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Indian Mobile Market Breaks New Record 26 Aug, 2008

9.22 million. 9,220,000. That’s how many new Indian GSM and CDMA subscribers were added in July. It breaks the earlier record of 8.94 million that was set a month earlier.

Out of all the mobile operators, Bharti Airtel expanded the most with 2.69 million. Vodafone Essar welcomed 1.7 million new subscribers, and Reliance 1.5.

Close to 300 million people now have a mobile phone in India. This makes India the world’s second largest mobile phone market after China.

The split between GSM and CDMA is currently roughly 74% vs 26%.

As new GSM operators, such as Videocon, Unitech, Reliance and Tata Telservices, start launching mobile services by the end of this year, growth is expected to grow upwards of 10 million new subscribers per month.

A market with amazing contrasts

Rafat Ali recently wrote a blog entry about Cyriac Roeding’s (former EVP of mobile at CBS) travels in India.

He visited the spiritual city of Varanasi, and found himself standing at an intersection, observing his surroundings:

“The backdrop of this ancient scenery is dominated by a giant billboard from the mobile carrier Vodafone. And on the sidewalk, where men in wet orange T-shirts pass by after their spiritual bath in the Ganges River, a young entrepreneur has set up a booth on two wheels, which carries only two stationary telephones on a counter. This is a mobile phone recharging station, where consumers can add credit to their prepaid cell phones.”

There are many reasons for India’s mobile revolution. One of the most important is accessibility. Only a couple of million Indians – around 5% of the population – have Internet access. And getting a traditional wired phone installed is often a cumbersome process.

As it’s possible to get a new mobile phone for as low as $25, and as mobile services (voice, text messaging, data) are priced very competitively (the average country-wide ARPU lingers around $7), getting a mobile phone is the way to go.

But an enormous challenge still remains – making sure that mobile services are accessible to everyone. Which in the case of India translates to close to 400 million people – a majority located in rural areas – that still can’t use a mobile phone because there’s no coverage.

That’s where VNL’s WorldGSM™ system comes into the picture – helping operators reach rural markets profitably.

Further reading

To learn more about India’s mobile market, here are some resources worth visiting:

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The Kamla Show: “Serving The Next Billion Mobile Users” 23 Aug, 2008

Hear VNL’s CEO Anil Raj’s conversation with Kamla Bhatt about VNL’s mission – to help mobile operators serve rural markets profitably.

The contents of the podcast, in the words of Kamla, centers around the rural market opportunity, VNL’s solar powered GSM system WorldGSM™ and microtelecom:

How do you serve the next billion is the the central focus of conversation in many telecom companies. How do you address the bottom of the pyramid in emerging and developing economies? I caught up with Anil Raj of VNL, an Indian-Swedish telecom company that recently introduced a new product: solar based GSM -system that appears to clearly address the needs and challenges in rolling out mobile infrastructure into rural areas. VNL uses the term microtelecom to address the needs of the bottom of the pyramid.”

Anil also expands on mobile market trends such as the mobile phone becoming increasingly important in many areas of life – from a portable telephone to a remote control for life, and from “how are you?” to “where are you?”.

Listening options

Crank your phone 19 Aug, 2008

How do you charge your mobile phone when there’s no electricity grid? A hand cranked dynamo may be the simplest, and most cost-efficient, answer.

We’ve earlier mentioned companies like Solio and Suntrica that make portable solar chargers.

Solio’s product is definitely at the high-end of the spectrum and retails for around $100, which may be a bit steep for a rural citizen. Suntrica’s product range is a bit different both in regards to price and product range, and they will soon publicize more information about the products. We’ll return with a new report on Suntrica then.

On a related note: if you have soldering skills and a DIY mindset, you can even make your own solar charger.

Solar chargers can be used collectively in a village – shared between a group of people. So can hand-cranked chargers, of course. And they do retail for quite a bit less than many of their solar peers. VNL-er Nikhil Swadia has done some research on what’s available.

The Chinese manufacturer Wenzhou Kaishi Electric offers a couple of different hand-cranked phone chargers. Cranking at 150 rpm/for 1 min provides enough power for 8 minutes of talk time. The chargers come with plugs for charging most common brands of mobile phones. It costs $1.8 in large quantities, most likely translating to a retail price point of around $10.

CNET has reviewed some hand-wound mobile phone chargers that cost around around $20 to 25. And there are more to be found at NexTag.

Clearly, there are many options for a villager to charge a mobile phone. And these portable chargers – both solar and hand-cranked – are quite convenient for anyone outside the range of the electricity grid.

As solar power technology matures further, and as adoption of mobile communication in rural communities increases, the field of portable chargers will evolve quickly. We’re tracking the development right here on the blog.

