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Construction : Telecom | October 2015 | Source : Infrastructure Today

Tele buzz

India´s aspiration of being a leading digital economy needs to overcome several bottlenecks. With marginal penetration levels vis-a-vis global counterparts, it has miles to go.
Fact 1 - China Mobile, the leading Chinese operator, had 940,000 4G base stations at the end of June 2015. This is more than what all Indian operators have between them across all technologies (2G, 3G and 4G).

Fact 2 - Data revenue of Indian operators is at around 20 per cent of overall revenues, while Chinese telecom operators earn 50 per cent of their revenue from data services.

Fact 3 - With a fixed broadband penetration of 1.2 per cent, India ranks 125th in the world, significantly lower than peers such as China (14 per cent) and Brazil (10 per cent).

So the question to ponder upon is- could we be the world´s leading digital economy and knowledge driven society if our communication networks are under-invested and under-penetrated?
Communication is central to everything digital. Smart Cities cannot be ´smart´ if network connectivity is poor, citizen e-services will continue to under perform if reach is limited, mobile transactions will keep on failing resulting in poor customer experience and machine-to-machine or internet-of-things will remain a distant dream for the country.

To overcome these bottlenecks, we need to continuously address all three key infrastructure components together, i.e., spectrum, towers and backhaul fiber.

Spectrum is a very limited, non-consumable, perishable natural resource which gets wasted if not put to use. Capacity of a telecom network is a direct result of the quantum of spectrum, the underlying technology deployed, and number of towers installed using the spectrum. Average Indian telecom players´ spectrum holding is much lower (~15 MHz) than their international (80+ MHz) and Asian peers (50+ MHz).

Due to legacy allocation rules, considerable amount of spectrum allocated is fragmented and not suitable for rolling out of 3G or 4G services, while a section of it is not available for commercial use. The government has only recently allowed spectrum sharing and trading. While detailed guidelines are still awaited, this is a significant step in the right direction and will address many of the spectrum concerns of the industry. Ongoing 4G launches will also help in reducing some of the capacity constraints, a mere 15 per cent re-deployment of 2G spectrum (from 1800 MHz and 850 MHz band) for 4G use will increase overall capacity of telecom networks in the country by about 40 per cent.

A lot still needs to be done. We have very valuable 700 MHz spectrum lying unused, which can be deployed for LTE services and should be the first choice for rolling out rural broadband. Also, M&A guidelines can be revisited to facilitate exit of sub-scale operators.

The second key component, i.e., telecom towers, is critical for the survival and growth of wireless infrastructure. We have around 400,000 towers in the country today, with an average tenancy (defined as number of operators sharing a tower) of two. Airtel, the country´s leading telecom operator, has around 200,000 base stations (as compared to more than 2 million for China Mobile) and covers around 87 per cent of population with its network. Clearly, we will need many more towers to cater to the growing data demand and to meet our aspiration of being the leading digital economy of the world.

However, Indian tower companies are facing challenges around increased consumer activism stemming from their concerns of health hazards of electro magnetic field (EMF) radiation from telecom towers. The industry has to work together along with the government to educate people and work with leading health organisations such as the WHO to conduct India specific studies to address these issues. They should also deploy techniques such as tower camouflaging, landscaping and stealth structures to address aesthetic concerns.

The third key element is availability of fiber backhaul connectivity. Today, in urban areas only around 20 per cent of telecom towers have fiber backhaul, resulting in very poor wireless broadband speeds. Of around 1.5 million RKms of fiber, intra-city fiber accounts for less than 20 per cent. This is primarily due to very high right-of-way costs, lack of universal guidelines for granting fiber laying permissions, and absence of a universal or shareable duct policy (dig once).

While the government´s ambitious Bhartanet Project will connect 250,000 gram panchayats (GPs) and will fill-in for the need of inter-city and city-to-GPs backhaul requirement, the government needs to address in-city fiber roll-out bottlenecks as well. As a start, the government should look to connect all rural telecom towers as part of its Bharatnet Project to accelerate deployment of 3G or 4G services. We should also modify our building by-laws to have mandatory ducts or optical fiber with non-discriminatory access mechanism in all upcoming office complexes, commercial spaces and residential complexes as part of the process of obtaining a completion certificate.

Clearly, there is a significant latent demand for data services. On top of it, various ongoing government initiatives around Digital India, Smart Cities and extensive online citizen services will also call for more supply. Indian telecom operators are struggling to scale up network investments to meet the rapidly evolving needs of their consumers and to ensure quality service. And it would augur well for the sector to have some financial and regulatory support from the government. The government has taken many enabling policy decisions in the last few months such as spectrum sharing and trading. However, considering the policy challenges that the sector has inherited, a lot still needs to be done, and it can hoped that many progressive policy decisions would be taken to add the much-needed impetus to India´s telecom story.

This article has been authored by Neeraj Katariya, Associate Director, PwC India.

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