Nokia Siemens Networks, the telecom equipment maker created by the merger of the network infrastructure divisions of the two companies, is selling to Indian telcos the promise that it can cut their expenses in half in rural areas.
Telcos in India, the fastest-growing mobile telephony market in the world, believe future growth will come from small cities and rural areas. The country already has 165 million mobile subscribers, but that translates into a mobile penetration of just around 15% because much of India’s billion-plus population still lives in rural areas that are currently off the grid for telcos.
Phone makers and operators have started selling phones that cost less than Rs1,000 to tap this market, but the Nokia-Siemens initiative is among the first on the network infrastructure side. The equipment it is vending is essentially a micro-architecture for rural coverage based on the popular GSM technology standard.
“We have reduced both the capex (capital expenditure) as well as the opex (operating expenditure) parts,” said Rauno Granath, head of growth markets for Nokia Siemens. The company conducted trials in 10 villages across India over the past year. It has shrunk the GSM antenna, which currently requires an iron tower to support its 75kg weight, into something that can “be put up like a TV aeriel”, according to Granath.
“It is like a pole and only five metres long,” said Granath, “and you do not need a tower to hoist it”. However, the antenna can cover only a distance of around 2-3km, compared with a normal GSM antenna, which covers an area of between five km and 10 km. “Our idea was to introduce a micro system which can be easily deployed in modules in areas of patchy population,” added Granath.
The real saving, according to the company, is in the infrastructure required to support existing antenna. While a base station and antenna may currently cost Rs5,00,000, telcos usually spend another Rs20-30 lakh for a shed and a tower that houses the antenna. The new equipment does not need that, according to Nokia Siemens, which refused to give out details of its cost. The equipment is set to hit the market in 2008.
Alok Shende, the head of the technology practice at research firm Frost and Sullivan India, said that while this technology would help save on tower costs, “you still have to spend the same amount on electronics and on connecting the base-station to some point on the network”. He added that these ‘connecting’ expenses were significant .
With Indian telcos projected to add close to 1.5 lakh cell-sites, mostly in rural areas, over the next two years, other firms are taking notice too. The Shenzen, China-based Huawei Technologies said it is working on similar technology, but refused to give more details.
Swedish firm LM Ericsson Telephone Co. recently launched base-station electronic equipment for rural areas that can work without air-conditioning in temperatures up to 50 degree Celsius.
Operators too are yet to warm up to the idea. “We have heard a lot of vendors talking about rural-specific solutions,” said Sanjay Kapoor, president of Bharti Airtel. “Though we have heard of trials, any major breakthrough is yet to reach the market,” he added.