CONTINUING THROUGH TO OVERALL COMMUNICATIONS COST MANAGEMENT

Machine-based invoice validation is a required first step in successful, long-term continuing cost management. Don’t forget the first objective is to reduce expenses and at the same time build a system to maintain good expense control. Overall, the work involves good accounting practices to analyze, classify, and quantify direct and indirect expense and capital investment in areas such as each of the following:

• Cable TV service
• Cable modem service (Internet access)
• Cellular telephone service
• Conferencing services
• Content distribution and delivery
• Fax machines
• Hosting facility use
• Internet access facilities
• Pagers
• Private line data services
• Telephone service
• Website developers

Although it’s tempting to make judgments about the value of each while making and completing a list, resist this inclination in favor of focusing on defining the details of how many, how much, how used, and by whom on the first pass. Try to make the list as complete and definitive as possible in terms of equipment, stand-alone application software, facilities, and services. Another important point is to capture the function or functions of each, and do your best to map that function to a business process because sooner or later it will be time to evaluate its impact on the business compared to other expenses or investments.

Get answers to the following questions:

• How are communications circuits, equipment, facilities, and services being used?
• What are the components of each circuit, piece of equipment, facility, or service?
• What are the units of usage and attendant cost?
• What is the volume and total cost of use/ownership?
• Is the cost fixed or variable, and if it’s variable what is/are the variable parameters?

Once the answers are placed into a spreadsheet and understood, consider them in light of other questions such as:

• What business are we in, or what’s the mission of our enterprise?
• What is each department’s role in that mission?
• What is the responsibility of each head on the payroll?
• How does their use, or lack thereof, impact communications cost?
• How can current communications unit cost be reduced?
• How will any considered change impact the ability to deal with suppliers and customers?
• What are the potential risks and rewards from any proposed change?

Satisfactorily addressing the above landscape puts you in a position to consider and undertake several next steps. These include:

• Validate monthly billing (i.e., make sure specific items of equipment, facilities, and services being billed match what is actually in use or in accordance with an appropriate service agreement, contract, order, tariff filing, or whatever caused the billing).
• Make a list of all circuits and facilities terminated in the telephone room. This is a room in each building where telephone company wiring enters the building from the outside. Sometimes there is more than one such room in a single building. More often, one room in a single building serves multiple nearby buildings on the same or directly related owner’s property. Prepare the list so it shows unused capacity. For example, in the case of copper cable, the telephone company typically installs what it calls an entrance facility, which is a terminal block on the wall with every single pair of wires in the cable connected to the terminal block. The other end of the cable is terminated on a block in a cabinet, or spliced into a larger cable connecting it to the nearest wire center or controlled environmental vault. In the case of fiber entrance facilities, there will be light wave terminal equipment mounted in a rack or on a wall. This equipment can be used to provision T1, DS3, OC3, or OC12 transmission capacity. Record circuit identification details and get an explanation of the amount of capacity in use and available for future use.
• Compare the circuit list with the items being billed. Many times service is disconnected, but the billing continues. If circuits, facilities, or service is being billed but not delivered (i.e., billing for a fax line, but the line is physically disconnected), you are due a refund. Getting the refund can be challenge without a disconnect order. It is not unusual to find billing errors. Be cautious about use of the term disconnected. A telephone line, which may serve or have served a fax machine, may not be disconnected from the service provider’s perspective. However, it is an entirely different matter for billing for the line to appear on the bill, and the line not available for use because service was interrupted or discontinued at some point in the past. If a valid disconnect order exists and service was not discontinued, the refund is due.
• Recognize and understand the importance, relationship to, and difference between unit cost and departmental and enterprise wide expense. How expenses are classified and tracked by a department and then rolled up into the overall picture is important because it’s easy to lose sight of duplication and individual item unit cost. For example, it is a common practice to include volume discount from basic pricing in contracts for most all equipment, facilities, and services in use. Don’t be surprised if this escapes the attention of the person who writes each service order change or the person who pays the bill each month.

