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The Unsustainable Power

Costs Behind One of the
Oldest Public Utilities
The Unsustainable Power Costs Behind One of the Oldest Public Utilities
Aging Telephone Systems Create Crushing
Power and Environmental Costs
The power consumption and cooling costs of one of
the oldest public utilities in the world - the public
switched telephone network (PSTN) – are skyrock-
eting. Better known as plain old telephone service
(POTS), the PSTN is used by 60 percent of the residen-
tial population and almost all US businesses.
Costs are mounting against this aging infrastructure, which now
causes an estimated 57 percent of network failures. In the US,
more than 35,000 aging “central offices” power the PSTN.
These legacy telecom centers house endless racks of equipment
and aging switches that plow through 12 billion kWh (kilowatt)
hours of power every year, which compares roughly to the power
consumption of 1 million homes annually. The CO2 emissions pro-
duced equal those of more than two million cars. In fact, central
offices, which can make up as much as half of the top telecom
operators’ real estate footprint, require more energy per square
foot than all other commercial buildings. In the last decade, these
power costs have tripled.
Globally, the numbers are even more staggering. With an annual
power bill of $63 billion for 350 billion kWh, communications
networks consume the capacity of approximately thirty power
plants. Telecom network power consumption equals 270 billion
kWh of this figure. The United States consumes approximately 10
percent of this, equaling 27 billion kWh or the amount of energy
it takes to power Miami-Dade County annually.
With businesses, rural communities and emergency responders
still heavily reliant upon the PSTN, a complete shutdown of this
public utility is a challenging scenario. Migrating the PSTN to
an all Internet ProtocoI (IP) infrastructure is viewed by most as a
viable, scalable solution. While a serious cost proposition, an
all IP-based network significantly reduces the amount of network
equipment that is required, which in turn significantly lowers the
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operating expenditures (OPEX) to power the network. From a
consumer perspective, IP networks also provide feature-rich voice
and video services, which are increasingly the norm.
By migrating central offices to IP, the approximately 70 percent of
energy costs eliminated equate to a reduction of 8.4 billion kWh
– the equivalent of burning 3.4 million tons of coal – and $1.3
billion in power savings annually in the US alone. Additional
savings include reducing real estate by up to 85 percent, water
for cooling by approximately 70 percent – which equates to 16.8
billion gallons of water a year or two times the amount of bottled
water consumed in the US each year. It also reduces CO2 emis-
sions by an estimated 40 percent – the equivalent of removing
almost one million automobiles from the road.
A Tale of Two Centuries
Shutting Down the Aging Telephone Network, Transi-
tioning to IP
Grant Seiffert, President of the Telecommunications Industry
Association, the leading advocate in Washington, D.C. for the in-
formation and communications technology (ICT) industry believes
that time is running out for the PSTN.
“The race is on to implement viable
solutions that transition the PSTN to IP as
the clock is ticking on infrastructure far
surpassing its 25-year life expectancy and
costing operators millions of dollars to
operate in energy,”
he said. “But we are talking about rebuilding something that
took one hundred years to build, making it a daunting task for
individual operators, governmental bodies and the collective
industry as a whole.”
The Unsustainable Power Costs Behind One of the Oldest Public Utilities

The Upside: Reducing Power to Pay for an IP Future

The FCC and a Growing Industry Coalition
The Federal Communications Commission (FCC) has made IP transformation one of its top priorities with new FCC Chairman Tom Wheeler
spearheading initiatives and network trials that will expedite the

$63 GDP
transformation of legacy networks to IP. Global

“This is what I have called the Fourth Network Revolution, and Power Bill
it is a good thing,” said Mr. Wheeler. “History has shown for ICT
that new networks catalyze innovation, investment, ideas
and ingenuity. However, the way forward is to encourage
BILLION industry
of Luxemburg

technological change while preserving the attributes of network

services that customers have come to expect.”

A transformed network provides not only the services consumers and businesses are accustomed to receiving now, but also provides all the
features and services that come with IP-based technology.

Over the last twenty years, real time communications has exploded and continues to grow. Consumers are connecting with more modalities
to choose from, including voice, instant messaging, SMS and over-the-top services like Skype. Mobile and fixed experiences are blending,
with the growth of hot spots and WiFi, while bundled services continue to fuel growth with triple and quadruple plays.

While the benefits are clear, modernization requires significant upfront expenditure and carriers face a quandary over investing in new
advanced services or investing to preserve the services already in place. This competition for capital and financing almost always favors the
new services placing the operators in a difficult situation for financing the PSTN migration.

GENBAND, a supplier of the technology powering the world’s largest telecommunications networks, uniquely understands this
predicament, having supported hundreds of operators worldwide with network IP transformation projects. In 2010, GENBAND acquired
the sizable assets from Nortel, which included both the software, IP-based switches of the future and the hardware powering the vast
majority of the PSTN.

