& cplSiteName &

What's the Real Cost of Network Downtime?

Charlie Ashton
9/3/2014
50%
50%

When networks go down, even for a brief moment, thousands of dollars are in jeopardy. Can service providers afford sacrificing carrier-grade reliability and risk facing downtime?

I've been examining the technical requirements for carrier-grade reliability in telecom networks quite a bit in recent weeks. One recent blog post discussed the differences between "high availability" and "carrier grade," while a subsequent post outlined some of the key challenges that make it so hard to implement true six-nines (99.9999%) reliability in a telecom platform.

Given both the technical challenges and also the licensing costs associated with delivering carrier-grade reliability, sooner or later a smart finance person is going to ask whether the benefits actually outweigh the expense. Isn't high availablity good enough? Why go to the additional expense of carrier-grade reliability? So it's interesting to look at some numbers that unequivocally tell us the real question is not "Can you afford to implement carrier-grade reliability?" but rather "How could you possibly afford not to?"

Let's start with the numbers that no one can dispute. The traditional standard for telecom network reliability, measured at the service level, is six-nines or 99.9999%, which translates to an average 32 seconds of downtime per year, per service.

As service providers plan for the progressive deployment of NFV in their networks, they inevitably consider the use of standard enterprise-class virtualization software for use in their NFV infrastructure. The standard reliability guarantee for such enterprise solutions is three-nines (99.9%), which implies 526 minutes of downtime per year.

So as a service provider, what will 526 minutes actually cost you, compared to 32 seconds?

One report estimates the cost of downtime as $11,000 per minute, per server. This represents the revenue that's lost as a result of service level agreements (SLAs) with customers (mostly high-value, enterprise users). If each server is down for 526 minutes per year, that's an annual cost of $5,780,000 per server. We'll call that $6 million per server to keep the math easy.

Now, how many servers do you have in your data centers, delivering the services that your customers depend on? If you have 1,000 servers then your total annual cost of downtime is 1,000 x $6 million, or $6 billion.

And just to make it worse, that $6 billion represents only the revenue that's lost as a result of customer SLAs. It doesn't include the long-term revenue impact caused by some of those customers switching to other service providers who are promising them the service uptime that they need.


Find out more about key developments related to the systems and technologies deployed in data centers on Light Reading's data center infrastructure channel


To complete the analysis, the corresponding revenue loss for service outages in a network with true six-nines carrier-grade infrastructure will be $5,780 per server, or total of $6 million, if we again assume 1,000 servers in the data center. That's not negligible, but it's only one-thousandth the cost of the first scenario and customers are much less likely to switch providers if they experience such low average downtime.

So, putting ourselves in a service provider's shoes and assuming our hypothetical 1,000-server installation, the trade-off is clear. We can base our NFV infrastructure on enterprise-class software designed for IT applications, incurring $6 billion in lost revenue because of our SLAs, while risking customer defections because they can't tolerate the downtime. Or we can implement carrier-grade infrastructure that delivers the reliability that customers have been conditioned to expect, in which case downtime should only cost us $6 million and we can expect to retain our high-value customers.

What do you think? Are these numbers realistic? We’d be delighted to hear from readers with more visibility into the true cost of downtime.

Charlie Ashton is director of business development at Wind River.

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
varun.dit@gmail.com
50%
50%
varun.dit@gmail.com,
User Rank: Light Beer
9/23/2014 | 6:44:47 AM
NFV fraction
NFV based network availabity is not upto the standards of Tier-1 Operators, but it definately meets requirement of small operators as there business model is different. Moreover studies shows that software clustering will improve the availability factor for NFV based networks.

Another things which is very important if you are looking to create NFV solutions for Tier-1, who are six 9 based, you have to identify correct Network Functions which can be replaced and your Network Management Systems can support.
More Blogs from Column
Spectrum sharing is becoming a bigger issue as the 5G radio specification evolves.
Addressing current and future app demands while laying the foundation for mobile's next big network transition.
Broadcasters can no longer rely on pulling audiences to the TV screen; they need to pursue their audiences on digital, wherever they are.
Why advanced data analytics are the future for streaming video services.
5G could ride the traditional wireless hype cycle, or – quite possibly – break the chain, suggests Nokia's North American CTO.
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
LIVE NOW!
Friday, December 2, 1:00PM EST
The SDN Approach to IP & Optical Integration
Sterling Perrin, Senior Analyst, Heavy Reading
UPCOMING COURSE SCHEDULE
Friday, December 2, 1:00PM EST
The SDN Approach to IP & Optical Integration
Sterling Perrin, Senior Analyst, Heavy Reading
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Women in Comms Introduction Videos
Korn Ferry Consultant: How to Find, Cultivate & Be the Best Talent

11|30|16   |   4:10   |   (1) comment


Erin Callaghan, a managing consultant for Korn Ferry Futurestep, shares strategies for companies to improve how they recruit and for women to ensure they don't get lost in the pipeline.
LRTV Custom TV
We Can Make the World More Sustainable

