Risk analysis for optical network operator facing uncertain traffic and costs

Optical networks are expanding fast due to the growing traffic demand. This paper focuses on the risks for a network operator originating from uncertain future equipment costs and traffic demands that are often insufficiently taken into account. A European backbone network is studied where the optical network layer is dimensioned for the forecasted traffic, the cost-benefit analysis is performed using forecasted equipment costs and finally a sensitivity analysis is performed. The impact of fluctuations in equipment costs and deviations from forecasted traffic on the NPV of the operator is measured.