The Indian telecom sector has witnessed significant transformation over the years. During Phase I of the sector’s growth, operators were mainly involved in selling voice and data minutes as well as value-added services. They also started sharing passive infrastructure for asset optimisation and managing energy costs and uptime.
During Phase II, operators continued to sell voice and data services and took initiatives to improve customer experience. However, they started forming separate entities to manage their tower assets and future roll-outs. These tower/IP-1 companies were also responsible for optimising energy costs and uptime.
As the market is now slowly transitioning towards Phase III, tower companies have begun outsourcing their energy management functions to specialised operations and maintenance (O&M) companies.
Telecom ecosystem – Stakeholders’ deliverables
For operators, the growth is largely dependent on subscribers and ARPUs. The key deliverables include seamless network availability, high quality data availability, and spectrum acquisition and monetisation. Failing to meet these deliverables results in revenue loss on account of call drops and low data speed.
As for infrastructure providers, the key deliverables include uptime and cost optimisation through tenancy augmentation. Failing to meet these results in penalties for downtime and
lower attractiveness for customers (operators) due to high tenancy costs.
Meanwhile, for O&M service providers, the growth is driven by factors such as towers under service and service rate per tower. The key deliverables include constant uptime percentage, site hygeine, equipment health and energy cost optimisation. Failing to meet these results in penalties for downtime.
Role of O&M
The need for professionally managed, technically competent and financially sound O&M companies is becoming critical in light of the high energy costs in the telecom ecosystem and new regulations from the Department of Telecommunications to reduce carbon emissions.
Currently, energy costs are the largest component of the opex of a telecom operator/tower company. There are various reasons for the increase in energy costs. These include grid power deficit, mismanagement and pilferage issues, the increased use of indoor base transceiver stations (BTSs), variations in the degree of renewable energy usage, and high capex for the deployment of innovative energy optimisation solutions.
Opex reduction requires a focused ap-proach and site-specific solutions. A lower opex can be achieved through an improvement in grid power supply, better personnel management, remote monitoring solutions, efficient estate management, conversion of indoor sites to outdoor, supportive regulations, and long-term O&M contracts based on fixed-cost O&M models.
Challenges in the implementation of new technologies
- The deployment of new solutions requires high upfront capex – In several instances, the cost of deploying new solutions is as high as 50 per cent of the initial site construction cost.
- Maintenance and security challenges – On-the-ground training is required for technicians to ensure proper equipment upkeep. Equipment security – This is important to prevent equipment vandalism and sabotage.
- Need for site-wise customisation and optimal technology choice – Unique site designs based on tenancy, site load, grid power availability, geographical conditions, weather, law and order, telecom traffic, and site accessibility, etc. are required.
Going forward
India continues to feature on the list of countries with very low ARPUs and a tariff increase is not likely in the short term owing to the high price elasticity and hypercompetition in the market. Thus, energy cost optimisation is a sine qua non for the sustainable growth of telecom operations. A change in the business model is required to make optimisation of energy costs a win-win proposition for service providers and end-users.
Based on a presentation by Ajit Shankar, Chief Executive Officer, Ardom Telecom
