With significant consolidation of tenancies owing to recent mergers and acquisitions, the number of key towercos is likely to reduce to four or five in the next few years. While this augurs well for the management of a large number of towers (close to 500,000 towers pan-India), attention needs to be paid to addressing the chronic problems faced by the industry.
Although there has been some improvement in grid supply across India, the situation is far from acceptable. At non-metro locations, the average grid availability is no more than 12 hours on a daily basis. To address this gap, many technology initiatives have been taken up by the industry in the past, which include adoption of innovative technologies and deployment of energy efficient equipment to reduce energy requirements at a telecom site. These are:
- Heat management strategies: Indoor-to-outdoor transformation, free cooling solutions, heat tunnelling and intelligent shutting down of air conditioning based on ambient temperature.
- Energy hybrid solution: A combination of solar photovoltaic (PV) battery, diesel generators (DGs) and the grid, which uses using intelligent control algorithms, auto device management sequence operation, and various devices to service load in different energy availability conditions.
- Active system management: It includes putting into sleep mode base transceiver stations, and associated cabinets and extra transmitters during low traffic so as to reduce the energy consumption. Equipment without sleep mode consumes constant energy depending upon the maximum traffic to be adopted.
While all this has happened with varying degrees of commitment and pace across different telcos and towercos, not much has happened in terms of controlling and monitoring operations remotely. The industry is yet to move to business models that encourage automatic modes of operation rather than the manual modes prevalent currently.
Key challenges – Grid availability, tenancy losses and O&M approach
Close to 10 per cent of the telecom towers in India are grid deprived. The condition of the grid, if at all available to these sites, is so pathetic that, for all practical purposes, they are deemed as “off-grid”. The problem is compounded further by a combination of issues that include diesel pilferage, site access challenges where the owner does not permit access to the site unless he is financially gratified; and deliberate manual mode operation so that the site runs on DG despite alternative technology solutions being deployed at the site.
Further, telco consolidation has resulted in tenancy losses. It was an obvious outcome and totally expected. But it has its adverse effects on the serving entities and people. First came uncertainty, then confusion and finally downsizing. Redundancies in roles, locations and functions had to be addressed. Some sites were shut down; relocations happened and accumulation of equipment as well. The impact on performance will be seen in the months to come.
Finally, the approach towards operations and maintenance (O&M) of passive infrastructure by towercos is traditionally bifurcated into two formats. One in which outsourcing is fully interleaved into deliverables and the towerco only supervises the O&M with minimal field staff. In the other, in-sourced model, the towerco manages O&M in-house; it hires O&M staff on a monthly outsourced payroll from human resource agencies, but manages them fully. While both models are prevalent owing to financial prudence and diligence, optimum equipment performance and energy conservation and management are not achieved at the end of O&M. Failed DGs, overused batteries, under-provisioned power systems being driven to capacity are examples of how the industry is suffering due to its own inefficiencies.
Key emerging trends
With revenues under pressure and costs of operations still rising, towercos will look beyond traditional business and explore opportunities in areas such as in-building solutions, Wi-Fi hotspots, and fiberisation for smart city projects. Some business models have already been crafted while others remain to be developed on how towercos will do these projects.
Cost optimisation for energy appears to be at the forefront of the thought chain of the industry. More and more players are now looking at ways to contain costs and de-risk themselves from fluctuations in diesel rates and grid availability.
Let us look at the global scenario to understand where we are in India. The information and communications technology (ICT) industry alone accounts for about 2 per cent or 860 million tonnes of the world’s greenhouse gas emissions. The main sectors that contribute to emissions within the ICT industry include the energy requirements of PCs and monitors (40 per cent), data centres (about 23 per cent), and fixed and mobile telecommunications (about 24 per cent). Many countries have initiated steps to reduce energy consumption and emissions in line with the Kyoto Protocol of 1997, which was signed by over 160 countries, including India, to reduce their emissions of greenhouse gases. The importance of green and energy efficient telecom equipment has grown phenomenally in recent years and will continue to grow going forward.
Green power by itself is not feasible or economical at all locations. There are areas where this is not an option or the return on investments is too low to justify. The focus of green telecom has swung strongly towards energy efficiency. While clean power is not to be discounted, operators (and thus suppliers) are placing much more emphasis today on curbing power consumption than on deploying green base stations.
It is estimated that by 2019, sustainable telecom network infrastructure investments will account for 61 per cent of the global telecom capital expenditure, representing a $210 billion market. Of these investments, 65 per cent will go into mobile networks alone.
Services such as network and site planning can also reduce the energy needed to run a network, and vendors are also placing more emphasis on their own supply chains to reduce energy consumption and decrease emissions.
Given the recent industry consolidation, pressure on revenues, ever-increasing diesel prices and operating expenses, what should then be the focus areas of telecom infrastructure service providers?
In addition to the traditional cost containment measures that a company adopts to regulate expenses, focus has to be shifted to the following:
- Modifying the current O&M approach to a fully interleaved one with energy management and building a business model of risk and reward sharing through outsourcing wherein technology upgrades will be brought in by the service partner.
- Traditional modes of power and fuel cost “pass-through” would have to end as there is no incentive for the introduction of energy efficiency measures by the service partner.
- There is no robust remote management and control infrastructure enabling tower management at an integrated level. In most cases, there is a skewed dependence on the telco and its infrastructure to provide “OMC feed” based on which the towerco gets to know the status of failure of passive infrastructure at a site. A comprehensive tower operations centre with field remote sensors coupled with it, and software capable of sophisticated energy analytics and fault diagnostics and pre-alerts can go a long way in minimising the overall field staff cost and failure-to-recovery time.
The way forward
A lot has happened in the last five years in the energy management space but a lot more needs to happen if we seek to contain the operating costs of managing telecom passive infrastructure. It is evident that energy will play a pivotal role in how the towercos manage their opex. Technologies that help minimise wastage (and hence contingent costs) and enhance efficiencies have been trialled and solutions that work have already been identified. There are clear choices on what works and to what effect.
With the presence of big players with large national tower footprints, an ad hoc business approach and duplication of resources and efforts will not yield results. What businesses need is a robust business model that works on outsourcing with an outcome promise bundled with energy, and O&M. Towercos have in the past placed their bets on the opex model, but did not refine it enough so as to implement the model on a large scale. The time has come to do so now.