The network edge How can operators overcome the challenges of high costs and low ARPUs when building networks in remote and rural areas? RAHIEL NASIR looks at how technology is helping to provide many of the answers. Why should mobile operators invest time and money in expanding their networks to remote and rural areas? Compared to the more ‘sophisticated’ mobile users in densely populated urban zones, surely smaller communities in outlying regions can only offer them the depressing prospects of low ARPUs and a slow return on investment? Orange, one of Africa’s biggest operators, doesn’t agree. “Our strategy is to connect the unconnected – not necessarily out of philanthropy but because we think that in the long run it pays,” says Patrick Puges, SVP of emerging markets technical strategy. “Also, when you consider the potential of an area, you must take into account the incoming calls. Yes, the people there may have low ARPUs – but they may have relatives in urban areas or outside the country, and when the coverage is good you can have incoming calls which bring revenues.” Puges says that the number of SIMs in Africa outweighs its actual number of subscribers. Because of multi-SIM usage, it is estimated that around half of the population still remains uncovered by a mobile network – and that represents a huge opportunity for business according to Rajiv Mehrotra, founder and chairman of Indian infrastructure firm VNL: “Every operator wants to be the first to tap the huge potential of millions of prospective subscribers who exist at a sub-USD5 ARPU level.” Furthermore, parts of Africa are witnessing an ongoing demographic/geographic shift that will help drive rural network rollouts. Nick Arvanitis, global marketing director with Swedish power management specialist Flexenclosure, says: “The proliferation of M-PESA applications and the increasing movement of younger people from the countryside to the bigger cities will drive demand in the villages. So those that have left can keep in touch and new mobile money transfer services can be used between them. These new apps will also increasingly improve ARPU.” But as many industry experts point out, even if operators put aside the issues of low ARPUs and high rollout costs, there are still plenty of other hurdles that need to be overcome. Remote and rural areas lack roads, skilled manpower, and backbone networks for trunking and backhaul. And of course, they offer little or no grid power which means diesel generators will need to be supplied, serviced and protected. The operator’s costs just continue to rise. Downsize to upsize Orange has tried to reduce the cost of investing in remote and rural areas in a number of ways. Firstly, it has used “downscaling”, as Puges explains: “For instance, you can have base stations that are capable of covering just a community but not more. This is something that we tried in Niger. You scale down in terms of capacity, masts and in overall configuration, and so you need less energy (which is usually brought by solar). You end up with a configuration that is less than 50 per cent of the cost of a regular site. “But this has its limits especially when [the site is] connected with satellite and the operating costs become high. We’ve worked with a number of manufacturers and use compression. In this way we were able to, for instance in Niger, extend the coverage to about 40 sites which would have been impossible to cover using standard site technology.” Puges goes on to discuss another cost-cutting method which does not rely on base stations but uses enhanced Yagi-style directional antennas instead. “By using an outside antenna that is more than one metre long, we can extend the coverage up to 40km from the base station if the conditions are good in flat land. We can provide villages with a classical phone system using this antenna, which is less than EUR100 in investment, and can bring limited communications to villages which otherwise would not be covered.” So why are the more established and conventional wireless networking solutions not being used to connect far flung communities? VNL’s Mehrotra reckons there is no incentive for operators to go rural and remote in coverage if traditional technology deployments are used. Satellite prices remain high for operators (as confirmed by Orange above) and microwave means building towers which also carry a hefty price tag. Then there’s fibre. But this may never reach Africa’s inland remote and rural areas (if at all). Puges believes fibre will only serve as a backbone which, at some point, will connect the rural area. “For instance, if you look at Cameroon you may one day have a single axis of fibre along the country – but no more.” So what hope is there for operators? “That’s where innovation comes in,” says Mehrotra. “VNL offers WorldGSM – a highly cost-effective, end-to-end rural telecoms network infrastructure solution that helps operators offer affordable GSM and wireless broadband services in difficult to reach, low ARPU, thin population density locations.” Mehrotra claims that WorldGSM provides the entire rural connectivity ecosystem – equipment, end user terminals, Wi-Fi access points, and transmission over IP. It is all designed to be selfsustainable using 100 per cent solar power, and can be fully monitored from a remote NOC. The system is currently being used by service providers in various countries including Bolivia, Myanmar and even in rural USA (see World News, p33). In Africa, MTN has installed sites at two remote locations in northern Ghana where existing solutions to offer mobile services were not commercially viable. “There is