This article highlights key insights from a recent CSP-exclusive virtual roundtable, exploring how service providers can futureproof networks to enhance sustainability, control costs, and boost revenue.
On November 20, STL Partners, in collaboration with Cisco, hosted a virtual roundtable exclusively for CSPs, focusing on driving collective economic and sustainability success. The workshop featured engaging content presentations and an interactive breakout activity. Speakers for the presentations included Bram van der Zwet, Lead Architect for Networks & Infrastructure at Swisscom; Gianluca Calabretta, IP and Optical Sales Specialist at Cisco; and Philip Laidler, Managing Director of Consulting at STL Partners. This article highlights key takeaways from the event, including insights from the breakout discussions. The session was structured into two parts: a 30-minute plenary presentation followed by a 30-minute group breakout activity.
Presentations summary
The presentations focused on how service providers can achieve sustainability and business objectives through network innovation. STL’s section highlighted the challenges operators face in aligning these goals, drawing lessons from hyperscalers that prioritised AI-driven revenue opportunities at the cost of their sustainability goals and consequently reputation. It also outlined key technology actions operators can take to achieve step changes in both sustainability and economics. Gianluca illustrated these strategies in action with the example of Cisco’s Routed Optical Networking (RON) solution and showcasing the significant cost and sustainability savings across various use cases. Bram concluded by taking the audience through Swisscom’s transformation journey through a Q&A with Philip. Bram shared how what started-out as network convergence exercise became a more fundamental transformation in Swisscom’s operating model, successfully achieving both economic and sustainability outcomes through its partnership with Cisco. The slides, including Figure 1, and the recording of the presentation can be accessed here (password: 1120Webinar).
Figure 1: The challenges with aligning economic and sustainability outcomes
Source: STL Partners
Breakout activity summary
The breakout session aimed to explore strategies for achieving both economic prosperity and sustainable growth. Attendees were divided into four groups, two assigned each of two themes: (1) Sustainable and Economic alignment OR (2) Exploring Technology Use Cases.
Breakout theme 1 – Sustainable and economic alignment
The objective for the two groups focusing on this theme was to identify the challenges of simultaneously achieving sustainability and economic growth, and to explore innovating strategies for overcoming these challenges.
The breakout groups identified three challenges in aligning sustainability and profitability:
1. Creating a compelling business case: Telcos often struggle to incorporate non-financial benefits, such as environmental and social impacts, into Total Cost of Ownership (TCO) calculations. While metrics like energy savings are quantifiable, factors like emissions reduction or social responsibility are more abstract and often remain unaccounted for. The absence of standardised frameworks for incorporating these factors into design, deployment and operating decisions make it harder for operators (indeed all enterprises) to gain internal approvals and align stakeholders. As such, it can be complicated to justify transformative sustainability projects.
2. Forced obsolescence: Investing in upgrades that offer only incremental performance improvements risk being perceived as forms of forced obsolescence. This contributes significantly to a continuous contribituion to Scope 3 emissions through the embedded carbon of new hardware without any substantive reduction. There is therefore a preference for more innovative, system-wide overhauls and the investment in transformative technologies that can deliver sustained environmental benefits. Clearly these must also bring economic benefits.
3. Pressure from customers around their scope 3 commitments: With new EU regulations pushing sustainability reporting to the forefront, telcos are under growing pressure to assist (enterprise) customers in managing their own Scope 3 carbon emissions. This includes providing granular transparency into the carbon impact of services delivered over their networks. What was once a “value-added” offering is now becoming a non-negotiable requirement in RFPs and business negotiations. Customers not only demand emissions data but also expect proactive steps from telcos to align their services with broader sustainability goals.
To address these challenges, the groups identified three innovative solutions:
1. Pursuing ‘leap-frog’ transformation of operating model and supporting technologies. Participants agreed on the need to move away from incremental upgrades and embrace radical, transformative solutions that over-haul traditional business models. Vendors must prioritise durable, sustainable designs that reduce embedded carbon while delivering compelling ROI for customers. This requires a mindset shift from short-term sales cycles to long-term partnerships that support both economic and environmental goals. Participants also stressed the importance of extending equipment lifespans, offering refurbished units, and standardising technology to minimise waste and improve interoperability across networks.
2. Strengthening vendor collaboration: Telcos emphasised the importance of engaging with vendors through structured, multi-layered governance. Regular sessions with suppliers can be used to evaluate carbon footprints, track deviations, and co-develop solutions to meet sustainability objectives. Designing networks with sustainability in mind – for instance, using energy-efficient servers or coherent pluggable optical modules – can yield both cost savings and reduced emissions.
3. Carbon calculator for customers: A prominent solution discussed was the development of carbon calculators. These tools provide customers with transparency into the carbon impact of the services they use. By offering such visibility, companies can empower customers to make informed decisions while encouraging preference for sustainable networks. By offering such tools for free, telcos not only enhance customer trust but also differentiate themselves in a competitive market.
Breakout theme 2 – Exploring technology use cases
The goal for the two groups in this theme was to identify technology use cases that effectively address key challenges faced by operators, driving both economic and sustainability benefits.
