Ovum: Telcos to go Green

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Ovum: Telcos to go Green

Telecommunications research firm Ovum believes ‘green’ issues will start to impact the telecommunications sector in Australia and across the globe. But the analyst firm claims profit goals will drive companies into green action.

Matt Walker, Ovum analyst, believes three factors – power, environment and green is in - will spur the telecommunications industry into ‘green action’.

“First, energy and electricity, mainly, have significant direct costs for telcos. Power, Ovum estimates, currently accounts for around two to three percent of telcos’ operational spending, but this varies significantly around the globe. These costs are rising, in some cases dramatically, due to high-usage data centers and mobile network expansion, particularly into rural areas,” said Walker.

He said environmental and energy cost concerns give rise to a number of sizable business opportunities to service providers.

Examples include video and audio-conferencing, international connectivity, Ethernet LAN/IP VPN (IP Virtual Private Network), storage, power line communications, storage, radio frequency identification (RFID) tracking, and intelligent transport.

“Also the whole 'green is in' gives credible, sustained commitments by corporations to environmentally friendly practices that can pay off with public goodwill. Environmental policy and practice is becoming a key element of broader corporate social responsibility efforts. Already, the telecom sector’s environmental impact is mainly positive, and currently accounts for about 1 percent of global greenhouse gas (GHG) emission yet 3 percent of global GDP. But there is much room for improvement,” he said.

Walker believes the electricity costs that come with data traffic growth and increased overall network penetration are putting pressure on telco’s operating budgets. In 2007, telco electricity opex in 2007 accounted for roughly $8 billion in Europe and the Middle East and Africa (EMEA), and $6 billion in Asia-Pacific.

“Researchers at Japan’s Advanced Industrial Science & Technology Institute (AIST) have estimated that routers alone, keeping technology constant, would account for 9 percent of Japan’s total electricity consumption by 2015. Beyond the network, power consumption by customer premises equipment is also significant, especially as broadband moves to fiber,” he said.

Deploying services that tap the public’s interest in energy efficiency and the environment offer real revenue opportunities. Becoming a good corporate citizen through measurable, sustained environmental action, i.e. showing leadership, can set telcos apart from the mainstream, according to Walker.

“Climate change, pollution and rising energy costs represent enormous problems that lack simple solutions. However, there are tactics that telcos can use to prosper amidst these challenges. Increasing the energy efficiency of your network, and the CPE needed to support services, is important,” said Walker.

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