3 minute read 21 Oct 2022
Gati Shakti yojna

How digital infrastructure rollout will transform India

By Prashant Singhal

EY Emerging Markets Technology, Media & Entertainment and Telecommunications (TMT) Sector Leader

Spearheads growth strategy in rapidly converging Technology, Media and Telecommunications (TMT) ecosystem.

3 minute read 21 Oct 2022

Investment to the tune of INR 2.2 lakh core is required in the next five years to build digital infrastructure. 

In brief

  • Post 5G launch, towercos can unlock new growth opportunities in setting up the digital infrastructure by monetizing existing assets and exploring business adjacencies.
  • The PM GatiShakti National Master Plan is a visionary step to further enhance ease of doing business in India.

India stands in the throes of a digital revolution. Pan-India 5G rollout would transform India into a broadband super-highway and uplift the socio-economic fabric of the country. 5G is expected to lead to a surge in data traffic, which will necessitate upgrading existing networks and build new greenfield ones. The opportunity is ripe to really accelerate digital infrastructure deployment in the country.

5G to necessitate investments in digital infrastructure 

Significant investment is required over the next five years in the telecommunication industry to set up the underlying digital infrastructure to support 5G launch. This would entail a cumulative investment of INR92,100 to INR141,100 crore during the period 2022 to 2027 in various building blocks of 5G, in addition to macro tower investments.

5G to necessitate investments in digital infrastructure

Towercos are well positioned to address the optical fiber cable (OFC) opportunity, with considerable experience of managing distributed infrastructure. Conventional microwave wireless-based backhaul cannot support 5G’s multi-Gigabit speed requirements. This necessitates OFC deployment to enable 5G networks. Additionally, a fiberized backhaul also helps support the deployment of edge data centers and small cells. 

OFC opportunity for Towercos in India

Network densification will be a key feature to support high-bandwidth applications and surge in data traffic in a 5G network. Towercos’ ownership of shared infrastructure and expertise in Right-of-Way (RoW) makes them ideally placed to deploy small cells. Small cell deployments are expected to increase capacity, improve coverage and energy efficiency while reducing risk of radiation. Street furniture can be utilized to mount small cells for providing telecom services as well. Considering the costs involved, complexity, and time frames for densification of the proposed 5G network infrastructure, there is a need to put in place a mechanism for using the existing street resources for large-scale deployment of small cells.

Increased adoption of low latency and high bandwidth applications has necessitated the need for edge data centers. Towercos can optimize their asset utilization by offering space for co-location of edge data centers. Through steady power supply and fiberized backhaul, tower sites can support edge data centers closer to the user, reducing the need to send backhaul data traffic to a centralized hub.

Proactive measures by the Government of India (GoI) to enable a faster rollout of digital infrastructure and enhance ease of doing business

The PM GatiShakti — National Master Plan, with an estimated investment of INR100 lakh crore and bringing 16 Ministries together, is truly a transformative moment for India. Seamless coordination between different government departments is expected to bring in significant efficiencies in delivering projects. For the telecoms sector in India, the PM GatiShakti National Master Plan will be instrumental in boosting the digital infrastructure rollout. 

The GatiShakti Sanchar Portal has brought together all central ministries and states/union territories under one platform. It is one of the best examples of a coordinated approach to improve efficiencies and quicken decision making. There is a significant decline witnessed in the average number of days to dispose of RoW applications. Disposals are keeping pace with the increase in applications received. 

In August 2022, the government amended the Indian telegraph RoW rules 2016, to enable quicker and easier rollout of digital infrastructure such as small cells and fiber. Furthermore, they have rationalized the administrative fees for telecom infrastructure, which will help in reducing operating cost.

Key considerations to boost the digital infrastructure deployment in India

  • Enhance scope of IP-Is to allow active infrastructure sharing
  • Incentivize digital infrastructure rollout through fiscal benefits and viability gap funding
  • Rationalize Property Tax on mobile tower sites across all states
  • Align state RoW rules with the center
  • Prioritize electricity connections at tower sites at industrial tariffs

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Towercos are expected to play a key part in building the underlying digital infrastructure for 5G rollout. Significant investment is required in deploying macro towers, fiber network, small cells and data centers. To accelerate digital infrastructure development in the country, a significant overhaul of existing policies, procedures, and processes will be required. The launch of ‘GatiShakti Sanchar Portal’ is a step in the right direction in significantly reducing the time for Right of Way (RoW) approvals. Going forward, it is important to enhance the scope of Infrastructure Providers Category-I (IP-Is), incentivize digital infrastructure rollout and prioritize electricity connections at tower sites.

About this article

By Prashant Singhal

EY Emerging Markets Technology, Media & Entertainment and Telecommunications (TMT) Sector Leader

Spearheads growth strategy in rapidly converging Technology, Media and Telecommunications (TMT) ecosystem.