Skip to main content

TecnO-ecoNomICs of IP optimised networks and services


TONIC will concentrate on techno-economic evaluation of new communication networks and services, in order to identify the economically viable solutions that can make the Information Society to really take place. TONIC will use a business case study approach to assess new broadband and IP service scenarios, yielding quantitative economic results, and identifying and quantifying the associated risk factors. The project team builds upon previous experience in developing and exploiting techno-economic models for broadband access network evolution by integrating the services and applications level in its analyses. The results are key economic indicators such as Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period. Based on these results and on the risk analysis, TONIC will formulate recommendations for optimal service rollout strategies.

- to assess the new business models associated with offering Internet Protocol (IP) based mobile services in a competitive context
- to evaluate the cost and benefits of providing fixed broadband access to both competitive and non-competitive areas, and to determine the most appropriate network infrastructure from an economic viewpoint
- to analyse the results of the above studies in order to provide easy-to-understand conclusions to support strategic investment decisions.

These objectives rely on the following technical achievements:
- Service definition and impact on traffic: TONIC will define service sets and usage patterns in order to determine the traffic load on the network and to provide means for demand forecasting.
- Demand forecasting and tariff modelling: TONIC will develop forecasting models for mobile and fixed broadband services.
- Modelling the network solutions and service scenarios using a specially designed software tool.

Work description:
To achieve its goals, TONIC is organised into five Work Packages as described below:
- Work Package 0 is devoted to project management and co-ordination.
- Work Package 1 will investigate and define the services and applications; it will model the demand for new services and future market evolution, and establish tariff structures.
- Work Package 2 will evaluate the different access technologies for offering IP broadband services and conduct business case studies to develop guidelines for the selection of technology and timing for roll out, depending on the different types of areas covered.
- Work Package 3 will focus on developing the techno-economic tool including a cost database, to ensure compatibility with the evolving software environment.
- Work Package 4 will ensure the dissemination of the TONIC results, including the organisation of a workshop.

The emphasis of the work is on WP2, which carries out the case studies. Other work packages are supporting and ensuring the work of WP2, while WP4 makes sure that the results are properly disseminated in different international forums.

The main results of TONIC will be presented in the form of pertinent recommendations to policymakers, network operators and service providers regarding communications investment strategies. Annual audits serve both as internal and external milestones for the project where all the work is reviewed. Intermediate results are documented in deliverables and scientific papers that will be presented in conferences and journals.
The project has completed techno-economic evaluation of four case studies and it has produced 7 deliverables documenting the results in detail. Results have been disseminated via numerous publications. Achievements of individual Work Packages are:
WP1 Market modelling has collected market data covering West European countries. WP1 has estimated reference broadband access tariffs and made tariff prediction models. Demand models and forecasts for different access technologies in the fixed and mobile network, have been developed. Additional consolidated forecasts have been produced for different European country groups.
WP2 Business Cases consists of four techno-economic case studies: BC1 Seamless mobile IP service provision economics has completed a model to evaluate the economic feasibility of hybrid UMTS & WLAN network with roaming capabilities. BC1 has identified relevant service classes, usage patterns, and has utilised the demand forecasts for different technologies developed by WP1. The expected revenues from different service classes have been estimated together with network building and running costs yielding a complete business case analysis. BC2 Economic viability of 3G MVNOs as mobile IP-based service providers without own radio access network is evaluated. The case is divided into two business profiles: a company without a mobile license aiming to expand its other services, such as fixed broadband services, secondly a high brand value and large customer base company aiming to expand its business in the mobile telecom area. The profitability for all cases has been shown. BC3 Economics of fixed networks for broadband IP services investigates fibre based access architectures (FTTX) in combinations with copper lines applied within different urban areas. Several network technologies using, e.g. ATM or Ethernet as a “layer two” protocol basis, have been compared. Results show that differences between technologies are surprisingly small, whereas their type is critical. Dense urban and urban areas are profitable with most technologies, whereas sub-urban area is already critical. BC4 Economic viability of broadband services in non-competitive areas has defined and characterized the rural and non-competitive areas by income level and cost of infrastructure related to settlement patterns type. It has analysed ADSL, VDSL, LMDS and DTT technologies for different country groups in Europe and quantified the subsidisation needed providing broadband services in these areas.
WP3, Tool support and methodology development, has provided support for using the TONIC techno-economic modelling tool.
WP4 Dissemination and exploitation of results has organised the 4th workshop on Telecommunications Techno-Economics (Rennes in May 14-15, 2002). WP4 has also published some 50 conference/journals papers and has maintained the project website

Funding Scheme

CSC - Cost-sharing contracts


Keilalahdentie 4
02150 Espoo

Participants (7)

Rue Charles Cadiou - Zone Industrielle Du Vernis
29200 Brest
6 Place D'alleray
75505 Paris 15
30 Panepistimiou Str.
10679 Athens
Alte Tiefenaustrasse 6, Worblaufen
3050 Bern
Am Probsthof 10
53121 Bonn
Snaroeyveien 30
1331 Fornebu
Campo Universitario De Santiago
3800 Aveiro