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Testing Times: T&M players face cost challenges

September 02, 2013
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Driven by the increasing demand for quality of service and network uptime, the Indian test and measurement (T&M) industry has witnessed stable growth over the past year. According to analysts, the industry is growing at 12-15 per cent annually. This can be largely attributed to the following factors:

•   Increasing uptake of mobile handsets and smartphones, which has created the need for enhanced device testing solutions to deliver quality services

•   In order to increase capacity, operators are gradually shifting from centrally managed networks based on macro base stations to heterogeneous ones known as HetNets, which comprise a mix of femtocells and small cells (micro and pico cells). The management of these self-organising networks requires changes in both T&M and operational processes

•   Increasing uptake of wireless data and traffic on data networks

•   Network upgradation and interoperability requirements

•  Device portability with higher efficiency, which increases the ease of use of testing instruments

•  Need for high speed data transfer

•  Launch of new technologies such as 3G and 4G

•  Introduction of innovative applications and mobile TV services as well as technology convergence

•  Increasing compatibility of telecom devices with the services and products of other industries such as health care, banking, education, retail and manufacturing.

The T&M segment would continue to grow with development of the telecom industry. According to TechNavio, the network T&M market in India will witness a compound annual growth rate (CAGR) of 11.26 per cent during 2011 to 2015. However, this growth potential cannot be fully tapped unless the issues and challenges faced by T&M providers are addressed.

According to Frost & Sullivan, one of the major challenges faced by T&M companies is pricing-related pressure from product development companies. In order to keep development costs low, these companies try to minimise testing costs. This is an issue as these companies otherwise make large investments to keep pace with technology development and meet customer needs.

High raw material and component costs are also a challenge for T&M equipment manufacturers. Most Indian manufacturers provide T&M solutions by replicating equipment that is available in the global market. They need to import components from countries such as China. However, the high import duty on these products increases a manufacturer’s overall costs.

Further, investment on research and development (R&D) in India is limited, with most companies spending only 10 per cent of their budget on R&D.

For T&M equipment manufacturers, keeping product lines in sync with customer demand requires significant investments in R&D and test platforms that are future-proofed to allow the same hardware to be manufactured and used over time.

Moreover, according to Aeroflex Systems Limited, T&M tools are regarded either as very expensive or too complex. There is also a lack of awareness about the appropriate use of such equipment. Several players have deferred the deployment of these tools, despite the possibility of compromising on network quality. Also, being a relatively new industry, changes are being witnessed constantly, especially in terms of technology evolution. Therefore, it is important for companies to understand existing standards and ensure correct implementation.

Some other challenges faced by the T&M segment are:

•   Low availability of alternative testing technologies and platforms

•   Lack of clarity in government policies

•   Price-sensitive end users and low subscriber ARPUs

•   Lack of a structured ecosystem.

 Road map

According to Frost & Sullivan, the Indian wireless T&M space is likely to witness strong growth with the industry moving towards 4G cellular wireless standards; the availability of feature-rich smartphones and a wide range of services and applications; and the predominance of data centres. In fact, till 2017, the mobile device testing segment is expected to generate revenues of $600 million at a CAGR of 19.5 per cent. This is due to the expanding mobile device user base and the technological progress in mobile devices and smart chipsets. As these developments call for advanced testing mechanisms, mobile device testing will be of key importance going forward. Wireless core and wireless backhaul offer significant scope for development till 2017, with the expected deployment of long term evolution (LTE) time division duplex and LTE frequency division duplex.

In sum, with several emerging technologies, the T&M industry is expected to play a key role in providing integrated and quality solutions in the wireless space.

 
 
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