Optional or a must? Reevaluating your telco data center operations for greater energy efficiency

Optional or a must?


To say that digitalization and the Internet of Things (IOT) have affected the telecommunications (telco) industry is an understatement.

Consumer and business demands around more bandwidth, faster Internet speeds and unlimited data, in addition to Cloud computing and the growth of smart devices continue to challenge telco providers. So much so that many telcos increasingly continue to invest in and build their own data centers today. Which leads to a multitude of questions. Have telcos mastered the full potential of digitalization to make such moves? Or will increasing ownership of their own data centers enable them to do this? Do they have the right resources and technologies in place to run their own data center? And with such actions, what have telcos perhaps not considered when it comes to making more property investments for data storage and optimization? While telco companies’ ownership of data centers is not a new activity, what actions they take now and into the future to make their data center operations more efficient are considerations that must weigh top of mind. Let’s take a deeper look.

Understanding just how great the digital demand is             

Out of the 2.8 billion global social media users today, 91% of them access social from mobile devices.1 As a result of the increased use of smartphones, Over-the-Top (OTT) data service providers emerged offering free- or lower-cost voice, messaging, and video services to users via the internet, without the need to invest in traditional cable or satellite service. Think Skype, WhatsApp, Apple’s FaceTime or Google Hangouts. In fact, Facebook’s WhatsApp is one of the most used OTT tools, with more than 1 billion users in over 180 countries.2  (OTT apps such as Facebook Messenger, Google Hangouts and Snapchat have greater use than Whatsapp in the U.S.3)


And such OTT providers continue to proliferate the market today, placing increasing demand on traditional telco providers. Telco companies’ unlimited wireless data plans have enabled providers such as Netflix and Hulu to offer video streaming services. T-Mobile US Inc.’s John Legere announced free video streaming and increased high-speed tethering limits for its Unlimited plans in 2015.4 The company took that a step further a year later with its “Binge On” program in 2016, allowing unlimited video streaming for free for T-Mobile customers.5


As the demand for connectivity increases, the telco market is also testing the rollout of fifth generation *5G) mobile networks which would equal more speed, greater efficiency and less latency. While T-Mobile, AT&T and Verizon have each made their own preparations and investments for 5G, how early we will see rollout and implementation is still a question up for debate, with some industry reports touting 2020 as the earliest we will see 5G public use.


Such impacts have led to a mix of data center activities. For example, some telcos continue to invest in more data center footprint. Deutsche Telekom, parent company to T-Mobile US., is building its seventh data center—a 9,000 square meter colocation data center in Prague, set to open in 2018.6 According to The Stack, China Telecom is expanding its data center footprint in Hong Kong, and also adding three new point-of-presence (PoP) sites in North America to “strengthen the company’s network in North America, reduce latency, and speed content delivery and data transmission for customers.” The first site will be located in Hillsboro, Ore., the second in Aurora, Ill., and the third in Montreal, Quebec, Canada.7 Yet, others instead choose to partner with existing data center providers. Verizon Communications Inc, for example, is selling its 29 data centers—located across 24 sites in 15 metro areas—to Equinix for $3.6 billion.8

Factoring in data center energy considerations

As telcos continue to take different actions to streamline their businesses and expand beyond just voice and data providers to meet hosting, cloud, networking and power requirements, there are a number of aspects they may want to consider.


For one, greater data demands and expansion into such areas as described above means the need for a greater data center footprint and the right mix of data center technology—from proper heating, ventilation and air conditioning (HVAC) to fire suppression systems, building automation, power distribution and more. Such systems not only increase transparency and visibility in one’s data center but also can help ensure better data center cooling to maintain operational efficiency and prevent costly downtime.


Another consideration is with regards to business transition planning. To own and run a data center is a huge and expensive undertaking. It requires focus and resources away from the core business of what a telecommunications company may be focused on providing. To ensure that they are prepared for this reality, telcos need to ask themselves, ‘How will the balance between strategic and operational decision-making be affected? Is my service model and go-to-market approach changing enough to validate owning and running a data center? If so, what type of data center do I want to invest in? How much capital do I need? What should my data center redundancy plan look like? Do I have the right team to manage those redundant system components to ensure continuous operation? Should I own or should I co-locate with an existent data center provider instead? How will my competitor landscape change?’


When it comes to evaluating the competition, it is also important to understand the different types of data centers in the market today and which ones are most scalable. Taking this evaluation step can help target how your data center measures in the marketplace and what level of efficiency you want your data center to have.  For example, for a telco company to compete in the existent hyperscale data center market—i.e., think Amazon, Facebook and Google—telco companies would have to have just that—the ability to scale. Many of these hyperscale data centers already have the right server utilization and cooling equipment and processes implemented to garner the most energy efficiency. On the other end of the spectrum, smaller data centers account for 60% of all data center energy use and are often the most inefficient, according to the 2016 United States Data Center Energy Usage Report. An opportunity to gain better energy efficiency for telecommunication companies that own and operate their own data centers is perhaps in the edge data center space. As smart devices continue to evolve, more content generation and consumption will occur locally which means greater development of edge data centers to support telecommunication needs. This also means there has to be a change in how data centers consume energy and achieve greater efficiencies. The edge data center model may provide a “healthier balance”—between smaller and hyperscale data center models—to position telcos for digital and IoT growth.


Perhaps the last reminder for telco data centers when it comes to energy efficiency is that it’s not just consumers that are putting demand on telcos. While consumers make up a huge segment of a telco companies’ customer base, other clients such as those in the automotive, financial and commercial space are demanding more automation for greater transparency into their business, thus leading to greater data creation and heavier IT workloads. There are numerous way to improve energy efficiency in a data center to address such business demands. For example, managing cooling airflows, hot- and cold-aisle containment and managing data center hotspots with thermal optimization to improve airflow to servers. In fact, according to the Department of Energy, “data center infrastructure energy efficiency can be improved 20% to 40% by applying ‘best management’ energy-efficiency measures and strategies, typically with short returns on investment payback.”9  However, to ensure that a telco provider’s data center strategy is aligned with its current business goals, they may be best suited to work with a consultant or data center SME who can identify how an integrated data center management approach may help them get the most value from an infrastructure or data center technology investment plan.




1.       Hootsuite, “Digital in 2017 Global Overview,” Jan. 24, 2017

2.       Facebook  

3.       Statista, “Share of population in selected countries who are active WhatsApp users as of 4th quarter 2016,” 2017

4.       T-Mobile, “T-Mobile Goes Over the Top with Free Video Streaming,” Nov. 10, 2015

5.       T-Mobile, “Now, More Than 100 Services Stream Free with T-Mobile’s Binge On and Music Freedom,” April 5, 2016.

6.       Datacenter Dynamics, “T-Mobile is building a 9,000 sq m data center in Prague,” May 16, 2017

7.       The Stack, “China Telecom expands HK data centre footprint,” July 6, 2017

8.       Equinix Inc., “Equinix to Acquire Portfolio of 24 Data Center Sites from Verizon in $3.6 Billion Deal,” Dec. 6, 2016

9.       U.S. Department of Energy, Better Buildings Initiative.