USO: Call of the Village

Things are moving in the right direction in spreading mobile
penetration in rural and remote areas, thanks to the USO administrator
initiative of providing infrastructure support for mobile services in rural and
remote areas. Plans are to spend around Rs 1,600 crore over a five-year period
to provide mobile connectivity to rural areas through service providers like
BSNL, Hutchison Essar, and IP-1 players like GTL Infrastructure, Nitel, Quipo,
and Reliance Infrastructure. All this will help in boosting rural economy which
can play a lead role in ensuring Indian economy to grow at 8-9% per annum.

On the rural spread, India has a total of 638,499 villages out
of which about 44,856 villages are uninhabited as per 2001 census. So, 594,000
inhabited villages account for 72.22% of the total population of India. Till
date, we have covered only 60% of India's geography, and a large part of rural
geography is yet to be covered. Infrastructure support for mobile services will
act as a catalyst for rural growth. Even in the past, the government has
provided a lot of support to rural people by deploying MARR (multi access rural
radio), and VPT (village public telephones). Presently, around 559,000 villages
have VPT, and for the remaining 35,000 villages, VPT are to be set up either on
satellite or on other technologies. The USO initiative of providing mobile
services will help in increasing mobile footprint in rural areas, as till date
communication in majority of the villages has been possible only through
community phones i.e. VPT or wireline phones.

Presently, 80% of the towers are located in urban areas, and
remaining 20% are in rural India. We are seeing a shift, and it is expected that
in couple of years it would be 60% in urban, and 40% in rural areas, as 70% of
the population resides there, and a lot of coverage is yet to happen. Indian
teledensity is at around 19%. Out of this, urban teledensity is at around
49.53%, and rural teledensity is at around 1.84%. There is a wide gap between
urban and rural teledensity, and the digital divide needs to be bridged. The
latest initiative will help in covering around 22% of India's population,
thereby providing mobile connections to people residing in remote and far-flung
areas.

In the latest bid, companies like BSNL, GIL, Hutchison Essar,
Nitel, Quipo, and Reliance Comm infrastructure will set up 7,871 mobile towers
in around 500 districts across India and would initially provide voice services.
The tower companies will be provided remuneration on a quarterly basis for a
period of five years from USO fund. Reimbursement will be in four quarterly
installments ie June 30, Sep 30, December 31, and March 31. Even the companies,
which are planning to share towers, have been finalized; BSNL leads the race
followed by Reliance Comm, Reliance Telecom, Bharti Airtel, Hutchison Essar,
Aircel, and Idea. Tata Teleservices is the only operator that doesn't have the
intention to share tower in the USO project. A single tower can be shared by a
maximum of three operators, and they are also paying a small bid amount to all
tower players. And, after the contract period, tower companies can make fresh
set of negotiations with mobile service providers. And, in the future, tower
companies can also extend to provide broadband services.

Financial
Bid Results for Part of USO

The bid document for services in rural areas specifies that 50%
of the site is to be rolled out within eight months, and remaining within 12
months period of signing the agreement. The agreement for tower providers is
valid for a period of six and a half years, unless revoked earlier for reasons
specified elsewhere. To make the system foolproof, the tower area will have a
security cabin to provide shelter for guard for protecting the property, and
also maintaining stock of diesel, batteries, and others. Apart from this, there
would be provision of recharging of mobile handsets, so that people don't have
to go to far off places to charge their handsets.

Service providers are exploring all possibilities of reducing
cost and time to rollout services in rural areas. This new initiative of USO
administrator will help in reducing capex by around 25-40%, as it not only
allows passive sharing but also, with the recent recommendations, active
infrastructure sharing and backhaul on a suo moto basis. The regulator has even
recommended amendment in the license condition to allow active infrastructure
sharing limited to antenna, feeder cable, NodeB, radio access network, and
transmission systems. Another major initiative is backhaul sharing for mobile
services in rural and far-flung areas. The authority has recommended amendment
in the license conditions to allow service providers to share their backhaul
from base trans receiver station to base station controller. It has been noted
that such a sharing is permitted on optical fiber as well as radio medium at
certain nodes. And, in rural areas it is all the more important, as majority of
towers are ground based and per tower cost is high (presently, tower and
backhaul connectivity account for 50-60% of the cost). All this will help in
creating rural infrastructure at low cost, and in eliminating digital divide.

Pravin Prashant

pravinp@cybermedia.co.in