Making Mobile Networks Cheap and Green

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Of course, that means that the opportunity VNL is pursuing is also a prime target for traditional vendors such as Ericsson, Motorola (MOT), Alcatel-Lucent (ALU), and Nokia Siemens Networks, a joint venture of Nokia (NOK) and Siemens (SI). All of them are developing base stations for developing countries, powered by wind, solar energy, or biofuel, with an eye to bringing mobile-phone service to people not currently on the network or the power grid.

The difference, says VNL's Raj, is that traditional telecom equipment vendors "are on a never-ending quest for higher and higher speeds," not making cheaper base stations. "We have just one focus, and that is to make the best and most cost-effective rural telecom system."

Fuel Consumption is a Major Challenge

Indeed, typical base stations today are about the size of a large refrigerator and require about 1,000 watts of power. Most of that energy is wasted as heat, so the base stations also require cooling equipment that uses another 1,000 watts. Backup batteries draw another 500 watts. Since most rural areas in developing countries have either intermittent electricity or none at all, expensive diesel generators are used to power them. In India alone an estimated 1.8 billion liters of diesel are used each year to fuel mobile-phone networks. Operating these networks is getting more expensive as the price of diesel rises. Fuel can account for as much as two-thirds of base station operating costs (BusinessWeek.com, 2/20/08), and then there is the expense of trucking diesel over poor roads to far-flung locations and protecting the fuel against theft.

In the search for alternatives, the GSM Assn, an industry group, said it has successfully tested wind- and solar-powered base stations in Namibia made by Motorola and base stations from Ericsson fueled by used restaurant cooking oil in India. "We expect to see real innovation in Africa and Asia, which will end up being adopted by Europe and North America," says Dawn Haig-Thomas, director of the GSM Assn.'s development fund.

Still, the most efficient of these alternative energy powered base stations use anywhere from 600 watts to 700 watts, says Godfrey Chua, an analyst at technology consultancy IDC. And only a tiny fraction of base stations are run on alternative energy today, leaving the majority of the 1.6 billion people who live off the electricity grid, and another billion living in areas in which the grid is inconsistent, without phone service.

Submarine Batteries Save Energy

Getting mobile phone service to customers in these areas has been on the agenda of traditional vendors like Ericsson for the last 10 years. The incentive is obvious. "Our future growth is in emerging markets," says Ulf Ewaldsson, a vice-president at Ericsson and head of the company's radio division. He notes that Ericsson, the world's largest telecom equipment maker, now sells one base station every 11 minutes in India.

But Ewaldsson concedes that cost has held back solar-powered solutions. Only about 200 of Ericsson's 1.3 million installed base stations around the globe use solar power. A far larger number use diesel or alternative fuels. Once companies find a way to cut the cost of solar panels and governments put their weight behind affordable renewable energy, Ericsson says it will be ready to integrate these power sources more widely. "We are extremely well prepared for this," says Ewaldsson. "We are selling base stations with software that is prepared to take in a variety of energy sources, including off-grid."

In the meantime, the company has come up with some innovative ways to ensure that base stations gulp less energy. It now uses submarine batteries in base stations that can be charged and recharged many more times. Diesel is used only to charge the batteries, reducing fuel consumption by 40%. Ericsson also has developed a sleep mode for radio transmitters so that they automatically shut down when no one is making phone calls. If all of Ericsson's installed GSM base stations had this feature, carbon dioxide emissions would be reduced by 1 million tons per year—the equivalent of 330,000 cars each traveling about 10,000 miles or 16,000 kilometers per year.

Stolen for Scrap

The company also has developed a new approach to building towers. In the past, they were constructed of steel, but the material was often stolen for scrap in developing markets. Ericsson's new Tower Tube is instead made of concrete cylinders, which have the added advantage of better protecting batteries and other equipment from extreme heat without the need for expensive cooling.

In addition to its in-house innovations, Ericsson is keeping its eye on interesting approaches being developed by startups, says Ewaldsson. VNL is just one of some 30 young companies trying to tackle the challenge of connecting the rural poor, he says, and Ericsson is looking at all of them with a single goal in mind. "We are not just talking about serving the next 1.5 billion," says Ewaldsson. "We are aiming at the next 3 billion—we want to get a mobile phone to everyone on earth."

If VNL has its way, it will play a big role, alongside the big equipment makers, in making that dream a reality.

Schenker is a BusinessWeek correspondent in Paris.