ENVS6500_MA2_Drunis

ENVS6500 –Business andthe Natural Environment
Lecturer: AdamTyndall
CRITIQUE 2
Critical Analysis of Telstra’s 2008 Online Billing Life Cycle Analysis.
STUDENT: Aaren Drunis (3189437)
e-mail:c3189437@uon.edu.au
Due 17th
March 2014
Current Wordcount ~2454

ENVS6500 – Business and the Natural Environment Critique 2– QuestionTwo
Aaren Drunis 1 | 10 ENVS6500
Table of Contents
1 Introduction.....................................................................................................................................2
1.1 Literature Review.................................................................................................................... 3
2 Critical Analysis.............................................................................................................................. 4
2.1 Overview of the Life Cycle Analysis ....................................................................................... 4
2.2 Internal Factors; Energy Usage.............................................................................................. 5
2.3 External Factors; Customer Opportunities............................................................................. 6
3 Conclusion......................................................................................................................................8
References ............................................................................................................................................ 9

1 Introduction
Life Cycle Analysis (LCA) is a process which is utilised by an organisation to provide an analysis and
assessment of the environmental impacts of a product and/or process over its full life cycle, from the extraction
or use of raw materials, through to the use of the product by customers (Fig. 1). It provides an astute tool for
providing an organisation with information on a products environmental impact which can be utilised within the
decision making process towards managing environmental impacts (Miettinen & Hamalainen 1997).
Figure 1: Life Cycle Analysis concept (Source: http://w w w .marcelgomez.com)
Over the last two decades there has been increased adoption of the use of online transaction and billing
services by organisations as a means to achieve increased cost efficiencies, offer improved ease of services
to customers & potentially reduce environmental impacts. In 2008, the Australian telecommunication’s
company, Telstra, produced a LCA examining the environmental impacts of its existing paper billing services in
comparison to online billing (Telstra, 2008), with a goal of identify the environmental benefits of online billing
services versus standard paper billing services. The LCA forms part of a continued proactive approach towards
climate change and waste management promoted by Telstra which also includes reductions in carbon
emissions from vehicles and ICT, reductions in E-waste and the minimisation of environmental impacts in
operations through environmental assessment (Telstra, 2014). This report will provide a critical analysis of the
online billing LCA produced by Telstra in 2008, examining a number of key findings as well as reviewing the
limitations and implications of the LCA. Particular attention is given towards future actions which may either
improve the outcome of the LCA or augment the outcomes of the LCA.

1.1 Literature Review
As part of the LCA a literature review was carried out to identify studies that considered the life cycle impact
of online vs paper billing. As has been found within this assessment, the report notes that no specific literature
reviews appear to cover this field. Instead, it is assumed that much of the analysis done in this field has been
completed by private consultants & not published to the public. It should however be noted that studies in e-
banking and telecommunication services can provide insights applicable to the LCA, through the identification
of the environmental benefits of online services over traditional paper services (Hischier & Reichart, 2003;
Turk et al. 2003).

2 Critical Analysis
2.1 Overview of the Life Cycle Analysis
The LCA process, guided by the ISO standard 14040 series (ISO, 2014) assessed the environmental inputs
and impacts associated with paper and online billing, taking into consideration energy and material use for both
billing methods. Using Telstra’s billing platform and customer base numbers as the basis for the assessment,
identification of the most significant contributing factors influencing the environmental impact of each billing
method were addressed with the LCA evaluating three key areas (Telstra, 2008);
 Bill preparation;
 Bill distribution; and
 Use of the bill by the customer.
For each of these stages, four general environmental impacts were considered; global warming, human toxicity,
abiotic depletion and land use. A general empirical analysis comparing the impacts between a single paper and
online bill was made, identifying significant environmental benefits in favor of online billing (Table 2.1).
Table 2.1: Comparative review of environmental impacts of a single online / paper bill (Telstra 2008).
While identifying potentially significant reductions that could be achieved through online billing, this is however
only a comparative & standardised analysis of the impacts. At the time of publishing the LCA, Telstra serviced
approximately 11.52 million customers, with around 1.4 million individual customers currently using online billing
and 11.4 million individual customers receiving paper bills, with around 80,000 individual customers receiving
both. The LCA had anticipated that by 2009, online billing services operating at full capacity could service up to
3.8 million customers, with potential to save more than 19 million sheets of A4 paper for every one million
customers using electronic billing.

