Sustainability beyond telecoms

Zoran Vasiljev, Arthur D. Little
18 Dec 2008

The telecoms industry in the past was much less associated with the theme of sustainability than many other so-called 'heavy' industries, such as energy, chemicals or automotive. An obvious explanation for this is that the telecoms is much less carbon-intensive, and consequently could be seen as greener. However, appearances can be deceptive.

It is a mistake to equate 'sustainability' with 'green' - sustainability is more encompassing than green, comprising not only environmental issues but also social, marketplace and quality of life issues. As any telecoms executive can testify, the industry has to cope with plenty of sustainability issues, such as the digital divide or inclusion, security, privacy and responsible content. Various initiatives have been undertaken in this regard, such as the Global e-Sustainability Initiative, a partnership of ICT companies that promotes technologies for a sustainable development.

Telecoms players are also well positioned to help other industries cope with sustainability challenges. Indeed, telecoms is not only a medium of communication but also an enabler for several customer industries, including health care, education, public services, transportation, building and agriculture - particularly in developing economies.

Sustainability issues in the telecoms industry are driven by four key factors: opex reduction, rapidly evolving legislation and regulation, product creation and revenue development, and consumer preferences and predominance of the social dimension.

These drivers can have significant economic impact. For example, the operation of a mobile network is a significantly energy-intensive process, with a large percentage of a telcos' opex sunk into the energy cost of running the transmission network. A projected rise in energy costs leaves these operators exposed to higher energy prices and reduced margin.

Also, a new breed of consumers is pushing manufacturers and service providers to offer a broader portfolio of sustainable products. In a recent Arthur D. Little consumer survey, more than 50% of the respondents indicated that a greater availability of green products would increase their overall purchases of green goods.

Understanding these drivers is essential to managing and coping with sustainability issues in a strategic manner. A strategic approach to sustainability focuses on what a company can do to convert risk into opportunity, rather than simply managing or avoiding risk. Telecoms companies must shift from a risk-driven to an opportunity-driven approach.

Enabling sustainability

Telecoms have a powerful role to play in enabling and enhancing the sustainability of other industries. Through the provision of new products and services, or the innovative application of existing ones, telecoms companies can help firms in other industries transform sustainability issues into new sources of revenues and competitive advantage for themselves, while at the same time providing benefits to the recipient industry, society and the environment.

It is no surprise that within the healthcare industry, demand for ICT-enabled solutions is strong. The application of ICT can make the healthcare system more efficient by reducing the trade-off between quality and cost of service. Many European countries have collaborated to establish an e-health plan, aimed at supporting national health systems in reducing treatment costs and enhancing treatment quality.

The telecoms industry is in a strong position to impact sustainability on two levels: both addressing the sustainability issues within its own industry, and functioning as a vehicle to support other industries in coping with their own sustainability challenges. Telecoms companies should shift from a risk-driven to an opportunity-driven approach, i.e.

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