The telecom infrastructure segment has seen big changes in 2017. Consolidation in the services space has led to a decline in tenancies and, therefore, profitability of tower companies. In this scenario, players in this space are exploring new revenue opportunities while also streamlining their existing business models. In an interview with tele.net, Umang Das, vice-chairman, Tower and Infrastructure Providers Association (TAIPA), expressed his views on the performance of the tower industry in 2017, the impact of hypercompetition among operators on the tower industry, the energy efficiency practices adopted by tower companies and the expectations from ­policymakers. Excerpts…

How was the year 2017 for the telecom sector as a wh­ole and for the tower industry in particular?

The year 2017 has been momentous as the concept of digital services proliferated during the year. The country not only saw a greater adoption of digital services but started witnessing a transformation to­wards a digital society, with the government also taking many concrete steps in this direction. This momentous change has led to the need for a robust backup infrastructure, which is fundamental for the transformation. I think 2017 has been a watershed year and the next five years will be crucial for us to say whether we are a transformed nation or not.

Has the industry performed in line with the government’s vision?

First, there is a vision and policies are ­formulated on that basis. Thereafter comes the issue of implementation on the ground. While the industry supports the government’s vision, a major concern that remains unaddressed is that several recommendations made by the regulator have yet to be converted into implementable policies. There need to be clearly defined rules for the vision to become practically implementable. Policy clarity has not emerged, which makes implementation extremely challenging at the ground level and in many cases, leads to litigation. I am hopeful that the National Telecom Policy (NTP), 2018 will provide implementable directions to achieve the vision of a digital India.

“One of the most important challenges today is to increase the level of fiberisation from the current 15-20 per cent to 100 per cent fiberised towers.”

What have been TAIPA’s recommendations and suggestions for NTP 2018?

It may be noted that TAIPA has already given its recommendations and suggestions regarding infrastructure policy matters to the Department of Telecom­muni­­­ca­­tions (DoT) and the Telecom ­Regula­tory Auth­ority of India (TRAI). The role of TAIPA has been to highlight that in the telecom domain, in addition to the ­concerns of ­services, spectrum, financial health and hypercompetition, the importance of infrastructure – its roll-out and availability as well as steps towards ease-of-doing business – is also a fundamental consideration. The biggest difference between us and some other industry groups is that we are ­focusing government attention on issues related to ease-of-doing business and not on ­seeking any financial subsidy or relief. Furthermore, we are helping in cost optimisation by taking the responsibility for asset sharing and simultaneously rolling out ICT (information and communication technology) in­frastructure to ensure win-win benefits and the transformation of the industry as a whole. Our aim is to give the telecom infrastructure segment its due recognition as an essential industry.

Further, TAIPA has played a vital role in making the government aware that right of way (RoW) should also be applicable to IP-1 players. While this provision is still not there in the gazetted RoW rules, it has been recognised by the government and we are hopeful that it will be suitably addressed in NTP 2018. We are focused on ease-of-doing business and infrastructure sharing, which have become global benchmarks. Infrastructure sharing is not limited to only towers but also covers fibre, antennas, transmission equipment, street furniture, in-building solutions, etc.

What is the current size of the telecom infrastructure market?

The sector has over 450,000 telecom towers. In one of its previous consultation papers, TRAI had estimated that the revenue would be close to Rs 200 billion annually. This is a growing figure. How­ever, market performance cannot be measured in terms of only revenue; there are also parameters such as tenancy sharing and long-term sustainability by way of returns on investment. Our entire model revolves around investments and sharing. As an industry, our sharing level is in excess of two, which is an encouraging trend.

The good news is that the infrastructure industry is getting recognised. This category includes common telecom infrastructure such as in-building solutions and fiberised towers. Further, upcoming technologies such as 5G and internet of things (IoT) will lead to around 50 billion net touch-points globally in the future. This would require a huge transformation in te­rms of infrastructure, comprising not only towers but also fibre and common tele­­com infrastructure for end-to-end offerings. However, one of the most important challenges today is to increase the level of fiberisation from the current 15-20 per cent to 100 per cent fiberised towers.

How has hypercompetition among operators impacted the tower industry?

Due to hypercompetition, operators are hard-pressed in their ability to make investments in new infrastructure. There are two broad areas that are pressuring operators – one, the huge payment outgo on spectrum and two, declining ARPUs. In such a situation, investments in infrastructure by operators become a problem. Although these issues may get resolved over time, infrastructure providers can make investments in creating common telecom infrastructure that is available to all. We, therefore, need ease-of-doing busi­ness and a policy environment that encourages us to do that.

What are the opportunities that will arise for tower companies from programmes like Smart Cities?

The government is going to play a big role in establishing smart cities. The infrastructure for providing ICT in smart cities has multiple applications and will be accessed by multiple service providers, who are not limited to telecom. To this end, not just telecom service providers but a host of other service providers will come into play in this space. That said, we are still waiting for a liberal policy that will enable us to partner with the government and local government bodies for the creation of basic ICT infrastructure for smart cities that can be shared across multiple stakeholders.

“Upcoming technologies such as 5G and IoT will lead to around 50 billion net touch-points globally in the future. This would require a huge transformation in terms of infrastructure, comprising not only towers but also fibre and common telecom infrastructure for end-to-end offerings.

What are your views on energy management in the tower space?

For us, energy management initiatives are driven by our “diesel-free” sites progra­mme. This is an anti-pollution progra­m­me that aims to do away with the need for diesel generator (DG) sets and shift to renewable and cleaner forms of energy at our tower sites. This involves fundamental efforts towards shifting from DG sets and diesel consumption to new technology solutions, energy storage solutions, energy efficient lithium-ion batteries and im­pro­ved grid connectivity.

To this end, the government should treat tower sites as critical services and prioritise direct grid connectivity to tower sites. Some of the new technology solutions are solar based, some are hybrid models of solar, and some are pure lithium-ion. In case of a grid outage, energy storage solutions can take over and the need for a DG set will theoretically vanish and, if there is still any requirement, a shared DG set can provide power to more sites than just one. Today, 20-25 per cent of our sites have become diesel-free. Grid power availability has also improved. Moreover, since 70-80 per cent of operations and maintenance (O&M) services are related to energy, involving independent companies to take care of this requirement enhances cost effectiveness. So, we are driven by two considerations – one is to go diesel-free and the second is O&M being supported by independent energy companies.

What is the telecom infrastructure outlook for 2018?

We look at 2018 with a lot of hope as we await the launch of NTP 2018. Further, we see a very conducive environment em­er­­­­ging between the regulator and ­policy­makers, which is a very positive change. The regulator is being heard with due consideration on its recommendations. Fur­ther, policymakers are looking to come up with conducive policies that would not just maximise revenues for the finance ministry but also focus on ­con­nectivity and coverage. The highest levels of government are now looking at a transformation towards a digital India. All these developments augur well. As industry associations, we have to see how we take this message forward and prioritise ­implemen­tation at multiple levels of government in the states and local bodies.