Tilak Raj Dua witnessed the birth of wireless communications in India and has been deeply involved with the tower industry as we know it today since 2011. With over 35 years of experience in telecoms, he started out working with MNOs, vendors and service providers including market leaders leaders Bharti Airtel and Alcatel to name a few. In his earlier roles he also worked closely with the ITU on Telecom Licensing and Regulatory issues like spectrum management, Pricing, Efficient Utilisation and Spectrum re-farming. Subsequent to this, he moved on to the role of Deputy Director General of the Cellular Operators Association of India (COAI). He then joined India’s Tower and Infrastructure Providers Association (TAIPA) in January 2011, and took over as its new Director General from 1st April 2015.
TowerXchange: Can you share some details on the history of TAIPA and its key objectives?
Tilak Raj Dua, Director General, TAIPA:
TAIPA, the Tower and Infrastructure Providers Association was formed in 2008 to promote tower and energy management used to support cellular communication. Our members include Bharti Infratel, Indus Towers, Reliance Infratel, GTL, Viom Networks, American Tower, and Tower Vision, between them representing almost 400,000 towers in the Indian market.
The tower sharing concept was evolved with the help of the Ministry of Communications and the Ministry of Urban Development. The aim of TAIPA is to share capex and reduce time to market, especially for new operators entering the market in addition to existing ones. TAIPA works with its five committees: Energy including renewable sources, Finance, Legal issues, Regulatory and Operations which includes interactions with the telecom service providers, incumbments as well as new operators. A recent PwC study puts the total number of towers at 585,000 including poles & IBS. Many of these towers are owned by the leading tower players but there are some smaller companies with marginal market share. For example Ascend and ITIL, which merged in 2011, have around 4,500 towers.
TAIPA draws on the expertise of its members to identify key common issues facing towercos. We then assimilate and compile this and go back to the government and regulator to resolve these action points. We have an ongoing dialogue with the Ministries of Communications, Finance, Infrastructure, Domestic Affairs and Urban Affairs beside industry regulator and other statutory bodies.
The telecom infrastructure industry was granted official infrastructure status in 2013 putting it in the same category as industries such as Ports and Transportation. The benefits for infrastructure providers include higher loan limits and five to ten year tax holidays. Telecoms infrastructure providers are now working closely with the Department of Economic affairs, the Planning Commission, the Revenue Commission and the Reserve Bank of India. The main objective of awarding infrastructure status was to seek support for the tower industry similar to others like ports, highways, etc.
TAIPA is also working on promoting innovation in energy management alongside the Ministry of New and Alternative Energy, looking at solar, wind, bio-gas and energy storage technology such as lithium-ion batteries. We help create investor confidence in towercos and infrastructure providers, and we’re also helping the Ministry of Urban Development to meet its ambitious target of creating 100 Smart Cities.
TowerXchange: A common challenge facing the evolution of many countries’ local tower industries has been the co-ordination of regulation and taxation between Central and local government. What has been your experience of these issues in India?
Tilak Raj Dua, Director General, TAIPA:
The Government of India came out with a Uniform Tower Installation Policy on 1 August, 2013 and advised all States to align their respective state policies accordingly. However, they proved to be unenforceable, as the different States were apprehensive about losing revenue. The central government’s tower rollout guidelines included a nominal administrative fee, but the States claimed that this fell within their domain. The States demand multiple taxes and levies for registration/applications, renewals and sharing fees, many of which are not in line with central government guidelines.
The States also demand multiple documents and No Objection Certificates from different Government Departments prior to the processing of any application. TAIPA continues to take up such issues with the Ministries, State Governments and the regulators to ensure the enforceability of the new guidelines through regulations or statutory backing. The Government’s parliamentary committees have recommended supportive guidelines but these lack constitutional enforceability and still need to be given statutory backing.
Our discussions involves issues such as right of way and grid electricity access. Achieving infrastructure status meant that tower providers should be provided the necessary timely grid connectivity as a priority and at a reasonable rate. Also, some infrastructure providers offer energy management and they are expected to start using renewable sources. This brought its own challenges as there was a huge funding gap to implement these technologies, requiring the towercos to work with the government and the regulator. These targets are still considered unviable due to technical limitations and the amount of funding required to meet them. The tower industry will definitely grow faster as these issues are resolved.
