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Balancing the price of network components with total cost of ownership

Posted by Krista Tysco
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Balancing the price of network components against the lifetime cost is an ongoing challenge for broadband service providers as they strive to consistently deliver high-quality service that meets customers’ expectations.

While it’s vital to manage the level of capital cost for components, the use of cheaper or sub-standard materials is directly linked to poorer performance profiles which in turn can lead to a higher frequency of service calls, reduced customer satisfaction and the inevitable issue of customer churn.

There is a variety of criteria to consider when purchasing broadband components, however the fundamental mechanism of which to gauge your purchasing decision is in analyzing the initial price versus the Total Cost of Ownership (TCO).

After all, if your initial capital outlay is less, but you find your products or installations are subject to frequent repairs, replacement or repeat servicing, any initial cost savings can soon become irrelevant.

So what is the best way to ensure you’re able to be responsive to the increasing consumer demand for higher speed and better quality, while at the same time keeping firm control of operational costs?

In this blog post, we explore two factors that can play significant roles in enabling broadband service providers to determine the value of a higher initial cost.

1) Quality network components

Cables and connectors can often be viewed as commodity items, where a product from one company is compared on equal standing to another. Components however, act as the framework for which your service can stand or fall.

Cutbacks in regulations, assessment and enforcement also mean not all components are created equally, which can have a profound effect on a service providers' installation and operational costs over time.

Research suggests that one of the leading causes of service calls is not only due to improper installation of coaxial cable and connectors or loose connectors, but to sub-standard components that impact electrical and mechanical performance.

From the provider’s perspective, investing in higher-quality connectors means simpler, faster installations - and more of them. For the consumer, better connectors means better, faster service.

Some key questions to ask when assessing the quality of materials could include: Have the components been rigorously tested to industry standards? Is the manufacturer committed to continual testing? And can they provide examples of real-world performance?

While factory acceptance tests or laboratory results can tell one part of the story, field-test reports, which can demonstrate a product’s effectiveness in real-world situations, will provide more compelling evidence.  

2) The cost of service calls

Another element to consider is the quantifiable cost of repeat service calls. One of the most significant installation issues for service providers is the “last mile” - the connection from the utility pole to the customer premise equipment (CPE) - where there are multiple possibilities for loose connections.

At an average cost of $75 a truck roll, service calls can easily add up to millions of dollars over the course of a year, which quickly justifies spending a little more on quality components to begin with. High numbers of repeat service calls within 30 days can also lead to customer churn.

Proper training of installers can also contribute to the total cost of ownership in ensuring that you're employing a highly-skilled workforce that is familiar with all the latest installation techniques, products and tools.

A commitment to research and development

While profit and maintaining the edge on your competitors is essential in order to ensure a sustainable and enduring business, it’s equally important to seek out products and partnerships that will consistently provide high quality and value.

A final question to consider is also how invested is your prospective (or existing) supplier in the broadband industry as a whole?

Seeking out a company with a rich history of technical expertise and technological research, is conscious of the market as a whole, and consistently strives to release innovative products will provide invaluable reassurance when you're considering a partnership.

broadband network components buying guide

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