Bandwidth Cost Trend Market Analysis for ATM Technology

by Abhijit S. Pandya; Ercan Sen CRC Press, CRC Press LLC ISBN: 0849331390 Pub Date: 110198 Previous Table of Contents Next

C. Bandwidth Cost Trend

The bandwidth cost is expected to continually decline as the bandwidth capacity increases as a result of using technologies such as Dense Wavelength Division Multiplexing DWDM and the expansion of the fiber network using high quality Polarization Mode Dispersion-PMD free fiber cable. Figure 1-2 provides a projection of such a trend relative to current bandwidth cost for access local transport segment. A similar trend is also valid for metro and long-haul segments as well. As seen in Figure 1-2, significant bandwidth cost reduction can be achieved as a function of capacity increase. However, the important factor is the relative capacity increase with respect to the associated cost involved. The rate of capacity increase has to be greater than the rate of cost increase. Figure 1-2 Bandwidth cost projection for local transport. When we consider DWDM and installation of new fiber for capacity increase as two possible alternatives, the DWDM is much more favorable to installing new fiber cable. Particularly in distances less than 400 miles where no DWDM regenerators are required, the DWDM provides much higher cost reduction than the new fiber installation. This is mainly because the rate of capacity increase is much higher relative to rate of DWDM equipment cost. In the case of fiber installation, it is very difficult to achieve cost reduction due to the very labor intensive nature of the process. As it can be seen in Figure 1-3, the cost of fiber installation linearly increases with distance. Hence, it is obvious to assume that significant bandwidth cost reduction will mainly come from the utilization of DWDM technology. Figure 1-4 illustrates implementation of the DWDM-based transport system for 500 km and 1000 km distances. Based on the current technology, it is necessary to regenerate each wavelength at every 500 km distance due to the accumulative noise effect from the optical line amplifiers. It is expected that further advances in optical technology will push the maximum distance without signal regeneration to longer distances, hence reducing the cost of DWDM further for the long-haul transport segment.

D. Market Opportunities