Green and the rural challenge

Rural has become a buzzword for the operators what with urban telecom density rising to 80% and rural remaining at around 13% in a country. Out of the total population of 1.1 bn around 700 mn are in the rural areas. This is sure to raise the pitch for the grab of more subscribers. Even five years back, many were wondering whether the Indian Government was setting unrealistic target of 500 mn as the subscriber base for telephone by year 2010. In June 2009, the real subscriber number went past 450 mn of which less than 40 mn was fixed line, the same as five years back.

At a recent telecom event experts suggested that the USO Fund that subsidises the rural push of telcos stop paying for network extensions and concentrate on supporting transmission towers and equipment that could be shared between operators to reduce costs of rural service. Incidentally USO Fund has now reached Rs 35,000 crore and is shifting its focus to speeding up rural telecom extension and infrastructure.

Significantly it is not the 2 and 2.5 G network services alone are taking the journey to the villages seriously. Most of the telcos expect 3G, WiMax and new mobile technologies like HSPA and yet to come LTE to be more popular in rural areas. Broadband, IPTV etc would add video to voice and data and enable distant villages to connect to latest developments in urban centers. More so in education, healthcare, entertainment, agriculture operations, the visibility plus voice would make a telling difference narrowing the digital divide.

The reason why Bharti Airtel, BSNL, the two leaders in private and public sectors respectively are so hopeful on the rural connectivity is because rural income is going up. In the recent economic downturn, it was the rising demand in rural markets that saved several FMCGs from a wash out as urban demand subsided. However, the rural markets are not a smooth sailing for the service providers and also for the equipment makers who must follow the service providers' requirements.

The challenge is not just that the rural ARPUs might be lower than the urban ones-even the present ARPU at around $8 is the lowest in the world. There are infrastructural constraints from availability of power round the clock to maintenance, air conditioning and supply of network inputs. Only those telcos would succeed in the rural push who have a clear business plan for the rural areas which takes a variety of problems into consideration.

Besides there is a problem of the power shortage. Even back up batteries would fail in the hinterland if the power cut is over 10 hours at a stretch as it often is. Infrastructure like transmission towers, mobile base stations, computers, optical equipment etc are the core of the network. If rural service is to be affordable to the people in the villages on the one hand and profitable to the operators on the other, the big burden lies on equipment suppliers who have to design their ware for the lowest cost, highest efficiency and work in non-AC mode.

The equipment should require the minimum of maintenance and highest of life cycle. In setting up some of them like transmission towers, one has to reduce the number to the barest minimum through sharing of resource between many operators. To expect diesel generating sets to act as power back up would not be viable-both from the environmental aspect as well as from the perspective of supply of diesel to the remotest corner of the country.

Equipment suppliers and operators are now working on new business plans for rural areas. Alternate technologies like solar and wind power for back up batteries, more efficient and long lasting equipment requiring no maintenance yet having longer life provide the answer. Convergent networks using both WiMax and mobile phone technologies like 3G are finding increasing acceptance. Convergence between mobile telephone and computer and between wireless networks and wireline optical fibre is inevitable as the traffic load increases. In essence, the rural business plan of all telcos is now shot with different levels of green technologies.

Many operators are going green even out of their sense of corporate social responsibility, apart from the needs of reliability of networks and lower capex and opex. They want to reduce the carbon footprints of their networks out of their conscious commitment to a greener future. Network vendors are seeking to gain competitive advantage by reducing the power requirements of their equipment. Network efficiency is directly proportionate to power requirement: higher the network efficiency lower is the power requirement.

So the efficiency level has become a critical criterion for rural networks. To sum up, developing a green strategy is now considered a critical part of the rural business plan-and is also a win-win situation for the telcos hard pressed by competition.

(The author is DK Ghosh, CMD, ZTE Telecom India)