Network design and interconnection pricing in a heterogeneous terrain

In the design of a telecom network, the selection of link technology in a heterogeneous terrain is a challenging task as cost varies according to distance and total bandwidth. Traditionally research effort considers only distance and bandwidth for modelling of financial cost and ignores the effects terrain may have. We show quantitatively how geographical terrain and associated link technology influence the total cost. Our approach has implications for regulators who need to govern interconnection prices of services (voice, message or data) which may be provided by networks of different operators. We have modelled the link cost based on distance, bandwidth, terrain and technology simultaneously using a general error regression technique applied to real data obtained from the Indian Telecom Company, BSNL. We show that the error between the actual and modelled cost is less than 5% for all cases. Using our model, the financial cost to the operator is reduced and regulators can ensure a balanced development for the country.