To reduce your company’s costs, you have to have a solid grasp of your industry’s expenses.

Telecom service providers are no exception.

But you need to know where to look. As Chief Marketing and Product Officer Cloud of Age Solutions, I focus on telecom expense management for next-generation service providers and carriers. Here are some lessons learned.

First, all expenses fall into two categories: Capital Expenditures (CapEx), which are major purchases that will be used in the future; and Operating Expenditures (OpEx) which represent day-to-day costs that are necessary to keep a business running. But within CapEx and OpEx, there are recurring cost drivers (“the usual suspects”).  These are consistently good targets for expense reduction.

Here are 10 of the biggest of these cost “buckets” – are these on your checklist?

  1. Spectrum/Government Licensing Fees (CapEx)
  2. Telecom and IT Hardware and Software (CapEx)
  3. Permissions for Creating the Relevant Infrastructure e.g. laying fiber cables, installing BTS, etc. (CapEx)
  4. Rentals (including office space as well as space for the installation of Base Transceiver Station or BTS (OpEx)
  5. Employee Salaries (OpEx)
  6. Marketing & Advertising (OpEx)
  7. Diesel Consumption Costs to keep Diesel Generators (DGs) Running per Circle (OpEx)
  8. Support Contracts for all Hardware Procured (OpEx)
  9. Interconnection and Access with International ISPs (OpEx)
  10. Rental of Infrastructure from Other Service Providers (OpEx)

A respected CFO I worked with always stated “he with the lowest cost wins.”  Notice, he did not say “lowest price.” The two are very different. Continually looking for ways to sustainably lower costs, eliminate waste and making processes more efficient is not a blind race to be “cheapest.”   Toyota, Intel and Nike are excellent non-telecom industry examples.  None are “low price” providers — but all of them embrace systematic cost reduction and have enjoyed above average profit margins in their respective industries. Lower costs provide flexibility. It not only gives companies the ability to be more price competitive, it also frees up resources to make strategic investments in marketing, sales and product that higher cost competitors can’t.  So while it is important to grow the top line, it is still very important to manage the bottom line.

Want more ideas for telecom expense reduction? Check out the Cloud Age Solutions resource page for podcasts, webinars, white papers, and more.