Smart NetEx decisions for improved Capital Efficiency and Customer Experience
There’s an interesting story playing out between U.S. state governments and city municipalities over the expansion of small cells. There is a significant push from the US government to expand small cells installation base and thereby increase the investments in this space. Many operators in the US are more than ever focused on getting the small cells deployment strategy correct as well as get it rapidly implemented.
Small cells are nothing new. We have been hearing for more than 7 years now, on the potential benefits of microcells – small cells, femtocells, picocells and how they can alleviate the capacity/coverage problems. Only in the last 2 – 3 years, small cells trend has picked up, with the uptick in mobile broadband and massive video consumption.
As the need for network capacity is constantly increasing, Telcos cannot afford to wait for long, till new technology standards are completely finalized and hence, it has prompted many prominent big names to announce 5G fixed wireless offering and 5G trails with vendors. In what looks like proactive initiative or in some cases the must-have network features, many Telcos have started to take incremental advantages and gains from 4G LTE-A/LAA with advanced features like Massive MIMO, 256QAM, Carrier aggregation etc. Despite all these, the coverage and capacity problems plague in extremely dense urban settings. Festive events or public aggregation pose challenging problems, especially when the traffic demand becomes quite unpredictable, forcing Telcos to deploy super buffered capacities. For example, look at some few stats related to last year’s Super Bowl at NRG Stadium, Houston. It probably created history of sorts on data transfer –
- Verizon’s network transmitted 11 terabytes up 57% from the last year
- AT&T data transmission is 9.8 terabytes, nearly double from the last year
- Sprint’s network carried 5 TB data transfer
- Super Bowl Live at Discovery Green the week prior to the Super Bowl, there were 59.9 TB of data, or 171 million social media posts with photos, used on the AT&T network in Houston
High voltage events like these, are becoming of strategic importance for the operators to keep the network up and for keeping the customer experience top-notch for obvious reasons. Customer perception – the potential brand establishment, is highest during these events. Telcos don’t want to take any sort of chance in such events and thus opt to deploy microcells with high-speed backhaul to support such events.
With 5G, we will see an increasing number of HetNets – small cells operating in tandem with macro cells thus handling offloading, higher throughput, greater coverage and in the process enables superior customer experience. Next evolution of investment planning is moving in the direction to cater to network densification trend.
Network Investment planning
Network capacity expansion cycle has shrunk, given the fact that the rate at which the traffic growth forecast exercises are done at every few months. This cycle is going to shrink further, due to dynamics of the data demand on the network, new business models, and technology changes. Network Planners and Capital allocators at CSPs, now require greater insights to address the high impact zones where Capex investment or capacity expansion provides maximum business outcomes.
Unfortunately, the processes for network investments still carry age old practices in this new paradigm! For instance, in one of our discussions with Telcos in India, we understood the yearly network Capex budget is decided based on competition strength or weakness in various circles (sub-regions) and based on simple extrapolation of traffic forecasts. Once these projections are agreed upon by various internal teams, network planning team go through series of technical negotiations with vendors and orders are placed. Of course, this is high level description of the entire laborious and time-consuming process. But you get the drift – there’s no rigor in understanding the insights that Telco’s own data can throw upon, for better network investments decisions.
For capital allocators inside Telcos, aka CFO vertical, it is important to understand the optimal use of capital on network investment. Investment in network capacity expansion can be done intelligently, keeping in view of key business metrics like maximizing ARPU, targeting high revenue sites, tackling competition presense etc, which ultimately helps in achieving business goals – maximize revenue, efficient usage of resources (cost center), optimize opex, learn lessons for next capex cycle etc. A data analytics approach reinforces and propagates this methodology of crunching data from various sources, understand the different moving parts and provides decision models and corresponding outcome scores for capital allocators to make appropriate network investment decisions, backed up by data.
In the other end of the spectrum, the network planners and network managers are really focused on customer experience around the existing sites and at times around newly commissioned sites (new investments), to understand the factors impacting the quality of user experience. Some of these factors could be – no services due to coverage holes, poor connections due to capacity hotspots etc. These factors are crucial, as they provide clues about the network coverage or capacity bottlenecks that need to be fine-tuned through further investments or capacity augments.
Ultimate goals for network teams is to reduce customer churn, keep up customer experience and reduce network downtimes. With advent of newer technologies like 5G, these goals will be stretched due to increased complexity of the networks and super high load demand expected. Network planners are looking for advanced yet locally adpatable solutions to address network investment strategies to meet increasing expectations on great customer experience.
Therefore, it has become more important than ever that Telcos need to take a holistic perspective about many factors like the network capacity elasticities, everchanging user demand dynamics, quality of experience, financially lucrative regions, subscriber demographic profiles, marketing expansions, competitive presence and accordingly influence the network investment decisions to maximize both customer delight and achieve business objectives.