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Connecting India: Leveraging the rural telecom opportunity

July 19, 2016

With the urban markets saturating, the rural segment has emerged as the new growth centre for telecom operators. While the progress in taking connectivity to the rural areas has been slow, changing consumer preferences, improving literacy rates, rising disposable incomes and the growing awareness about telecom applications are leading to an increase in telecom uptake.

The government too is implementing several projects that have a rural focus, such as BharatNet, and offering e-services to reduce the digital disparity between urban and rural areas. Industry experts share their views on the key trends in the rural segment, policy growth drivers, the evolving broadband landscape, the emerging opportunities for value-added service (VAS) players and the strategies adopted by tower companies to resolve energy management issues…

BK-Syngal-Dua-ConsultingTV-Ramachandran-Pres-Broadband-IndiaSharat-Chandra-MD-TelEnergy-Technologies 

RURAL MARKET OVERVIEW 

Brijendra K. Syngal

The rural telecom landscape has changed considerably over the years, especially with the use of wireless technologies such as cellular phones. The change is perceptible from the growth in teledensity, which rose from 5 per cent in 2006 to around 50 per cent now. However, the growth continues to be led by plain vanilla voice services. The pace of change may not be that great because of some infrastructural problems relating to the availability of power to run the very basic base transceiver station (BTS) and backhaul connectivity to the nearest switching centres. There are also apprehensions on the part of operators about inadequate opportunities in rural India, which affects their return on investment. This will change with the government’s intent to execute the Digital India initiative for providing connectivity.

Moreover, the efficacy of connectivity or being in touch is very well understood. There is going to be an increase in the migration of human resources, which will increase the basic need to stay in touch with the people back home. This, in turn, can increase the need to transfer money quickly. Operators must engage more with these people to educate them about the use of telecom services, which will have a multiplier effect of increased usage.

Operators must focus on making rural users aware of the power in their hands in the form of information availability. In order to use that information, education in the vernacular language is important. Once this is established, the operator must look for commonalities to provide them services that interest them. The approach has to be in sync with the requirement.

Meanwhile, the BharatNet project, which was meant to impact rural India, has been mishandled. The project’s focus on just one technology, fibre and GPON has impacted it. The situation continues to be the same, driven by an industry-vested interest and not a reach-out approach.

While rural consumers hold immense potential, the challenge lies in harnessing that potential through education, awareness and cost effectiveness.

RURAL BROADBAND OVERVIEW

T.V. Ramachandran

Broadband is generally synonymous with urban broadband. We, at the Broadband India Forum (BIF), believe that the benefits of broadband are greater in rural areas than in urban areas. This is because broadband penetration in rural areas is almost zero at present, and some of the game-changing applications and services in these areas can only be provided using broadband. Some of the objectives that can be achieved through rural-centric applications are identification of the right market price for farm produce, the elimination of middlemen, increased job availability, and greater penetration of healthcare, education and e-governance services. Moreover, with the increase in broadband penetration in rural areas, there is an increase in income levels, thereby driving GDP growth. However, for broadband to take off in these areas, it is essential to have relevant local or regional content to attract the masses. It is also necessary that it is affordable and caters to the country’s diverse population, characterised by multiple languages, varying literacy levels, inequitable physical infrastructure and different income groups.

Broadband connectivity in rural areas has several benefits with the convergence of voice, data and video. The key concern is how to roll out broadband services in rural areas through cost-effective and quick deployment of towers and fibre networks.

The Department of Telecommunications is already working on the challenges involved and has issued rules for right of way (RoW) and setting up of towers. This will go a long way in ensuring broadband provision in the rural areas in a timely and cost-effective manner. In addition, an MoU has been signed between the central government and the state governments to provide free RoW to the BharatNet project and grant permission for laying fibre and installing towers on their properties.

Some of the technologies that can support the laying of optical fibre and installation of mobile towers to provide cost-effective broadband access to rural and remote areas are satellite communications, Wi-Fi and millimetre wave technology. Satellite communications is particularly suited for providing high speed broadband access in rural and remote areas. It can help connect gram panchayats and once fibre reaches these areas, it can function as a backup link. Wi-Fi technology can help provide broadband access in rural areas through hotspots, which can serve as broadband aggregation nodes that can be backhauled using either optical fibre or wireless backhaul technologies. As optical fibre deployment is very time-consuming and expensive, cost-effective, high throughput and wireless backhauling technologies can be used for support. The E- (71-76 GHz, 81-86 GHz) and V- (57-66 GHz) band systems can help reduce congestion and constraints in the broadband network. E- band can carry data up to 10-12 km in rural areas.

As per the UN Broadband report of 2015, India ranks very low in terms of its broadband efforts. In fixed broadband, India stands at the 113th position with a penetration level of 1.2 per cent, and on mobile broadband front, it is worse off at 155th position and an average penetration level of 9.5 per cent. We see this as a huge opportunity and are committed to making broadband happen, for which we have adopted a very positive and bullish approach. There is a huge potential for broadband penetration in the country and with government initiatives such as Digital India, the current gloomy scenario of broadband adoption is likely to undergo a dramatic change. We, at BIF, are committed to facilitating this process by working in partnership with all elements of the ecosystem including players in the areas of content, devices and infrastructure.

ENERGY MANAGEMENT

Sharat Chandra

The rapid growth in wireless telecom infrastructure has resulted in a renewed focus on energy management and opex reduction, particularly in areas that have low ARPU. It is ironical that the cost of setting up and managing wireless infrastructure in rural areas is much higher than in urban areas, yet the revenue yield is only a fraction of what it is for urban areas. This is due to the lack of availability, reliability and stability of power in rural areas. In addition, the challenges associated with diesel and power theft and infrastructure management in rural areas far exceed those in urban areas.

However, there are several opportunities that can be leveraged only through technology, processes, tools, people and resource management. If managed effectively, these opportunities can generate huge business for the energy management sector, tower companies, and operations and maintenance (O&M) companies. For example, grid power-deficient or off-grid sites are a key area of concern for tower companies; however, this deficiency can be converted into an opex reduction opportunity. To this end, energy service companies can make use of technologies such as lithium-ion batteries and automated control and monitoring for site management. As a result, the diesel run for on an off-grid site can be reduced from 18-20 hours per day to 6 to 8 hours or even less, thus significantly reducing the opex.

The telecom industry has been witnessing consolidation, which started with carriers (operators) and has now moved to tower companies as well as energy companies. Moreover, offerings are shifting from pure-play equipment sales bundled with installation and commissioning, to stand-alone O&M and to managed energy services. This means that customers are expecting an outcome in the form of energy savings and not buying a product based on a specification sheet. In addition, penalties will be an exception and hopefully not a cash flow item. It is this new business model – the opex model for opex reduction – that will take root.

Indian telecom infrastructure is at the cusp of change and it is great to know that large players are willing to contribute to make this change to happen. Technology will enable it, business will propel it and infrastructure will absorb it. We must prepare ourselves to contribute through effort, resources and corporate will, and be a catalyst for it.

 
 

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