Giving high priority to the issue of passive infrastructure sharing, the Department of Telecommunications (DoT) has sought the views of the Telecom Regulatory Authority of India (TRAI) for any amendments/changes in the existing licensing conditions or legislation to encourage sharing of infrastructure. At the same time, it has cautioned that encouraging infrastructure sharing must not come in the way of mobile growth.

So far, operators have been setting up their own towers, which involves huge expenditure and rollout time. The exponential growth in mobile subscribers and the limited availability of spectrum have forced mobile operators to set up more and more BTS sites. Aside from the cost implications, this has marred the skyline in urban areas.

Sharing of infrastructure is a way out. Effective sharing of passive infrastructure can help save significant resources to finance further rollouts, enhance environmental aesthetics and lower costs of operation.

In order to cater to 136 million mobile subscribers, service providers have collectively commissioned approximately 90,000 towers in the country. To meet the government targets ?? 250 million telephones by 2007 and 500 million telephones by 2010 ?? about 135,000 towers would be required by 2007 and 330,000 by 2010.

Recognising the importance of infrastructure sharing for rapid deployment of mobile services in both rural and urban India, TRAI has brought out a consultation paper highlighting the key issues and status of infrastructure sharing today and possible policy interventions.

Current status of infrastructure sharing
Service providers are currently sharing 25 per cent of the tower sites for passive infrastructure only. This is predominant in small towns and rural areas.

Government initiatives
According to the paper, at present, infrastructure sharing is being undertaken mostly on a voluntary basis between service providers. It has not picked up the desired momentum and there is no planned approach to achieve this task. Global experience indicates that sharing of infrastructure has given an impetus to subscriber growth and rural coverage. Replicating the same in India will bring similar advantages, particularly in rural, remote and densely populated urban areas.

The government has undertaken several initiatives. In the urban areas, Project MOST has been jumpstarted, encouraging mobile service providers to mutually negotiate on sharing of towers. Recently, initiatives have been taken by operators to enter into long-term mutual agreements for passive sharing of infrastructure. For instance, an agreement has been signed between Hutch, Idea and Reliance Communications to enable sharing of over 23,000 existing towers amongst them.

In the rural areas in particular, infrastructure sharing is crucial in reducing rollout costs and increasing the expected rate of return on investment. DoT and the Universal Service Obligation (USO) Fund are ready to provide financial support for setting up towers and active infrastructure to help service providers roll out mobile services faster and at much lower investments.

Regulatory and licensing issues
Though heralded as an effective measure to reduce capex and opex, the implementation of infrastructure sharing faces a serious hurdle. While the government has permitted passive infrastructure sharing, it is unclear as to whether active infrastructure sharing would be permitted by modifying the licensing conditions. Thus, although new equipment that permits active sharing is rapidly becoming popular, no formal provision has been made for active infrastructure. In addition, the advantages offered by infrastructure sharing, namely, efficiency, cost savings and time-to-market, are counterbalanced by the drawbacks of potential consolidation, possible lack of adequate competition and reduced service differentiation.

It is believed that infrastructure-sharing arrangements may affect the competitive independence of service providers in the market as a result of the network integration achieved through such cooperation. A significant concern has been raised regarding the potential of infrastructure sharing to lower the competition in the marketplace, depending on the extent of such arrangements. The overriding concern is to ensure that any derived efficiencies do not mar the competitive environment ?? a prime reason why regulators the world over have been desisting from mandatory infrastructure sharing. Active sharing has not been favoured by various regulators in this context.

Given this situation, TRAI has raised the following questions for discussion:

  • Is there a need to bring appropriate legislation/amendments in the licensing conditions to encourage passive infrastructure sharing?
  • Can active infrastructure sharing be permitted by modifying the existing licensing conditions?
  • Would any potential competition concerns arise with infrastructure sharing? If so, how would such competition concerns be addressed without any adverse impact on the consumers’ benefits in terms of choice of service providers, access, availability of services, range, quality of services and pricing?
  • What advantages can subscribers expect by infrastructure sharing and how can these be monitored?

    TRAI has asked all stakeholders to respond to the consultation paper by December 2006. It can then take its recommendations forward.