In the past few years, operators have been extensively sharing passive infrastructure, resulting in huge cost savings. The next step is sharing of active infrastructure. While it is a given that active infrastructure sharing leads to significant cost savings, it also means a degree of loss of control over the equipment shared.
This is one of the main reasons holding operators back from getting into active infrastructure sharing in a big way. It is a trade-off between what you save and what you lose. Therefore, for active infrastructure sharing to become a reality in the country, operators will need to resolve questions like what and how much active infrastructure should be shared. Operators will also need to define their preferred business model and the technology solutions that can be adopted in both the urban and rural markets.
In the current Indian context, where containing opex and capex is a big challenge, especially in the urban markets, active infrastructure sharing is expected to pick up soon. In fact, analysts expect active infrastructure sharing to get a further thrust with operators likely to face a cash crunch following the aggressive bidding for 3G and Wi-Max spectrum and subsequently rolling out of services. This will strengthen the business case for active infrastructure sharing.
In the global arena too, the huge licence fee that operators paid in the European countries did not permit them to go alone. They resorted to active sharing right from the start.
In the Wi-Max space, 20 MHz of spectrum will be auctioned, which will give about 40 Mbps of capacity from one tower site if a four-sector configuration is used.
This capacity, which is difficult to be consumed entirely by a single operator, presents the possibility of sharing among multiple players. Therefore, the government may want to step in here and widen the range of active sharing from just the antenna, radio frequency cable, Node B and radio network controller to spectrum sharing (as and when it is allowed). This will significantly boost active sharing in the country, especially in the area of WiMax and long term evolution (LTE) for the data services.
For active infrastructure sharing to become a reality, however, it is important for the industry to work closely with the regulator. The Telecom Regulatory Authority of India (TRAI) has already come out with a paper on the mobile virtual network operator (MVNO) concept.
Active infrastructure sharing models At present, multiple models of operation are available to operators. These include joint ventures, separate operations, or sharing of just the core. Though it is still too early to predict which model most of the operators will decide on, according to analysts, the joint venture model seems to be a better option. However, international experience shows that in the case of the joint venture model, operators have to be careful in choosing the right partner, one that has the same vision and objectives for successful active infrastructure sharing.
The differentiation can always be provided in terms of the features and offerings.
A clear exit route is also important. For instance, in Australia, Vodafone and
Optus had to separate due to fundamental differences in their strategies.
The advantage India has is that there is already a vehicle in place in the form of joint ventures on the passive infrastructure sharing front. This can be leveraged to promote active sharing. But it is still too early to be able to determine its evolution in the country.
Low uptake so far The main reason for the low uptake of active infrastructure sharing in the country has been that by the time active infrastructure sharing was permitted on a commercial basis (November 2008) in 2G, all the major players were already established in their circles and had their own way of increasing their coverage. This prevented them from getting into active infrastructure sharing.
However, in the case of 3G, operators will have to get permissions from landlords and find the necessary space to set up the hardware at the existing sites. Since space is a major constraint at these sites, it would be difficult to put up a 3G base transceiver station. This will be one of the reasons why 3G is likely to see more active sharing right from the beginning.
Another reason for the limited active sharing in 2G was the spectrum crunch that already existed by the time 2G spectrum was made available in the country.
Therefore, not much capacity or technology was available for active sharing. But today, with the launch of 3G and WiMax, customers are expecting data rates to be at least a hundred times higher than what is being offered currently at almost the same ARPU. So, while the technology will be getting upgraded, no additional revenue will be available to the operator. To bring down the operator’s expenditure, it will be imperative to share active infrastructure as well.
The other challenge with respect to 2G spectrum availability was that the spectrum was allotted to operators in non-contiguous bands, which lacked the continuity needed to derive spectrum efficiencies. Moreover, the operators wanted to be the first to launch their services. So, time-to-market was the essence in rolling out 2G services. This is no more a challenge today. Case for infrastructure sharing in 3G With 3G, huge broadband growth is expected. So, if an operator has not been able to engage in active infrastructure sharing on 2G networks, 3G will offer it the opportunity to do so.
In addition to capex and opex savings, 3G also helps operators meet their rollout obligations. The government has outlined strict rollout obligations for 3G and WiMax. If all operators had to set up their own network to meet these obligations, it would be a costly affair.
For a pan-Indian rollout of 3G, the amount of savings will mostly depend on the number of operators sharing the infrastructure. If more than two operators share the infrastructure, there will be a decline in the observed costs, a 20-30 per cent saving in capex and a 40-45 per cent saving in opex. Moreover, the savings will primarily come in the early years when an operator is building out infrastructure. In the later years, only the capacity will be enhanced on the same network.
Another compelling factor for telecom operators to go in for active infrastructure sharing is the non-availability of sites. Besides, the existing tower companies and operator companies would be more than willing to accept tenants, as operators would prefer not to go for a single-tenancy site.
Wi-Max Active infrastructure sharing makes even more sense in the case of Wi-Max and LTE than it does for 3G. While only 5×2 MHz of 3G spectrum is being allotted to operators for overcoming the spectrum crunch they are facing in increasing the wireless capacity on their networks, nearly 20 MHz of Wi-Max spectrum will be available for rollout of viable data services. Moreover, Wi-Max technology is stable. There are already almost 600 deployments in about 150 countries. Other alternative technologies like LTE and time division (TD)-LTE are also on the anvil and are being launched on a commercial scale. Networks based on these technologies are much easier to share.
The Indian telecom market is undergoing a technology evolution. New technologies and solutions are coming up that will facilitate active infrastructure sharing.
With the evolution of technology, solutions are now being provided to lower the power consumption, thereby leading to significant opex savings. Companies are coming up with a whole set of modular equipment that can be plugged in and played. For instance, Nokia Siemens Networks has launched a flexi Node B, which offers the flexibility to remove the solution out of a joint venture in case of differences and stand alone as well.
Motorola is also offering solutions that can cater to tonnes of data in a smaller footprint. The size of both the radio and the core network has come down quite a bit.
The bottlenecks in the adoption of active infrastructure sharing include the lack of points of interface for interconnections. However, discussions are on among operators and this issue is expected to get resolved soon. There is also an issue in synchronisation. If each operator engaging in TD-LTE network sharing has a different business case, the TdLTE uplink and downlink requirement of the operators will be different. But there is technology available today that can resolve this issue as well.
All in all, operators in the country should go in for active infrastructure sharing. While it will help the new operators survive in the increasingly competitive scenario, it will be a new source of revenue for existing operators, who will benefit from the vast amount of savings in their capex and opex. (Based on a panel discussion among Jacob Mathew, Vice-President, Projects, Idea Cellular; Bharat Bhatia, Regional Director, Asia, Global Government Affairs, Motorola; Randeep Raina, Head, GSM and Mobile Broadband Sales, India Region, Nokia Siemens Networks India; and Kishore Bhagtani, Deputy General Manager, BSNL) While active infrastructure sharing will help the new operators survive in the increasingly competitive scenario, it will be a new source of revenue for existing operators, who will benefit from the vast amount of savings in their capex and opex.
