EXECUTIVE SUMMARY

Theyve been waiting for you.

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Rural markets present a massive opportunity for any mobile operator who can find a way to reach remote, low-ARPU users cost-effectively.

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 $2 per month today even before the impact of communications increases their ability to pay. The same is the case across the developing world.

THE NEXT BILLION MOBILE USERS.

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.

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).
In December 2009 over 19 million new users were added to the mobile phone population in India. But rural teledensity is still far behind urban teledensity. The reason is simple: current mobile technology cannot reach the hundreds of millions of people ready to

Companies aggressively going after the next billion [mobile users] in emerging markets will be the new industry leaders.
PYRAMID RESEARCH The Next Billion: How Emerging Markets are Shaping the Mobile Industry Oct 2007

Rural India is a prime example of the opportunity and the initial focus of the VNL plan. Its not hard to see why:

embrace it.

A huge population 720 million people in 630,000

villages across 3.2 million square miles.

NET MOBILE ADDITIONS 2007-2010: 1,4bn

1,500 1,200 900 600 300

A massive economy over 50% of Indias 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).

61% of net additions

India China United States Nigeria Brazil Turkey

Pakistan

Indonesia Mexico Iran

A booming economy with a growing consumer

durables market.
0

Rest of world

A parallel economy with the same needs as developed markets but a reduced ability to pay.
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Source: Pyramid Research

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YOU CANT GET THERE FROM HERE.

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 areas. Unfortunately, the mobile systems in use all over the world today seem to have been designed to maximize vulnerability to these four challenges. Todays GSM is not ready to serve rural populations.

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 LIMITS OF TRADITIONAL GSM

GSM, as we know it today, was designed for urban and suburban locations in developed markets. Its a general-purpose network entirely unsuited to the unique challenges of serving rural and remote communities. Mapping the inherent limitations of todays GSM to the challenges of rural deployment, we can see the massive gulf between the opportunity and the tools available to seize it:

India, not China, will be the greatest contributor to the next billion mobile users, adding 294m subscriptions between 2007 and 2010.
PYRAMID RESEARCH The Next Billion: How Emerging Markets are Shaping the Mobile Industry Oct 2007

Deployment demands The typical GSM

THE CHALLENGES OF RURAL AREAS

There are four main difficulties in serving rural communities, each one of which has appeared insurmountable

Power challenges Most of rural areas have huge

power problems. When fuel can be afforded and delivered, power tends to come from diesel generators.

Revenue challenges Rural areas can pay for

mobile services, but only around $2 per month. The cost base of any solution has to be geared to these ARPU levels.

Base Station is a complex affair, with 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 planning, 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 Controller (BSC) or Mobile Switching Center (MSC).

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.
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Due to power availability constraints even in urban settings, the current GSM networks in India are estimated to burn billions of litres of diesel each year. Fuel quality, transport challenges and the demands of generator maintenance make this power source unsustainable for rural GSM deployments.

WORLDGSM: DRIVING DOWN THE THRESHOLD OF VIABILITY

orldGSM is a new approach to delivering profitable mobile services to unserved rural areas

across the world. Its 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:

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 todays GSM.

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.

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 densities and ARPU levels found only in urban areas. Rural communities simply do not justify the cost of todays GSM infrastructure and no government subsidy can fill the gap.

Self-contained With BSC and MSC functionality

integrated and deployed in the field on Base Station towers.

Self-deploying the entire WorldGSM Base Station packs into boxes, can be transported even by cart 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.

Taken together, the challenges inherent to the rural opportunity and the limitations and demands of traditional GSM create a circle that is impossible to square.

Near-Zero Maintenance update software

remotely and perform simple swap repairs if needed.

Cascading Star Architecture a unique,

Asking traditional GSM to serve the population of rural areas is like getting an elephant through the eye of a needle. We need to take another approach.

modular architecture optimised for low-cost rural expansion; with local switching to minimise backhaul.

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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 full-fledged mobile infrastructure thats completely independent of the power grid. Driving down the threshold of viability to the $2 ARPU level requires an order of magnitude cost reduction. 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 communications for the first time.

Current equipment vendors win because their

networks are extended further and the new users require expansions of the core network.

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.

WorldGSM is specifically designed for licensed operators 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).

Rural Sites are centrally deployed.

Village Sites are mounted on rooftops throughout villages.

Up to 1 0k m*

Last existing conventional BTS

Highway / Main Road

MSC

BSC

Up to 20 km*
Up to 20 km*

* Distance depending on the terrain

Host Network

MSC

BSC

Rural Site

Village Site

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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.

ABOUT VNL
VNL - Vihaan Networks Limited, was founded in 2004 by Rajiv Mehrotra, Chairman & CEO. He is also the Chairman of the Shyam Group, that has wide ranging interests in all areas of telecom including services, equipment manufacturing and telecom infrastructure services. The group has a history of successful communication initiatives in rural areas through its cable TV systems (satelite TVRO) and MARR village telephone systems. It is credited with establishing some of the earliest GSM, CDMA and fixed networks in India. The VNL team has over 300 members who are led by a management team with deep experience of the telecom business. VNLs pioneering work has been widely praised: during Mobile World Congress 2010, the GSMA awarded VNL with the Green Mobile - Best Green Programme Product or Initiative Award. Earlier in February, Fast Company named VNL one of the Fast 50: The Worlds 50 Most Innovative Companies. In December, VNL was named as a Technology Pioneer 2010 by The World Economic Forum. In September it was named the third most innovative company - and the most innovative telecoms company in the world in the Wall Street Journals

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 areas.

annual Technology Innovation Awards. In November VNL was selected as a 2009 Top Pick and named as a company to watch in the wireless infrastructure market by Light Reading, a specialist telecoms analyst and publishing house. VNL also won the Best Technology Foresight category at the 2008 World Communications Awards and came second in the Green Network Hardware and Infrastructure category at the 2009 CTIA Wireless E-Tech Awards.

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