Business decisions based on upfront costs alone invariably turn out to be expensive mistakes. Yet too many tech decisions remain based on an unhappy combination of ignorance and knee-jerk reactions.
Written in London and despatched to TechRepublic at 31Mbps over free wi-fi from a coffee shop on London's Pall Mall.
I have just been listening to the CFO of a European telecoms provider complaining that his organisation's optical fibre rollout is going to cost a bundle in increased energy bills. He had been expecting overall electricity consumption to fall.
Over a coffee I ascertained that this provider has a fibre-to-the-cabinet (FTTC) programme and has retained the old copper network topology with exactly the same number of telephone switch sites.
As I explained the full capabilities of optical fibre and what fibre-to-the-home (FTTH) actually means, the colour drained from his face at the realisation that his company had missed a huge opportunity to reduce the equipment and building catalogue instead of drastically increasing it.
It was clear that flawed network plans and poor economic thinking were about to cost him even more over many years.
In brief I gave him the formula for success on a table napkin:
- Close down the PSTN and replace it with VoIP.
- Dismantle all MPLS networks and replace with IP over Ethernet.
- Dispense with 90 per cent of all telecoms property by exploiting fibre reach.
- Reduce manpower by 70 per cent and man-in-van crews by 90 per cent.
- Introduce new and novel alliances and service offerings.
On paper his projected power bill would then drop to less than 10 per cent of what it used to be with the old copper technology, and a much smaller fraction of what their current rollout would demand.
So what had gone wrong with his organisation's thinking? The only interpretation was that its plans were based on a fundamental lack of understanding, and spoke volumes about its planning, modelling and purchasing processes.
Over the past 40 years the planet seems to have become economically dumber as technologically-induced change has accelerated. Knowledge, thinking and comprehensive modelling have now been replaced by knee-jerk reactions, fast-paced deal making, and upfront costing compounded by short-termism.
Designing and running a networks business is not rocket science, but it does involve a good deal of sophisticated modelling and consideration. Thinking and planning for the long term is vital. Short-term thinking is the kiss of a lingering death.
Unfortunately this CFO is going to experience one bad news story after another. Soon, the shortcomings of FTTC will necessitate its replacement and the bandwidth demands of today will look as silly as those 9,600bps dial-up modems of only 25 years ago.
A modest dimensioning of this type of network business requires at least a consideration of:
- Today's network and customer demands.
- Rate of growth.
- Future requirements.
- The competitive landscape.
- Likely stage-left influences and effects.
- New services and applications to come.
- Quality of service - which includes reliability, resilience, performance, and utility.
- Return on investment .
- Capital expenditure.
- Operational expenditure.
- Repair and maintenance.
- Fleet management and scale.
- Real estate.
- Terminating old and outdated services.
- Retiring old or outmoded equipment.
- Spares holdings.
- Software support and migration.
- Reducing old liabilities.
- Achieving green targets.
- The changing face of technology.
- New and novel markets.
- Network and business support.
- Energy and materials budgets.
- The green agenda.
Despite our advanced computing and modern modelling capabilities giving us an ability to cope with so many fast-changing dimensions, companies seem to continue planning and investing on the basis of Dickensian thinking and methods.
So, I can guarantee that I am weeks - or perhaps days - away from another CFO or banker telling me we don't need optical fibre because it can all be done on power lines and LTE-G4 wireless. And as ever I will try and let him or her down gently with the bad news: it ain't going to work in the short term let alone in the future.
And in readiness for even worse to come, I can tell them that THz waves, infrared, software-defined radios mesh nets, ultra-wideband et al are not going to cut the mustard either.
But I can still guarantee that ill-informed investments will still go ahead driven by soda-straw vision and potential short-term gains.