Comparative economic analysis between direct and indirect wiring in the copper-based local loop

In a copper-based local loop, a circuit pair is indirectly connected to each subscriber usually via a primary cross connection point (PCP) which acts as a buffer to absorb circuit demand fluctuations among subareas. But some telephone operators adhere to the classic practice of direct wiring based on technological preferences without taking advantage of cost-efficient flexibility points. We analyse the extra cost of maintaining the old practice of direct wiring over the popular one using flexibility points in a single PCP area. For that, the expectation of circuit shortages in subareas during a single replenishment period for the direct wiring is first obtained. Exploiting the convexity of the expectation, we then present a procedure for optimally allocating circuits among subareas, which not only serves its own purpose of circuit provisioning for the direct wiring but also precisely calculates the extra cost over the indirect case.