Out of a deal that would see one shell-shocked service provider purchase network equipment from a payroll purging gear-maker comes insight as to just how carriers go about choosing equipment.
Telus Mobility is buying a bunch of wireless microwave equipment from network gear maker Alcatel, to connect cell sites in parts of eastern Canada. It’s a move that could spell some cost savings for the carrier.
Alcatel announced the three-year agreement late last year. The deal should see Alcatel sell dishes and transmission equipment to Telus Mobility, which will employ them where parent company Telus Corp. does not operate its own microwave network today (read: outside of Alberta and B.C.).
According to Hilbert Chan, vice-president of corporate engineering at Telus Mobility in Toronto, the microwave equipment purchase makes good business sense for his company.
“What we’re using currently are leased facilities we obtain from local telephone companies such as Bell and MTS.(ellipse)It’s an operating expense that we have to incur on a monthly basis. We got into an analysis of using microwave equipment in lieu of paying the operating expenses.”
Leased lines are expensive in some places, Chan explained.
“When you get into the second-tier cities like Windsor and London (both in Ontario), you don’t have a whole lot of choice. Those facilities(ellipse)could range from hundreds to thousands of dollars on a monthly basis.”
Chan wouldn’t say how much money Telus Mobility would pay Alcatel for the microwave equipment. But he did say the new infrastructure would cost less than installing wireline links between cell sites.
“The cost of laying copper or fibre, it’s quite labour intensive and quite time-consuming. Microwave is a ‘free-space’ technology. You can point one end of the equipment to the other end over a few kilometres, and you’re able to set up operations very quickly.”
Alcatel Canada’s spokesperson Geoff Cowan in Vancouver said the Telus Mobility agreement goes beyond equipment. It includes network design, which is a team effort. “We do it jointly. They come to us with the system configuration, the areas they want to cover. We do the design of the system, take it back to them; they validate it.”
And so it goes. But not everything about Telus Mobility and Alcatel is as smooth as that. Both companies have had their share of problems lately. Alcatel in December announced it would reduce its North American workforce by 400 people, 200 in Canada. The company said it was aligning costs with revenues.
Did Telus Mobility have qualms about working with a vendor that was trimming staff in Canada? Not particularly, said Chan.
“Alcatel is a huge, international conglomerate. The team that we’ve been dealing with has international support all over the globe. The decision in terms of how Alcatel structures its forces, it’s Alcatel’s decision. That doesn’t factor into our decision whatsoever.”
He added that Telus Mobility chose Alcatel’s equipment over other vendors’ wares because it proved reliable and cost-effective.
Telus Mobility, however, has also faced trouble recently, tied as it is to beleaguered Telus. That communication company faced numerous customer complaints about quality of service in 2003, as well as fires and floods that impacted both its wireline and wireless operations in B.C.
Telus is trying to make up for those past problems. Its Web site features an apologetic letter from company CEO Darren Entwistle. “Recently, some aspects of our service have not been at the levels you deserve,” he writes to customers. Recently the company said its service levels are back up to par.
Chan said Telus Mobility’s move to microwave technology could be viewed as furthering the company’s commitment to quality. “The focus is not just on cost effectiveness. It’s also a way of enhancing the service.”
According to Lawrence Surtees, a telecom analyst at IDC Canada Ltd. in Toronto, users shouldn’t notice a difference in service quality when Telus Mobility turns on the microwave equipment. Nor would it make much difference to the carrier if Alcatel laid off a couple-hundred people in Canada. For a global-sized firm like Alcatel, the job cuts are “not even a ripple,” and wouldn’t sway a carrier’s decision to purchase equipment.
What matters, Surtees said, is that Alcatel provides the right amount of support. Although microwave seems easy to work with, it’s actually relatively complex.
Radio frequency (RF) technologies like microwave require line-of-site configuration. Engineers must consider aspects such as weather patterns, topography and atmospheric vagaries. “Installing RF is a different world,” compared to wireline, Surtees said. “It’s much more complicated.”
Still, microwave is also more cost effective. Surtees said $0.80 of every dollar spent laying fibre goes towards digging underground passages to put the cables in. Microwave makes that cost moot.