center for tele-information evolution of the infrastructure market serenate final workshop bad...

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

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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

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Introduction (2)Introduction (2)

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

•Organization

•Regulation

•Market

•Technology

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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

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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

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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

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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

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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

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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)

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Market trends (2)Market trends (2)

Scenarios

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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

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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

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Economic analysis (3)Economic analysis (3)

Transmission link

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

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Economic analysis (5)Economic analysis (5)

Router and switch equipment

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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

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Economic analysis, example IEconomic analysis, example I

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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

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Economic analysis, example IIEconomic analysis, example II

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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)

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Economic analysis, example IIIEconomic analysis, example III

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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

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Economic analysis, example IVEconomic analysis, example IV

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Economic analysis, example VEconomic analysis, example V

• Combined router and switch solution

- POP solution

- 10 wavelengths of either 10 or 40 Gbps

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Economic analysis, example VEconomic 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

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Economic analysis, example VEconomic analysis, example V

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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