With energy prices spiralling out of control and the explosion in mobile data consumption, telcos must get smarter about how they optimize their network traffic. Stephanie Huf explains
It may be industries like aviation that understandably won a reputation for being the most gas-guzzling out there – one of the worst offenders, accounting for 2.1 percent of total emissions worldwide – but not that far behind is the telecoms sector, representing an astonishing 1.6 percent of global emissions. Clearly, there’s much work to be done to make our industry more sustainable. But with the shaky macroeconomic outlook and spiraling energy costs, telcos are under tremendous pressure to balance their books more sustainably, too, as data usage soars.
In 2022, the fluctuating cost of wholesale energy brought a renewed focus to the whole sustainability issue. Some telcos were smart around hedging their energy costs, which did help to mitigate the problem. However, our industry is energy-hungry, and these moves can only go so far. Some telcos have been forced to raise their bills to offset the spiraling data costs as well as to cover investment in more sustainable infrastructure – with some of them having raised bills by nearly 15% in a recent re-pricing push, never a popular move with consumers, and especially given the wider economic climate.
Until recently, most operators have focused on sourcing renewable energy to meet zero-emission targets and looked towards efficiencies from 5G at some nondescript time in the future to lower overall mobile network energy consumption.
But geopolitical events such as the war in Ukraine have caused the energy cost to spike so dramatically that commercial and operational activity has been impacted, and 5G savings in the future won’t save the day today. Meanwhile, that same shaky macroeconomic outlook has heaped additional financial pressures on end users.
While 5G was designed to be more energy efficient than its predecessors – and it is, with cell sites that are able to put themself to ‘sleep’ when network traffic is low – the volume of data traffic that 5G can drive will inevitably see higher spikes in data consumption. This will especially be the case around consumer activity like ultra HD video streaming, something that was barely possible with the speeds of 4G before it.
So, concerns around energy and renewables are no longer some abstract goal to strive towards but an urgent commercial imperative and a question of business continuity. Even now, early in 2023, wholesale energy prices are as much as two to four times higher than in 2021, drastically changing operators’ economic landscape. The extensive price fluctuation puts profitability under significant pressure, and operators must square up to the challenge.
It seems that high energy prices may be another of those ‘new normals’ we keep hearing about, and so governments and regulators alike have asked for innovative, voluntary solutions from businesses to help solve challenges around energy efficiency. In short, gone are the days of simply being able to set aside a pot of money to cope with these fluctuating energy prices – the only way for businesses to bring costs down is by generating new tools and solutions which are designed to bring energy usage down without compromising on the end-user experience.
With some irony, though, that end-user experience is behind the tremendous energy costs. Today, users are accustomed to high-resolution video whenever they want – and any lags in service are considered unacceptable.
But moving data consumes a lot of energy: according to the GSMA, every single gigabyte transmitted uses around 0.17kWh of electricity, depending on network conditions. Some projections for data traffic suggest an average of 46 GB per smartphone per month by 2028 – and 85% of the global population owns a smartphone, with the rough figure of 6.84 billion smartphones in active use – and that is an awful lot of data.
So the pressing question is: how can operators, caught between needing to deliver this high-speed data transfer while reducing costs, get that balance right?
Video streaming accounts for 60-70% of total mobile data traffic, and that doesn’t come cheap. But one possible solution lies in the fact that the default method for video streaming is to opt for high-definition or ultra-high-definition streams.
Considering that most streaming is performed on smartphones, is this level of quality necessary? High-definition, 1080p videos can require four times as much data as standard definition, so why are YouTube and Meta (Facebook) automatically delivering them at the highest possible quality that a user’s bandwidth will allow? Is HD or UHD video really required in all instances – and would users even notice if the videos in their social feeds were standard definition instead of HD?
Our research says the answer is that users don’t even notice. In fact, an astonishing 70% of users can’t even tell the difference between SD and high-resolution video when viewed on smartphones – at all. If, for a casual TikTok user, there’s no perceived difference in watching their cat videos in HD or SD, then why is the default option to stream in the best possible resolution? By defaulting to these high-resolution options, we are essentially throwing bits and bytes down the drain.
In fact, the Carbon Trust recently estimated that the European average is 55g of CO2e for every hour of streaming – the equivalent of driving 300 meters or so in a car.
The content giants like Netflix and Amazon account for more than half of internet traffic, and an astounding majority of daily usage, at 80%, is accounted for by just a few companies, like Meta, Netflix, YouTube, and gaming company Activision Blizzard. With this demand for video only set to increase, there are growing debates around who exactly should bear the cost of it all. Netflix, for instance, has committed to net zero – but only for its own corporate operations and film and TV production.
This issue was raised in France recently when the finance ministry debated whether Netflix should be forced to drop its resolutions to preserve bandwidth. At peak times, they argued, 80% of fixed and mobile data traffic comes from large content providers like Netflix, YouTube, Disney+, Amazon Prime, and Apple TV. Reducing the volume of data would have a preferable impact on mobile networks and reduce electricity consumption. During the Covid-19 pandemic, arrangements were made with content providers explicitly to turn down this energy usage.
But as the debate over who should pay for what data flares, operators remain the ones shouldering that burden for now. Equally unwilling and unable to pass this cost on to customers, video optimization is becoming necessary. Data consumption has ballooned from 2011, when the average household used just 17GB of data each month, to 429GB just ten years later – and this hunger for video content is projected to grow ten-fold in the years ahead, let alone the next decade.
In 2023, telcos will have to continue on their efficiency and sustainability drives, but they’ll also have to introduce more strident business continuity planning, accounting for worst-case scenario events like temporary electricity disruption. Mobile telcos will have to more closely interrogate the role partnerships they have with the large content providers. In uncertain times and difficult economies, there has traditionally been a sense of cooperation, but this may begin to shift away from singular events to more organized traffic management capabilities.
Stephanie Huf is SVP, Head of ESG, and Chief Marketing Officer at Enea