Collaborating with the FCC, similar policy influencers, partners and customers, GENBAND is part of a larger consortium that is focused on
PSTN phase-out options and approaches for supporting network modernization.

GENBAND has supported a range of large carriers worldwide, transitioning portions of their networks to IP. One major carrier achieved
approximately 90% energy savings while reducing real estate requirements by 97% on a particular project. While this project represented
only a small part of the carriers’ ongoing initiatives to transform nationwide networks, it is also a key part of sustainability programs.

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The Unsustainable Power Costs Behind One of the Oldest Public Utilities

Industry Collaboration and New Creative

Approaches to Network Transformation
To address the funding issue GENBAND has partnered with
TelEfficient to finance network transformation to IP on the back
of energy savings and without upfront capital investments.
TelEfficient, a company specializing in capital project management
of network transformation projects, has developed a network of
domestic and international lenders who provide funding through
TelEfficient’s energy savings-based financial tools.

“You can’t solve this problem without solving the financing arm,”
said David Walsh, CEO of GENBAND. “By partnering with TelEf-
ficient, we are able to offer a real solution for service providers
who are anxious to upgrade their networks and offer the latest
communications services to their customers. It is like cash for clunk-
ers, except they drive off the lot in a highly functional new vehicle
without any down-payment.

The network upgrade is paid for on the
back of reduced energy and other costs—
taking the risk and capital requirements
out of network transformation and
dramatically greening the telecom
provider’s equipment along the way.”
Jennifer Pigg, Vice President with the Yankee Group, believes
the transformation of the PSTN to IP is one of the few instances
where there is a bottom-line business case for sustainability.
“After talking with countless communications providers about their
network migration plans, among the most significant barriers to
IP transformation are competition for capital and financing,” said
Ms. Pigg, who has spent several years researching the benefits
and challenges of network transformation. “The GENBAND
– TelEfficient approach is unique in introducing a financing
component for providers who are looking for an accelerated but
practical path forward.”
Freeing Central Office Real Estate for Data
Centers and Reducing Cooling Costs
Another significant benefit of PSTN migration is real estate sav-
ings. For every central office that is migrated to IP, up to 10,000
square feet of space can freed up. This equates to 300 million
square feet of freed space in the US alone – the equivalent of two-
thirds of all available commercial office space in New York City.
Additionally, by transitioning their networks to IP, service providers
can recycle or repurpose their central office space to high-demand
data centers, which allow for advanced capabilities such as web
hosting, cloud computing, IPTV and colocation services.
Triggered by increased mobile and smartphone adoption, com-
munications providers are in the midst of building out their data
centers to accommodate the cloud and data “explosion.” As such,
they are being forced to expand the physical and virtual elements
of these data centers. There is approximately 90 million square
feet of new data center real estate capacity required in the US
through 2017, just to keep pace with the new communications
and IT demands of the industry.

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The Unsustainable Power Costs Behind One of the Oldest Public Utilities

But data centers are also energy hogs. Between 2011 and 2012 alone, the power required by all the world’s data centers rose by 63
percent (from 24GW to 38GW), and the trend has only continued.

For every dollar of spending on energy to power data centers and central offices, another
dollar is spent to cool them.
Partnering with cooling technology pioneer Inertech, which has transformed the physical and costly layer of cooling data centers and
central offices through breakthrough technology, GENBAND has focused on building an IP transformation ecosystem that doesn’t
replace one aging energy drain with a more modern energy sink hole. A key priority is to implement power-saving IP technology, while
simultaneously transforming the cooling costs for these modernized data centers.

TELUS, a national telecommuni-cations company in Canada, has worked closely with

Inertech to create one of the world’s first smart, ultra-green data centers, which uses
around 80 percent less power for cooling and over 80 percent less water than a
conventional data center.
“The TELUS vision was to create a sustainable data center based on four key principals – efficiency, scalability, reliability and security,” said
Jakob Carnemark, Chief Executive Officer at Aligned Energy and Inertech. “Leveraging Inertech’s proprietary cooling technology, we were
able to help TELUS realize their vision along with significant cost savings from reduced power consumption.”

With FCC PSTN phase-out trials now initiated, including AT&T’s projects in West Delray Beach and Carbon Hill, Alabama, the industry’s
PSTN sunset is now formally underway. However, such a broad and fundamental transition will take time and demand patience. Residential
and business customers alike still depend on the PSTN for vital services daily. But with costs mounting against this aging infrastructure and
new Internet-based features and functionality emerging daily, operators and consumers alike understand the time for a new network has
finally arrived.

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