The introduction of contract regimes for the provision of bus s ervices, such as competitive tendering1 and performance-based contracts, is usually premised on a prior assumption that the size of the physical contract area is given and that any policies related to interactions between contract areas, such as integra ted ticketing and fares,2 are agreed to. This article examines the evolving arguments th at encourage a review of contract area sizes before recontracting and the posi tions supporting the benefits of service quality-related issues such as an integrate d fares policy. Given that a growing number of analysts (especially in Europe and Australi a) are promoting the appeal of increasing physical contract area size to facilitate, among other reasons, an integrated fare regime, it is timely to explore the pros and co ns for such reform to ensure that they are not counterproductive to the desired outcomes of a reform process. The arguments presented here caution the support for t oo small a number of large contract areas on grounds of internal efficiency losse s and limited gains in network economies (but support amalgamating very small contract areas). Existing empirical evidence, limited as it is, tends to support contract areas (and depots) currently serviced by fleet sizes in the range 30 to 100 regard less of urban develop- ment profile. Alternative ways of delivering cross-regional and broad-based network benefits are proposed.