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Does Green Telecom Make Cents?

NEW YORK -- There aren't any telecom operators debating the merits of being environmentally friendly today, although most are debating the expense. Green may be a warm and fuzzy marketing term, but if it's not bringing in the green, operators may be reluctant to make moves.

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

jayja 12/5/2012 | 4:23:03 PM
re: Does Green Telecom Make Cents?

I hope there is discussion today comparing the energy usage of current telco technology investments, specifically wireless access, passive networks and xDSL.  Is PON as green as we think?  I'm glad Chuck Graff is presenting.  Verizon has publicly reported qualitative energy savings for FiOS vs xDSL, but I'm not sure I've ever seen hard numbers.

paolo.franzoi 12/5/2012 | 4:23:03 PM
re: Does Green Telecom Make Cents?

Well, in PON the home user is paying to power the phone.  SO....I am quite sure it saves energy for Verizon.


I am not quite sure which metric one would use to compare DSL and PON.  Watts per bit per second for data?


seven


 

srikrishnak 12/5/2012 | 4:22:59 PM
re: Does Green Telecom Make Cents?

The driving force is always $ and C. Unless there is a strong benefit to the TELCO's the adaptation would still be very limited. I've seen solar base stations, wind powered base stations but the deployment is very limited. In the core vendors like Ericsson, Nokia, ALCALU claim green products but if you look at the cumulative the energy costs are increasing due to the increasing usage. Service providers need to have bigger and bigger equipment due to the increased usage (cost per byte keep on dropping be it wireline or wireless)so unless the policy is to transfer the cost to end user it'd be status quo IMHO.


 

shygye75 12/5/2012 | 4:22:57 PM
re: Does Green Telecom Make Cents?

You're absolutely right about money being the real driver for any telco green initiatives beyond feel-good PR. The discussions at yesterday's conference usually came back to the cost theme. On the positive side, operators like Verizon and Comcast are seeing some cost savings, expressed mainly in terms of reduced truck rolls and improved equipment reliability. This is only one slice of the issue, however, and operators are still struggling to quantify other benefits of green initiatives.

[email protected] 12/5/2012 | 4:22:32 PM
re: Does Green Telecom Make Cents?

The business case really has to stand up for the alternative energy sources.  Good will alone is not enough.  Having said that, it could be argued that some of the highly profitable, multi-national telecoms brands should be making an investment in this area, particularly as they are rolling out new networks or updating the existing infrastructure.  The prices are never going to come down unless we start to scale up the use of these renewable resources.  Alastair Hanlon, Convergys

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