A Case Study

This article seeks to develop a richer understanding of the suitability of IP telephony in the Public Switched Telephony Network (PSTN) with an actual local exchange carrier (LEC)’s case and network simulation. We also performed a simple real options analysis to evaluate a telecommunications network. The underlying network and associated data were derived from our studies of an actual LEC. The preliminary result shows that an IP telephony network would save about 73% of the total link capacity of a circuit switched network and it could also carry some integrated services traffic at low incremental cost. The value of the IP telephony network was shown as positive under real options and as negative using net present value (NPV). We measured deferrable and irreversible value as well as the uncertainty value of an IP telephony network. Through this experiment, we can get inference that IP has potential for a voice carriage.