It was identified that the level of environmental impact is influenced by the number of customers receiving online
bills, the energy use of internet servers and the number of customers opting for online bills and printing their
own bill. It was also estimated that if one million individual customers (excluding business and government
customers) received online as opposed to paper billing there would be an estimated saving of 226,80 kg CO2
emissions annually, 39,000 tonnes of paper annually and reduced impacts for toxicity, land and resource use
(Telstra, 2008). The LCA provides a robust comparison between online and paper billing, providing a clear
definition of the potential benefits of online billing versus paper billing, with a significant potential for future
growth based on the findings of the scenario presented within the LCA. It has been noted within subsequent
corporate responsibility & sustainability reports that a continued shift by consumers towards online billing has
resulted in year-on-year reductions in paper usage relative to the number of customers receiving bills from
Telstra (Telstra, 2009; 2010; 2011; 2013); although it should be noted that exact figures for this shift have not
been sourced, therefore have not been independently verified. The use of quantitative values to identify the
outcomes of the LCA provides Telstra with the means to further assess the impact of continued growth in online
billing. As was identified in the LCA only 1.4 million out of 11.4 million customers as of 2008, were using online
billing; representing only approximately 12% of customers at the time of publish (Telstra 2008). As such there
is significant potential for further reduction in the environmental impacts of the billing service. At this stage, it is
important to consider the influence that certain factors such as server energy usage, number of customers
printing their own bills and most importantly, the actual number of customers receiving online billing has on the
overall impact as online billing usage continues to grow. Furthermore, the LCA based its findings on a number
of assumptions which are not only likely to alter the outcome of the report but also indicate potential areas for
improvement.
2.2 Internal Factors; Energy Usage
Energy usage by internet servers housing the billing data presents a significant variable which can be directly
controlled by Telstra, but which is also influenced by customer uptake of online billing. It is duly noted within the
LCA that the measurement for electricity usage for servers is highly complex (Telstra, 2008), incorporating both
server and air conditioning energy usage. A limitation of the LCA is identified in the fact that online billing servers
are located on site with other servers, therefore the direct energy use could not be measured (Telstra, 2008).
This raises a potential question; does the centralisation of server facilities provide energy efficiency benefits or
increase energy usage? The LCA provided an answer to this question based on the findings of Koomey (2007),
who conducted a review on server electricity use, identifying that the power used by cooling servers is roughly
equal to that used by servers. This would suggest that as server capacity is increased, the increase in energy
usage would exhibit a somewhat linear trend, although it is likely that improvements in server and air
conditioning efficiencies may present further opportunities to decrease energy usage further (Chapman, 2012).
By adopting new server & cooling technology, greater energy and cost efficiencies could be achieved (Emerson
& Leibert, 2007). A particular example of such an initiative is a 2011 assessment by Telstra which identified the
performance of cooling systems at exchanges (Telstra, 2011 p 48).

Further to these considerations it is noted within the LCA report that the energy usage of the billing servers
remains constant regardless of the number of bills produced. While this is the case, the environmental benefits
from online billing have a critical threshold in terms of the impact on global warming, whereby the difference in
the impact of an online bill versus a paper bill increase as the number of online bills decreases (Telstra, 2008).
Indeed it should be noted that at the time of publish the number of user utilising online billing was less than 70%
of the base number of online bills that can be produced at capacity. While by 2009 it was expected this capacity
would be met, future increases in server capacity would require consideration of this threshold in order to
maximise the potential environmental benefits.
2.3 External Factors; Customer Opportunities
As external factors, the percentage of customers who receive online billing and print their bills and the overall
number of customers receiving online bills both present future opportunities and challenges for increased
environmental benefits following the LCA. As noted by Epstein & Roy (2001), stakeholder reactions provide a
core component of a framework for addressing corporate social performance. The consideration of stakeholder
reactions to the services offered can be utilised through surveys conducted to measure stakeholder perceptions
and attitudes towards the implementation of online billing, thus allowing the collection of data on the number of
individuals and/or organisations which print online bills, the quality of service of online billing and identification
of the reason why customers continue to receive paper bills. This information would not only provide the benefit
of providing a more accurate assumption on the number of users printing online bills, but also identify the key
barriers to further adoption of online billing by customers & the potential constraints of existing online billing
services such as the level of customer satisfaction (e.g. service quality), customer confidence (e.g. privacy
concerns, authentication) and environmental awareness (e.g. recycling).
Risks associated with of online security & data privacy (Barwick, 2014; Winterford, 2012) could potentially be
addressed to promote greater confidence in online services in order to encourage an increased uptake in this
method of billing by potential customers. Such information may also provide an opportunity for the organisation
to develop future strategies to encourage more users to adopt online billing. Potential approaches may involve
financial incentives for customers, or active promotion by Telstra of this particular sustainability initiative. The
course of action taken in this regard would require appropriate financial analysis and assessment in order to
assess societal, corporate and environmental factors to determine the benefits of such approaches & align
these decisions within the organisations corporate strategy (Epstien & Roy, 2001).

