vnl wp telecom rural india

White Paper:Bringing Telecom to Rural India

VNL, July 2008

As the developed mobile markets all over the world ap-

proach 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:

2––12

© 2008 VNL | www.vnl.in

720 million potential mobile users await.

A 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.

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.

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).

A parallel economy• – with the same needs as

developed markets but a reduced ability to pay for

them.

The rural consumer in India cannot pay the $50 per

month typical of London, Tokyo and Sydney. Nor can

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

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

television penetration levels of 26% and growing).

The reason is simple: current mobile technology can-

not reach the hundreds of millions of people ready to

embrace it.

THE OPPORTUNITY

“India, not China, will be the greatest contributor to the ‘next billion’ mo-bile users, adding 294m subscriptions between 2007 and 2010.”

– PYRAMID RESEARCHThe Next Billion: How Emerging Markets are Shaping the Mobile Industry Oct 2007

NET MOBILE ADDITIONS2007-2010: 1,4bn

0

300

600

900

1,200

1,500

Rest of world

United States

NigeriaBrazilTurkey

Pakistan

IndonesiaMexico

Iran

61% ofnet

additions

India

China

Source: Pyramid Research

{

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“You Can’t get there from here.”

R ural India has a massive pent-up demand for

mobile services; a limitless supply of low-cost

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.

As powerful as these market drivers may be, the inhibi-

tors 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

technology, processes and models.

the Challenges of rural india

There are four main difficulties in serving rural commu-

nities, each one of which has appeared insurmountable:

Power challenges• – Most of rural India is not

served by the power grid. Some areas may get ‘ag-

ricultural 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 com-

bination 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.

Despite these challenges, other complex services have

profitably been delivered to rural India (including cable

television).

Unfortunately, the mobile systems in use all over the

world today seem to have been designed to maximise

vulnerability to these four challenges.

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

“The cost of passive infrastructure is enormous and telecom companies should consider the infrastructural challenges in the rural areas.”

– SANJEEV AGA, CHAIRMANCII National Committee on Telecom and Broadband

THE OBSTACLES

COMMUNICATION SPEND% of GDP, by region, 2006

0

1%

2%

3%

4%

5%

NorthAmerica

WesternEurope

Global average: 3.2%

Asia Paci�c EasternEurope

Africa &Middle East

LatinAmerica

Source: Pyramid Research

2006 2010

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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 general-

purpose network entirely unsuited to the unique chal-

lenges of serving rural and remote communities.

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 plan-

ning, 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 in-

cluding any Base Station Controller (BSC) or Mobile

Switching Center (MSC).

Due to power availability constraints even in ur-

ban settings, the current GSM networks in India are

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 deploy-

ments.

Skills demands• – A typical GSM Base Station

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 expendi-

ture 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 op-

portunity and the limitations and demands of tradition-

al GSM create a circle that is impossible to square.

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

“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

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worldgsm™: driving down the threshold of viabilitY

W orldGSM™ is a new approach to delivering

profitable mobile services to rural India and

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

engineering of telecommunications to meet the needs

of rural and remote communities.

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,

the entire system can be run on solar power. No

power grid or generator necessary.

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 functional-

ity integrated and deployed in the field on Base

Station towers.

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.

Near-Zero Maintenance• – top up the batteries

every three months; update software remotely and

perform simple swap repairs if needed.

Cascading Star Architecture™• – a unique,

modular architecture optimised for low-cost rural ex-

pansion; 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

whole new purpose.

WorldGSM™ is the first fully-fledged mobile infrastruc-

ture that’s completely independent of the power grid.

driving down the threshold of viability to the $3

ARPU level requires an order of magnitude cost reduction.

THE SOLUTION

“Affordability and availability of infrastructure will be key challenges for telecom industry to reach the rural customer.”

– MR. D SHIVAKUMAR, VP & MANAGING DIRECTORNokia India

ARPU

Threshold of viability

BASE STATION CAPEX

Ordinary Base Station

WorldGSM™ Base Station

$0$0

$10

$3

$30

$40

$50

$25,000 $50,000 $75,000 $100,000

Source: VNL

Barrier of entry to BoP markets

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the worldgsm™ design Challenge

WorldGSM™ has been designed from a blank sheet

of paper to remove all unnecessary power consump-

tion and all extraneous costs. Anything that does not

contribute directly to setting up and terminating phone

calls has been removed and everything remaining has

been squeezed to minimize power and remove cost.

