Managing capacity for telecommunications networks under uncertainty

d’Halluin, Y.; Forsyth, Peter; Vetzal, Kenneth R.

doi:10.1109/tnet.2002.801416

Cited by 55 publications

(27 citation statements)

References 9 publications

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“…However, this does provide an additional benefit in that payments for capacity upgrades can be spread out over time, rather than occurring all at once when the upgrade decision is made. Another important difference between the present paper and [3] is that in the context of this work, there is no traded asset available to facilitate estimation of a parameter known as the market price of risk. Consequently, alternative methods are required, as discussed in detail below.…”

Section: Introductionmentioning

confidence: 99%

“…Previous papers dealing with the general question of optimal capacity levels which use a real options approach include [12,5,2,3]. A general overview is provided in Chapter 12 of [6].…”

Section: Introductionmentioning

confidence: 99%

“…In contrast, a study of when to add capacity in the context of bandwidth for Internet traffic is provided in [3]. In the situation considered, technological factors dictate that extra capacity must be added in discrete levels, the firm has a finite investment horizon (due to the assumption that in an environment with rapidly evolving technology, new products will make investments in current technology rapidly obsolete), and there is a significant lead time for capacity to be installed once expansion decisions are made.…”

Section: Introductionmentioning

confidence: 99%

“…In the situation considered, technological factors dictate that extra capacity must be added in discrete levels, the firm has a finite investment horizon (due to the assumption that in an environment with rapidly evolving technology, new products will make investments in current technology rapidly obsolete), and there is a significant lead time for capacity to be installed once expansion decisions are made. In this paper, we consider an application similar to that in [3], except in the case of wireless network capacity for cellular telephone service. A significant constraint on the algorithm provided in [3] is that the lead time required for an upgrade determines the upgrade decision interval.…”

Section: Introductionmentioning

confidence: 99%

“…In this paper, we consider an application similar to that in [3], except in the case of wireless network capacity for cellular telephone service. A significant constraint on the algorithm provided in [3] is that the lead time required for an upgrade determines the upgrade decision interval. For example, if it takes three months for new capacity to be installed, the firm can only evaluate whether to upgrade capacity every three months.…”

Section: Introductionmentioning

confidence: 99%

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Wireless network capacity management: A real options approach

d’Halluin

Forsyth

Vetzal

2007

European Journal of Operational Research

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This paper applies financial option valuation methods to new wireless network capacity investment decision timing. In particular, we consider the case of network capacity for cellular telephone service. Given a cluster of base stations (with a certain traffic capacity per base station), we determine when it is optimal to increase capacity for each of the base stations contained in the cluster. We express this in terms of the fraction of total cluster capacity in use, i.e. we calculate the optimal time to upgrade in terms of the ratio of observed usage to existing capacity. We study the optimal decision problem of adding new capacity in the presence of stochastic wireless demand for services. A four factor algorithm is developed, based on a real options formulation. Numerical examples are provided to illustrate various aspects of the model.

show abstract

Section: Introductionmentioning

confidence: 99%

“…Previous papers dealing with the general question of optimal capacity levels which use a real options approach include [12,5,2,3]. A general overview is provided in Chapter 12 of [6].…”

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Wireless network capacity management: A real options approach

d’Halluin

Forsyth

Vetzal

2007

European Journal of Operational Research

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A ruin theoretic design approach for wireless cellular network sharing with facilities

Egan

Peters

Nevat

et al. 2016

Trans. Emerging Tel. Tech.

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With the rise of cheap small cells in wireless cellular networks, there are new opportunities for third party providers to service local regions via sharing arrangements with traditional operators. In fact, such arrangements may be particularly desirable for large facilities—such as stadiums, universities, and mines—as they already need to cover property costs, and often have fiber backhaul and efficient power infrastructure. In this paper, we propose a network‐sharing arrangement between large facilities and traditional operators. Our network‐sharing arrangement consists of two aspects: leasing of data access and spectrum from traditional operators; and service agreements with users. As a consequence of the incorporation of the user service agreements into the sharing arrangement, financial as well as physical resource constraints need to be accounted for. This introduces a new dimension into wireless network resource allocation, which requires a new evaluation framework. To this end, we develop a framework based on ruin theory, where the key metric is the probability that the facility is insolvent within a fixed time period. We then investigate the effect of initial capital and physical layer parameters on the ruin probability, which provides insight into the robustness of the network‐sharing arrangement to varying conditions.

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Cost Versus Flexibility of Different Capacity Leasing Approaches on the Optical Network Layer

Verbrugge

Colle

Pickavet

et al.

Optical Network Design and Modeling

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This paper discusses different capacity leasing scenarios for the optical network. It aims at providing systematic understanding of cost structure of optical networks, without focusing on technical details. It reviews different kinds of capacity leasing approaches discussing the relative costs and the flexibility associated to them to adapt to future traffic needs. Then it applies the Real Options principles to evaluate the most convenient planning solution. Real Option valuation is shown to be the formalization of the natural way of valuating different alternatives under uncertainty, taking into account that information becoming available during the course of the planning horizon might influence the strategy followed. The goal of the paper is to give insight in the practical applicability of the technique for the network operator.

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Managing capacity for telecommunications networks under uncertainty

Cited by 55 publications

References 9 publications

Wireless network capacity management: A real options approach

Wireless network capacity management: A real options approach

A ruin theoretic design approach for wireless cellular network sharing with facilities

Cost Versus Flexibility of Different Capacity Leasing Approaches on the Optical Network Layer

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