Techno-economic analysis and empirical study of network broadband investment: The case of backbone upgrading

  • Authors:

  • Borka Jerman-Blažič

  • Affiliations:

  • Jožef Stefan Institute, University of Ljubljana, Ljubljana, Slovenia and Faculty of Economics, University of Ljubljana, Ljubljana, Slovenia

  • Venue:
  • Information Systems Frontiers
  • Year:
  • 2008

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Abstract

The paper introduces the basic problems of investment in new technologies in an operator telecommunication network. Investment in technologies for delivering broadband services at the metropolitan and backbone levels from technical and economic point of view are evaluated and assessed. In particular, the paper deals with an empirical study and a techno-economic analysis of two key broadband technologies used for upgrading metropolitan and backbone networks: SDH and WDM. The study is based on two basic measures, i.e., CAPEX and OPEX, while the financial assessment of the overall technology deployment uses two economic evaluation measures, i.e., Net Present Value and the Internal Rate of Return. The study is focused on the network of Telekom Slovenije, the incumbent operator in Slovenia. The data used in the study was supplied by the operator. The study showed that in long-term WDM appears to be a more economic solution than the SDH technology. The study pointed out also that any techno-economic evaluation in the area of telecommunication network backbone upgrading should be always based on calculation of several indexes as none of the known indexes taken individually is capable to provide complete picture of the required investment cost and the benefits arising from the used solution.