Insight: Why MNOs Should Care About Total Cost of Ownership

Segment(s): Telecom

Why Mobile Network Operators Should Care About Total Cost of Ownership

Why Mobile Network Operators Should Care About Total Cost of Ownership

Cost-efficiency is a clear priority for mobile network operators (MNOs) when deploying and maintaining 5G networks all around the world. Power backups could be crucial to addressing the challenges mobile operators face in the 5G era, but they simultaneously form a substantial part of capex and opex. When deciding on power backup solutions, operators thus need to look at the total cost of ownership rather than the initial investment.

Globally, MNOs are expected to spend 80% of sector capex or $890 billion on 5G networks over the next five years.1 When 4G launched in 2009, mobile operators did not see the great returns they had captured with earlier network generations. Despite their investment in 4G infrastructure, revenues showed flat or tepid growth. In a few regions, including Europe and Latin America, revenues even dropped after the introduction of 4G.2 The big winners from 4G were not so much the builders of network infrastructure. Rather, it was the emerging technologies that leveraged 4G capabilities to build revolutionary hardware – mobile devices and semiconductors – and new services, such as mobile-based social media.3

Industry analysts and telecom executives are more modest today about the short-term revenue opportunities in the 5G era. Whilst pursuing new revenue streams, MNOs need to focus relentlessly on maintaining cost-efficient deployment and maintenance of network infrastructure.

Lithium Excels in Total Cost of Ownership Comparison
Total Cost of Ownership (TCO) is the purchase price of an asset plus the costs of operation. Assessing TCO represents taking a bigger picture look at what the product is and what its value is over time. Operating costs usually exceed the purchase price when it comes to solutions for power backup and comparing TCO between lead-acid and lithium-ion batteries, the latter comes out stronger.4

In short, the longevity of the lithium-ion batteries combined with the possibility of adding more advanced battery management systems (BMS) reduces operating costs significantly, resulting in favorable TCO.

Most importantly, lithium-ion batteries have a longer life expectancy than lead-acid batteries. At 25 degrees Celsius, a lead-acid battery has a life expectancy of five to seven years, whereas a Li-ion battery can last up to 20 years. For example, in countries where labor costs are high, the installation cost can exceed the purchase price of the battery itself, pointing to the cost-benefit of investing in a backup solution with a longer life expectancy.

Li-ion batteries are also far less sensitive to and can handle temperature fluctuations and spikes with limited effect on battery life, a major shortcoming of lead-acid batteries. This functionality adds to the longevity, flexibility, and low maintenance costs of Li-ion batteries in addition to reducing operating costs for cooling and heating.

The embedded intelligence of the lithium-ion technology allows for more advanced BMS than is possible with lead-acid alternatives. If connected to remote management system monitoring, diagnostics, fault-finding, and upgrades can be conducted remotely. This saves time and money for MNOs.

Furthermore, the energy density and energy efficiency of lithium-ion technology is superior to traditional lead-acid solutions. The energy density – the energy stored in a given volume – is two to three times greater for Li-ion batteries. This allows for trimmed premise rents as Li-ion batteries only require about a half the space as a lead-acid based solution while delivering the same power. Meanwhile, the superior energy efficiency of the Li-ion technology reduces energy turnaround losses from around 15-20% for lead-acid batteries to around 5% for high-quality Li-ion batteries.

As cost-efficient deployment and maintenance of network infrastructure will be increasingly important in the 5G era, lithium-ion powered backup solution is the superior alternative for MNOs that want to maintain the profitability level of their networks. Its long life-expectancy, ability to handle temperature fluctuations, intelligent BMS, and high energy density all contribute to a favorable TCO.

Want to know more about how to rethink power backup in the 5G era? Download our full report!

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Sources

  1. GSMA, Global Mobile Trends 2021, 2020. https://data.gsmaintelligence.com/api-web/v2/research-file-download?id=58621970&file=141220-Global-Mobile-Trends.pdf
  2. McKinsey: The road to 5G: The inevitable growth of infrastructure cost, 2018. https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/the-road-to-5g-the-inevitable-growth-of-infrastructure-cost
  3. Global X: What 4G’s Run Can Teach Us About the 5G Future, 2019. https://www.globalxetfs.com/what-4g-can-teach-us-about-5g/
  4. GEP: Lithium-Ion batteries are changing the face of power backup, 2020. https://www.gep.com/blog/mind/lithium-ion-batteries-are-changing-the-face-of-power-backup

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