a 2/2TRx WorldGSM site at Zinido and a 2TRx site at Dakpiemyli,” says Mehrotra. “Both are revenue generating sites that provide GSM and GPRS services to more than 3,000 subscribers creating roughly 200 erlangs of voice traffic daily. These zero opex sites generate round USD4,000-5,000 per month.” WorldGSM is also being used by Africa Mobile Networks (AMN). In January, it switched on its first base station site at Kaobagou in northern Benin, using a BST and BSC from VNL which is working in collaboration with satellite operator Gilat. Mehrotra says that with the launch of AMN’s commercial services, around 5,000 people in Kaobagou now have voice and data services for the first time. “The solar powered site is integrated with the core network of BBCom and is located deep in rural Benin, some 750km north of Cotonou. It has a 45 metre mast with a 2TRx capacity WorldGSM BST. This has a range of up to seven kilometres from the base station, covering approximately 150 square kilometres. The base station is currently processing around 4,000 voice minutes of traffic each day.” Another company that has developed an innovative remote networking solution is US-based Range Networks. Its CEO Ed Kozel believes that while traditional networks are very stable, they remain very complex and the market is now limited by a high concentration of suppliers. “The number of vendors has shrunk to just a few. Complexity and no competition equates to little innovation and very high cost. If ARPU is low and cost structure is quite high, operators have no incen-tive to deploy to remote and rural areas – which is obvious from the fact that nearly two billion people on our planet don’t have access to mobile networks.” Kozel says that “complaining about ARPU” is in part to blame the customer because the problem can also be solved by attacking it from the other end, i.e. from the cost perspective. “That is what Range Networks and its OpenBTS technology have done – re-imagined the mobile access network for the 21st century, relying on IP and in the process simplifying networks and eliminating a lot of cost. We have cases of networks where the break even ARPU over a three-year period has been USD2 per user per month.” Range Networks is essentially a software company and has developed a new technology that is being disseminated via an open source model. Kozel says the emergence of software-defined radios, an exponential increase in the processing power of CPUs, and the use of IP have made it possible to create solutions using inexpensive, standardised computer hardware running Linux. He adds that all this fundamentally lowers the initial price point of a fully functioning cellular network. “Our systems are low power. Our RapidCell base station only consumes up to 35W which means it can easily be powered by a solar panel. This unit also weighs only 5kg, has a weatherised casing, and can be mounted on a pole outdoors, with an omnidirectional antenna at the top. Installation is quite simple. In fact, we have customers using this solution for temporary, emergency networks; they can carry a ‘network-in-a-box’ and have it up and running in minutes.” Kozel says Range’s system don’t require circuit mode (T-1/E-1) service for backhaul. Instead, it can backhaul using any IP network and even with low-cost Wi-Fi which he describes as a “good value replacement” for traditional microwave systems. The company has very recently updated its system which can now support a greater number of concurrent base stations (see Wireless Business, p14). While Range may be a relative newcomer, it already has networks operating on all continents including a pilot implementation in Macha, southern Zambia. Here, although commercial operators cover some parts of the rural village, large areas and its surrounding region lacked any signals, and were unlikely to get them. Using Range’s Snap Network and OpenBTS software for voice and SMS traffic, researchers from the University of California Santa Barbara set up two sites to cover 35km2 in just two days. As the base stations draw less than 35W of power, operating and maintenance (carried out by specially trained villagers) costs are said to be much lower than equivalent GSM-based platforms. Range adds that its entire system in Macha operates as a self-contained local loop, thus removing the need for expensive cellular-grade interconnections, hardware and software. Sharing – the way forward? Orange agrees that such innovative technologies (as well as others like Altobridge’s lite-site system which it uses in parts of West Africa) are making things easier. But it adds that the active equipment they offer are not the major part of the cost associated with running a remote site. “It’s good to have these technologies to reduce energy consumption, bandwidth needs, etc. But the main issue we are still facing is passive infrastructure,” says Puges. As a result, another approach Orange has adopted when it comes to the economics of rural network deployments is sharing resources with its competitors. Puges says this can be done in a number of ways: “The most obvious one being passive infrastructure sharing (the towers, the energy, fencing, and so on). This can be done in several modes. The oldest one is by sharing bilateral agreements with one of our competitors. So we go to their sites and they come to ours, and we try to keep everything balanced. “We’ve also been increasingly relying on tower companies that take the responsibility to operate and build new passive infrastructure, and share it between at least two operators. We’ve been very active with towercos in Africa over the last two