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.

Further reading:

Profitability in times of rising oil prices 7 Jul, 2008

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.

Source: OPEC

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.

VNL’s WorldGSM™ technology helps mobile operators lower network operating costs in rural and remote areas. In a sustainable way. Find out more »

Going rural, going green 27 Jun, 2008

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.

The power and fuel challenge 26 May, 2008

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.

To get a sense of the scale, 2 billion litres is the annual milk production in Venezuela, and the total amount of bottled water consumed in the UK every year.

Fortunately, VNL’s WorldGSM™ technology can help mobile operators lower network operating costs in rural and remote areas. In a sustainable way. Find out more »

Solar roofing 20 May, 2008

Lumeta has developed solar roofing that can be installed in just half an hour. It’s a clever idea: photovoltaic tiles that integrate into an existing roof.

For residential applications, Lumeta offers both integrated S tile and Flat Tile solar products, as well as asphalt shingle roof systems for home builders.

Lumeta’s larger photovoltaic module – the PowerPly 380 – is intended for commercial applications. Triplepundit has an interesting video of a PowerPly installation (it’s fast): “Peel & stick solar fulfills the need … for speed!

Installing regular photovoltaic panels can difficult in two ways: it’s a cumbersome process, and large solar panels tend to stand out from the overall house architecture (a photovoltaic eyesore, if you will). So the idea of integrating a solar panel installation with existing roofing makes serious sense.

Indeed, the future looks bright for Lumeta.

Learn more:

Quote of the quarter 7 May, 2008

William McDonough, world-renowned sustainable architect and designer, explains why we’re not especially smart as a design species:

How can anything be beautiful if it is not ecologically intelligent? I reflect on the fact that it took us 5000 years to put wheels on our luggage. So, we are not that really smart as a design species. If we look at a tree and think of it as a design assignment, it would be like asking us to make something that makes oxygen, sequesters carbon, fixes nitrogen, distills water, provides habitat for hundreds of species, accrues solar energy as fuel, makes complex sugars and food, changes colors with the seasons, creates microclimates and self replicates.”

Powerful observation. Hear McDonough on Studio 360 or check out his website »