapidly, and will continue to decline as a result of continuing technical improvements.

D. Regulation

In February, 1996 President Clinton signed into law legislation that promises to change the way Americans receive telephone, television and computer services. By removing long-standing monopoly protections, the bill will allow people to get long-distance service from their local phone company or local phone service from their long distance or cable company. Or, they might get it all, with TV and cellular thrown in, from one company on one bill.

For all local phone companies, the bill imposes an obligation to share their networks with would-be competitors. That burden may be more than offset, however, by the promise that any competitor who lures away the most profitable customers will have to share in the cost of serving the least profitable ones.

For the cable industry, the bill offers the chance to compete with the local phone companies for telephone and cable services with roughly equal regulatory handicaps. The bill lifts price controls on many cable programs at the first hint of competition from telephone companies, and no later than March 31, 1999.

For TV broadcasters, the bill in principle guarantees existing licensees first crack at any spectrum awarded for digital service. It also lets them use the new spectrum for money-making communications services other than broadcast video, so long as they offer at least one channel of digital TV. The bill also eases the ownership limits on radio and TV stations, allowing the networks and ownership groups to add muscle while the smaller operators work to sell off their assets.

For all these industries, the new buzzwords are "one-stop shopping." Consumers will be introduced to ways of combining services that they haven't seen before. AT&T and MCI, for example will be able to "bundle" local residential phone service with their long-distance, cellular, paging, and Internet services.

By opening up previously regulated industries, this legislation will eliminate significant barriers that currently impede the natural convergence of the communications industry.

Strategic Responses from the Provider Industries

A. Telecommunications and the Internet

Digital technology coupled with the widespread installation of fiber optic cables has significantly changed the capabilities of most telecommunications companies. They now have the capacity to transmit more than just telephone conversations. Critically, as Richard Karpinski illustrates in his special report for this disk, intermediate technologies such as ISDN, ADSL/HDSL, and wireless cable all seem likely to be key parts of the telco corporate strategy for the next 5-10 years, as they determine the best ways to match new all-fiber networks to market demand.

The Regional Bell Operating Companies (RBOCs)

The RBOCs as a group have made substantial adjustments. Initially, the RBOCs, led by BellAtlantic, sought to develop a national approach to broadband, by developing delivery mechanisms outside their own traditional business region. Primarily, this was to be done through alliances with cable companies, most notably through Bell Atlantic's planned alliance with cable company giant Tele-Communications Inc. (TCI).

As a result of FCC cable rate rollbacks in 1994, this acquisition became less attractive to Bell Atlantic. The cash flow position of the cable companies was already weak and despite rate reductions, TCI still demanded the same acquisition price from Bell Atlantic. The expense of upgrading their networks, meant that even a partner such as Bell Atlantic, with massively deep pockets, could not afford to build its own regional broadband network and at the same time pay for TCIs nationwide cable upgrade.

To further complicate things, under deregulation, the nation's local telephone carriers must allow all competitors to set up for business in the local service market and connect to their traditionally monopolized network. Once that happens, the $95 billion a year residential telephone market will face its first real competition ever. Conversely, once a local telco faces at least one competitor in a state, it can seek to offer long distance service under its own brand name. Many analysts have prediced a flurry of mergers and joint ventures activity. In fact the recent announcement of the merger between SBC and Pacific Telesis Group may well foretell further consolidation in the telecommunications industry. In this deal, SBC will acquire Pacific Telesis Group for $16.7 billion. The companies are joining to gain geographic clout, economics of scale and greater control over both ends of phone and data calls.

Recently, the RBOCs have also moved aggressively to enhance the value of their own mobile franchises by combining to develop regional or national linkages, which will make national roaming easier for their subscribers, and will prepare the RBOCs for the PCS revolution. This will also position them to compete more effectively with the nationwide AT&T Cellular brand that resulted from AT&T's acquisition of McCaw Cellular Communications.

In addition, the RBOCs are also moving aggressively to develop the software and infrastructure necessary to deliver sophisticated offerings. Bell Atlantic has developed a state-of-the-art digital programming and conversion center in Virginia; PacBell has a similar center in California. All are making strategic decisions in anticipation of the new marketplace.

