o be understood. For example, reducing a piece of equipment from $10 to $8.70 (a 13 percent decrease) only reduces the total cost of a ser- vice from $100 to $98.70, which is a mere 1.3 percent net reduction. As implied by our earlier discussion, the edge equipment cost reduction has to be in the 100 to 1,000 percent range. In our example, the cost would have to go from $10 to $5, or better yet, from $10 to $1. In the latter case, the total service cost would go from $100 to $91, or about a 10 percent reduction. Even this is not all that significant, but if the OAM&P costs are reduced from $25 to $15, then the service cost falls by 20 percent, which is where customers start to show interest in examining an alternative to the embed- ded service they already have. The criticality of the 100 to 1,000 percent cost reduction is made clear when carriers state that they need 67 broad- band customers in a building to deliver sustainable break-even services. 4 A Chapter 3 mere 10 to 30 percent equipment cost reduction is meaningless. This implies that disruptive technology is needed. 3.1.4 Achieving Bandwidth Capacity Goals During the recent past, carriers have had three possible solutions to the problem of increased bandwidth demand, particularly at the long-haul level: Install new fiber. Invest in a new TDM technology to achieve higher bit rates. Deploy DWDM. Installing New Fiber to Meet Capacity Needs Traditionally, carriers have expanded their networks by deploying new fiber and ancillary trans- mission equipment. For each new fiber pair deployed, the carrier could add a capacity of up to 2.5 Gbps. Unfortunately, such deployment tends to be costly. The budgetary cost to deploy the additional fiber cable, excluding the cost of associated support systems and electronics, is in the neighborhood of $50,000 to $70,000 per mile (costs are higher in downtown urban cen- ters). Although this estimate varies from place to place, installing new fiber can be a major project. In many instances, a third party (such as a railroad or