VNL: Innovation for Rural

Telecom
Project Report: Business of Telecommunications

Submitted by: Group 2

Ankur Sharma (09P009)

Gaurav Budhrani (09P019)
Gagan Rajpal (09P108)
Tarun Dudeja (09P118)
Gururaj Mahajan(MP1541)
 VNL: Innovation for Rural Telecom

ABOUT VNL......................................................................................................................................................... 3

OPPORTUNITIES........................................................................................................................................................... 3
OBSTACLES................................................................................................................................................................. 3

VNL SOLUTION.................................................................................................................................................... 4

VNL HARDWARE..........................................................................................................................................................5
VNL SOFTWARE...........................................................................................................................................................5

DEPLOYMENT STRATEGIES OF VNL...................................................................................................................... 5

VILLAGE SITE............................................................................................................................................................... 7
ENERGY CONSUMPTION AT VILLAGE SITE..........................................................................................................................7
MONTHLY EXPENDITURE ON THE VILLAGE SITE FOR POWER WILL BE AS FOLLOWS......................................................................8

GOVERNMENT RULES AND REGULATIONS FOR RURAL TELECOM GROWTH..........................................................9

CONCLUSION...................................................................................................................................................... 9

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 VNL: Innovation for Rural Telecom

About VNL
VNL is Indian telecom equipment manufacturing company.  It has designed and developed a
complete GSM system, especially optimized for emerging rural area. This technology provides
enormous opportunities for mobile network operators to reach rural community.  The company
focuses on micro telecom areas, especially rural areas. VNL has very experienced management
team, who expertise in various domains of telecom, operators, equipment vendors, suppliers
and NGOs.  The company has won many awards for its initiatives and innovation in rural
telecom. It has been named “Fast 50: The World’s 50 Most Innovation Companies” for 2010.
VNL makes telecom equipment that helps mobile operators reach rural markets profitably.
VNL’s WorldGSM technology is the industry’s first micro telecom application, a complete GSM
system optimized for the massive rural opportunity. It will help operators to make profitable
business by serving low ARPU users in the rural India.

Opportunities
The opportunities available to VNL in the Indian market are as follows

 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 durables market, for example, growing at
25% per year (vs 10% nationally).
 A parallel economy – with the same needs as developed markets but a reduced ability
to pay.

Obstacles
Even though this opportunity is available for a long time to Indian telecom operators but
following obstacles hampered the penetration of Indian rural market

 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.
 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.

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 VNL: Innovation for Rural Telecom

 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.

VNL solutions provide answer to these obstacles. In this report, we will discuss the opportunity
provided by VNL products and how they can be used in penetration of Indian market.

VNL Solution
WorldGSM 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. This technology by VNL is not a competitive
technology for existing GSM technology but it will work as a complementary to GSM to
penetrate the markets which were not possible before. Following are the advantages of
WorldGSM technology offered by VNL
 Low-power – at less than 50W per Base Station, the entire system can be run on solar
power. No power grid or generator necessary.
 w 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 functionality 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.
 Near-Zero Maintenance – update software remotely and perform simple swap repairs if
needed.
 Cascading Star Architecture – a unique, modular architecture optimized for low-cost
rural expansion; with local switching to minimize backhaul

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 VNL: Innovation for Rural Telecom

VNL 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
architecture
 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 Station 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.

VNL 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
• 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.

Deployment Strategies of VNL

There are two types of deployment schemes that are being proposed for VNL system
deployment and they are as follows

 Rural Deployment: This deployment is 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.

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 VNL: Innovation for Rural Telecom

 Road Side 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

In this report, we have discussed the rural deployment scheme and its cascading architecture
with focus on power consumption at its village site as the main criteria. As power consumption
at the towers is the main hindrance in the rural area in India, we have focused on the whether
this model can work or not. We have also discussed the different non-conventional sources of
power for the towers to be used in the rural area.

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 VNL: Innovation for Rural Telecom

In the cascading architecture of rural deployment there are two sites. One is Rural Site – a 40-
metre freestanding tower – and the other Village Site – a rooftop-mounted Base Station that
clusters around the towers.

Village Site
WorldGSM is the first mobile network designed to serve the rural population. Village site is an
important member of WorldGSM deployment strategy. Village site can be deployed on the
rooftop or ground in the villages. The Village Site has a 6 or 9 meters pole with an Omni
antenna on top, solar panels, batteries and the Blue Box BTS – a complete 1 or 2 TRX BTS.
The entire Village Site only requires 50 watts to function. i Unlike traditional GSM Base Stations,
the Village Site needs no shelter, air conditioning, mains power, generator or diesel fuel. It’s
designed to be carted to site and assembled in hours by untrained local workers.

The Cascading architecture is the key to the deployment of this Village site. This cascading
architecture is more like a hub and spoke model of delivery, optimized for delivery in rural area.