TowerXchange: How would you characterise the consistency of processes as one moves from one State to the next, one Circle to the next – is there a vision to create a standardised, consistent process country-wide?
Tilak Raj Dua, Director General, TAIPA:
TAIPA is meeting with the Chief Secretaries of State and the Head of Urban Development and Information Technology Departments to ensure that State Guidelines are aligned with the DOT Guidelines.
In Kerala for example, the government is very IT savvy and has come out with multiple initiatives to promote Smart Cities and financial inclusion and to develop the infrastructure that they require. They have implemented workable guidelines including reasonable levies that can be used as a benchmark for other states and the guidelines are in line with DOT.
The current government is bullish about infrastructure rollout; their goals include the creation of 100 Smart Cities, Digital India, the Empowerment of Women and financial inclusion. These goals will all require access to ubiquitous mobile connectivity with robust telecom infrastructure.
There was a recent case in Kerala concerning broadband and IT penetration through the State itself allowing the leasing of government property on which to erect telecom structures. States like Andhra Pradesh and Assam have also incorporated similar provisions in their policies. Some more states are coming online but it is a longer process. Other states have now started using Kerala’s approach as a benchmark and this is promoting alignment with the central government’s vision.
TowerXchange: What are the biggest challenges facing the Indian cellular operators, towercos and infrastructure providers?
Tilak Raj Dua, Director General, TAIPA:
There is a need to create awareness about the reality regarding radiation hazards, in partnership with the telecom service providers. This is an ongoing issue and the Indian government has issued one of the most stringent guidelines as compared to the WHO limits to ensure that public health is considered the top-most priority.
As spectrum availability increases there have been recent allocations through auction in the 800/ 900/ 1800/ 2100MHz frequencies. There will be an increase in the number of towers while moving from lower to high frequency. A recent Ofcom study reveals that services over the 1,800 MHz band will require twice as many towers as the 900 MHz band. The latest auction saw the shift of some operators from 1,800 to 900, some from 900 to 2,100 and some from 900 to 1,800; this will lead to changing tenancies and incremental changes in the numbers of towers. In situations where an operator previously had no spectrum and received new spectrum in the 1,800 MHz band, new towers may need to be deployed. When an MNO has to change from 900 to 1,800 MHz their existing towers will require new tenancies, or they will need a new RF map to identify blank spots.
Furthermore, there are artificial restrictions i.e. no towers are allowed near schools or hospitals, heritage monuments, etc and all this has an impact on network coverage and other impacts in terms of call drops, poor network connectivity, etc. Spectrum trading and spectrum sharing are not yet allowed and levies are imposed on spectrum usage levels. With high mobile penetration in India, the growth focus of telecom companies is shifting from voice to data. Tower companies are evaluating the need to increase the number of towers and looking into the new revenue streams like WiFi, Micro cells, fiberisation, etc.
In addition to spectrum issues, there are stringent targets for integrating renewable energy sources, including a phased reduction of carbon footprint of 5-18% between 2013 and 2020. This is a major task for TSP/IP-Is. (Tower Service Providers / companies registered in the Infrastructure Provider category I)
TowerXchange: What role will towercos play in facing the challenges of integrating renewable energy into the network?
Tilak Raj Dua, Director General, TAIPA:
In 2011 an RFP was issued which led to responses from 25 renewable energy services companies, of which four were selected for pilot projects involving different technologies including solar and biofuel. Renewable energy deployment specific to telecom sector requirements hasn’t taken off yet, but TAIPA is continuing the efforts with RESCOs. The ecosystem is developing, particularly solar, and this has been supported by government initiatives.
TAIPA has very recently met with a few RESCOs to discuss the government objectives and determine how these can be met. One obstacle is the time it would take for renewables to achieve tariff to grid parity – much more progress needs to be made.
Looking back over the last two years there has been an improvement in availability in the ecosystem including EB availability. TAIPA members have already initiated the concept of ‘Diesel Free Sites’ – wherein a bare minimum of diesel is consumed only for maintenance of the DG set and any emergent situations. Moreover, TAIPA members are increasingly working towards reduction in diesel consumption by shifting indoor sites outdoors, thereby cutting down the need for air-conditioners, use of free cooling units, high life Li-ion batteries, etc. TAIPA has been closely focussed on this.
