Broadband penetration has been called one of the important measures of a country’s competitiveness. The increasing amount of voice and video applications constantly drives demand. To meet demand, telecommunications companies are deploying broadband networks and services. However, since technology advances quickly, it may be unwise to invest too early and too much. Therefore, all telecommunications companies face a dilemma: invest now and see the technology become obsolete, or do nothing and see customers go away.

This paper demonstrates how to select the best technology to invest in, using a techno-economic analysis approach. Actually, it only considers two technologies: synchronous digital hierarchy (SDH) and wavelength division multiplexing (WDM). The empirical study focuses on Slovenia, a country in southern central Europe with a population of over two million people. It should be noted that country differences must be taken into account when reading this paper.

Two economic measures are used to assess financial viability: capital expenditure (CAPEX) and operational expenditure (OPEX). For revenue, net present value (NPV) and the internal rate of return (IRR) are used. Using these parameters, the author concludes that Telekom Slovenije should upgrade its backbone with either SDH or dense WDM (DWDM). However, a comparison of the cost and revenue shows DWDM is a better long-term choice.

Government regulation and competition from other carriers are not considered in this paper. Therefore, the conclusion may not be readily applicable to other carriers in other countries.