The Department of Telecom's new guidelines, which permit sharing of active infrastructure among service and infrastructure providers, have given a major boost to telecom service providers. The new guidelines will not only help service providers (SPs) cut costs, but will also make consumers happy, as the savings will trickle down to them as cheaper tariffs.

Issuing the guidelines on infrastructure sharing, the Department of Telecom said, “Sharing of active infrastructure among service providers, based on mutual agreements, is permitted.”

Earlier, DoT allowed sharing of only passive infrastructure. Passive infrastructure sharing refers to sharing of physical sites, buildings, shelters, towers, power supply, and battery backup. Active infrastructure sharing, in addition, involves access to common antenna, feeder cable, Node B, radio access network (RAN), and transmission system. Sharing of allocated spectrum, however, is not allowed as of now.

If we look at cost involved, we see that annual costs per site to operators without sharing would be $77,785 and when there is passive sharing it would be $50,546. Now, with active sharing, the annual cost per site to operatos would be $38,341. This, in turn, will save 24% annually when compared to passive sharing.

Welcome Change
DoT has said that the licensing conditions of unified access services and cellular mobile service providers will be suitably amended wherever necessary to permit such sharing.

Almost all major service providers have welcomed the government's initiative on active infrastructure sharing. Manoj Kohli, president and CEO, Bharti Airtel, says, “As a company that has pioneered sharing of passive mobile telecom infrastructure in the country, Bharti Airtel will now commit to do so in active networks with new vigor.”

DoT has also simplified the procedure for infrastructure providers, by reducing the time for clearance to erect towers and antennae to about forty-five days. Sites located beyond 7 km from the airport reference point (ARP) and the antenna height not exceeding 40 m from the airport level need only be “registered” on the wireless planning coordination (WPC) website and clearance will be issued accordingly.

DoT has also not forgotten to give financial incentives on infrastructure sharing in urban and rural areas. In urban areas, state governments will be requested to charge the same amounts, at par with unshared towers, for setting up shared towers irrespective of the number of service providers sharing the tower. And, for rural areas, all eligible service providers/infrastructure providers will be permitted to participate in the forthcoming scheme of USOF on infrastructure sharing, irrespective of whether they were beneficiaries of the infrastructure sharing scheme within that area.

Ground Rules
There are some things that infrastructure providers need to keep in mind. They shall set up ground base towers (GBTs) of a minimum height of 40 m with design duly approved by TEC/SERC/IITs. Such a tower shall be capable of catering to the requirements of minimum three service providers sharing the infrastructure for mobile services. However, the number of service providers sharing this tower may vary depending on the proposal submitted by the infrastructure provider at the time of registration with USOF.

Also, infrastructure providers will have to set up the infrastructure site within one year from the date of signing of the agreement with the administrator-the USOF. No subsidy shall be payable to the infrastructure provider if such infrastructure is set up after the expiry period.

Innovation has already begun in the infrastructure space. Recently, Vanu showcased the first wireless infrastructure solution for the Indian service provider. It enables individual base stations to simultaneously operate GSM, CDMA, and beyond.

With wireless standards developed entirely on software instead of specialized, single-purpose hardware, the solution accelerates time-to-market for new services while delivering unprecedented capital and operating cost-savings.

Carriers can easily and economically add new wireless standards or increase system capacity via remote software downloads. This means the base station can support new networks via a relatively simple software upgrade instead of costly hardware replacements. Sanjay Bakaya, senior director, Vanu, says, “We are quite happy with DoT's guidelines and we are engaged with all major existing and new carriers and some tower companies to offer our MultiRAN product that will provide independent network management and competitive services differentiation to the operator.”

“The move is expected to benefit both old and new players who are awaiting fresh spectrum allocation” Arun KapurMD, Quippo Telecom Infrastructure	“We are engaged with all major existing and new carriers and some tower companies to offer our MultiRAN product” Sanjay Bakaya senior director, Vanu	“Operators in Europe who have gone in for sharing of the radio access network (RAN) expect 20-30% saving” Naresh Singh principal research analyst, Gartner	“It will provide the industry with the opportunity to bring down operating costs” Manoj Kohli president & CEO, Bharti Airtel

Talking about financial gains that can be expected from the new regulations, the move will benefit both old and new players, who are awaiting fresh spectrum allocation, as sharing of active infrastructure will help them in rolling out networks faster, reduce time-to-market, and increase capex savings, thereby resulting in lowering of tariffs. Naresh Singh, principal research analyst, Gartner, says, “Operators in Europe who have gone in for sharing of the radio access network (RAN) expect 20-30% savings on RAN capital and operational expenditure in the long term, assuming full 2G and 3G consolidation.”

According to analysts, sharing active infrastructure will save around 24% annually and it will be approximately 50% and 35% in terms of capex and opex savings, respectively.

Also, for using non-conventional energy sources, service providers may avail several fiscal and financial incentives under various schemes of the Ministry of New and Renewable Energy. Adding the MVNO angle, Arun Kapur, MD, Quippo Telecom Infrastructure, says, “Opex is a variable head and will depend on the amount of traffic carried by operators. However, it can have a positive impact on opex if the MVNO business model comes in the Indian scenario.”

While subscriber base is growing rapidly, ARPU decline and growing competition (a number of new licensees have lined up for spectrum) are bringing down the prospects of sustained profitability-costs have gone up while returns on investment are diminishing. So, every cost saving avenue is welcome. Also, the government's objective to bring down telecom tariffs to the level of 50 paise per minute will get some fresh blood as a result of this move.

Sandeep Budki
sandeepb@cybermedia.co.in