Network Investment and the Price War, At What Cost?

The world has evolved to a place in which mobile devices and interconnectivity are a critical part of our daily lives. Mobile growth is exploding and will continue to. Ericsson estimates there will be 9.1 billion mobile subscribers by 2021 and video streaming will be 70% of the usage! (source) From using a mobile device to Skyping with your friends to pay monthly bills on a Smartphone, the wireless world is increasingly becoming an indispensable part of our daily lives. I personally enjoy connecting with people on LinkedIn and Instagram; it is amazing that from the touch of our fingertips we can see how globally integrated we are. It is interesting to see that deep down many of us like and want the same things in life, regardless of our global geography or age.

Many don’t understand how much they depend on their mobile device until it doesn’t work anymore (as I covered in a previous post). People continue to shop around for a cheaper solution, a better plan or a deal on a new device. When their phones stop working or calls drop, people become outright angry! Yet the vast majority of subscribers don’t understand how expensive and complex it is to maintain a reliable wireless network and why cell phone service should actually cost more than it does. Customers must be willing to pay for network reliability. If they don’t, it will eventually impact them and hopefully it won’t be during a disaster when lives are depending on getting in touch with first responders or loved ones.

The US Wireless Industry has a lot of challenges, one of the biggest is the continued price war between Carriers. Users want more capacity, more coverage and a better experience, yet don’t want to pay for it. The expense of building and operating a wireless network in a 1,000,000 part model is a complex and huge undertaking. It will only continue to get more complex as networks become denser and “Middleprise markets” become more penetrated with small cells and DAS solutions. To entice subscribers to churn from their existing provider, Carriers continue to try and out position each other on price with programs such as paying cancellation fees, iPhone for life and data sharing plans. These tactics work as we are seeing an on-going price war, customer loyalty dropping and average revenue per user dropping sequentially quarter by quarter. But what does that mean for investment in reliability and resiliency? The network is the revenue engine and the thing that every single subscriber is using to pay their bills, stay connected, or create a mobile workforce.

I have seen firsthand the challenges within the wireless industry. The investment in maintenance and break/fix alone is enormous, yet finance departments and executives are straddled with the difficult questions: do we continue our maintenance OpEx budget and invest capital in network resiliency assets (mind you that these investments are revenue protecting, but not revenue generating), or do we redirect corporate resources toward revenue generating activities such as new cell sites, additional capacity, carrier ads, small cells, new spectrum and new technology. My experience has been that during challenging business cycles, Carriers often constrain maintenance OpEx and Network Resiliency CapEx budgets and redirect them toward revenue generating budgets.

Network reliability is more than just investing in resiliency solutions such as standby emergency generators at the cell site, but it is also a function of preventative maintenance and proper investment in disaster recovery resources and contracts. While some don’t agree with me, my stance has always been “if you can’t maintain it, don’t build it”. Budgets come and go quarter to quarter depending on meeting The Streets expectations or not. Constraining maintenance budgets at the expense of meeting shareholders top and bottom line numbers is a dangerous game in the long run and is very short-sighted and can also be a tremendous waste of money. On the heels of the 2004-2008 Hurricane Season and after Hurricane Sandy, all Carriers began investing in capital resiliency assets, because customers were really angry due to loss of service, yet a few years later with the hurricanes far in the distance, maintenance of those assets tend to fall by the way-side. What about huge expenses spent on site acquisition, site selection and planning for standby generators, yet the investment never made because of a bad quarter? Unfortunately, it all happens way too often.

Not investing in continued and regular preventive maintenance and network reliability will impact customers, reduce asset life span, cause extended outages during power failures, and cause more expensive repairs and capital replacements in the long run…that is the bottom line.

Doing the same things in the same way as the competition is a formula for failure. At Cat5 Resources we live and breathe network reliability and understand the importance of the investment in maintenance & break/fix and network resiliency. Cat5 Resources has developed a business model that differentiates us and creates value for our customers. We understand the challenges Carriers face and offer solutions that can reduce OpEx, create efficiencies and save money. Reliable networks ensure happy customers, and happy customers ensure happy shareholders in that order.

The power grid is aging rapidly and is ridiculously vulnerable to failure from severe weather events, which are increasing. Demand for power is rising 400% faster than capacity enhancements. Networks will always require maintenance and repair and disasters will continue to happen. Through advocacy and grassroots, I try to help consumers understand the expense and importance of Network Reliability and Resiliency, why Carriers invest in these programs and why consumers should pay for it. The US Wireless industry is dangerously close to breaking as Carriers battle it out on price and continue to constrain OpEx budgets, subsequently incurring larger and larger network vulnerabilities. Unless something changes, and investment in network reliability & resiliency is given a top priority, the critical communication infrastructure of the US will continue to be at exposed to risks.

I’m passionate about network reliability and minimizing operational risks. As always, please feel free to contact me anytime to share information or just say hello. I can be reached at any time at or via voice / text at +1 704 951 7424

Cat5 Resources is here to help customers to maximize their investment, protect their revenue and support them during disasters. Cat5 Resources provides comprehensive services including Logistics & Transportation, Maintenance, Repair, Installation, Refueling, Disaster Recovery and many other technical & operational services to the Critical Infrastructure sectors across the United States.


Richard Zinno