The year 2000 was a key one for the Indian telecom sector as a new crop of players, telecom infrastructure providers or IP-1s, became a part of the industry value chain. Initially, most of these were either small stand-alone companies or tower assets of telcos hived off as independent entities. A major breakthrough came in 2005 when passive infrastructure sharing started in a big way, which later led to the conceptualisation of Indus Towers in 2007. This was an exemplary innovation for the tower industry not only in India but worldwide, where three of the key telecom operators and arch-rivals came together to establish an innovative business model for passive infrastructure sharing.
IP-1s took up the role of integrated, neutral hosts whose infrastructure could be used by competing telecom operators. For the Indian telecom sector, this meant a rapid deployment of network services, fast go-to-market, and capex and opex savings. As per the Tower and Infrastructure Providers Association (TAIPA), tower sharing in the Indian telecom sector has resulted in capex savings of Rs 230 billion since 2006.
Following the success of passive infrastructure sharing, IP-1s have expressed interest in enhancing their role to active infrastructure deployment and sharing as well. While passive infrastructure generally comprises dark fibre, right of way, duct space and towers, active infrastructure involves active electronic network elements, which are responsible for network intelligence. These include antenna, feeder cable, Node B, radio access network (RAN) and transmission systems.
At present, while IP-1s are allowed to create and share passive infrastructure, the permission for creating and sharing active infrastructure is granted only to telecom licensees. Thus, IP-1s cannot own and share active infrastructure but can only install it on behalf of licensed telecom operators.
Now, with the growing focus on digitalisation and 5G, the discussions around active infrastructure sharing have gathered steam. Infrastructure upgrades and network densification have become crucial but these cannot be done by telcos alone. It is imperative to bring in more participants in this space, especially those that have expertise in rapidly deploying robust telecom infrastructure through innovative business models. IP-1s are the best suited to take up this role and a policy push in this regard is likely to benefit the sector at large.
Against this backdrop, the Telecom Regulatory Authority of India’s (TRAI) recently released consultation paper on enhancing the role of IP-1s is a key and timely move. The telecom regulator has sought stakeholders’ comments on whether the scope of infrastructure and tower providers should be increased to include the provisioning of common or shareable active infrastructure such as nodes and RAN. Telcos, on their part, support this concept in-principle, as it will bring several benefits to them (see box “Benefits of active infrastructure sharing”).
TRAI’s consultation – Key pointers
In August 2019, TRAI released a consultation paper on the “Review of Scope of Infrastructure Providers Category-I (IP-1) Registration”, seeking industry views on whether the scope of IP-1 registration should be enhanced to include common shareable active infrastructure. The objective is to discuss and thereafter recommend the necessary policy changes, if any, to the government to encourage the deployment and sharing of active infrastructure by IP-1s.
TRAI has sought industry views on what should comprise common shareable active infrastructure. “It is important to prescribe the extent and scope for the type of network elements that can be owned, established, and provided on a rent/lease or sale basis by IP-1s to telecom service providers (TSPs),” states the TRAI paper. To this end, a possible option could be to include all those network elements in the scope of IP-1 registration that are currently allowed for sharing only among licensed TSPs. These include antenna, feeder cable, Node B, RAN and transmission systems.
Further, TRAI has sought industry views on whether IP-Is should be allowed to own, establish and provide wired access networks and in-building solutions, in line with global developments. “To encourage investment in active infrastructure by IP-1s, should they be allowed to provide end-to-end bandwidth, that is, digital transmission capacity capable of carrying messages through leased lines to TSPs,” says TRAI.
Another matter of deliberation is the identification of the TSP category with which such active infrastructure elements can be shared by IP-1s. As per the existing guidelines, IP-1s are permitted to provide passive infrastructure assets on a lease/rent out/sale basis only to licensed TSPs, which are permitted to create their own infrastructure. On similar lines, TRAI suggests that IP-1s may be permitted to provide infrastructure and end-to-end bandwidth through leased lines to different categories of TSPs such as virtual network operators (VNOs) and multiple system operators (MSOs) as they are licensed by the Department of Telecommunications (DoT) for providing telecom services and creating their own infrastructure. Other TSPs such as cloud service providers and machine-to-machine (M2M) connectivity providers, which are currently not registered with DoT, will also be eligible to get infrastructure services from IP-1s as and when they get registered with DoT.
If IP-1s are allowed to own, establish and rent/lease active network infrastructure, which also includes wireless telegraph apparatus, they would be required to obtain the licence for owning such apparatus, as well as an import licence from the Wireless Planning and Coordination wing of DoT for importing such equipment. Furthermore, for activating wireless backbone transmission systems, IP-1s would require microwave backbone spectrum for establishing point-to-point communication links. In light of these requirements, TRAI has sought industry views on whether IP-1s should be made eligible to obtain such wireless telegraphy licences and backbone spectrum. This may also require a discussion around licence fee and spectrum charges.
Case for enhancing the role of IP-1s
Given the role of IP-1s in the rapid deployment of mobile networks across the country by way of passive infrastructure sharing, it is only natural that these entities should be allowed to create and share active infrastructure as well. According to T.R. Dua, director general, TAIPA, “There is a need to enhance the scope of IP-1s so that they can leverage the sharing concept through newer business models such as leasing out common duct and fibre on a non-discriminatory basis, which would ultimately result in cost efficiencies.” Further, despite the fact that active infrastructure sharing is permitted among licensed TSPs, there are hardly any success stories of active infrastructure sharing by telcos in India. This is because the TSPs operating in the same geographical area and providing similar telecom services are not willing to share their resources if it leads to a competitive disadvantage. The best example is fibre sharing, which has been mostly in the form of a bilateral swap rather than true sharing.
In fact, TSPs are likely to be more comfortable in sharing/leasing/renting telecom infrastructure that is owned and maintained by a non-competing entity, in this case, an IP-1. Even TRAI has noted that the sharing of infrastructure is plausible only when such infrastructure is rolled out and shared in a non-discriminatory manner, by stand-alone companies that are not in direct competition with the TSPs. Infrastructure creation by stand-alone companies will also help in attracting investments from entities providing infrastructure funds.
As for IP-1s, TRAI’s suggestion of providing end-to-end bandwidth to multiple TSP categories, if supported by the industry, will broaden their addressable market. At the same time, it will help in propelling the growth of VNOs, cloud service providers, MSOs, content delivery networks, M2M connectivity providers, etc., which also require telecom resources like end-to-end transmission bandwidth and dark fibre but have to depend solely on telcos to meet their requirements. Other service providers registered with DoT for providing application services such as tele-banking, telemedicine, tele-trading, e-commerce and call centre services also require such telecom resources for interconnection. However, TRAI has clarified that its proposal to provide end-to-end bandwidth to TSPs by IP-1s does not include permission to provide end-to-end bandwidth to end users/subscribers, which would continue to be the prerogative of licensed TSPs.
The consultation paper comes at a time when the industry is gearing up for massive digital infrastructure development to realise government programmes like Digital India and the Smart Cities Mission. Significant investments will be required to meet the objectives of universal broadband access and tower fiberisation, as mentioned under the National Digital Communications Policy, 2019.
“As we plan for technological advancements, infrastructure sharing by a neutral host provider will be a path-breaking initiative. It will help support the financially stressed industry and will enable TSPs to focus on their core business. It will attract investments in the sector and accelerate the roll-out of digital services,” says Dua.
Enhancing the role of IP-1s and involving them in the creation and sharing of core and access network elements will be a win-win for all. s
Akanksha Mahajan Marwah