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.

Network Architecture, Facilities, and Services

If network architecture can be thought of as analogous to a framework, then facilities and services can be thought of as the bits and pieces that give the architecture detailed substance and a useful purpose. In communications networks, as in broadcast networks, there is an input and output—the basic function. Both must be managed and their assets and cost of operation must be accounted for. Both are enabled with interfaces and protocols. Both tend to evolve and adapt to regulatory and technology forces. More importantly, those that respond favorably to market demand, survive, grow, and prosper.

This chapter is not about how to design and build a telecom network. The intent is to provide information about the nature and characteristics of networks sufficient to communicate desires and requirements to potential equipment and service providers using Internet and Telecom terms, standards, and symbols. The overall goal is to help the reader understand communications network architecture, facilities, and services. The secondary objective is to provide a framework with which to evaluate potential service provider’s ability to deliver facilities and services capable of meeting their requirements, and ultimately assessing and measuring performance against the terms in a contract.

LANGUAGE AND TERMINOLOGY OF COMMUNICATIONS NETWORKS

Communications network architecture is most often taught and thought of as being layered and linked. Layering breaks the network into a set of logically related components. Linking connects the components and makes up an end-to-end facility or service. The network becomes the link between all the equipment at all the locations making up the network. Successful use of network facilities and services always includes a set of common equipment at each location where facilities are terminated, enabling service delivery. Still, equipment, facilities, and services alone are insufficient to ensure successful business use. Man cannot live by bread alone; he must have peanut butter. The key ingredient required for success is a walking, breathing human being, qualified to be responsible and held accountable for making sure all the equipment, facilities, and services are configured, maintained, and changed as day-to-day demands of the enterprise change.

If you are a designer, manager, or senior staff responsible and/or accountable for making or approving decisions related to design, planning, and management of assets and operating expenses related to communications network asset and expense management, the material in this section is one of the more important, if not the most important, part in the book. It can be a technical foundation for a process whereby you and your organization can take firm control of communications equipment and service vendors by first defining your needs in their terms and lingo so you can establish a competitive procurement environment as the first step in building a long-term mutually beneficial relationship between your organization and the vendors. You can benefit greatly if you take the time to study and understand the technical and economic aspects of how to order and piece together end-to-end facilities and services to build the network best suited to your business.

The level of detail is structured around the common equipment at each location and its interface to network facilities and services. One side of the equipment is connected to the network facility that provides access to network services. The other side of the equipment interfaces to local area network (LAN), private branch exchange (PBX), and Moving Picture Experts Group (MPEG) compression and decompression equipment.

Figure 1 shows an example of the common equipment found at a typical operations site engaged in production, post-production, and on-air transmission operations.

Figure 1: Typical Operations Site Common Network Equipment

Figure 1: Typical Operations Site Common Network Equipment

Basic service requirements include telephone or dial-up service, data transmission, Internet access, and content transport within and outside each site. Group ownership operations may range from half a dozen operational sites to 50 or more. The geographic scope might range from purely local stations to statewide or regional or national in size.

This level of detail may seem insufficient when considered from a broadcast operations point of view; however, it is quite satisfactory for network planning and design purposes where the objective is to inform a potential equipment and/or service provider. It can be used to delineate equipment from services, and it can also be used to inform potential consultants or network designers about their responsibilities in terms of a design, project, or program management.

On the communications network side, the level of detail goes substantially deeper in the form of definition, description and use of various network elements, and several alternatives for linking them together. Figure 2 is a simple sketch showing four sites with links between each.

Figure 2: A Four-Site Network Topology Diagram

Figure 2: A Four-Site Network Topology Diagram

The link arrangement depicted in Figure 3 is only one of several possibilities. Obviously if there were only two sites, there would only be one link between the two. Traffic requirements would drive the selection, but it’s quite likely the links would be bidirectional, and of equal capacity, also called full-duplex, asymmetrical bandwidth.

The arrangement shown is called a ‘‘round-robin’’ because it connects all the sites in a series arrangement, with only one link between any two. This arrangement has operational advantages in terms of reliability and robustness; however, it may have disadvantages because the traffic may be more than it can handle in some places and more than needed in others. For now, keep in mind that there are three types of traffic: voice, data, and program content.

While not explicitly mentioned, the Internet is becoming much more important in many ways; however, it will be included as a potential resource when the traffic is segmented into content creation, distribution, and delivery. Also, don’t forget that the Internet is nothing more than just another resource built on a set of technology. The technology is the family of Internet protocols (IP) that can be used separate and apart from the public Internet to build a private network based on IP standards and techniques.

Regardless of the basic technologies and all the architectural considerations, it is the end-to-end service between any two sites that we seek. Figure 3 is simply a reminder of our reference model.

Figure 3: End-to-End Service Reference Model

Figure 3: End-to-End Service Reference Model

Any seemingly complex, multisite network can be decomposed or decoupled into single, defined point-to-point paths, which can be observed, monitored, and measured in many ways. Once end-to-end measurements are made and a profile of its characteristics recorded, it becomes a benchmark for future operations.

One last point is that the single path can be broken apart and individual component performance measured and characterized. One simple obvious characterization is connecting two sets of equipment with wire or fiber, sometimes referred to as the ‘‘perfect network,’’ and measure performance. And of course there are ways to measure and characterize the performance of the facilities and service making up the link between the sites.

Now we go to details of network architecture, facilities, and services.