The Double-Edged Sword of Diesel Subsidies 3 Oct, 2008

Mobile operators demand that the Indian government maintains diesel subsidies, underlining that telecom is a public utility and higher fuel costs impacts the consumers.

Business Line reports that “Cellular Operators Association of India and the Association of Unified Telecom Service Providers of India are planning to approach the Government seeking a total exemption or only a marginal increase in diesel price…”

Why? Because power costs are astronomically high; “…cellular operators spend nearly 35 per cent of their operational expenditure on procuring diesel for running generator sets that power their base stations”.

Since mobile infrastructure equipment has high power demands, it is impossible to deploy it without power support in areas where electricity is scarce. This means diesel generators are so far the only solution to provide coverage.

The need for diesel generators holds true for both urban and rural areas – multiple daily power cuts are commonplace in Indian metros, and basically all sites are equipped with generators that run several hours every day. In fact, it’s not uncommon for these generators to run 24/7/365, since shutting down and powering up a generator wears more (and costs more) than leaving it running.

So, while providing mobile coverage to everyone is a top priority, and telecom is truly a public utility, is the solution really to deploy more traditional, power-hungry mobile infrastructure?

From the article:

“…Some companies even deploy helicopters to transport diesel to remote places in order to keep the mobile networks running.”

Clearly, this is not a sustainable practice. And besides the high cost of fossil fuel, the environmental impact is enormous. According to our estimates, Indian mobile operators burn upwards of 2 billion litres of diesel every year, just to power diesel gensets. This translates to 5,24 billion kilogrammes – 5,24 million metric tonnes – of carbon dioxide emitted every year.

There’s a dire need for mass deployment of renewable energy sources and sustainable technology. But clean energy is only one part of the picture.

As we’ve previously underscored, rolling out mobile networks in rural and remote areas requires a complete re-engineering of technology, business models and approach. The solution is actually to let profitability and sustainability go hand in hand.

Quoting Thich Nhat Hanh from yesterday’s Times of India;

“Protecting the environment is protecting ourselves.”

The case for WorldGSM™ has never been stronger.


“Green Power for Mobile” Initiative – Good News for Off-Grid Telecom 29 Sep, 2008

GSMA’s latest initiative pushes for the use of renewable energy sources for mobile networks.

The target is to have 100,000+ off-grid base stations deployed by 2012. As a regular reader of the VNL blog, you should be quite familiar with the large power and fuel challenge that mobile operators face.

Energy prices are soaring, while ARPU’s are dropping. The solution to these issues is to focus on energy efficiency and renewable energy sources.

With this in mind, GSMA’s effort is both very timely and highly relevant. The explosive growth in the mobile industry must be managed responsibly to avoid an enormous negative environmental impact. Especially in countries like India where more than 9 million new users are added every month and base stations are being deployed quicker than suppliers of diesel generators can deliver. In May this year, Bharti Airtel (one of the largest mobile operators in India), claimed they were adding almost 3,000 new base station sites every month.

Pushing for the usage of renewable energy sources for mobile networks not only has the potential of reducing air pollution and mobile operators’ operating costs – because of the huge scale of the mobile industry, it can impact the whole renewable energy field; providing a live testing ground for new innovations in solar and wind power.

We applaud GSMA’s initiative. But beyond their project’s focus on renewable energy is a required re-thinking of mobile infrastructure technology – the area where VNL is singularly focused.

The next billion mobile users will come from rural areas, and to roll out mobile networks here is a unique challenge. It’s not only about using solar or wind power. And it won’t do to simply attach a large solar array to existing mobile infrastructure, since the energy requirement and cost per site simply prevents the solution from scaling. And the idea of burning a matter – be it diesel or cooking oil, or a mixture of both – to extract power is not sustainable in the long run. We’ve earlier argued against biofuels, and remain firm in our stance.

Off grid telecom, or “microtelecom” in VNL lingo, consists of four key ingredients:

  1. Low power (no more than a lightbulb, which makes solar power viable)
  2. Low cost (no more than a simple tractor, per site)
  3. Dead simple installation (so local labourers can do the job)
  4. A business model that scales

With WorldGSM™ – VNL’s solar powered GSM system – all these ingredients are present. The combination allows mobile operators to finally provide mobile services to rural areas.

Profitably so. And responsibly so.

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