In a short span of time, the Indian telecom sector has been recognized as the fifth largest in the world and the second largest among the emerging economies of Asia. The enormous growth in mobile services in the past few years has been largely confined to urban consumers. The challenge now lies in providing affordable connectivity for the people living in rural and remote areas. Easy availability and access to reasonably priced telecom infrastructure will be crucial for telecom operators to reach out to rural markets with an affordable service offering.

Service providers today require innovative, converged infrastructures that are scalable to cater to tomorrow's new bandwidth-intensive services. Such networks need to be intelligent and provide support integration and flexibility, as they will give carriers short-term relief from competitive pressures and address new market opportunities.

The two major trends in infrastructure are: more bandwidth and more data. Data services such as broadband, mobile video, and mobile gaming would require the network infrastructure to have superior data capabilities. Hence, wireless operators would upgrade their infrastructure to equipment that are capable of supporting these new services.

These data services are often bandwidth intensive and will drive the bandwidth requirement up. Thus, wireless operators are expected to significantly enhance the bandwidth capacity of their networks.

However, common network technologies that serve these data requirements are best suited for best-effort services such as the Internet. As mobile video and mobile gaming services pick up, it would become important for these data technologies to be able to provide carrier-class features. This has been the prime motivation behind the ongoing development of carrier Ethernet. This would involve the addition of carrier-class features, quality of service, carrier-grade operations, and administration and maintenance features to data technologies such as Ethernet.

Broadband is another untapped segment and we are certain that the government's vision for rapid growth of broadband is round the corner. Easy availability and access to reasonably priced telecom infrastructure is crucial for operators to reach out to rural markets with an affordable service offering. The other essentials required for faster uptake will be the need for low-cost and easily maintainable PC/Internet access devices, and creation and customization of relevant content.

Worldwide, 3G has been deployed in several networks over the last seven years. However, due to spectrum allocation issues, 3G is yet to take off in India. India is to become a major market for 3G in the next few years. However, the lack of legacy also enables Indian SPs to jump-start to later releases of 3G (3G Release 5, and HSPA).

Technological evolutions are happening at a frenzied pace. India has not yet been able to launch WCDMA 3G services, which are in vogue in 100 countries. Newer technologies like HSUPA/HSPA are gaining ground for 3.5G mobile services. Mobile WiMax and LTE are waiting to unleash their promises for a new mobile Internet era. Other services like mobile TV/IPTV will emerge with the launch of 3G/mobile WiMax.

WiMax has been a promising new technology. Currently developed version of WiMax offers only fixed broadband (no mobility). Majority of the copper infrastructure in India is owned by public sector telecom operators, and deploying copper to the houses is an expensive exercise for other operators. Hence, fixed-WiMax is seen as an exciting alternative to providing DSL-based broadband (over the copper telephone line), particularly by private service providers. WiMax has also been touted as a technology that would take telecommunications connectivity to rural India. Sparse distribution and significantly lower ARPUs in rural areas make deployment of copper-based infrastructure unprofitable.

On the optical network infrastructure front, pure-packet technologies such as carrier Ethernet hold the promise of lower price/bandwidth ratio. Carrier Ethernet provides bandwidth efficiency by employing statistical multiplexing and is perfectly congruent to the all-IP transmission that 3G and WiMax demand. The Institute of Electrical and Electronics Engineers has been working on the standards that enable Carrier Ethernet. This would pave the way for network operators to deploy Carrier Ethernet systems that scale to several 10s of Gbps, and would lower network infrastructure costs.

GSM and CDMA will continue to be the two main technologies for mobile services. GPRS and EDGE and data services on CDMA have been in vogue for several years now. In the quest to make the networks ready for UMTS WCDMA 3G services, most mobile operators have upgraded their core networks to an all-IP environment based on soft switch enabled technologies.

Challenges
India is the fastest growing mobile market in the world today adding around seven million new subscribers per month. The country will need to sustain and enhance this growth rate, if it has to achieve the 500 mn subscriber mark by 2010. A significant part of the future growth will come from connecting rural India that has not yet been touched by the mobile revolution or benefited from it.

Sustaining the blistering growth rate and providing mobility to rural consumers throw up a different set of challenges. From economic perspective, the two key challenges for equipment providers are: first, quick and cost effective rollout of networks in rural areas in the context of declining equipment prices; and the second is simultaneously investing in creating products/solutions that enable viable business models that drive down total cost of ownership for operators and the affordability barrier for the common man.

