Economic analysis of integrated voice and data networks: A case study

This paper describes the results of a study to evaluate alternative switching strategies for future integrated voice and data networks. Three fundamental problems are addressed: 1) the economics of integrating voice and data applicatiom in a common communications system; 2) the comparison of alternative switching technologies for integrated voice and data networks; 3) the cost-effectiveness of alternative voice digitization rates and strategies. Three broad switching technologies and variations thereof are investigated and compared. The switching technologies are: circuit switching, packet switching, and hybrid (circuit-packet) switching. Each switching technology can accommodate either voice or data applications separately or combined voice and data requirements in an integrated fashion. Results of studies regarding communications systems option are provided and the sensitivity of the results are tested with respect to traffic variations, cost trends of switching and transmission, and network performance variables. The significant variables which affect the results are identified and quantified. The intent of this study is to identify and quantify network technologies which demonstrate long-term low operating costs, This is a necessary effort to provide the basis for determining the most cost-effective evolutionary path for future communication systems. It is recognized that transition problems and associated costs may be other important factors determining the ultimate evolutionary path. However, determining these costs was not an objective of this study. Neverthless, this study provides a framework and a target technology for detailed evolution, planning, and cost analysis.