11|29|16   |     |   (0) comments


GeSI is a global e-Sustainability Initiative organization bringing together 40 big multinational companies around the world. According to GeSI's report, information and communication technology can make the world more sustainable. Luis Neves, chairman of GeSI, shared with us his opinion at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
Finding a New Way to Engage Customers & Drive Revenue

11|29|16   |     |   (0) comments


Mobile revenues are declining. Digicel, a player in the Caribbean telecommunications/entertainment space, has found a new way to engage customers and drive revenue. John Quinn, CTO of Digicel, shared with us its story at Ultra-broadband Forum (UBBF2016)
LRTV Custom TV
Do You Really Need Gigabit Infrastructure?

11|29|16   |     |   (0) comments


Altibox is the biggest fiber-to-the-home (FTTH) player and the largest provider of video and TV in Norway. They started out with zero customers in 2002. Now they have close to half a million households and companies attached to their FTTH business. Nils Arne, CEO of Altibox shared with us their story and insight on 5G at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
BT’s Openreach Strategy & Its Updates in 2016

11|29|16   |     |   (0) comments


A lot of developments at Openreach this year in terms of strategy and planned investments. Peter Bell, CIO of Openreach BT, shared with us the updates of Openreach at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
ITU: The Broadband Is Our Future

11|29|16   |     |   (0) comments


At Ultra-broadband Forum, Houlin Zhao, Secretary General of ITU, discussed how important it is for countries, companies and everybody to be working together to help to build the broadband and digital economies (UBBF2016).
LRTV Custom TV
Tackling 5G in Dallas

11|28|16   |     |   (0) comments


Here are our highlights of the 5G North America show in Dallas, Texas with Light Reading's Dan Jones.
LRTV Interviews
Cox Prepping for Virtualization Trials

11|14|16   |     |   (0) comments


In this video interview, Cox's Jeff Finkelstein discusses MSO's plans to test managed business services in early 2017 and tackle Distributed Access Architectures.
LRTV Custom TV
Drivers & Potential of NGP

11|11|16   |     |   (0) comments


ETSI has created an Industry Specification Group to work on Next Generation Protocols (NGP ISG), looking at evolving communications and networking protocols to provide the scale, security, mobility and ease of deployment required for the connected society of the 21st century. The NGP ISG will identify the requirements for next generation protocols and network ...
LRTV Custom TV
Huawei IP 2020 for Future Networks

11|11|16   |     |   (0) comments


Future Networks should satisfy many requirements such as high throughput, extremely low latency, flexible mobility, intrinsic security, networking automation, and so forth. The Chief Architect of Huawei Future Networks addresses a holistic solution, i.e., IP 2020, to achieve these requirements for various future life scenarios (e.g., autonomous driving, tactile ...
LRTV Custom TV
Digital Object Architecture

11|11|16   |     |   (0) comments


Digital Object Architecture provides a basic information infrastructure that can facilitate interoperability between or among different systems, processes, and other information resources, including different identity management systems. Digital objects are networked objects that are named by digital object identifiers and instantiated by an infrastructure service ...
LRTV Custom TV
BT's Openreach Has High Hopes for Long-Reach VDSL

11|11|16   |   06:04   |   (0) comments


Peter Bell, Network Portfolio CIO at BT's access business Openreach, talks about the operator's trial of a new broadband access technology called Long Reach VDSL.
Upcoming Live Events
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
AT&T Debuts DirecTV Now on New Video Platform
Mari Silbey, Senior Editor, Cable/Video, 11/28/2016
Apple Seeds 5G? Seeks 'Multi-Gigabit' Chip Designer
Dan Jones, Mobile Editor, 11/30/2016
Altice Plans FTTH for Entire US Footprint
Iain Morris, News Editor, 11/30/2016
Altice FTTH Bill Could Hit Almost $9.6B in US
Iain Morris, News Editor, 12/1/2016
Samsung Bows to Investors, Considers Revamp
Iain Morris, News Editor, 11/29/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Live Digital Audio

Even when there's a strong pipeline of female talent in the comms industry, it tends to leak all the way to the top. McKinsey & Company says women experience pipeline leakage at three primary points: being unable to enter, being stuck in the middle or being locked out of the top. Each pipeline pain point presents its own challenges, but also opportunities to stop the leak. Wireless operator Sprint is making a conscious effort to improve its own pipeline from new recruits to the C-suite, and it wants the rest of the industry to do the same. In this Women in Comms radio show, WiC Board Member and Sprint Vice President of Enterprise Sales Nelly Pitocco will give us her take on the industry's pipeline challenges. Pitocco, who joined Sprint in May and has spent 20 years in the comms industry, will also offer solutions, share how Sprint is tackling the challenge within its own organization and take your questions live on air.