Look beyond the price tag - TCO is the way to go

By Dr. Dahlit Brin 6 min read


Rolling out 5G networks as fast as possible while trying to keep costs at bay? Looking at box prices is not enough. Operators need to look at the TCO (total cost of ownership) along the lifecycle of their wireless hauling solutions. This enables a real dollar for dollar comparison across competing offers, and ensures that operators truly get their money’s worth and spend minimum CAPEX and OPEX over time.

 

Mobile operators are under immense pressure to reduce costs of network rollouts, upgrades and maintenance, specifically due to the need to prepare older generation networks for 5G and roll out 5G links quickly. Wireless backhaul plays an increasingly important part in 5G preparation and deployment. Moreover, it holds huge potential for reducing bottom-line costs for mobile operators in their quest to provide superior quality of experience to their subscribers and gain market share, while keeping those costs at bay. Let’s look at how telcos can get the maximum bang for their bucks when expanding their focus from price alone to total cost of ownership (TCO).

Assembling the total cost puzzle

TCO refers to all costs that crop up at one point or another along the lifecycle of a solution – be it equipment, software, services or a mix. When it comes to wireless backhaul solutions, we essentially need to look at the challenges and costs connected to deployment, operations, after-sales support, and upgradability in the long run.

Of course, price is always important and a central topic on the agenda. But let’s park this on the side for a moment and focus on other, equally significant cost factors.

  • Installations and upgrades

We want to be sure that installations and upgrades take place as smoothly and quickly as possible. Time is money, and the shorter the rollout time, the lower the labor and labor-related costs will be. Additionally, the size of the equipment that needs to be fitted on the tower has multiple effects on installations, upgrades and operations. Large equipment, besides having higher prices and taking longer to install, is more costly to install. Very large antennas require cranes, and, for older towers, costly reinforcement measures must be taken. Where operators don’t own the towers, higher rental fees are incurred. For very crowded towers, large equipment can be a showstopper, as additional links cannot be installed.

  • Field visits

Related to the topic of installations and upgrades, operators always want to reduce the number and duration of field visits. Truck rolls are expensive and, in certain regions of the world, even dangerous. We have carried out installations in countries where our teams had to be accompanied by security forces, which not only makes the operation more complicated and stressful, but also very expensive. And let’s not forget cases where locations are simply very hard to reach. So, any measures where field visits can be reduced or avoided altogether, will drive down direct and indirect costs immensely.

  • Longevity

Once installed, we want to ensure that the link is as sound as a dollar. Long product lifetime and high Mean Time Between Failures (MTBF), besides granting huge peace of mind, translates into direct cost savings. The longer equipment lasts, the less operators need to invest in new equipment. Similarly, the longer links run without problems, the less field visits are required and the lower the maintenance and repair costs. And that leads me to the topic of after-sales support. Typically, operators don’t want to spend time dealing with repairs and return merchandise authorizations (RMAs). So, by offering superior after-sales services, headaches for operators will be alleviated and real savings in terms of labor and inventory costs can be made.

  • Power consumption

Power consumption is always an issue and for different reasons. There are regions, such as in Africa, where power generation is very difficult and costly, especially at very remote sites. European operators, in particular, want to minimize their energy footprint to help meet their CO2 emission reduction targets, as well as help reduce their OPEX. In other cases, electricity costs simply are very high. Hence, wherever operators can reduce power consumption in their networks, they will strive to do so.

A day late and a dollar short

While most discussions focus on costs, I pledge for widening the view to what operators get in return, namely their potential revenue gains. When telcos can reduce time to market (TTM) in their rollouts and upgrades, they also reduce time to revenue because it allows them to gain market share faster and start earning hard cash more quickly. And not only that. By deploying high-quality links with low MTBFs, operators can provide that superior quality of experience that will prevent churn and empowers them to charge premium prices for premium services. All these important considerations get lost if focusing solely on price.

In summary, price is important – it always has been and always will be. But operators must look beyond the price tag and ensure they get their money’s worth. The best way to do that is to look at the total cost of ownership and the revenue gain potential that a solution offers. Only by doing so can a real dollar-for-dollar comparison be made.

Stay tuned for next week’s blog where we explore how Ceragon’s wireless solutions can help reduce TCO along the solution lifecycle.

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