Lecture#11 Forecasting in the telecommunications The Bonch-Bruevich Saint-Petersburg State University of Telecommunications Series of lectures “Telecommunication networks” Instructor: Prof. Nikolay Sokolov,

Forecasting: foreword Forecasting is the process of making statements about events whose actual outcomes (typically) have not yet been observed. A commonplace example might be estimation of the expected value for some variable of interest at some specified future date. Prediction is a similar, but more general term. An important, albeit often ignored aspect of forecasting, is the relationship it holds with planning. Forecasting can be described as predicting what the future will look like, whereas planning predicts what the future should look like. There is no single right forecasting method to use. Selection of a method should be based on your objectives and your conditions (data, etc.). Source:

Forecast (XV century) “The time will come when people from the most distant countries will speak to one another and answer one another”. Leonardo da Vinci

“Inaccurate” Predictions “This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us” Western Union internal memo, 1876 “I think there is a world market for maybe 5 computers” Thomas Watson, Chairman of IBM, 1943 “There is no reason anyone would want a computer in their home ” Ken Olson, President, Chairman & Founder Digital Equipment Corporation, 1977 “640K ought to be enough memory for anybody” Bill Gates, Microsoft, 1981 Conclusion: “Prediction is very difficult, especially if it's about the future“. (Niels Bohr, Nobel Prize in Physics in 1922.).

Main considerations One of the reasons of qualitative network development is the interest of the group of subscribers which brings in a good return to Operator in new kinds of services. A number of requirements of this subscriber's group stimulate radical changes in different components of telecommunications network. At present time, the most essential changes take place in access networks. It is desirable that qualitative changes were recognized during the development of forecasts. These results are necessary for the choice of rational principles of further telecommunication system development. Different methods are being applied during the process of telecommunications networks planning. Method selection is carried out taking into consideration problem put by, character of the considered process, and available statistic information.

Unexpected surprise

Formalized forecasting methods

Two examples of trend extrapolations

Economic indicators

Set of functions:

Least-squares method

Forecasting of the future and the past

Revenue generated by PSTN

Future revenue structure

Change of the bandwidth requirements in access network

Forecasting related to access networks

PC markets (1)

PC markets (2)

PC markets (3)

Internet access

Internet in Europe

Mobile traffic (types of terminals)

Laptops and Internet

Statistics of disasters

Generalization (1) Forecasting can be broadly considered as a method or a technique for estimating many future aspects of a business or other operation. There are numerous techniques that can be used to accomplish the goal of forecasting. For example, a retailing firm that has been in business for 25 years can forecast its volume of sales in the coming year based on its experience over the 25-year period—such a forecasting technique bases the future forecast on the past data. While the term "forecasting" may appear to be rather technical, planning for the future is a critical aspect of managing any organization—business, nonprofit, or other. In fact, the long-term success of any organization is closely tied to how well the management of the organization is able to foresee its future and to develop appropriate strategies to deal with likely future scenarios. Intuition, good judgment, and an awareness of how well the economy is doing may give the manager of a business firm a rough idea (or "feeling") of what is likely to happen in the future. Nevertheless, it is not easy to convert a feeling about the future into a precise and useful number, such as next year's sales volume or the raw material cost per unit of output. Forecasting methods can help estimate many such future aspects of a business operation. Source: Reference for Business. Encyclopedia of Small Business, 2nd edition.

Generalization (2) Source: Reference for Business. Encyclopedia of Small Business, 2nd edition. Suppose that a forecast expert has been asked to provide estimates of the sales volume for a particular product for the next four quarters. One can easily see that a number of other decisions will be affected by the forecasts or estimates of sales volumes provided by the forecaster. Clearly, production schedules, raw material purchasing plans, policies regarding inventories, and sales quotas will be affected by such forecasts. As a result, poor forecasts or estimates may lead to poor planning and thus result in increased costs to the business. How should one go about preparing the quarterly sales volume forecasts? One will certainly want to review the actual sales data for the product in question for past periods. Suppose that the forecaster has access to actual sales data for each quarter over the 25year period the firm has been in business. Using these historical data, the forecaster can identify the general level of sales. He or she can also determine whether there is a pattern or trend, such as an increase or decrease in sales volume over time. A further review of the data may reveal some type of seasonal pattern, such as peak sales occurring before a holiday.

Instructor: Prof. Nikolay Sokolov, Questions? Forecasting in the telecommunications