Telecom Infrastructure Sharing - A Means to Counter Investment Deficiency?

Telecommunications companies have taken a number of cost-cutting measures to alleviate the massive effects of the ongoing global financial crisis, including cutting down their workforce. With investment deficiencies piling up, temporary solutions have been taken. And while temporary solutions are necessary for companies to weather the storm, long term solutions have begun to surface like outsourcing network operations, investing in network business information, and infrastructure sharing.
These days, telecom companies cannot afford to lose money as the global economic climate is still on unsteady footing, and ironically, one way for telecom companies to generate more revenue is to broaden their reach by building new cell sites in areas with little or no service at all. So how do companies go around the fact that they need to shell out money to broaden their reach?
A recent report by management advisory and investment firm Delta Partners emphasized the need to utilize infrastructure sharing strategies. The said report was geared toward the Middle East and North Africa (MENA) region and it underlined a projected $8 billion in savings over a period of 5 years for telecom companies.
If the report's estimated savings are to be believed, then infrastructure sharing could be a good solution to counter investment deficiency. Telecom infrastructure sharing, as the name suggests, is a cost effective solution for telecoms to expand their reach to other areas.
Rollout costs for new sites are far from inexpensive, and they eat up a large chunk of telecom companies' budgets. A telecom company looking to broaden its reach without spending too much on erecting new towers can find a cost effective solution in sharing another company's assets.
There are several infrastructure sharing options that companies can take, limited only by the telecom regulatory and legislation in different countries. Also, the options of sharing depend on what electronic and non-electronic infrastructure companies are willing to share or lease.
Here are some of the possible infrastructure sharing options companies today can tap into:
-Passive sharing is what the name suggests; it allows for telecom companies to share passive or non-electronic infrastructure (non-electronic infrastructure accounts for the larger chunk of rollout costs). In cell sites, "passive" equipment includes the tower itself, electrical supply, air-conditioning equipment, and technical premises, among other things. Thus far, passive infrastructure sharing is the most commonly used option by telecom companies around the world.
-Active sharing involves the shared use of electronic infrastructure in a cell site, including the base tower station, switches, antennas, transmission and signal processing transceivers, and microwave radio equipment.
-Spectrum-sharing is basically a lease agreement between two companies. With spectrum-sharing, a company can lease a part of another company's spectrum which enables both companies to provide service to the same customer. This type of infrastructure sharing is utilized in some parts of the world; it promotes better service at competitive prices and benefits customers.
There are other types of telecom infrastructure sharing types, each catering to a specific need. These include site sharing, mast sharing, antenna sharing, RNC (Radio Network Controller) sharing, backbone sharing (switch and router sharing), geographical splitting, frequency sharing, and base station sharing. With these, telecom companies have a lot of options available to them.
Today's economic climate calls for companies to run like well-oiled cost efficient machines; companies can benefit from even the smallest savings. Measures such as telecom infrastructure sharing will provide companies with a means to save on rollout costs and in the long run, the said savings can be used to counter shrinking investments. It is a solution that might prove practical, especially for companies looking to expand.
Infrastructure sharing opens a number of possibilities for telcos; savings translate to more capital to reinvest on building new sites, save companies from slimming down the workforce, and stay competitive, among others. The customers benefit too, as the healthy competition promotes better quality of service and lower costs.

Jonnadeth Coja Mesa is the Editor/Associate Publisher of NBI Magazine who is responsible for the content of the magazine. NBI Magazine is a free for subscription online magazine that published quarterly.
The purpose of NBI Magazine is to provide people working in the Telco industry inside information about trends and activities in the telecom network business intelligence area and at the same time give an opportunity to learn from the front-runners and experts in business intelligence.

