The rural network has always been a sore point with the service providers who continue to focus on the urban part of the market. It is tough to deploy and manage telecom network in the rural sector as low population density coupled with low paying capacity means that it is a challenge to provide connectivity in the rural geographies profitably.
This reflects in the poor tele-density in the rural areas. While urban India boasts of an overall tele-density (wireline and wireless) of 168%, it is actually 56.6% in rural India at the end of December 2017, according to data released by Telecom Regulatory Authority of India (TRAI). The recently released Draft National Digital Communications Policy 2018 strives to change this and hopes to raise the rural tele-density to 100%.
This is easier said than done. The Indian telecom industry is going through challenging times. The industry has invested over Rs. 9 lakh crore till date but is saddled with a debt of over Rs. 4.5 lakh crore. The hypercompetitive environment in the urban areas mean that the telcos continuously have to come up with plans which put pressure on their margins.
The traditional high capital expenditure model that is so successful in the urban market is just not suitable for the rural market. The Average Revenue Per User (ARPU) in rural markets like Bihar and Orissa hovers around Rs. 60, while the national average stands at Rs. 78. Clearly, the return of investment of deploying the network in a rural environment is spread over a much longer time span than it is for urban areas.
Innovative Approach To Address Rural Challenge
Innovative and cost-effective technology solutions are the need of the hour to meet the unique requirements of the rural India.
Expansion in the rural part of the country is vital for the Indian telcos as the profitability continues to drop in the urban market. On the other hand, the rural market offers new customers in a mostly untapped market. Furthermore, the future growth is going to come from the rural areas as stiff competition in the urban markets brings down the profitability.
There are technology options which can empower the service providers not just to survive but also thrive in the rural market. The high-volume-low-cost approach is crucial to success in the rural market. This is all the more important as rural India has demonstrated that it is as data hungry as the data consumption rose after the launch of Jio’s commercial services in 2016.
Virtualization Can Provide Connectivity For All
The world over the telcos are discovering the benefits of virtualization to bring down the cost while at the same time enhancing the operational efficiency of the network. Recently, Telefonica conducted a pilot to connect the unconnected communities in remote LATAM (Latin America). The service provider used virtualized all IP network to bring down cost, increase the time to market and also to maintain profitability. It not only makes the network agile but also empowers the telcos to launch newer services faster and respond to the changing market dynamics.
Virtualization creates virtual hardware platforms and thus reducing the cost of equipment, hardware and also brings down energy expenditure.
The Indian telcos can also use the concept of virtualized 2G, which can enable them to move the customers to 4G whenever the market is ready. The 2G technology is still relevant in the developing nations, but telcos are reluctant to deploy because it is not easily upgradeable to the latest cellular technologies. However, that is not the case with virtualized 2G, which can be so easily upgraded to 4G that it doesn’t even require a visit from the site engineer.
The solution requires much fewer base stations to provide coverage in the same area, thus bringing down consumption of power. It also doesn’t need any cooling or shelter further reducing the expenditure.
The Indian service providers need to adopt newer and innovative approaches to address the different demands of the rural areas. Virtualization allows not only to provide connectivity to the unconnected but to also prepare the networks for 4G and other upcoming technologies. Adoption of virtualization is possibly the only way for the Indian service providers to ensure that the tenets of the draft National Digital Communications Policy 2018 are met.
Author: Rajesh Mishra, Co-founder, President and CTO, Parallel Wireless
DISCLAIMER: The views expressed are solely of the author and DigiAnalysys does not necessarily subscribe to it. DigiAnalysys shall not be responsible for any damage caused to any person/organisation directly or indirectly.