ericsson white paper
284 23-3137 Uen Rev A | February 2010
intensity in telecom
networks using TCO
Climate change is one of the most compelling global challenges of our time. Compared to other sectors
such as travel and transport, buildings and energy production, the ICT sector is relatively energy-lean,
responsible for about 2 percent of global energy use and subsequent carbon emissions (with telecom
representing just 0.6 percent).
While telecom is relatively energy-lean, telecom networks are still energy-driven and energy costs
represent a signiﬁcant opex item that is increasingly important as energy prices rise and energy efﬁciency
continues to be in focus. The challenge for operators is to pursue growth in telecom networks, while
ensuring the 2 percent of global emissions does not signiﬁcantly increase over the coming years.
This environmental challenge cannot be met in a static commercial or operating landscape. New
technologies and applications are driving growth in both mobile and ﬁxed broadband data networks.
These networks are expanding to serve more subscribers and increasing trafﬁc per subscriber. From
an environmental perspective, this means that while the absolute amount of energy consumed by
telecom networks is growing – along with associated CO2e emissions – the carbon intensity of the
network trafﬁc is lower than the activities the trafﬁc replaces. The goal then is to increase energy
efﬁciency in driving additional trafﬁc so the carbon intensity differential between that trafﬁc and the
activities it replaces is as great as possible.
Due to the nature of networks, telecom operators need to employ a framework that not only includes
metrics to minimize carbon intensity, but also caters to network effects: the most efﬁcient network
design draws together the maximum amount of trafﬁc in the fewest nodes, given a set of constraints,
including transmission costs, spectrum limitations, radio link budgets and/or optical limits.
Each of the elements in an operator’s cost structure has an associated environmental impact.
Traditionally, this impact has been given relatively little consideration by operators when making network
investment decisions. Additionally, a methodology has not been in place for operators to understand
cost and environmental dimensions simultaneously.
There are many investment trade-offs to be studied along the way, and the approach that allows
these to be investigated in the most straightforward way is TCO. By linking CO2e and associated cost
evolution estimates into the TCO framework, an operator has a powerful tool to use when considering
alternative network designs and power-saving features, evaluating trafﬁc enhancements and minimizing
environmental impact while improving competitiveness.
TCO2 • A GROWING CHALLENGE
In addition to cost-effective operations, operators are also recognizing the need to respond to the
climate change challenge by reducing the environmental impact of their operations.
Life-cycle assessment (LCA) is the most complete methodology used when a company is considering
its carbon footprint – in other words, its complete impact on CO2e emissions. For telecom equipment, the
LCA framework includes carbon impacts from raw materials, manufacturing, transport and operations
until it is decommissioned and disposed of.
In the future, operators will need to ﬁnd ways to balance investment decision-making so that it
is based on both economic and environmental grounds. The approach can be referred to as TCO2,
and it can help telecom players
lower costs while simultaneously
reducing their carbon footprint.
LCA studies indicate that
more than two-thirds of all CO2e
emissions associated with network
equipment during its lifetime
are attributed to its operation.
The TCO2 approach focuses
speciﬁcally on network operations
and efﬁciency gains that will lower
the carbon impact.
Today, TCO and CO2e emissions
associated with network operations
are the primary focus for operators.
Figure 1: The TCO2 model
Operators, however, will need to
make investment decisions in the
long term that consider the total cost and total CO2e impacts.
Telecom operators can use the TCO2 methodology in network operations to evaluate carbon emission
and energy consumption savings from different solutions and network scenarios.
When an operator is building a network – or rolling out more capacity or coverage – there are choices
and trade-offs to evaluate in designing and implementing the solution. When the issues primarily
involve costs, then TCO is an
effective framework to use when
evaluating different options.
TCO is useful when evaluating
two or more solutions that result
in the same potential to generate
revenues: in other words, build one
way and the annual cost structure
will be A, or build another way
and the cost structure will be B.
