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.” !