Skip to content

Connect-World: the leading Telecom magazine, ICT magazine, Telecom magazine, ICT and Telecom Industry Press Releases and Blog.



Welcome to Connect-World, the information and communication technology (ICT) decision makers' magazine.

Increase font size  Decrease font size  Default font size 
You are here:     Home Latin America 2009 Rural telephony and $2 ARPUs

Latest ICT Event

Broadband & TV Connect Asia 2014
Tue Apr 29-Wed Apr 30

Broadband & TV Connect Asia 2014

To join our mailing list click here


Latest Poll

Choose Your Region

Connect-World Featured Articles

Rural telephony and $2 ARPUs

Written by  Rajiv Mehrotra
Rate this item
(0 votes)
Rajiv MehrotraIssue:Latin America 2009
Article no.:7
Topic:Rural telephony and $2 ARPUs
Author:Rajiv Mehrotra
Title:Founder, Chairman and CEO
PDF size:204KB

About author

Rajiv Mehrotra is the Chairman and Founder of Shyam Telecom a provider of RF equipment and systems for indoor coverage and capacity. He is also the Founder and Chairman of the Shyam group of companies that today have a footprint in all areas of telecom. Mr Mehrotra laid the foundation of the cable TV revolution in India by pioneering local manufacturing of TVRO satellite equipment. Mr Mehrotra also founded one of the first operators in the world to deploy CDMA technology for fixed wireless services as well as the first GSM operator in Rajasthan (one of India’s largest states). Mr Mehrotra is associated with various industry associations in India and is on the Board of Sistema, the Russian consumer services conglomerate. Rajiv Mehrotra earned his degree in Computer Engineering from Mumbai University.


Article abstract

Billions of the world’s rural residents lack access to voice and data communications. They will not be easy to reach; traditional mobile network equipment is too expensive, uses too much power, requires skilled engineers and is difficult to deploy. Microtelecom uses local stakeholder entrepreneurs, partnering with operators, to deliver mobile services within their communities. Microtelecom is a solar powered, low cost, self-contained, low maintenance way to extend GSM. Microtelecom networks in remote areas will generate dramatic social, environmental and commercial returns.


