tele.net?s sixth annual conference on ?Telecom Infrastructure in India: Changing Scenario: New Challenges and Opportunities” at The Imperial, New Delhi, was held today.
tele.net hosts a conference on ?Telecom Infrastructure in India”
The conference was attended by over 150 delegates from different factions of the telecom industry. Indus Towers is the lead sponsor of the event and American Tower Company, Aegan Batteries, Infozech Software and Panacis are the co-sponsors.
Key sessions of the conference include ?Key Trends and Market Outlook, Infrastructure Provider perspective, Policy and Regulatory Roadmap, Impact of Recent Developments, Opportunities and Challenges in Active Infrastructure Sharing, Reducing Cost of Energy: Strategies and Solutions-I, Issues and Challenges, Operator Viewpoint, Changing Economics and Financing Requirements, Technology Viewpoint, Renewable Energy Solutions for Telecom, Reducing Cost of Energy: Strategies and Solutions-II and Rural Telecom Infrastructure: Current Scenario and the Way Forward.
In the session on Key Trends and Market Outlook, Pankaj Agrawal, co-head, Analysys Mason India said that the recent TRAI recommendations on spectrum roadmap and pricing have positioned TD LTE as the primary BWA technology for India. However, given relatively limited range of smartphones for 2300 MHz, the initial TD deployment in India will leverage home gateways and USB modems.
Also, as LTE does not currently support voice, TD LTE will need to depend on underlying networks such as HSPA for circuit switched fall back. Over time, 700 MHz FD LTE may be deployed for coverage and mobility, and TD may be used for capacity offload in dense urban clusters.
He added that service providers may also leverage EDGE to provide a data fallback option with HSPA and TD LTE in select markets and hotzones. For instance, Malaysia-based Maxis adopted a “thick coverage” strategy, rolling out 3G in strategic areas or ones with heavy data traffic with the rest of the country being served by GPRS/EDGE networks. in fact, going forward, micro-cellular technologies such as WiMESH and Wi-Fi will also witness a higher deployment for providing capacity in dense urban clusters in Metros and Tier 1 cities.
He concluded that the operators will have a blended network, with FD LTE, TD LTE, HSPA+, GSM/EDGE along with WiFi / WiMESH, and small cell deployments. This, in turn, will help operators to reduce data pricing, and offer technology neutral packs. Such a scenario has been seen in countries like Indonesia which have then witnessed an increase in adoption of data services.
The keynote session, Infrastructure Providers? Perspective, was a panel discussion. Milind Bengali, COO, GTL Infrastructure, Amit Sharma, executive vice president and president, Asia, American Tower Corporation, B.S. Shantharaju, chief executive officer, Indus Towers formed the panel. Broadly, the panel concluded that if TRAI?s latest recommendations pertaining to spectrum pricing are implemented, it will have a negative impact on tower companies? operations. Also, cost optimisation emerged as a key issue. The panel concluded that this is the key to success and energy is one key area that has to be looked upon from the cost saving perspective.
In fact, all tower companies have increased their efforts on this front and significant progress has already been made. For instance, Indus Towers has managed to achieve energy cost savings of 18-20 per cent in the past two years. The company has already made 9,000-10,000 sites diesel-free and is targeting to take this up to 20,000 sites by March 2013.
Currently, all the tower companies have largely moved on to fixed energy models. Indus Towers has about 85 per cent of their current sites offered to operators on a fixed cost basis and this number is likely to go up to 97 per cent in 2012. Besides, several companies have begun using renewable energy sources as well. Several pilots have already been conducted in this regard, but on a small scale.
Today, most of the tower companies are looking to outsource energy management including renewable energy to RESCOs. TAIPA has already initiated a move in this direction by floating an RFP inviting RESCOs to set up region-wise operations. Under this model, RESCOs will get an opportunity to service all the operators in the region they will be selected for instead of providing their services on an operator-wise basis.
Besides high cost of energy, some of the common issues faced by tower companies relate to RoW and asset life cycle management. Automation is another key area that needs to be looked upon in order to ensure better and efficient control systems.
Tower sharing is another area of concern, which needs to be optimised. For instance, Viom Networks currently has one of the highest tenancy levels of 2.4x. However, this is not balanced across the country with some tower sites having up to four tenancies and some struggling to get even a single tenancy.
Tower companies also need to focus on quality improvement in terms of a higher uptime, adhering to their SLAs and standardising the MSAs they sign with operators.
Going forward, Rs 500-1,000 billion will be needed to be invested in the industry in the next three to four years. However, given the current financial health of the tower industry, banks and private equity firms do not seem very keen to invest in this space.
Also, deployment of new technologies, such as 3G and BWA, will be a key growth driver in the future for this space.
