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Wi-Max Initiatives - Deployment expected to pick up pace post-auctions

March 15, 2010
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Even as the global Wi-Max market continues to grow at a steady clip with deployments increasing every month, in India, the largest potential market for Wi-Max, telecom operators other than the incumbents are still waiting for the Wi-Max spectrum auctions to take place. Key Wi-Max service providers comment on their initiatives in this segment, the potential of the technology and the challenges involved...

What have been your company's initiatives in the Wi-Max segment? How is the segment expected to progress in the short term?

Pranesh Babu K.
Sify was one of the early members of the WiMAX Forum, and has been its active member since 2005. We launched our first Wi-Max infrastructure in February 2007, and the technology has been an integral part of our wireless infrastructure ever since. Today, Sify is one of the largest broadband wireless access providers in India. Wi-Max access infrastructure is an integral part of our last mile strategy to provide our customers with reliable and robust connectivity. We continue to invest in the Wi-Max space to expand our footprint and provide higher bandwidth services to our enterprise customers on wireless.

Senior BSNL Official
Bharat Sanchar Nigam Limited (BSNL) has planned a two-pronged strategy for Wi-Max deployment in the urban and rural regions. Extensive deployments have been planned for making the broadband technology available in the rural areas.These deployments are in progress on the basis of support/subsidy from the Universal Service Obligation Fund as well as from other government schemes. The rural Wi-Max deployments have been taking place in two phases that are being supported by the Department of Information Technology. In the first phase, which envisages the deployment of 1,000 base transceiver stations (BTSs), BSNL plans to provide wireless broadband connectivity to 1,000 rural blocks through Wi-Max. The purchase orders for the equipment have been placed with HCL Infosystems for the north and east zone circles, and with Gemini Communications for the south and west zone circles. Approximately 210 BTSs were commissioned in December 2009. All 1,000 BTSs are likely to be installed by early 2010. These BTSs will provide broadband coverage to about 11,500 rural common service centres (CSCs) for e-governance. At present, more than 380 BTSs have been integrated. In the second phase of the rural project, approximately 6,863 BTSs will be deployed, which will provide wireless broadband connectivity to an estimated 6,863 rural blocks through Wi-Max.These BTSs will provide broadband connectivity to approximately 41,000 rural CSCs of the e-governance project. A total proposed grant of Rs 5.5 billion has been sanctioned for the project. The tender has been finalised and advance purchase orders (APOs) have been issued to L1, L2 and L3 bidders. The APO to the L4 bidder is pending clearance. The project is expected to be commissioned by August 2010. Once commissioned, it will provide connectivity to approximately 50,000 rural CSCs.

In the metropolitan cities and other urban areas, the company has planned a build and operate revenue-share model, whereby a Wi-Max franchisee will provide the capital investment and be responsible for deploying as well as operating and marketing the Wi-Max networks. The franchisees are in the process of being selected through an expression of interest procedure for all the circles where BSNL offers its services except in two circles –­ Kerala and Punjab. In these circles, the organisation will deploy Wi-Max services on its own in order to gain first-hand knowledge and experience.

BSNL has entered into a franchisee agreement with Soma Networks for providing Wi-Max services to its customers in the Andhra Pradesh, Gujarat and Maharashtra circles on a revenue-sharing basis. Services were launched in all the three states in 2009, with 25 BTSs in each circle. At present, there are approximately 3,000 customers in these circles. A tender has been finalised for the procurement of 1,600 BTSs in the Kerala and Punjab circles, with ICOMM and Huawei as the suppliers. The project envisages urban and highway coverage across all the major cities of Kerala and Punjab. The purchase order for the equipment has been placed with ICOMM for the Kerala circle and with Huawei Telecommunications for the Punjab circle. The equipment required for the project is at the installation stage and the project is likely to be completed by early 2010. Validation testing has been going on at both the places, and the service is expected to be launched soon.

What is the potential of Wi-Max in the country, given that 3G services will also be launched around the same time?

