It won’t be a surprise to anyone that energy prices are rising. Amid geopolitical turmoil, depleting resources and public pressure, the cost of our consumption is increasingly being felt by citizens and companies alike, says Phil Thompson, VP, client partner executive, Spirent Communications.
This is especially true of the international telecoms sector, whose energy consumption is orders of magnitude higher than comparative industries. The Global System for Mobile Communications Association (GSMA), a global body for the telecommunications industry, says that telecommunications account for between 2-3% of global energy consumption. That alone would produce high costs, however, energy is taking up a greater proportion of their budgets.
In 2018, Mckinsey reported that energy bills take up around 5% of telecom companies’ operating expenditure. However, the GSMA claims that in 2021 alone energy consumption rose to between 15% and 40% of the industry’s operating expenditure.
There are good reasons for this the telecoms sector has never been quite as important as it is today. In the 20th century we relied on telecommunications for many essential functions. But in the 21st, we rely on it for nearly everything. Globalisation and the expansion of connected technologies has made international connection a baseline function of our everyday lives. As these connected technologies underpin our world ever more deeply, the telecoms industry is called upon to take a greater role.
The growth of 5G and increasing centrality of mobile devices and thus demand for mobile internet have asked more and more of the telecoms sector. In line with that growth, so has the sector’s energy consumption. According to a report from ABI research, the introduction of 5G will nearly double the sector’s power consumption by 2030.
Customers can’t foot the bill
Price rises haven’t just affected the telecoms sector although many have passed it on to end-users. A number of European telecoms companies have already raised rates and in April, UK telecoms companies will be raising their prices above inflation by a record 14% in an attempt to accommodate their own rising costs. BT’s chief executive Phillip Jansen explained the price rise by pointing to “extraordinary energy costs” that the company has had to face in the last year.
These rises have drawn public ire with UK-based consumer group Which? reprimanding the sector to The Guardian, saying that telecoms providers should “step up and play their part to support their customers through the cost of living crisis.” Others have called upon the sector’s UK regulator, Ofcom, to intervene on behalf of consumers.
Amid both rising energy prices and rising inflation, customers will struggle to pay yet another inflated bill. Moves like this are at best unpopular, but at worst threaten the long term trust which consumers place in telecoms providers.
Unless power costs miraculously come down, telecom companies will have to find some other way to save money.
Waste in telecoms labs
Thankfully, there are plentiful opportunities to cut those energy costs, especially because telecom operators often deal with a high level of energy waste. Mckinsey, the management consulting groups says that around 85% of the waste within the industry comes from inefficient equipment and inefficient use of that equipment.
It’s around this particular locus that telecom operators can save tremendous amounts of energy, and thus operating expenditure.
Telecoms labs in our experience are a site of significant waste. Large telecom operators will often run consolidated labs which cover large geographical regions and smaller labs meant to test local conditions in specific areas. These labs are generally replete with expensive, power-hungry equipment meant to test the products and services.
While larger labs are made to test and verify products, smaller labs often repeat that process for specific local conditions. Because these functions are duplicated at both the regional and local level, this represents an unnecessary redundancy which continues to add to energy bills.
That’s only part of the picture. Much of the unnecessary waste in telecom operators comes from the equipment within those labs. Although this equipment is often unused most of the time, it is left running all of the time. According to Spirent data, 93% of the equipment used in those labs is used less than half of the time. To make matters worse, over three quarters of that equipment is used less than 90% of the time.
Using energy more efficiently
Much of this waste comes from inefficient use of the resources on hand. This ultimately leads to duplicated functions and resource costs. However, telecom operators can streamline their lab resources by automating their test and validation functions within a single platform.
This would help on two levels. The first is that it would allow telecom operators to consolidate their labs and eliminate the duplication of functions and resource expenditure. They would be able to share data more efficiently between labs and consolidate testing functions in fewer labs, thus saving on the energy expenditure needed to run that network facilities.
Secondly, automation would allow the more efficient use of power-hungry lab equipment. By federating and consolidating lab functions, operators can schedule resources as and when they’re needed, meaning that equipment need not be running around the clock and that unnecessary energy need not be expended on cooling that equipment.
Our data shows that by merely using these labs and machines more efficiently, they could cut around 40% out of their energy bill. However, the potential benefits go further still.
That consolidation can enable better use of lab equipment and better use of lab field resources as well as greater optimisation of lab space. To boot, it can enable faster lab service and thus, faster end-user deployments.
In our research, we modelled a telecoms operator using data from customers that maintained 5 global labs and 7 smaller satellite labs. Our model showed that using automation, that operator could save nearly €1 million a year in energy costs. In labour savings, the same operator could save nearly €4 million. By consolidating labs, the operators could reduce the equipment it needs by 35% and save a further €800,000. Ultimately, our modelled operator could save €5.6 million a year by automating its functions and consolidating its lab network.
Beyond the bill
Cutting energy bills is just one part of the equation. The simple fact is that the telecoms sector needs to drastically cut its energy consumption. As environmental crises become a central public concern, the telecoms industry will pay prices far beyond periodically high energy bills. The use case detailed represents 2250 metric tons of CO2 for a single large inefficient lab.
Telecoms consumes around 3% of global energy, according to GSMA. The Boston Consulting Group predicts that if it doesn’t find ways to become more efficient then that number could rise to around 14% of global consumption by 2030.
While there’s a downside to letting this situation lie, there’s plenty of upside to doing something about it. Green investing is becoming a driving force in global markets. Not only are customers drawn to companies which can claim a smaller carbon footprint but so are investors. Bloomberg Intelligence has even predicted that Environmental, Social and Governance (ESG) investments will reach 50 trillion by 2025. From that point of view, automating telecom labs isn’t just a way to cut costs, but a real opportunity to positively transform the industry.
The author is Phil Thompson, VP, client partner executive, Spirent Communications.
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