E-Business Infrastructures are Replacing the Traditional Office

e-Business Infrastructures are Replacing the Traditional Office
More and more, companies understand that the traditional office is being replaced with the Internet. Searching for information no longer requires reading trade journals, newspapers, white papers or even going to the library. Now, finding information is just a point and click away. Taking into account how fast technology changes, eBusiness is a relatively new realm of IT, a new avenue of productivity. eBusiness infrastructure is defined as "The collection of platforms, networks, products, applications, and databases and the business rules governing the flow of data and work among them, both internally and to external systems. Integration into cohesive systems is achieved with vendor-supported customization, pre-built adapters and gateways, and program to program interoperation technology such as XML, Web services, distributed object protocols, and cross platform development tools and languages." Now, that is a mouthful, but it highlights the importance of only hiring, or outsourcing, to those that are experienced in building customized ebusiness solutions.
Jupiter Communications reports that because of poor performance, 46
percent of Web customers surveyed have left a site that they otherwise preferred, and 24 percent returned only after establishing a relationship with a competing company.
For example, John Barbour, CEO of Toysrus.com commented on the challenges of competing in an e-business environment. "We learned that you need to have a very robust infrastructure to handle this business and the scale of it. One of the things people don't realize is that most of these Internet businesses, including ourselves, have to grow infrastructure at a dramatic rate. Companies are increasing tenfold within a space of a year, two years. And that's incredibly tough to manage, no matter who you are," said Barbour.
In today's Internet-driven global economy, winners are those who ensure their businesses and the data driving it are ubiquitously accessible. To compete in today's fast-paced Global world, all businesses must have the right eBusiness infrastructure to ensure success. Companies need to make sure that all their business-critical networks, systems, and applications are constantly available anytime/anywhere. eBusiness is a new realm of IT demand, a new avenue of productivity in today's fast growing modularized distributed network environment. No matter how many or how complex the business processes may be, to compete effectively, businesses must keep ALL their data, applications, and networks available (and accessible) for their customers, employees, partners, suppliers, (and even investors) at all times.
It bears repeating that it is imperative that your development team has the experience to design, develop, implement, and support eBusiness infrastructures that combine data, voice, and video, utilizing the latest and the greatest hardware and software technology in diverse operating environments. Whether your focus is local, national, or even if the world is your playing field, by utilizing the web, you can build and support the right infrastructure to alleviate the IT complexity that surrounds your business.
Constructing an e-business IT infrastructure that performs dependably, 24 x 7, requires a multifaceted knowledge of the performance capability, load balancing, security concerns and ever-changing Web-based technologies that are available today.
Jupiter Communications reports that because of poor performance, 46 percent of Web customers surveyed have left a site that they otherwise preferred, and 24 percent returned only after establishing a relationship with a competing company.
For example, John Barbour, CEO of Toysrus.com commented on the challenges of competing in an e-business environment. "We learned that you need to have a very robust infrastructure to handle this business and the scale of it. One of the things people don't realize is that most of these Internet businesses, including ourselves, have to grow infrastructure at a dramatic rate. Companies are increasing tenfold within a space of a year, two years. And that's incredibly tough to manage, no matter who you are," said Barbour.
With web expansion and usage continuing to exceed expectations, the most problematic hurdle can oftentimes be sustaining an architecture that will scale as quickly as your business grows. Sustaining an e-business infrastructure.....be if for disseminating your company's information, or as an e-commerce Web business, where you sell products of services, requires managing your infrastructure expansion on a constant basis to insure your are meeting your visitors expectations. In some instances, you may even need to consider a total technology redesign of your web site. Today, anyone who wants to sell product or services must have a complete e-infrastructure that will keep pace with business growth, deliver new features to end users and support new product offerings.

About Spain - Infrastructure

These About Spain articles are not about tourism, although Spain is a beautiful country.
They are meant to function as a reference for management and organization. Spain is the decor to which common business issues are mirrored. Each company is struggling with certain issues, just in the same way that a government and the inhabitants of a country are dealing with similar topics; distribution, priorities, communication, investments, infrastructure. (Corporate) Governance. And many others.
When you live and work in a foreign country you automatically compare that country with your own. During the process of adaptation you wonder about the differences and you will not only get to know a new country, the process also sheds some new lights on your own background.
One of the first (relevant) differences is the topic of infrastructure. Infrastructure is therefore important both for an organization as for countries, because infrastructure is about quality. And when you examine the style of an organization you come across at least two possible ways of dealing with infrastructure.
But let's first search for a definition. What are we talking about? Infrastructure is a very broad area; here are some definitions :

