"Driving Down Costs: Strategies for Effective Opex Savings in the Telecom Industry"

Telecom service providers have faced significant challenges in recent years due to increasing competition and changing consumer demands. One of the key challenges for CSPs (Communication Service Providers) is managing operational expenses or #opex . With the rapidly evolving technological landscape, CSPs must continue to invest in new infrastructure and services to remain competitive. However, these investments can be costly, leading to increased OPEX.

Throughout the past decade, the opex/revenue ratios for most companies have remained on an increasing trend with 1% increase overall. However, there were a few exceptions to this trend. Companies such as #bhartiairtel , #charter , #kpn , #Tele2 and #telenor were able to achieve remarkable reductions in their opex/revenue ratios, exceeding 10%.

To invest heavily in new technologies of 5G/AI, it is essential for CSPs to find ways to reduce operational expenses while maintaining high levels of service quality. Although same time CSPs are investing a lot on Automation and Cloudification, still there are few reasons of increased Opex/Revenue ratio.

Reasons for Increasing OPEX

There are several reasons why OPEX has been increasing for CSPs. One of the primary reasons is the need to invest in new technologies to keep up with the competition. For instance, the rollout of #5gtechnology requires CSPs to upgrade their infrastructure, which can be costly. Additionally, CSPs must invest in cybersecurity to protect their networks from cyber threats, which can also increase operational costs.

Another factor contributing to the increase in OPEX is the growing demand for #data services. Consumers are using more data than ever before, which places a strain on CSPs' networks. As a result, CSPs must continue to invest in their networks to ensure they can handle the growing demand. This can be costly, as it requires significant investment in infrastructure, equipment, and personnel.

Furthermore, regulatory compliance requirements can also increase OPEX for CSPs. As governments around the world implement new regulations to protect consumers' privacy and data, CSPs must invest in compliance programs to avoid costly fines and legal action.

Ways to Reduce OPEX

While the challenges of managing OPEX are significant, there are several ways that CSPs can reduce operational expenses while maintaining high levels of service quality.

One way to reduce OPEX is to invest in #automation and #artificialintelligence (AI) technologies. By automating routine tasks and leveraging AI to optimize network performance, CSPs can reduce their reliance on manual processes and personnel. This can lead to significant cost savings while improving service quality. CSPs have historically struggled to innovate new services with their current systems. Rather than adopting new approaches to support innovation, they prefer to evolve these systems.

Azalio suggests that CSPs have a decision to make in their journey to cloud network automation: either take a revolutionary approach that allows them to transition to a cloud-native converged IT/Network, or an evolutionary approach based on current network and OSS automation practices. We believe that Products and Serivces for Network Automation can empower CSPs to safely adopt the revolutionary approach to software-based network management, enabling them to experience the benefits that cloud-native has already demonstrated in other industries. Specifically, this approach can lead to a higher rate of innovation and lower operational costs for CSPs.

Few Automation tools use broadly across Telco for Automation:

·??????IBM Cloud Pak for Network Automation

·??????Cisco Crosswork for multi-layer Transport Automation

·??????Ciena Blue Planet Multi Domain Service Ochestrator

·??????Nokia Flow One Orchestrator + Inventory Solution

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Another way to reduce OPEX is to implement a cloud-based infrastructure. By leveraging cloud technologies, CSPs can reduce their reliance on physical infrastructure, which can be costly to maintain and upgrade. Additionally, cloud-based infrastructure can be more flexible and scalable, enabling CSPs to quickly and easily respond to changing consumer demands. The advantages of public cloud adoption, which other industries like retail, manufacturing, transport, and financial services have experienced, are also applicable to telecom operators. However, this comes with certain caveats. The typical benefits that arise from this include cost savings in IT operations, quicker innovation, and increased business agility as resources shift from traditional maintenance and upgrades to DevOps-centric teams. It's important to note that CSPs are complex technology providers operating in a tightly regulated environment, with universal service obligations. Therefore, while we anticipate a significant impact from cloud transformation, it may be somewhat tempered when compared to its effect on the broader enterprise.

CSPs can also reduce OPEX by outsourcing certain functions to third-party providers. For instance, outsourcing customer service or network maintenance can reduce the need for internal personnel and infrastructure, leading to significant cost savings. Outsourcing work to small SI players can help to reduce opex for CSPs. It allows CSPs to negotiate better rates with these smaller companies. By outsourcing specific work, CSPs can focus on other areas of their operations. This can lead to greater efficiency and cost savings overall. Working with smaller SI players can also bring new ideas and perspectives to the table. However, it is essential to choose outsourcing partners carefully to ensure that service quality is not compromised.

Finally, CSPs can reduce OPEX by optimizing their supply chain and vendor relationships. By working closely with vendors to negotiate favorable terms and streamline supply chain processes, CSPs can reduce costs and improve operational efficiency.

Conclusion

Managing OPEX is a significant challenge for CSPs. With the increasing demand for data services, regulatory compliance requirements, and the need to invest in new technologies, it can be challenging to balance cost savings with service quality. However, by investing in automation and AI technologies, leveraging cloud-based infrastructure, outsourcing certain functions, and optimizing supply chain and vendor relationships, CSPs can reduce OPEX while maintaining high levels of service quality. Ultimately, these strategies can help CSPs remain competitive in a rapidly evolving market.