Vnl Wp Telecom Rural India

White Paper: Bringing Telecom to Rural India VNL, July 2008

As the developed mobile markets all over the world approach saturation, the industry has begun to consider ‘the next billion’ users. These are the rural populations living beyond the reach of traditional communications networks of any kind. Rural India is a prime example of the opportunity:

THE OPPORTUNITY

2 –– 12

720 million potential mobile users await.

The rural consumer in India cannot pay the $50 per

A

they pay the $7-10 per month typical of Delhi and

s the developed mobile markets all over the world approach saturation, the industry has

begun to consider ‘the next billion’ users. These are the rural populations living beyond the reach of traditional communications networks of any kind.

“India, not China, will be the greatest contributor to the ‘next billion’ mobile users, adding 294m subscriptions between 2007 and 2010.” – PYRAMID RESEARCH The Next Billion: How Emerging Markets are Shaping the Mobile Industry Oct 2007

month typical of London, Tokyo and Sydney. Nor can Mumbai. But research and experience shows that they can and will pay around $3 per month today – even before the impact of communications increases their ability to pay.

The challenge is to deliver a mobile service to rural users that can not only be viable, but be profitable at these low levels of Average Revenue Per User (ARPU). Currently, the mobile phone population in India is growing by eight million phones per month. But rural teledensity has yet to break the 5% barrier (despite

Rural India is a prime example of the opportunity:

• A huge population – 720 million people in 630,000 villages across 3.2 million square miles.

television penetration levels of 26% and growing).

NET MOBILE ADDITIONS 2007-2010: 1,4bn

1,500

• A massive economy – over 50% of India’s total GDP. There are almost same number of middle to high income households in rural areas (21.16 mn) as urban India (23.22 mn).

• A booming economy – with the consumer durables market, for example, growing at 25% per year (vs 10% nationally).

1,200 900

{

61% of net additions

600 300

Pakistan

Indonesia Mexico Iran

India China United States Nigeria Brazil Turkey

Rest of world

0

• A parallel economy – with the same needs as

Source: Pyramid Research

developed markets but a reduced ability to pay for them.

The reason is simple: current mobile technology cannot reach the hundreds of millions of people ready to embrace it.

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THE OBSTACLES “You CAN’T get there from here.”

R

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The challenges of rural India

ural India has a massive pent-up demand for

There are four main difficulties in serving rural commu-

mobile services; a limitless supply of low-cost

nities, each one of which has appeared insurmountable:

labour to help deploy them; and a large entrepreneurial class ready to deliver services at the local level. Cheap handsets are available and, unlike urban locations, space for Base Stations is plentiful.

“The cost of passive infrastructure is enormous and telecom companies should consider the infrastructural challenges in the rural areas.” – SANJEEV AGA, CHAIRMAN CII National Committee on Telecom and Broadband

As powerful as these market drivers may be, the inhibitors are even more formidable. The obstacles to providing profitable mobile services to rural India (and similar rural populations all over the world) come from two main sources: the inherent constraints of the market – its geography, economy and skill levels; and the inherent limitations of current GSM

• Power challenges – Most of rural India is not served by the power grid. Some areas may get ‘agricultural power’ – two hours in the morning and evening – but even this is the exception. When fuel can be afforded and delivered, power tends to come from diesel generators. The combination of poor fuel quality and poor generator maintenance severely limits the life of any generator.

• Revenue challenges – Rural India can pay for mobile services, but only around $3 per month. The cost base of any solution has to be geared to these ARPU levels.

• Skills challenges – There are no trained telecom engineers and few people can read or write. This makes the installation and maintenance of GSM networks highly challenging.

• Access challenges – These are extremely remote communities, served by poor roads and no other significant infrastructure.

technology, processes and models. Despite these challenges, other complex services have profitably been delivered to rural India (including cable

COMMUNICATION SPEND % of GDP, by region, 2006

5%

television). 2006

2010

Unfortunately, the mobile systems in use all over the

4% Global average: 3.2%

world today seem to have been designed to maximise

3%

vulnerability to these four challenges.