years.” Orange is one of the eight operator groups in Africa and the Middle East that recently signed up to a GSMA-led industry initiative for sharing infrastructure. Their aim is to deliver mobile broadband to off-network rural communities, as well as reduce the cost of services elsewhere. The other telcos include: Bharti Airtel, Etisalat, MTN, Ooredoo, Saudi Telecom Company, Vodafone and Zain. Collectively, these operators manage 79 network operations across 47 countries in Africa and the Middle East, covering 551m mobile connections. However, the GSMA says that unique mobile subscriber penetration across the MEA region is only 40 per cent compared to 47 per cent globally. It believes the industry has shown its commitment to innovating in order to serve the billions living in rural areas, and now calls upon governments to support and encourage the commercial infrastructure sharing arrangements that it aims to propose. The association’s view is that regulatory frame-works should encourage flexible commercial sharing arrangements and facilitate access to government-owned assets at preferential rates. It says this will help hasten the rollout of new networks and support the business case to extend networks into rural areas. So what is the GSMA specifically asking for from the eight operators? Peter Lyons, director for Middle East and Africa, says: “With the strategic direction now set at the regional level, the next step is for operators to undertake an extensive review of the relevant regulatory, commercial and technical conditions in each of their operating markets.” Power struggles While infrastructure sharing is a positive step forward in the industry’s quest to connect the unconnected, Puges admits that the approach may not work with all aspects of a cell site. For instance, diesel costs are often cited as the biggest operational expense when running sites powered by gensets. And while one well-known alternative is to use renewable energy sources, this may present problems. “Orange is probably the operator with the largest solar installed base in Africa. We’ve currently got more than 2,000 solar sites, and we now have a good evaluation of where and when to use solar, and its evolution over time. It’s got many advantages but also a few shortcomings. One of these is that it’s difficult to share a solar site because it’s not well adapted to site sharing. “The amount of energy you need when you have two operators is usually too much for a pure solar solution. It’s engineered very strictly in order to cover the needs of the existing equipment installed – if you have more traffic than expected then you need to install a generator in addition to the solar panels. The equation is still good because the generator will only run three hours a day, for instance, but it then starts to get more complicated.” But here too, technology offers a solution. Flexenclosure’s eSite management system has been designed to help operators reduce the cost of powering a base station and is currently being used at 471 sites for various operators in Africa (the latest of which is inwi in Morocco). “The whole idea with eSite is to find a way of providing power to sites where the electricity is either poor or non-existent in an economical way,” says Flexenclosure CEO David King. “eSite consists of a box with some electronics, batteries and some intelligent software. The software determines where it’s going to source the power from. This could be the sun, the generator, or the grid (when the grid is working), so it works on a hierarchy of choice. It then decides for how long and for how much it should charge the batteries. So what eSite is doing the whole time is using an algorithm to work out how to maximise battery lifetime and minimise generator runtime. If you do those two things, you run your site as economically as possible.” Earlier this year, Flexenclosure announced a new version of eSite which can now work in multitenant environments and provide power to several base stations, thus catering to the needs of tower companies. Helios Towers Nigeria, said to be the largest independent towerco franchise in Africa, has already deployed this version in the western states of Oyo, Ondo and Ekiti. “When we started, eSite was designed for one base station and one operator,” says King. “Using exactly the same form factor, what we’ve done is develop the smarts inside so that it can handle up to four tenants [with a combined power load of up to 10kW]. It can meter those tenants and disconnect one if it wants to. So a tower company can use eSite in a situation where they’ve got more than one tenant at the site.” Technology therefore seems to have the answer to many of the challenges operators face when deploying remote and rural networks. But not the whole answer. For a cellco such as Orange, the most pressing issue is finding the right economic model: “It’s not really about the technology but discussing with our competitors and governments how to achieve the coverage,” says Puges. Without such support, he admits that connecting remote areas would eventually come to a halt as it would not offer a reasonable return on investment. “Yes, there may be some cases where it just won’t fly. In that case, we need to look at outside financing such as from international organisations or the state itself. We see that in some countries the state has universal service funds and invests in infrastructure (not necessarily in the right places, by the way). We can talk with them about the best ways to use that money. And rural coverage is certainly a better way than putting in fibre when the operator already has this.” !