Nautel-CFO-Darlene-Fowlow

Darlene Fowlow, Nautel's CFO & VP Finance

“From a CFO’s perspective, a TCO analysis like this would significantly help my decision-making. The engineer has the experience to best quantify the true benefits of a new transmitter purchase. This approach puts that expertise into a language I can understand and evaluate to make the right overall decision.”

-Darlene Fowlow, CFO & VP Finance, Nautel.
 
 
Nautel-NX50-Ampfet50

The photo above clearly illustrates how Nautel’s innovative transmitter design and smaller footprint can contribute to cost savings over the life of a transmitter. We have reduced the footprint of our 50 kW AM transmitter by 67% since the introduction of the Ampfet 50 (pictured above right) in the mid-80’s.
 

Learn more about Nautel transmitters

 

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Total Cost of Ownership

 

When it comes to justifying the cost of a major station upgrade to your CFO, GM or owner it helps if you can speak their language and demonstrate that you’ve done your homework. There’s a significant difference between the basic purchase price of something and its long term cost. Here’s a quick and simple explanation for calculating Total Cost of Ownership (TCO) for a new capital expense.

First, some background. TCO is a technique used to make sure that all associated costs over a given time period are considered when you’re acquiring a new asset. TCO not only reflects the costs of purchase but includes all other aspects in the further use and maintenance of that asset. While there is no broad accepted formula for TCO, the main thought is that you need to consider all relevant costs which are related to an asset. In some cases, we also refer to reducing costs (such as lower power consumption, elimination of replacement tubes or reduced maintenance).

Let’s take the example of a new transmitter. Typical cost elements might include:

  • Direct Costs
    • Purchase price (including applicable sales taxes)
    • Freight
    • Installation
    • Financing
    • Training
  • Operating Costs
    • Energy
    • Repair and support (parts/labor)
  • Other
    • Space allocation (if rent is by the square foot/meter)
    • Indirect station expenses
    • Depreciation tax deduction or other tax incentives on new purchase
    • Value of lost air time on older transmitters

To complete you own TCO, gather cost information on your present transmitter using the above cost elements, and compare them to your new transmitter. Be sure to check transmitter efficiency as part of the formula. Those who are air conditioning their sites in a closed-loop environment will want to add in additional efficiency savings due to the reduced cooling demand where applicable.

Discuss with your CFO any potential federal and state tax savings that adding the new equipment will create, and if other tax incentives may be applicable to further reduce the TCO.

If your existing transmitter has history of failures or if you see an increasing number of failures due to age, what is the cost of lost air time or potential reduced coverage when operating on a lower power backup transmitter? These costs are hard to calculate, but nonetheless, should be noted below your TOC argument, if applicable.

Total cost of ownership should be reflected over the anticipated life of the equipment as a main transmitter. Major market stations might utilize a 10-year replacement cycle for equipment, whereas smaller markets may plan 15 or even 20 years for their replacements.

20 Year Cost of Ownership Example

How Nautel transmitters help lower your TCO

 

Nautel’s innovative transmitter design incorporates many features that provide for considerable cost savings over the life of a transmitter. Features like those listed below significantly lower your power and maintenance costs and repay the capital investment of a new transmitter in just a few years.

  • Solid state reliability (no tube replacement cost)
  • High operating efficiency (saves monthly electric bill)
  • High level of redundancy (less off-air time)
  • Compact design for a smaller footprint (important for rental situations)
  • Reliable rugged design
  • 100% remote control access to user interface (helps reduce trips to transmitter site)
  • Easy maintenance (reduces cost)
  • Modular serviceability (reduces cost)
  • “Soft failures” keeps transmitter on air, maintaining revenue generation

 

Additional Cost of Ownership Considerations

 

Every transmitter installation has its own peculiarities and some of these costs may be quite significant in your situation:

  • Is your site remote or is an expensive helicopter or snow cat rental required for access?
  • If you have a tube transmitter do you religiously follow tube management recommendations which might require additional monitoring and visits?
  • Would commonality of spare parts and modules between transmitter models and stations lower your servicing costs and reduce lost air time?
  • Have you factored in savings due to advanced monitoring such as Nautel’s Advanced User Interface that can reduce the need for costly site visits?

Read more for a detailed look at how power savings alone can easily amount to $500,000 – $1,000,000 over the life of a 50kW transmitter more>>


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