Both cases can have the same
revenue-generating potential, but
the proﬁts and cash ﬂows will differ
depending on the efﬁciency of
The cost mapping shown in
Figure 2 outlines a categorization
of annual costs in an operator’s
income statement. All capital
expenditures have been converted Figure 2: A network operator’s cost structure
TCO2 • A TOTAL APPROACH
to depreciation, which is useful
when making comparisons
and trade-offs between
annual operating costs and
Business-driven costs are
those driven by the relationships
between the operator and
its customers, and between
the operator and other
operators (as well as corporate
overheads). The result of the
operator’s decisions relating Figure 3: The TCO model
to its dealings with customers
and other operators can be expressed in terms of trafﬁc, which is met with a given level of coverage,
capacity and quality. The operator must make decisions on how to build and operate a network to
fulﬁll those demands. The costs related to that demand fulﬁllment are network-driven, and these costs
are the object of the analysis.
The model illustrated in Figure 3 is used to calculate alternative scenarios in order to make
a cost comparison of dimensioning and building the network in different ways. TCO is used to
form an understanding of the cost dynamics (trade-offs) of employing a particular set of features or
The result can be expressed in a number of ways. In addition to showing it as an absolute number,
it can also be divided by capacity or coverage, or the number of subscribers served by the underlying
network. This can result in a number of useful metrics: TCO per Erlang, megabyte (MB) served, square
kilometers (km2) of coverage, and/or per subscriber.
Environmental impacts, CO2e and carbon intensity also need to be calculated with the costs for
each scenario. The energy consumed, in terms of annual kilowatt hours (kWh), can be multiplied by
a carbon intensity ﬁgure for the power mix supplied by the electricity grid (metric tons of equivalent
carbon dioxide per megawatt hour or MTCO2e/MWh) giving an amount of CO2e for each scenario. Any
other operationally related CO2e amount should be added to these ﬁgures. This includes any CO2e
emitted by locally produced power, as well as ﬁgures from maintenance vehicles.
The sum total CO2e for each scenario can be related to network trafﬁc in terms of Erlangs, megabytes
of data per subscriber or per revenue unit to arrive at carbon intensity.
The TCO framework – along with associated carbon intensity ﬁgures – can be applied when minimizing
environmental impact. In a landscape of growing subscriber numbers and trafﬁc, this means maximizing
the energy efﬁciency and minimizing the CO2e costs of the delivered trafﬁc. The approach is used in
a stepwise fashion starting with network design, which explores alternative ways to build a network
with the required coverage, capacity and quality, and which has the least environmental impact and
demands the fewest physical resources.
TCO2 • A TOTAL APPROACH
This approach is not limited
to “greenfield” network build- EFFICIENCY OPTIONS
outs, though that is where the biggest Operators focusing on the efﬁciency of their existing networks, have various options.
savings can be made. It also applies to Three of these are:
capacity expansions, modernization, • modernizing and optimizing networks, including upgrading to energy-efﬁcient network
network transformation and new hardware as part of network evolution, and reducing energy consumption in the installed
service offerings. base by using energy-reducing software and capacity-enhancing features
When designing and deploying • sharing assets and resources to leverage economies of scale and reduce CO2 from
networks a key distinction should higher utilization of assets and resources (by sharing operational resources, passive or
be made between static and full network operators can substantially lower costs and environmental impact)
dynamic power demands. • changing the energy mix by supplying the network with less carbon-intensive energy
All electronic telecom equipment sources from the electrical grid, or by directly investing in renewable energy sources
consumes power when it is such as solar and wind powered radio sites.
switched on. Power supplies, basic
operating functions and signaling Operators must choose the best combination of these investment options to support their
between nodes (and in the case business objectives.
of mobile communications,
between radio base stations
and mobile handsets) consume
power even when the network is
not carrying any trafﬁc. In broad
terms, power-saving features
are designed to lower this static
power consumption. There are
many features today that monitor
network activity and successively
power down unneeded equipment
during times of low trafﬁc without
degrading quality of service.
