Taking Aim at the Sustainability Challenge Sitting on Top of the Cell-site Mast

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4Q 2021 | IN-6346

As climate change becomes a more pressing concern, mobile operators and equipment vendors are beginning to adjust their business models towards sustainability.

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Sustainability and Reducing Environmental Impact Front and Center


The topic of environment and sustainability has taken the front seat for the past two weeks with the 26th United Nations Climate Change Conference (COP26). This year, it is much more significant than ever with many climate change related events happening across the world. Based on calculations by Groupe Speciale Mobile Association (GSMA), the mobile industry estimates its carbon emissions to be around 220 million tons of carbon dioxide equivalent (Mt CO2e) per year. To rally the mobile industry, earlier this year GSMA released their report “Mobile Net Zero – State of the Industry on Climate Action” and called upon the mobile operators to target and reach net zero carbon emission by 2050.

Being one of the first sectors to surpass the 20% target for net zero target set by the United Nations, the mobile industry is no stranger to the topic of climate change. Operators accounting for more than 60% of industry revenues have committed to science-based targets. In addition, operators are one of the forerunners to leverage renewable energy sources for the electricity purchased above the market average. More recently, mobile operators are increasing leveraging artificial intelligence (AI) to further reduce energy consumption and thereby emissions. This is just another step taken to tackle climate change and protect our future.

Scope 3, the Elephant in the Room for Telecommunication Industry


Emissions are categorized into three “scopes” or categories. “Scope 1” covers the direct emissions from owned sources while “Scope 2” covers indirect emissions from the generation of electricity, heating, and cooling which mobile operators have purchased and/or consumed. In the case of the AI application above, it tackles Scope 2 emissions. Scope 1 and 2 make up about one-third of total emissions from the industry. The remaining two-third emissions come from Scope 3, which are indirect greenhouse gas emissions from a company’s value chain. Based on GSMA’s report, within Scope 3, capital goods, defined as the plant, property, and equipment, makes up almost 30% of emissions.

Clearly, mobile network operators have a significant investment in capital infrastructure. This includes the physical infrastructure, such as the mast to the equipment and the antenna and radio units for the base stations. Globally, it is estimated that there are about seven million cell sites where multiple base stations for different wireless technologies can be found at each. For one mobile operator, there can be an average of three to six antennas per cell site; imagine the sheer number of antennas globally. The mobile industry has traditionally been operating with a rip and replace policy towards antennas for every wireless generation, which contributes to emissions. To address environmental problems and to be a champion for sustainability, it is necessary for mobile operators to take Scope 3 more seriously. However, Scope 3 is also the most challenging for mobile operators to tackle. This is no surprise as these emissions lays outside of mobile operators’ direct locus of control.

ACT NOW is the Right Message, But the RIGHT BUSINESS MODEL is Crucial


While the message is clear, business remains business. There is a need for a feasible business model to allow sustainability initiatives to work. Answers are needed for questions such as, how can suppliers help reduce telecom operators’ Scope 3 emissions? How can mobile operators incentivize or work with suppliers? Upstream vendors and mobile operators now have a bigger role to play with the expanded focus on environment and sustainability.

In the upstream supply chain, it becomes necessary for vendors to investigate how sustainability can be achieved via recycling or reduction in material used and wasted. Alternatively, Research and Development efforts could be channeled to enable a higher level of circularity for the various equipment installed, be it the constituent parts or the whole. One recent example is Amphenol Antenna Solutions which recently launched their Integra program. The company has made their 4G antennas modular and introduced an element of flexibility. During a replacement of antennas, older antennas might still contain relevant components (e.g., the antenna arrays) that can still be used. This helps extend the lifespan of components and materials used in manufacturing an antenna while cutting emissions. Furthermore, vendors potentially could reduce their Bill of Materials (BoM) cost by using components and parts from existing equipment. Incorporating sustainability often also requires a change in the architecture of the supply chain, from global to local. Shorter delivery lead times and reduced freight cost are some of the benefits as vendors get closer to the markets which they serve. These can serve as a differentiation factor between vendors and bolstering one’s competitive edge. Yet, challenges still loom for vendors. For example, ensuring that performance is not compromised while keeping cost unaffected. Another challenge is when recycling equipment, supply chain and points of collection have to track emissions, too. There will be emissions coming from the transportation which needs to be minimized. Other challenges include ensuring the workers have the right skillset to implement recycling tasks as vendors expand their footprint into more countries.

Vendors cannot undertake these initiatives alone, as mobile operators play an important part in the equation. Mobile operators are the purchaser of vendors’ equipment and influence the strategic decisions of many vendors. Therefore, mobile operators have the ‘pull’ factor for innovation and can influence change in business models. Businesses can and should be responsible for the externalities created from their operations, but it is important to be realistic and know that competition, profit expectations, and underlying costs exist for any business. As such, mobile operators can build in sustainability and carbon emissions as part of their procurement framework. For example, a major operator group, Vodafone Group, has included a 20% weighting for environmental and social criteria in its equipment selection process for vendors. In addition, the Vodafone Group has launched the Asset Marketplace, a B2B solution, which aids in sustainability efforts by reselling or repurposing equipment, such as antennas. There are benefits for mobile operators to take into account Scope 3 emissions, such as reduced dependency and increased cost from the upstream supply chain. In addition, the reputation built could increase the trust factor for the mobile operator and raises consumer awareness about the environment. There are now mobile networks (e.g., Honest Mobile in UK) pledging to be carbon negative, signaling a changing set of expectations from consumers.

While it is not likely that the impact of these initiatives will be observed in the near term, we certainly hope to see a continued reduction in Scope 3 emissions in the future. This could be the right time to start a paradigm shift in the supply chain of telecommunication industry. Over time, these challenges will be overcome, and a viable business model will start to surface with a unique proposition of its own. We are at the start line of this shift, and it remains to be seen what innovative solutions and unique business models will surface in the future.