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Ramping Up - Current status and recent initiatives in telecom transmission deployment

November 15, 2009

A fast growing subscriber base, the advent of new technologies and applications and increasing competition in the market have made the telecom transmission industry one of the most robust, attractive and fast expanding segments of the Indian economy. With new players rolling out networks and existing players in expansion mode, competition will only heat up in the coming years.

tele.net takes a look at the key trends in the Indian telecom transmission segment and the network expansion and upgradation plans of major service providers...

Size and growth

The transmission equipment market in India has been growing steadily over the years and has registered a compounded annual growth rate (CAGR) of 18 per cent from Rs 7.3 billion in financial year 2004-05 to Rs 30 billion in financial year 2008-09.

In spite of the economic downturn, the past year has been productive for the industry. During the period 2007-08 to 2008-09, the transmission equipment market for telecom in India grew by 54 per cent from Rs 19.5 billion to Rs 30 billion. In financial year 2009-10, the transmission equipment market size is expected to reach Rs 37 billion. Analysts expect this growth rate to be maintained over the next three to five years.

According to Kiran Pande, president, ECI Telecom India, "The transmission equipment industry in the country has experienced tremendous growth in the past few years, and we expect this trend to continue in the next three to five years, mainly fuelled by ongoing expansion and enhancements to existing infrastructure, new network deployments into remote, uncharted areas, and the expected growth in demand for broadband, IPTV and mobile TV applications."

Key trends

The key transmission equipment vendors are ECI Telecom, Tejas Networks and Huawei, which have a combined market share of about 70 per cent. While ECI Telecom claims to have around 30 per cent market share, Tejas and Huawei together account for almost 40 per cent. Market data further suggests that Alcatel-Lucent and Ericsson have a combined market share of slightly over 20 per cent while Fibcom and Nokia Siemens Networks (NSN) together control 7 per cent. The remainder is split amongst smaller players such as UTStarcom, ZTE, NEC and Ciena.

The transmission industry has transformed significantly since private operators first started rolling out their transmission networks to provide pan-Indian services. While copper was the key transmission medium at the time, optic fibre is being extensively utilised now. The demand for high speeds and bandwidthhungry applications has made optic fibrebased transmission necessary. Optical platforms drive greater network efficiency and decrease operating costs as data traffic grows exponentially and revenues per bit decline.

Today, almost all telecom players are investing heavily in laying optic fibre cable networks across the country. Power Grid Corporation of India Limited (PGCIL) has recently announced plans to invest Rs 12 billion over the next three years in its telecom business. The state-owned power transmission company is in talks with a number of television channels for providing its network for video-streaming facilities. The company will provide its fibre optic network mounted over its overhead transmission network to provide the required bandwidth to television companies to air their video content. Many private telecom companies like BPL, Bharti Airtel and Telecommunications Consultants India Limited have sought alliances with PGCIL and RailTel for using their extensive transmission networks.

A new trend is that of interfacing Ethernet networks with optic fibre backbones for greater efficiency of data transmission. This method of transmission is ideal for local area networks and is rapidly gaining ground for creating metropolitan area network/wide area network architecture.

While optic fibre is used in the backbone and for high capacity routes, microwave-based transmission is being used to connect mobile base transceiver stations (BTSs). Microwave systems are also being used as back-up for optic fibre and as backhaul for BTSs. According to Vijoy Kumar, GM, Cellular Mobile Telecom Services, BSNL, "Microwave media is being increasingly preferred by operators as microwave links eliminate the cost of digging up roads for fibre. It also resolves the issues in getting the requisite clearances from municipal departments."

Satellite media in inter-domain routing and VSAT, etc. are used mainly for the Andaman & Nicobar Islands, Lakshadweep Islands, the Northeast and the upper Himalayan areas.