The Long Distance Carriers

The strategic thrust of the Long Distance Carriers, AT&T, MCI, Sprint, etc., has not changed as fast as that of the RBOCs. With the passage of the Telecommunications Act of 1996, they are forced to defend of their existing long-distance markets against what appears to be a certain challenge from the RBOC. The defense is likely to include aggressive entry into local service, updated technical infrastructure and an assortment of new services like:

• Wireless services
• Internet access
• Custom content

Conversely, with the passage of new legislation, the long distance carriers have been given the opportunity to compete for local service and have begun taking steps to do so. In particular, they see wireless connections as a way to reach local phone markets without constructing extensive local networks. Their current strategies also include:

• New services into the local loop
• Strategic alliances with major local loop partners
• Efforts to get into interactive and related high tech markets

The recent phenomenal growth of the Internet will have significant ramifications. A few years ago, the Internet user base was dominated by academics and researchers. Now, most users pay to access it through an Online Service Provider or an Internet Service Provider. According to a Find/SVP survey, currently, 46% of all Internet access is through an online service provider. Individual dial up modem accounts typically cost about $20 per month. Depending on use, access and types of connection, corporate accounts can cost hundreds to many thousands of dollars per month. The Internet now encompasses approximately 70,000 networks worldwide, about half of which are in the United States. Current users on the Internet, estimated at 30 million, are doubling annually.

Companies everywhere are rushing to understand this new revolution, knowing that if they don't they will be left behind regardless of their existing size or strength. Telephone companies face a particularly difficult challenge, because they have historically considered themselves to be the sole carriers of electronic information. As a result RBOCs and long distance carriers are racing to offer Internet access.

There are some key uncertainties facing the Internet that will need to be addressed in order to realize the big financial returns that current growth rates imply. These can be summarized as follows:

• Security. There have been difficulties in ensuring that communications, electronic commerce and transactions remain secure over the Internet. Recently, however, companies like Visa and Microsoft have made significant progress in the development of encryption software and security tools. It will then become a public relations issue as providers work to ensure consumers that their transactions are secure. In fact, AT&T has recently announced that it would cover 100% of a customer's deductible (usually $50) in the case of credit card fraud over their online service.
• Technical bottlenecks. Although the Internet Engineering Task Force has issued a set of new standards for the next version of the Internet, these have not yet become fully adopted. It is also unclear how they will affect what appear to be some significant traffic bottlenecks caused by the sudden influx of new users (and by the equally sudden adoption of bandwidth-intensive graphical interfaces)
• Delivery mechanisms. The new graphical interfaces are very elegant, but they are painfully slow over dial-up telephone lines-even at the 28.8 Kbps. speeds supported by current generation modem. Speeds closer to those possible over a LAN are required, and it may be a number of years before cable or telco providers can deliver these speeds at appropriate pricing levels to broad segments of the residential market.
• Pricing problems. The Internet was originally developed as a research network that provided services that were, at a personal level, free to users. That ethic still permeates the Net, and the switch to commercial providers and prices is likely to be a painful and contentious one. For content provision, electronic commerce, and software services to develop into significant businesses on the Internet, the pricing model must allow operators to achieve substantial levels of profitability. The cost of running and developing these services is not trivial, and giving away services for free will, over time, cause providers to cease operations over the Internet. Today, the only pricing models that are resulting in profitable service operations on the Internet are advertising, Web page design and consulting, and Internet access. Internet access can be tricky, however, as the RBOCs and long distance carriers enter the market and compete with the traditional players (i.e., UUNet, PSI, BBN) using aggressive pricing to gain market share.
• Linkage problems (and opportunities). As the telcos and cable companies roll out their broadband networks, the Internet will almost certainly be able to run on top of them. How the new physical delivery mechanisms mesh with the existing network of networks remains to be seen. Still, should the telcos or cable operators offer a high speed home for the Internet, that would solve many of the existing delivery mechanism problems noted above.

B. Cable TV and Broadcast Networks

Cable Companies. Convergence will bring intense competition to the cable industry. Since digital technology has made it possible to transmit television programming over telephone wires and by direct satellite transmission, cable companies face competitors much stronger than just traditional broadcast TV. This comes at a time when cable penetration in the market is flattening out, and when revenues per subscriber have also begun to level off.

The biggest companies, such as TCI, Jones Cable and Time Warner are expanding as fast as possible either through acquisitions or through strategic alliances. They clearly believe that to deal with the threat from the RBOCs, they have to reach a critical mass.

The smallest cable companies have realized they cannot compete in the new world of convergence and are working to sell out their assets as rapidly as possible. This strategy has also been adopted by some bigger names, such as Viacom.

The cable companies do have some significant factors operating in their favor. In particular, they have the bandwidth in place to deliver multimedia to the home. Consequently, many cable companies are joining up with content providers, telecommunications companies, and satellite providers to obtain access to content as well as the capital investment needed to upgrade their networks for two-way transmission.

