The Green Tangle

Commercial power and fossil fuel consumption is turning out be a crucial

element in deciding the opex of telecom operators in the country. The situation

is alarming since many operators spend over a third of their opex on power and

fossil fuels like diesel. Since management of energy resources is too complex,

stakes involved are high.

The expansion of operators into new circles and rural areas and the entry of

new players will add fuel consumption. Strengthening their foothold in rural

area without adequate power backup spells danger for the telcos. The challenge

for operators lies in feeding power to BTS sites, especially in rural parts of

the country where grid power is available only for a few hours during the day,

while in some parts there is no grid connectivity at all. This emerges at a time

when the ARPUs are falling.

Issuance of additional and new 2.5G license as well as 2G license combined

with announcement of 3G spectrum auction has put telecom operators on toes to

build new infrastructure in new circles.

The ever-growing telecom market in India is also under pressure to reduce

carbon emissions.

As per the report of Sir Nicholas Stern, former World Bank economist, India

could face 9-13% loss in GDP by 2100 if global warming remains unchecked.

The present state of the Indian telecom market-a mix of new and existing

operators-has got operators asking themselves whether to invest in setting up

new infrastructure to increase their reach and returns or build a green

infrastructure, which initially will cost a lot.

In a Fix



Telecom operators are faceing a challenging situation today. To run their

telecom networks in India, operators have to spend billions on power and fuel.

That pressure is mounting as price of power and diesel is unpredictable.

Operators are worried from this increasing cost of their expenditure on fuel

because of cut throat competition among them to provide low priced service to

users.

“The overall opex for 2008-09 is approximately Rs 3,000 crore. Out of this

the expenses for power (commercial supply) is Rs 616 crore and for diesel it is

Rs 741 crore,” says Harish Jere, general manager, Infrastructure Planning &

Operations, Reliance Communications.

Carbon emission targets set by the Kyoto Protocol is compelling countries to

cut down on carbon emission. Though in India there is no strict legislation for

companies to turn Green, many telecom operators are voluntarily adapting Green

practices.

“Most corporates are now getting more aware and conscious about the benefits

of Green. It will not be right to single out the government. It has to be a

joint initiative. Though things do work well when there is a law. Guidelines are

always a good driving force. CNG for transport has changed the scenario

completely. Similarly, any regulation binding the telcos towards Green will

surely make a difference,” says Ravinder Jain, CIO, Aircel.

The benefit of growing Green also adds to the brand value and reflects in

response of the customers towards companies.

“Going Green is really a win-win situation for customers. They can

significantly reduce their CO2 footprint with our solutions, save money on

energy bills, and build a responsible company brand that consumers are

increasingly responding to and putting importance to while choosing their

operator,” says Michael Kuehner, head, Nokia Siemens Networks, sub-region India.

The wireless segment dominates the Indian telecom industry when compared to

wireline telephony. Therefore, to manage the growing subscriber-base, telecom

operators are forced to increase the number of BTS towers in India.

However, the challenge is greater in rural India.

“Northern and northeastern parts of India have been the regions where

Reliance Communications had to spend more for power management. This is

primarily because of inaccessible terrain, rough weather conditions and less

market. The maximum amount is spent in states of Bihar, Uttar Pradesh, Madhya

Pradesh and Maharashtra where the availability of power is low. We spend nearly

70% more than a normal state. The current figure of state electricity board

power availability on pan India is 16-17 hours per day and the diesel generator

(DG) running is nearly 4-5 hours per day. In states mentioned above the DG

running is nearly 14-15 hours,” elaborates Jere.

Here, diesel generator is the easy alternative but this too comes with

costs-on telecom operators' exchequer and the environment.

“According to research firm Ovum, power currently accounts for between 2-3%

of total telecom opex globally, and is trending upwards. Compared to fixed

players, wireless carriers have relatively high electricity costs and they will

place power consumption as a key criterion for evaluating radio access network

infrastructure,” says Anurag Vashistha, senior VP, energy management, GTL.

