Beginners:

TCO of a Mobile Network

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Example to Understand TCO Basics

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One-off costs• Purchase PC (desktop computer)

• Purchase screen

Example to Understand TCO Basics

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One-off costs• Purchase PC (desktop computer)

• Purchase screen• Purchase desk

• Purchase computer chair• Purchase cables, mouse, printer, etc.• One-off software costs

Ongoing costs• Electricity costs• Internet connection costs• Cloud storage subscription• Software subscription costs• Hardware/Software repair costs

Example to Understand TCO Basics

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One-off costs• Purchase PC (desktop computer)

• Purchase screen• Purchase desk

• Purchase computer chair• Purchase cables, mouse, printer, etc.• One-off software costs

Ongoing costs• Electricity costs• Internet connection costs• Cloud storage subscription• Software subscription costs• Hardware/Software repair costs

Capital Expenditure (CapEx)

Operational Expense or Operational Expenditure

(OpEx)

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TCO = CapEx + OpExTotal Cost of Ownership

Capital Expenditure

Operational Expense

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Capital Expenditure (CapEx)

Operational Expense (OpEx)

TCO

How to Write CapEx & OpEx? 🤔

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CAPEX OPEX

CapEx OpEx

CapEX OpEX

Capex Opex

capex opex

Simplified Generic Network Architecture

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AS

CS

Voice (PSTN)Network

Data (IP)Network

Device / UE

RadioAccess

Network

CoreNetwork

AirInterface

PS

Backhaul

AS

TransportNetwork

OSS / BSSOperations & Support

Network Components• RAN• Transport

• Backhaul, Fronthaul, etc.

• Core Network• Operations & Support• Miscellaneous

We are going to use ‘Rule of Thumb’

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Rule of thumb: The English phrase rule of thumb refers to a principle with broad application that is not intended to be strictly accurate or reliable for every situation. It refers to an easily learned and easily applied procedure or standard, based on practical experience rather than theory. – Wikipedia

Rule of thumb: A broadly accurate guide or principle, based on practice rather than theory. – Oxford Dictionary

CapEx & OpEx of a Mobile Network

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30%

70%

TCO

CapEx OpEx

In a typical Mobile Network, CapEx is 30% and OpEx is 70% of the TCO over a 10 year period

Network CapEx Breakdown

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50%

15%

10%

20%

5%

CAPEX

RAN Transport Core Network Operations & Support Miscellaneous

The RAN or Radio Access Network is the biggest cost in CapEx and this is mainly because of Spectrum costs

Network OpEx Breakdown

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The RAN or Radio Access Network is also the biggest cost in OpEx. This is mainly due to the amount of power required for RF transmission

65%

10%

5%

15%

5%

OPEX

RAN Transport Core Network Operations & Support Miscellaneous

RAN CapEx Breakdown

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Site Construction, Spectrum and Equipment accounts for majority of the RAN costs

15%

10%

20%

5%

10%

10%

2%5%

15%

8%

50%

RAN CAPEX

Transport Core Network Operations & Support Miscellaneous

Spectrum Equipment Antennas Accessories

Site Construction Installation

RAN OpEx Breakdown

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Power Consumption, Site Rentals & Operations are the largest contributors to OpEx

10%

5%

15%

5%

10%

19%

19%

7%

10%

65%

RAN OPEX

Transport Core Network Operations & Support

Miscellaneous Power Consumption Site Rental

Operations Manpower Other Hw & Sw

RAN CapEx

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20%

20%

5%

10%

30%

15%

RAN CAPEX

Spectrum Equipment Antennas Accessories Site Construction Installation

Reducing Site Construction Costs

• Site sharing• Leasing from tower

companies

Site Sharing / Mast Sharing

This is the most basic approach for infrastructure sharing

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CN CS/PS

RNC

NodeB

Cell/ Frequency

Site Sharing

ServicePlatforms

HSS/HLR

CN CS/PS

BTS

BSC

Cell/ Frequency

Site Sharing

ServicePlatforms

HSS/HLR

CN PS only

eNodeB

Cell/ Frequency

Site SharingServicePlatforms

HSS/HLR

2G 3G 4G

Operator 1

Operator 2

Mast Sharing exampleA busy rooftop in Hawaii, an example of how complex site design is with multi-operators, multi-RATs & multi-bands...

