Why going green makes good business sense in telecom?

As explained in my previous post related to Green Telecom, energy consumption is one of the leading drivers of operating expenses for both fixed and mobile network operators. Reliable access to electricity is limited in many developing countries that are currently the high-growth markets for telecommunications.

It’s been a long time until telecom’s carbon footprint has been a hot topic in the industry. Without preventive measures, it is expected to increase dramatically in the coming years reaching the 179 MtCO2e in Mobile infrastructure related assets, 51 MtCO2e in Telecom devices or 49 MtCO2e in Fixed broadband. However, increasing legislative and market pressure will force telecom operators to rapidly reduce their carbon footprint.

As an example, Vodafone has recently said it will halve its carbon dioxide emissions by 2020, largely by making its networks more energy efficient. Like Vodafone, some other telecom companies and handset manufacturers have already decided to conduct similar exercises (as listed in the European ICT companies’ commitments to targets and deadlines for CO2 and greenhouse gas emissions (GHG) and energy efficiency / consumption) such as Deutsche Telekom (20% reduction of CO2 emission by 2020), France Telecom (20% reduction of CO2 emission by 2020), Telecom Italia (30% increase for eco-efficiency indicator by 2020), British Telecommunication PLC (80% reduction of CO2 emission by 2020) or Nokia (6% reduction of energy consumption of offices and sites by 2012).

Nice promises, right?. The bad news for the operators and network infrastructure vendors come when realizing that corporate social responsibility initiatives (with a goal of reducing their networks’ carbon footprints), can decrease their competitive advantage and financial performance. Therefore, operators have to prevent any potential downside with a clear and straightforward green strategy to comply with regulation at the same time they obtain significant economical benefits.

This is not just a question of reducing the power requirements of their equipments. Some additional factors will converge over the next several years, creating significant market potential for greener telecom networks. These market drivers are manifesting themselves in several ways within the global telecom industry. The large equipment vendors are creating highly efficient network elements that consume far less power than in previous hardware generations.

Operators and vendors alike are exploring innovative network architectures and topologies that will support more capacity with fewer infrastructures. And the entire industry is working to incorporate renewable energy sources such as solar and wind power, particularly for off grid mobile base stations in developing countries where the vast majority of subscriber additions will occur over the next five years.

mmC Group has recently closed a strategic partnership with off7, a specialized carbon emissions consultancy with which we have collaborated in diverse green strategy assignments having done a detailed examination of the opportunities and challenges associated with improving the energy efficiency of fixed and mobile telecom networks, as well as utilizing renewable power sources such as solar photovoltaics, wind energy, and fuel cells.

As a result, we have gained a comprehensive experience in the technologies as well as the key drivers of market development over the next five years and beyond. Detailed business case analyses have been provided to our clients, along with an in-depth examination of industry participants’ motivations for deploying greener networks. Forecasts included energy efficient network infrastructure capex spending and emissions reductions from fixed and mobile networks as well as telecom data centres have been delivered…but what for?

Just for giving the answer to the question: Can a telecom operator become green? And the answer is YES but there’s another question to rise: Which is the potential downside (either operational and financial) of doing things wrong? And the answer is SEVERE.

A carbon reduction commitment does not specifically deal with the scenario where a company outsources parts of its business. Considering that most of the reductions come from the infrastructure and that most of the operators are looking at infrastructure outsourcing agreements, we have some problems to deal with: Who will bear the cost of participation? Who will bear the cost of investing in low carbon technology? Who will be responsible for carbon strategy? Does it make business sense to offshore carbon-heavy activities to a jurisdiction with lower environmental costs? etc.

As usually, I have prepared a case study on how do we approach to Green telecom strategies in the telecom sector. I would really appreciate to get your comments and help me answer to the original question: Can a telecom operator become green?.
Best regards, CVA.

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