TDM Network Operating Costs Rise, as Stranded Assets Grow

source: CenturyLink

With the caveat that carrier costs include lots of allocated expense that some would note is discretionary, CenturyLink makes the argument that operating costs per access line are climbing steadily, which is what one would expect for any network with growing stranded assets.

Simply, fixed costs are borne by a smaller number of customers over time. That does not necessarily mean that operating costs for each special access line are going up by the same amount, or at the same rate, but the principle should hold.

CenturyLink’ says its operating expense per access line increased by more than 50 percent from 2007 to 2015, from approximately $650 to nearly $1,000.

source: CenturyLink

CenturyLink’s ILEC operating expense per business data service (BDS) circuit also has increased, from $18,831 to $20,832, just from 2011 to 2015.

That should not come as a surprise. TDM service demand is falling, for all U.S. tier-one service providers in the "telco" segment.

source: Telco 2.0

For its part, AT&T has been reporting for some years distinctly different growth trajectories for “strategic business services” and legacy services based on time division multiplex.

Verizon has a bigger problem. Its business segment revenue is declining, period. In the second quarter of 2016, global enterprise revenue dipped 3.3 percent, year over year, for example.

The larger point is that business data services are a legacy service, delivered on a legacy network that will be completely decommissioned at some point in the not-too-distant future. As demand shifts to the next-generation networks, the stranded asset problem gets worse.

source: Telco 2.0