System and method for determining an evolving combination of network components to maximize the net present value of a provider's cash flow

• US 20060173765A1
• Filed: 03/20/2006
• Published: 08/03/2006
• Est. Priority Date: 02/01/2001
• Status: Abandoned Application

• Current Assignee: Level 3 Communications LLC (Lumen Technologies, Inc.)
• Original Assignee: Level 3 Communications Incorporated (Lumen Technologies, Inc.)
• Inventors: Crowe, James Q., Alvarez, Jose F., Lotosky, Lorraine, Rushmeier, Russell A., Das, Indraneel, Reynolds, Mark A., Koster, Paul J.
• Application Number:
  US11/384,460
• Publication Number:
  US 20060173765A1
• Time in Patent Office: Days
• US Class Current: 705/35
• CPC Class Codes: G06Q 20/108 Remote banking, e.g. home banking
• CPC Class Codes: G06Q 20/1085 involving automatic teller machines [ATMs]
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03

Abstract

A method and computer program product are presented for selecting and arranging an appropriate combination of network components, or elements, in a communications network. The selection of network components is done in a manner that maximizes the net present value of cash flow resulting from the provision of communications services between nodes of the network. The method comprises the steps of receiving information that constrains network design and price establishment, and then using the constraint information to select a combination of network components for each link in the communications network. According to the invention, the selection of network components is performed for each of several successive time periods, effectively planning the evolution of the network. The selections are made so that the network components satisfy demand over time while maximizing the net present value of the cash flow that results from the provision of communications services.

Claims

1. A method of maximizing a net present value (NPV) of a cash flow that results from provision of communication services between nodes of a network, wherein maximization is achieved through selection of an appropriate combination of network components and product prices over a plurality of consecutive time periods, the method comprising the steps of:

(a) receiving constraint information regarding demand for products, prices of products, network topology, available technology, costs, and an initial state of the network;

(b) forming an expression that models revenue received as a result of sales of products at each time period T, wherein the revenue expression is a function of price and demand for each product p at each time period T;

(c) determining traffic capacity for each link at each time period T;

(d) forming an expression that models costs of providing communications services, wherein the cost expression is a function of demand for each product p at each time period T and of the number of rings and wavelengths bought, used, and retired, for each technology, circle, and time period T;

(e) forming an expression that models NPV as an objective function of revenue and costs; and

(f) optimizing the objective function.

2. The method of claim 1, further comprising the step of:

(g) using the optimization to determine network components for each link in the communications network, the timing and location of the deployment of the components, the prices of products, and the timing of price changes.

3. The method of claim 1, wherein the constraint information regarding demand for products comprises the following:

(a) non-decreasing demand from any time period to the next, wherein the extent of any demand increase from one time period to the next is capped;

(b) a predetermined level of demand for each link and each product in an initial time period; and

(c) a fixed proportion of total network-wide demand for each link.

4. The method of claim 1, wherein the constraint information regarding prices of products comprises the following:

(a) a non-increasing price for each product for any time period to the next;

(b) a constant price elasticity with respect to price for each product;

(c) a bell-shaped curve for the elasticity of any product over time; and

(d) a predetermined price for each product in an initial time period.

5. The method of claim 1, wherein the constraint information regarding network topology comprises the following:

(a) a fixed set of nodes requiring connectivity; and

(b) a fixed set of links providing the connectivity.

6. The method of claim 1, wherein the constraint information regarding available technology comprises the following:

(a) a predetermined set of possible combinations of data rates and maximum numbers of wavelengths for a fiber, wherein any technology is an element of the predetermined set;

(b) a predetermined set of fiber generations, wherein any fiber belongs to one of the fiber generations.

7. The method of claim 1, wherein the constraint information regarding costs comprises the following:

(a) the prevailing market cost of each network component at each time period T; and

(b) a predetermined fixed cost compression rate.

8. The method of claim 1, wherein the constraint information regarding the initial state of the network comprises the following:

(a) the number of wavelengths bought in an initial time period;

(b) the number of rings bought in the initial time period; and

(c) the amount of fiber bought in initial-time period.

