Rural GSM - High Costs Barrier to Entry

Mobile Network Operators (MNO) seldom roll out GSM services in rural or sparsely populated communities. Average Revenue Per User (ARPU), CAPEX and OPEX determine which areas are serviced and those which are not. A small rural population of 2.000 can generate annual revenues around USD 48.000 (assuming ARPU of USD 2.00/month). Lets see how this compares with equipment cost.

Equipment manufacturers do not publish price lists and almost all transactions are covered by Non Disclosure Agreements (NDA). However, by gleaning promotional materials it is possible to arrive at a good guestimate cost of a small BTS. To service a small subscription base of 2.000 you require an investment of about USD 90/subscriber (USD 90.000 per transceiver (TRX) including connectivity to the core network - BSC and MSC).

About 70% of this cost is infrastructure related: air conditioning, security, generator sets, sleeping quarters, civil works etcetera. The cost of active elements (electronics) is roughly USD 30.000. That is CAPEX what about OPEX?

This article puts the running cost of a BTS at USD 210.000/year. Most of that cost goes into providing continuous power assuming the site is off the main supply grid.

Clearly the numbers do not add up especially that CAPEX/OPEX figures do not include the six digit mobile licensing fees and mandatory GSMA membership subscription (for SIM cards, roaming etc.) currently at GBP 9.000 (USD 0 - 50 million revenue).

Annual operating costs must drop from USD 100/subscriber to under USD 24/subscriber for viable GSM deployment in poor areas. Renewable energy sources (solar and wind) coupled with innovative software/hardware design could reduce OPEX to well within USD 20/subscriber.

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