• The basic physical systems of a country's or community's population, including roads, utilities, water, sewage, etc. These systems are considered essential for enabling productivity in the economy. Developing infrastructure often requires large initial investment, but the economies of scale tend to be significant. (www.investorwords.com)
• As a Base; the stock of basic facilities and capital equipment needed for the functioning of a country or area; "the industrial base of Japan" As a Substructure; the basic structure or features of a system or organization (www.wordreference.com)

The definition I favor will include also elements like; education, safety, and other aspects of national governance.
Possible ways of handling an organizational infrastructure are; pave the way (the infrastructure) once it is clear that you need it (1) or; prepare and plan the infrastructure up front before rolling out new business developments.
The advantage is of the first is that it is the most flexible way; you only start investing in new roads, etc...once people really start using them. "Let's first check whether this road will really be used, before paving it..."
This approach seems the preference way in Spain. Big real estate projects will start their developments at fallow areas. Later on, roads will be constructed or improved. Normally this wouldn't be a problem. Yet, water is another element of infrastructure. Recently however, a real-estate development project was cancelled because of insufficient water supplies. The infrastructure wasn't ready.
In the Netherlands, you wouldn't easy encounter those kinds of problems; they prefer the other way, where infrastructure, care and governmental support are often leading (although there is a trend in the other direction).
The origin of this infrastructural difference could be traced to the differences in the nature (and not the culture) of both countries. Holland is small and flat and therefore easily endowed with infrastructure. The Spanish countryside is extensive rough and uneven.
Yet the other cause is the cultural difference; The Netherlands have always had (like other northern countries) an elevated collective sector, whereas Spain is a country with many individual 'States' struggling for more autonomy; and that doesn't benefit a "collective" support.

Indian Telecom Industry - Sharing Telecom Infrastructure

De-licensing, implementation of open-market policy and other liberal economic policies has helped the Indian Telecom sector register a remarkable growth during the last 5 years. Indian Telecom sector today is the second largest and the fastest growing telecom market in the world only after China. Competition is intense with 4 out of the top 10 telecom players accounting for two third of the entire mobile market.
While all major telecom companies like BSNL, Bharti, MTNL, Reliance and Tata Infocomm have experienced a drastic increase in their subscriber base over the last few years, Average Revenue per Unit (ARPU) continues to be a major concern as price competition shows no sign of boiling down. According to TRAI, as of December 2008, the total subscriber base stood at 346.9 million, growing from 0.9 million as on March 1998. Despite growing subscriber based, mobile penetration still continues to remain at a low 27% compared to 94% in the US. Moreover, growth has been primarily from metros and Class A circles.
Due to growing competition and declining ARPU, large telecom players including Bharti, BSNL and Reliance are now increasingly focusing on rural and Class B and C circles to capture the untapped subscriber base. Since growth will be coming from lower income strata, it can safely be assumed that APRU will continue to slide further.
ARPU and MoUs (Minutes of Usage) are two critical factors for a telecom company as it directly impacts its EBITDA (earnings before interest tax depreciation and amortization) margins and IRR (internal rate of return). In the past, telecom companies were able to improve their EBITDA figures by amortizing cost over large and growing subscriber base. However, cut-throat competition and declining ARPU is increasing the pressure on these companies' EBITDA an IRR.
Sharing of telecom infrastructure seemed to be the most logical step towards improving capital efficiency and reducing the cost of maintaining passive telecom infrastructure, besides enabling them to focus on their core operations. Return on Capital Employed (RoCE) and Profits are also positively impacted when telecom operators prefer to lease towers instead of owning them.
A tower infrastructure company provides passive telecom infrastructure on a sharing basis to telecom operators by entering into Master Service Agreements (MSAs) with them. While sharing of telecom infrastructure is now the order of the day across the world, the extent to which they are shared depends on the competition and regulatory climate in each country.
In order to improve operational and capital efficiencies, large telecom companies including Bharti Airtel, Reliance Communications and Tata Teleservices, hived off their tower divisions as separate companies. This benefitted them not only in the form of reduced operating cost and capital requirement, but also unlocking of significant value. Tower infrastructure subsidiaries always have the advantage of an assured occupant. As per ICRA, telecom infrastructure can generate good returns after achieving an average occupancy ratio of 1.7.
Besides hived off telecom infrastructure subsidiaries, there are several Independent Telecom Infrastructure Companies (ITIC) that build passive and active telecom infrastructure on anticipatory basis and rent it out to operators. For example, Essar Telecom Infrastructure Limited, Xcel Telecom Private Limited, GTL Infrastructure Limited, Quippo Telecom Infrastructure Limited, Vision India Private Limited, Aster Infrastructure Private Limited and TVS Interconnect Systems Limited.
ITICs are at a disadvantage against other telecom infrastructure subsidiaries as they have no assured occupants. Moreover, large telecom operators have their own infrastructure subsidiaries. As such, ITICs focus on regional and new operators. Unitech, Swan Telecom and S Tel Limited are some of the new entrants that will bank on such ITICs to optimize their investment.
Mobile tariffs are currently so low that any further reduction in tariffs will be impossible. The only distinguishing factor will be the quality of service provided by telecom operators. Given the scarce spectrum coupled with ever increasing number of subscriber base, providing good quality of service will demand additional passive and active telecom infrastructure thus increasing the demand for ITICs. Introduction of mobile number portability with limited switching costs is seen to be another important factor that will drive the ITIC sector.
Driven by intensifying price competition, mobile tariffs are now the lowest in the world. Consolidation is now expected to be the strategic and most logical step in the future, which will be supported by the rapidly increasing number of ITICs.

