ChannelVision Sept-Oct 2017

Even so, anything that smells of “if you build it, they will come” likely will curl carriers’ noses, at least at first whiff. And they probably couldn’t go along with such a plan even if they wanted to. Looking at current carrier cost structures, De- loitte sees little room for the billions of dollars needed to lay deep fiber. At least not as long as they are op- erating two networks. Largely driven by the demand of running both legacy and IP net- works, Deloitte argues, carriers are overburdened by operating cost. “Without the ability to shutter legacy real estate and decommis- sion TDM support systems entirely, cost cutting alone simply cannot keep pace with customer loss and corresponding revenue declines,” said the research firm. “As legacy TDM wireline networks continue to descale, the percentage of fixed costs overwhelms the cost structure,” Deloitte continues. Indeed, operating two networks (legacy TDM and IP) forces the larg- est wireline carriers to spend, on av- erage, five to six times as much on operating expenses as they do on capital expenditures, show Deloitte’s findings, leaving less for capital ex- penditure when compared to cable and wireless-only operations. Meanwhile, other labor-intensive industries such as construction, hospitality and agriculture typically have capital intensities below 5 per- cent, compared to a typical wireline telecom carrier with the expected capital intensity of 14 to 18 percent. “Retirement of legacy TDM networks could greatly reduce the Source: Deloitte analysis of publically available information flow By 2021, 63 Percent of Total Mobile Data Traffic Will Be Offloaded Source: Cisco 0 20 40 60 80 100 120 140 Cellular Traffic from Mobile Devices Offload Traffic from Mobile Device Exabytes per Month 2016 2017 2018 2019 2020 2021 37% 63% Zettabytes Channel Vision | September - October, 2017 36