Tower Trends: Industry perspective on the current state of telecom infrastructure

With the Indian telecom industry witnessing rapid roll-outs of next-generation technologies such as 3G and 4G, the prospects for the infrastructure segment have improved significantly. The demand for new towers and tenancies has increased with operators introducing new technologies to cater to the growing data uptake. However, the segment faces several policy, regulatory and financial challenges. At tele.net’s Tenth Annual Conference on “Telecom Infrastructure in India”, industry stakeholders discussed the key trends, the emerging opportunities, and issues and challenges faced by infrastructure companies. Excerpts…

Umang Das

The key reason for the emergence of the telecom infrastructure industry independent of operators was the need for infrastructure sharing. Making a modest beginning in 2005-06, with 50 towers in Punjab, the industry now boasts of over 400,000 towers across the country. Mean­while, the telecom industry as a whole has evolved from simply offering voice connectivity to providing comprehensive end-to-end solutions.

In the infrastructure industry, the cost structure has changed significantly. Capex figures at a particular site have come down from Rs 350,000-400,000 to below Rs 100,000 in the course of a few years. This can be attributed to design improvements. With strict pole designs and in-building solutions, the cost of the new tower desig­ns is likely to be significantly more optimised than what it was in the past.

The need for infrastructure sharing, driven by high capex requirements, has reduced somewhat. Operators are now looking at rapidly rolling out their network to cater to the increasing demand for data. In addition, the telecom industry is witnessing consolidation, which would lead to the emergence of six or seven serious players. The impact of the above will be felt by infrastructure providers as 99.9 per cent of a towerco’s revenue comes from operators.

I believe that the market will move towards an end-to-end pay model, wherein operators will look for partners who can provide a plug-and-play solution rather than just passive support. For providing such end-to-end services, the fiberisation of towers will need to be expedited.

Meanwhile, consolidation in the tower industry is expected to be good for the country. As the infrastructure industry is capex-heavy, it is essential that only those players that have the ability to invest as and when required should remain in the market. Since consolidation is taking place at the operators’ end, the same will be progressively reflected in the infrastructure industry as well.

On the policy front, the Department of Telecommunications (DoT) is coming up with an integrated infrastructure policy, which will focus on right-of-way (RoW) issues. Once the policy is finalised, a number of issues are expected to be resolved. However, support at the state level will be essential for its success.

Financing continues to be a challenge in the sector. The industry is in discussion with the government for issuing telecom bonds. This will help the industry raise low-cost funds. It is essential that the industry has access to multiple sources of funding. Currently, telecom operators in India spend the majority of their funds in acquiring spectrum. This has limited their ability to invest in infrastructure, thereby increasing the stress on infrastructure companies.

Going forward, it is essential that master service agreements between operators and towercos are revisited. Moreover, while government policies are slowly be­com­­ing more conducive, there is still a need to spread awareness among states.

Meanwhile, energy management at tower sites will remain a key focus area. With renewable energy becoming a viable alternative and the need for carbon emission reduction growing, renewable energy service companies will emerge as an im­portant link in the telecom value chain. Partnership between tower companies and energy management companies is being actively encouraged by the Tower and Infrastructure Providers Association.

“The market will move towards an end-to-end pay model, wherein operators will look for partners who can provide a plug-and-play solution rather than just passive support. For this, tower fiberisation will need to be expedited.”

Devender Singh Rawat

Bharti Infratel’s performance in the past year met the company’s expectations. We saw a 6.4 per cent increase in the number of towers and a 7 per cent growth in tenancy.

The Indian telecom industry is witnessing increasing 4G deployments. When an incumbent operator rolls out 4G, equipment is added onto the existing sites to enable these services. However, an increase in 4G tenancy is being brought about by Reliance Jio Infocomm Limited, which is launching pure-play 4G services. We have not seen pure-play 4G-only data sites being built yet. After the first round of 4G coverage is over, operators will start focusing on enhancing coverage and improving the quality of service (QoS), thereby installing independent 4G sites in future.

Currently, challenges faced by towercos are very similar across geographies. Towers per se are technology-agnostic and challenges are more on the operators’ side. We believe that in the long run, some of the 4G sites, particularly capacity ones, will be required in areas where no towers are built to cater to capacity requirements. At the initial stages, 4G roll-out will require the same approach as any standard site and therefore, there will be no challenges from a towerco’s standpoint. How­ever, challenges for towercos will emerge at later stages when technologies such as small cells and in-building solutions will be deployed.

As demand for data in the country is growing with the 4G ecosystem maturing much faster than anticipated, we are witnessing a rush towards monetisation of 4G. We believe data will open up additional opportunities for sharing infrastructure. Also, there is an opportunity for fibre growth because the backhaul requirement for 3G and 4G data usage is going up. Further, data is being used indoors unlike voice, which is mostly used outdoors. Therefore, in-building solutions and solutions that can cater to capacity and coverage requirements inside buildings will be­come more and more critical. A key development that will open up immense opportunities for tower companies is government initiatives such as Smart Cities. The smart city infrastructure requires an under­lying layer of telecom infrastructure.

On the energy management side, Bharti Infratel has undertaken the P7 programme. The programme involves moving to alternative sources of energy, reducing energy consumption at cell sites, and increasing the efficiency of equipment deployed at the sites.

