Tilak Raj Dua Director General, Tower and Infrastructure Providers Association (TAIPA)
Telecommunication has emerged as a key driver of economic and social development in an increasingly knowledge-intensive global scenario. The Indian telecommunication sector has undergone a revolutionary transition in the last two decades to become the world’s second-largest telecommunication market. Today, India is one of the fastest-growing telecom markets and is recognized in the global arena for its contribution in the development of the country’s economy. Contributing nearly 6 percent to the Indian GDP, the sector is of immense strategic importance to the country.
In the coming years, the sector will continue to play a leading role in successful implementation of various government programs like Digital India, Make in India and development of Smart Cities. These programs and initiatives present plethora of opportunities for telecom sector, especially the telecom infrastructure providers as the telecommunication infrastructure is the bedrock for achieving the PM’s vision of a Digital India.
As the sector transforms into the next phase of growth trajectory, there are certain ways of working which may be required to be revisited and challenged to drive the ongoing momentum.
Tower Industry Overview
The industry has witnessed a dramatic rise in the number of subscribers which have crossed the 1-billion mark. The Indian telecommunication industry is the world’s second-largest industry today. The remarkable growth of the sector can be mainly attributed to telecom infrastructure industry which came into existence when the Department of Telecommunications initiated the IP-I registration in the year 2000. IPs, since then, have played a pivotal role in expanding affordable wireless services to the masses.
Telecom infrastructure players have ensured drastic reduction of cost and time involved in roll out by creating shared infrastructure for the telecom service providers, which in-turn has led to affordable services to end users besides faster roll out and improved accessibility in the hinterlands. The salient features of infrastructure category are:
- Permission through simple registration
- 100 percent FDI permitted
- No license fee
Over the years, the telecom tower industry in India has emerged as the trendsetter in the telecom infrastructure segment. Accompanied by one of the world’s lowest tariffs and low handset prices, the number of towers have quadrupled since 2006 from 100,000 to nearly 420,000+ towers in 2016. The success story of the infrastructure providers has been possible due to their unique business model which is linked to the objective of sharing.
Unique Business Model
The business model of the Indian tower companies is based on sharing their towers with the operators on a non-discriminatory and transparent manner. Sharing of towers is one of the major drivers for expanding affordable services for the subscribers and improved quality of services in every nook and corner of the country.
The telecom towers are technology-agnostic structures and can cater to all technology platforms, be it 2G, 3G, or 4G. This results in a win-win situation for both TowerCos and OpCos. Sharing concept has many advantages like:
The concept of tower sharing has been critical to the growth of telecommunications industry and in order to encourage tower sharing among the operators, the government of India initiated a project Mobile Operators Shared Towers (MOST). Key objectives of the project were:
- Improve coverage and quality of services to the subscribers.
- Avoid undue proliferation of cell sites while leveraging the benefits of technological innovations.
- Make cellular communication more affordable for subscribers by reducing cost for service providers.
- Protect environment and save energy. IP has contributed significantly toward the protection of environment by energy- saving initiatives such as tower sharing.
Thus, the Indian tower industry has been one of the pioneers in infrastructure sharing.
Presently, there are close to 420,000+ towers in India which are expected to increase to more than half a million by 2020 (as per a Deloitte report). Further, on the back of aggressive 3G and 4G expansions, reports are suggesting that the tenancy ratio will rise to 2.48 by 2020. Also, a recent study done by ASSOCHAM-KPMG reports that the tenancy will reach 2.9 by 2020 from 1.9 in March 2016. Increase in tenancy ratio has been a key growth driver for tower companies.
Factors Hindering Growth of TowerCos in India
DoT has issued specific guidelines around location restriction and documentary requirements for installation of telecom towers; these are yet to be adopted by a majority of states.
The government has conferred infrastructure status to the tower industry, which puts it at par with other infrastructure providers. However, benefits such as accelerated depreciation, higher ECB limits, eligibility for VGF, softer lending rates, etc., are yet to be extended to the industry.
Different fee structure is being levied by states. It needs to be aligned with DoT guidelines uniformly across the country.
