Infrastructure sharing has become a key trend in an industry that is looking to expand its reach quickly and cost-effectively. In light of the strong focus on this segment, tele.net recently organised a conference on "Telecom Infrastructure in India –­ Management and Sharing: Issues and Opportunities". We bring you a series of excerpts from presentations made by analysts, operators and vendors at the conference.

As mobile telephony penetrates emerging markets at a rapid pace, the global connectivity vision is fast becoming a reality. In the Asia-Pacific (APAC) region, the mobile subscriber base is expected to exceed 2 billion by 2012, and 63 per cent of the population is predicted to own a mobile phone.

The APAC market is divided into clusters comprising emerging growth markets with low mobile and broadband penetration rates, transition markets with high mobile and low broadband penetration rates, and developed markets with high mobile and broadband penetration rates.India, Sri Lanka and Indonesia are emerging growth markets, while Malaysia, Thailand and the Philippines are transition markets. Singapore, Hong Kong and Japan, on the other hand, are developed markets.

India is expected to contribute significantly to the surge in mobile subscribers in the APAC region. The country's mobile subscriber base is slated to reach 600 million by the end of 2013, registering a compounded annual growth rate (CAGR) of 18.3 per cent. Mobile revenues, expected to touch $35,000 million by end-2013 at a CAGR of 12.56, will witness a declining trend. As competition increases, there will be increasing pressure to drive down tariffs, which will cause a consistent decline in the average revenue per user (ARPU). This will be a key concern faced by the industry.

With increasing competition, telecom companies today have to be better than their competitors in at least two out of the three business functions –­ managing/ expanding network and infrastructure, improving customer intimacy, and creating richer services/content. Cost optimisation and revenue generation strategies are essential to success.

Under these circumstances, infrastructure sharing has become imperative. Without sharing, the number of towers required by 2014 is expected to be 1.06 million. With shared infrastructure, the figure could come down to 430,000.

Infrastructure sharing, which provides significant cost savings while rolling out mobile networks, is increasingly being adopted by operators around the world. The concept became popular in 2000 as it was adopted by service providers like Telstra in Australia, Vodafone and Optus in the UK, and Telefonica and KPN in Germany. Today, the infrastructure sharing model has been adopted by prominent Indian telecom service providers like Bharti Airtel and Idea Cellular, as well as by Pakistani telecom majors like Warid Telecom.

There are primarily two types of infrastructure sharing: active and passive.While the former involves the sharing of only physical infrastructure and space, the latter involves the sharing of some constituents of the active network layer.There are various sharing models: site sharing, mast (tower) sharing, radio access network (RAN) sharing, core network sharing and network roaming.

While passive sharing is allowed globally, active sharing is still restricted in many markets including Denmark, France and Germany. On the other hand, complete sharing is permitted in the UK, Malaysia and Saudi Arabia. Site, mast and RAN sharing as well as roaming are generally encouraged, and even mandated in a few countries. It is core network sharing that is mostly limited.

In India, the Department of Telecommunications recently approved the Telecom Regulatory Authority of India's recommendation of allowing active infrastructure sharing among service providers.The implications of the move include easier entry for the new players, faster rollout of networks and services in underserved and rural areas, increased competition, more competitive tariffs, and opex and capex savings.

Though active infrastructure sharing is poised to take off in India, there are still several challenges. For example, it is difficult to formulate an effective business model while taking into account factors like contract duration. It is definitely easier to undertake independent service deployment. There is also the issue of dividing the cost of operating and maintaining the shared infrastructure.

There are several technical challenges as well. It is difficult to organise the shared and the dedicated parts of infrastructure.Sharing has an adverse impact on the quality of 2G services. Vendor compatibility and support are the other issues.

But even with these concerns, there is no doubting that infrastructure sharing is set to take off in a big way in India.
Nitin Bhat, vice-president, ICT Practice, Asia Pacific, Frost & Sullivan