Blazing a Trail in Infrastructure Management Education in India

Infrastructure and Economic Development
The Planning Commission has set an ambitious double-digit national economic growth rate during the 11th Five-Year Plan. How do we go about pursuing this tall order? There is now a general consensus that the answer lies mainly in the creation of high quality infrastructure - physical, social and economic. How the Interstate Highway System launched by the Eisenhower administration in the '50s helped create a more mobile and vastly wealthier America is now legendary. Back home, in India, we have the classic case of the Grand Trunk Road, built by the 16th Century ruler, Sher Shah Suri, to promote trade. A 2000 km stretch of the Grand Trunk, linking six Indian states, still acts as the backbone of commercial prosperity across India.
Several studies in the past have shown that the spread of rural infrastructure assists economic growth and leads to a decline in poverty. According to the Rural Infrastructure Report, recently brought out by the NCAER, development of rural infrastructure has a five-fold impact on the economy. Good infrastructure creates better access to employment and provides further earning opportunities;
increases production efficiency; gives access to previously inaccessible commodities and services; helps citizens save time and, thereby, involve themselves more in productive activities; and
improves the health and physical condition of the rural population.
Infrastructure-centric Governance
Economic liberalization heralded the beginning of a new era of infrastructure-centric governance in India. The government is already putting in place a transparent and independent regulatory framework for the infrastructure sector, based on international best practices. A committee has been constituted under the chairmanship of the Prime Minister, to closely monitor the progress in all key infrastructure projects, on a quarterly basis. A Viability Gap Grant Scheme has been instituted for supporting infrastructure projects (like power, roads, ports, airports, railways, water supply & urban transport) which, despite being economically viable, are financially unviable. A Special Purpose Vehicle (SPV), called the India Infrastructure Finance Corporation Limited (IIFC), has been set up to lend funds with longer term maturity to commercially viable projects in infrastructure sectors, including projects which become viable after receiving viability gap funding from the government. Comprehensive Model Concession Agreement (MCA) Frameworks for Public Private Partnerships (PPPs) are either in place or being formulated for the Highway, Seaport & Airport sectors. These MCAs, based on internationally accepted principles and best practices, unbundle risks and costs, and allocate them to the party best suited to manage them. Rail container movement, so far monopolised by the public sector entity, CONCOR, has been thrown open to competition, making private sector entities eligible for owning and operating container trains.
Today, the sectoral policies at the national, regional & local levels are being developed around 'touchstone' principles, like: (1) Efficient use of existing assets and optimal allocation of additional resources, (2) payment for services, (3) equitable contractual structures, (4) transparent process of procurement, (5) fair regulatory framework, (6) enabling institutional infrastructure, and (7) sustainable incentives and concessions.
New Demands on Infrastructure Management
As path-breaking concepts, frameworks and methodologies are being evolved, at the national, regional and local levels, especially in the critical facets of infrastructure management such as financing, contracting and regulation, an Infrastructure Manager today needs to have a variety of skills:
 Marketing, business development and financial management skills for mobilizing and administering project resources.
 Engineering and technical skills for ascertaining the technological soundness of the project.
 Skills in Participatory Learning & Action (PLA), Information, Education & Communication (IEC), and Strategic Environmental Assessment (SEA) to evaluate the location-specific social, economic & environmental impact of the project.
 Organizational & capacity-building skills to ensure the sustainability of the project.
