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Wednesday, January 18, 2012

The 4 Hidden Costs of Maintaining a TDM Network

The 4 Hidden Costs of Maintaining a TDM Network
By Ali Kafel – January 2, 2012

Reducing the cost of network operations and administration is one of the leading business drivers behind the migration from TDM to SIP. Ironically, adherents of the status quo use cost reduction as an argument against migration, citing that:
1.     Their TDM equipment is already paid for;
2.     It continues to generate revenue; and
3.     It has minimum capex needs and stable opex requirements.

While this sounds like a solid argument, in reality it’s a lot more like saying I drive this old beater and it’s not fast or pretty but it’s paid for and gets me where I need to go—all it needs are gas and oil.

What some network operators don’t realize is that there are four hidden costs lurking in every TDM network, and they’re draining money and performance as slowly and steadily as an engine with a leaky gasket.

Hidden Cost #1: Power Consumption
Given their history in the days of the telco giants, it’s not surprising that TDM installations have massive footprints with extremely high power consumption.  While the size of the network certainly impacts its energy cost, so does the location.  In Los Angeles, for example, the KwH cost of electricity has nearly tripled since 1990, when many of those TDM switches were first deployed.  And energy costs are expected to increase in the future as the power grid is modernized and a new per-hour/peak usage billing model is introduced.  As a result, some markets (such as the European Union) have issued target reductions that businesses must meet continuously or they will be forced to do so through carbon offset programs.

By contrast, IP softswitch architectures use far less energy to support one million busy-hour call attempts (BHCAs) in a single, standard telco frame.  A TDM switch, excluding line peripherals, would require 10 to 12 telco frames and still support fewer BHCAs.  The message for TDM champions?  That old car of yours may be paid for, but the mileage is terrible and it’s burning oil.

Hidden Cost #2: IMT costs
TDM networks typically utilize Inter-Machine Trunks (IMTs), which provide a direct circuit path between each TDM switch in the network (e.g., 10 switches would require unique 45 IMTs).   Each IMT needs to be maintained and managed to function properly. With IP switches, you can replace these circuit paths with an IP cloud architecture and shrink your interconnection  costs by 70%.  For TDM operators, that’s like replacing an old car that’s in the repair shop every month with a new car that only needs an oil change twice a year.

Hidden Cost #3: Skillset and Spare Parts
TDM switches require spare maintenance parts because they’re old; it’s a fact of life. Yet the primary TDM vendors have ramped down the production of spare parts.  That presents TDM operators with a double whammy:  the challenge of finding maintenance spares for their aging TDM products and paying more for the ones they find.  Spare parts for TDM switches will become a bigger issue over time for telcos that continue to rely on a technology that’s at the end of its design life.   Also, just as TDM Spare Parts are becoming a scare commodity, so are TDM  engineers with the skill sets to administer these legacy networks. While perhaps a less visible immediate issue than a depleted warehouse of backup spares, a shortage in skill sets can have critical impacts when network failures do occur. In other words, your out-of-warranty car could cost you a small fortune in specialty replacement parts and service  if you want to keep it running.

Hidden Cost #4: Opportunity Cost
Perhaps the strongest driver for VoIP is beyond operational efficiency and cost savings - competing service providers have been offering VoIP as standard or enhanced telephony service as a way to drive new revenue streams for their businesses (especially by stealing customers away from the incumbents).  This is especially true for Cable Operators and other competitive ‘local carriers’ taking customers away from the incumbents. For example, Comcast in the US now has about 9M digital voice subscribers, taken away primarily from incumbents Verizon and ATT. In Europe, Talk Talk, a competitive local carrier, took has taken away about 4M residential voice customers away from BT. Enterprises not offering compelling IP services that their employees demand are bypassing their IT departments, and are going directly to cloud providers offering such services. This comes at a huge cost of lost revenue and customers. That old car of yours may be paid for, but your customers may not want to ride in it because the ride is uncomfortable or  you may not be able to take them where they want to go.

None of this should be news to TDM network operators.  After all, these switches have been deployed for over 25 years and are now operating at the extreme end of their design life.  It’s true that human beings tend to resist change, but trusting your network to equipment that’s nearing its end of life is no less risky than driving for months with the Check Engine light on.  Sooner or later, something is going to break – and you can only hope it’s a small repair this time.

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