Pranesh Babu K.
Wi-Max is a standard that evolved from "The government should delink Wi-Max from 3G and defer the auction till a reasonable amount of spectrum per service provider can be allocated at a viable cost." Pranesh Babu K., Senior Vice-President, Network and Service Engineering, Sify Technologiesmultiple broadband wireless access solutions that were proprietary in nature.This technology was an alternative to expensive terrestrial connectivity solutions such as copper and fibre, and provided interoperability between multivendor equipment, resulting in cost advantages. 3G evolved to provide enhanced data facility to mobile instruments. While Wi-Max is capable of providing reasonable bandwidth speeds to a large number of serious broadband users from a cell site (up to 25 Mbps), 3G supports lower bandwidth per cell site and cannot provide a decent user experience to a large number of serious broadband users from the same cell site (up to 9 Mbps per cell site). Considering that broadband availability and penetration in India are still at a nascent stage, we believe that the two technologies can coexist and cater to different segments of customers.

Senior BSNL Official
Wi-Max has immense potential in the Indian market. The country's broadband demand is estimated to go up to almost 200 million connections over the next 8-10 years. Even after using all the other available wireline technologies such as digital subscriber line (DSL), and wireless technologies such as 3G and evolution data optimised, a shortage of approximately 60 million to 75 million connections is likely to result. This demand can be tapped and met by wireless broadband technologies such as Wi-Max. Being a 4G technology, Wi-Max provides speeds that are otherwise not possible. Moreover, rural regions lack an extensive fixed line infrastructure. In such a scenario, Wi-Max will play a critical role in enabling the provision of broadband services and will thus help in improving the lives of the rural populace.

Should Wi-Max auctions be delinked from the 3G auctions? What other steps can the government take to expedite the mass deployment of Wi-Max in India?

Pranesh Babu K.
The Wi-Max auction will be held only for three blocks of 20 MHz spectrum per circle. We believe that 20 MHz is not sufficient for providing decent and cost-effective Wi-Max services for any operator, whether internet service providers or mobile service operators. Other countries with much lower population densities have auctioned 30 MHz to 60 MHz per service provider, which is much more realistic.India may today be nowhere among the top 10 countries in broadband subscriber numbers, but it certainly has the potential to be among the top ones. We have more than 11 mobile service providers for each circle, whereas we are only talking of three WiMax service providers per circle, which includes both ISPs and mobile service operators. This is totally unrealistic, especially considering broadband penetration in India is very low even when compared to the other BRIC countries or other developing nations. The government should delink Wi-Max from 3G and defer the auction till a reasonable amount of spectrum per service provider can be allocated at a viable cost, and also increase the number of service providers per circle to at least five, to do justice to broadband penetration.

Senior BSNL Official
This is primarily a government policy decision. Therefore, BSNL will refrain from commenting on this issue.

What are the key bottlenecks hindering the uptake of this technology in the country?

Pranesh Babu K.
The pricing of Wi-Max spectrum has to be viable and realistic. With the clubbing of Wi-Max spectrum and mobile spectrum, DoT declared a base price of Rs 17.5 billion for Wi-Max spectrum, which is totally unrelated to the size of the broadband market. With bidding, the price has nearly doubled to Rs 30 billion.At this price, its deployment for broadband services becomes an issue due to the cost at which these services will be provided as well as the ability to recover those costs. Therefore, the extent to which broadband penetration can be increased will be limited by the price at which it is made available.

On the other hand, if the Wi-Max spectrum auction is delinked from mobile spectrum and priced at Rs 2 billion as a base price, it is more in relation to the size of the broadband market. With bidding, it rises to about Rs 4 billion. At that price, combined with aggressive pricing of broadband services, there may be a 10 per cent increase in broadband penetration. This will result in a 1.3 per cent to 1.5 per cent increase in GDP, according to recent studies conducted by the World Bank and by BCG Telenor.

India's GDP is at a trillion dollars today. Therefore, a 1.3 per cent increase will amount to a minimum of Rs 150 billion, which is five times the benefit of pricing spectrum at a much higher level. The government must understand this perspective. Broadband penetration today is a measure of a country's competitiveness, and unless we view this in the national interest, we will be increasingly left behind other economies.

Our large rural population will not have access to Wi-Max anytime soon, as carrying services to these areas will not be economically viable. The government should look into rural broadband separately with lower royalty or royalty-free spectrum.

Senior BSNL Official
There are some key bottlenecks that have been hindering the uptake of this technology in the country. For instance, since WiMax is a relatively new technology, interoperability is a key concern. There is, therefore, a need for all the stakeholders in the value chain, including vendors, radio access network vendors, access devices manufacturers and the WiMAX Forum, to come together to make the interoperation of various equipment a reality. Despite the concerns, this technology clearly holds strong promise for providing broadband connectivity in the country.

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