How to succeed in a Network O&M deal to reduce costs?

Following my previous post related to how to improve EBITDA through a cost reduction program, I would like to share our thoughts on what’s maybe one of the sub-topic where most of the cost reduction measures come from: Network operation and maintenance.

Due to prevailing IP networking trend and urgent demand and growth in mobile data services in mature markets, network maintenance has become increasingly complicated. As a result, operators have been forced to shift their operation and maintenance (O&M) focus from equipment to services. This is the case of a Central European operator, source of this business case that is presented in the presentation bellow.

Previously mobile networks transported services via a single medium, which made maintenance more straightforward and simplified. However, due to the gradual transition to broadband networking, more access means have now become available and base station coverage requirements have also become increasingly varied.

Tightening regulatory policies, growing coverage, rising costs, and increasingly varied terminal applications have all contributed to cause greater diversity in regards to access means at the base station level. Given the current trend in the mature markets, the door is now wide open for other possibilities (such as fiber,  microwave, copper wires or the Ethernet) to be used to deliver mobile bearer capabilities. In this case, the operators face the daunting challenge of maintaining and managing various types of bearer media.

On top, varied frequencies and data service requirements of different commercial districts have contributed to the density of base station coverage. As a result, the number of 3G base stations may be twice the number of currently operating 2G base stations in the near future. In the initial stage of 3G construction, 80% of all 3G base stations will be able to share sites with 2G base stations.

Another key learning of the case unveils how the maintenance mechanism should also be able to support both 3G and 2G service bearers. O&M systems are now required to be able to support more complex, but flexible configuration and control of multiple service types, as the OPEX is reduced.

Network O&M cost is generally believed to be 3 to 4 times as high as network building cost. Consequently, the need continually arises for mobile operators to reduce O&M costs. Their first reaction is generally to minimize their O&M workforce through automation and information technologies. However, most operators are hesitant to accept substantial O&M transformation in order to protect their investment and control costs.

Those operators accepting that the network O&M evolution is a progressive process and being able to adapt its processes and tools will gain significant financial upsides. Enjoy the reading.

Best regards, CVA