Copper-based telecom network

The major advantage of this network is that it is widely available. In industrialized countries there is almost universal access to this network, and in all countries the network can be accessed in the major cities. In those areas, use of existing infrastructure facilities is still very competitive in providing most types of services. However, in areas not covered by copper-based networks, use of other network technologies is likely to offer a cost efficient alternative.

The network is usually operated by the incumbent operator, which in many cases is fully or partly owned by the public. The copper-based networks are established in markets with monopoly, and are therefore designed for covering the entire market. Efforts have been made to introduce competition through demands for unbundling of facilities and interconnection with other networks.

To establish a copper-based network demands substantial long term investments in particular in the access network. Existing copper-based networks have gradually been expanded during several decades and their architectures are not optimized with regard to use of current technologies. If an entirely new network were to be built today, it would not be based on use of copper-based technologies, and the design would therefore be very different from those of today’s copper-based networks operated by the incumbent operators.

One problem is that networks are designed mainly for carrying POTS, while a growing share of the traffic is based on IP or other data communication protocols, and in some areas there are problems with capacity and quality of service.

Network costs depend on the kind of network design applied. The most recent detailed cost analyses are those made for calculation of interconnection charges using forward-looking cost accounting methods, such as long run average incremental costs (LRAIC), used within the EU, or total element long run incremental costs (TELRIC) , which are used in the US. These types of cost analyses are to a certain extent based on existing basic network designs, but with use of the most recent transmission technologies. It should be noted that the outcome of such analyses highly depends on the assumptions made, and very different results may be obtained for different network architectures and geo-types.

A survey of cost analyses made shows that access costs constitute 35-50% of the total network costs. Here the major cost driver is total cable length, which again depends on the number of connections and the density of customers. Therefore it may cost as much as five times more to connect customers in rural areas than in metropolitan areas. A major part of the costs are related to the laying of cables underground. Here substantial savings can be obtained through the use of ducts that can be shared between several cables. The digging costs are highly dependent on the geo-types. Here it should be noted that digging costs per km often are much higher in metropolitan areas than in the open land.

The costs of copper-based networks are affected by the following technological advances:

• Today the copper-based trunk network is replaced by an optical network, while the access network is still based on copper lines. Installation of fibers has reduced the cost of capacity in trunk networks considerably.
• Digitalization of switching facilities and use of packet switched transmission technologies has reduced switching costs.

Implementation of Next Generation Access Network technologies will reduce transmission costs even further. Altogether these trends imply that the cost of the copper-based access network constitutes a still larger share of the total network costs.

However, technological advances are also taking in this part of the network. As discussed in other sub-section, alternative access networks offering lower costs or higher capacity have been developed, but in areas where investments in copper-based access networks have already been made, the development of technologies offering more capacity on existing access facilities is at least as important.

It is possible to upgrade the copper-based access networks to carry high-speed services through the use of xDSL technologies; the possible capacity depends on the length of the copper cables and the quality of the network. The bandwidths offered here range from 128 kbps to 10 Mbps. xDSL is the most widespread access technology for broadband access as 57% of all broadband connections use xDSL (end 2003).

Provision of higher bandwidth will often, but not always, require more investments in the access network, and of course more capacity in the core network. By all means, the capacity is much lower than in optical networks. On the other hand, the additional investments needed for upgrading the network are only a fraction of what is needed for the establishment of an optical network.

Indicative cost per line in a fixed telecom network