Christoph Fitih, Parallel Wireless, Technology, Virtualised 2G

Virtualized 2G enables telcos to address key challenges

The communication technologies have forever transformed the way we live and work across the world. The impact is much more in a developing country like Nigeria. A case in point is how mobile money has become an integral part of everyday life in Nigeria. In 2015 mobile technologies and services generated 6.7% of GDP in Africa and it is further likely to increase to $210 billion by 2020 as mobile services lead to an overall increase in productivity, says GSMA Mobile Economy Africa Report 2016.

The impact could have been much more if the challenges faced by the service providers were adequately addressed. The Nigerian service providers face some unique challenges. Regular shortage of power is one of the biggest pain point of the Nigerian telcos, who are forced to use generators on a regular basis thus increasing their operational expenditure. It also makes it extremely tough to expand in the rural areas.

The low paying capacity leads to an overall low Average Revenue Per User (ARPU) in Nigeria. The high cost of deploying and managing networks means along with low ARPU means that the return on investment is spread over a longer time for African telcos than those in other regions. Goes without saying that this also makes it difficult for them to come up with newer and innovative services. It also means that both telcos and the subscribers suffer because the service providers are unable to add to their existing revenue streams and the consumers remain deprived of the latest products.

Then like the service providers in the rest of the world, the telcos in the region also face increased competition from the Over-The-Top (OTT) players, who are successfully grabbing a share of the voice revenue without actually setting up the network. It is almost a case of a double whammy for the service providers.

A Different Approach
The solution is that the telcos go for innovative solutions to address these problems. The capital-intensive network deployment model that works in the rest of the world might not be the right approach for the unique realities of Africa. The usual strategy is to replicate what has been successful in the developed parts of the world, but in fact, a fundamentally different approach might be required for the Nigerian service providers.

Technology solutions can empower the Nigerian and African telcos to bring down the network deployment and management cost. Automation and cloud are just two technologies which will enable service providers to significantly bring down the cost and enhance efficiency at the same time. Form factors that support many technologies in the same structure can also allow the Nigerian telcos to bring down the expenditure. Form factors that are easy to install and have self-optimizing and self-healing capabilities will also help the telcos to reduce the network deployment cost.

On the other hand, the power issue can be at least partially addressed by utilizing the alternate sources of energy like solar and wind. Some service providers have already started leveraging the natural sources of energy, which are available in abundance in Africa, to power their base stations.

The concept of Virtualization can further help the telcos to reduce their dependence on hardware-centric nature of the traditional network. It brings down the cost for service providers by increasing the software component. This also adds the much-needed agility and flexibility to the network, making it easier for the telcos to launch newer services faster.

Leveraging Virtualized-2G Before Moving To 4G
Virtualization also allows the service providers to easily move from 2G to 4G. Contrary to the widespread perception, 2G continues to be relevant in the developing regions of the world. More than 60% of the subscribers are on 2G network on the continent, and 43% of the subscribers will be using the 2G network even by 2020, according to GSMA report. 2G continues to grow in the developing economy. Limited spending capacity, low literacy and a basic knowledge of ICT mean that the users continue to rely on feature phones and essential services.

The service providers tend to replicate the successful network deployment strategies in the developed parts of the world, but this needn’t be the right strategy. The limited paying capability of the region means that the 2G continues to be relevant in this part of the world. The virtualization-powered 2G solution allows the service providers to provide services profitably till the time their subscribers are ready to move to 4G.

Virtualized 2G Makes It Easier To Upgrade To 4G
The available 2G solutions are not upgradeable, so service providers find it difficult to justify investment in 2G without a clear path to the future technologies. However, a virtualized 2G is easily upgradeable to 3G and 4G and doesn’t even require an engineer on the site for the upgradation.

Besides fewer base stations are required to cover the same area leading to a reduced consumption of power and decreased expenditure. Further, because it is software based the solution doesn’t require any cooling or shelter thus bringing down the cost for the telcos. It will allow service providers to expand in the rural markets without investing in heavy equipment, thus keeping the capital expenditure under check.

A 2G solution, which utilizes the principles of Network Functions Virtualization (NFV) and Software Defined Networking (SDN) will enable the telcos to cost-effectively provide improved quality of services to the end subscribers. Besides, it connects the unconnected, bridges the digital divide for inclusive growth.

Even as service providers start to offer 4G services to the subscribers in the urban areas, they can use virtualization enabled 2G solution to provide services in the rural areas. It will bring in new subscribers to their network, and they can be easily and quickly moved to 4G when the market is ready. This way the service providers can meet the demands of their 2G subscribers while at the same time preparing the networks for the 4G future.

Christoph Fitih is the director, Africa Sales, Parallel Wireless.