Operators like Idea Cellular have also started moving away from the more traditional multiplexing protocols (these allow you to transfer multiple-digit bit streams over optic fibre using laser or light emitting diodes) to new ones such as reconfigurable optic add-drop multiplexers (ROADMs). Synchronous optical networking (SONET) and synchronous digital hierarchy (SDH), for instance, are widely used standardised multiplexing protocols. Companies like BSNL in contrast, still use some plesiochronous digital hierarchy systems, which are being phased out (SONET and SDH can transfer higher volumes of traffic). Says Pande, "On the technology front, many operators are looking to invest in SDH and WDMbased solutions to support the significant increase in network traffic. IP-based technologies such as carrier Ethernet are also gaining ground.

ROADM is a form of optical adddrop multiplexer which enables an operator to remotely switch traffic from a WDM system at the wavelength layer. The main advantages of ROADM are that the planning of the entire bandwidth assignment does not have to be carried out during the initial deployment of a system and the configuration can be done as and when required without affecting traffic already passing the ROADM. ROADM also allows for remote configuration and reconfiguration, and meets the need to build out major metropolitan networks in order to deal with the traffic driven by the increasing demand for packet-based services.

Going forward, as data traffic increases, growth will come mainly from packetbased transmission networks. Operators are experimenting with upcoming technologies like internet over DWDM/addon services digital network (ASDN), etc.

As operators migrate to IP-based networks, an IP backbone and Wi-Max backhaul will be widely used in new networks, complementing optical and microwave transmission. Mahanagar Telephone Nigam Limited (MTNL) and AlcatelLucent have jointly launched the operator's first IP-based mobile next-generation network (NGN) to offer enhanced services to residential and enterprise customers in Mumbai. The mobile NGN solution provided by Alcatel-Lucent is 3G and IP multimedia subsystem-ready and will help MTNL in network optimisation and bandwidth savings, while reducing space and power requirements.

"Technology-wise, the demand is mainly based on multi-service provisioning platform (MSPP) technologies, and we see a transition to Ethernet-based transport. This is expected to grow rapidly in the next few years as 3G networks evolve and as triple-play services such as high speed internet and IPTV services expand," Pande sums up.

Network expansion

Existing players like Bharti Airtel and Aircel have sketched out hefty investment plans for their networks, including setting up and upgrading transmission networks.

For instance, Bharti Airtel is likely to undertake an investment of about Rs 6 billion in order to expand its network in the Assam and north-eastern circles of the country in 2009-10. With traffic likely to grow in the future, investments will also be made in laying of optic fibre. Aircel is also planning to invest $5 billion over the next three to five years to expand its operations across the country. The company recently launched its services in Hyderabad, Delhi NCR and the eastern and western parts of Uttar Pradesh and Mumbai.

Meanwhile, companies like MTNL and Tata Communications are investing in transmission networks for their 3G and Wi-Max services respectively. While MTNL has floated a tender for the supply, installation and commissioning of 200,000 GSM lines (both 2G and 3G) for Mahanagar Telephone (Mauritius) Limited, Tata Communications is planning to expand its Wi-Max footprint from 50 to 70 cities by the end of 2009. MTNL is planning a capital expenditure of a little over Rs 17 billion in 2009-10 on network expansion, broadband and new initiatives such as fibre-to-the-home for faster delivery of its interactive services.

Tata Teleservices Limited (TTSL) is ramping up its GSM operations and investing in transmission networks for the same. It has already started ordering equipment for its core and transmission networks from NSN, Huawei, NEC, etc. The company is renewing its optical transmission network and has granted Alcatel-Lucent a sevenyear contract for implementing an optical multi-service node solution for the same. It has also selected Israeli broadband wireless networking systems supplier Ceragon Networks for supporting expansion of its GSM mobile network in seven new circles. Ceragon is providing its FibeAir 1500R wireless SDH and FibeAir IP-10 solutions that support native TDM, Native2 (hybrid TDM/Ethernet) and native Ethernet over a single platform.

