As a trusted name in the power generation industry for its diesel generators for a wide range of industrial applications, Cummins Power Generation also provides state of the art hybrid power solution to telecom cell sites. Alan Zhao leads Cummins dedicated global team serving the telecom cell tower industry. In a career spanning 28 years, Alan held various technical and business roles at Cummins and at Motorola where he managed their 2.5G, 3G and 4G advanced technology development programmes. Currently Alan is Director of Cummins’ Telecom Business, a role which he says combines his passion for telecoms and growth segments in energy industry.
TowerXchange: Where does Cummins fit in the telecoms infrastructure ecosystem?
Alan Zhao, Director – Telecom Business, Cummins Power Generation:
To better define where Cummins fits in the telecoms ecosystem we must first understand what makes up that ecosystem: Active equipment, which includes revenue-generating infrastructure such as electronics, antenna and controls; Passive or enabling infrastructure, which includes real estate, tower structures, power equipment and utilities.
Cummins is a global leader in power generation. We leverage our tradition of reliable, dependable power in partnering with MNOs and towercos to better understand their specific KPIs, providing a unique value proposition; achieving the lowest Total Cost of Ownership (TCO).
Traditionally Cummins has been associated with our market-leading diesel generators, but we also have a complete range of hybrid product offerings specifically designed for telecom site application. This wide range of product offering allows us to provide the right solution for our customer’s specific capability requirement.
TowerXchange: How do you see the role of power companies evolving if one end of the spectrum is pure upfront capex sales, and the other extreme is a pure opex business model where power is provided as a service?
Alan Zhao, Director – Telecom Business, Cummins Power Generation:
From the perspective of companies like Cummins and our peers, the pure capex model is the lowest risk approach. But the critical question is what does the end customer want from a power perspective?
As a provider of power equipment, Cummins finds itself in a unique position to be able to assist our customers in optimising capex to reduce opex. Again, at Cummins we don’t see ourselves to be aligned to either extreme. We have relied on our vast experience in designing, engineering and manufacturing superior power products to align to the needs of our customers and their KPIs, whether their focus is on capex or opex.
So at the moment I don’t believe we have a healthy ecosystem to go to the extreme ESCO end of spectrum of where end customers don’t have to think about power and ESCOs provide it as economically as possible
As the industry and our customers continue to evolve, it is incumbent upon providers such as Cummins to evolve along with them. However at this stage, I don’t think the telecom power industry have fully understood or agreed on the real operational risks and challenges in providing that basic, reliable power infrastructure. Because of that lack of agreement and understanding, you get a very different view from different players in the telecom power industry. So at the moment I don’t believe we have a healthy ecosystem to go to the extreme energy service company (ESCO) end of spectrum of where end customers don’t have to think about power and ESCOs provide it as economically as possible.
TowerXchange: Coming back from studying the rollout in Myanmar, it seemed to me that energy efficiency is being traded off against time to market – is that a familiar scenario?
Alan Zhao, Director – Telecom Business, Cummins Power Generation:
Yes, we’re very familiar with that scenario. Given the maturity of the business cycles and economies in certain geographies, optimising energy efficiency and time to market may be conflicting priorities. It’s something which we’re experiencing right now in Myanmar. Even though renewable hybrid is more energy efficient, traditional power sources are taking priority in some cases owing to their fast deployment.
We have to understand that Myanmar is a country where first hurdle is to make the power available. Only after power is accessible does having higher efficiency solution become relevant.
The tradeoffs of energy efficiency against expediency is a complex one. But our success is measured by a simple question: do I have power? We know that our customers and their subscribers want a communications vehicle that is ubiquitous. Reliable power is vital to maximising availability and ubiquity.
TowerXchange: Tell us about Cummins’ footprint in emerging markets – do you have any idea how many cell sites are using Cummins solutions for backup or primary power?
Alan Zhao, Director – Telecom Business, Cummins Power Generation:
Cummins is usually number one or two in market share in each of the regions in which we operate. We understand telecom customer’s needs, and traditionally have been very strong in larger applications such as BSC, MSC and data centres. In last few years, we have made big strides in lower power load scenarios like cell towers. Our customers, like Huawei, now rely on us as their one-stop shop for all their power needs including for cell sites, MSC, BSC and data centres.
Our footprint in emerging markets is substantial. For example, we’re a preferred vendor for Ooredoo Myanmar – we’re shipping several hundred generators. We have invested significantly in Africa and as a result we are currently executing high volume orders to be deployed for Ethiopiatel. We have always led the market in LatAm and we have a growing presence in Asia Pacific
Our generators have been installed at cell sites for MNOs like Telenor, Vodacom and STC, and we have also done several projects globally with Huawei.
I can’t give you the exact number of sites; it’s hard to get to that level of granularity at our volumes. But I can say that we work through 6,000 service locations, with distributers in 190 countries.
