Over the years, telecom services have emerged as an important tool in accelerating social and economic development in India. Telecom infrastructure plays an instrumental role in sector growth. Currently, India has about 40,000 digital telephone exchanges, of which 27,000 are in rural areas. The industry has a portfolio of about 386,000 towers and 900,000 km of optic fibre cable (OFC) network. There are 6,000 transmission points spread across the country. Bharat Sanchar Nigam Limited (BSNL) owns the majority of these assets. The operator has established 38,000 telephone exchanges, and has more than 750,000 km of OFC network and 5,000 points of presence across the country.

While the country’s telecom growth so far has been characterised by increasing wireless voice subscribers, broadband services are driving the next phase of expansion. The industry is witnessing a surge in uptake of data services and the existing telecom infrastructure is proving to be inadequate to meet this increasing demand.

While an expansion and upgradation of tower and fibre infrastructure by operators is required, their poor financial state has prevented them from making significant investments in this space. BSNL, with its vast base of telecom infrastructure, stands to gain in this scenario. Of late, the operator has started sharing its tower infrastructure with private companies to drive efficiencies as well as improve revenues. BSNL is currently sharing 4,000 towers with Bharti Airtel; it is also in discussions with Reliance Jio Infocomm and Idea Cellular in this regard. For 2014-15, BSNL has set a target of sharing an additional 10,000 towers.

On the other hand, players such as Uninor, which are still new to the Indian market and operate on a relatively small scale, are completely reliant on tower providers to meet their infrastructure requirements. Uninor is currently leasing telecom infrastructure from companies such as Indus Towers, Viom Networks and Bharti Infratel. In contrast, Uninor’s parent group – Norway-based Telenor – deploys its own infrastructure in most of the other countries where it operates.

Innovations in the infrastructure space

Telecom is a competitive business and with the growing demand for data services, the entire value chain supporting the industry has undergone a change. For instance, equipment vendors and IT service providers have become more customer oriented in recent times and recognise the importance of delivering high quality customised services.

Infrastructure service providers in India, however, are yet to bring in such transformational changes in their strategies and practices. The business approach continues to be highly transactional in nature and infrastructure building is often seen as a construction business.

Given the high rate of growth in the telecom industry, players in the infrastructure space have to provide innovative solutions to meet the evolving needs of operators. The internet is slowly becoming a utility service in India like electricity and water, as is the case in many European countries. The industry needs to recognise these developments and respond accordingly to the changing needs of subscribers.

Further, spectrum is a scarce resource in India and the need to explore network sharing models is crucial in such a scenario. Operators have in the past shared towers for providing 2G services; they can now look at sharing base transceiver stations for 3G and 4G as well. The industry also needs to bring in innovation to make operating models more flexible.

Challenges and solutions

The telecom infrastructure industry faces several challenges. Fibre cuts owing to the construction of new roads and expansion of existing roads have become a major issue. Seeking right-of-way (RoW) approval from various regulatory authorities also remains a major hurdle. Further, the exorbitant RoW fees charged by state bodies often make fibre deployment unviable. Above all, the telecom infrastructure segment is not keeping pace with the surge in demand for data services due to inadequate innovation.

Besides transforming and overhauling the country’s existing network infrastructure, operators and tower infrastructure providers can take various measures to address the issues facing them. For instance, common ducts for various infrastructure services should be constructed and made available on a lease basis. RoW charges should be uniform and rationalised. Deployment of a fibre network can be extended to urban centres along the lines of the National Optical Fibre Network project, where only incremental fibre will be required to be installed. Further, the government must look into according infrastructure status to telecom operators as well.

Going forward, transformational strategies as well as innovation will play a key role in driving growth in the telecom infrastructure space.

Based on a presentation by Anil Jain, Chief General Manager, Network Planning, BSNL, and Rade Kovacevic, Vice-President, Operations, Uninor at tele.net’s Eighth Annual Conference on Telecom Infrastructure in India on April 29-30, 2014 at The Leela Ambience, Gurgaon