Optimal Modernization Policies for Telecommunications Facilities

This paper considers a problem of telecommunications network modernization. The model presented provides the cost criterion corresponding to a general network evolution strategy which may consist of a combination of three basic policies: expansion of existing facilities; overlay of existing facilities with modern equipment to serve the growth; or replacement of existing facilities with modern equipment. The cost criterion is basically defined as the cumulated sum of all inflated discounted cash flows. Two major problems are discussed: 1) the single location or local facility evolution problem applicable to single transmission links or switching nodes and 2) the multilocation problem involving several nodes. An application of the second problem described here concerns the selection of switching equipment types for a telephony network (including remote concentrators). For both problems, simple necessary and sufficient conditions are derived for pure strategies to be optimal. Pure strategies involve events occurring at the beginning and/or end of the study horizon.