It is estimated that 300,000 new BTS sites will roll-out in three years in

India while nearly 200,000 exist already. Typically, these sites are backed by a

15-25 KVA or 40 KVA diesel generators. Most sites are located in grid-deficit

areas that need a diesel generators to run for as much as 4-20 hours.

Even a typical 15 KVA diesel generators consumes over 2.5 ltr of diesel every

hour. Going by this basic statistics, Indian telecom towers consume diesel worth

Rs 17.5 mn, assuming the average price of diesel is Rs 35. This means a minimum

of 5.2 mn kg of CO2 is emitted into the environment per day. Transporting diesel

to the BTS site and theft of diesel, common in rural areas, add to the woes of

telecom operators.

Looking for Alternatives



Operators want to go Green if not by choice then by compulsion caused by the

escalating cost of energy management on their BTS site. Energy management is the

biggest component of an operator's operating expenditure. According to an ABI

research report, network infrastructure accounts for 80% of this opex.

Therefore, operators are focusing on reducing even a unit of power consumed per

BTS site.

“Going Green is really a win-win situation for customers: they can significantly reduce their CO2 footprint with our solutions; save money on energy bills; and build a responsible company brand that consumers are increasingly responding to” Michael Kuehner, head, Nokia Siemens Networks, sub-region India	The tariff being paid is at commercial rates. In some states where our connected load is more than 20 kw we need to go for time-of-day tariff” Anurag Vashistha, senior VP, energy management, GTL

“In all the recent announcements of our wins, you can clearly see the trend

in our customers putting a lot of emphasis on the environmental aspects of our

products, in addition to their technical capabilities and potential to save opex,”

says Kuehner.

Idea Cellular, Ericsson and the GSMA's Development Fund teamed up to develop

bio-fuels as a power source for wireless networks in rural India. In a pilot

project, bio-fuels were used to power mobile base stations located in Latur,

Maharashtra, where main electricity is highly unreliable. In the first phase,

four BTSs in the Maharashtra circle were powered by bio-fuels. After completion

of this phase, Idea started powering approximately 350 base stations in Andhra

Pradesh with waste cooking oil. These base stations were made to run on 80:20

blend of diesel fuel and non-edible oil. “The green project success in AP can be

attributed to a favorable ecosystem in the region where an entrepreneur was

engaged for sourcing, blending and distribution of the fuel,” says Rajat Mukarji,

Chief Corporate Affairs Officer, IDEA Cellular.

Reliance is looking for an opportunity to deploy wind and solar energy

solutions to run their sites. It targets to run approximately 10,000 sites using

renewable energy sources. As an alternative to diesel, Tata Teleservices is

experimenting with Liquefied Petroleum Gas (LPG).

With operators focusing to reduce power consumption in their active

infrastructure, a key initiative in this regards is IP transformation of the

present networks across the globe. “With an IP-based network, an operator can

reduce its overall power consumption and hence contribute to a green globe as

well as reduce their total cost of ownership,” says an Alcatel-Lucent

spokesperson.

Green Move



Since almost all passive infrastructures of operators are outsourced, the

responsibility lies on infrastructure solution providers to reduce energy

consumption by the infrastructure they provide to operators. Therefore, Green

solutions have become a business necessity and have entered the list of

corporate social responsibility. Various infrastructure companies have also

joined the Green bandwagon.

Talking about the Green initiatives adopted by GTL Infrastructure, Prakash

Ranjalkar, COO, GTL says, “We are investing our resources in innovative

practices and solutions to minimize the consumption of energy. Various technical

solutions that are being tested for energy management on the demand side

include: identification of energy efficient air conditioning system with high

EER (Energy Efficiency Ratio); free cooling/emergency free cooling concept of

air conditioning systems to utilize cool ambient temperatures for reducing

compressor running; wide input voltage range SMPS better efficiency even at

lower input voltages; fuel optimizer method of operating DG, interleaved with

battery back up; and usage of energy star rated products. GTL Infrastructure has

also created a dedicated National Network Operations for online monitoring of

site parameters, which will bring in operational efficiencies.”

Tulip Telecom as a part of its internal Go Green initiatives, Tulip is also

planning to have solar installations in a large percentage of its PoPs.

