Outlook for 2013 (Part 3): Future Telecoms Infrastructure
Posted on April 22, 2013
In the third part of our outlook series, we take a look at the changing dynamics of the always-on telecoms infrastructure.
Telecoms infrastructure across the globe is rapidly changing as a result of increasing consumer demand and investment by operators. We expect that this demand will be significantly influenced by requirements from developing nations, with increased investment in telecoms. However, these markets face a critical issue - unreliable electrical grid supply.
Roughly 70 per cent of the approximately 400,000 mobile towers in India (one of the biggest telecoms markets) face electrical grid outages in excess of 8 hours a day. To mitigate this, telecoms tower operators currently use diesel generators and batteries to generate power. This has led to the telecoms tower industry in India consuming over 2.5 billion litres of diesel annually - see our whitepaper on The True Cost of Providing Energy to Telecom Towers in India for reference.
The rising operating costs, the logistical issues and the environmental cost of using diesel means the industry has to look for alternative solutions for the future.
Renewable energy technology
In light of these issues, we can expect the telecoms industry to focus on practical cleaner and cost-competitive solutions to overcome the power challenge and huge cost implications - in addition to the above, read our whitepaper on Green Solutions for Telecom Towers.
When faced with grid failure, telecom operators need a supply of reliable energy to keep the critical systems going. In essence, it needs to be always on. We expect telecoms operators to invest in technologies such as fuel cell back-up power systems as they offer longer, continuous and durable run time with the added bonus of zero emissions. Additionally (and arguably more importantly for developing nations), the cost is significantly cheaper than using diesel.
On a macro level, we can expect to see a lot more consolidation from providers in order to achieve scale. The increase in demand for telecom services, the rising operational expenditure and the increased competition in the market will see an increase in mergers and acquisition.
From a network operator's point of view, we have already seen the merger of Orange and T-Mobile in the UK to form Everything Everywhere, allowing them to successfully compete for the 4G services rollout. The consolidation of the market will also present an opportunity for niche players to succeed based on innovative technologies and smart business models. The key opportunity lies in each operator gauging its capabilities and making the business decision to either consolidate or specialise in its own area.
The other trend that we can expect to see is that governments will begin to invest in supporting telecoms infrastructure. For example, the Telecom Regulatory Authority of India has started granting subsidies to encourage the successful development of telecom towers. As the public sector continues to realise the opportunities that connectivity affords not only the population but the economy as a whole, we expect to see more support for telecoms operators and investment in the infrastructure to sustain this progress.
There is no doubt that the telecoms infrastructure will continue to evolve as fixed and mobile communications increase. The key to success lies in choosing the right, sustainable technology and leveraging the available resources at the right time to ensure that the customers stay connected, and the telecoms infrastructure remains always-on.