Motivation

From the introduction of telephony in the late 19th century the basic concept of setting up a dedicated switched tunnel capable of transmitting the human voice in a more or less recognisable form between two end users has not changed. Connections were established dynamically through switching offices and transmission throughout the telephone network was analogue, with the actual voice signal being transmitted as an electrical voltage from source to destination.

With the advent of digital electronics and computers, digital transmission became possible. Since the 1970s telecommunications networks have evolved towards digitally switched networks where each conversation is transmitted as a statically reserved 64 kb/s stream. Today the Public Switched Telecommunications Network (PSTN) stands at the brim of a new evolution, the transformation towards packet based, Next Generation Networks (NGN).

While most people agree that the future of communications networks is based on NGN concepts, less is know about the financial impact it will have. In today’s competitive environment, feasibility is one of the main concerns of management. The success of projects is measured on financial yardsticks and decisions taken based on monetary forecasts and impact. The turning point that NGN marks represents a unique chance to build up a new network with increased efficiency.

The complexity of the decision-making process in implementing NGN emphasises the need for adapting advanced operations research techniques and methods for structuring the network. Although optimisation-based methods have traditionally been used during technical design, such methods have not been used extensively by managements from a financial viewpoint.