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FT World Telecoms: VNL, Disruptive Rural GSM



A genuinely fascinating presentation at last week’s FT Conference
was given by Rajiv Mehrotra of VNL, an Indian startup that aims to deliver connectivity “where the roads stop”. The big issue here is OPEX - the GSMA estimates that by 2014 there will be 640,000 base stations operating beyond the reach of the electricity grid, which will cost a round $15bn a year in diesel fuel alone. We can only realistically expect the price of oil to go up, and storing tanks of it in a basically unpoliced environment brings its own problems. 60% of a typical African MNO’s OPEX is diesel. 37% of a typical Indian MNO’s OPEX is diesel.

So the real limiting factor on the minimal ARPU required to deploy is energy.

Mehrotra argues that retrofitting standard base stations with solar power is a poor deal because the stations are too big - the solar install, the base station, and even the wall around it are too much capital for the expected margins on the ARPU ever to repay. His answer is a new take on the picocell concept. VNL’s product is a picocell-scale, self-contained base station and WLAN access point designed for a spot deployment into villages, under a sparse macrocell overlay network. It draws no more than 50 watts (like a small light bulb) and is therefore relatively cheap to power with solar cells.

At this point, we couldn’t help but remember an old consulting project of ours. If the idea is to radically downsize the BTS and spot-deploy to the villages, is it possible to disaggregate the deployment further and have small-scale enterpreneurs - like the wholesale airtime/money transfer resellers, for example - or community organisations deploy them where they think there is a demand? Think of it as a nano-MNO. In some ways it’s the ultimate Happy Pipe.

Interestingly, VNL is actively considering something like this using universal service obligation funds as a pot of capital for user-owned deployment. There’s disruptive for you.

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