9. The method of claim 1, wherein said step (c) comprises the step of determining the network components necessary to provide the determined capacity for each link at each time period T.

10. The method of claim 1, wherein said step (f) comprises the steps of:

(i) removing any non-increasing price constraint;

(ii) performing an initial optimization; and

(iii) evaluating a resulting plan.

11. The method of claim 10, wherein said step (f) further comprises the steps of:

(iv) when a price increase is observed for a product, adjusting the price at the point of increase to eliminate the increase; and

(v) performing a subsequent optimization using the adjustment of step (iv) as a further constraint.

12. A method for modeling a communications network over which communication products may be offered, wherein the method comprises:

(a) receiving constraint information that comprises a demand for the communication products, an initial state of the communications network, offering prices for the communications products and costs for components of the communications network;

(b) using the constraint information to form a revenue expression that models revenue received as a result of sales of the communication products during a plurality of time periods, wherein the revenue expression is a function of price and demand for the communication products at each time period;

(c) using the constraint information to form a cost expression that models costs of providing the communication products during the plurality of time periods, wherein the cost expression is a function of demand for the communication products at each time period and cost of maintaining the communications network at each time period;

(d) relating the revenue expression to the cost expression to yield an objective function;

(e) optimizing the objective function; and

(f) using the optimized objective function to determine appropriate components for the communications network and to determine appropriate offering prices for the communications products.

13. The method of claim 12, wherein the constraint information regarding the initial state of the communications network comprises network topology information representing an initial set of network nodes each connected to at least one other network node by a link, and wherein the constraint information regarding demand for the communication products comprises:

(a) non-decreasing demand from any time period to the next, wherein the extent of any demand increase from one time period to the next is capped;

(b) a predetermined level of demand for each link and each communication product in an initial time period; and

(c) a fixed proportion of total network-wide demand for each link.

14. The method of claim 13, wherein the network topology information comprises a fixed set of nodes requiring connectivity and a fixed set of links providing the connectivity.

15. The method of claim 12, wherein the constraint information regarding costs for components comprises a prevailing market cost of each component at each time period and a predetermined fixed cost compression rate.

16. The method of claim 12, wherein the optimizing act (e) comprises:

(i) removing any non-increasing price constraint;

(ii) performing an initial optimization; and

(iii) evaluating a resulting plan.

17. The method of claim 16, wherein the optimizing act (e) further comprises:

(iv) when a price increase is observed for a communication product, adjusting the price at the point of increase to eliminate the increase; and

(v) performing a subsequent optimization using the adjustment of act (iv) as a further constraint.

18. The method of claim 12, wherein the constraint information regarding offering prices for the communications products comprises:

(a) a non-increasing price for each communication product for any time period to the next;

(b) a constant price elasticity with respect to price for each communication product;

(c) a bell-shaped curve for the elasticity of any communication product over time; and

(d) a predetermined price for each communication product in an initial time period.

19. A method for modeling a communications network over which communication products may be offered, wherein the method comprises:

(a) receiving constraint information that comprises a demand for the communication products, an initial state of the communications network, information regarding an initial state of the communications network, offering prices for the communications products and costs for components of the communications network, wherein the information regarding the initial state of the communications network comprises network topology information representing an initial set of network nodes each connected to at least one other network node by a link;

(b) using the constraint information to form a revenue expression that models revenue received as a result of sales of the communication products during a plurality of time periods, wherein the revenue expression is a function of price and demand for the communication products at each time period;

(c) determining traffic capacity for each link at each time period;

(d) using the constraint information to form a cost expression that models costs of providing the communication products during the plurality of time periods, wherein the cost expression is a function of demand for the communication products at each time period and cost of maintaining the communications network at each time period;

(e) relating the revenue expression to the cost expression to yield an objective function;

(f) optimizing the objective function; and

(g) using the optimized objective function and the determined traffic capacity for each link to determine appropriate components for the communications network and to determine appropriate offering prices for the communications products.

20. The method of claim 19, wherein the network topology information comprises a fixed set of nodes requiring connectivity and a fixed set of links providing the connectivity.