To achieve this, VNL has had to:

Design and build our own hardware• –

to maximise control

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

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,

a few bags of concrete, solar panels and a compass.

This is GSM, but not as we know it.

the worldgsm™ hardware

Developing our own hardware gives VNL the ability to

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

existing hardware could match.

There are three boxes at the core of the WorldGSM™

system:

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.

GreenBox™ 160i• – the world’s first rural-

optimized 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 Or-

angeBox™ supports up to 6 GreenBox™ 160i nodes,

serving over 10,000 subscribers.(WorldGSM™ Rural,

Road or Village sites).

WorldGSM™BlueBox™ 901

WorldGSM™BlueBox™ 902

WorldGSM™GreenBox™ 160i (BSC)

WorldGSM™OrangeBox™ 600i (MSC)

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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

The WorldGSM™ core network is built on the MontaVista

distribution of Linux. This confers the following advan-

tages:

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.

two deploYment options

WorldGSM™ can be deployed in either of two main

configurations:

Rural Deployment• – for low-cost, blanket cover-

age of an entire rural area. Using the Cascading

Star™ architecture to scale with demand on a

modular basis as needed.

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 cover-

age 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.

8––12


WorldGSM™GreenBox™ 160i (BSC)4WorldGSM™

OrangeBox™ 600i (MSC)3

WorldGSM™ Village Site1

WorldGSM™Rural Site2

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.

9––12


worldgsm™ road Coverage produCts

For road deployments, the WorldGSM™ system comprises the Road Site, equipped with high-gain di-

rectional antennas, the OrangeBox™ 600i (MSC) and the GreenBox™ 160i (BSC) — typically co-located

at the end node of the host network.

WorldGSM™Road Site1 WorldGSM™

GreenBox™ 160i (BSC)3WorldGSM™OrangeBox™ 600i (MSC)2

expandability

Each Road Site can support up to 500 users and each BSC can support up to

16 1 TRX BTS nodes.

10––12


worldgsm™ road deploYment

MSCBSC

HOSTNETWORK

RoadSite

RoadSite

Host network

Road Site

OrangeBox™ 600i (MSC)

GreenBox™ 160i (BSC)

worldgsm™ rural deploYment

10 km20 km

65 km coverage corridor

5 km

Highway / main road

Host network

Rural Site

Village Site

Village Site is mountedon rooftops throughoutvillages. Rural Site is centrally deployed.

OrangeBox™ 600i (MSC)

GreenBox™ 160i (BSC)

typical rural deploymentVillage 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 co-

located at the end node of the host network.

it’s fast, it’s simple and it drives capex and opex to new lows.

typical road deploymentWorldGSM™ 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.

bi-directional coverage

The WorldGSM™ Road Site uses two high-gain directional antennas that point

in opposite directions, creating a bi-directional coverage pattern.

11––12


the worldgsm™ arChiteCture

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

ture™, a unique approach to Radio Network Planning.

Cascaded Star Architecture™ has several important

advantages:

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

It provides an easy entry into previously •uncovered areas.

It enables low-cost expansion as uptake increases.•

All three contribute significantly to the cost, power sav-

ings and sustainability of the WorldGSM™ system.

extending existing gsm networks

While WorldGSM™ can be a complete standalone

GSM network, it comes into its own as a solution that

extends the reach of existing networks by going where

they cannot go.

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

Operators win• because they can now address

massive rural markets cost-effectively and profitably.

Users win• because they get affordable communi-

cations for the first time.

Current equipment vendors win• because their

networks are extended further – and the new users

require expansions of the core network.

WorldGSM™ is specifically designed for licensed opera-

tors with existing networks – the companies with the

most to gain from the rural opportunity (and the keen-

est to seize first mover advantage in remote communities).

the bottom line

Unlike generic GSM, WorldGSM™ has been specifically

designed for one specialist application: connecting pre-

viously 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 de-ploy. This makes it the ideal solution for seiz-ing the massive opportunity represented by rural India and beyond.

Highway / main road

12––12


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, govern-

ments 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

vnl wp telecom rural india

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