Tower companies have served as the backbone of the mobile services industry. Riding on the infrastructure created mostly by them, India has come thus far in its data journey. At 2,360 PB, the country’s data consumption in 2018 was the highest in the world. Moving forward, telecom infrastructure providers will have a bigger and more strategic role to play in making the Digital India vision a reality. To this end, they would have to move outside their conventional business zones and roll out “digital” infrastructure, which will pave the way for a future characterised by smart cities, in-building connectivity, connected devices, artificial intelligence, etc.
There is also an urgent need to compensate for the revenue loss on account of the rather hurried telco consolidation that the industry witnessed over the past two years. Amidst telco mergers and exits, tower tenancies have dipped. As per industry estimates, tenancies have come down from around 840,000 in March 2017 to about 700,000 in December 2018, while the tenancy ratio has declined from about 1.78 to around 1.37 during the same period. Also, with fewer but bigger operators left in the fray, the need for new sites will be limited in the future. It is thus logical that towercos look beyond their core focus areas to adopt new business models, expand their offerings and explore new revenue streams.
Towercos, like other players in the telecom value chain, have placed big bets on India’s data growth, which, as per industry experts, will continue during the next decade as well. Towercos are aligning their business priorities with the changing sector needs. They are keen to explore new business avenues and opportunities modelled around data services to catapult the sector on to the next phase of growth. “Several new requirements will emerge with the transition to a digital economy. The role of passive and associated infrastructure will become crucial with the densification of networks and the high level of IoT-isation in industrial and other sectors. Hosting multilayer sensors for various technologies emerging in unlicensed bands such as LoRA and 5G will play a major role,” says Bimal Dayal, chief executive officer, Indus Towers. Besides putting up traditional macro sites for 4G and 5G, towercos are exploring opportunities in the area of smart cities, fibre deployment, installation of small cells and micro sites, and in-building solutions (IBS).
Interestingly, the National Digital Communications Policy (NDCP), 2018, notified last year, provides the much-needed policy impetus to infrastructure providers. Objectives such as increasing tower fiberisation, streamlining approval processes, mandating IBS, and allowing IP-1s to roll out and share active infrastructure will pave the way for transforming towercos into network companies (netcos). The NDCP 2018 seeks to encourage active infrastructure sharing by enhancing the scope of infrastructure providers and promoting the deployment of common shareable passive and active infrastructure. The policy also enhances the scope of towerco partnerships with municipal corporations and other local government bodies for the development of smart city elements, including digital backhaul infrastructure.
A look at some of the new and diversified business models that telecom infrastructure players are exploring…
Given that fibre-based connectivity is at the heart of next-generation digital service proliferation, the pace of fiberisation in both the access and backhaul is expected to pick up, going forward. Towercos can play a pivotal role in the provision of fiberised backhaul to tower sites. On the access side, they can play the role of neutral hosts for the provision of fibre-to-the-home for telecom service providers.
That said, the requirement for multiple approvals and clearances remains a challenge in the ease of infrastructure roll-out. “This industry is still seen as a soft target for revenue generation, with very high right-of-way (RoW) charges, and ad hoc and arbitrary charges being levied at the local municipality/state level, which leads to avoidable litigation and roll-out delays,” says Amit Sharma, executive vice president and president Asia, ATC India.
There continues to be poor adherence to the RoW guidelines issued by the Department of Telecommunications. Currently, 13 states have notified and aligned their policies with the RoW Rules, 2016, while another 13 states have existing policies that are under discussion. About 10 states have no uniform policies in place.
Hetnets – Small cells, Wi-Fi and IBS
Building dense heterogeneous networks (hetnets) will be key for 5G success, and towercos can take the lead in developing such networks. They can capitalise on their experience of managing distributed sites to diversify into the small cell business. Demand for small cells will go up in the future for meeting infill coverage demand and capacity needs at densely populated locations such as business hubs, residential apartments and airports.
“Providing white-labelled Wi-Fi within buildings and outdoors is another area that infrastructure companies can focus on,” says Dayal. To this end, partnerships can be explored with Wi-Fi providers, cable players and other emerging solution providers.
