Common Ground : Active infrastructure sharing could help optimise investments

Telecom has been one of the most indispensable services in the current Covid-19 crisis, and the sector has helped several other sectors cope with this pandemic. In the new normal, connectivity will play a major role in helping organisations undergo digital transformations, creating collaboration opportunities for the business.

In fact, the recent few years have been nothing short of exciting for the Indian market. Innovation is just around the corner with new-age technologies such as 5G shaping up the market. Of course, 5G requires huge industry investments, which at the moment seems like a daunting proposition given the cash-strapped situation of the telcos and the huge industry debt.

To this end, investments can be optimised through infrastructure sharing. The deployment of common shareable infrastructure, both passive and active, can help rationalise investments in the sector, while ensuring faster roll-out of infrastructure and quicker time-to-market. Infrastructure sharing will be extremely critical in optimising the industry’s capex and opex requirements while avoiding duplication of infrastructure. Infrastructure sharing would also enable telcos to focus on the competition in the service layer and on delivering differentiated, quality services to consumers instead of spending time and energy on building infrastructure.

Case for active infrastructure sharing

Passive infrastructure sharing has become a norm for the Indian telecom industry, whereby, typically, sites and masts are shared. This does not require any kind of intelligent coordination. On the other hand, active sharing, still uncommon in India, involves the sharing of intelligent network elements such as radio and access nodes.

There are several perspectives on active infrastructure sharing and its promising impact on coverage, quality of service and pricing. It can also provide telcos with cost-saving opportunities, which in turn will help them invest in next-generation technologies.

Currently, active infrastructure sharing is permitted amongst telecom service providers (TSPs) only, and is mostly limited to feeder cables, radio components, etc. For the industry to truly benefit in terms of operational efficiency, sharing of infrastructure will be critical, going forward. The practice of sharing can bring in requisite synergies between telcos’ operations and will significantly reduce capex and opex.

Recently, the government allowed active infrastructure sharing for Wi-Fi routers and access points. Sharing is expected to boost the adoption of public Wi-Fi services, as well as broadband penetration. This is a positive move and will require collaboration between various industry stakeholders.

In fact, with digitalisation being at the core of the nation’s growth, extending the scope of active infrastructure sharing by bringing in more participants in the ecosystem will help in mitigating several industry issues to a great extent.

That said, active sharing comes with a whole lot of complexities. Interoperability of the hardware is a challenge. Security is another consideration. Then there are issues such as segregating frequencies and ensuring least interference. Further, given the competition between TSPs, telcos may not always want to expose and share their resources, technology and architecture with competitors.

Cost benefits

Globally, active infrastructure sharing is already happening in parts of Europe, America and Korea. In such geographies, improvements to the tune of 30-55 per cent have been achieved in cash flows. Opex has come down by 18-30 per cent and capex savings of about 25 per cent have been achieved. Clearly, active infrastructure sharing has a huge potential, if supported by appropriate incentivisation by policymakers and participation from infrastructure players.

Sharing for 5G

With India lagging on the 5G front, especially given the lack of clarity on commercial roll-outs and spectrum-related issues, active infrastructure sharing can prove to be instrumental in enabling quicker time-to-market. Active infrastructure sharing has played a pivotal role in several global telecom markets where 5G has been launched commercially. Telcos have come together to jointly deploy small cells for faster service proliferation.

Conclusion

The industry is now moving from differentiation to integration, and as it steps into the 5G era, network sharing will be a key turning point. Going forward, we may expect a significant movement in this space from both industry players and policymakers.