Overview

An important component of any discussion related to telecom is its economics. The economics of bandwidth is integral to the design and development process, from networks to the smallest component. Cost/benefit analysis has driven the evolution of telecom. Telecom economics has allowed the deployment of the largest and fastest information system ever known to man, and this has already transformed our world, fundamentally touched our lives, and raised the human condition. The authors of this book made a concerted effort to include only economic models, rules, and data that reflect the conditions of the post-2000 economic meltdown.

Telecom networks are deployed to make money. A new network will not be deployed without sound economic forecasts showing that it will generate a profit. Witness the unfortunately slow adoption of the Internet in Africa, even though there is a suitable fiber backbone on that continent. It takes thousands of people and billions of dollars to deploy and support a nationwide network. Thus, it is critical for all who work in telecom to understand some of its basic economic tenets. This chapter contains a somewhat eclectic collection of rules, all relating to cost structures and economics inherent to modern optical telecom. Some of these are famous, and some apply to areas other than just telecom (such as the learning curve and Moore's law), but they all contain useful information for anyone engaged in any part of the optical telecom industry.

The telecom industry has developed an economic architecture based on several layers...