A signiﬁcant portion of power
consumed by a network can be
termed “dynamic,” as it varies in
direct relationship with the amount
of trafﬁc being handled in a network
at a given time. This portion of the
power consumption can be made more efﬁcient – that is, more trafﬁc can be handled with a given
amount of energy – by employing capacity-enhancing features. Most network equipment vendors have a
range of features designed to deliver more trafﬁc through a given network. The effect of employing these
features is that less power is needed
for any unit of trafﬁc. In growing
networks it is both cost effective and
environmentally friendly to deploy
as many capacity enhancements
as possible before adding more
sites or nodes. Examples of such
features are the use of AMR-HR
in mobile voice networks, and of
higher-order modulation schemes
for data transmission. Figure 4 is a
conceptual illustration of the way in
which energy efﬁciency is increased
through the use of a capacity-
Once all capacity-enhancing
features have been considered,
the next task in the step-by-step
approach is to consider power
solutions at the site and node level. Figure 4: Enabling energy-efﬁcient growth through capacity enhancements
TCO2 • A TOTAL APPROACH
Exploring power on a site level is critical in developing regions, where many sites do not have
access to the electricity grid, or the grid supply is unstable. In such places, it is common to employ
diesel gensets to supply power locally. In these cases, it is especially useful to use the TCO2 approach
to optimize both costs and CO2e emissions on the site level. Here there are many trade-offs to be
considered. For example:
• raising the allowable operating temperature on site wherever possible to lower the cooling
requirements, and lead to the use of smaller diesel gensets and to the associated reduction in fuel
consumption and CO2e emissions
• adding appropriate battery capacity on site and regularly cycling the batteries to signiﬁcantly
reduce genset running hours (both directly reducing CO2e emissions, and indirectly by minimizing
ﬁeld maintenance visits)
• using wind and solar solutions to further reduce genset running hours and, consequently, diesel
consumption and associated CO2e emissions.
Note that each step under consideration entails a number of investments as well as savings. These
trade-offs can be thoroughly evaluated by using the TCO2 approach.
An additional area of potential savings, both in terms of costs and environmental impact – which is
speciﬁc to mobile networks – is network optimization. There are many network features and services
aimed at reducing interference and streamlining cell handovers, which are not immediately recognized
as contributing to energy efﬁciency. Their combined effect, though, is to maximize the amount of trafﬁc
through a radio access network with a given amount of installed resources. Applying a TCO2 approach
to investments in these features and services generally indicates both an attractive cost trade-off
(versus adding more radio base station capacity) and better CO2e emissions metrics.
Finally, the area of shared resources provides a number of alternatives to further reduce costs
and environmental impact. Resource sharing encompasses a wide spectrum from outsourcing ﬁeld
maintenance and network operations, to network sharing on a passive or active basis. Each step
along the continuum can mean savings in both cost and CO2e emissions. Both savings are derived
from sharing resources with other operators.
TCO is a powerful tool for isolating and calculating the ﬁnancial impacts of employing a solution or
set of features in a network build-out or capacity expansion.
Each of the elements in an operator’s cost structure also has an associated environmental impact.
Traditionally, this environmental impact has been given relatively little consideration by operators when
making network investment decisions. Additionally, a methodology has not been in place for operators
to understand cost and environmental dimensions simultaneously. The TCO2 approach provides this
methodology, resulting in an ideal framework to assess both ﬁnancial and environmental impacts of
building and operating networks.
TCO2 • CONCLUSION
AMR-HR Adaptive Multi-Rate – Half Rate: AMR was adopted as the standard speech codec
by 3GPP in October 1998, and is now widely used in GSM and UMTS
capex capital expenditure
carbon intensity the amount of CO2e emitted per unit of activity, for example, kgCO2e/kWh of electricity
produced, kgCO2e/km driven, kgCO2e/subscriber, kgCO2e/Erlang or kgCO2e/MB
CO2e the concentration of CO2 that would cause the same level of radiative forcing as a
given type and concentration of greenhouse gas; examples of such greenhouse gases
are methane, perﬂuorocarbons and nitrous oxide
depreciation the reduction in the value of long-term assets over their useful life
Erlang a unit of trafﬁc in a network equivalent to one voice hour
ICT information and communications technologies
LCA life cycle assessment
opex operational expenditure, a measure of recurring costs
TCO total cost of ownership
TCO2 total cost of ownership + CO2e emissions
GeSi, SMART 2020: Enabling the low carbon economy in the information age, Global e-Sustainability
Measuring emissions right – assessing the climate-postive effects of ICT. Ericsson white paper,
TCO2 • GLOSSARY, REFERENCES