2% 1% 0

Today’s GSM is not ready to serve rural India. North America

Western Europe

Asia Pacific

Eastern Europe

Africa & Middle East

Latin America

Source: Pyramid Research

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The limits of traditional GSM GSM, as we know it today, was designed for urban and suburban locations in developed markets. It’s a generalpurpose network entirely unsuited to the unique chal-

estimated to burn about 1.8 billion litres of diesel each year. Fuel quality, transport challenges and the demands of generator maintenance make this power source unsustainable for rural GSM deployments.

lenges of serving rural and remote communities.

• Skills demands – A typical GSM Base Station

“New cellphone makers and service providers understand that they can make money by bringing cellphone service within reach of people who live on $2 a day.” – BUSINESS WEEK, SEPT. 24 2007

Mapping the inherent limitations of today’s GSM to the challenges of rural deployment, we can see the massive gulf between the opportunity and the tools available to seize it:

• Deployment demands – The typical GSM Base Station includes three refrigerator-sized cabinets, mains power supply, large battery backup, dual air conditioning units, a tower or roof site and backhaul capability. All this is housed in some kind of building – either existing or built for purpose. Just getting all of this equipment to a rural community multiplies the cost of deployment – before provisioning, civil engineering, radio planning, testing and maintenance is factored in.

• Power demands – Power was clearly not an issue when GSM was conceived. A typical Base Station site alone requires about 3000W to run – not including any Base Station Controller (BSC) or Mobile Switching Center (MSC). Due to power availability constraints even in urban settings, the current GSM networks in India are

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deployment process takes around three months from planning to commissioning, and involves dozens of people including radio network planners, site acquisition teams, site engineers, civil engineers, equipment vendor installation professionals and commissioning teams from the operator. This supply chain can barely meet the demands of the urban mobile infrastructure. It could never scale for the rural opportunity even if it could do so cost-effectively (a clear impossibility). The workforce in rural India has none of the skills necessary to deploy and maintain today’s GSM.

• Cost demands – A typical GSM Base Station alone costs in the region of $100,000, before BSC and MSC costs are factored in. Funding this capital expenditure requires the kinds of population densities and ARPU levels found only in urban areas. Rural communities simply do not justify the cost of today’s GSM infrastructure – and no government subsidy can fill the gap.

Taken together, the challenges inherent to the rural opportunity and the limitations and demands of traditional GSM create a circle that is impossible to square.

Asking traditional GSM to serve the population of rural India is like getting an elephant through the eye of a needle. We need to take another approach.

THE SOLUTION

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WorldGSM™: driving down the threshold of viability

W

• Self-deploying – the entire WorldGSM™ Base Station packs into two carts and is easily installed by unskilled field staff who may not be able to read or write. No buildings, power, air conditioning. Just point it South and turn it on.

orldGSM™ is a new approach to delivering profitable mobile services to rural India and

beyond. It’s the first example of microtelecom, the re-

• Near-Zero Maintenance – top up the batteries

engineering of telecommunications to meet the needs

every three months; update software remotely and perform simple swap repairs if needed.

of rural and remote communities.

“Affordability and availability of infrastructure will be key challenges for telecom industry to reach the rural customer.” – MR. D SHIVAKUMAR, VP & MANAGING DIRECTOR Nokia India

• Cascading Star Architecture™ – a unique, modular architecture optimised for low-cost rural expansion; with local switching to minimise backhaul.

While the major equipment vendors focus on the latest services for developed, urban markets, VNL has quietly re-engineered ‘plain vanilla’ GSM to make it fit for a

WorldGSM™ is a complement to existing GSM networks, extending them to seize the rural opportunity. It is:

• Low-power – at less than 100W per Base Station,

whole new purpose. WorldGSM™ is the first fully-fledged mobile infrastructure that’s completely independent of the power grid.

the entire system can be run on solar power. No power grid or generator necessary. ARPU

• Low cost – a fraction of the cost of traditional GSM Base Stations; profitable at very low densities and ARPUs.

• Fully GSM standards compliant – easily links to existing networks, dramatically extending their reach.

• Self-contained – With BSC and MSC functionality integrated and deployed in the field on Base Station towers.

$50

Ordinary Base Station

$40

$30

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iab

ilit

y

WorldGSM™ Base Station

$10 $3 $0

res

v of

Barrier of entry to BoP markets $0

$25,000

$50,000

$75,000

$100,000

BASE STATION CAPEX Source: VNL

Driving down the threshold of viability to the $3 ARPU level requires an order of magnitude cost reduction.

