By Mikael Ricknäs, IDG News Service, 07/22/2008
VNL wants to turn the way mobile base stations are made and installed on its head, making it more economic to offer service in rural areas in developing countries. To do so, it looked to consumer electronics manufacturers and furniture giant IKEA for inspiration.
The majority of future growth for mobile operators will come in developing countries, in rural areas where subscribers will get their first phone. But traditional equipment is too expensive to buy and maintain if operators are to remain profitable where average revenue per user (ARPU) falls below US$2, according to Anil Raj, CEO of VNL, a Swedish-Indian start-up.
To be able to address this market you have to start with a blank piece of paper, and assume that there are no roads, no electricity, no qualified personnel, and an ARPU of $1-$2, according to Raj.
To reduce power consumption as much as possible, VNL decided to support only circuit-switched GSM (Global System for Mobile Communications) connections, and not the more power-hungry data connections of GPRS (General Packet Radio System) or 3G (third-generation) systems.
In addition, the company looked for help in other sectors where power consumption is a concern.
“If you use traditional telecom components you quickly hit a limit of what is possible, so instead we decided to use components from consumer electronics,” said Raj.
So its equipment use speech coding from an MP3 player, its components for digital signal processing are usually found in cars, and the software is all open source.
VNL also quickly decided to go with a solar powered solution, a technology which has become more stable in recent years.
“Solar power isn’t getting more efficient, but it is getting cheaper. There is a lot of VC money going into improving the manufacturing process,” said Raj.
The end result is VNL’s WorldGSM Village Site base station, with a power consumption of under 50 watts, according to Raj. A typical GSM base station last year consumed 800 watts, according to Nokia Siemens, a manufacturer of traditional network infrastructure.
Nokia Siemens’ base stations support more users than VNL’s, but that is not necessarily what is needed in rural areas, according to Raj.
“Existing base stations are really good at scaling up, but not down to support a smaller number of subscribers in one site,” he said.
The WorldGSM Village Site base station has enough capacity to support up to 100 typical subscribers, the company said.
Its cost is also radically different from exiting base stations. A WorldGSM Village Site will cost about US$3,500. Today it’s difficult to find a base station that costs less than US$25,000, according to Raj. VNL foresees a model where a village buys its own base station, to minimize the risk for operators.
Keeping equipment costs and power consumption down isn’t enough to get the job done, according to Raj. VNL has also had to rethink the way base stations are installed. The normal way of installing base stations just isn’t practical when you are in the middle of nowhere. “Our vision is that villagers can go to and pick up a base station, put it on their ox-cart, travel for two days and then install it themselves,” said Raj.
VNL uses color coded cables, and when connecting it to the rest of the network a continuous beeping sound will tell the installer when the microwave link is pointing in the right direction.
It also uses pictures to explain the installation process, in part because it does not have the resources to translate its manual to the many languages that would be necessary, and also as a way of getting around illiteracy among potential installers.
VNL will start trials in September, with an Indian operator that will remain anonymous for now. The goal is then to start shipping larger volumes during the first quarter next year.
Cracking the market for mobile equipment isn’t something easily done. Selling to carriers has always been difficult for start-ups, and unlike Chinese manufacturers ZTE and Huawei, VNL doesn’t have the backing of the Chinese government. But Raj is convinced the company has found a niche large enough to become a success.