Abstract

Increasing network demand is expected to put pressure on the available capacity in core networks. Flexible optical networking can now be installed to increase network capacity in light of future traffic demands. However, this technology is still in its infancy and might lack the full functionality that may appear within a few years. When replacing core network equipment, it is therefore important to make the right investment decision between upgrading toward flexible-grid or fixed-grid equipment. This paper researches various installation options using a techno-economic analysis, extended with real option insights, showing the impact of uncertainty and flexibility on the investment decision. By valuing the different options, a correct investment decision can be made.

© 2013 Optical Society of America

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References

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2013 (1)

2012 (1)

2010 (1)

S. Gringeri, B. Basch, V. Shukla, R. Egorov, and T. J. Xia, “Flexible architectures for optical transport nodes and networks,” IEEE Commun. Mag., vol.  48, no. 7, pp. 40–50, 2010.
[CrossRef]

2004 (1)

B. T. Olsen and K. Stordahl, “Models for forecasting cost evolution of components and technologies,” Telektronikk, vol.  4.04, pp. 138–148, 2004.

1998 (1)

T. E. Copeland and P. T. Keenan, “How much is flexibility worth?” McKinsey Quarterly, vol.  2, pp. 38–50, 1998.

Basch, B.

S. Gringeri, B. Basch, V. Shukla, R. Egorov, and T. J. Xia, “Flexible architectures for optical transport nodes and networks,” IEEE Commun. Mag., vol.  48, no. 7, pp. 40–50, 2010.
[CrossRef]

Botham, P.

M. Tahon, S. Verbrugge, P. J. Willis, P. Botham, D. Colle, M. Pickavet, and P. Demeester, “Real options in telecom infrastructure projects—A tutorial,” IEEE Commun. Surv. Tutorials, to be published.
[CrossRef]

Careglio, D.

Casier, K.

S. Verbrugge, K. Casier, J. Van Ooteghem, and B. Lannoo, “Practical steps in techno-economic evaluation of network deployment planning,” in 13th Int. Telecommunications Network Strategy and Planning Symp., 2008, pp. 1–101.

Castro, A.

Colle, D.

M. Tahon, S. Verbrugge, P. J. Willis, P. Botham, D. Colle, M. Pickavet, and P. Demeester, “Real options in telecom infrastructure projects—A tutorial,” IEEE Commun. Surv. Tutorials, to be published.
[CrossRef]

Copeland, T. E.

T. E. Copeland and P. T. Keenan, “How much is flexibility worth?” McKinsey Quarterly, vol.  2, pp. 38–50, 1998.

Dembeck, L.

Demeester, P.

M. Tahon, S. Verbrugge, P. J. Willis, P. Botham, D. Colle, M. Pickavet, and P. Demeester, “Real options in telecom infrastructure projects—A tutorial,” IEEE Commun. Surv. Tutorials, to be published.
[CrossRef]

Egorov, R.

S. Gringeri, B. Basch, V. Shukla, R. Egorov, and T. J. Xia, “Flexible architectures for optical transport nodes and networks,” IEEE Commun. Mag., vol.  48, no. 7, pp. 40–50, 2010.
[CrossRef]

Fernández-Palacios, J. P.

Gebhard, U.

Gringeri, S.

S. Gringeri, B. Basch, V. Shukla, R. Egorov, and T. J. Xia, “Flexible architectures for optical transport nodes and networks,” IEEE Commun. Mag., vol.  48, no. 7, pp. 40–50, 2010.
[CrossRef]

Gunkel, M.

Keenan, P. T.

T. E. Copeland and P. T. Keenan, “How much is flexibility worth?” McKinsey Quarterly, vol.  2, pp. 38–50, 1998.

Konrad, B.

Lannoo, B.

S. Verbrugge, K. Casier, J. Van Ooteghem, and B. Lannoo, “Practical steps in techno-economic evaluation of network deployment planning,” in 13th Int. Telecommunications Network Strategy and Planning Symp., 2008, pp. 1–101.

Lopez, V.

Olsen, B. T.

B. T. Olsen and K. Stordahl, “Models for forecasting cost evolution of components and technologies,” Telektronikk, vol.  4.04, pp. 138–148, 2004.

Pedrola, O.

Pickavet, M.

M. Tahon, S. Verbrugge, P. J. Willis, P. Botham, D. Colle, M. Pickavet, and P. Demeester, “Real options in telecom infrastructure projects—A tutorial,” IEEE Commun. Surv. Tutorials, to be published.
[CrossRef]

Quagliotti, M.

