1 / 27

Evolution of Costs of International Connectivity

This analysis examines the organizational and regulatory aspects, trends in bandwidth demand, market trends, and economic analysis of the evolution of costs of international connectivity over the next five years. It includes examples and conclusions.

hgoldstein
Download Presentation

Evolution of Costs of International Connectivity

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Overview • Introduction • Organizational aspects • Regulatory aspects • Trends in bandwidth demand • Market trends • Economic analysis incl examples • Conclusions

  2. 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

  3. Introduction (2) • Parameters affecting the evolution in transport infrastructure for research and education networks • Organization • Regulation • Market • Technology

  4. 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

  5. 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

  6. 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

  7. Trends in bandwidth demands (1) Very different usages patterns, which might suggest different connection levels or a building block principle

  8. Trends in bandwidth demands (2) • Based on average growth rates the predicted traffic volume is 33 times bigger in 2006, equaling 20,000 Terabytes

  9. 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)

  10. Market trends (2) Scenarios

  11. 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

  12. 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

  13. Economic analysis (3) Transmission link

  14. Economic analysis (4) Transmission equipment

  15. Economic analysis (5) Router and switch equipment

  16. 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

  17. Economic analysis, example I

  18. 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

  19. Economic analysis, example II

  20. 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)

  21. Economic analysis, example III

  22. Economic analysis, example IV • Link distance and capacity • 15 km link NIL • 4 x 10 GE • Equipment: • 8 interface cards • 8 Gbic interface modules

  23. Economic analysis, example IV

  24. Economic analysis, example V • Combined router and switch solution - POP solution - 10 wavelengths of either 10 or 40 Gbps

  25. 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

  26. Economic analysis, example V

  27. 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

More Related