Need for Holistic Training
With a huge investment requirement of the order of about Rs.14.5 trillion ($320 billion), over the next six years, and a spate of new investor-friendly policies in the offing, Infrastructure is all set to become the most 'happening' sector of the Indian economy. The immediate requirement of the Indian economy is a pool of holistically trained domain-ready infrastructure managers, who have the ability and grit to (a) convert the huge investments into quality infrastructure facilities; (b) upgrade the existing infrastructure set-up; and (c) sustain high infrastructure service levels by adopting better management practices. Be it physical, social, economic or environmental infrastructure, the demand for such holistically trained managers is going to be unprecedented.
A Trail-blazer
In response to this crying need for domain-ready managers the first-ever comprehensive Post-Graduate Diploma in Infrastructure Management (PGDIM) Programme in the country was launched in August 2005. The programme, offered by Karnataka's prestigious Visvesvaraya Technological University (VTU), is being conducted by the School of Management for Infrastructure and Development Strategies - India (MINDS), at Bangalore. MINDS is a Division of the Centre for Symbiosis of Technology, Environment & Management (STEM), a professional research group with nearly two decades' standing in Development Research, Consultancy & Training.
The PGDIM is a one-year full-time programme for graduates in all disciplines of engineering and post-graduates in other disciplines. The curriculum is designed on a holistic approach to Infrastructure Management covering Project Management; Marketing; Contract Management; Infrastructure Finance; ICT Applications; GIS Applications; Strategic Environmental Assessment (SEA); Legal & Regulatory Environment; and Emerging Paradigms. The programme participants also work on live projects being implemented by reputed infrastructure organizations, and gain hands-on professional experience.
Based on the encouraging experience of running the unique PGDIM Programme, VTU is commencing a new format two-in-one PG Programme in Infrastructure Management from the academic year 2007-08. Very modular in structure, this innovative programme provides for a 'Dual Qualification Option' whereby a student receives a Post-Graduate Diploma in Infrastructure Management (PGDIM) on successfully completing the first year and also an MBA Degree in Infrastructure Management, after the second year. One exceptional feature of the Dual Option PG Programme is that it is a highly modular arrangement whereby a student needs to make up his/ her mind only midway or even at the end of the one-year PGDIM whether to move on to the second year of the MBA.
The second year (MBA level) comprises two semesters and includes an advanced Internship by way of extended project assignments. An additional feature of the MBA is that it also provides for specialization in areas such as Urban Governance & Management, IT Infrastructure Management, Communication & transportation, Power & Energy, Health, Education, Water & Sanitation, and PPP.
Both the PG Diploma and the MBA Degree are awarded by the VTU.
Good Corporate Response
The first batch students gained hands on experience through Corporate Exposure & Learning (CEL) Internships at leading public/ private infrastructure organisations, including GMR Hyderabad International Airport Ltd (GHIAL), Hubli-Dharwar Municipal Corporation (HDMC), IDECK, Kristal Group, TCE Consulting Engineers Ltd and UN Habitat. The study topics included: (i) Financial Risk Analysis in the context of airport infrastructure management; (ii) Installation of Effective Public Grievance Redressal and Emergency Response Systems (PGRS &ERS) in Municipal Environment; (iii) Urban Planning & Renewal; (iv) Planning and Scheduling for Infrastructure Development; (v) Commercial Aspects of Power Business Consulting; (vi) Evaluation of UN-Habitat Programme on Water for Asian Cities; (vii) Environmental Impact assessment for Setting up of Small Hydro Power plants. Naturally, the first PGDIM Batch was welcomed by the industry and received a 100% final placement offer with attractive packages comparable to any emerging sector. The employers include DLF Group, IL&FS and Infrastructure Development Corporation of Karnataka (IDECK).