The previous trend had been to use the cheapest base stations. But in markets experiencing rapid mobile subscriber and traffic growth, employing solutions that provide the lowest total cost of ownership - without jeopardizing network quality - is the most effective way to implement a profitable expansion.

Financial modeling is frequently used in the evaluation and decision-making process of building a network, which represents the largest set of operator investments. TCO is not a business case in the sense of cash flows over time; rather, it is a method of cost comparison where the focus is on the financial dynamics of building networks in a variety of ways. When the issues at stake involve primarily costs and not revenues, TCO is the clearest metric to assess investment options.

Because GSM is a mature technology, one might think that the equipment has become a commodity. However, this is not the case, as new developments continue to improve its efficiency.

Both coverage and capacity expansion solution areas provide low TCO for operators extending coverage into new geographical territories and adding capacity in already covered areas. These offerings focus on the radio network, but in order to reduce the total cost of ownership, all parts of the network must be considered, including the core and transmission networks.

High-quality performance and scalable capacity are essential for achieving low TCO with cost-efficient coverage and mainstream high-quality products; the alternative is cutting costs at the risk of compromising functionality and quality in the radio network. The bottom line? Employing advanced radio solutions to minimize the number of radio sites will deliver far better savings than installing cheap radio base stations.

Ericsson has drawn up TCO guidelines for the telecom industry. Its portfolio includes effective tools for reducing TCO, such as, for GSM, TCC (transmitter coherent combining) and 4WRD (four-way receiver diversity); for WCDMA, Extended Range, as used by Telstra in Australia; MiniLink TN for backhaul transmission; and in the core network, layered architecture. 

Several case studies have been undertaken to evaluate how softswitch technology can be used to reduce core network opex. These studies, along with operational experience gained from commercial softswitch operations, indicate that core network opex can be reduced by up to 50 percent.

Radio engineer Christer Friberg summarizes Ericsson's position by saying: "Ericsson offers the holy grail in total cost of ownership. We give operators the keys they need to provide these mobile services to more subscribers."