How much am I spending on my access network again?
March 6, 2018
If you are not from the Telecommunications industry please do not read this article. This is not for you faint hearts
OK now – if you even have an iota of interest in managing Cable infrastructure – strategizing, financing, building or operationalizing – let’s have a chat.
A couple of words on the terminology. Your network is broken into five components – Backbone (your inter-city connectivity), Metro (your intra-city connectivity), Edge (your hub centers), Outside Plant (your distribution network from hubs to home) and In-home (your CPE portfolio). Out of these five the three components – Edge, Outside Plant and In-Home network – together are called the Access network. What is special about Access – you may ask?
Bottom line – 85 – 90% of your yearly CapEx budget goes into managing the Access network.
Let me put this in perspective – if your yearly revenue is $30B and you are investing ~15% (a typical Capital Intensity Ratio of Telecom industry) in CapEx back into the growth of your network, then your yearly spend on Access is ~$4B (90% x 15% x 30B = ~$4B). So, yes, if I were you, I would check this Access thingy very closely.
Lately we, in the Cable industry, are faced with significant competitive pressure (both from the incumbents and the new entrants), a myriad of deployment options (D3.1, Fiber Deep, FTTH, Full Duplex, Small Cell), and the continuing trend of exponential growth of consumer traffic. A perfect storm right! Ok – what is this got to do with Access? Simple – for example, if you strategize to deploy FTTH to meet the three above issues, you will need to deploy fiber terminating equipment in the hub sites (Edge activity), pull fiber to customer homes (OSP activity) and install fiber terminating CPE in the home (In-Home activity). So yes, any transformational decision that you want to make – you will wiggle the Access network heavily. And yes, this comes out of your $4B budget!
Any of the major strategic Access decisions that you would like to do in the next 5 – 10 years, due to the three market forces, you will be spending in billions if not tens of billions in the Access transformation. So, you got to get this right. If not, you will not have a very happy leadership.
An incorrect strategic plan can get you into hot waters with the competition, could erode your customer loyalty, and you may be piling up regrettable infrastructure investment. Let me leave you with this problem statement. In the next blog, I will talk about dos and don’ts of Access transformation.
In the meantime, if you get a chance, read one of our white papers Understanding the Basics of Transformation in the Telecom Industry.