The telecommunications industry has an energy problem. It consumes an amount of power which dwarfs other sectors and, of late, it is facing ever-steepening energy bills. In an age of environmental crisis, it’s too high a price, says Phil Thompson, VP, client partner executive, Spirent Communications.
In fact, the industry accounts for a large proportion of global energy consumption. According to the Global System for Mobile Communications Association (GSMA), A worldwide trade organisation for the telecommunications industry, it accounts for somewhere between 2% and 3% of global energy consumption. Another report from the Boston Consulting Group (BCG) alleges that the industry could account for up to 14% of global emissions by 2040 if serious steps aren’t taken to address their output.
The high price of telecoms energy consumption
In times of environmental crisis, it’s an increasingly hard level of consumption to justify. Even if the political climate were accommodating of that level of consumption, there are still a range of reasons for the telecommunications industry to cut down in this area.
One of them is expense. As a large consumer of energy, telecommunications energy bills are typically high. Mckinsey noted that in 2018, energy accounted for around 5% of the sector’s operating expenditure. Between the arrival of new technologies like 5G and rising energy prices, the sector is facing steeply climbing energy bills. One GSMA report claims that in 2021, energy consumption rose to between 15% and 40% of the sector’s operating expenditure.
Another is compliance. The sector is increasingly expected to comply with environmental regulation, meet sustainability targets and possibly face compliance penalties if they can’t meet the relevant goals.
Public pressure is also a factor. In 2021, EY released their “Top 10 risks in telecommunications.” For the first time, sustainability entered the list, immediately shooting to fifth place. EY say that sustainability is something that consumers expect of their telecommunications providers, citing that 79% of UK consumers expect companies to operate sustainably and 74% of technology, media, entertainment and telecoms CEOs expect companies to proactively ameliorate the environmental impacts of their operations.
It’s against this backdrop that the telecoms industry is being pressured to cut down its emissions. The industry is attempting all manner of strategies to try and mitigate their considerable carbon footprint. Dutch telecoms company, KPN, recently contracted an offshore wind farm to supply 50% of its energy for the next 15 years. Others are looking to green towers to help cut down their carbon emissions. While these forward thinking developments should be rightly welcomed in the effort to cut down the sector’s consumption, telecommunications companies can start closer to home.
Waste
Telecommunications companies deal with a significant amount of energy waste from easily fixable problems. According to Mckinsey, 85% of waste in the industry comes from things like heat loss from power systems, inefficiencies in equipment and equipment that is kept running, even while it’s not being used.
We’ve seen this time and time again in our telecommunications clients. Commonly, they’re companies that want to meet green targets or cut their energy bills, but still run with significant inefficiencies. We see this most clearly in the lab.
Spirent data from two large labs shows the kind of waste that many experience. Nearly all 93% of the equipment present in those labs were used less than 50% of the time. Furthermore, over three quarters 77% of the equipment used in those labs was left unused 90% of the time.
There are huge energy savings to be made here not just from the energy required by these power-hungry machines, but also the energy needed for cooling those machines. In fact, according to our calculations, labs like these can save 40% of their energy expenditure by using their equipment more efficiently.
Lab sprawl
The labs that telecoms companies do maintain are often inefficiently organised, further contributing to the sector’s consumption. A large telecoms operator, for example, will often maintain a number of global labs replete with energy-hungry equipment which is used for product verification and testing. These typically run around the clock. Operators will then maintain a number of smaller satellite labs which are used to test in local market conditions as well as to test products and services again after they’ve been tested in larger labs.
This organisation is another source of significant waste and redundancies which require operators to repeat the same tests and processes that have already been carried out in another lab.
Cutting consumption and bills
Introducing automation into these telecoms labs can do much to cut out the energy waste that they currently cause. Automation can allow operators to centralise lab functions and as such, they can share resources, information between sites and ultimately consolidate existing labs.
In doing so, operators can cut out the quotidian energy expenditures that accrue from merely having to run separate facilities. Federating those labs with automation will allow them to schedule the energy and resources that they need, when they need them and not have to keep their equipment running when it’s not being used. According to our calculations this can save a large lab nearly £5 million a year.
This can help operators improve and save in a whole number of areas. By consolidating labs, operators can maximise equipment and resource utilisation while optimising existing lab space. This alone could decrease CapEx spending by 40%. In turn, the efficiencies that come with automation could accelerate time to market for products and services, and reduce the time spent in managing lab resources.
Perhaps the most important of those savings is in an operator’s carbon footprint. We’ve used US Environmental Protection Agency Impact models to project the amount of potential energy that can be saved. Our analysis found that a large lab can save 2 ¼ thousands metric tonnes of Co2 a year. That’s equivalent to 500 cars taken off the road, 275 million individual smartphone charges or 37,000 trees planted.
Saving money, energy and the planet
At a time when telecoms companies are expected to cut down their energy usage, they’re also expected to develop and improve. The introduction of technologies like 5G and the ever increasing demand for mobile data, means that labs are being pressured to test and deliver an ever more complex array of products and services, at ever greater speeds, than ever before. Automation can help consolidate labs and cut down on energy waste by better rationalising resource use and information sharing.
It’s not all about limiting costs, meeting compliance demands or fulfilling social responsibilities either. A smaller footprint appears to be becoming an increasingly big draw for green investors. In 2020, mutual and exchange traded funds invested a reported $288 billion (€272.03 billion) into sustainable assets. Environmental, Social and Governance (ESG) investment is growing rapidly and Bloomberg Intelligence predicts that they’ll grow from their 2020 value of $35 trillion (€33.06 trillion) to $50 trillion (€47.23 trillion) by 2025. Telecom organisations need to look at energy saving not just as a way to cut costs but a way to transform their business.
External pressure notwithstanding, telecoms operators live with a tremendous amount of energy waste, which could be better used or cut out altogether in order to improve sustainability and shrink carbon footprints. Automation offers a way to do that, helping save money, power and hopefully, the planet.
The author is Phil Thompson, VP, client partner executive, Spirent Communications.
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