As operators look to cut their costs, Janez Öri, Strategy and Business Development Director at communications solutions provider Iskratel has cautioned them against simply looking at the price tag of equipment, warning that cheaper items could end up costing between 300 per cent and 800 per cent more than the initial capex saving.
Speaking at ANGA COM, Öri highlighted how operators could find themselves locked-in and left behind with inferior, non-upgradable technology if they buy cheap, thus missing out on introducing new revenue-generating services. Instead, he recommended investing in a software programmable hardware.
“To remain competitive with their Tier-1 rivals, Tier-2 operators are continuously forced to upgrade their equipment and vendors are exploiting this by offering initial capex discounts as a way to make a profit off the back of operators,” he noted. “This is what we call the ‘low-capex trap’ which sees operators stuck in a cycle of buying cheap ACIS-based, non-upgradable hardware before seeing a return on their previous investment – barely keeping them afloat, let alone positioning them to outperform their Tier-1 rivals.”
“While operators may save an initial 10 per cent when buying cheap, this will soon backfire as increased OpEx and rising TCO decreases operators’ ability to keep up with demand.”
According to Öri, operators can avoid the trap by adopting an approach which considers their TCO throughout the expected lifecycle of the equipment, avoiding vendor lock-in, maintaining a fixed cost structure for a five-year period and allowing them to easily introduce new services across generations of equipment – making them consistently profitable and competitive.
“By investing in programmable hardware, which is easily software-upgradable for future needs, services and protocols, operators can reduce 70 per cent of operational and maintenance costs throughout the prolonged lifecycle of their equipment, positioning them to outperform their competitors in service, quality and price,” concluded Öri.