The trick is keeping post-acquisition costs down

The costs associated with embedded multimedia terminal adapters only begin with the purchase price; the trick to making EMTAs truly cost-effective is keeping those post-acquisition costs as low as possible. What if it was possible to reduce customer premises issues by one-fifth?

Total Cost of Ownership (TCO) takes into consideration all of the costs of operating an EMTA over its entire useful life. While the lowest acquisition cost is important in controlling initial capital expenditures, it is relatively small compared with the TCO. The cost of installing and maintaining the device over the life of the product represents the largest opportunity for cost reduction.

A small fraction in cost reduction, or cost avoidance, in the area of installation and maintenance can easily translate into millions of dollars of annual savings, even for the most modest of deployments.

Figure 1 illustrates a breakdown of the EMTA TCO into three categories of cost. The lowest and simplest cost is the direct acquisition cost of the device, which is a well-known quantity. Provisioning and installation costs may vary significantly depending on the accuracy of provisioning and the success of the initial installation.

Inaccurate provisioning will result in customer trouble calls that put additional load on customer care centers. An unsuccessful initial installation may require a second or third truck roll at significant additional cost.

Another variable cost includes annual maintenance and operating costs. These depend on the stability and reliability of the product, mean time between failure (MTBF) and ease of troubleshooting to reduce mean time to repair.

TCO cost elements and Cumulative costs

To get an appreciation for the TCO, it is necessary to observe all of these cost categories over time. Figure 2 shows an example of the individual and cumulative costs over the life of the product.

Assuming a 2 percent churn per month, the average service duration for an EMTA at any one location is about four years. That means, on average, an EMTA will be installed twice in its lifetime. During this period, the individual costs include the EMTA acquisition cost, the refurbishing cost, two installation costs and eight annual maintenance/operation costs. (An EMTA is designed to last longer than eight years. Its actual lifetime depends on several factors, including operating environment, subscriberinduced damage and obsolescence. In this example, we assumed eight years to simplify the illustration.)

The two largest cost reduction or cost avoidance opportunities are with provisioning/installation and annual maintenance/operations. So how much effort should one spend on the two largest opportunities, and what is the payback?

Well, even a modest 2 percent reduction in costs across an installed base of 500,000 subscribers can result in savings of $1.5 million or more every year.

The first step in reducing provisioning/installation and maintenance costs is to understand all of the contributors to excessive costs and then create a corrective action program to eliminate or reduce them.

The most effective way is to analyze historical customer trouble report (CTR) data. CTRs can be separated into two categories: those generated as a result of the activation of a new customer, which encompasses the provisioning and installation process, and those that come from the mature installed base.

Field data has shown that new installations typically generate a higher percentage of CTRs due to issues such as inside wiring, provisioning errors and customer education. For example, 4,000 new installs may generate the same number of CTRs as an installed base of 10,000 due to the vast difference in percent contribution.

So how does one separate the CTRs into these two categories? The simplest way is to perform a time domain analysis of the relationship between the trouble report dates and the installation dates.

Figure 3 shows a typical example of the monthly CTR arrival as a function of days after initial installation. The red curve indicates that 30 percent of the CTRs arrived within four days of installation. Another 20 percent arrived between day five and day 25, for a total of 50 percent of all of the CTRs for the month.

The curve tapers off after 25 days, with the remaining 50 percent contribution from the mature installed base.

CTR arrival profile

With the CTR arrival profile separated into three segments in time, a systematic Pareto analysis provides unique insight into the types of reported problems for each segment (New Installs, Recent Installs and Mature Installed Base) and actions taken to resolve them. It is important to have this level of granularity because the reported problems will likely be different for each segment, and thus will require different corrective actions.

The next level of analysis takes the Pareto of reported problems and breaks each problem down to the resolution actions taken. This is a key part of the analysis because it provides a complete picture that allows determination of the cost of each problem. For example, an inside wiring or RF drop issue requires a truck roll at very high cost, whereas a provisioning problem requires a much lower cost to resolve. This also provides information for root cause and corrective action planning. Many customer premises issues may be avoided by more comprehensive postinstallation validation procedures.

Advanced EMTAs have embedded diagnostics features that can identify installation-related issues. When integrated with a “Performance Assurance” system, a postinstallation “Health Check” can quickly uncover marginal inside wiring faults and RF levels. Left unresolved, these may later degrade into service-affecting issues that require a secondary truck roll to resolve.