TowerXchange: How has the entry of independent towercos into Africa, LatAm and Asia affected your business? Given their aggressive SLAs, how do towercos’ requirements differ when in comes to UPS?
Alan Zhao, Director – Telecom Business, Cummins Power Generation:
Not all towercos have the same business model. For example, some towercos may have traditionally considered power as a potential vulnerability for their business, which may lead them to operate in markets where grid power is more reliable. On the other hand, others who operate in emerging economies where a reliable grid may not be available, power is a much greater concern. Therefore Cummins offers different solutions and strategies to meet those differing business models.
Towercos are all fundamentally looking for the same thing – reliable, dependable power delivered in the most economical way. Towercos that operate in areas with reliable electricity grid generally use Cummins’ solutions for standby power and emergency use only. Others who operate in regions with unreliable grid or no grid, are seeking the most efficient solution for their given capex budget against their definition of TCO.
The definition of TCO is not consistent and clearly agreed upon by different stakeholders like towerco, opcos and their equipment vendors. In particular, the time horizon over which energy equipment investments are evaluated is seldom clear
However, the definition of TCO is not consistent and clearly agreed upon by different stakeholders like towerco, opcos and their equipment vendors. In particular, the time horizon over which energy equipment investments are evaluated is seldom clear, which creates problems for power solution providers. Much of the information around cell site power is very proprietary, which I understand, but the lack of transparency creates inefficiencies as we attempt to move the industry to a healthier ecosystem. As an industry we need to be more standards driven, and more transparent about how we define the “Total” in TCO, in a given context.
TowerXchange: How do you efficiently upgrade the power solution at a single tenant site to accommodate multiple tenants?
Alan Zhao, Director – Telecom Business, Cummins Power Generation:
Looking at today’s radio technology, adding one more BTS may not create much of a power rating issue – we can easily deal with that.
Again, this all goes back to understanding the customer’s business model. Tenancy ratio generally is a key indicator of profitability as it relates to revenue generated per tower site. As a provider of power solutions to our customers, we must understand the customer’s business today, what are their current and future power requirements, how they intend to grow and at what rate, and then size a solution that operates efficiently, both in the short term and future.
we must understand the customer’s business today, what are their current and future power requirements, how they intend to grow and at what rate, and then size a solution that operates efficiently
TowerXchange: Is the in-built RMS capabilities of your solutions an alternative to third party RMS sensors, or a complimentary data feed to be integrated into a consolidated view of different systems at a cell site?
Alan Zhao, Director – Telecom Business, Cummins Power Generation:
Cummins provides hybrid energy solutions with a built-in remote monitoring capability. We offer flexibility to integrate with existing sensors in the case of brownfield sites. Additionally we offer a complete Cummins solutions with new sensors for Greenfield sites. As an example, we integrated a third party data feed with our solution per request of our customer in Myanmar.
In my view, sensors are just enablers of RMS. Remote monitoring may lose its value if it is not leveraged as a toolset for opex reduction. Remote monitoring offers little value in its own right; people don’t want 20 more emails, they just want reliable power! So Cummins differentiates our solutions by leveraging remote monitoring information, and combining it with local service support to enhance our ability to provide reliable power.
TowerXchange: Finally, please sum up how you differentiate Cummins from other solution providers in telecom power?
Alan Zhao, Director – Telecom Business, Cummins Power Generation:
I’d like to sum up Cummins’ differentiation in three broad categories:
1. Cummins’ superior product and features: The reason we’re number one or two in most markets is simply because we have a better, more reliable product, and our customers vote with their pockets. You can count on Cummins to continue to provide that level of product differentiation.
2. Cummins’ value add: Cummins offer the best warranty on the market; it’s longer and it offers better coverage. The customer has a single point of contact with Cummins and can avoid confusion over accountability of service and warranty issues. Power relies on strong service and parts availability, and Cummins’ global service network helps telecom companies in 190 countries, from over 6,000 service locations. Cummins has achieved unrivalled success in international markets because we know what it takes to support our customers.
3. Cummins’ financial stability and scale: Almost all telecom companies are global in nature, with a need to serve customers globally without having to add 50-100 suppliers to manage all this complexity. A global company like Cummins can leverage our financial strength to help give OpCos peace of mind. It’s hard for smaller regional companies to match the stability and financial scale Cummins has, which enables us to deal with the maturation toward power as a service at a global level. Too often there is a mismatch between what aspiring ESCOs want to be and their financial strength. Cummins don’t take risky steps we can’t stand behind; if we do something we have the strength and scale to stand behind it.
Cummins look forward to continuing to work with TowerXchange to provide the information necessary to transform the telecom industry and the telecom power industry. I feel the challenges are less at the level of exciting new technologies, but more work needs to be done at an operational business level.
