FORECASTING OF TRAFFIC Recommendation E.506 FORECASTING INTERNATIONAL TRAFFIC 1

1 Introduction This Recommendation is the first in a series of three Recommendations that cover international telecommunications forecasting. In the operation and administration of the international telephone network, proper and successful development depends to a large degree upon estimates for the future. Accordingly, for the planning of equipment and circuit provision and of telephone plant investments, it is necessary that Administrations forecast the traffic which the network will carry. In view of the heavy capital investments in the international network, the economic importance of the most reliable forecast is evident. The purpose of this Recommendation is to give guidance on some of the prerequisites for forecasting international telecommunications traffic. Base data, not only traffic and call data but also economic, social and demographic data, are of vital importance for forecasting. These data series may be incomplete; strategies are recommended for dealing with missing data. Different forecasting approaches are presented including direct and composite methods, matrix forecasting , and top down and bottom up procedures. Recommendation E.507 provides guidelines for building forecasting models and contains an overview of various forecasting techniques. Recommendation E.508 covers the forecasting of new international telecommunications services. 2 Base data for forecasting An output of the international traffic forecasting process is the estimated number of circuits required for each period in the forecast horizon. To obtain these values, traffic engineering techniques are applied to forecast Erlangs, a measure of traffic. Figure 1/E.506 outlines two different approaches for determining forecasted Erlangs. The two different strategies for forecasting are the direct strategy and the composite strategy. The first step in either process is to collect raw data. These raw data, perhaps adjusted, will be the base data used to generate the traffic forecasts. Base data may be hourly, daily, monthly, quarterly, or annual. Most Administrations use monthly accounting data for forecasting purposes. With the direct strategy, the traffic carried in Erlangs, or measured usage, for each relation would be regarded as the base data in forecasting traffic growth. These data may be adjusted to account for such occurrences as regeneration (see Recommendation E.500). In both strategies (direct and composite) it is necessary to convert the carried traffic into offered traffic Erlangs. The conversion formula can be found in Recommendation E.501 for the direct strategy and in this Recommendation for the composite strategy. Composite forecasting uses historical international accounting data of monthly paid minute traffic as the base data. The …