The introduction of storage systems such as Li-Ion batteries are having an impact, particularly on sites that are off-grid or that have unreliable grid access. With the help of new energy storage systems, a plethora of new diesel-free towers have been created where diesel is used only minimally to maintain standby gensets. As a result sites with four to six hours downtime no longer need to burn diesel during outages. Li-Ion batteries are already being used on a large scale in India as infrastructure providers are increasingly working with these solutions to build more diesel free sites.
TowerXchange: We understand that energy services companies provide power for around 10,000 of India’s telecom towers now. Do you anticipate ESCOs will eventually serve the majority of the country’s towers? And what are the greatest challenges to them achieving scale?
Tilak Raj Dua, Director General, TAIPA:
The eight RESCOs that TAIPA has been working with include AST, CMES, Pace Power, Gensol, Bhaskar Solar, Essential Energy, KMRE and few more. We have given them an opex model to work with, i.e. the ESCO provides the capex and we pay per kWh used with the minimum guaranteed offtake. The industry is keen to support the ESCOs by way of providing minimum guaranteed options. They have asked for the geographical location and minimum number of towers to make their business model viable.
TAIPA has insisted on the opex model as this will work better in the long run; if they generate more than we consume they can sell the excess power to the community. If we consume less than anticipated, we will still pay for what was projected i.e. minimum guaranteed offtake. The Ministry of New and Renewable Energy is working very closely with the RESCOs and they have organised a number of workshops on energy storage systems, solar systems, wind power, etc. The Indian RESCO model is advancing quickly with the improvement in the availability of the ecosystem.
TowerXchange: What do you see as the greatest opportunities for diversification of tower and infrastructure providers’ business models?
Tilak Raj Dua, Director General, TAIPA:
Infrastructure companies see new revenue streams from providing Wi-Fi hotspots and microcells, LED lighting, OFC laying, CCTV, etc. Indus Towers was recently awarded a project to roll out 18,000 street lights in Delhi to provide a white label Wi-Fi service for MNOs. Other companies are looking into providing CCTV security services as well.
TowerXchange: Considering the maturity of the Indian tower market, do you anticipate consolidation in the near term or is there potential for new competitors to enter the market?
Tilak Raj Dua, Director General, TAIPA:
Consolidation is anticipated; there are likely to be some mergers as we move forward, and we have already seen some of the smaller 1,500–2,000 tower towercos being taken over by the existing IP-Is. Leading IP-Is may also be looking at some of these portfolios as well and looking into the possibility of a consolidation or merger.
TowerXchange: Is BSNL likely to create their own towerco?
Tilak Raj Dua, Director General, TAIPA:
As a public company with ~62,000 towers, BSNL being a Government owned company have not adopted the sharing model aggressively, and their tenancy ratio remains very close to one. Discussions about creating a separate BSNL towerco have been going on for a long time and the general feeling is that they will have to do this one day due to their financial issues and to generate funds. Their single tenancy ratio means their assets currently don’t have maximum value, but monetising the towers could help BSNL come out of their financial crunch.
This proposal is still standing with the government but there have been changes in BSNL’s hierarchy and management team. The new Chairman has many ideas and a vision for a new strategy, and is bullish about getting this done.
TowerXchange: What changes do you predict in the Indian tower industry over the next five years? Do you think the Indian towercos will seek to expand internationally in future?
Tilak Raj Dua, Director General, TAIPA:
In the next five years I see the Indian tower industry growing thanks to the ongoing spectrum auctions and new revenue streams including white label Wi-Fi and CCTV.
As the government eases right of way regulations there will be more tower rollouts to support the inevitable increase in demand for connectivity.
As for international growth, Indian towercos’ are likely to start work in Bangladesh, Sri Lanka, Nepal and Myanmar; these are the countries where broadband penetration is low and there is an opportunity to transfer the concept of tower sharing. These are the countries that are hungry to adopt the new models to support their burgeoning connectivity.
TowerXchange is happy to welcome Tilak Raj Dua as the latest member of our Inner Circle network of advisors.
