The rapid growth of the telecom sector necessitates the building of digital in­frastructure comprising fibre, small cells and mobile towers to support the de­mand for data. At present, India is highly fibre starved. Despite being the second lar­­gest telecom market in the world, its fi­bre km per capita is much lo­wer than that of several other key telecom markets. The fibre km per capita in China with a population of 1.3 billion is 0.87, whereas in In­dia, which has a 1.2 bi­llion population, it is merely 0.09.

Fiberisation – the heart of 5G

The laying of fibre is one of the most critical elements of communication. Fibre gi­ves an optimal network performance en­su­ring reliable, stable and faster services at the right cost. It creates a future-proof net­work to maximise operational efficiencies. The deployment of 4G and 5G networks requires strong fibre backhaul. With small cells becoming a crucial part of the 5G roll-out, fiberised backhaul will be essential in the future.

At present, India has more than 3 million km of optical fibre cable (OFC). This translates into 36 per cent of towers currently fiberised, while a total 70 per cent of towers need to be fiberised by 2024 for leveraging 5G. The share of fiberised towers in states including Gujarat, Karnataka, Telangana and Kerala is 37 per cent, 44 per cent, 38 per cent and 36 per cent respectively. Meanwhile, 45 per cent of towers are fiberised in Delhi and 31 per cent in Uttar Pradesh. The required investment for pan-Indian incremental tower fiberisation will be Rs 520 billion-Rs 595 billion.

Earlier, in August 2020, the prime mi­ni­ster of India had laid down the vision to connect every village in the country with OFC in 1,000 days. To achieve this, cables would have to be laid at nearly 3.6 times the current pace, up from the existing ave­rage of 350 km a day to over 1,251 km a day. Towercos will have a significant role to play in realising this vision as they possess the skill set and experience to ex­pe­dite the country’s fibre growth story.

OFC market overview

The OFC market is projected to grow from $4.9 billion in 2022 to $8.2 billion by 2027 at a compound annual growth rate (CAGR) of 10.9 per cent. The Indian OFC market stood at $881.5 million in 2019 and is projected to grow at a CAGR of 19.7 per cent to reach $2.1 billion by 2024. The growth is driven by continued investments made by the government in de­veloping the OFC network infrastructure for various projects. Fibre-to-the-ho­me connectivity has grown manyfold ow­ing to government initiatives such as Di­gital India, the Smart Cities Mission, the Nati­onal Broadband Mission and BharatNet. The growing nu­m­ber of data centres in India will further fuel this growth.

Challenges

While fibre roll-out has to be expedited to achieve the Digital India reality, several key challenges are yet to be overcome. Th­e­se include:

  • Non-uniform implementation of the RoW Rules, 2016: At present, 35 states have aligned their policies with the Right of Way (RoW) Rules issued by the De­part­­ment of Telecommuni­cations. The non-implementation of the RoW Rules has created several hurdles in fibre de­ployment across tower sites. RoW still remains the biggest cost component for tower operators.
  • Permission delays and lack of dee­m­ed approvals: Delays in getting the necessary permissions where the policies are not aligned with the RoW Rules escalate the overall cost of the project. Further, no-objection certificates pertaining to mo­­bile tower sites are often not acted upon by the requisite authority during the application stage, despite guidelines ma­ndating deemed approval within the turnaround time of 60 days.
  • High administrative and investment costs: The administration fees levied on processing tower site approvals are not aligned with the central policy of 2016 and its 2021 amendment for laying of the aerial fibre structure, leading to high ad­ministrative costs that impact the corpus of investment that would otherwise be utilised for tower site expansions. Mo­re­­over, fibre costs have been increasing, adding significantly to operators’ capex burden. Therefore, it is imperative that op­erators opt for a sharing app­roach in infrastructure planning and utilisation, which would save duplication costs.
  • Property tax levied on mobile tower sites: At present, property taxes on mo­bile tower sites are being levied using methodologies that do not remain consistent across all states of the country. Further, levying property taxes on tower sites tends to discourage property owners from allowing the installation of to­wer sites on their properties.

Key recommendations

  • Formulation and implementation of RoW policy in line with RoW Rules in states: Al­though the RoW Rules we­re notified in 2016, a few key states have not yet aligned their RoW policies with that of the ce­ntre. Accor­ding to the Di­gi­tal In­fra­struc­ture Provi­de­rs Asso­cia­tion (DIPA), top pri­ority should be given to au­tomatic RoW approvals with ra­ti­o­na­lised cost th­ro­ugh a single-window po­rtal. More­over, timely approvals should be provided with a provision for deemed ap­proval.
  • National dig-once/call-once policy and cross-sector infrastructure sharing: Evolving a national dig-once policy for ducting to lay fibre across roads and national highways will pave the way for efficient fibre laying across the country. Further, a common duct will enable in­f­ra­­structure providers category-1 (IP-1s), telecom service providers (TSPs) and internet service providers to lay fibre ea­sily for providing broadband services. The availability of common infrastructure would save time, costs and effort and resolve problems faced in the laying of underground cables to a large extent.
  • Enhancement in the scope of IP-1s: The Telecom Regulatory Authority of In­dia had strongly recommended the expansion of scope of infrastructure pro­viders to cover active infrastructure on a sharable basis which will allow IP-1s to offer digital infrastructure on a pl­ug-and-play model to the TSPs. This will lead to incentivisation of fiberisation initiatives as IPs would be able to offer a complete solution to TSPs.
  • Utilisation of the USOF Fund: The laying of OFC to the last mile involves huge ca­pex and a subsidy of Rs 989 million to be provided by the Universal Ser­vice Obli­gation (USO) Fund. The USO Fund can be utilised to create fibre backhaul in urban areas as well. Band­width sha­ring can be mandated and IP-1s/TSPs should be eligible to bid.

The way forward

By 2025-26, India will experience a 2.7 times rise in data traffic per smartphone per month, a subscriber base of 330 million, the 5G wave and a 1.4 times growth in enterprise expenditure on business and technology. DIPA is of the view that in­formation and communications technology (ICT) infrastructure needs to be declared a critical utility, at par with other utilities such as gas, water and electricity. The provisioning of ICT infrastructure must be made mandatory for obtaining a completion certificate for any commercial and residential building. Further, necessary amendments are requir­ed in the National Building Code (NBC)-2016 with provisions for laying of ICT infrastructure such as cables and ducts. The states must be mandated to implement the NBC by amending their building by-laws. Also, a mandate towar­ds fibre sharing is needed, which would lead to a reduction in capex and avoid the duplication of infrastructure as well as disruptions.

Based on a presentation by T.R. Dua, Director General, DIPA