vnl wp telecom rural india

VNL, March 2009

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:

WHITE PAPER

Bringing Telecom to Rural India

2––13

© 2009 VNL | All rights reserved, Commercial in Confidence

THE OPPORTUNITY

THE nExT BIllIon moBIlE usERs.

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 and

the initial focus of the VNL plan. It’s not hard to see why:

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 du-

rables market, for example, growing at 25% per year

(vs 10% nationally).

A parallel economy• – with the same needs as de-

veloped markets but a reduced ability to pay.

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 Mum-

bai. But research and experience shows that they can

and will pay around $2 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 ru-

ral teledensity has yet to break the 5% barrier (despite

television penetration levels of 26% and growing).

The reason is simple: current mobile technology

cannot reach the hundreds of millions of people ready to

embrace it.

“India, not China, will be the greatest contributor to the ‘next billion’ mobile 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

{

3––13


“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 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

technology, processes and models.

THE CHAllEngEs of RuRAl IndIA

There are four main difficulties in serving rural communi-

ties, each one of which has appeared insurmountable:

Power challenges• – Most of rural India is not

served by the power grid. Some areas may get

‘agricultural power’ – two hours in the morn-

ing and evening – but even this is the exception.

When fuel can be afforded and delivered, power

tends to come from diesel generators. The combina-

tion of poor fuel quality and poor generator mainte-

nance severely limits the life of any generator.

Revenue challenges• – Rural India can pay for mo-

bile services, but only around $2 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 OBSTACLES

“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

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

challenges 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 back-

haul 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 conventional

Base Station site alone requires about 5000W

to run – not including any Base Station Con-

troller (BSC) or Mobile Switching Center (MSC).

Due to power availability constraints even in

urban settings, the current GSM networks in

India are estimated to burn about 2 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.

Skills demands• – A typical GSM Base Sta-

tion 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 profes-

sionals 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 work-

force 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 den-

sities 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 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.

“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 50W 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• – update software

remotely and perform simple swap repairs if needed.

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 whole new purpose.

WorldGSM™ is the first fully-fledged mobile infrastructure

that’s completely independent of the power grid.

driving down the threshold of viability to the $2

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

6––13


THE WoRldgsm™ dEsIgn CHAllEngE

WorldGSM™ has been designed from a blank sheet of pa-

per to remove all unnecessary power consumption 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• –

re-creating 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

local workers.

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 WorldGSM™:

BlueBox™ BTS • – complete BTS that can be

entirely solar powered, requiring only 50 watts of

power (depending on configuration). It bolts on to

a WorldGSM™ Village Site or Rural Site and starts

transmitting in minutes.

GreenBox™ BSC• – complete standalone Base Sta-

tion Controller in a compact box. A single Green-

Box™ supports up to 16 TRXs.

OrangeBox™ MSC• – complete standalone Mobile

Switching Center in a compact box. A single Orange-

Box™ supports up to 5 GreenBox™ BSC nodes, serving

over 10,000 subscribers and 20,000 BHCA..

WorldGSM™Village Site

WorldGSM™Rural Site

WorldGSM™GreenBox™ BSC

WorldGSM™BlueBox™ 902

WorldGSM™OrangeBox™ MSC


7––13


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 con-

figurations:

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

age of an entire rural area. Using the Cascading

Star™ architecture to scale with demand.

Rural Deployments combine the WorldGSM™

Rural Site – a 40-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.

8––13


WorldGSM™ Village SiteA COMPLETE BASE STATIONIN JUST SIX HOURS.

BlueBox™ BTSwith Integrated Backhaul

Solar Panels

Power SystemEnclosure

GSM OmniAntenna

Power Cable

RF Feeder Cable

6m or 9m

(depending oncon�guration)

9––13


WoRldgsm™ RuRAl CovERAgE PRoduCTs

For rural deployments, the WorldGSM™ system comprises the Rural Site (typically deployed as a hub),

Village Site, the OrangeBox™ MSC and the GreenBox™ BSC – typically co-located at the end node of the

host network.

WorldGSM™Village Site

WorldGSM™Rural Site





10––13


WoRldgsm™ RoAd CovERAgE PRoduCTs

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

directional antennas, the OrangeBox™ MSC and the GreenBox™ BSC — typically co-located at the end

node of the host network.




WorldGSM™Road Site

11––13


WoRldgsm™ RuRAl dEPloYmEnT

WoRldgsm™ RoAd dEPloYmEnT

MSCBSC

HOSTNETWORK

RoadSite

RoadSite

Host network

Road Site

OrangeBox™ MSC

GreenBox™ BSC

WoRldgsm™ RuRAl dEPloYmEnT

10 km20 km

65 km coverage corridor

5 km

Highway / main road

Host network

Rural Site

Village Site

Village Sites are commonlymounted on rooftopsthroughout villages.Rural Sites are centrally deployed.

OrangeBox™ MSC

GreenBox™ 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™ MSC and a GreenBox™ 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™ MSC and a GreenBox™ 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.

12––13


THE WoRldgsm™ ARCHITECTuRE

WorldGSM™ is based on VNL’s Cascaded Star Architecture™,

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 a low-cost and viable entry into previously •uncovered areas.

It enables low-cost expansion as uptake increases.•

All three contribute significantly to the cost, power

savings 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 keenest

to seize first mover advantage in remote communities).

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.

Highway / main road

© 2009 VNL | All rights reserved

VNL, the VNL logo, BlueBox, GreenBox, OrangeBox and WorldGSM are trademarks of VNL.

VNL assumes no responsibility for any inaccuracies in this document.

VNL reserves the right to revise this document without notice.

VNL-WP-BTRI-0030 | March 2009

ABouT vnl

vnl makes an end-to-end gsm system that helps

mobile operators reach rural markets profitably.

WorldGSM™ is a complete solar powered GSM system

entirely optimized for rural markets.

For the first time, operators can build profitable busi-

nesses serving low-ARPU users in difficult to reach

communities.

The microtelecom revolution is ready to begin and

vnl is leading the charge.

CoRPoRATE HEAdQuARTERs VNL, Vihaan Networks Limited21-B, Sector 18, Udyog ViharGurgaon 122 015, Haryana, INDIATel +91 124 309 2000

vnl wp telecom rural india

Documents

cascading star architecture

rural populations living

worldgsm system comprises

traditional communications networks

gain directional antennas

worldgsm village site

billion mobile users

greenbox bsc typically