Page 248 - Optical Switching And Networking Handbook

10_200023_CH09/Bates 1/17/01 9:45 AM Page 233

Cost Implications and Financial Trending 233

works, causing the bandwidth consumption to outpace capacity.This
also could happen to cable TV (CATV) operators. Using DWDM tech-
nology, cable operators can multiplex numerous services while sav-
ing fiber capacity for future expansion.
It should be less expensive to include DWDM during the initial
system installation rather than wait until all the bandwidth is con-
sumed.An upgrade from dedicated fiber requires a laser transmitter
as well as the DWDM multiplexing and demultiplexing equipment.
Postponing the DWDM installation only prolongs a problem that
will occur eventually. Fiber capacity will become saturated, requiring
the upgrade and the replacement of costly lasers. Furthermore,
delays experienced while the new electronics are ordered and
installed and service disruptions during the upgrade will all serve to
frustrate both carriers and consumers. Installing DWDM upfront is
also less expensive because a small initial premium prevents having
to change the entire system in the future.

Opportunity Costs

Because carriers typically focus on core services (such as voice, ana-
log broadcast video, and interactive data), they may overlook other
opportunities that fiber offers. Because the infrastructure passes
many business and residential small office and home office (SOHO)
users, fiber lines can be leased to businesses for LAN-to-LAN inter-
networking. Moreover, newer broadband services, including cable
modems, telephony, and multimedia applications, can be added with
few cost implications. With local DS-3 tariffs ranging from $3,000 to
$8,000 per month, carriers can create additional revenue by leasing
excess fiber to businesses at competitive prices. Their mainstay core
services can still be provided using DWDM technology. These rev-
enue opportunities can be significant in the future, thereby offsetting
the incremental costs of using DWDM.