Explaining its Green initiatives, Probal Ghosal, CEO, Quippo Telecom says,

“Quippo is an environment-friendly company. On the telecom infrastructure part,

we have taken a number of initiatives. All our diesel generators comply with

central pollution control board norms. We are using high capacity battery back

up in order to reduce diesel generators running and hence control/limit the

emissions.”

Quippo has also installed solar power system at two sites in Karnataka that

are under trial with an aim at reduce the diesel generators running at the

sites. Also, Tulip has installed fuel catalyst in 1,000 diesel generators that

result in reduction of pollutants.

“If Green increases the benefits then it is easily accepted, but if it is going to cost more on the opex then people will hesitate” Manoj Upadhyay, managing director, Acme Tele Power	“If operators don't cut opex which is mainly due to energy cost, at BTS sites then it is not possible to sustain long term profit” Rakesh Malhotra, managing director, Luminous Teleinfra

Government Initiatives



The central government and state governments of Maharashtra, Tamil Nadu,

Madhya Pradesh, Karnataka and Gujarat have defined policies for wind

generation-the most favored Green energy at present-on a commercial basis. The

Ministry of New and Renewable Energy has recently announced a policy for 50MW

grid connected power plants. The Electricity Regulatory Commissions of various

states have renewable purchase obligations by which a particular utility should

have a stipulated generation from Green sources. A high level committee has also

been set up by the Government of India for preparing the National Renewable

Energy Law.

However, regulatory and operating issues like open access, distribution loss

reduction, and industry-specific tariff restructuring still need to be sorted

out.

“At a time when the country is reeling with power shortages, policies should

be defined to facilitate us to set up Green generating plants for self use

thereby reducing our dependency on grid power. This would go a long way to

reduce the energy shortage and improve quality and cost of services. The tariff

being paid is at commercial rates. In some states where our connected load is

more than 20 KW we need to go for time-of-day tariff,” says Vashistha.

Challenges



According to industry sources, it is good to talk about Green, but there is

a difference in the approach of operators. “There are some people who paint

there logos and boards Green but that doesn't mean that you are Green. The Green

theme comes out with the internal philosophy of the company in terms of the

business it does, its employees' behavior and behavior of the organization

overall. That finally boils down to the technology,” says Dalip Sharma, managing

director, Delta India.

The first major challenge of adapting Green solutions is its cost. Therefore,

operators are in a tangle to put money on Green sites or in expanding

infrastructure that gives better RoI initially.

“If Green increases the benefits then it is easily accepted but if it is

going to cost more on the opex then people will hesitate. Therefore, it is the

duty of vendors to innovate on technologies and provide solutions to operators

at reduced prices than the existing opex. One needs to focus on three main

concepts: first is to reduce power consumption; second is to reduce diesel

generators running time; and last is complete replacement of diesel generators.

We are working on all these three concepts,” says Manoj Upadhyay, managing

director, Acme Tele Power.

The challenges in adaption of green solution is its cost at first. Therefore

operators find them in tangle whether to put money on green site or in expanding

infrastructure that gives better return on investment initially.

“When the trend of network expansion will turn little flat then for opex will

be critical issue for operators. If they don't cut opex which is majority due to

energy cost at BTS site then it is not possible to sustain long term profit.

This phase will come in Indian telecom market in next couple of years when

operators will have to focus on cutting opex by adapting green solutions,” says

Rakesh Malhotra, managing director, Luminous Teleinfra.

“Renewable energy solutions can bring stability to expenses in remote areas

and as returns on initial investments in solar or wind comes down, the business

case become more attractive. We see initial investments paying off within 18

months in some cases. After the site is up and running, the operational costs

are practically zero,” says Kuehner.

The reduction in the cost of crude oil prices globally is also posing a

challenge in adoption of Green power solutions. Though in the case of extreme

rural and remote hilly areas where transportation of diesel becomes really tough

and expensive, operators prefer to install renewable sources of energy available

in a hybrid solution format. It is time for operators to go for green solutions.

Prasoon Srivastava & Arpita Prem



prasoons@cybermedia.co.in