Bringing Telecom to Rural India

WHITE PAPER
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:

THE OPPORTUNITY
THE nExT BIllIon moBIlE usERs.

2 13

s the developed mobile markets all over the world approach saturation, the industry has

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.

begun to consider the next billion users. These are the rural populations living beyond the reach of traditional communications networks of any kind.

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

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-

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

ral teledensity has yet to break the 5% barrier (despite television penetration levels of 26% and growing).

A huge population 720 million people in 630,000

villages across 3.2 million square miles.
NET MOBILE ADDITIONS 2007-2010: 1,4bn

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).

1,500 1,200 900 600 300 0

61% of net additions

A booming economy with the consumer durables market, for example, growing at 25% per year (vs 10% nationally).

India China United States Nigeria Brazil Turkey

Pakistan

Indonesia Mexico Iran

Rest of world

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

The reason is simple: current mobile technology cannot reach the hundreds of millions of people ready to embrace it.

2009 VNL | All rights reserved, Commercial in Confidence

THE OBSTACLES
You CAnT gET THERE fRom HERE. THE CHAllEngEs of RuRAl IndIA

3 13

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.

ural India has a massive pent-up demand for mobile services; a limitless supply of low-cost

There are four main difficulties in serving rural communities, 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 morning and evening but even this is the exception. When fuel can be afforded and delivered, power tends to come from diesel generators. The combination of poor fuel quality and poor generator maintenance severely limits the life of any generator.

The cost of passive infrastructure is enormous and telecom companies should consider the infrastructural challenges in the rural areas.
SANJEEV AGA, CHAIRMAN CII National Committee on Telecom and Broadband

Revenue challenges Rural India 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.

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.

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

COMMUNICATION SPEND % of GDP, by region, 2006

profitably been delivered to rural India (including cable television).

2006 2010

5% 4%

Global average: 3.2%

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

3% 2% 1% 0

North America

Western Europe

Asia Paci c

Eastern Europe

Africa & Middle East

Latin America

Source: Pyramid Research

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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. Its a general-purpose network entirely unsuited to the unique challenges of serving rural and remote communities.

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.

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

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.

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:

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 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.

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.

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.

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).

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.

2009 VNL | All rights reserved, Commercial in Confidence

THE SOLUTION
WoRldgsm: dRIvIng doWn THE THREsHold of vIABIlITY

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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.

orldGSM is a new approach to delivering profitable mobile services to rural India and

beyond. Its the first example of microtelecom, the re-engineering of telecommunications to meet the needs of rural and remote communities.

Near-Zero Maintenance update software

remotely and perform simple swap repairs if needed.

Cascading Star Architecture a unique,

Affordability and availability of infrastructure will be key challenges for telecom industry to reach the rural customer.
MR. D SHIVAKUMAR, VP & MANAGING DIRECTOR Nokia India

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 a complement to existing GSM networks, extending them to seize the rural opportunity. It is: WorldGSM is the first fully-fledged mobile infrastructure thats completely independent of the power grid.

Low-power at less than 50W per Base Station,

the entire system can be run on solar power. No power grid or generator necessary.
ARPU

$50

Ordinary Base Station

Low cost a fraction of the cost of traditional

GSM Base Stations; profitable at very low densities and ARPUs.

$40

$30

Th
WorldGSM Base Station

res

ho

ld

v of

iab

ilit

Fully GSM standards compliant easily links

to existing networks, dramatically extending their reach.

$10 $3 $0

Barrier of entry to BoP markets

$0 $25,000 $50,000
BASE STATION CAPEX
Source: VNL

$75,000

$100,000

Self-contained With BSC and MSC functionality integrated and deployed in the field on Base Station towers.

driving down the threshold of viability to the $2 ARPU level requires an order of magnitude cost reduction.

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THE WoRldgsm dEsIgn CHAllEngE

WorldGSM has been designed from a blank sheet of paper 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.

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

To achieve this, VNL has had to: 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.

