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Industry Trends in the telecom infrastructure space: Sameer Sinha, Chief Sales and Marketing Officer, Indus Towers

March 30, 2012
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Telecom has been recognised as an important tool for the socio-economic development of any nation. It is one of the key support services needed for the growth and modernisation of various sectors of an economy. Telecom has become especially important in recent years because of the rapid growth of IT.

Studies suggest that the use of telecom increases the income of business entities and households, thereby contributing to GDP growth.

It is well established by various international studies that there exists a causative relationship between an increase in telecom penetration and GDP growth. Research also indicates that telecom access significantly improves the social and economic conditions of people living in rural areas by enhancing education, health and financial services, and by driving non-agricultural economic activity.

The Indian government has recognised that the provision of world-class telecom services, infrastructure and information is crucial to the economic and social development of the country.

In the past few years, the distinction between communication and IT has been diminishing with emerging common infrastructure blurring the differentiation between content and carrier methods. As has been the case in most of the developed world, the combination of enhanced computing power and improved telecom services has resulted in a major improvement in economic productivity.

India is perceived to have a comparative advantage in terms of IT and IT-enabled services. The extent of the advantage depends critically on the availability of high quality telecom infrastructure, which is an important tool for meeting the country’s socio-economic objectives.

Growth of the telecom sector

Telecom services in the country have improved significantly since Independence. Growth in rural demand has outstripped urban demand with telecom penetration increasing manyfold in villages.

On the fixed line side, at the initial stages, telephone exchanges were of the manual type, which were upgraded to automatic electromechanical type. They were subsequently upgraded by inducting digital electronic exchanges on the networks on a large scale. Voice and non-voice telecom services, which include data transmission, facsimile, mobile radio, radio paging and leased line services, cater to a variety of needs of both residential and business customers. The ISDN facility is available in almost all cities.

However, the real growth in the telecom sector has come through wireless networks. Since the launch of wireless services  in 1995, the country has witnessed a revolution in the segment, which has not only connected people but also changed their lives. The exponential growth in telecom penetration from low single digits in the 1990s to 70+ in 2011 is testimony to this.

New technology

Technology development has progressed at a fast pace and India has embraced the latest technical know-how continuously. Technology is a great enabler and will continue to improve the experience of end-users.

From 2G to 3G to 4G and beyond, the technology road map continues to fascinate.

The telecom revolution witnessed by the country in voice is set to be replicated in data services. 3G-enabled data services were rolled out in 2010-11 and these networks would be enhanced in 2012-13 along with 4G service roll-out.

The availability and adoption of smartphones and tablets will facilitate the broadband revolution, with the mobile becoming the only means of internet access for several users.

When India embraced 3G technology, Indus Towers Limited undertook the ambitious task of hosting 3G equipment at 33,000 sites in less than one year.

The company has tower infrastructure in place for long term evolution, which will enable fast and efficient service roll-out.

Reforms in the telecom sector

Telecom is one of the few sectors in India to have witnessed the most fundamental structural and institutional reforms since the 1990s. Considering the expected growth of telecom service demand with the increase in economic activities, the union government announced the National Telecom Policy (NTP) in 1994, which was revised in 1999. The NTP, 1999 allowed private sector participation to supplement the efforts of the Department of Telecommunications (DoT) for basic telephone services. The opening up of basic services provided a major opportunity for private and foreign investors. Other policy initiatives include the addendum to the NTP, 1999; the Broadband Policy, 2004; and the amendment to the Broadband Policy, 2004.

To a large extent, the perceived link between communication and IT, and economic growth has shaped the Indian telecom policy and market perception, and, consequently industry activity. Access to information infrastructure has been seen as a prerequisite not only for a robust IT industry but also for the growth and competitiveness of other services and industries.

India needs foreign investments to fund growth. Policymakers and the government will continue to play an important role in maintaining the telecom growth momentum, and in making it inclusive and sustainable.

Telecom infrastructure

Telecom towers are an integral part of the telecom network infrastructure. In fact, they are the most expensive component of the network. The tower industry has emerged as an independent business segment with most telecom companies hiving off their tower operations into separate entities.

Going forward, the focus will be on increasing the utilisation of existing infrastructure and avoiding duplication. New tower designs that are more suitable for rural applications also need to be seriously looked at due to different business requirements in these areas.

Green initiative

Energy has been an important aspect of the telecom value chain – mainly due to non-availability of quality power in India. Generating power through diesel generators has been a drain on the already squeezed margin of telecom companies.

Indus Tower’s approach of going green is not only about using alternative energy to power towers; the company is also exploring possibilities such as using green equipment and following a process that has a minimal impact on the environment.

Indus Towers has established two state-of-the-art tower operating centres (TOCs) to monitor service uptime at its headquarters in Gurgaon. There is full redundancy for its TOC operations through the standby set-up at Chennai.

The company’s green road map starts with using green telecom equipment and green designs for passive telecom sites, through enhanced site sharing and power generation from alternative sources.

The company’s green value chain can be classified into four parts:

Green active equipment

•   There has been a significant reduction in power consumption by active equipment from about 2.5 kW per base transceiver station (BTS) to below 1 kW per BTS. Also, the new BTSs are capable of working at much higher temperatures.

Green passive configurations and equipment

•   Investments are being made to ensure that the passive infrastructure equipment is state of the art with the highest possible energy efficiency. The company is working on increasing the number of outdoor cell sites, which eliminates the need for installing air conditioners at sites, thereby reducing the energy cost by 20-25 per cent. Indus Towers is also implementing retrofitment solutions like DC generator sets, free-cooling units, soft-start inverters and fuel catalysts to reduce energy costs.

Green sharing

Sharing of sites by multiple operators optimises energy costs significantly. Sharing by two-three operators brings down the energy cost by 20-30 per cent.

Green energy sources

•   Indus Towers is focused on using renewable sources like solar, wind, fuel cells, natural gas, biomass and geothermal energy to power telecom towers. It has made significant progress in implementation of solar-hybrid solutions. A project for deployment of 2,500 such sites has been initiated.

•  The company is also planning to source green power from renewable energy developers such as rural electrification services companies, which are promoted by the Ministry of New and Renewable Energy.

Market trends

Telecom tower companies will focus more on sharing as compared to new installations. The tower footprint has already reached 90-95 per cent of the geographical coverage and adding tenancies on existing towers is expected to bring more value to the telecom industry. However, new buildouts will take place in unserved areas.

The key regulatory challenges faced by telecom tower companies in India are:

•    Statutory clearances: Instead of the multiple authorities involved, a single-window clearance system should be made available by DoT.

•  Grid power availability: Telecom towers are distributed across remote corners of the country and securing reliable electricity supply is always a challenge.

•  Arbitrary tower taxes: Various civil and government authorities levy arbitrary taxes with no uniformity.

•    Infrastructure status: The telecom tower industry should be given infrastructure and essential services status.

Future outlook

Currently, there are up to 12 mobile operators in each service area and these companies are catering to almost 900 million subscribers. Wireless telephony would continue to fuel sector growth with the mobile subscriber base reaching 1.15 billion by 2013.

The industry will witness consolidation among service providers, which could be expedited by the recent Supreme Court judgment that cancelled certain 2G licences. This would stabilise the market.

The next big wave of growth is going to come from broadband/data services. The existing telecom infrastructure is prepared for this in terms of 3G and 4G roll-outs.

The industry focus from now on would be on enhancing the experience of the connected world.

 
 
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