Nearly 30 per cent of our portfolio is green now. On a consolidated basis, 30,000 sites have been declared green as of March 2016.

On the policy side, the government is sensitive to the challenges faced by infrastructure providers. The central government has come out with clear guidelines for RoW. Letters from the central government to all states suggest that state government buildings should be made available for telecom towers. The government has also been very clear about its stand on EMF radiation. Now, the major challenge is the implementation of these guidelines at the state level. We are engaging with various state governments to ensure that these guidelines evolve into definitive policies.

“In-building solutions and solutions that can cater to capacity and coveragebrequirements inside buildings will become more andmore critical.”

Amit Sharma

We are in the midst of a data revolution, as a result of which the demand for data will far exceed the available capacity. Meeting the increased data demand will be the single biggest challenge in the adoption of 3G and 4G in India. While a US operator invests 80 per cent of its capex in improving the network, an operator in India spends only 20 per cent.

4G is not just about transmitting high speeds but also about enhancing the quality of experience. It will be three to five years before we are able to provide a satisfactory quality of experience to customers. Today, installing a tower in an urban area is very difficult given the plethora of permissions and approvals needed from multiple government bodies. Although there are some genuine concerns, most restrictions arise out of vested interests. More recently, activists, resident welfare associations and government bodies have started opposing the installation of towers because of ill-founded fears regarding radiation. There­fore, on the one hand, we have the telecom ministry talking about the criticality of addressing the call drop problem and having a task force, and on the other, municipal authorities in states like Delhi are engaged in sealing towers. This implies that there is not enough understanding about the challenges in providing good quality data services in urban areas.

In order to address these concerns, the government should continue lending support to the industry in dispelling the radiation fears. We must compliment the positive stance taken by the telecom minister, DoT and the Telecom Regulatory Autho­rity of India in this regard. In addition, the telecom ministry’s recent directive allows tower installations on government buildings. However, more needs to be done on this front.

Meanwhile, the sharing of optical fibre networks should be encouraged. It does not make sense for each operator to have its own metropolitan optic fibre network. Fibre transmission and backhaul are essential elements of data networks and sharing will make fibre deployments much more economical.

We will not be able to meet the in­creasing data requirements in cities, unless operators and infrastructure provi­ders work together as partners with the government. One of the most misused phra­ses in India is public-private partnership. The government should bring in enabling provisions and infrastructure providers should increase their capex investment in areas that are unprofitable for telecom operators. Operators have already invested in spectrum and now they need to invest in bringing in more subscribers, developing applications and content, and ensuring good quality of service.

For this, a new partnership model needs to evolve.

“Fibre transmission and backhaul are essential elements of data networks and sharing will make fibre deployments much more economical.”

Sameer Sinha

So far, telecom networks have been predominantly voice-centric. However, we are now witnessing the roll-out of pure data-centric networks. While for voice, 80 per cent of the usage is outdoors, for data, the same percentage of usage is indoors. Therefore, from now, the entire coverage capacity planning needs to focus on indoor areas. Further, while we are currently handling primarily two spectrum bands, 900 MHz and 1800 MHz, we are likely to have new bands in the future, including 2100 MHz, 2300 MHz, 850 MHz and 700 MHz. This means that we will have to accommodate six bands on the existing infrastructure. Furthermore, earlier we considered 2-3 Mbps as good data speeds, but now we are looking at data speeds of 20-30 Mbps, with some operators even planning for 80-100 Mbps download speeds. These emerging trends necessitate a number of changes to be made on the ground. All this needs to be done quickly and in an environment-friendly and innovative manner.

Currently, around 90 per cent of the sites are macro sites. Going forward, we will need a higher number of smaller sites. Both the industry and consumers are expecting innovations, and we have already seen some progress on this front. For instance, we are developing sites that merge with background structures, thereby increasing their aesthetic value.

We do not need a new physical infrastructure to install additional sites. We will use the existing structures, but will perhaps need to improve the visual image of the sites. Further, in-building solutions will be an important growth area. As more and more buildings are being constructed, we will need new solutions for data transmission within them.

Meanwhile, the Smart Cities and Digital India initiatives have provided an opportunity to infrastructure providers to roll out telecom infrastructure in a plan­ned manner and that too, in collaboration with the government. Moreover, the recently issued spectrum sharing and trading norms and active infrastructure trading guidelines have created several opportunities.  Through antenna sharing, the number of antennas that go on the site can be reduced. This will smooth the way for roll-outs.

In addition, it is imperative that tower companies take over the task of fibre deployment. Since fibre is a capital-intensive infrastructure, it does not make sense for individual operators to seek RoW permissions. Moreover, a uniform tower policy is the need of the hour. Currently, multiple agencies are involved in granting RoW approvals. While our registration with the DoT is for perpetuity, the RoW rules keep changing every now and then, and even retrospectively at times. The central government has issued advisory guidelines to the states in this regard but the compliance level needs to be improved.

Another important aspect is energy efficiency. Telecom tower companies have been working on this front for the past five to six years and their efforts have been fairly successful. In all these years, the number of base transceiver stations on our sites has doubled, but the total energy spend has remained flat. Going forward, we are looking to deploy renewable energy solutions at our sites.

“It is imperative that tower companies take over the task of fibre deployment. Since fibre is a capital-intensive infrastructure, it does not make sense for individual operators to seek RoW permissions.”