Factors that Affect TCO in Wireless Hauling Networks

by TzvikaNaveh | Mar 16, 2014 8:04:30 AM

Today we’re continuing our series on TCO-related issues for wireless hauling networks. In this installment, we want to mention some of the major factors with which mobile network operators (MNOs) must contend as they deploy and operate hauling links. If you have any comments or questions about this post or about how to lower your TCO, CAPEX or OPEX in your network, please reach out directly to me at [email protected]

 

CAPEX + OPEX = TCO

As you may recall from our previous TCO blog post we published here on the Backhaul Forum, TCO is made up of capital expenditures (CAPEX) and operating expenditures (OPEX) with OPEX being, by far, the larger component. If you didn’t catch the last post on OPEX and CAPEX, here’s a quick video primer to get you up to speed - http://www.youtube.com/watch?v=ZyBeJVlZ2Oc

 

Below, I’m going to outline and describe the typical factors and their relative contributions to CAPEX and OPEX and I’ll give key tips for reducing both costs simultaneously.

 

CAPEX Factors

Site Construction (30% of Total CAPEX)

It’s clear that wireless solutions provide fast service and low cost, though site construction expenditures can add significant expenses.

KEY TIP: Limit construction costs by reducing the number of sites that must be deployed, minimizing the quantity of equipment per site and simplifying installation by making the site easily reachable and convenient to access.

 

Equipment (25% of total CAPEX)

When operators are able to reduce the number of sites, they automatically reduce the quantity of wireless equipment to install and maintain. By acquiring wireless equipment with high capacity, Mobile Network Operators (MNOs) can minimize the number of sites they are required to deploy to meet or exceed the demand for capacity.

KEY TIP: Consider network sharing to reduce equipment costs.

 

Accessories (20% of total CAPEX) – Picture of equipiment

The installation of hauling equipment requires plenty of accompanying accoutrements like IF cables, dehydraters, waveguides, grounding lugs, lightning arresters, mounting fixtures, racks, enclosures, weather-proofing materials and more.

KEY TIP: Aim to decrease the quantity and cost of accessories.

 

Installation (15% of total CAPEX) – Photo of workers installing

During the rollout of a new network, installation can constitute a huge financial outlay, sometimes in the billions of dollar. Network planners are advised to try to reduce the numbers and sizes of sites.

KEY TIP: Consider installation procedures that minimize time and effort at each site.

 

Antennas (10% of total CAPEX) - Photo of antenna

Smaller antennas cost less than larger ones. Antenna size and weight also influence the size of towers. Radio signal strength has a great bearing on the size of antennas as high signal strength can achieve link budget over greater distances enabling the use of

KEY TIP: Use fewer, smaller and lighter antennas.

 

OPEX Factors

OPEX includes all those costs that the MNO encounters once the network is deployed in order to operate it. Operating expenditures are the major cost to the operator constituting 70% of the total cost of ownership, so operators are advised to seek technologies and procedures that can keeping operating expenditures as low as possible.

Here is a typical breakdown of the factors that constitute OPEX in the hauling network:

 

Real Estate (30% of total OPEX)

Operators have to acquire—purchase or rent sites—for their base-stations. Fewer and smaller sites are the key to keeping this large expenditure affordable. In the equipment room, space, too, is often at a premium.

KEY TIP: Small footprint wireless equipment is a good way to reduce real estate-related costs.

 

Operations (30% of total OPEX)

For most operators of extensive wireless hauling links, spectrum-license fees are a major cost factor. The licensed bands are in the 6-42GHz range (6-38GHz in North America) where the lower part is the more desirable (because of reduced signal attenuation) and thus more expensive.

KEY TIP: Operators can alleviate license fees by deploying more powerful radios since better signal strength compensates for some signal attenuation enabling the MNO to license a higher, less expensive frequency band. Of course, with higher spectral efficiency, operators can purchase less spectrum.

 

Power Consumption (15% of total OPEX)

Whether deployed remotely outdoors, or in the nearby equipment room, power consumption can eat a hole in the OPEX budget. In addition to its own power requirements, wireless hauling equipment gives off heat and requires cooling, contributing substantially to higher expenditures.

KEY TIP: Consider lower-cost wireless equipment to save on power-consumption.

 

Hardware and Software (15% of total OPEX)

Over time, MNOs upgrade elements of already-deployed hardware and software in the form of new releases of operating systems and applications, and hardware-part upgrades. Applying software upgrades remotely is a big cost savings.

KEY TIP: Modular hardware with swappable cards is preferable to wholesale equipment replacement.

 

Manpower (10% of total OPEX)

Manpower efficiency can be significantly enhanced by hauling specialists who partner with MNOs to produce the most effective network configurations and deployment plans, considering all the factors that we have mentioned.

KEY TIP: Simplify your operations and eliminate site visits needed for upgrades.

 

I hope that you found this OPEX and CAPEX post interesting and useful for improving and making your network more efficient. Be sure to check out next week’s post where I’ll be focusing on how competing MNOs have turned to cooperation agreements with each other to share the cost of hauling networks, a concept known as network sharing (You can read more on the subject here) to reduce TCO.

If you would like to hear more about how Ceragon’s products, specifically our IP-20 platform, can assist you for lowering your TCO, CAPEX or OPEX in your network, please reach out directly to me at [email protected]

 

ISPs & RSPs

TzvikaNaveh

Written by TzvikaNaveh