Green tech + Ikea = Good idea! 15 Aug, 2008

Hello Ikea eco-friendly and sustainable energy products – not just organic slip covers, but FLAT-PACKED SOLAR PANELS!

The environmentally concerned will be happy to learn that the disposable furniture specialist, Ikea, has created its own Green Tech Energy Fund and will invest circa $77 million on development in five key areas: solar panels, alternative light sources, product materials, energy efficiency, and water saving / purification.

Ikea hopes to bring a full line of green technology products to market within three to four years.

Read more about the good news.

The Long Tail in microtelecom – Enhancing lives through mobile communication 8 Aug, 2008

With his article “The Long Tail,” in the October 2004 issue of Wired, writer Chris Anderson popularized the idea of the “long tail” in explaining why online retailers such as Amazon.com, Netflix etc. are uniquely positioned to fill a huge demand that traditional retailers cannot serve cost-effectively.

Sites like these try to market more obscure products to a large number of customers, realizing profits in doing so.

This same concept can impact the business models of mobile operators as they also face a similar market curve (see figure below).

Long Tail market curve

Until now, operators haven’t offered mobile services to villages because it has been impossible to do it profitably.

The reason for excluding the “Long Tail” from mobile services is simply because of the threshold of viability – explained in the figure below:

Threshold of viability

By adjusting the cost base, we have been successful in driving down the threshold of viability to $3. Now, with the advent of WorldGSM™, it is possible to connect the unconnected long tail – and help to improve the lives of billions of people around the world.

Find out more »

Reuters: “Spanco Tele board oks buying up to 15 pct in Vihaan Networks” 2 Aug, 2008

MUMBAI, July 31 (Reuters) – Spanco Telesystems Ltd (SPTS.BO: Quote, Profile, Research) said on Thursday its board has approved a proposal to acquire up to 15 percent stake in Vihaan Networks Ltd, a product company manufacturing GSM equipment.

The equipment can be used in telecom and mobile operators network to extend their reach in rural markets and augment subscriber base in a cost effective manner, it said in a statement.

Shares in Spanco were trading up 0.4 percent at 97.20 rupees in a weak Mumbai market. (Reporting by Janaki Krishnan; Editing by Ramya Venugopal)

Read article at in.reuters.com »

BusinessWeek: “Making Mobile Networks Cheap and Green” 1 Aug, 2008

by Jennifer L. Schenker, BusinessWeek
August 1, 2008

VNL of Sweden unveils a solar-powered base station for the cellular industry that is a fraction of the size and cost of conventional towers.

It has taken 21 years to get mobile phones into the hands of 3 billion people around the world. Reaching the next 1.5 billion, who live in the world’s poorest and most remote corners, is expected to take a lot less time but will pose much tougher challenges.

There is, for instance, the thorny question of how to justify the expense of installing transmission towers in areas where people can only afford to pay as little as $2 per month for phone service—not to mention the cost of running and servicing equipment where electricity and engineers are in short supply.

That is where VNL, a new, privately funded Swedish-Indian telecom equipment maker comes in. Co-founded by Anil Raj, a Stockholm-based mobile industry veteran who held key roles at Ericsson (ERIC) and Sony Ericsson, VNL includes a dozen of the engineers and executives who created the digital-mobile technology known as GSM. They have turned their expertise to the challenge of making mobile networks that are vastly cheaper, simpler, and less power-hungry than anything ever before devised.

The Four-Year Wait is Over

Now, after four years in stealth mode, VNL is finally pulling back the curtain. In July, the company introduced its radically new mobile transmission towers—known in industry parlance as base stations. Costing just $3,500 each (compared with prices typically ranging from $10,000 to $100,000 for conventional base stations) and roughly the size of a laser printer, VNL’s base stations are powered by solar energy and use only as much energy as a 100-watt lightbulb. That’s one-sixth the amount needed by the most efficient competing base stations that run on alternative energy.

Low prices and stingy energy use are only part of VNL’s top-to-bottom rethink of mobile networks. The company’s equipment also is designed to be transported in small pieces that can fit into oxen-drawn carts traveling over rough terrain. The components carry Ikea-type instructions that use pictures and color codes instead of text, so that nonliterate people can install the gear. Further simplifying the job: When the microwave portion of the tower is correctly aligned, the base station issues a series of rapid beeps, like the ones trucks make in reverse. Once installed, the base stations can be managed remotely, reducing maintenance costs by 90%, VNL says.

The combination of these and other breakthroughs should mean that, for the first time, operators can build profitable businesses serving the poorest people in difficult-to-reach places, says VNL chief Raj, a former head of Ericsson India and founder of Hutchison India, now the country’s second-largest operator. Raj says it is in India—one of the world’s hottest telecom growth markets—where the limitations of existing equipment are becoming most apparent. There are 700 million people in rural areas there who would be able to afford $2 a month for mobile service, if only operators could figure out a way to serve them economically.

