The world is going through a rapid digital transformation. The telecom infrastructure space has evolved significantly in the past 15 years. With networks upgrading from 2G to 3G to 4G and now to 5G, the role of infrastructure players has evolved enormously. From being pure-play telecom infrastructure providers, infrastructure companies are now transitioning to being digital infrastructure providers. This is expected to open up a plethora of opportunities, which can be tapped via appropriate monetisation models. A look at how the telecom infrastructure space has evolved in the past decade, how the role of infrastructure companies is evolving and the way forward…

Evolution of telecom infrastructure

The telecom infrastructure space has evolved enormously in the past decade. Initially, in the 2G and 3G eras, it was focused around tower infrastructure as the dominant drivers were voice, SMS and, to some extent, MMS. Towers played a key role because data connectivity and voice transmission took place entirely through microwaves and GSM antennas. However, with networks moving to 4G over the past few years, data has become the most dominant driver. As data volume and speeds have increased exponentially, backhaul transmission has undergone a big change to cater to this surge in data traffic and fibre has emerged as the key driver for carrying data. Going forward, as 5G makes inroads into the sector, the infrastructure growth driver is expected to shift from data to connectivity. With 5G coming into the picture, various new use cases based on cutting-edge technologies such as internet of things (IoT) are expected to be implemented, and these use cases will demand connectivity across various aspects in order to be successful.

As traditional infrastructure can no longer cater to the new-age connectivity needs, this calls for the setting up of digital infrastructure. The essential difference between digital infrastructure and traditional telecom infrastructure is that while the latter is mostly limited to pure-play tower infrastructure, the former consists of towers, fibre, Wi-Fi, small cells, edge data centres, data centres, cloud and other such elements.

Going forward, 10-15 years hence, satellite infrastructure is also expected to take a more concrete shape.

Role of infrastructure providers in the digital age

Among the various stakeholders in the telecom infrastructure space, infrastructure players are best suited to tackle the digital age. As such, they have a key role to play.

Operators are now keen to provide content and not just connectivity. As operators put their focus and investments into content, the need to ensure a robust connectivity infrastructure will be key, which will be the responsibility of infrastructure providers.

In India, towercos are still at a level where they are only providing traditional telecom infrastructure. There is an urgent need for them to transition from providing pure play telecom infrastructure to providing digital infrastructure. The faster they transition, the better it will be for them from the sustainability and the futuristic value chain perspectives. This major shift is expected to take place over the next five years.

At present, telecom operators are the customers of traditional infrastructure players. But this will change as they transition to the role of digital infrastructure provider. Their customer base will expand to include any platform provider that needs connectivity. For example, with the advent of IoT, a platform provider offering metering solutions will require connectivity solutions and will need help in managing, connecting and maintaining its meters. Thus, an IoT player would be a potential customer for digital infrastructure providers.

Likewise, if an infrastructure provider ventures into the data centre space, its customer base will not just be limited to telecom operators but will also include over-the-top content players, retail chains and everybody using data centres.

The way forward

Going forward, as the customer value chain changes, the infrastructure value chain will also change. How much value can an infrastructure company derive from these changing value chains will depend on the company’s vision, the kind of capital it has and its investment opportunities.

These are highly opportune times for infrastructure players, as enterprises and players across sectors are looking for entities to come in and set up digital infrastructure, and to make it shareable. Every IoT player cannot have its own infrastructure to connect its sensors. These players will have to piggyback on a common infrastructure, which will be provided by digital infrastructure providers.

Based on the address by Sairam Prasad, Chief Technology Officer, IHS Towers, at a recent conference