November 3, 2022

Looking at the big picture – how to lower your Wireless Backhaul TCO

Looking at the big picture – how to lower your Wireless Backhaul TCO

Planning a microwave 5G project is time consuming and requires skills from several different disciplines. Investing in microwave equipment that reliably delivers high-capacity internet with minimal maintenance and operational costs is crucial to maximizing the anticipated return on investment (ROI). This requires project planners to have a high technical ability and a strong business acumen including a clear understanding of the cost drivers applicable to their network.

A common mistake when anticipating ROI for 5G equipment is only considering the purchase and installation costs. Future expenses also need to be considered to understand what the total cost of ownership (TCO) is. Without knowing the TCO, the estimated ROI cannot be calculated correctly. An incorrect ROI will result in a misleading higher anticipated profitability, not accounting for major future expenses.

Anticipated ROI = (Lifetime Expected Revenues/ Lifetime Expected Expenses)*100
TCO = Initial CAPEX + Initial OPEX + Future CAPEX + Future OPEX

The table below illustrates expenses that are considered when planning a microwave project.

Initial CAPEXInitial OPEXFuture CAPEXFuture OPEX
Hardware – radio, antenna and other accessoriesSite/path surveys and Link designHardware upgradesAnnual Spectrum license fees
Tower engineering and strengthening (if needed)Spectrum license application and initial feeMobilization and Installation costsTower lease fees (radio, and antenna) if applicable
Shipping and storage costsAntenna upgrade costs (if needed)Maintenance, cost of reliability (truck rolls, repair/replacement)
Mobilization and Installation costsCapacity upgrade and other feature licensesPower costs

Initial CAPEX/OPEX and 5G Projects

As the demand for 5G speed increases, it’s creating a wireless gold rush of vendors and budget “5G capable” equipment that promise high-capacity solutions at a low initial price (CAPEX). However, the equipment is either low capacity and will need additional hardware to scale or is software limited requiring expensive licenses to unlock capacity and features. Often, budget equipment becomes a “you get what you pay for situation.” They advertise “pay as your grow” but it quickly becomes “pay more later”. These additional operating expenses add up over the lifetime of the equipment reducing ROI.
In the example below, based on the initial CAPEX Vendor B appears to be the better business decision. It’s $5,000 dollars less. It’s $5,000 on the purchase date but will it still be such a value in 5 years?

Figure 1: Choosing the right vendor solution to lower your transport and access network TCO
Figure 1: Choosing the right vendor solution

Future CAPEX/OPEXs for Microwave 5G Projects

Many vendors are not upfront with TCO. They count on the allure of a low starting price and busy professionals not always doing their homework. Their customers only realize how expensive it is to upgrade when its time to scale capacity or add new features. At that point the buyers only have two options, rip and replace or pay the higher upgrade costs. Other considerations can also drive significant ongoing operational costs, such as increased tower lease costs to support larger antennas, or higher recurring spectrum fees.
Below is an example of the 5-year TCO from Vendor A. The total of CAPEX and OPEX over 5 years is $6,580. With the addition of the initial CAPEX the TCO of vendor A is $21,580.

Figure 2: Vendor A 5-year microwave network TCO
Figure 2: Vendor A 5-year TCO

Now compare this with the 5-year TCO of vendor B. Notice the anticipated CAPEX and OPEX is much higher at $22,822, resulting in a TCO of $32,822. Why is Vendor B’s TCO $11,242 higher than Vendor A’s? Vendor A’s equipment was able to increase capacity with minimum investment, compared to Vendor B which required additional planning, licenses, and hardware to increase capacity. If you were to multiply the effort and expense to scale across an entire network then Vendor B quickly goes from Hero to Zero if overall TCO is a key part of planning your 5G microwave network.Figure 3: Vendor B 5-year microwave network TCO
Figure 3: Vendor B 5-year TCO

Unexpected Expenses

Capacity upgrades like the example above are easily accounted for in TCO but budget equipment can incur unexpected OPEX/ OPEX too. To keep their prices low, budget vendors will cut corners. A common source of expenses with budget equipment is their half-baked management software and poorly designed hardware with a lower MTBF. When the software or hardware fails so does the network, resulting in service interruption and expensive truck rolls.

How can you lower your Network TCO?

Aviat Networks works every day to develop solutions that drive down every aspect of OPEX/ TCO. The following table lists some of the key drivers in costs that Aviat has found as a result of discussions with our customers around the world, and what we have done to address this.

TCO DriverAviat’ SolutionBenefit/Result
Complex, time consuming Link DesignAviat DesignFree online Design tool for microwave, E-Band and Multi-Band links, including 3rd Party products. Designed to be used by Engineers
High tower lease feesHighest Tx Power radios, 4+0 with A2C+Aviat’s products all support market leading system gain performance, while A2C+ provides up to 10dB system gain improvement for 4+0 configurations, to reduce the size of antennas needed that significantly lowers tower lease costs
High annual Spectrum chargesMulti-BandMoving capacity from expensive microwave bands to cheaper E-Band, while maintaining microwave for critical availability traffic
Replacing microwave with fiber to increase capacityMulti-Band-VAOverlay new E-Band link on top of legacy microwave to support multi-gigabit capacity needed for 5G, removing the need to deploy fiber
Deploying fiber for longer distance linksMulti-Band-XDHigh capacity up to 10 Gbps over extended distances up to 20 Km
Expensive routingWTM 4000 Integrated MPLSIntegrated networking built into all-outdoor microwave, removes the need for additional router and cabinet at edge sites
Reducing downtime and improving network availabilityCTR 8740 HAResilient, high availability routing as an alternative to much more costly redundant solutions.
Complex and expensive Trunking solutionsSTR 4500 Split-Mount TrunkingCompact and super-efficient solution for long distance (>100Km) links with up to 10 Gbps capacity
Frequency InterferenceFrequency Assurance (FAS)FAS detects hard to spot interference that can cause poor link performance and outages
Outages and degraded performanceHealth Assurance (HAS)HAS enables proactive monitoring of all links so performance issues can be detected and repaired before outages occur
High Logistics and WarehousingAviat StoreOnline ordering, fast delivery, minimized inventory, fewer site delays – save up to 7.5% of each order value

Contact us to speak to someone from Aviat about how we can help you with your specific TCO drivers

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