How Much Does a Service Outage Really Cost a Telecom Company?
Your customers rely on your service, so when it goes down, every second is crucial. Natural disasters, security breaches, physical link failures, and even hardware/software crashes can cause widespread business disruption. In fact, as with most companies – regardless of industry – that rely heavily on telecom or mobile connectivity, a service outage can shutter many businesses.
Light Reading, a news source covering the communications industry, reported in late 2013 that mobile companies lose $15 billion annually to network outages. That number only increases each year.
In fact, one communications company commissioned an independent market research and competitive analysis report entitled “Mobile Network Outages & Service Degradations: A Heavy Reading Survey Analysis.” It found:
- 30% of those surveyed are keeping the number of incidents to between one and three a year or one every several months.
- 34% of respondents report at least 15 incidents a year, or one to two per month.
- $20 billion a year is spent by mobile operators on network outages and service degradations.
- More mobile operators are now reporting a higher incidence of outages and degradations that take over 48 hours to fix.
What a telecom service outage means to your customers
A service outage can strike a business where it hurts the most – financially. Angry, frustrated businesses fear outages because they can:
- Halt internal and external communications
- Adversely affect the supply chain
- Disable customer service centers
- Cripple manufacturing and delivery processes
In addition to the financial cost, a service outage can be a PR nightmare for both you and your customers.
How service outages affect the telecommunications industry
How much will it cost you if your service goes down? Here are a few of the financial impacts:
- Long-term loss of revenue
- Angry customers that are dissatisfied with any downtime are more likely to switch to a new service provider. You can potentially lose entire contracts and the revenue that each generates annually.
- Lost productivity
- You can calculate the financial cost of lost employee productivity during a service outage. Each employee who stops productivity to work on the service outage costs you. Consider the overtime hours your employees will need to fix the outage, and then to catch back up on their regular workload. Others might incur overtime hours as they try to pinpoint how the outage happened and how to prevent it from happening again.
- Replacement costs
- A service outage can adversely affect your hardware and software, rendering them inoperable. It’s an expensive repair bill to replace broken hardware and corrupted software, and it means a longer downtime than expected.
- Lost reputation
- A service outage, especially a long one, can irrevocably damage your company’s reputation. For example, if your company suffers a service outage that results in your customers’ loss of data, that makes the front page news on every channel. And that kind of publicity has a negative, long-term effect on your company’s reputation, affecting its future growth.
How to calculate your customers’ revenue loss during a service outage
A simple formula like the following can help you determine each customer’s potential for lost revenue in the event of a service outage.
Consider a stock brokerage firm who moves billions of dollars in trade every day. Even though the New York Stock Exchange is only open around 6.5 hours a day for 252 days a year, their potential for lost revenue is astronomical. While this example might be an extreme, some retailers generate enough annual revenue from operations that a 3% average network outage can cost them millions.
Recent industry network outages
Several high profile network outages over the past few years clearly illustrate the potential fallout.
- In September 2015, many of Sprint’s customers in the US Midwest could not make or receive calls and texts for over an hour.
- In August 2015, customers reported outages in AT&T’s fixed and mobile services across several US states for a period of several hours.
- In July 2015, T-Mobile USA agreed to pay the Federal Communications Commission (FCC) a $17.5 million fine as compensation for outages lasting three hours in August 2014, during which emergency 911 services were inaccessible.
A service outage, even a short one, can have devastating effects on your business. Without access to phones, email, and other critical business systems, your customers’ businesses processes can grind to a halt. When that happens, customers look elsewhere for providers who can minimize or eliminate service interruptions or outages.
Contact Mapware to help minimize or eliminate service interruptions or outages.