Cable Modems. In 1995 CableLabs, the R&D arm of the cable industry, announced that the cable industry would now focus its attention on the Internet. Combined, TCI, Time Warner and Comcast have recently ordered over 500,000 cable modems from Motorola and Toshiba. In theory, cable modems can connect a computer to the thick coaxial cables used to bring television signals into the homes. The cables, via a cable modem, can allow two-way data traffic at hundreds of times the speed of traditional telephone lines. The greater bandwidth makes it more practical to use E-Mail and other communications applications over the Internet. It's not just the speed of the cable modem-even the slowest of which can achieve transfer rates of 500 Kbps.-that changes the nature of computing, but also the constant access they provide. Like the cable box on top of a television, cable modems are always connected. Being permanently on line, with no need to dial up a service provider, means that at any given moment the Internet is immediately accessible.

There are indications, however that full realization of the promise of high speed communications is still several years away. In fact, cable modems rarely reach top speed. The fastest are now capable of achieving transfer rates of 10 megabits per second. Individual users, however, see only a fraction of that, since they must share the total bandwidth with everyone else who is active on their local network. One answer might be the @Home Network, a joint venture between Tele-Communications Inc. (TCI) and the Silicon Valley venture capital firm of Kleiner Perkins Caufield & Byers, that proposes to create a new fiber-optic cable backbone and a network of servers that would temporarily cache or store much of the Internet to speed up access times. Reflector sites for popular Internet material now seem a likely general effort to address Internet bandwidth limitations.

Broadcast Networks

The major networks ABC, CBS, NBC, FOX have traditionally held a monopoly over broadcast television programming, choosing what will and will not be broadcast. However, alternative programming continues to gain market share.

As a result, networks have had to rethink their own strategies. Increasingly, they have turned to merging with either content providers or infrastructure builders in order to obtain exclusive rights to content or to diversify their distribution options. The networks have entered into various strategic arrangements to manage this issue:

All still face the key question of whether their traditional franchise will hold in the era of convergence. Control over the gateway between stations, affiliates and content providers will increasingly rest on the networks ability to package content, and that may not be enough of a service to maintain the existing advantage, especially as other competitors try to access the same final distributors.

C. Software Companies

Several of the major players in the computer hardware and software industry have started to preach and promote the benefits of convergence of multimedia and computer telephony. According to a study done by the Pelorus Group, the market for digital desktop video and desktop video-conferencing is expected to grow to $8 billion by 1998 as hardware, software, and telecommunication technology converge and prices continue to fall.

An array of digital video capabilities is now being incorporated into personal computers for business markets. Video-to-the-Desk is being driven by the demand for video services and video server software. Rapid developments in desktop video-conferencing, digital video for multimedia applications, and collaborative work group software will cause the service to evolve much faster than previously expected. Server software that focuses on video-on-demand technology is being used to develop entertainment based applications and training-on-demand solutions.

Data-conferencing software-sometimes overlooked in the rush to build high bandwidth image based services-is also playing a major role in the industry convergence. IBMs CEO Lou Gerstner has recognized this trend and has made network-centric computing the centerpiece of IBMs strategy to develop products that will accelerate its top line growth in the years to come. Network-centric computing means that all hardware and software products are designed with the expectation that they will be used in conjunction with telecommunication to increase end-users productivity and reduce cycle times. In short, to help businesses re-engineer their operating processes and sharpen their competitive edge.

Lotus Notes, a software package that allows users to work collaboratively on documents in real time, is being embraced by many major telecommunication providers around the world such as Deutsche Telekom, and various Local Exchange Carriers. Given IBMs network-centric computing strategy, it is no surprise that they acquired Lotus Development Corp. to complement their products as well as broaden its distribution via IBMs global channels. Other alliances that sought to take advantage of this rapidly emerging need include: [sic]

Conclusions

No one company will be able to deploy an interactive multimedia system on its own. Contributions will be needed from many industries, and partners will be essential at each step of the development and deployment of a system or service. Companies will indeed need to learn how to be partners and competitors at the same time.

The convergence of digital industries is now and will continue to generate faster product cycles, more competition, and erosion of the traditional methods of doing business. This rapid change, which seems to create new businesses, traditional business failures or creative alliances practically overnight, represents both tremendous opportunity and significant risk. Evaluating the business opportunities that Convergence presents, requires a careful inventory of skills, technology, assets and financial resources. Defining markets, selecting services, estimating demand, determining revenues and calculating costs are all required steps before a commitment can be made.

Source: "Convergence" by Robin Gaster & Carol Martin, Deloitte and Touche, January, 1996©1996 Deloitte and Touche