Govind Gaiha, senior advisor, Pricewaterhouse Coopers made a presentation in the session on Impact of Recent Developments. Gaiha said that the Supreme Court?s verdict cancelling 2G licences awarded in 2008 has adversely impacted the net growth for Uninor and MTS. However, it does not bring any consequent impact on infrastructure. Moreover, he opined that the infrastructure being used by these operators would get absorbed by other licensees who win the spectrum during the upcoming 2G auction, as the cost considerations associated to set up a de-novo network would be very high for the winner.
Gaiha said that the IP- I companies will be affected in terms of new expansions and existing tenancies. Similarly, TRAI?s recommendation on telecom infrastructure also entails a few issues. For example, the IP-I registered companies (more than 350) belong to different class and, therefore, cannot be treated by the same stick. There are independent tower companies; companies that have been created by hiving off of infrastructure by telecom operators; and other companies like RailTel ONGC etc. which have created telecom infrastructure as a byproduct of the facilities already existing with them in terms of coverage of their own respective networks and have no intention of becoming a telecom service provider.
Gaiha said that the reduction of FDI investment from 100 per cent to 74 per cent will require a working out of a methodology for balancing the equity amongst the various stakeholders and is therefore not likely to be an easy exercise. Also, the additional spectrum requirements of existing operators are not very high and are only to the tune of a few Mhz, that too in only certain urban geographies. Once the additional spectrum becomes available, the cost of Radio Access Network per erlang would be lower for the incumbent operators who do not see a risk to their licenses.
In the session on Investment Requirements and Financing Needs, Shubham Majumder, executive director, Kotak Mahindra Capital Company said that most operators are currently meeting their financing needs through bank debt/ buyer?s credit. However, domestic commercial lenders have already exceeded the allowed sectoral limit to offer debt to the telecom companies. Some loans have turned sticky in the last 12 months owing to a pressure on their cash flows and some tower companies had to re-structure their debt component.
So, Majumder said that in such a scenario, bank loans may get increasingly challenging, given the issues faced by the telecom industry on the policy and regulatory fronts.
Going forward, he added that investment will be needed to increase the tower foot print; to increase telecom infrastructure coverage of rural areas; for technological upgradation for new technologies like 3G and LTE; to explore alternate sources of technology; and to enter into active infrastructure sharing.
The session on Reducing cost of energy: Strategies/Solutions contained a presentation by Ankur Lal, chief executive officer, Infozech Software. Lal said that the tower industry is facing several issues, such as increasing energy costs, diesel pilferage and regulatory pressures to adopt new forms of energy. Net, net, the challenge lies in collecting accurate data in a timely fashion from remote sites. Further, making processes dynamic, sustainable as well as automated is difficult.
Lal said that outsourcing energy data management offer multiple benefits, such as lower capex, assured service levels and reduced management overheads.
In the session on Issues and Challenges: Local Levies and Municipal Laws, B. Ramanand, chief operating officer, American Tower Corporation said that in the absence of proper regulations, vigilante groups tend to obstruct construction of towers through violent and non violent means. Local authorities have no clear directions and hence obstruct construction of towers in their jurisdiction.
Ramanand said that issues currently faced by tower companies in rolling out new sites are sealing of sites from time to time triggered by public or political events; long delays in approvals; ad-hoc fees; corruption at lower levels; etc.
He added that zoning is a state subject and thus action needs to be taken at that level to resolve these issues. This has been recognised by several state governments which have then made progress in the past one year to formulate appropriate guidelines. Some of the key features of these guidelines include safety of structure; clearances from additional local bodies like AAI, SACFA , EB, etc.; periodicity of renewal (one-time or periodic); service fee; annual recurring fee, etc.
Nevertheless, he said that over time, tower companies have worked towards resolving these issues. For example, in the absence of clear guidelines, the tower industry has collectively approached courts. Some important rulings so far include the power to levy fees rests with the municipal authorities; sealing prohibited without due process; tower tax is not lawful; implausible clauses like approval from neighbors are not needed; stamp duty has to be paid on lease agreements, etc.
The Operator Viepoint session was a panel discussion between Anil Jain, deputy director general, broadband, BSNL and Ashwini Khillan, CTO, MTS India. Broadly, the panel concluded that the current business models are restricted to just two or three types of tower build-outs. However, given the expected increase in data demand, there is a growing need to introduce micro-cells, pico-cells, Wi-Fi sites in the market.
Also, as operator demand for these solutions increase, tower companies are believed to be working towards getting these implemented especially in the densely populated urban areas where data demand is likely to be much higher than remote areas. This is because the new solutions are likely to provide better cost flexibility to operators.
Also, with the increasing penetration of broadband services, optic fibre cable will emerge as a key part of telecom infrastructure. The National Optic Fibre Network will provide adequate backhaul to both private and public operators to serve the remotest regions of the country. OFC network sharing has been a successful model in several countries and has led to an increase in broadband penetration.
The panelists agree that there is a need to improve spectrum availability in all existing bands. Currently there is over 250 MHz of spectrum made available per circle, whereas about 750 MHz of spectrum will be needed in order to ensure efficient operations.