While the LCA identifies the overall benefits of online billing over paper billing for existing services, there is
potential for the future consideration which can be given to the volume of customers using each method of
delivery. As previously stated, only approximately 12% of existing customers utilised online billing services.
Although it has been noted in subsequent corporate sustainability and environment reports that the number of
customers utilising online billing has shown an upwards trend following the LCA due to customer uptake of
online services, the high volume of customers using paper billing provides another potential avenue for future
reductions in the environmental impact of billing services. Within the LCA relevant statements are provided
(Telstra, 2008);
1. The bill paper is sourced from Australian paper and does not contain recycled material
2. The average distance to landfill from customers residence is 50km
3. 50% of bills are recycled, 50% are sent to landfill
4. Average customer is delivered 29.9 sheets of paper and 9.2 envelopes a year, equating to a total of
For each of the points specified above, the impact of paper billing services could potentially be reduced. Of
particular importance is the constitution of the paper used for billing. Assuming the statement provided in the
LCA is accurate, the use of recycled material provides the biggest opportunity for additional reductions in carbon
emissions and land use. External to Telstra, reductions in pollution and energy use in the transportation of
waste could be considered, although this would fall out of the scope of Telstra’s activities and forms an external
impact. Identification of customer trends could be utilised to provide an accurate representation of the number
of bills recycled, while greening initiatives could be used to encourage greater stewardship by customers, with
the goal of increasing the rate of recycling. Finally, reduction in the size of bill may offer similar benefits as the
recycling of materials, reducing materials used and etc. are these really worth it, does this reduce the
environmental benefit of online billing & thus undermine this initiative?

3 Conclusion
Life Cycle Analysis provides a robust tool for decision makers to analyse the environmental impacts of existing
services, allowing for future development of environmental efficiency strategies and aiding organisations in their
development as an environmentally sustainable organisation (de Jonge, 2003; Miettinen & Hamalainen, 1997).
The LCA conducted by Telstra in 2008 examined the environmental impacts associated with paper and online
billing, identifying significant environmental benefits with online billing services over traditional paper billing
(Table 2.1).
The LCA identified three main factors influencing the environmental benefits/impacts of online billing; server
energy usage, number of customers receiving bills online and printing bill and the overall number of customers
receiving paper billing over online billing. Utilising the findings of the LCA to consider future improvements,
potential growth in online billing is identified, with environmental benefits in relation to paper billing. With over
11.4 million customers & only 1.4 million customers currently using online billing, there is significant potential
for growth in the number of customers using online billing. It may be possible to identify opportunities for
additional growth in online bill services through the use of stakeholder information in order to identify key
barriers/challenges in the adoption of online billing & the development of appropriate strategies to overcome
these issues.
As online billing services grow, energy use of data servers presents the greatest impact of the online billing life
cycle, with a significant contribution to global warming in relation to other components of the online billing
process. It is noted that energy of servers and air conditioning cooling the servers is tightly coupled, however
greater efficiencies can be achieved through the adoption of newer more energy efficient hardware. Future
improvements were not only identified in regards to the online billing services, but also for existing paper billing
services. This may include but is not limited to; the use of recycled paper for billing, greening initiatives to
increase recycling of paper bills & reductions in the bill size. As the organisation continues to provide more
customers with online billing, such initiatives may provide further reductions in the environmental impac t of the
billing services.
The LCA provides just one tool at the disposal of the organisation to achieve a reduction in environmental
impacts. It has been identified that the quantification of the impact each part of the life cycle has for both paper
and online billing present further opportunities for future greening initiatives to achieve greater sustainability
outcomes.

