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Overview. Introduction Organizational aspects Regulatory aspects Trends in bandwidth demand Market trends Economic analysis incl examples Conclusions. Introduction (1).
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Overview • Introduction • Organizational aspects • Regulatory aspects • Trends in bandwidth demand • Market trends • Economic analysis incl examples • Conclusions
Introduction (1) Based on material collected from equipment suppliers and operators and modeling work by Dante & CTI to illustrate the evolution of costs of (international) connectivity over the next five years
Introduction (2) • Parameters affecting the evolution in transport infrastructure for research and education networks • Organization • Regulation • Market • Technology
Organizational aspects (1) Current model for NREN transmission networks, 3 layers: - International - National - Local/ university Alternative models/ features for network infrastructure - Regional networks - Border hopping and border crossing
Organizational aspects (2) Ownership options for the physical infrastructure • Full ownership of fibres • Dark fibres • Managed dark fibres • Direct access to fibres • Buying of capacity
Regulatory aspects New regulatory package • Public or private network • General authorization - notification • Local loop unbundling (copper and fiber) RoW Regulation can only facilitate competition & development
Trends in bandwidth demands (1) Very different usages patterns, which might suggest different connection levels or a building block principle
Trends in bandwidth demands (2) • Based on average growth rates the predicted traffic volume is 33 times bigger in 2006, equaling 20,000 Terabytes
Market trends (1) • Equipment market • Infrastructure services • Deregulation • New technologies • Unprecedented availability of very low cost capital • Market scenarios • Four market structures: Liberal I & II; emerging; monopolistic • Three scenarios: optimistic (I), neutral (II) and pessimistic (III)
Market trends (2) Scenarios
Economic analysis (1) • Three major building blocks • Transmission link • Transmission equipment • Routing and switching equipment • Transmission link • Full ownership • Dark fibre • Direct access • Leasing capacity
Economic analysis (2) • Assumptions - List prices for equipment - No sharing included - Digging for fibre, € 50,000/km - Leasing dark fibre, € 500/km - Leasing dark fibre with amplification, € 750/km - Leasing dark fibre with amplification and regeneration € 1,000/km - Equipment operation and maintenance, 20% of investment costs - Fibre operation and maintenance, € 1,000/km - Capital costs, 10% per year - Amplifiers every 75 km - Regenerators every 800 km
Economic analysis (3) Transmission link
Economic analysis (4) Transmission equipment
Economic analysis (5) Router and switch equipment
Economic analysis, example I Link distance and capacity • 3000 km link • 4 x 40 Gbps or 16 x 10 Gbps Equipment: • 2 DWDM terminals • 8/32 interface cards • 36 amplifiers • 3 regenerators • 24/96 regenerator interface cards
Economic analysis, example II • Link distance and capacity • 500 km link • 4 x 40 Gbps or 16 x 10 Gbps • Equipment: • 2 DWDM terminals • 8/32 interface cards • 6 amplifiers
Economic analysis, example III • Link distance and capacity • 150 km link NIL • 4 x 10 GE • Equipment: • 8 interface cards • 8 Gbic interface modules • 2 amplifiers (one at each end)
Economic analysis, example IV • Link distance and capacity • 15 km link NIL • 4 x 10 GE • Equipment: • 8 interface cards • 8 Gbic interface modules
Economic analysis, example V • Combined router and switch solution - POP solution - 10 wavelengths of either 10 or 40 Gbps
Economic analysis, example V Equipment for a pure router solution • 1 10/40 Gbps router • 10 10/40 Gbps router interface cards Equipment for a combined router and switch solution • 1 10/40 Gbps switch • 1 10/40 Gbps router • 15 10/40 Gbps switch interface cards • 5 10/40 Gbps router interface cards
Conclusion • Investment/ building of fibre expensive and distance dependent • If the market is transparent and there are competition among several players, it is not economic relevant for NRENs to build transmission link unless • The distance between the connected points are relatively short and the cost of deploying a transmission link can be shared with others • There is no available fibre