Voice&Data July 2014 Vnd100 by Dataquest

www.voicendata.com

Special Issue

`100

VOL 20 ISSUE 07 July 2014

The Business of Communications

Telecom Industry Grows 10.8%

`429,087 cr 54%

46%

Telecom Services

Telecom Infra

Telecom Infra TOP 10 Samsung

`27,293

Nokia

`15,774

Indus Towers

`13,922

Micromax

`9,212

Cisco

`6,434

Viom Networks

`5,554

Ericsson

`5,391

Nokia Networks

`5,211

Bharti Infratel

`4,999

Huawei

`4,802

Telecom Services TOP 10

Voice&Data Leaders

| Pg 17

Airtel

`57,556

Vodafone

`37,606

Idea

`26,504

BSNL

`25,498

RCom

`22,321

Tata Communications 6

`17,450

Tata Teleservices

`10,452

Aircel

`11,294

MTNL

`3,392

Uninor

`2,543

V&D-CMR Telecom Industry Survey FY2013-14. (Revenue in `Crore)

134 pages including cover

Special subscription offer on Page 126

content

India Telecom

Website: www.voicendata.com EDITORIAL GROUP EDITOR: Ibrahim Ahmad EDITOR: Nandita Singh CORRESPONDENT: Sanjeeb Kumar Sahoo EDITORIAL ADVISOR: Prasanto Kumar Roy

DESK SUB EDITOR: Charu, Ruchika Goel SR EDITORIAL CO-ORDINATOR (EVENTS): Manishika Miglani ASST MANAGER DESIGN: Bhagbat Pattnayak, Harnek Singh, Pramod S Rawat COVER DESIGN: Harnek Singh

BUSINESS HEAD of SALES & MARKETING: Satish Gupta (satishg@cybermedia.co.in) AGM-Sales (Events): Sudheer G

12| Overview

NORTH Subhadeep Sen SOUTH & WEST Pradeep Kumar PUNE Sunay Choudhury Kolkata Sandeep Roy Chowdhuri INTERNATIONAL Arvind Razdan MARKETING Arvind Razdan, Sidharth Malhotra, Kuldeep Khatana

EVENTS & Communities Manager: Debabrata T Joshi

17| Leaderboard 18| Telecom Infra 21| Telecom Services 13 | Survey Methodology

OPERATIONS General Manager: CP Kalra Manager: Ashok K

SHARED SERVICES Vice President: Manish Verma PRINT SERVICES: T Srirengan CIRCULATION & SUBSCRIPTION: C Ramachandra Jagdeep Khanna, Raghavendra S, Raju Salve, Srinivas Gangula AUDIENCE SERVICE: Sarita Shridhar MIS & DATABASE: Ravikant PRESS COORDINATOR: Harak Singh Ramola

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Telecom Infra Carrier Infra

Page 23

35| Carrier Networks Departure from Legacy

50| Test & Measurement Year of Nominal Growth

41| Passive Infra Leveraging Build-outs

51| OSS/BSS Driven by Transformation

45| Managed Services Converged Infra Play Arrives

55| Software, Solutions & Consulting A Fragmented Market

Enterprise Communication 57 User Devices 59| Enterprise Networking Gets Out of the Box! 62| Structured Cabling The Year of Drought? 64| Communication Equipments & Devices Sum is Better than Parts 67| Software & Applications Business beyond Endpoints

4 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

73| Mobile Phones Smartphones Make it Big! 78| Data Cards Whiffs of Threat 80| Tablets Pulled Down by Oversupply?

Industry Survey TOP10 Companies Telecom Infra

Telecom Services

Samsung

Airtel

Nokia

Vodafone

Indus Towers

Idea

Micromax

BSNL

Cisco

RCom

Viom Networks

Tata Communications

Ericsson

Tata Teleservices

Nokia Network

Aircel

Bharti Infratel

MTNL

Huawei

Uninor

Telecom Services Voice Services

Page 94

97 Data Services

99| Fixed Makeover to Bring Growth Back 101| Mobile Services Northbound Again! 103| IP Telephony The Empire Strikes Back?

105

106| Wireline Broadband Growth is Beyond DSL 108| Mobile Broadband 3G Tariff Cuts Did the Magic! 110| Enterprise Agility Is New Demand Driver

Other Services 113 Policy 114| VAS In Search of New Pastures 116| Mobile Wallets FocusonSubscriberGains 119| OTT Partnering with Frenemies Regulars Voicemail....................................................06 Editorial......................................................08 News Roundup........................................ 130

122|

Go after International Best Practices

—Inderpreet Kaur

Senior Analyst, Telecoms Research, Ovum

125| Right Policy Mix is Key

—Rajan S Mathews Director General, COAI

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 5

VOICEMAIL

FEEDBACK

From Online Readers

Share your views at vndedit@cybermedia.co.in

Most Read from V&D Online COAI dispels mobile radiation-cancer link

June 2014

In order to dispel fears about the effects of the Electromagnetic Field (EMF), the Cellular Association of India (COAI) brought under one roof experts from various fields like—oncology and radiology--to express their views on mobile radiation. http://bit.ly/1qtOpbq