ACCEPTANCE OF EQUIPMENT

Digital equipment and systems always include some form of software. After all, digital hardware wouldn’t be of much value without the software. Software sometimes goes by other names or euphemisms such as firmware or micro code. Less often, other software such as interpreters and compilers and utilities may be included or supplied with equipment or part of systems. Application or configuration software may be required for the equipment or system to function properly or meet requirements. Applications software might be the product of a third party developer. The possibilities are many, but what is important is what the requirements are or what was included in the order or supply agreement that caused the equipment to be delivered.

The digital television transmitter contains detailed specifications and a general approach to test and acceptance. This gives the potential supplier an idea of expected performance and an outline of proving the equipment meets or exceeds the specifications. What is not included is a detailed test plan. A test plan can be written from scratch by the buyer or alternatively provided by the supplier as part of the deliverables, subject to approval by the buyer. Both require significant effort to prepare and validate. Chances are the supplier or the manufacturer already has a detailed test plan for each component or subsystem used in the manufacturing process as well as a system test plan for a complete unit.

Making a manufacturer’s system test plan valid for use in accepting the equipment is dependent on emulating the intended use and environment. Essentially, this involves assembling the system as close as possible to the final operational configuration. In most cases this is not a big issue. However if the equipment or system will carry significant volumes of traffic, this may not be possible, except through the use of traffic generators. Again, the main concern is to carry out any and all steps included in the supply agreement. Simply making measurements and validating functions and features outlined in the supplier’s published specifications is prudent and helps to uncover and resolve any issues or concerns.

Acceptance of Circuits, Facilities, and Services

On the service provider side, similar concerns and processes exist. The governing approach is either in a tariff or some form of supply agreement. If not explicitly mentioned or called out, then the alternate approach is to use applicable ANSI, IEEE, IETF, ITU, or other applicable recommendations. The process and focus of the effort should be structured around the end-to-end service model block diagram. Initial concern is to make sure connectivity exists by examining and testing the underlying circuit or facility. Validating or accepting a new circuit on an existing facility is less complicated but riskier than accepting a new facility. Regardless, the process is fairly simple and very similar.

If the circuit or facility is intra–LATA (local), only one provider is involved. If it is inter-LATA (long-distance), three service providers are involved: two local exchange carriers and one inter-exchange carrier. If the service is international, the international portion will involve two more physical pieces and a local exchange carrier at the far end.

Circuit acceptance in any case involves a fairly simple process and requires relatively simple test equipment. When the service provider informs you that it is ready for acceptance, simply connect the equipment, loop back the circuit at the far end, and initiate a bit error rate performance test for at least 48 hours—preferably 72 hours. The circuit should perform error free. If there are errors, turn it back over to the provider and ask them to fix it.

Once the circuit or facility is accepted, then remove the bit error rate test equipment and replace it with the operational equipment (multiplexer, server, or whatever) and begin operational tests with the complete system.

EVALUATING EQUIPMENT AND SERVICES

Evaluating equipment and services is usually within the context of feasibility assessment, or project planning. Risk is minimal and limited to the amount of time and perhaps travel expense invested in this type of activity. As projects grow and commitments are made, risk grows. What we are concerned about is risking capital, and if the opportunity is real, risking the loss of not just the invested capital, but also some or all of the promised return. The worst of all possible nightmares is a scenario where the project causes a problem outside the scope of the project as envisioned, requiring an unplanned, unbudgeted expenditure.

Not only should equipment and services be evaluated, but their source of supply as well. Conducting due diligence on one or more suppliers varies by level of effort depending on several factors such as how long the prospective supplier has been in business, their size, and their capability to produce and deliver the products and services required by the project at hand. A new supplier that’s been actively supplying products or services in the marketplace for several years will require less effort than a start-up. A start-up with an innovative, new product may require more effort; certainly it’s likely the effort will be different. Well-known or start-up, any situation involving claims of significant new technology should be taken with a grain of salt until all potential material risks have been uncovered, examined, evaluated, and quantified.

Due diligence is most effective and efficient when it is conducted in a way that it becomes a benchmark for acceptance of equipment and services. Conducted properly, there should be no surprises for buyer and seller. If function, form, and performance are not as expected, then there has been a misunderstanding in the past, or something about the hardware, software, or services needs troubleshooting and fixing. Ideally, the due diligence process takes into account the requirements and specifications, and compares capabilities and performance of equipment, facilities, and services of one or more sources of supply. The process should begin with a simple paper-based evaluation. Once everything looks okay on paper, more extensive evaluation can be undertaken.

