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GSMA Mobile Briefing: “Green with Envy? Base Station Minnows Take on Big Guns”

By Justin Springham, GSMA’s Mobile Business Briefing Newsletter 12 September, 2008

The mobile industry’s base station equipment sector is not always associated with young, aspiring companies driving development into new growth areas. Dominated by the likes of Ericsson, Nokia Siemens Networks and Alcatel-Lucent, as well as, in recent times, Chinese equipment vendors Huawei and ZTE, this is a multi-billion dollar market led by a number of high-profile players and primarily focused on delivering technology to support advanced mobile services.

But the phenomenal growth rate of mobile network deployments around the world is paving the way for smaller players to potentially grab a valuable slice of action in an emerging new area.

The mobile industry today serves a staggering 3.2 billion subscribers, almost half the world’s population. More than 90 percent of the roughly 2 billion new subscribers expected to join this community over the next few years will come from emerging markets. According to Unstrung Insider, extending service to the next two billion subscribers will require between 1.5 million and 2 million new base stations, more than half of them located in areas without access to electric grids. And with that comes a huge opportunity for pioneering companies working on a range of alternative ‘green’ energies that can be harnessed to power off-grid radio sites at a fraction of the running cost of diesel-powered generators.

“There is enormous demand in the developing world for alternatively-powered base stations,” believes Dawn Haig-Thomas, Director of the GSMA Development Fund. “There are some 1.6 billion people living off the electricity grid and a further billion living in areas in which the grid power supply is inconsistent. Areas lacking grid power supply today are typically also areas lacking mobile coverage. Operators are desperately seeking cost-effective power solutions that will enable them to extend their networks into these remote areas. With diesel prices making generator solutions less attractive, the focus is now on wind and solar power.”

It’s therefore no surprise that the major base station equipment vendors all currently offer at least one alternative energy-powered solution each, such as solar, wind or biofuels. Ericsson and Alcatel-Lucent have separately installed about 400 solar-powered base stations throughout Africa and Asia. A recent Wall Street Journal report claimed that Alcatel-Lucent’s solar base station requires about 750 watts to run, while Ericsson’s solar base station needs about 600 watts (compared to as much as several thousand watts for ‘traditional’ GSM base stations). Both sets of vendor equipment reportedly require technical staff to install them over a course of weeks. In India, IDEA Cellular has also installed around 350 base stations that run on biodiesel, produced from waste vegetable oil, a deployment which began as a pilot in conjunction with Ericsson and the GSMA Development Fund.

Despite these high-profile developments, a small set of vendors focused on the production of alternatively-powered base stations are attracting industry interest. Last month saw the launch of VNL, a Swedish-Indian startup that claims to have spent the past four years developing a simplified GSM base station powered by solar panels and requiring much less power than similar offerings from its larger rivals. VNL says its WorldGSM base station can be installed in rural areas with little professional training and requires up to only 120 watts to run; about the same as a light bulb. The base station costs US$3,500, compared to the US$40,000-US$100,000 price of a traditional electricity-powered GSM base station.

Of course, launching a product – no matter how impressive – and generating commercial success are two different matters, especially for a little-known startup, but VNL isn’t short on confidence as it prepares to take on its heavy-hitting competitors. “We probably have the most sophisticated technology of all vendors,” Board Member Anil Raj told me prior to the company’s official launch. To date the company has signed up Indian infrastructure provider QTIL for trials, and claims that agreements with several ‘prominent’ operators have been reached and are in the process of being finalised.

Meanwhile Sweden-based Flexenclosure touts its E-site product as “the flexible and green base station solution for the global telecom industry.” Already a winner of the 2008 GSMA Mobile Innovation Global Awards, E-site is making a name for itself by claiming to enable operators to cut their operating costs by at least 50% and providing break-even for its customers in 15-18 months. Specifically designed for off-grid locations, Flexenclosure claims E-site can support 3G networks as well as 2G GSM.

Elsewhere, Winafrique is establishing itself as a provider of efficient and sustainable alternative energy solutions for East and Central Africa. Located in Kenya, Winafrique claims to have completed a total of 21 sites powered by wind and solar, including many for regional mobile operator Safaricom, and says it has cut operator costs by up to 70%. And UK-based PowerOasis is another contender, holding claim to a number of successful deployments of renewable power at base stations in both the UK and Africa.

Such companies are demonstrating their potential in what is already a huge market. ABI Research recently reported that the number of off-grid solutions is “extremely high” in Africa (45 percent) and some parts of the Middle East (25%). It noted there are also some relatively high levels of off-grid mobile sites in Asia Pacific (15%).

And it could just be that green power for mobile networks becomes a truly global opportunity for the emerging talents of VNL, Flexenclosure and others. “We expect to see the greatest innovation coming out of Africa and Asia, where the need is currently most acute, which in turn will be adopted by Europe and North America,” says the Development Fund’s Haig-Thomas.

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