Prime Target

Technology consultancy Frost & Sullivan figures the global market for rural base stations is already $15 billion annually and growing at 15% to 20% a year. According to Sharifah Amirah, a principal analyst in Frost & Sullivan’s London office, mobile equipment sales in emerging markets soon will surpass those in developed markets.

Of course, that means that the opportunity VNL is pursuing is also a prime target for traditional vendors such as Ericsson, Motorola (MOT), Alcatel-Lucent (ALU), and Nokia Siemens Networks, a joint venture of Nokia (NOK) and Siemens (SI). All of them are developing base stations for developing countries, powered by wind, solar energy, or biofuel, with an eye to bringing mobile-phone service to people not currently on the network or the power grid.

The difference, says VNL’s Raj, is that traditional telecom equipment vendors “are on a never-ending quest for higher and higher speeds,” not making cheaper base stations. “We have just one focus, and that is to make the best and most cost-effective rural telecom system.”

Fuel Consumption is a Major Challenge

Indeed, typical base stations today are about the size of a large refrigerator and require about 1,000 watts of power. Most of that energy is wasted as heat, so the base stations also require cooling equipment that uses another 1,000 watts. Backup batteries draw another 500 watts. Since most rural areas in developing countries have either intermittent electricity or none at all, expensive diesel generators are used to power them. In India alone an estimated 1.8 billion liters of diesel are used each year to fuel mobile-phone networks. Operating these networks is getting more expensive as the price of diesel rises. Fuel can account for as much as two-thirds of base station operating costs (BusinessWeek.com, 2/20/08), and then there is the expense of trucking diesel over poor roads to far-flung locations and protecting the fuel against theft.

In the search for alternatives, the GSM Assn, an industry group, said it has successfully tested wind- and solar-powered base stations in Namibia made by Motorola and base stations from Ericsson fueled by used restaurant cooking oil in India. “We expect to see real innovation in Africa and Asia, which will end up being adopted by Europe and North America,” says Dawn Haig-Thomas, director of the GSM Assn.’s development fund.

Still, the most efficient of these alternative energy powered base stations use anywhere from 600 watts to 700 watts, says Godfrey Chua, an analyst at technology consultancy IDC. And only a tiny fraction of base stations are run on alternative energy today, leaving the majority of the 1.6 billion people who live off the electricity grid, and another billion living in areas in which the grid is inconsistent, without phone service.

Submarine Batteries Save Energy

Getting mobile phone service to customers in these areas has been on the agenda of traditional vendors like Ericsson for the last 10 years. The incentive is obvious. “Our future growth is in emerging markets,” says Ulf Ewaldsson, a vice-president at Ericsson and head of the company’s radio division. He notes that Ericsson, the world’s largest telecom equipment maker, now sells one base station every 11 minutes in India.

But Ewaldsson concedes that cost has held back solar-powered solutions. Only about 200 of Ericsson’s 1.3 million installed base stations around the globe use solar power. A far larger number use diesel or alternative fuels. Once companies find a way to cut the cost of solar panels and governments put their weight behind affordable renewable energy, Ericsson says it will be ready to integrate these power sources more widely. “We are extremely well prepared for this,” says Ewaldsson. “We are selling base stations with software that is prepared to take in a variety of energy sources, including off-grid.”

In the meantime, the company has come up with some innovative ways to ensure that base stations gulp less energy. It now uses submarine batteries in base stations that can be charged and recharged many more times. Diesel is used only to charge the batteries, reducing fuel consumption by 40%. Ericsson also has developed a sleep mode for radio transmitters so that they automatically shut down when no one is making phone calls. If all of Ericsson’s installed GSM base stations had this feature, carbon dioxide emissions would be reduced by 1 million tons per year—the equivalent of 330,000 cars each traveling about 10,000 miles or 16,000 kilometers per year.

Stolen for Scrap

The company also has developed a new approach to building towers. In the past, they were constructed of steel, but the material was often stolen for scrap in developing markets. Ericsson’s new Tower Tube is instead made of concrete cylinders, which have the added advantage of better protecting batteries and other equipment from extreme heat without the need for expensive cooling.

In addition to its in-house innovations, Ericsson is keeping its eye on interesting approaches being developed by startups, says Ewaldsson. VNL is just one of some 30 young companies trying to tackle the challenge of connecting the rural poor, he says, and Ericsson is looking at all of them with a single goal in mind. “We are not just talking about serving the next 1.5 billion,” says Ewaldsson. “We are aiming at the next 3 billion—we want to get a mobile phone to everyone on earth.”

If VNL has its way, it will play a big role, alongside the big equipment makers, in making that dream a reality.

Read the article at businessweek.com ››