There are two basic approaches to conducting evaluations. A general evaluation can be undertaken whereby the supplier provides a set of information about the capabilities and performance characteristics of the equipment. The evaluator takes that information and proceeds to determine if the equipment or services are capable of performing as claimed in the information provided. This may or may not determine if the equipment and services meet the business requirements of the buyer. The other approach to evaluating equipment and services takes a specific requirement or set of requirements and then proceeds to determine if the equipment and services meet some or all the details in the requirements established by the buyer.

Once a direction is established, then the process can be sequenced into three or fewer logical steps. Step one can be what’s referred to as a paper-based exercise. Simple expert analysis of the information provided by potential suppliers can be analyzed to determine if it meets or exceeds the requirements established by the potential buyer. The next step after paper evaluation requires examination and testing of one or more working samples. Depending on the size and complexity of the project and the potential risks/returns at stake, scalability may be an issue. If scalability is a concern, then the structure of the initial working samples and their evaluation criteria should be staged and structured so as to be extensible to greater scale. Another way to view this issue is to structure the paper evaluation and the initial working sample evaluation so it is representative of the full scope of the network or system as known at a given time.

EXAMPLE EQUIPMENT AND SERVICE SPECIFICATIONS

The remainder contains examples of specifications that can be used to detail technical requirements for a digital transmission facility for a multiple station group. The examples cover a studio-to-transmitter (STL) network, digital television transmitter, design, erection, and installation services. The material is intended to serve as the technical content of an RFI or RFP and acceptance of deliverables.

STL Network

The STL network will provide and all transmission facilities required to transport content, monitor and control transmitters, and support voice and data communications, site security, and network management functions. The network must be designed to meet very high reliability operations with less than a 1-minute outage per month, cumulative outage of less than 10 minutes per year. Each site must have at least two physical routes between the central master control and each transmitter site. If one path experiences an outage, the network will be required to sense the outage and restore service via the alternate route without human intervention. Alternate route facilities between the central site and each transmitter site will be designated Main and Backup. Both paths will be subject to monitoring and alarm at all times. The normal mode of operation is Main path on air, and Backup path in standby. If the Main path experiences an outage, the network will be required to switch to Standby signal automatically without human intervention. If the Standby path experiences an outage, it will cause an alarm to be initiated and logged. Service restoration will be of the highest priority, and at least equal to any service restoration priority provided to other customers in the class covering public convenience and safety.

Service Provider Technical Qualifications

The service provider shall demonstrate competence through design level expertise with classical and contemporary network technology, systems, facilities, services, and network operations. The successful service provider will own more than 75% of all facilities that the network traverses. For those portions it does not own, it will be required to demonstrate satisfactory contractual business relationships with the owner.

The successful service provider will incorporate network management systems that can be accessed by the buyer for purposes of lodging requests for investigation of alarms and outages. Preference will favor those service providers capable of demonstrating current capabilities to accept requests for investigation of outages or service impairment whereby the user enters information into a terminal or other device with an Internet browser-type interface. It will be an absolute requirement that the successful service provider acknowledge a request within 1 minute of lodging by an automatically generated response, and confirm within certain time frames, depending on priority included in the request.

Responses to this request will be evaluated based on cost and technical trade-offs across performance, robustness, and reliability. Presentation of facts and figures is left to the service provider; however, greater consideration and eventual award will be given to the proposal with meaningful, detailed design characteristics that are related directly to service cost. Highly summarized, the most credible proposal containing best performance, robustness, and reliability constrained by most favorable start-up and long-term cost is most likely to be accepted. The buyer reserves full and final judgment on all matters of the selection and award process and will not under any circumstances pay for cost estimates, proposal preparation, or a similar effort, material, or services except by formal agreement to do so in advance of a formal purchase order.

Due diligence will follow initial selection. Due diligence includes physical examination of a cross-section or example of network elements making up the service provider’s core network. Terminals and central offices serving all sites will be examined closely and must include face-to-face meetings with technicians, supervisors, and managers who will be supporting the network. The successful supplier will exhibit confidence in its ability to isolate and resolve issues and concerns of all levels of severity in a competent, logical, and straightforward manner. An examination of power systems, heating, ventilation, air handling, and safety systems and procedures will be conducted.