Rambach, F.

Ruiz, M.

Serra, L.

Shukla, V.

S. Gringeri, B. Basch, V. Shukla, R. Egorov, and T. J. Xia, “Flexible architectures for optical transport nodes and networks,” IEEE Commun. Mag., vol.  48, no. 7, pp. 40–50, 2010.
[CrossRef]

Stordahl, K.

B. T. Olsen and K. Stordahl, “Models for forecasting cost evolution of components and technologies,” Telektronikk, vol.  4.04, pp. 138–148, 2004.

Tahon, M.

M. Tahon, S. Verbrugge, P. J. Willis, P. Botham, D. Colle, M. Pickavet, and P. Demeester, “Real options in telecom infrastructure projects—A tutorial,” IEEE Commun. Surv. Tutorials, to be published.
[CrossRef]

Van Ooteghem, J.

S. Verbrugge, K. Casier, J. Van Ooteghem, and B. Lannoo, “Practical steps in techno-economic evaluation of network deployment planning,” in 13th Int. Telecommunications Network Strategy and Planning Symp., 2008, pp. 1–101.

Velasco, L.

Verbrugge, S.

M. Tahon, S. Verbrugge, P. J. Willis, P. Botham, D. Colle, M. Pickavet, and P. Demeester, “Real options in telecom infrastructure projects—A tutorial,” IEEE Commun. Surv. Tutorials, to be published.
[CrossRef]

S. Verbrugge, K. Casier, J. Van Ooteghem, and B. Lannoo, “Practical steps in techno-economic evaluation of network deployment planning,” in 13th Int. Telecommunications Network Strategy and Planning Symp., 2008, pp. 1–101.

Willis, P. J.

M. Tahon, S. Verbrugge, P. J. Willis, P. Botham, D. Colle, M. Pickavet, and P. Demeester, “Real options in telecom infrastructure projects—A tutorial,” IEEE Commun. Surv. Tutorials, to be published.
[CrossRef]

Xia, T. J.

S. Gringeri, B. Basch, V. Shukla, R. Egorov, and T. J. Xia, “Flexible architectures for optical transport nodes and networks,” IEEE Commun. Mag., vol.  48, no. 7, pp. 40–50, 2010.
[CrossRef]

IEEE Commun. Mag. (1)

S. Gringeri, B. Basch, V. Shukla, R. Egorov, and T. J. Xia, “Flexible architectures for optical transport nodes and networks,” IEEE Commun. Mag., vol.  48, no. 7, pp. 40–50, 2010.
[CrossRef]

J. Opt. Commun. Netw. (2)

McKinsey Quarterly (1)

T. E. Copeland and P. T. Keenan, “How much is flexibility worth?” McKinsey Quarterly, vol.  2, pp. 38–50, 1998.

Telektronikk (1)

B. T. Olsen and K. Stordahl, “Models for forecasting cost evolution of components and technologies,” Telektronikk, vol.  4.04, pp. 138–148, 2004.

Other (5)

S. Verbrugge, K. Casier, J. Van Ooteghem, and B. Lannoo, “Practical steps in techno-economic evaluation of network deployment planning,” in 13th Int. Telecommunications Network Strategy and Planning Symp., 2008, pp. 1–101.

M. Tahon, S. Verbrugge, P. J. Willis, P. Botham, D. Colle, M. Pickavet, and P. Demeester, “Real options in telecom infrastructure projects—A tutorial,” IEEE Commun. Surv. Tutorials, to be published.
[CrossRef]

“Spectral grids for WDM applications: DWDM frequency grid,” , 2012.

“Final results on novel packet based petabit transport networks fulfilling scalability, quality, cost and energy efficiency requirements,” , 2012.

“Efficient and optimized network architecture: Requirements and reference scenarios,” , 2011.

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Figures (5)

Fig. 1.
Fig. 1.

UK core reference network [4].

Fig. 2.
Fig. 2.

Core network installation choices.

Fig. 3.
Fig. 3.

Cost breakdown for different scenarios.

Fig. 4.
Fig. 4.

Impact of uncertainty on investment cost.

Fig. 5.
Fig. 5.

Cost evolution under uncertainty for the different scenarios.

Tables (2)

Tables Icon

TABLE I Available Muxponders [3]

Tables Icon

TABLE II Total Cost for the Installation Options