On Distributed Communications Series

X. Cost Estimate

I. Cost Estimate

Examined Network Configuration

Table I lists the parameters on which the definition of the specified communications network is based for costing purposes. The definition of a redundancy level of 4' is shown in Fig. 1.

Cost Summary

Table II presents an approximate estimate of the cost anticipated for the proposed system using the limiting assumption defined and enumerated in Table I. Table II is divided into two major sections. The first, "Total Initial System Investment," includes the three sequential phases of Research and Development, Engineering and Installation, and Purchase of Major System Elements. The development and hardware purchased in these phases are capitalized and form a fixed investment of about $235 million.

The second section of Table II includes those annual cost factors involved in amortizing the initial investment on a ten-year basis, as is commonly done in the communications business; also included are operating personnel costs and a profit factor.

It should be understood that the cost estimate is based on a number of assumptions about system design, implementation, and operation; these assumptions represent a significant departure from today's commonly accepted practices. It is for this reason that the cost estimate is as low as it is.

To obtain a feeling for the size of the undertaking being considered, we might compare the $60 million annual cost to the $1 billion the Department of Defense currently spends each year for communications of all forms. This outlay has been growing 15 per cent annually.

It is to be noted that if the distributed network could reduce the present expenditure by 6 per cent or more, it would thereby pay for itself-not to mention the key goal of increased survivability which it offers.

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