In the past year, oil prices have risen more than 100% and are currently at $140.73. According to most of the energy experts the situation is only going to get worse.
The price of oil is predicted to go as high as US$200/barrel in the next 12-18 months.
Our earlier findings have indicated that power and fuel constitute the biggest chunk of operating costs for mobile operators – The power and fuel challenge.
Soaring energy prices and falling ARPU put mobile network operators in a difficult position. It’s definitely the right time for mobile network operators to start looking at renewable energy sources as an option to run their networks and reduce their operating expenditure.
There has been some recent buzz around the rural opportunity. And about the need for sustainable energy sources.
Everyone wants to get connected. Mobile operators want to reach new growth markets. And oil is, after all, going extinct.
On the 24th of June, The Economic Times wrote that:
“The government is considering a proposal by which companies using solar or biogas power for running the rural telecom infrastructure would be subsidised.”
India’s Department of Telecom (DoT) has, according to Economic Times, around Rs 15,000 crore of unutilised money under the USOF (Universal Services Obligation Fund) scheme and is finding ways to spend it.
Unstrung Insider recently released the report “Mobile Networks Go Green: The Lean Base Station” which examines the opportunities for using sustainable energy sources to power radio sites in remote areas.
John Blau, research analyst at Unstrung, recently underlined the importance of new energy sources:
“The growth in mobile networks over the next few years will come from emerging markets. Of the more than 1.5 billion new subscribers from emerging markets by 2015, nearly two thirds live in remote parts of the world, where access to electric grids isn’t guaranteed.”
The most common way to reach areas where there’s no power grid is to deploy conventional base stations with diesel generators. And even in emerging market cities, the power grid is often so unreliable that diesel generators have to run several hours every day to keep the mobile network running.
Unstrung estimates that around 1 million new base stations will be needed to extend connectivity to rural areas in emerging markets.
The good news is spelled WorldGSM™ – VNL’s complete GSM system that helps mobile operators reach rural markets profitably.
We also have a new white paper in the works about the mobile energy crisis. It’s coming soon, and will explain mobile operator’s power woes further.
It will also provide ideas for how the mobile industry can move forward sustainably. Which is, actually, the only way forward.
We recently analysed the balance sheets of Airtel and Idea. The outcome was not surprising. One of the biggest chunks of operating costs is spelled “Power & Fuel”.
Mobile operators around the globe are faced with the problem of reducing ARPU because of fierce competition. The biggest challenge for operators is to rapidly enhance their existing infrastructure while remaining profitable.
One way to improve profitability is to reduce the costs of operations of the network. On analysis of the balance sheets of Airtel and Idea, we found that “Power and Fuel” forms the biggest chunk in the network operating costs.
Refer to the charts below for details of the distribution of network operating costs for Airtel and Idea (FY 2006 – 07).
Added to the actual cost of grid power and fuel for generators, the environmental impact of today’s mobile networks is enormous. Most of the electricity doesn’t come from renewable energy sources like wind or water.
In India alone, 2 billion litres of diesel fuel are burned annually just to power the diesel generators needed to keep Base Stations running.
Full-scale, traditional GSM networks use an enormous amount of power. Each Base Station requires 3-4000 Watts of power — before air conditioning is factored in.
In remote areas like rural India, there is either no electricity grid or it’s only available for a few hours each day. Diesel generators are used to fill the gap times, resulting in over 1.8 billion litres of diesel fuel being burned every single year in India alone.
And it takes even more fuel to bring the diesel fuel to each generator. The generators themselves are typically low quality and poorly maintained, resulting in replacement every two or three years — more waste, more greenhouse gas emissions.
Using sustainable energy sources is a prerequisite to reach underserved rural and remote communities. Microtelecom equipment must be energy efficient enough to allow for solar or wind power sources.
Want to learn more? “The Solar Imperative” (a white paper by Anders Hansson) is a good start.
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