References
Barwick, H. (2014). Telstra breached privacy of over 15k customers: Privacy Commissioner, Computer World,
Retrieved April 19, 2014, from
http://www.computerworld.com.au/article/540175/telstra_breached_privacy_over_15k_customers_priva
cy_commissioner_/
Chapman, M.T. (2012). Solutions for a more energy-efficient data centre: From water to fresh-air cooling.
Retrieved April 16, 2014, from
http://public.dhe.ibm.com/common/ssi/ecm/en/xsw03125usen/XSW03125USEN.PDF
de Jonge, A (2003). Limited LCAs of Pharmaceutical Products: Merits of Limitations of an Environmental
Management Tool, Corporate Social Responsibility and Environmental Management, 10, 78-90.
Emerson & Leibert. (2007). Five Strategies for cutting data center energy costs through enhanced cooling
efficiency. Retrieved April 17th from http://www.thegreengrid.org/~/media/Member%20Added/data-
center-energy-efficiency_151-47%20white%20paper.pdf?lang=en
Epstien, M.J & Roy, M.J. (2001). Sustainability in action: Identifying and measuring the key performance
drivers, Long range planning, 34 (5), 585-604.
Hischier, R. & Reichart, I. (2003). Multifunctional electronic media – Traditional media – The problem of an
adequate functional unit; A case study of a printed newspaper, an internet newspaper and a TV
broadcast, International Journal LCA, 8(4), 201-208.
Koomey, J. (2007). Estimated Total Power Consumption by Servers in the US and the World, Retrieved April
21, 2014, from http://enterprise.amd.com/Downloads/svrpwrusecompletefinal.pdf
ISO (2014). Environmental Management – Life Cycle Assessment – Principles and Framework, Retrieved
April 16, 2014, from http://www.iso.org/iso/catalogue_detail?csnumber=37456
Marcel Gomez (2014). Life Cycle Assessment Consultancy Services. Retrieved April 20, 2014, from
http://www.marcelgomez.com/eng/?page_id=1604
Miettinen, P & Hamalainen, R.P. (1997). How to Benefit from Decision Analysis in Environmental Life Cycle
Assessment (LCA), European Journal of Operational Research, 102, 279-294.
Telstra (2008). Online Billing Life Cycle Analysis, Retrieved April 15, 2014, from
http://telstra.com.au/abouttelstra/download/document/billing-full-report.pdf

Telstra (2009). Telstra Corporate Responsibility Report 2009, Retrieved April 21, 2014, from
http://www.telstra.com.au/abouttelstra/download/document/corporate-responsibility-report09.pdf
Telstra (2010). Corporate Citizenship Report 2010, Retrieved April 21, 2014, from
http://www.telstra.com.au/abouttelstra/download/document/telstra-corporate-citizenship-report-2010.pdf
Telstra (2011). Sustainability Report 2011, Retrieved April 21, 2014, from
http://www.telstra.com.au/abouttelstra/download/document/2011-sustainability-report.pdf
Telstra (2013). Sustainability Report 2013, Retrieved April 21, 2014, from
http://www.telstra.com.au/abouttelstra/sustainability/reports-and-downloads/
Telstra (2014), About Telstra: Environment, Retrieved April 17, 2014, from
http://www.telstra.com.au/abouttelstra/sustainability/environment/
Turk, V., Kuhndt, M., Alakeson, V., Aldrich, T. & Geibler,J.V. (2003). The environmental and social impacts of
ebanking. Retrieved April 19, 2014, from http://www.edis.sk/ekes/Barclays_case_study.pdf
Winterford, B, 2012, Telstra shuts down systems after privacy breach, IT News for Australian Business,
Retrieved April 19, 2014, from http://www.itnews.com.au/News/282930%2ctelstra-shuts-down-systems-
after-privacy-breach.aspx

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