An optimal investment strategy model for fiber to the home

A modeling approach is demonstrated for selecting an optimal investment strategy, over time, for deploying optical fiber in the local loop. The analysis proceeds in three steps. First, the authors forecast cost trends for the key components of a residential fiber network over a 20-year time horizon. Second, an engineering planning model calculates the total cost of providing broadband services using various technologies, for each level of component costs. Third, a dynamic programming model determines the optimal time to deploy fiber-based technology, given component cost trends and revenue forecasts. This approach allows the authors to examine when to begin installing residential fiber networks, and whether some investments should be deferred in order to incorporate future technologies. A description is given of the broadband network architectures evaluated in the study. The authors describe their procedure for determining the optimal investment scenario over time. They review the component cost and other assumptions underlying their scenarios. They present results of their analysis