India - infrastructure sharing

DoT allows telcos to share active infrastructure; tariffs may fall

Having sat over it for well over a year, the communication ministry on Tuesday approved sector regulator TRAI’s recommendation to let service providers share active infrastructure. The move will bring down the overall expenditure of telecom companies by over 50% and help reduce tariffs further.

So far, Indian telecom companies were permitted to share only passive infrastructure such as towers, repeaters, shelters and generators. Active infrastructure sharing will allow operators to use all key electronic components including antennas, feeder cables, nodes, radio access network, transmission systems and backhaul, with the exception of spectrum. ET had reported about DoT giving its nod to the active infrastructure sharing policy in its edition date February 21.

“Active infrastructure sharing will be limited to antenna, feeder cable, Node B, Radio Access Network (RAN) and transmission system only. Sharing of the allocated spectrum will not be permitted. The licensing conditions will be suitably amended wherever necessary to permit such sharing,” the DoT said in a statement.

Put simply, the DoT announcement means that apart from spectrum (radio frequencies), telcos can now share all physical infrastructure.

The policy will give a boost to the new entrants who have bagged licences for telecom operations who can now share both active and passive infrastructure of existing players and launch services within a short span. The quick rollout is likely to trigger off a fresh tariff war which may lead to cuts in call rates.

Indian cellular subscribers already enjoy the lowest tariffs in the world. Importantly, active infrastructure sharing will play a major role in expediting the rollout of mobile networks across the country, especially rural India, which is costlier.

Active infrastructure sharing will also enable operators to provide mobile services to subscribers wherever their own network is not available and help increase coverage area and quality of service at almost no additional expenditure.

“This move will significantly bring down the cost of rolling-out the telecom network infrastructure resulting in lowering of tariffs and increase in telecom penetration. This is a win-win development for the government, industry and consumers,” a Tata Teleservices spokesperson said.

GSM players were also positive about the move. “Sharing of active infrastructure will significantly accelerate growth and expansion on networks and coverage leading to speedy rollout and delivery of cost effective services in both urban as well as rural areas” the Cellular Operators Association of India (COAI), the industry body representing GSM players, said in a statement.

The DoT also reduced the timeframe for the Standing Advisory Committee for Frequency Allocation (SACFA) to clear applications for setting up of towers and other related infrastructure to 45 days from 90 days. “SACFA procedure is being further simplified to reduce the time for SACFA clearance to about 45 days.

Sites located beyond 7 km from Airport Reference Point (ARP) and the antenna height not exceeding 40 meters from airport level need only to be “registered” on the Wireless Planning Coordination website and clearance will be issued accordingly,” the DoT statement added.

The new guidelines also makes it difficult for local bodies to randomly tax telcos. The DoT has said that state governments should charge an uniform levy irrespective of the number of operators that share the infrastructure. At present, some state governments and municipal bodies impose different levies on telcos for towers and other infrastructure, which include registration charges, processing fees, stamp duty, octroi amongst others and each operator has to pay these levies independently even if they share the infrastructure with existing players.

The guidelines also add that the tower companies and telecom service providers can both bid for all upcoming projects funded from the Universal Service Obligation Fund (USOF). The DoT will soon invite bids to set up 11,000 mobile towers across the country and the project is estimated to cost between Rs 3,000-4,000 crore.

Last year, the DoT had invited bids to set up about 8,000 towers, and the DoT has said that even ‘beneficiaries in the first phase infrastructure sharing’ can participate in the second stage for the 11,000 towers project. “To encourage the concept of infrastructure sharing in rural and remote areas, no subsidy shall be paid if newly-erected tower is not shared,” the DoT policy said.

Active infrastructure

It includes base tower station, microwave radio equipment, switches, antennas, transceivers for signal processing and transmission.

Passive infrastructure

It includes air-conditioning equipments, tower, shelter, diesel electric generator, battery, electrical supply, technical premises and easements & pylons that account for nearly 60% of network rollout costs.

Current situation

Till now, Indian telecom companies were permitted to share only passive infrastructure.

So, what happens now?

Apart from spectrum (radio frequencies), telcos can now share all physical infrastructure—passive as well as active.

How will telcos benefit?

Active infrastructure sharing will enable operators to provide mobile services to their subscribers wherever their own network signal is not available and help them increase their coverage area and quality of service (QoS) with almost no additional expenditure. While passive sharing enables telcos to share over 30% in both capex and opex spendings, service providers say that this figure could touch 50% once active infrastructure sharing gets nod.

How will govt benefit?

It’s estimated that India would require approximately 3,30,000 towers by 2010. Now, sharing of active infrastructure will save huge investments as well as time taken for rollout of services. It will also lead to optimal utilisation of scarce national resources and Improve the aesthetics of the landscape.

And, what about you?

Indian cellular subscribers already enjoy the lowest tariffs in the world. Now, quicker rollout of services may trigger off a fresh tariff war which may lead to cut in call rates. Moreover, it will also improve quality of service.