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

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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.

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Notes

  1. COM(2004) 369: “Connecting Europe at High Speed: National Broadband Strategies”

  2. Capital expenditures (CAPEX) are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. Operational expenditures (OPEX) are the on-going costs for running a product or business.

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Acknowledgment

Part of this work was carried out within the European project BReATH: Broadband e-services and access from the home, from FP6, Broadband for all Strategic Objective, 2004–2006. Thanks for the data and other information go to Aleš Mazej, M.Sc., Telekom Slovenije.

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Authors and Affiliations

  1. Jožef Stefan Institute, University of Ljubljana, Jamova 39, Ljubljana, Slovenia

    Borka Jerman-Blažič

  2. Faculty of Economics, University of Ljubljana, Jamova 39, Ljubljana, Slovenia

    Borka Jerman-Blažič

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  1. Borka Jerman-Blažič
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Correspondence to Borka Jerman-Blažič.

Additional information

This study was partly funded within the Project BReATH—Broadband e-services and access to the home, from 6th Framework Program on Information Society Technology, strategic objectives Broadband for All, of European Union.

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Jerman-Blažič, B. Techno-economic analysis and empirical study of network broadband investment: The case of backbone upgrading. Inf Syst Front 10, 103–110 (2008). https://doi.org/10.1007/s10796-007-9059-y

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