© 2008 VNL | www.vnl.in

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The WorldGSM™ design challenge

The WorldGSM™ hardware

WorldGSM™ has been designed from a blank sheet

Developing our own hardware gives VNL the ability to

of paper to remove all unnecessary power consump-

drive down power, cost and size to a degree that no

tion and all extraneous costs. Anything that does not

existing hardware could match.

contribute directly to setting up and terminating phone calls has been removed and everything remaining has

There are three boxes at the core of the WorldGSM™

been squeezed to minimize power and remove cost.

system:

To achieve this, VNL has had to:

• Design and build our own hardware – to maximise control

• BlueBox™ – the low-power, low-cost BTS (Base Transceiver Station) in a box. Complete GSM Base Station functionality in a single box, including microwave backhaul. It comes in two capacities – 1 TRX and 2 TRX.

• Develop and test our own software – millions of lines of code that re-creates GSM for rural use

• Re-engineer the physical infrastructure – with new form factors that can be deployed by anyone, anywhere, in days

• Invent a new network architecture – to support limitless scalability at low cost

• GreenBox™ 160i – the world’s first ruraloptimized BSC (Base Station Controller). One GreenBox™ 160i supports up to 16 BTS nodes (WorldGSM™ Rural, Road or Village sites).

• OrangeBox™ 600i – the compact MSC (Mobile Switching Center) for rural deployments. One OrangeBox™ supports up to 6 GreenBox™ 160i nodes, serving over 10,000 subscribers.(WorldGSM™ Rural, Road or Village sites).

The result: a complete GSM system that needs no grid power, can be carted to site and erected in days by unskilled people. The raw materials that make up the solution include such things as the open source Linux operating system, off-the-shelf signal processors, hardware-store brackets,

WorldGSM™ BlueBox™ 901

WorldGSM™ OrangeBox™ 600i (MSC)

WorldGSM™ BlueBox™ 902

WorldGSM™ GreenBox™ 160i (BSC)

a few bags of concrete, solar panels and a compass. This is GSM, but not as we know it.

© 2008 VNL | www.vnl.in

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By foregoing the use of Application Specific Integrated Circuits (ASICs) VNL has greatly reduced the cost and risk associated with hardware development. The result is small, low-power, low-cost hardware with the flexibility of a software-driven system.

The WorldGSM™ software

Two deployment options WorldGSM™ can be deployed in either of two main configurations:

• Rural Deployment – for low-cost, blanket coverage of an entire rural area. Using the Cascading Star™ architecture to scale with demand on a modular basis as needed.

The WorldGSM™ core network is built on the MontaVista distribution of Linux. This confers the following advantages:

• Extreme stability – carrier-class uptimes • Flexibility – to choose from a wide variety of silicon and hardware

• Ubiquity – easy to find skills and resources • Open Source – free and easily adapted • Wide acceptance – by operators all over the world

On top of the operating system, VNL has developed its own Linux-based version of the GSM standard on which the world’s mobile networks run. The software covers everything from power control and stripped down handover algorithms to a wide range of compelling end user features.

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Rural Deployments combine the WorldGSM™ Rural Site – a 21-metre freestanding tower – and the WorldGSM™ Village Site – a rooftop-mounted Base Station that clusters around the towers.

• Road Deployment – for highly focused coverage along major roads and arteries, often running between towns and villages with existing coverage. Road Deployments use bi-directional antennas to create a string of coverage along roads, ending in a BSC to connect to the main GSM network.

The deployment options can be easily combined into a single WorldGSM™ network or as simple extensions to any existing GSM network.

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WorldGSM™ RURAL coverage PRODUCTS For rural deployments, the WorldGSM™ system comprises the Rural Site (typically deployed as a hub), Village Site, the OrangeBox™ 600i (MSC) and the GreenBox™ 160i (BSC) — typically co-located at the end node of the host network.

Reaching into villages    Village Site is especially designed for mounting on rooftops within villages. The photovoltaic panel and battery packs are mounted beside the mast.

Expandability    Each Rural Site can support up to 500 users and each BSC can support up to 16 1 TRX BTS nodes.

