Does Green Telecom Make Cents?
Light Reading is kicking off its Green Broadband event here today, where the business case for going green will be a hot topic. (See Previewing Green Broadband 2010.)
In a recent Heavy Reading survey of network operators, 53 percent saw difficulty in creating the business behind environmentally sound practices, while 79 percent said current economic conditions represent the most formidable challenge in going green. (Ed. note: Lots more results to come today.)
"[Green initiatives] are still a nice-to-have thing for companies, but few have been convinced it's necessary," says Heavy Reading senior analyst Alan Breznick. "Companies talk about how they are doing this or that, but haven't used it as a selling point to show customers they will save money or power and will cost less or produce more revenue for them."
All the big equipment makers, including Alcatel-Lucent (NYSE: ALU), Juniper Networks Inc. (NYSE: JNPR) and Ericsson AB (Nasdaq: ERIC), are eager to help operators make the transition and to sell more (energy-efficient) equipment in the process.
Ericsson is in New York this week for the UN Millennium Development Goals Summit, where it's encouraging global broadband adoption, but also talking up the importance of energy conservation. Elaine Weidman-Grunewald, Ericsson's head of sustainability, says there's a very real business case for wireless operators to modernize, but it requires looking at the big picture. (See ITU: Half of World Should Get Broadband by 2015.)
"When you reduce energy consumption, it's so closely connected with cost, and when the networks are so energy dependent, energy is a huge op ex," Weidman-Grunewald says.
In remote and rural areas, alternative sources of energy can be a viable way to reduce that op ex. Over the next 10 years, the payback period for wind and solar-powered base stations will be reduced to less than six months, says Joe Madden, a principal analyst with Mobile Experts. As a result, more than 150,000 base stations will move from diesel generators to alternative energy sources, such as inexpensive wind turbines, over the same period.
"In many cases for emerging countries, the payback time will come back to less than one year and less than six months in some areas," Madden says. "It becomes a no-brainer to use solar power instead of just diesel."
There has been some experimentation with alternative power sources in the US too. T-Mobile US Inc. , for example, installed a solar panel this month in Chalfont, Penn., its first solar-powered cell site in the US.
But in developed regions in the US and Western Europe, it's a much more expensive proposition, and even if it's not a capex game anymore, it's certainly a daunting capex proposition. Breznick says the industry has seen progress in the last year, but that there hasn't yet been a lot of solid business analysis done amongst the operators to decide whether it will help the bottom line.
"A lot of companies haven't developed a business plan for it, or if they have developed a business plan, they haven’t developed a strategy," he says.
— Sarah Reedy, Senior Reporter, Light Reading Mobile