The significance of product reliability is often underestimated when considering the cost of maintaining and operating customer premises equipment (CPE), including cable modems (CM), embedded multimedia terminal adapters (eMTA) and Gateways. Anytime a CPE or its associated external power supply/AC adapter fails, a dispatch or “truck roll” is required to replace it and restore service to the consumer. The cost of replacing failed devices each year can be staggering and is directly proportional to the reliability of the product.
Product reliability is measured by mean time between failure (MTBF). MTBF can be calculated from component reliability predictions or measured over time in a large field population. Calculated MTBF does not take into account design, manufacturing, quality control or deployment deficiencies. Only empirical data from a large field population over time can provide a true measure of product reliability.
Annual failure rate (AFR) is the inverse of MTBF (years) and represents the percentage of units that fail after being in service for one year.
- AFR of 1 percent means: 1 out of 100 units fails after a year of continuous service
- AFR of 0.5 percent means: 1 out of 200 units fail after a year of continuous service
- AFR of 0.25 percent means: 1 out of 400 units fail after a year of continuous service
Due to the large volume of CPE deployments, even small variations in AFR can make a monumental difference to the bottom line.
To illustrate this, consider the following examples:
Example 1: What is the difference in maintenance costs between an EMTA with an AFR of 1 percent versus 0.4 percent over a five-year period?
- Cost of customer service call: $20
- Cost of replacement EMTA*: $60 (discounted cost to account for units under warranty; assuming one-year warranty over five years, replacement cost is 4/5 of regular EMTA price)
- Cost of truck roll: $100. Cost of replacing a failed EMTA: 20 + 60 + 100 = $180
- AFR of 1 percent creates an annual cost of: $180 x 1 percent = $1.80 per EMTA
- AFR of 0.4 percent creates an annual cost of: $180 x 0.4 percent = $0.72 per EMTA
- The cost savings offered by the more reliable product is $1.08 per EMTA per year, or $5.40 over a five-year period
- The numbers are even more significant when the size of the population is considered:
- 1 million in service: $5.4 million
- 2 million in service: $10.8 million
Example 2: What is the maintenance cost of external power supplies on CPE?
External power supplies (AC adapters) on CPE can be a significant contributor to additional maintenance cost. They present an additional point of failure and are subject to loss or damage. As high as 50 percent of CPE recovered from churn are either missing AC adapters, have damaged adapters, or are just aesthetically not suitable for recirculation and must be replaced at additional cost to the operator. This creates additional overhead for stocking and managing the multiple application/vendor-specific AC adapters for each type of device deployed.
- AC adapter AFR: 1 percent
- Cost of customer service call: $20
- Cost of replacement AC adapter*: $6 (discounted cost to account for units under warranty; assuming one-year warranty over five years, replacement cost is 4/5 of regular price)
- Cost of truck roll: $100
- Cost of replacing a failed AC adapter: $20 + $6 + $100 = $126
- AFR of 1 percent creates an annual cost of: $126 x 1 percent = $1.26
- Churn rate: 1 percent per month (12 percent annually)
- Churn loss/damage: 50 percent
- Cost of replacing lost or damaged AC adapter: $7.50
- Loss from churn creates an annual cost of: $7.50 x 12 percent x 50 percent = $0.45
- Annual cost savings by deploying CPE without AC adapters: $1.26 + $0.45 = $1.71 per year, or $8.55 over a five-year period.
- The numbers are staggering when the size of the population is considered:
- 1 million in service: $8.55 million
- 2 million in service: $17.1 million
Product reliability has a profound and measurable impact on the ongoing maintenance and operational cost of delivering broadband services. High-quality products with low failure rates translate into significant cost savings by reducing the number of truck rolls to replace failed devices. Integrated power supplies eliminate the costs associated with an additional point of failure, loss from churn and overhead of managing additional inventory for replacements.