Benefits of Village Site of WorldGSM:

 Lower Power Consumption at the site

 Easy to deliver and install with no requirement of specialized technical force
 Low maintenance cost
 Full 3GPP compliant
 Cascading architecture helps in scaling the reach easily and faster

Energy Consumption at Village Site

Every village site has 1 or 2 Bluebox BTS which are highly energy efficient. This BTS can be
entirely solar powered, requiring only 50 watt or 125 watt depending upon the architecture being
used at the site. This BTS is designed to work in harsh outdoor conditions. There is no
requirement of shelter, air conditioning, grid power, generator or diesel fuel. The BlueBox comes
in two sizes, 1 TRX and 2 TRX, and supports GSM 900 & 1800.

Total energy consumption at the village site depending upon the BTS type will be as follows

Type of BTS BTS (1TRX) BTS (2TRX)

Power Consumption (in Watts) 100 175

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 VNL: Innovation for Rural Telecom

Total Power Consumption in a

month(in Watts) 72000 126000
Total Units of electricity used 72 126

Total energy consumption of the BTS is close to an electricity bulb at the household. Also, the
capital expenditure to set a base station in this cascading architecture is close to $25,000 where
as a traditional base station requires close to $100,000. Also, energy requirement as well as
operational expenditure in case of traditional BTS is very high with respect this model. Hence,
even at low ARPU this model can work efficiently.

Now, we will compare the cost of production of 1 unit of electricity in India by various sources of
energy. We have compared only three sources of energy here i.e. traditional source of energy,
solar power and wind power.ii

Source of Power Cost of 1 unit

Traditional Rs 3.5
Solar Rs 20
Wind Rs 5

As we can see the cost of solar energy is very high with respect to traditional and wind power, it
is not economically viable to use solar power in traditional base station where power
consumption is very high. But in the case of this model as the power requirement are close to
that of lighting a bulb, it would be feasible to use solar power. Also, traditional power reach is
major worry in the rural area which in turn lead to utilization of diesel generators. Hence, this
model is sustainable in rural area as the capital expenditure as well as the operational
expenditure can be covered at lower ARPU level as well as the lower concentration of
population.

Monthly expenditure on the village site for power will be as follows

Type of BTS BTS (1TRX) BTS (2TRX)
Power Consumption (in Watts) 100 175
Total Power Consumption in a month 72000 126000
Cost of Power using Traditional source of
Power (in Rs) 288 504
Cost of Power using Solar panels as
Power (in Rs) 1440 2520

Cost of Power using Wind Energy as 360 630

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 VNL: Innovation for Rural Telecom

Power (in Rs)

Here we can see that the power consumption is very low even in the case of solar panel. As
already discussed that the capital expenditure is low here, this model seems to be really viable
and sustainable in rural India.

Government Rules and Regulations for Rural Telecom Growth

TRAI recommended that the mobile services should be under the ambit of USOF. The
infrastructure for the mobile telecom in rural areas should be shared by service providers to
receive support from USOF and the funds collected as Universal Access levy should be made
available to USOF. There should be no requirement of SACFA clearance for deployment of
towers upto 40 m in rural areas. All the operators who have optical fibre connectivity in rural
areas should be mandated to provide leased lines to other operators who are rolling out their
networks in rural areas and such bandwidth owners shall get an incentive of 10% on the ceiling
tariffs specified by TRAI from USOF for facilitating mandatory sharing. This connectivity should
be provided with a discounted price at the rate of at least 30% and difference between ceiling
specified by TRAI and the discounted price should be supported from Universal Service
Obligation Fund (USOF). Thus bandwidth users shall get a discount of 30% on the ceiling
specified by TRAI. A recent report for Indian telecom by renewable energy committee states
that “The CAPEX of the solar / hybrid solar-wind systems ranging from 10KW to 17KW comes
to around 26-51 lakhs after considering the 80 percent accelerated depreciation benefit given by
the Government of India(owing to which there will be reduction of about 25% in capital cost).” iii.
On the other hand the CAPEX required for VNL’s WorldGSM system is close to 12 lakhs. Also
as we have discussed the OPEX in case of VNL architecture is very low because of low power
consumption. Also, low maintenance cost along with no requirement of expert technical staff is a
win-win situation for VNL.

Conclusioniv
As discussed in this report, VNL innovative GSM architecture has lowered the CAPEX and
OPEX requirement for deployment of GSM architecture in the rural area.

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 VNL: Innovation for Rural Telecom

As shown in the above graph, the ARPU level required for sustainable VNL model is $3 (Rs
125-150) which is lower than the average ARPU of Indian telecom market. Such ARPU level are
possible in rural markets in India. On the other hand, we have the model in which using passive
infrastructure by sharing of 2-3 telcos is required. But the scalability is higher in case of VNL’s
model as well as the maintenance cost and less requirement of skilled labor force are in favor of
VNL. Another added advantage for VNL is the utilization of solar power for its power
requirement which is in abundance in the Indian heart land for major part of the year. One last
important factor in favor of VNL is that the technology is complementary to existing GSM
technology which will help telcos penetrating the Indian market.

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i
http://www.vnl.in/solutions/rural/
ii
http://www.energetica-india.com/power-generation-from-wind-and-solar-energy/
iii
FIRST REPORT OF THE COMMITTEE ON NON-CONVENTIONAL ENERGY TO POWER RURAL TELEPHONY, DOT (2008)
iv
http://www.vnl.in