Center for Tele-Information Evolution of the Infrastructure Market SERENATE final workshop Bad...

Center for Tele-Information

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


Introduction (1)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)Introduction (2)

Parameters affecting the evolution in transport infrastructure for research and education networks

•Organization

•Regulation

•Market

•Technology


Organizational aspects (1)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)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 aspectsRegulatory 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)Trends in bandwidth demands (1)

Very different usages patterns, which might suggest

different connection levels or a building block principle


Trends in bandwidth demandsTrends in bandwidth demands (2) (2)• Based on average growth rates the predicted

traffic volume is 33 times bigger in 2006, equaling

20,000 Terabytes


Market trends (1)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)Market trends (2)

Scenarios


Economic analysis (1)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)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



Transmission link


Economic analysis (4)Economic analysis (4)Transmission equipment



Router and switch equipment


Economic analysis, example IEconomic 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 IEconomic analysis, example I


Economic analysis, example IIEconomic 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 IIEconomic analysis, example II


Economic analysis, example IIIEconomic 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 IIIEconomic analysis, example III


Economic analysis, example IVEconomic 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 IVEconomic analysis, example IV


Economic analysis, example VEconomic analysis, example V

• Combined router and switch solution

- POP solution

- 10 wavelengths of either 10 or 40 Gbps



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


ConclusionConclusion• 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

Center for Tele-Information Evolution of the Infrastructure Market SERENATE final workshop Bad...

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