With India emerging as the largest mobile player and as many as nine service providers jostling for space and higher share of revenue, one query that keeps on popping-up is that despite the tremendous growth the high costs of rolling out services is still a major pain for the service providers.

In such a scenario, sharing of telecom infrastructure among service providers is becoming the order of business in the telecom industry where rivals are becoming partners in order to lower the increasing investments.

According to Cellular Operators Association of India with as many as six operators in some states, there around 70,000 towers catering to 100 million mobile users already and another 1.4 lakh towers would be required by 2007 at a cost of Rs 25,000 crore to cater to the growing cellular subscriber base.

According to industry estimates, sharing a cell tower costs around Rs 2 crore and each operator needs over 300 towers to cover a city like Delhi. So, if each of the three private GSM-based operators Bharti, Hutch and MTNL in Delhi had to set-up a tower by themselves, it would have cost around Rs 1,800 crore to cover whole city.

The high costs of rolling out services in remote and rural areas of the country combined with the relatively low revenue earning potential, the demand for sharing of telecom infrastructure is getting louder. Intense competition in the urban areas has reduced the average revenue per user (ARPU) of mobile operators in India to less than Rs 400 per month, one of the lowest in the world.

Currently, Indian telecom companies are permitted to share only passive infrastructure such as towers, repeaters, shelters and generators. Both TRAI as well as operators feel that, where radio access networks of operators are shared, better intra-circle roaming can be achieved.

This will enable operators to provide mobile services to their subscribers wherever their own network signal is not available and help them increase their coverage area and quality of service (QoS) with almost no additional expenditure.

There are companies that have started setting-up passive infrastructure as a source of revenue. Companies such as Quipo are aiming to build at least 5,000 towers to lease out to mobile operators.

“Every circle has at least three to four cellular operators on an average offering mobile services across the same area. Therefore, instead of erecting four different towers, operators now prefer renting out space on towers set-up by another operator. This saves on cost of putting the towers and enables quicker roll-outs,” said a cellular operator, 60 percent of whose network is shared.

Global trends
Examples of infrastructure sharing at different levels abound globally. For example, five Malaysian operators signed a MoU on sharing of telecom-munications infrastructure way back in 2001.

The objective was to optimise and consolidate their respective resources to provide quality services to their customers. In 2004, Australia's four mobile operators committed to third-generation multiple access infrastructures sharing on two radio access networks.

Cell site sharing helps in reducing the cost significantly. Some operators were able to bring down the cost of network operations by around 40 percent in the last one year by such sharing arrangements, mainly in urban areas. In addition, the operators save on precious time in terms of locating buildings, negotiating prices and then setting-up their site.

The next level up is to share the antennae at the site. The base station equipment that manages the transmission of signals over the mobile network can also be shared. Finally, the operators can possibly share their core network itself. Hence, depending on how much of the network is shared, it is possible to save between 15 to 40 percent of the cost of building the network.

TRAI initiative
The regulator TRAI, in its recent recommendations on growth of telecom services in rural India, prescribes infrastructure sharing as the solution for improving rural tele- density upto 15 percent by 2007.

TRAI's recommendations specify Universal Service Obligation Fund (USOF) support of upto Rs 36 lakh to mobile operators who share their Base Tower Station (BTS) with others. TRAI has also proposed USOF support of upto 40 percent of ceiling rates of leased lines to the incumbents for sharing their optic fibre bandwidth and providing leased lines between BTS and base station controllers in the rural areas of the country.

TRAI is likely to recommend amendment in licensing conditions of service providers to allow them to share active infrastructure such as optic and feeder fiber cables, radio links, network elements, backhaul, antenna and transmission equipments.

Sources also said that TRAI is examining whether license condition needs to be modified to permit resale of point-to-point bandwidth for limited purpose of backhaul sharing.

“There is a pressing need to ensure the spread of service to rural areas and sharing of backhaul will play an important role in the spread of affordable service,” said a spokesperson for Cellular Operators Association of India (COAI).

Backhaul is one of the important aspects of infra-structure sharing. There is no doubt that without allowing the sharing of backhaul, the initiative of infrastructure sharing would not achieve its desired goals.

Going a step further, VSNL and Tata Teleservices have demanded that incumbents-BSNL and MTNL should be mandated to share their nationwide optic fiber backhaul network, created largely with public funds, with other operators on reasonable and non-discriminatory terms. The terms of such sharing should be regulated by TRAI to allow the incumbents to earn a reasonable rate of return on their investments. Reliance Communications added that the terms and conditions for sharing active infrastructure should be left to mutual agreements between the service providers.

Cellular service providers have opposed a proposal from TRAI to make infrastructure-sharing mandatory in a license agreement. Mobile operators argue that India is not ready for the introduction of mobile virtual network operators (MVNO) who buy airtime from operators and then resell it to the users.

TRAI floated a consultation paper seeking the industry's views on whether the sharing of infrastructure should be made mandatory since most operators were currently doing it on an ad-hoc basis.

TV Ramachandran, President, Cellular Operators Association of India said, “There is a need to encourage remote infrastructure-sharing through policy intervention and suitable financial incentives. However, infrastructure-sharing should not be mandated.”

A source in state-owned BSNL said, “As far as policy intervention for passive infrastructure sharing is concerned, it is already in place and almost every operator has taken it in a positive way.

A policy paper, which defines and explains the possibility of sharing and the resulting win-win situation for operators, consumers, industry and government should be brought in. There is no need to mandate the passive infrastructure sharing but it should be promoted.”

Reliance Communications on the other hand, has supported the TRAI move. “The authority has correctly noted that mutual sharing of infrastructure is not getting popular. Hence, we feel that passive infrastructure sharing should be mandated at least for three service providers. However, the commercial arrangements for sharing may be left to mutual agreements between the service providers.”

With Indian operators offering one of the lowest mobile tariffs in the world, they have to look at all the possible solutions to improve cost efficiencies and offer increasingly affordable services to customers. Shared towers will reduce the costs of the operators and the customers will be able to get quality services at affordable prices. Further shared towers will lead to enhanced aesthetics of the environment by minimising the intrusion of towers.

DQC news bureau

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