Design and build our own hardware

to maximise control

Develop and test our own software

re-creating GSM for rural use

GreenBox BSC complete standalone Base Station Controller in a compact box. A single GreenBox supports up to 16 TRXs.

Re-engineer the physical infrastructure

with new form factors that can be deployed by anyone, anywhere, in days

OrangeBox MSC complete standalone Mobile

Switching Center in a compact box. A single OrangeBox supports up to 5 GreenBox BSC nodes, serving over 10,000 subscribers and 20,000 BHCA..

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.
WorldGSM BlueBox 901 WorldGSM BlueBox 902

WorldGSM Rural Site

WorldGSM Village Site

WorldGSM OrangeBox MSC

WorldGSM GreenBox BSC

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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.

TWo dEPloYmEnT oPTIons

WorldGSM can be deployed in either of two main configurations:

Rural Deployment for low-cost, blanket coverage 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.

THE WoRldgsm sofTWARE

The WorldGSM core network is built on the MontaVista distribution of Linux. This confers the following advantages:

Extreme stability carrier-class uptimes Flexibility to choose from a wide variety of silicon
and hardware

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.

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 worlds mobile networks run. The software covers everything from power control and stripped down handover algorithms to a wide range of compelling end user features.

The deployment options can be easily combined into a single WorldGSM network or as simple extensions to any existing GSM network.

2009 VNL | All rights reserved, Commercial in Confidence

WorldGSM Village Site A COMPLETE BASE STATION IN JUST SIX HOURS.

GSM Omni Antenna RF Feeder Cable

8 13

BlueBox BTS with Integrated Backhaul

6m or 9m
(depending on con guration)

Power Cable

Solar Panels

Power System Enclosure

2009 VNL | All rights reserved, Commercial in Confidence

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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 BlueBox 901

WorldGSM BlueBox 902

WorldGSM Rural Site

WorldGSM Village Site

WorldGSM OrangeBox MSC

WorldGSM GreenBox BSC

2009 VNL | All rights reserved, Commercial in Confidence

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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

WorldGSM OrangeBox MSC

WorldGSM GreenBox BSC

WorldGSM BlueBox 902

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WoRldgsm RuRAl dEPloYmEnT

Typical rural deployment
Host network

OrangeBox MSC

GreenBox BSC

Village 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. Its fast, its simple and it drives capex and opex to new lows.

Village Sites are commonly mounted on rooftops throughout villages. Rural Sites are centrally deployed.

Village Site

Rural Site

Highway / main road

20 km

10 km

5 km

65 km coverage corridor

WoRldgsm RoAd dEPloYmEnT

Typical road deployment
WorldGSM 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. Its fast, its simple and it drives capex and opex to new lows.

Host network

OrangeBox MSC

GreenBox BSC

Road Site

Bi-directional coverage
Road Site Road Site MSC BSC HOST NETWORK

The WorldGSM Road Site uses two high-gain directional antennas that point in opposite directions, creating a bi-directional coverage pattern.

2009 VNL | All rights reserved, Commercial in Confidence

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THE WoRldgsm ARCHITECTuRE

WorldGSM is based on VNLs Cascaded Star Architecture, a unique approach to Radio Network Planning.

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.

Highway / main road

In this way, WorldGSM creates a win-win-win scenario:

Operators win because they can now address

massive rural markets cost-effectively and profitably. Cascaded Star Architecture has several important advantages:

Users win because they get affordable communications for the first time.

It allows WorldGSM to use panel or omni antennas

to provide coverage.

Current equipment vendors win because their

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

It provides a low-cost and viable entry into previously

uncovered areas. 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). All three contribute significantly to the cost, power savings and sustainability of the WorldGSM system.

It enables low-cost expansion as uptake increases.

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.

2009 VNL | All rights reserved, Commercial in Confidence

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 businesses 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 Limited 21-B, Sector 18, Udyog Vihar Gurgaon 122 015, Haryana, INDIA Tel +91 124 309 2000

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