Network Topology

Network topology will cover sites 1 through N. Service providers initial responses should be based on eight sites as depicted in Figure 1. After examination of the initial proposals and selection of two or three finalists, additional sites may be added for revised technical proposals and pricing.

 

Figure 1: STL Network Topology

Linking in the final network design will be a mix of round robin and point-to-point links between sites. Fully meshed network design is not technically prohibited; however, cost of such networks is likely not attractive. Furthermore, network management and utilization is unattractive because of operational complexity.

Service providers are requested to study the topology and capacity requirements of the STL network and propose at least two approaches. Each approach should be presented with a spreadsheet containing link numbers, site designation capacity, and pricing for each link. Specific routing details for each link are required to show active and passive network elements on each alternate route between sites. An analysis showing minimum and maximum time to repair a single failure of each active and passive element in each path or route will be included on a separate spreadsheet in the same file as linking and pricing.

Network Interface and Capacity

For the initial 3-year period, core network interface and capacity needs include diverse STS1 interface (51.8 Mbs) at each transmitter site and diverse OC12/STM4 (622 Mbs) interface at the central site. The service provider will include an estimate of the time, cost, and required notice for making additional capacity available in diverse STS1 increments.

Service interface will be DVB-ASI across a BNC connector on either side of a bulkhead or patch panel of the service provider’s choosing. In parallel with each service interface, the service provider will include an Ethernet interface to the network management system to facilitate voice and data communications required to support network management. The service provider may provide access to the public network at their option. If such is included, the service provider must demonstrate adequate and satisfactory firewall capabilities between the network interface point and the outside world.

The service between the central master control and each transmitter site will consist of a minimum of four 20 Mbs channels, net of any overhead, but not including any forward error correction. Forward error correction will be discussed in detail during proposal reviews and a determination made as to its necessity and value.

Premises Architecture and Network Interface

Architecture of the premises equipment includes capabilities to support program content transport, voice, data communications, Internet access, and similar applications such as video conferencing and visual site monitoring. Interface on the network side at SONET/SDH level STS1 or STS4 is preferred. All plesiochronous (PDH) service interfaces will be on the service side of the network interface equipment.

Service Interfaces include SMPTE 259, SMPTE 292, SMPTE 305, DVBASI, T1, DS3, and IEEE 10/100/1000BT in accordance with applicable standards. Suppliers are requested to provide a detailed list of applicable standards of official standards bodies such as SMPTE, IETF, ANSI, ITU, or other and relevance and applicability of each reference within the context of each standard’s use in their products and services. Figure 2 shows a functional block diagram of the general requirements. Potential suppliers are requested to include one or more block diagrams showing the next level of detail along with a matching spreadsheet for each item of equipment proposed.

 

Figure 2: Premises Equipment Architecture and Network Interface

The spreadsheet must include quantity, description unit price, and total price and discount applicable to each item based on total package price. Separate sheets in the file covering equipment, installation, and maintenance cost during the first and second through the fifth year of operational life are requested.

The service provider may offer network interface device equipment; however, it may not be part of an overall service contract, depending on initial and ongoing maintenance cost. Potential equipment suppliers are encouraged to quote stand-alone equipment with pricing separate from maintenance cost. Preference will be given to potential suppliers who can demonstrate successful, satisfactory business relationships with similar class customers.

Design and Installation Services

Services and material of the type required and described in this document are complex and risky. This SOW covers lifting, assembly, and installation of a passive transmission system on and at or near the top of tall tower structures. The major components of the system include a gas stop, transmission line components, hangers, an elbow complex, and an antenna. Successful completion of the work requires specialized technical knowledge and heavy lifting equipment. Preference will be given to service providers deemed in possession of these attributes:

• An established business of providing services such as contemplated
• A strong, accident-free safety record
• The continuous employment of key management and site crew personnel
• A stable financial condition with insurance adequate to cover all risks at each site
• Good relationships with tower designers and manufacturers capable of providing material and design knowledge sufficient to support modifications to existing towers, foundations, and guy cable
• An established relationship with third-party structural engineering firms, or regular employment of professional engineers licensed to do business and practice their profession in the state or states where the work will be performed