To get a sense of the potential cost savings in this area, consider this example:

  • Customer trouble report rate: 3 percent per month
  • Percentage of CTR with inside wiring/RF-level issues: 50 percent
  • Installed base of EMTAs: 1 million
  • Cost of truck roll: $100
  • Cost per month: 0.03 x 0.50 x 1 million x 100 = $1.5 million ($18 million annually)
  • Potential savings by one-fifth reduction in secondary truck rolls: $1.5 million/5 = $300,000 per month ($3.6 million annually)

Misdiagnosis and inappropriate resolution actions can be a significant contributor to operational costs due to multiple truck rolls before the actual issue is finally resolved.

For example, marginal RF levels can cause an EMTA to intermittently lose communication with the CMTS. This intermittent nature may result in “No Trouble Found” service calls. In some instances, the technician may opt to just replace the unit rather than inconvenience the customer with in-depth troubleshooting. Unless the root of the problem is addressed, a repeat CTR and truck roll is imminent. There are several methods to determine the extent of this practice.

The most direct method is for the operator to screen/test all units in their warehouse before returning them to the vendor for in-warranty or out-of-warranty repair. Units taken out of service fall into two categories: those replaced during a service/trouble call and those removed due to service churn.

Those replaced during a service/trouble call should show a high rate of failure at this screen/test procedure since they were diagnosed as “bad” EMTAs. A low rate of failure would indicate that units are being misdiagnosed and replaced unnecessarily.

A data-intensive method requires the examination of historical CTR summary data for all EMTA replacements. For example, if a repeat CTR appears shortly after an EMTA replacement, this may be a good indication that the replacement was unnecessary because it did not resolve the problem and required a follow-up service call.

Another method is to correlate serial numbers from the CTR (tickets) with field return reports provided by the EMTA vendor. These reports typically include serial numbers and the mode of failure, whether it is No Problem Found (NPF), Customer Induced Damage (CID) or component failure.

The advent of indoor, battery-backed EMTAs has provided cable operators with a means to effectively and economically roll out voice services without costly HFC plant upgrades, which include power node sizing and the installation of power passing taps on the subscriber coax drop.

Battery status monitoring via telemetry from the EMTA notifies the operator of local power failure, low battery conditions or a missing battery, or when a battery is nearing its end of life. The latter is indicated by a "Replace Battery" log or alarm.

Batteries are a consumable product. Though the life of Li-ion batteries may last six to 10 years, there are early-life failures to contend with. MTBF for a two-cell Liion battery pack typically results in annualized failure rates around 0.4 percent.

As the six-year anniversary of the installed base rapidly approaches, the incidents of "Replace Battery" may accelerate into double digits when these batteries simply wear out. The impending challenge of battery replacement and proper disposal for millions of EMTAs can be a very costly one. To control these costs, operators need to consider an "automated fulfillment" strategy, where battery replacement is accomplished without dedicated truck rolls.

Such a program would include the following elements:

  • Intelligent surveillance/service assurance system that monitors battery status and collects "Replace Battery" telemetry
  • EMTAs with "Replace Battery" are correlated to create subscriber name and address report
  • Report is electronically sent to a battery fulfillment service

If the EMTA is customer-accessible, a new battery is shipped to the customer with simple directions on how to replace it. A return label is provided so that the box used to ship the new battery is used to return the old battery for proper disposal. If the EMTA is installed where it is not customer-accessible, new batteries are shipped to the operator "just in time." Specialized workforce and inventory management systems can schedule battery replacements while technicians are "in the area" to avoid dedicated truck rolls.

Battery replacement on an unprecedented scale is imminent over the next several years. With a well-thought-out strategy, operators can realize significant cost savings and minimize impact to normal day-to-day operations.

TCO goes well beyond the initial purchase price of an EMTA. Installation, provisioning and maintenance account for the majority of the cost over the lifetime of the product. These areas represent the largest opportunities for cost reduction. Systematic analysis of customer trouble reports can identify the key contributors of problems that cause expensive truck rolls. EMTA diagnostic features integrated with intelligent surveillance/assurance systems can help minimize post-installation-related issues that result in secondary and tertiary service calls. Intelligent surveillance/assurance systems with workforce management capabilities can help operators develop and implement a highly effective strategy to replace the aging population of EMTA batteries.

A modest cost reduction in any of these areas will translate into significant annual savings.