From a technical perspective, there are a host of challenges associated with rural areas. These include limited electricity supply; issues related to equipment security, network planning, difficult terrain for rollout, addressable population and post deployment maintenance and running of networks, especially in the case of managed services.

Limited spectrum is also a major constraint. In fact, India is the most spectral efficient market in the world in terms of site capacity per MHz. However, these challenges are being addressed through service and product level innovations to ensure that growth rate is on track.

How to Prune Costs
Site costs can broadly be categorized under active electronics (BTS and MW), which are 30-35% of total site cost while the balance is infrastructure piece and site infrastructure like tower, battery/power system, aircons, and shelters. The project implementation cost will have network planning (RF, switch and transmission), implementation and commissioning, project management, and spares management.

Two vital mantras for improving operational efficiencies are: lowest total cost of ownership (TCO) model and highest total value of ownership (TVO) model. Operators need to build business models like managed services and managed capacity around these concepts to harness cost efficiencies.

The demography of the rural market is associated with a plethora of challenges for operators. It is characterized by sparse population over a large geographical area with potentially low ARPUs. Some of the major challenges include: (a) low ARPU subscribers (b) high infrastructure cost, and (c) poor affordability of rural users. The rural potential has to be tapped carefully as the population is highly price sensitive because of low levels of income and economic development. Operators must drive down operating costs to counter the impact of low ARPU and tariff reduction. Return on investment is not going to be very promising unless there are suitable value-added services for the target consumers.

Wireless infrastructure includes two components-base stations and other wireless-specific infrastructure, and optical fiber transmission, which is shared with other services. The latter contributes close to 30% of project costs. The need for network expansion coupled with decreasing ARPUs presents a significant challenge to operators. On the wireless-specific infrastructure front, operators have started decreasing costs by sharing their infrastructure (eg real estate) with other operators. This is especially valuable in metros, where real estate costs are high. On the optical fiber transmission front, several new technologies enable lowering of expense. Ethernet-switched NG-SDH enables operators to offer data services from their existing infrastructure with incremental changes. Upcoming technologies like Carrier Ethernet further help reduce optical transmission costs by providing better bandwidth/price ratios.

In the areas of 3G/HSPA and local cost GSM network solutions, Nokia Siemens Networks has very strong product offerings. It has developed a low cost solution called the Village Connection solution to help build rural connectivity village by village. This hardware-cum-software package will enable mobile connectivity to small villages with a population of about 2,000. The solution will obviate the need for putting up costly base stations (towers) and mobile switching networks to expand coverage. The solution provides an economical option to aid operators in India to expand network coverage to rural areas with average ARPUs as low as Rs 80-120. The Village Connection solution, which significantly reduces backhaul costs and enables a franchising business model, optimizes the local subscriber acquisition and support efficiency.

Increase in cost due to real estate; commodities like steel, copper, and lead; employee costs; and increasing cost of living will need to be offset as much as possible by gaining maximum synergies resulting from volumes, inter-operator collaboration in terms of sharing infrastructure and innovative business models, and execution methodologies to control these costs as much as possible.

Operator Concerns
Optimization of network using latest RF tools to utilize spectrum efficiently, sharing of both passive and active infrastructure, looking at WiMax as a means for delivering mobile personal broadband services and not just fixed/nomadic access, introducing latest applications to differentiate, and increasing the ARPU are some of the main concerns for operators.

Solutions that offer low total cost of ownership, better service quality, ease-of-scalability, and flexible business models like managed services are some of the other key expectations. Innovative and cost-effective solutions built to support their business case in tier-2 and-3 cities as well as rural markets help in driving down overall capex and opex to maintain viability.

ARPU for SPs is one of the lowest worldwide. While competition intensifies, and ARPUs are pushed further down, operational efficiency becomes paramount. The main concerns of operators are reducing network management costs, and challenges involved in increasing the usage efficiency of existing network and evolving the network in a direction that lowers cost, yet enables new services.

Another concern for operators is to converge their networks (for voice and data services) onto a common infrastructure. This would not only reduce the capital expenditure when they expand, but would also reduce the operational expenditure by simplifying the network.

India has one of the lowest tariffs (less than a rupee) in the world and on the other hand one of the highest levies and taxes (19-28% of revenue). Reduction of multifarious levies will further lower the affordability of services. Some important concerns grappling operators are:

• Delay in policy formulation and licensing for broadband wireless (such as 3G and mobile WiMax)
• Scarcity of spectrum
• Higher rate of levies and taxes of the order 19-28%
• Lack of support infrastructure for expansion in rural areas
• Affordability of devices and services in rural markets