Network downtime costs more than you think

Amidst growing competition, telecom operators are faced with the challenge on how to increase their subscriber penetration and enhance subscriber stickiness. While value added services such as voice, data and interactive applications promise healthier revenue and competitive edge over competitors, the inherent complexity of delivering these services can create vulnerabilities that can impact network reliability and cause unplanned downtime.

Downtime -- the unavailability of service or poor quality of service -- appeared to be one of the primary reasons why customers churn according to research from In-Stat. Results of the research show that nearly 47 percent of respondents will leave their service provider if they experience the following problems: poor coverage, dropped calls and network outages. Low subscription fee and customer service response were rated as secondary reasons to switch providers.

Despite this, most telecom companies are caught unaware with the cost of downtime. Some, however, are aware of the magnitude of the problem, oftentimes learning it from complaints from customers. Downtime comes in varying degrees. To clearly illustrate downtime’s impact, we use a Richter scale which rates network failures’ impact from one to 10 (micro to macro level) with each level having its corresponding consequence.



Network disruptions and downtime are costly. Network downtime can cost an operator an average US$144,000 per hour. But beyond that, downtime can cause more serious problems such as service degradation and disruption. These can lead to increased revenue loss, increased operating expenses and poor brand image.

	Telco Operators		Cost of Downtime for 5000 BTS Sites Per Hour*
	Normal Time Peak Time Ave Per Hour		$100,000 $323,000 $144,000
	* Revenue per BTS is $260,000 per year