How Telcos Mitigate Their Expenses

Telecom expenses

The battle to find new ways to cut costs and generate extra income is intensifyin in the fiercely competitive and high-stakes field of telecommunications. Since operators want to grow and gain a competitive edge, cost optimization models for telecom expenses in the telecom sector are a hot topic. A fundamental shift in organizational culture is necessary to optimize costs. Organizations to adapt to rapidly changing conditions and achieve higher profits. For that reason, the culture consistently questions the available resources and expenditure items.

Automation for the Win

Automation is one of the primary keys to optimizing telecom expenses.

  • Networks: automated fault detection and self-optimization systems
  • Energy: dynamic shutdown of unused network elements during idle time
  • Sales and marketing: virtual assistants for customer support and experience
  • G&A: admin tasks automation

In a recent survey, STL Partners researchers sought to understand how telcos pursue automation and define their strategies. The survey comprised over 100 key individuals from global telecom operators. Seventy percent of the respondents stated their plans to move beyond providing basic connectivity and seek new revenue growth opportunities.

Telcos have realized that emerging technologies such as 5G and edge computing are the gateway to differentiated solutions to customers. Nevertheless, network and service automation address declining revenue growth, regardless of the company’s strategic approach. Use cases like network maintenance, fault detection, self-optimization, and CI/CD will be crucial to handle growing complexity on the network side. Furthermore, to advance up the value chain, telcos will need to investigate dynamic business models. These models introduce new complexities. In Addition, partner and customer management, service provisioning, and service assurance will be crucial to making this move.

Open Interface-based Technology Solutions

Open interface-based technology solutions, Open RAN or vRAN, are the future of optimizing telecom expenses. To clarify, they offer reduced network-related costs (i.e., infrastructure rentals, RAN power consumption, repair, maintenance, etc.).

For example, look at the open radio access network (Open RAN). Open RAN enables several functions that are:

  • Programmable
  • Intelligent
  • Disaggregated
  • Virtualized
  • Interoperable

Multiple vendors competing for software opportunities and the development of openly specified hardware designs are the main reasons why open software will be less expensive. As a result, an open-source community will gradually develop. As a result of the increased flexibility in DU/CU pooling and the spectral efficiencies they can achieve, centralized open RAN has numerous CapEx and OpEx advantages. In the Rakuten Mobile 3rd Quarter report 2020, Rakuten touted a 40% lower CAPEX and 30% lower OPEX compared to a traditional network.

Agreements Among Giants

Network-sharing agreements have been the go-to cost-saving approach among telcos for many years. Passive infrastructure sharing, or the shared use of cell sites, towers, backhaul transport networks, etc., has been the most popular type of network sharing. In recent years, sharing active network components, such as RAN components and spectrum, evolved from this. Telcos are looking into sharing core network functionalities and parts to cut costs further in the 5G era (called “core network sharing”).

Mobile network-sharing agreements (NSAs) can encourage investment by easing capital restrictions, lowering the unit costs of expanding networks, and generating network cost savings that lower the overall investment size and operating costs.

Deals With the Clouds

By utilizing the capabilities of webscale cloud providers, telcos don’t need to look for multiple partners to address these issues; they can do so on their own. The big three cloud providers, AWS, Microsoft Azure, and GCP, have stepped up their investments over the past couple of years because they are committed to making significant progress in the telecom sector. Their recent partnerships with telcos have sprung up out of nowhere, proving those efforts.

By partnering with cloud providers, telcos are saving money on energy costs by deploying specially designed energy-efficient hardware and architectures created by cloud providers, cutting costs on network costs by moving critical network functions and workloads to the cloud, and improving customer experience and marketing by transforming customer data into insights using cloud data and analytics.

Cutting the Edge

Network slicing will allow telcos to lower OpEx costs through improved operations brought on by fewer cross-dependencies between network functions by segmenting parts of the network to cater to different customer types and use cases. As a result of the isolated slice deployment, which protects against network disruptions in other areas, this solution should also result in lower maintenance costs.

Final Thoughts

In an era that more or less rely on telcos, companies are looking for a way to make a profit while keeping prices affordable. This article has cited the different solutions mobile network operators can use to cut telecom expenses. The main issue is that companies have monopolized the market in some corners of the world, slimming their options. Look at Verizon and AT&T in the U.S. they are the biggest telcos in that market and reign supreme over it. As they have this “seniority,” they have the leverage to run the American telecom industry on their own terms.

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