Overview

Network economics and financial modeling are key facets of the design process but are probably given proper attention only by service providers, operators, and research institutions. From the text presented previously, this may seem like a contradiction, since the most common constraints of a network design are performance, reliability, and cost. Nevertheless, in practice there is disproportionately little time spent planning the topology, capacity, and traffic flows with respect to cost. This may be partly due to the lack of relevant skills in the design community, the lack of cost-effective modeling tools, or the difficulty in finding and analyzing the relevant tariffs and cost data. The focus for network designers, even in the area of backbone design, all too often appears to be on the choice of routing and switching equipment, which wide area protocols to implement, and the initial cost of the system. Unfortunately, a full financial analysis may demonstrate that the most cost-effective solution in the short term may turn out to be far less attractive in the long term. There could be several reasons for this, including the following:

• In the majority of internetworks, wide area costs represent a substantial proportion of the financial upkeep.

• High maintenance, training, and support costs can seriously erode annual budgets.

• Poorly chosen equipment could lead to early obsolescence, impacting network longevity.

• A design that works today but is underspecified for the future may be very expensive to upgrade later.

Since a number of these hidden costs are recurring, the penalty...