Source: Andy Sutton

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Cellnex buys yet more towers, this time from Poland's Play (link)

Orange announces towerco formation plans (link)

Three could become the latest telco to cash in on its towers (link)

Vodafone to create Europe’s largest tower company (link)

Beeline, Kcell and

Tele2 sign network

sharing deal in

Kazakhstan (link)

Saudi Telecom Company (STC) capitalises on tower infrastructure (link)

RAN CapEx

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20%

20%

5%

10%

30%

15%

RAN CAPEX

Spectrum Equipment Antennas Accessories Site Construction Installation

Innovations in Antenna Mounting

• Reduces the number of cables thereby reducing accessories cost and weight of equipment KMW antenna bolted on Nokia RRH

in Rakuten Network - TMN

RAN CapEx

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20%

20%

5%

10%

30%

15%

RAN CAPEX

Spectrum Equipment Antennas Accessories Site Construction Installation

Innovations in Antennas

• Single antenna can handle multiple bands and technologies

Source: ZTE

RAN CapEx

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20%

20%

5%

10%

30%

15%

RAN CAPEX

Spectrum Equipment Antennas Accessories Site Construction Installation

Innovations in Equipment

• Virtual RAN (vRAN)• Open RAN (OpenRAN, ORAN)• Cloud RAN (C-RAN)• Massive MIMO (mMIMO)

RAN CapEx

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20%

20%

5%

10%

30%

15%

RAN CAPEX

Spectrum Equipment Antennas Accessories Site Construction Installation

New Challenges with Installation

• Lot more equipment• Massive MIMO equipment is

much more heavier

RAN OpEx

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15%

30%

30%

10%

15%

RAN OPEX

Power Consumption Site Rental Operations Manpower Other Hw & Sw

Site Rental Costs

• Includes backhaul costs• Includes equipment

footprint costs – can be reduced by reducing the weight & size

• Municipalities can help by providing reduces rates on lamp posts, etc.

RAN OpEx

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15%

30%

30%

10%

15%

RAN OPEX

Power Consumption Site Rental Operations Manpower Other Hw & Sw

Operations

• Includes lab testing, troubleshooting, optimization, etc.

• Automation, AI and ML can help reduce the costs significantly

• Virtualization and softwarization can help keep costs down.

• CI/CD also helping with keeping costs down.

RAN OpEx

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15%

30%

30%

10%

15%

RAN OPEX

Power Consumption Site Rental Operations Manpower Other Hw & Sw

Manpower

• Includes field testing, drive testing & site maintenance, etc.

• SON and AI can help reduce the costs significantly

RAN OpEx

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15%

30%

30%

10%

15%

RAN OPEX

Power Consumption Site Rental Operations Manpower Other Hw & Sw

Power Consumption

• 5G has increased the power consumption with massive MIMO being the main culprit

• One solution being used in practice is to switch off equipment in the night

Further Reading

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• TechnEconomyBlog: 5G Economics – An Introduction (Chapter 1) by Dr. Kim Larsen (link)

• TechnEconomyBlog: The ABC of Network Sharing – The Fundamentals (Part I) by Dr.Kim Larsen (link)

• SlideShare: Fundamentals of Mobile Network Sharing by Dr. Kim Larsen (link)• Deloitte: The Age of Telecom Network Automation (link)• Telecoms Infrastructure Blog: The Big Small Cell Update by iGR (link)• The 3G4G Blog: Facebook's Attempt to Connect the Unconnected (link)• Telecomlead: Vodafone CEO reveals measures to cut Opex (link)• TMN: Orange targets a billion in RAN share savings, warns rivals on tower strategies

(link)

Thank You

To learn more, visit:

3G4G Website – https://www.3g4g.co.uk/

3G4G Blog – https://blog.3g4g.co.uk/

Telecoms Infrastructure Blog – https://www.telecomsinfrastructure.com/

Operator Watch Blog – https://www.operatorwatch.com/

Connectivity Technology Blog – https://www.connectivity.technology/

Free 5G Training – https://www.free5gtraining.com/

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AppendixSome reference TCO pictures with their source where available

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Source

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Source

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Source

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Source

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Source Source