The breakout groups identified three problems affecting sustainability and profitability for operators and their customers:
1. Measuring the carbon footprint of the network: Telecom operators face uncertainty in measuring and establishing a baseline for carbon emissions across multi-vendor networks, a crucial step in managing device lifecycles and planning decarbonisation strategies. This challenge is especially relevant for Scope 3 emissions, which represent the largest source of emissions for operators. Without effective measurement and baselining tools in place, tracking device lifecycle emissions becomes difficult, hindering progress toward net-zero goals and increasing the overall carbon footprint. From a financial perspective, this uncertainty makes it challenging for operators to meet regulatory requirements and attract sustainability-conscious customers, ultimately risking market share.
2. Rising energy demand from AI and traffic growth: The adoption of AI and growing traffic volumes are driving up energy demand, with the energy-intensive nature of AI potentially exacerbating carbon footprints if not addressed by energy-efficient technologies. Without proper mitigation, higher energy consumption leads to increased operational costs, particularly as energy prices continue to rise.
3. Balancing legacy evolution with modernisation: Operators face the dilemma of choice in either deciding to evolve legacy networks incrementally or to build entirely new ones. Budget constraints, integration complexity, and an inability to replace legacy assets quickly often force operators into a hybrid approach, where outdated equipment must coexist with new technologies. This challenge is compounded by organisational resistance, diverse vendor ecosystems, and the urgency of scaling to meet exponential data growth, which adds continuous financial and operational strain.
To overcome these problems, the groups identified three technology use cases that achieve economic and sustainable outcomes:
1. AI-powered monitoring in networks: Operators can optimise energy consumption in networks by leveraging AI-powered monitoring and automation. AI-driven management platforms for network nodes, combined with smart grid solutions, can significantly reduce energy usage in high-demand areas. This not only lowers operational energy costs but also enables traffic growth without a proportional increase in energy expenditure, supporting both economic efficiency and sustainability.
2. Centralised data orchestration and automation: Consolidation of data across multi-vendor systems into a single orchestration stack can enable more efficient resource allocation and reduces redundancies. Using this unified data, centralised automation tools can identify power inefficicincies, optimise equipment usage during low-demand periods, and integrate seamlessly with existing systems. In turn, this supports both sustainability and cost efficiency (enhancing profitability), as it minimises resource waste and improves reliability without requiring complete overhauls of existing infrastructure.
3. Interchangeable upgrades with modular network design: In adopting a modular network design, operators can enable interchangeable component upgrades of infrastructure. By using network abstraction layers and virtualised network functions, operators can avoid disruptive ‘rip and replace’ strategies, instead integrating new capabilities into existing frameworks (and easily re-using replaced components elsewhere in the network). This approach aligns spending (and budgetary constraints) with capacity growth needs – ensuring budget predictability while supporting sustainability goals in reducing e-waste from legacy equipment decomissioning
Next steps for operators
As the telecoms industry transitions from early sustainability initiatives to more comprehensive strategies, achieving the dual objective of sustainability and business performance demands better decision-making. STL recommends three key technology-driven actions that can deliver economic and environmental benefits while addressing the challenges identified during the virtual event’s breakout activity.
1. Don’t increment, re-architect: Upgrading network resources with the latest version is incremental. If vendors end support for legacy, this can be seen by operators as forced obsolescence (poor sustainability and economics). More transformative consolidation of service networks and network layers can radically reduce costs, emissions, and e-waste.
2. Modular design is sustainable design: Modular design allows operators to extend the lifespan of network infrastructure while reducing embedded carbon and e-waste. By enabling component-level upgrades instead of replacing entire units, this approach reduces forced obsolescence by reducing the need for complete equipment renewals and Scope 3 emissions tied to embedded carbon. It also speaks to balancing legacy evolution with modernisation, as modularity allows seamless integration of new components into legacy systems, enabling incremental upgrades without full overhauls. Furthermore, the ability to quantify emissions reductions from longer hardware lifecycles contributes to creating a compelling business case by providing clear environmental and economic advantages that resonate with stakeholders.
3. Automate and optimise for the long-haul: Automation and AI-driven optimisation can significantly enhance network performance, reducing both operational costs and emissions. Features like real-time scaling and automated energy-saving modes address rising traffic growth from AI by enabling dynamic management of resources to align with traffic demand. Additionally, by enabling more transparent reporting and improved energy performance, automation also helps operators meet pressure from customers around their Scope 3 commitments, supporting enterprise clients in managing and reducing their emissions. Finally, these innovations reinforce creating a compelling business case by showcasing how investments in AI and automation yield both measurable financial returns and sustainability outcomes.
Questions and Answers
This section outlines the answers to the questions received from attendees during the CSP exclusive virtual roundtable.
How are you currently achieving capex savings for customers?
Response from Cisco: By implementing coherent pluggable optics directly into the router, the customer can reduce CAPEX spent on transponders. This leads to a decrease in related costs such as transponder shelves, patch cabling, and HVAC systems that support them. Essentially, the customer needs to purchase fewer components, and the systems they do buy have lower ‘life support’ requirements compared to older equipment.
Find out more about STL’s expertise in sustainability within the telecoms industry at https://stlpartners.com/telecoms-sustainability/
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