Full Article

According to the GSMA, around three billion people, half the world’s population, live and work in rural areas that lack access to voice and data communications. In my home country of India, there are still millions of people who have never made a phone call. The majority, anxious to have a phone, do have money to spend, but realistically we are looking at average revenues per user (ARPU) of less than US$2 a month. In Latin America, as is the case in India, outside the large urban areas cellular coverage is sometimes limited, thus preventing an economic development of certain regions and creating an undesired social disparity. Mobile operators want to serve this enormous population - but they need to find a way to build a sustainable business model to connect the unconnected. This is not a ‘nice to have’ opportunity for mobile operators, it is a critical imperative for sustaining growth as the developed markets become saturated and revenues flatten out. In Latin America, countries like Brazil, with an 81 per cent cellular penetration rate at the end of April according to ANATEL, have reached a saturation level before cellular penetration has reached all the population. Some industry analysts argue that even that figure does not reflect true access to cellular networks since many Brazilians have more than one active line. This only proves that there are still millions of users in Latin America who have probably never owned a cell phone. The next billion users will not be easy to reach. The obstacles are formidable and remain the same as they have ever been; traditional GSM technology was designed for densely populated, relatively prosperous markets. As such, it is not suitable for the unique challenges posed by remote rural areas. Traditional GSM: • is too expensive - a typical GSM base station alone costs in the region of US$100,000, before BSC (base station controller) and MSC (mobile switching centre) costs. Urban markets can justify this. Rural markets cannot. The cost base of any solution has to be geared to low ARPU levels; • uses too much power - power was not top of mind when GSM was conceived in the early 80s. A typical base station site alone requires about 3000W to run. Most rural markets are not served by any power grid. Any power tends to come from costly and unreliable diesel generators - if fuel can be afforded and delivered at all. Latin America has experienced power crises in several of its countries such as Chile in 1996 and Brazil in 2001. Moreover, many Central American countries have old and inefficient diesel generators. The current GSM networks in India already burn 1.8 billion litres of diesel each year. Fuel cost, transport challenges and the demands of generator maintenance make this power source unsustainable for rural GSM; • relies on highly skilled engineers - a typical base station deployment takes around three months and involves radio network planners, site acquisition teams, site engineers, civil engineers, equipment vendor installers and operator commissioning teams. This model could never scale to meet the rural opportunity. Rural areas have no trained telecom engineers and few people can read or write. This makes the installation and maintenance of GSM networks highly challenging; and • it is too difficult to deploy - especially in areas with no electricity and poor roads. Equipment manufacturers have been struggling with how to build networks for low ARPU areas for years. The big TEMs (telecom equipment manufacturers) have rolled out networks in many remote places. However, most of these networks are one-offs and have been developed as part of corporate social responsibility programmes. If you scratch below the marketing hyperbole, you will soon discover that we will never see mass deployment or commercial networks built with this equipment for the reasons outlined below. TEMs are simply not focused on connecting the unconnected, since they have a host of other issues to deal with - LTE, Android, mobile content and WiMAX to name just a few. The GSMA Development Fund The GSMA Development Fund has been doing some sterling work to accelerate mobile solutions for people living on under US$2 per day. It works closely with mobile operators to create sustainable business solutions through the deployment of phone and Internet services that are commercial, scalable and easily replicated - and provides support in the following ways: • catalyse innovation - identify new opportunities and provide resources to stimulate projects; • drive market scaling - help prepare operators to scale projects from pilot to full rollout; and • knowledge networking - facilitate connections and sharing of market information and best practices. If you were a mobile operator seeking support to launch mobile phone and Internet services in developing markets, the Development Fund would definitely be worth a call. However, it is clear that the real opportunity lies beyond reach of current GSM infrastructure and simply adapting the current mobile infrastructure and business models for rural use will never work. A new solution based on entirely new thinking is called for. Solar power Without a doubt solar is the most feasible way to power networks in Latin America as well as Africa, India, and rural Asia. Solar powered networks can reduce the operating expenses for mobile operators to zero - and at the same time greatly reduce the environmental impact. Solar is gaining traction in Latin America as a power source and Chile, for instance, is promoting its usage quite aggressively. Solar could soon become one of the preferred options for new renewable power projects in Latin America. Re-engineering of GSM technology during the last five years reduced its power requirements and make it suitable for a rural environment where electricity is scarce or unavailable. The task sounds impossible, but a true GSM mobile base station has been built that can operate where there is no power. The base stations fit into two carts and two unskilled workers can assemble them in just six hours. This makes the base stations so inexpensive to buy, deploy and operate that GSM networks can be profitable even when they support only a few hundred users. Not only that, these base stations can create zero-opex (zero operating expense) networks. The dawn of Microtelecom About a year ago, the term microtelecom was coined to describe the new technologies, techniques, business processes and ideas that address the rural opportunity. We’re pleased to see this term gradually being taken up by the industry with many operators changing the way they think about some of the largest untapped markets in the world. Microtelecom is the first serious response to the gulf between today’s GSM and the rural market opportunity it fails to serve. Like microfinance, microtelecom is based on the belief that consumers at the ‘bottom of the pyramid’ can be profitably served - as long as the product or service is designed appropriately. The model is aimed at helping operators scale their rural businesses at maximum speed and with minimal exposure. It centres around local stakeholder entrepreneurs who partner with operators to deliver mobile services within their communities. This enables operators to break up the significant infrastructure and operations investment into smaller chunks that can be shared with local entrepreneurs - often as their second or third business. The essential ingredients of microtelecom are: • an extension to GSM and not a replacement - microtelecom doesn’t expect to displace GSM. Instead, it must integrate with GSM macro networks, extending them into previously unreachable rural areas; • solar powered - microtelecom can’t rely on the power grid or on diesel generators. They must be so low-powered - less than 100W per base station - that the entire system can run on solar power; • low cost - microtelecom infrastructure must be a fraction of the cost of traditional GSM base stations so that it can be profitable at very low population densities and ARPUs; • self-contained - BSC and MSC functionality should be integrated and deployed on base station towers rather than as standalone infrastructure. • self-deploying - a microtelecom network needs to be easily installed by unskilled field staff who may not be able to read or write; • very low maintenance - it must be reliable without constant maintenance by trained engineers. • an appropriate network topology - the architecture itself must be optimised for low-cost rural expansion and should make use of local switching to minimise backhaul; and • involving local people - the system’s simplicity makes it possible for operators to partner with local entrepreneurs to drive down costs, speed deployment and create a local presence. We are on the brink of a microtelecom revolution that will use new and innovative GSM systems to build networks in remote areas and generate dramatic social, environmental and commercial returns. The next billion mobile users await.

Read 3762 times
Login to post comments

Sign in

Online Readers

We have 5001 guests and 5 members online