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Interview with M. Upadhyay - "We are driving a huge services transformation initiative"

July 15, 2010
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The telecom industry has increasingly been focusing on green telecom solutions and on reducing energy costs. tele.net spoke to Manoj Upadhyay, CMD and founder of ACME Tele Power, which provides innovative power solutions to telecom companies, about its products and services, and the government initiatives in this area. Excerpts...

How important is the telecom sector for ACME Tele Power?
The telecom sector has been the genesis of ACME's humble beginnings. We have registered incredible growth in this industry over the past few years.Our largest installed base and our largest value-creation case studies are rooted in this industry. ACME is a result of the relentless drive for costeffective innovations, particularly in emerging markets like India.

We consider this industry to be the most important sector for ACME and we will continue to grow with telecom as it passes through the exciting curve of technology progression and industry maturity to reach the next 2 billion consumers who still do not have basic connectivity services, while simultaneously increasing our range of services at the top of the pyramid to an array of data and multimedia services.

What are the company's major products and services for the telecom sector in India?
ACME focuses on the two biggest industry challenges as of now -­ the high energy costs incurred by operators for running the existing sites, and huge spends on building out large passive infrastructure for rolling out services to cover new, low-ARPU rural markets. Our products and solutions cater to these two areas that represent over 30 per cent of the opex costs and over 60 per cent of the capex burden. Together, these two areas cost more than 60 per cent of the 15-year life cycle costs of building, operating and managing a telecom operations site.

We offer a range of solutions involving a combination of technologies, products and services including a build-operateown-lease model of complete telecom sites, turnkey site build-outs, complete long-term (10 years) managed energy services including site operation and maintenance, and pure products and services supplies for a complete passive rollout.

These offerings are built around our inhouse research and development (R&D) patented power, cooling and energy solutions. For instance, we were the first in India to launch a completely green, lowenergy consumption, ultra low-cost, singlebox solution for a passive solution. Three years ago, we set up a state-of-the-art factory at Rudrapur, which is one of the largest of its kind in Asia. We continue to invest in R&D (with facilities in India and abroad) of our in-house products, which cover more than 80 per cent of the equipment needed by an operator for complete cell site buildout. We combine this with our low-cost field services model (for instance, we have one engineer within 50 km of every cell site in India) to provide unique business models in line with our customer issue areas.

Our offerings represent a combination of technological innovation, proven industry-grade products (our installed base covers one out of every two sites of the 300,000-plus towers in India), and creative low-cost services models combined with unique risk-sharing business models with a focus on green energy, energy reduction and lowering life-cycle costs of the single biggest cost driver in telecom operations.

What are the alternative and back-up power solutions available for the urban and rural areas?
The telecom industry continues to be one of the largest consumers of power.Our key focus is on reducing diesel costs and energy consumption through alternative energy sources like generating solar power at sites, or through fuel cell solutions using hydrogen, compressed natural gas and other similar clean energy sources. We have, along with our partners, already incubated and successfully conducted trials. We are now close to commercially rolling out these alternative power solutions on a major scale. We have also pioneered variable load, low fuel consumption (30-40 per cent lower diesel for the same run-hours) genset solutions to cater to rural and nonurban users, where the need for low-cost alternative power sources is most critical, given the low ARPU and the need to further lower the operating costs. Alternative and back-up power solutions, both green and non-green, need to be customised to the site environment and power conditions.

Based on our wide range of conventional power, cooling and green shelter offerings, we can combine alternative and backup sources ranging from fuel cells, solar or variable load and high-efficiency generator set solutions to offer our clients optimal solutions for catering to a viable business case. Our ability to run, manage, operate and, in some cases, own and lease back these solutions provide our customers peace of mind as well as a risk-sharing partner model to be able to quickly take these solutions from an experimental stage to large-scale commercial money-saving projects. We are extremely bullish about the prospect of such solutions not just for the Indian market, but also internationally.

