March 30, 2011

Microwave Backhaul Total Cost of Ownership (TCO) pt. 2

How Important is Initial CAPEX?

Are we seeing the forest or the trees?

Based on microwave Total Cost of Ownership (TCO) model posted earlier, the most significant contributor to total cost is ongoing OPEX.

We see an increasing trend of operators making decisions on backhaul solution based mostly (sometimes solely) on price (or initial CAPEX). While initial CAPEX is important, if the goal is lowest cost, this can be problematic approach as initial CAPEX it is not the most significant contributor to total cost.  Ongoing OPEX is key.

Perhaps a better approach would be to focus on features most impacting lowering total costs.  For instance, adaptive coding and modulation can lower antenna sizes – which can reasonably reduce 10 year TCO by as much as $48,000 (which is 2-3x more than initial CAPEX).  Deploying ring architectures with high layer (L2/L3 or packet-based) failure recovery techniques can enable lower per hop reliability and smaller antennas – further lowering costs.

Microwave Backhaul Total Cost of Ownership

Gary Croke

Product Marketing, Aviat Networks