There are around 425,000 telecom towers in the country and this number is estimated to grow significantly, owing to the increasing pressure on operators to increase their network coverage. Policy clarity on spectrum trading and sharing, and on mergers and acquisitions is expected to further drive this growth.
While there is a constant need for network expansion, there is equal pressure to limit capital expenditure so that profitability is maintained. This has led to telecom operators opting to lease towers from tower companies. Leasing also helps operators launch their services in record time. The major trends dominating the telecom infrastructure space are as follows:
- Impetus from data growth: With the focus shifting from voice to data, tower companies need to evolve from their traditional areas of expertise. For instance, tower operators need to start interacting with new ecosystem partners such as Wi-Fi players and cable operators.
- Spectrum optimisation by operators: Telecom operators are employing spectrum usage optimisation techniques such as spectrum refarming and sharing. This calls for tower companies to improve their tower technology and equipment.
- Fiberisation of backhaul networks: Telecom companies need to invest in an efficient mobile backhaul network that ensures seamless voice and data connectivity across 2G, 3G and 4G/LTE networks. In India, about 20 per cent sites are fiberised compared to 70-80 per cent sites in developed countries. Poor fibre infrastructure is a bottleneck in providing quality data services. Tower companies can provide end-to-end managed services in the fibre value chain. For this, they need to work with the government and municipalities, and develop skills like network operations and maintenance, fault configuration, performance security and monitoring.
- In-building solutions (IBS): The traditional route for offering mobile services is through macro sites mounted on mobile towers. Approximately 60-65 per cent of mobile usage takes place inside a building and these macro sites often fail to provide good quality service inside buildings. To avoid signal loss, the power radiation of these sites needs to be high. In this context, IBS can ensure better service quality with fewer dropped calls by offloading traffic from macro-cell networks. Moreover, IBS sharing reduces the total cost of ownership since both the investment cost and the maintenance expenses are shared among multiple operators. This can be a great opportunity for tower companies.
- Minimisation of passive infrastructure requirements for active equipment: Initially, independent passive infrastructure was used to house active equipment by mobile network operators. Then, about a decade ago, sharing of infrastructure including tower space, shelter space and power started. Active equipment sharing is poised to be the future. This sharing model will not be limited to only the access network (base transceiver stations/base controller stations); it could be extended to the central nodes as well.
- Government thrust through the Digital India and Smart Cities initiatives: Digital India is one of the key focus areas of the government. Through this initiative, it aims to provide universal access to mobile connectivity and the internet in the remotest corners of the country. Further, the Smart Cities Mission presents an investment opportunity of $2 trillion over the next 30 years. Both these initiatives seek to drive citizen engagement through greater access to city services, education, training and job opportunities; enhance decision-making and facilitate intelligent sensor-based internet-of-everything innovations in transportation, utilities, public safety and environmental monitoring. In order to achieve these objectives, significant investment is needed in technology and connectivity. The most important technological components that need to be in place for smart city functioning are communication networks, intelligent telecom infrastructure, data centres, data analytics and cybersecurity. Tower organisations can work effectively with local governments and municipalities to set up the telecom infrastructure for smart cities. Although telecom operators will play a key role in connecting the city infrastructure, it is telecom infrastructure providers that will provide the backbone for the smart city initiative. Tower companies will need to develop innovative solutions like a mix of passive infrastructure, small cell solutions and Wi-Fi solutions, as well as system integration capabilities to meet the requirements of the Digital India and Smart Cities initiatives.
- Green telecom: With the growing public sentiment and regulatory pressure to reduce energy consumption and pollution, especially from diesel generators, telecom tower companies are adopting renewable sources of energy. This has led to the emergence of renewable energy service companies. Tower operators are adding to their portfolio towers run on technologies ranging from solar photovoltaic cells and fuel cells to biomass and biofuel.
- Emergence of new players: Network operators are facing competition from new market players such as Comcast, Google and mobile virtual network operators. They can pose a major threat to mobile network operators’ businesses and reduce the demand for tower sites.
Going forward, the telecom infrastructure industry will witness significant growth in tower deployments, greater fiberisation of sites and increased demand for tenancies. Recent government initiatives, as well as the push towards cashless payments, will further fuel growth in the telecom infrastructure space.