Robust Network Design with Uncertain Outsourcing Cost

The expansion of a telecommunications network faces two sources of uncertainty, which are the demand for traffic that will transit through the expanded network and the outsourcing cost that the network operator will have to pay to handle the traffic that exceeds the capacity of her network. The latter is determined by the future cost of telecommunications services, whose negative correlation with the total demand is empirically measured in the literature through the price elasticity of demand.