Optimal planning for optical transport networks

In optical transport networks, recent development of new technologies has led to highly accelerated (`disruptive’) increases in the capacity associated with a given investment cost. As a result, there have been dramatic decreases in the cost per unit of transport. We describe a nonlinear mixed-integer planning model that assumes both the continuous emergence of new systems and a constant-elasticity demand function. Optimization of the model with respect to price and technology acquisitions over time suggests that, with high elasticity and steeply dropping technology costs, a carrier will maximize net present value by frequently deploying new systems. This conclusion is in sharp contrast to the analogous results for voice networks, where demand is much less elastic and the rate of technology change is much slower.