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New technology makes telecom cheaper, but hurts tower companies

A technology that has been around for almost a decade is now getting deployed on a large scale by Indian telecom operators to deploy 2G, 3G and 4G networks using the same base station.

A Nokia illustration on old vs new situation

This could hit the revenue and growth prospects of telecom tower companies, while reducing the number of antennas mounted on each tower.

The technology, called ‘single radio access network’ or single RAN essentially combines the 2G, 3G and 4G networks operating in a single spectrum band onto one base station and antenna.

COST SAVINGS

As of now, operators like Idea Cellular, Vodafone and Bharti Airtel often run two technologies on the same spectrum band using two different sets of base stations and antennas.

For example, in many circles, these operators have a 2G network and a 4G network on the 1800 MHz band.

In some circles, they have a 2G network and a 3G network on the 900 MHz band.

Similarly, in the future, 4G will be added to existing 3G deployments in the 2100 MHz band.

Traditionally, this has been done by adding one more set of electronics and antenna at the tower using the ‘overlay’ method.

However, this results the operator getting charged twice or thrice for using a tower, as the payment for the tower is made on the basis of the number of antennas mounted on it.

This has forced companies like Idea and Bharti Airtel to deploy only Single RAN base stations as they expand their 4G networks.

“In nearly all cases where they are adding new 4G base stations on 1800 MHz, they are not renting new slots on towers where they already have a 2G base station,” said an industry official.

“Instead, they are taking down the existing 2G equipment, and replacing it with 4G equipment that can transmit both 4G and 2G signals,” he added.

The 2G-only base station that is removed from the tower is often scrapped, or redeployed in a 2G-only area.

This is likely to come as blow to tower companies like Indus and Bharti Infratel, who are banking on the expansion of 4G services to drive growth.

When a customer like Vodafone takes down a 2G-only base station and replaces it with a 2G+4G base station, the amount of rent that it pays to the tower company remains the same.

While most of the current single RAN deployments consolidate only within one band (such as 1800 MHz or 2100 MHz), technological developments would enable a single base station to manage multiple technologies and multiple bands as well.

For example, Ericsson this week launched its Wideband Radio 2242 solution, which works across two adjacent bands — 1800 Mhz and 2100 MHz.

SHARING THREAT

Another big threat on the horizon is sharing. The Indian government allowed telecom companies to share each others’ base stations, antennas and spectrum last year.

Though the companies are yet to ink such deals, they are learnt to be close to doing so.

This could make the situation even worse for tower companies.

While at present, a single tower may host six base stations from Idea Cellular, Bharti Airtel and Vodafone for providing 2G and 4G services on 1800 MHz, this number can be reduced to just one base station by using Single RAN technology along with infrastructure sharing.

This is also applicable to other band such as 900 MHz and 2100 MHz.

However, while this may hit the tenancies of towers in urban areas, the loss of revenue from such consolidation is likely to be made up by the expansion of 3G and 4G services into rural areas.

For now, tower companies believe that whatever savings accrue to telecom companies from the use of Single RAN and sharing facilities will be used by them to expand their 4G network.

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