TTSL is also active on the broadband front and has entered into a partnership with ECI Telecom for building a fixed broadband access network that can support speeds of up to 18 Mbps. The deal is expected to be worth about $70 million and will see TTSL deploying ECI's all-IP NGN technology.

BSNL has granted contracts to Ericsson, Huawei and ITI for its 93 million line $6 billion tender. It is also investing in high capacity networks and has awarded a Rs 2.5 billion contract to Sterlite Technologies to roll out a gigabitcapable passive optical network. The public sector company will soon invite fresh tenders for its Wi-Max network rollout, after the previous attempt was aborted in light of dubious operators making it to the final shortlist.

New players

New players looking to roll out services in India are also keeping transmission vendors busy. For instance, Unitech Wireless has recently awarded a GSM network deployment contract to NSN for providing services ranging from network implementation and operations and management for its rollout in six circles. It has also awarded a $500 million contract to Ericsson to supply and manage all network equipment for rolling out mobile phone services in Bihar, and eastern and western Uttar Pradesh.

New entrants are taking advantage of the government's April 2008 ruling permitting telecom players to share transmission systems. For instance, Datacom Solutions has signed a 10-year infrastructure-sharing deal with TTSL, according to which TTSL will provide transmission services for the former.

STel and Reliance Infratel have also signed an end-to-end telecom infrastructure-sharing agreement for telecom towers, transmission equipment for BTS sites and fibre backbone for intercity connectivity. STel's agreement with Reliance Communications (RCOM) covers six circles –­ Orissa, Bihar, Himachal Pradesh, the Northeast, Assam and Jammu & Kashmir –­ where the telecom operator plans to roll out its GSM services soon. Etisalat DB and RCOM have also entered into a similar deal. According to Arun Sur, head, networks, RCOM, "Any new operator entering the market finds it very difficult to launch services. Consequently, what is happening is that new operators are sharing the transport systems of various existing operators. Every new operator is relying on someone else's transport system."

ZTE has recently received a wireless network order from Loop Telecom. As part of the deal, ZTE will provide end-toend network equipment to the operator.The deal also includes the provision of a comprehensive portfolio of telecommunications equipment and services.

Government initiatives

The government is initiating several coMmunications projects necessitating the deployment of transmission equipment. MTNL has already invited bids from Indian and international firms to set up its communications and IT network infrastructure in Delhi for the Commonwealth Games 2010. MTNL intends to set up a converged (MPLS-based IP infrastructure) network –­ a two-layered, centrally managed IP backbone network. According to Kuldip Singh, Director, Technical, MTNL, "The technology permits the transmission of various signals within a given quality of service on the IP network, which is carried over MPLS at the MPLS core."

The government is also planning to float a Rs 100 billion ($2 billion) IT and telecom hardware contract for the creation of a nationwide 43,000 km long alternative communications network for the defence forces. At present, a detailed project report is being prepared by representatives of the army and navy together with BSNL, which will be executing the contract.

Long distance transmission initiatives

Companies are increasingly investing in undersea transmission networks. Tata Communications and Tyco Telecommunications have completed the installation, testing and commissioning of the TGnIntra Asia (TGN-IA) cable system. The 6700 km TGN-IA system connects Hong Kong, Singapore, Tokyo, Vietnam and the Philippines, and provides route diversity throughout the Asia-Pacific region. Tata Communications has also joined an international consortium to build a $600 million West African cable system, which will link countries in southern and western Africa and Europe.

Bharti Airtel has entered into an agreement with Australia Japan Cable (AJC) to link its assets on the upcoming AsiaAmerica Gateway (AAG) cable with AJC, which connects Australia to Guam and Japan. The deal will enable Bharti to carry voice and data traffic for telecom operators in Singapore, the west coast of the US and Australia.

All in all, with an ever-broadening telecom sector, the telecom transmission industry is likely to register substantial activity.


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