Smart cities and IoT
The Smart Cities Mission has opened up a range of new business avenues for tower companies, many of which are aspiring to become end-to-end communication infrastructure providers in the selected cities. “We see a big opportunity for infrastructure providers like us to create a robust and scalable ICT (telecom connectivity) layer on a shared basis. We will be setting up telecom infrastructure like towers and microsites with fiberised backhaul, meeting other connectivity needs of the smart city, and enabling fibre connectivity for homes and offices through fibre-to-the-kerb,” says D.S. Rawat, chief executive officer and managing director, Bharti Infratel. In a smart city, the solutions offered by tower companies can be a mix of passive infrastructure, small cells, Wi-Fi, fibre connectivity, etc.
Tower sites can be monetised by adding functionalities to them. Towercos can deploy smart poles, which can host mobile broadband infrastructure, Wi-Fi hotspots, LED lamps, active geo-location transponders for location-based services, electric vehicle charging points and surveillance cameras, all on a single structure. Unlike conventional telecom towers, these come with built-in power infrastructure for telecom equipment. The deployment of mobile wireless 4G/long term evolution infrastructure on smart poles can result in better coverage, particularly in urban areas, as well as improved data speeds, minimal signal dropouts, etc.
Smart poles are emerging as a key component of a city’s street infrastructure under the government’s Smart Cities Mission. They are equipped with connectivity solutions, surveillance cameras and charging facilities, making the city safer and better connected. Several civic bodies engaged in smart city development are forging long-term revenue sharing contracts with towercos to build and maintain such structures. For instance, Indus Towers has rolled out smart poles for the New Delhi Municipal Corporation (NDMC) at select locations. NDMC plans to install over 18,300 smart poles by 2020. Meanwhile, Bhopal smart city has launched a smart poles and intelligent street lights project under the Smart Cities Mission. Under this project, Bhopal Smart City Development Corporation Limited is planning to install 400 smart poles. Bharti Infratel led consortium is executing the Bhopal smart city project.
Tower sites can also be used for installing digital billboards for advertisements. Towercos can leverage distributed locations on highways or in densely populated areas to co-locate billboards for advertising. These can emerge as an effective digital advertising platform for displaying government announcements.
Network demand is growing multifold with technology moving from voice to data. The pace of this transition needs to be supported by aggressive infrastructure roll-out. Going forward, the industry would need to push the pedal on site fiberisation as well as on the deployment of infill sites, indoor solutions and Wi-Fi hotspots. The roll-out of 5G, commercialisation of IoT and deployment of smart solutions under the Smart Cities Mission would require infrastructure players to step up their game.
At the policy level, expeditious and effective implementation of the NDCP 2018 will prove to be a game changer for industry stakeholders. Initiatives such as Fibre First, mentioned in the NDCP, can bring India into the league of China and the US, which have achieved a significant level of fiberisation. Also, the policy allows for broadening the scope of IP-1s, which will enable them to assume a bigger role in creating shareable common digital infrastructure. There is also a need to replicate the successful tower sharing model in other infrastructure set-ups such as fibre, Wi-Fi and active equipment, as well as to ensure faster time-to-market and reduced costs.
According to Sharma, “While the government has taken initiatives to provide access to government land and buildings for tower installations, these initiatives have been sporadic at best and more work needs to be done on this front. Giving preferential electricity connections and tariffs (for example, industrial tariffs) to tower sites will help contain the cost of running the sites and make services more affordable for end users. Further, the security of critical telecom infrastructure needs to be mandated by the central and state governments, much like that of railway and electricity infrastructure. Another long-standing request of the industry has been to provide input tax credit for telecom infrastructure.”
An effective infrastructure roll-out strategy at the industry level is imperative for fulfilling India’s digital vision.
(In a bid to focus attention on the evolving telecom infrastructure space in India and discuss the initiatives needed to address supply and demand-side issues, tele.net recently organised a conference, “Telecom Infrastructure in India”. This section presents the key takeaways from the conference and highlights new and upcoming opportunities for telecom infrastructure players.)
Akanksha Mahajan Marwah