Valuing Flexibility in the Migration to Flexible-Grid Networks

Increasing network demand is expected to put pressure on the available capacity in core networks. Flexible optical networking can now be installed to increase network capacity in light of future traffic demands. However, this technology is still in its infancy and might lack the full functionality that may appear within a few years. When replacing core network equipment, it is therefore important to make the right investment decision between upgrading toward flexible-grid or fixed-grid equipment. This paper researches various installation options using a techno-economic analysis, extended with real option insights, showing the impact of uncertainty and flexibility on the investment decision. By valuing the different options, a correct investment decision can be made.