1

WorldGSM™ Village Site

2

3

WorldGSM™ OrangeBox™ 600i (MSC)

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4

WorldGSM™ Rural Site

WorldGSM™ GreenBox™ 160i (BSC)

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WorldGSM™ ROAD coverage PRODUCTS For road deployments, the WorldGSM™ system comprises the Road Site, equipped with high-gain directional antennas, the OrangeBox™ 600i (MSC) and the GreenBox™ 160i (BSC) — typically co-located at the end node of the host network.

Expandability    Each Road Site can support up to 500 users and each BSC can support up to 16 1 TRX BTS nodes.

1

WorldGSM™ Road Site

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2

WorldGSM™ OrangeBox™ 600i (MSC)

3

WorldGSM™ GreenBox™ 160i (BSC)

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WorldGSM™ RURAL DEPLOYMENT Typical rural deployment Host network

OrangeBox™ 600i (MSC)

GreenBox™ 160i (BSC)

Village Sites are mounted on rooftops within a 5km radius of a Rural Site. These “stars” are strung along from any existing GSM network node, extending its reach. An OrangeBox™ 600i MSC and a GreenBox™ 160i BSC are colocated at the end node of the host network. It’s fast, it’s simple and it drives capex and opex to new lows.

Village Site

Rural Site

Highway / main road

20 km

10 km

5 km

65 km coverage corridor

WorldGSM™ ROAD DEPLOYMENT Typical road deployment WorldGSM™ Road Sites are deployed along any rural road. A string of Road Sites ends at any existing network node, with a co-located OrangeBox™ 600i MSC and a GreenBox™ 160i BSC. It’s fast, it’s simple and it drives capex and opex to new lows.

Host network

OrangeBox™ 600i (MSC)

GreenBox™ 160i (BSC)

Road Site

Bi-directional coverage Road Site

Road Site

MSC BSC

The WorldGSM™ Road Site uses two high-gain directional antennas that point in opposite directions, creating a bi-directional coverage pattern.

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HOST NETWORK

Village Site is mounted on rooftops throughout villages. Rural Site is centrally deployed.

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The WorldGSM™ Architecture

Extending existing GSM networks

WorldGSM™ is based on VNL’s Cascaded Star Architec-

While WorldGSM™ can be a complete standalone

ture™, a unique approach to Radio Network Planning.

GSM network, it comes into its own as a solution that extends the reach of existing networks by going where they cannot go.

Highway / main road

In this way, WorldGSM™ creates a win-win-win scenario:

• Operators win because they can now address massive rural markets cost-effectively and profitably. Cascaded Star Architecture™ has several important advantages:

• It allows WorldGSM™ to use panel or omni antennas to provide coverage.

• Users win because they get affordable communications for the first time.

• Current equipment vendors win because their networks are extended further – and the new users require expansions of the core network.

• It provides an easy entry into previously uncovered areas.

• It enables low-cost expansion as uptake increases.

WorldGSM™ is specifically designed for licensed operators with existing networks – the companies with the most to gain from the rural opportunity (and the keenest to seize first mover advantage in remote communities).

All three contribute significantly to the cost, power savings and sustainability of the WorldGSM™ system.

The Bottom Line Unlike generic GSM, WorldGSM™ has been specifically designed for one specialist application: connecting previously unconnected rural communities in a profitable, sustainable way.

No other GSM solution costs so little, uses so little power and is so small and easy to deploy. This makes it the ideal solution for seizing the massive opportunity represented by rural India and beyond.

© 2008 VNL | www.vnl.in

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About VNL VNL helps mobile operators reach rural markets profitably. VNL is 100% focused on this massive opportunity. Our management team has deep experience at the highest level of the telecom industry and has long-established relationships with the key players in India, including the major operators, equipment vendors, suppliers, governments and NGOs. The microtelecom revolution is ready to begin and VNL is leading the charge.

Contact VNL E-mail:

[email protected]

Website:

www.vnl.in

Blog:

blog.vnl.in

VNL INDIA VNL, Vihaan Networks Limited 246, Phase IV, Udyog Vihar, Gurgaon, Haryana 122 015, INDIA Tel +91 124 4311600-609 VNL EUROPE VNL Europe AB Finlandsgatan SE 164 74 Kista, SWEDEN Tel +46 8 793 9080

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