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5 Ways To Reduce the Cost of Leased Capacity in Your Network

By Russ Green Comments
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Russ GreenIn a competitive environment, mobile, cable and fixed broadband services providers are under constant pressure to reduce the cost of operating the network. The breadth of customer demands means that you have to augment your network capacity with leased facilities from other operators. With ongoing changes in your network and customer demands, you need to continually monitor your use of leased capacity to make sure that the incurred spending is at a minimum.

This blog will take you through the five ways that you can identify savings through optimizing your use of leased capacity.

1. Re-route demands for minimized cost. Without any topology changes or equipment additions, you can analyze how re-routing your existing demands on the network can minimize costs. For this you need an accurate model of your network, a good cost model of your leased capacity and your current traffic and routing. By then re-routing all network demands while enforcing the constraint of no network changes, you can identify cost savings through the isolation of unused facilities. If you have a system that allows you to constrain aspects of this optimization, for example, saying which customer demands can’t be rerouted, you have a process that can be executed frequently to keep on top of your leased costs. In addition, if you incorporate forecast customer demands into this analysis, you can project future costs and savings too.

The investment of a system or process allows you to manage your operational costs without any capital expenditure!

2. Save cost through a leased-capacity upgrade. This technique extends the analysis in No. 1 above to allow leased capacity upgrade. Essentially you need an optimization algorithm that will now consider minimum cost-based re-routing, allowing bit-rate upgrade of leased capacity, and your cost model needs to contain pricing parameters of the higher bit rates. With the economies of scale in leasing capacity and the appropriate traffic patterns, you can identify additional savings user these higher bit rates.

3. Net savings through adding multiplexing capabilities. In an extension to No. 2, if you consider the addition of multiplexing capabilities to offices where you don’t have them, you increase your ability to make use of higher bit rates. By including the cost of this network enhancement and the appropriate optimization algorithm, you can find out what net savings can be achieved through multiplexing and hubbing. The right system should be able to do this automatically for you, and when combined with the ability to forecast future demands and network changes, you can assure future savings for your company too.

4. Invest in your own internal network to save leasing costs. One of the reasons to lease capacity is that you don’t have enough traffic to justify building your own network capacity. With growth in customer demands, you may reach the point where this is no longer true. If you expand your process and algorithms for analyzing cost savings of extending your network, you can find out if an investment of build-out reduces your total network cost.

5. Reduce cost through shopping around – comparing the costs of competing providers. Your leased-capacity providers face competition through new offerings from their competitors. If you expand your cost model to allow the geographic identification of alternate carriers, the capabilities they provide (not all provide all services) and the costs that this incur, you now can shop around. If your process and optimization mechanism can now also take this information into account, you can regularly make sure that you are getting the best price for your leased capacity.

Reducing operational cost is now a way of life for service providers. The complexity of identifying where and how to do this is exacerbated when you take into account the ongoing technology changes in your network. A return on investment of a system like this is easy to determine. In addition to the net savings which justify its implementation, you liberate the tedious, error-prone work from your skilled resources and free them to further the needs of your business.

Russ Green is SVP, Product Management & Marketing, VPIsystems . He has 15 years of enterprise software experience in large-scale, high availability systems, working with globally-distributed development groups and customers. Before joining VPIsystems, Russ was the vice president of Development for 724 Solutions, based in Switzerland. Contact him at russ.green@vpisystems.com.

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