![]() We strive to provide individuals with disabilities equal access to our website. Some are more complex than others to capture, and some require more capital spending than others (Exhibit 1). The biggest opportunities for energy-consumption and cost reductions lie in four areas. For both these reasons, energy consumption and costs are unlikely to fall without high-level recognition of the importance of reducing them and a comprehensive strategy for doing so. ![]() Moreover, reducing energy costs requires resources (labor and capital) at a time when operators are concentrating their investments on expanding the capacity and reach of their networks. ![]() Energy costs may well be aggregated at company level, but responsibility for the cost drivers is split across many different functions and divisions, such as network and infrastructure planning, field operations, facilities management, procurement, and IT, making managing this level of change all the more challenging. Seizing these opportunities, however, requires major organizational and mind-set shifts. Nevertheless, our work suggests that many operators can reduce energy costs by at least 15 to 20 percent in the space of just one year-and more over a longer period. Regulations governing distribution and retailing, green-energy incentives, OEM choice, and an operator’s starting point in energy efficiency will all make a difference. The extent of the potential savings will vary by operator and market. Some savings lie in deploying artificial intelligence (AI) and the Internet of Things (IoT): some in structural and architectural transformations, and some in cheaper and more sustainable energy sourcing. Some 85 percent is wasted because of heat loss in power amplifiers, equipment kept idling when there is no data transmission, and inefficiency in systems such as rectifiers, cooling systems, and battery units. 4ĥG network energy efficiency, Nokia, December 2016. In current mobile networks, for example, transferring data only consumes around 15 percent of energy. All operators have considerable scope to cut energy costs and consumption. As operators’ energy consumption expands, so will their carbon footprint, hurting not just the environment but also their reputation and standing, particularly among the expanding class of socially responsible investors.īut this does not have to be the case. Often making them some of the most energy-intensive companies in their geographic markets. Telecom operators already account for 2 to 3 percent of total global energy demand, 3 There is no reason to believe this trend will abate, particularly given the likely shift to electric vehicles in many markets and the extra demand for grid power that this will unleash.Ĭosts are not the only concern, however. On average, global power prices have risen by about 1 percent a year over the past decade, although in Australia, Canada, Egypt, France, and South Africa, they have climbed by between 3 and 7 percent. Supply-side costs are also likely to increase. By our calculations, these already account for 5 to 10 percent of a telecom operator’s energy costs. At the same time, as more services are provided at the edge, the number of data centers will need to rise. Each 5G site will need two to three times more power than the 4G-equivalent site, according to industry estimates. Although the 5G-new-radio standard is more energy efficient per gigabyte than are the 4G standards, the proposed 5G use cases and new spectrum bands will require many more mobile sites, outstripping potential energy efficiencies. This growing energy challenge is, in large measure, a result of the exponential growth in traffic that new 5G services are likely to deliver. McKinsey benchmarks for mobile and fixed operators.Īnd costs look set to rise further, putting greater pressure on margins at a time when the industry can scarcely handle any additional financial burden. In emerging markets, where low grid coverage often means operators must supply their own power with a generator set, energy can account for as much as 7 percent of expenditures. Energy costs for telecom operators around the world are already high: at the end of 2018, they accounted, on average, for around 5 percent of operating expenditures.
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