What is the business case for such solutions in India?
Alternative and back-up power solutions on their own will always be more expensive than conventional grid power on a like-to-like basis. The business case varies based on the site environment conditions including power (grid) availability hours per day, the nature of site deployment (outdoor versus indoor) and what kind of alternative power replaces which source.The higher the non-availability of grid power, the better is the business case for such solutions. Returns on investment are expected within two to three years of commercial deployment. However, opex-based business models yield faster returns to the operator while offloading longer-term risks to the provider. In some cases, for example in solar and fuel cells, government subsidies and incentives, in addition to the possibility of long-term carbon credits; help to enhance the business case.The key to the real business case lies in the ability to run, operate and manage the actual site conditions, given the ground operating conditions that have little to do with technology or the business case and more to do with the local conditions.

What are the key issues and challenges associated with their adoption?
As mentioned earlier, the key issue is the ability to run, manage and operate as per the business case prerequisites and the ability to prevent local issues such as theft, pilferage, vandalism and leakage of fuel costs. As is the universal case with power distribution, leakage through power theft is the biggest challenge for telecom sites as well. It is not the technology itself, but the industry's ability to adopt and deploy it that proves to be the major limitation.

What steps need to be taken by the government to provide an enabling framework and remove policy, financial and technical bottlenecks to promote renewable energy?
The government has so far been extremely supportive in creating an incentive and subsidy framework to support the incubation of these hugely beneficial long-term green projects in India. Given the longterm positive savings and the accrued industry benefits of creating a worldwide base for renewable energy technologies, benefits like accelerated depreciation and the Ministry of New and Renewable Energy's green subsidies are forward-looking initiatives by the government.However, the accelerated implementation of these schemes would require proper attention, both from the industry and the government. If India does not accelerate the implementation of these schemes, it will end up losing out to other competing economies like China which has a comparable scale and promise in this field.

What has been the international experience in using alternative energy sources?
Internationally, alternative energy in telecom is still a relatively new initiative, given that many of the Western countries do not really have a compelling reason to move towards these sources since grid power is available and stable. Now that telecom expands beyond the top 3-4 billion users to reach out to the bottom of the pyramid in emerging economies such as those of the BRIC countries, the lack of sufficient primary energy sources is being felt, and alternative sources of energy are being considered. Most experiments prove that though technology is available, the business case and field adoption vary depending on the country and the operator undertaking the project. Easily available private and public funds, government fiscal incentives and green consciousness have all helped to elevate this subject from the level of a merecorporate social responsibility initiative as it was some years back.

What strategy have you adopted to compete with global vendors such as Nokia Siemens Networks, Huawei and Alcatel-Lucent?
The vendors, in their discussions with the operators, are more focused on enhancing their revenues, whereas ACME focuses more on cost reduction. Although some of them do participate in the passive and energy side of the rollouts, ACME primarily complements and, therefore, collaborates rather than competes with any of these names. In fact, we have effective working agreements, either global or country specific, with almost all of them.Our strategy, therefore, is to work together with active technology companies to complement their offerings. This works perfectly, both for our customers and the companies mentioned, which are actually our partners.

What major initiatives is ACME planning to take in the telecom infrastructure space?
All our initiatives are planned around our key areas of focus -­ to reduce costs for our customers, create sustainable long-term value out of India, scale up business through product and service innovation in India and replicate similar models customised for international markets. We are driving a huge services transformation initiative that could change the face of telecom sites service quality, service level agreements, and the cost and scale witnessed so far. This involves changing the way we train our technical staff and managerial cadres, and driving a rich, costeffective global pool of such professionals with multi-pronged top-grade technical skills at costs unmatched anywhere in the world. This is combined with our R&D efforts of undertaking technological innovations to cater to next-generation services such as 3G/long term evolution and their associated site environment consumption patterns. We are simultaneously pioneering a path-breaking model to ensure that building sites in rural areas is economically viable for operators while simultaneously sustaining the test of local environmental conditions -­ we could provide sites with the same total cost including energy, in Mizoram (where power is not available for more than 18 hours a day) as in Delhi -­ where power cuts (and, therefore diesel generator fuel costs) are much lower.

Therefore, services transformation, product technology innovation and business model creativity are the three major areas of focus and we are hopeful they will yield transformational results in the near future not just for ACME but for the industry as a whole.

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