As 5G ignites the next wave of telecommunications disruption, the need for seamless service delivery is increasing. To stay competitive in a changing market, telecom companies must keep investing in infrastructure and technology, including building new cell towers, upgrading networks, and laying new fiber-optic cables to support the growing demand for data.
Significant investment in digital infrastructure requires solutions for accurate capital expenditure (CapEx) planning. The main challenge of smart CapEx, in turn, is to strike a balance between investing in new infrastructure and technology and controlling costs and improving profitability. Telecom companies must make informed decisions on network CapEx optimization and make suitable investments to ensure long-term benefits.
The nature of telecom network CapEx
Telecom operators face an increasingly complex challenge when it comes to CapEx planning. Network expenditure is expected to rise significantly over the next decade as telcos deploy 5G and edge cloud networks to improve both their consumer and enterprise offerings.
Modernizing networks is challenging, especially when dealing with new disruptive forces. Pricing pressure is still an issue, and new concepts like private mobile networks could change the market. Also, the 5G era brings new regulatory requirements for network coverage and spectrum re-farming.
Meanwhile, telecom operators must balance the rollout of 5G with upgrades to existing LTE networks to improve network quality. All these factors mean the need for more capital, whose intensity is set to rise from 13.4% in 2019 to 15.9% in 2024.
Source: “Telecoms CapEx forecast: Worldwide trends and forecasts,” Analysis Mason, March 2019
Telecom operators can overcome these challenges by adopting a smarter approach to CapEx planning. This involves realigning their people and workflows and integrating automation and artificial intelligence (AI) into their network planning tools and processes. By doing so, operators can improve CapEx efficiency, the customer experience, and regulatory compliance.
To achieve these goals, telcos must prioritize the quality of network investment and the role it creates in long-term value. This shift in mindset can lead to an improved return on invested capital (ROIC).
Challenges of traditional CapEx planning
Traditional network planning involves assigning budgets and making expansion forecasts based on usage and performance guidance. Different teams handle different parts of the network, which can lead to competing priorities and confusion. This often results in suboptimal allocation of capital and tasks due to a lack of clear accountability. All of these challenges can affect telco CapEx optimization or the process of optimizing capital expenditures for telecommunications companies.
Centralized control and oversight may not allow telecom operators be insufficient to keep up with changing network demands. Planning teams may not communicate effectively with other parts of the business, limiting the use of a holistic set of KPIs to inform planning activities. Apart from that, relying on multiple vendors and an aging technology stack can limit agility and responsiveness.
Source: Intelligent and agile: CapEx planning in the 5G era
To solve these problems, telecom companies need a better expense plan. Operators can improve CapEx efficiency, provide a better experience for customers, and satisfy regulators by realigning people and workflows and incorporating automation and artificial intelligence (AI) into network planning tools and processes. This new approach requires prioritizing the quality of network investment and its contribution to long-term value creation, ultimately driving improvements in return on invested capital (ROIC).
5G investment decisions for business success
To make informed decisions about 5G CapEx, telecom companies must gather and analyze large amounts of data from various sources, including network performance data, customer usage data, and market data. This requires a deep understanding of networks and customer needs. The solution is to use CapEx planning software that intelligently automates design and investment processes, incorporating advanced analytics, artificial intelligence (AI), and machine learning (ML) algorithms.
CapEx software can help telecom companies to:
- Visualize and predict revenue, churn, quality of experience (QoE), and time to congestion on a map, enabling telcos to identify areas of their network that require investment and prioritize investments based on ROI
- Use geospatial heatmaps to visualize predictive outcomes
- Accelerate investment decisions with the help of AI/ML, allowing telcos to quickly and accurately analyze large amounts of data and make informed decisions about capital expenditures
- Locate infrastructure for an optimal total cost of ownership (TCO) and ROI by analyzing market data and identifying the best areas for investment
Using CapEx software to automate and streamline planning processes, telecom companies can make informed decisions about capital expenditures and optimize investments to ensure long-term benefits. Advanced analytics, artificial intelligence (AI), and machine learning (ML) allow telcos to analyze large amounts of data quickly and accurately, thus identifying areas of the network that require investment and prioritizing capital expenditures based on ROI.
The benefits of smart CapEx for telecom services
The rollout of 5G networks presents new challenges for telecommunications network planning teams. They must now balance the need for site densification in urban areas with the need to bridge the digital divide in rural areas. Furthermore, deploying 5G campus networks that rely on network slicing is a departure from previous scenarios. To keep pace with these changes, telecommunications operators must take a holistic approach that prioritizes business outcomes and optimizes available resources. One way to do this is by using CapEx planning software, which can help operators effectively allocate resources and optimize capital expenditures.
Additionally, modernizing the network involves transitioning to massive multiple-input multiple-output systems and new fronthaul and backhaul solutions. To successfully navigate these changes, operators must rely on expert network planning to ensure their networks are built and managed efficiently and cost-effectively.
By using advanced analytics and AI/ML algorithms to make informed decisions about CapEx, telecom companies can obtain long-term benefits including:
- improved network performance
- reduced downtime
- higher customer satisfaction
Telecom companies can also reduce network upgrade costs, improve the efficiency of network operations, and lower customer acquisition costs.
Investing in the proper infrastructure and technologies is crucial for telecom companies to remain competitive in a rapidly changing market. The key tool for achieving this, CapEx planning software in telecom, can help companies expand their offerings with faster download and upload speeds, lower latency, and more reliable service.
With CapEx planning software, companies can allocate their resources more effectively and optimize their capital expenditures. This helps companies create targeted investments, make the most of their budgets, and attract and retain customers by delivering a superior experience that meets their needs or even exceeds their expectations.
Intellias smart CapEx case study
A major Ukrainian telecom services provider was undergoing a business model transformation when they encountered the challenge of effectively managing expenses. With over 23 million subscribers, the company strives to provide top-quality mobile and broadband data transmission services while ensuring adequate network coverage. To achieve this goal, they needed a sophisticated network visualization tool showing coverage, interference, service quality, and return on investment (ROI).
To address this challenge, they turned to Intellias — a professional product engineering company with expertise in location-based services and telecom software development. The Intellias team developed a custom-built, all-in-one CapEx software solution presented as a user-friendly web application. The application offers a wide range of functionality, including a visual map for base station planning that lets an operator check network coverage via heatmaps, work with quality of service (QoS) complaints, see base station radiuses and signal convergences, and so on. It also covers sophisticated business case calculations based on defined parameters.
The solution enables our customer to deliver wide coverage, accounting for specific needs of different services including street, indoor, and top floor coverage as well as capacity, latency, and throughput requirements. The smart CapEx solution also eases the process of optimizing planning decisions related to business and network KPIs, such as quality of experience (QoE), customer churn, revenue, return on investment (ROI), and coverage.
Custom solutions like this take from six to nine months to fully plan, develop, and deliver, with the price starting from $500,000. Using smart CapEx solutions, telecom operators can efficiently plan, deploy, and scale their network, make targeted investments, and drive revenue growth while managing capital expenses during telecom network expansion.
In the 5G era, being efficient with capital expenditures (CapEx) is critical for staying competitive and modernizing network planning in multiple areas. CapEx software can improve the customer experience, save money, and make work more efficient overall. By planning smartly, companies can build a strong foundation for achieving their strategic goals.
Artificial intelligence (AI), machine learning (ML), and automation can optimize CapEx by focusing on customer value, reducing customer loss, and increasing the return on invested capital (ROIC). All these benefits will determine which operators thrive (and not simply survive) in the 5G era.