Telecom operators and the impact of rising network costs

The telecom industry is witnessing new opportunities and challenges, presented by the global economic turbulence, political tensions, technological, and competitive environment. The need to make networks more agile, scalable, and adaptable has become more apparent now than ever.  Increased distribution and consumption of video and other user engagement platforms have all contributed to the generation of more complex and dynamic traffic patterns that impose new requirements on modern networks.

Leading network infrastructure providers are being impacted by the increasing costs of hardware and services. Many telecom operators have had to increase their tariffs aimed at improving their average revenue per user (ARPU) and help them deal with the financial stress. In South Asia, particularly in India, all the major telcos have increased their mobile tariffs by 20% to 25%.This will likely lead to growth in industry revenue.

Strategies to cope with the expected growth in networks

For a telecom operator, the bulk of its investment goes into acquiring spectrum. As new technologies bring greater opportunities, it also calls for added network investment. Rising infrastructure costs and the pressure of ramping up investments for upcoming 5G deployments, coupled with the cost of spectrum for 5G, are some of the key challenges operators are facing.

The technology cycle is getting shorter and as a result, network spending continues to remain high. Given the context, operators are now increasingly looking at solutions such as open RAN (O-RAN) and cloud in an effort to modernize their network infrastructure. Telecom operators all over the world are warming up to the idea of replacing their legacy radio access networks with O-RAN as they look to lower their CAPEX and OPEX amidst rising capital intensity and subdued subscriber and revenue growth. Telcos have started investing heavily in automation and its underlying technologies, such as service orchestration, network virtualization, and machine learning. Increased network automation not only helps in lowering operational expenses but also helps achieve a higher return on investment.

What operators can do

To mitigate this, telcos can utilize their current 4G/5G infrastructures optimally and;at the same time attract more subscribers.  Optimizing their path to 5G, it is important to understand that many elements of 5G can be built on 4G networks and mobile operators can take an evolutionary approach to infrastructure investment and hence minimize it.As 5G deployments accelerate, operators with existing 4G footprints can substantially leverage their 4G infrastructure, while they ramp up on 5G.

As telecom operators increase tariffs for their subscribers, the expectations of getting a consistently enhanced user experience from the network also go up and increase the risk of churn, even if this move increases the operator’s average revenue per user (ARPU) in the short term.Operators need to leverage their network assets and also explore alternate solutions, such as network sharing and new revenue models to deliver an exceptional digital experience.

Maximizing network capacity and subscriber experience

Scalable network architecture and services can transform operators’ future networks with innovation and enable them to evolve to new 5G capabilities. Here are the ways how Enea’s traffic management solutions help:

• Increase RAN capacity and boost savings - The traffic management solutions reduce highly congested user sessions by 15%, resulting in savings and additional network capacity, thereby delivering 25% more data.

• Deliver outstanding subscriber quality of experience (QoE) - Packet drops in the network are reduced by 10%, leading to a consistent quality of video, a better browsing experience, and an optimized and latency-free streaming session.

• Ensure enhanced resource utilization - The machine learning algorithms help operators configure the congestion management controls they need, thereby boosting RAN efficiency.

• Handling encrypted traffic effectively - The impact of encrypted traffic at the RAN level is reduced by as much as 20%. It gives deep visibility into the network traffic, helping operators to monetize existing 4G/5G assets while building new 5G infrastructure.

Mobile operators need to examine these solutions to maximize their network capacity and subscriber experiences while at the same time deploy the right solutions that best fit their needs.

Authored by- Rushal Arora, Product Marketing Manager –Telecoms, ENEA