In order to maintain the continued growth trajectory for the telecom sector, a robust telecom infrastructure is required as it constitutes a critical driver of economic growth and inclusion. Telecom infrastructure which includes dark fibers, cables, telecom towers, etc., is the backbone for enabling ubiquitous connectivity. Thus, it is of crucial importance that the process to install/roll out telecom infrastructure in the country is streamlined for quality services and seamless connectivity to the consumers.
However, presently the sector faces several challenges in establishing the telecom infrastructure, which include:
- Restriction on location of cell towers
- Difficulty in new site acquisitions
- Problems in RoW clearance
- Retrospective implementation of state tower policies
- High incidences of taxes on towers such as entry tax, property tax, etc.
- Absence of single-window clearance
- Coercive actions by authorities such as shutting down of operational sites/site sealing
- Poor availability of grid electricity
- Multiplicity of policies
These challenges lead to coverage gaps, call drops, and poor quality of services.
The continuous growth of the industry can be ensured by an active participation from the government and industry to create and support policy framework, infrastructure, capital pool, partnerships, and skill base. The government has been enabling ease-of-doing-business by pushing liberal policies to promote the growth of the sector. Many key initiatives have been taken by the government to boost the growth of telecom infrastructure. The industry appreciates the proactive support being extended by DoT/TRAI like:
- Issuance of uniform guidelines to state chief secretaries for ease of installation of telecom towers which are the bedrock for achieving the PM’s vision of Digital India.
- Allotment of government lands and buildings for installation of telecom towers.
- Government of India has accorded the infrastructure status to telecom sector in the year 2012.
- Amendments in building bye laws: The Unified Building Bye Laws (UBBL) 2016, have been amended to allow installation of towers on residential buildings in New Delhi.
- EMF Awareness and Mobile Towers Outreach Program launched by DoT across the country.
- Issuance of strict EMF norms and continuous monitoring of the same by TERM cells.
- DoT’s involvement with state governments: Directed letters to various chief secretaries and other authorities, highlighting the role of telecom infrastructure.
To ensure availability of infrastructure, the industry has taken several initiatives such as:
- Sharing mobile network infrastructure has emerged as a key trend.
- Deployment of DAS/IBS and low power BTS.
- Innovation in tower deployment such as use of fiber-reinforced polymer (FRP) telecom towers and portable masts/towers.
- Engagement with various state governments on alignment of state policies with DoT advisory guidelines.
- Meetings with various municipal corporations and other state departments.
- Awareness workshops with citizen groups, RWAs, doctors, academia, and government.
- Responding to public concerns.
- Use of social media to educate the public.
- Energy management initiatives: Telecom towers across the country provide uninterrupted telecom services to more than 1 billion subscribers. As per license conditions, a telecom operator needs to maintain a network availability higher than 99.5 percent. Uninterrupted power 24×7 is, therefore, a pre-requisite for any telecom tower site. To maintain quality of services and continuous communication, telecom infra companies have to use diesel generators as backup power resulting in huge financial burden upon telecom players just to meet the deficit of power supply and maintain the uptime.
The telecom industry is continuously working on implementing new technologies in order to avoid its dependence on diesel and reduce its operating cost. Energy cost (power + fuel) of telecom tower forms a major part (about 60 percent) of total expenditure. In order to address this, the industry has taken several suo motu initiatives such as deployment of diesel-free sites, variable-load DG sets, power-control units, free cooling units, energy-efficient storage technologies, etc. The industry has installed nearly 90,000 diesel-free sites wh
erein a telecom tower site consumes about 400 liters of diesel a year or approximately 1 liter of diesel a day, thereby reducing any impact. Also, the concept of sharing of tower has led to saving in cost of fuel needed to operate the base transceiver station (BTS), thus reducing the consumption of diesel in mobile sites.
On an average, 1000 BTS are being added every day to provide quality services to the masses.
In the near future, the flagship initiatives of the government, Digital India and Smart Cities would present immense opportunities in the emerging markets to expand the sector such as in-building solutions, fiberization of backhaul communication networks, and innovative deployment methods such as small cell solutions to enable connectivity, etc.