Shrivastava’s appointment as BSNL chief hangs COAI dispels mobile radiation-cancer link Professor R.V. Hosur is wrong! Nonionising radiation does cause DNA damage! Research published in April 2014 has proven how cell phone radiation damages DNA in a two-stage process involving ROS (Reactive Oxygen Species). DNA damage was previously shown by Dr. Henry Lai with proof of DNA single and double strand breaks at levels below currently accepted safe FCC exposure levels, however the mechanism was not discovered until now. This is the reason the wireless industry has launched this latest round of propaganda and lies! Visit www. rfsafe.com for the latest research and studies on cell phone radiation. —Via email, John

Struggling state-run telco Bharat Sanchar Nigam (BSNL) will take time to select its new CEO as the Appointments Committee of the Cabinet (ACC) has rejected Anupam Shrivastava’s appointment as its chairman and managing director. http://bit.ly/1qtOtrU

FDI in e-commerce will fuel SMEs growth: Industry Industry bodies and e-commerce firms have pitched for foreign direct investment in the e-commerce sector, saying such a move will propel growth of small and medium enterprises. http://bit.ly/1z4pVrV

RCom’s arm to pump in $200 mn in submarine cable link Global Cloud Xchange, a subsidiary of telecom operator Reliance Communications, has said it would invest $200 mn for laying 5,000 km long undersea cable network between Mumbai and Singapore. http://bit.ly/1qerRKa

Vodafone launches SNOC in Pune to strengthen network Vodafone India has launched its Super Network Operations Centre (SNOC) and Super Network Experience Centre (SNEC) in Pune in order to monitor its telecom networks and provide better business communication solutions to its enterprise customers. http://bit.ly/1ok6s0t

Govt to work for subscriber welfare and telecom growth s e n d y o u r f e edback FOR US t o s e r v e y o u better...

For subscription related issues, contact us at

Telecom minister Ravi Shankar Prasad has said that the government is scrutinizing spectrum sharing, trading, allocation, etc, for the betterment of the subscribers. http://bit.ly/V4LiKr

rsevoicendata@cybermedia.co.in

Intel introduces its first KitKat smartphone range

You can also write to Reader Service Executive, VOICE&DATA, Cyber House, B-35 Sector 32, Gurgaon-122 001, Haryana

Intex Technologies has launched its first KitKat smartphone range with Aqua i14 and Aqua N15, priced at Rs 7,090 and Rs 6,090, respectively. http://bit.ly/1yHGr0C

Fax: 91-124-2380694

6 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

FY 2013-14

editorial

Not Bad The way Indian telecom industry had been whining and crying in the last 12-18 months or so, the Voice&Data team was very apprehensive at the start of its 2013-14 annual survey. But thanks to the un-stoppable march of the Indian telecom users, these apprehensions have been belied and the industry grew a decent 10.8% to touch Rs 4,37,000 crore in 2013-14 fiscal. There might have been regulatory challenges and political uncertainties, but the Indian’s appetite for more communications is far from over. Do remember, that after several years of non-stop subscriber growth, we also saw subscriber numbers come down. Obviously those were mostly the double and triple SIM cards that were discarded. And this growth because of operators’ investing in telecom networks to keep it from falling apart, and users replacing old handsets is not totally surprising. Clearly, India has a potential for much more. The fundamental questions however remain. Most of these less than billion Indian users today use a phone out of sheer necessity. Mobile phone has become their lifeline. But are they happy with the service they get? My very strong gut feel is that majority will say ‘no’, and would not mind shifting to an operator who offers good services. Alas, we are yet to have a ‘good’ operator to which subscribers can shift. While the new government is expected to be faster and more forward looking with its reforms, I have never agreed that all the blame lies with the government. Even with the existing limitations operators can do a lot more to not let users down. When the subscriber base has actually not increased, we see so much action. Just imagine what will happen when consumers (in big numbers) start using their phones for data, video, services, education, entertainment, health and so on. Just imagine when internet of things becomes a reality. Unfortunately, the government and the industry have still not been able to come together and draw out a common vision. The result is that the industry as well as the consumers suffer. I hope the result of this survey reinforces our belief that what we see in Indian telecom today is just the tip of the big iceberg.

<ibrahima@cybermedia.co.in>

8 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

Overview

FY 2013-14 12 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

FY 2013-14

Survey Methodology

very year Voice&Data conducts its annual “Telecom Industry Survey” and publishes market sizing along with an overview of the industry across segments – branded as V&D 100. In 2014, editorial team at the publication undertook an exercise to re-look at the overall survey and re-align the segments factoring in the growth direction the dynamic telecom industry is taking. So, Voice&Data, in 2014, engaged CyberMedia Research (CMR) for the purpose and put together a joint virtual team to conduct this survey. The team comprised CMR, V&D and an independent analyst for cross-validation. Here is more on the survey methodology: Broadly, the industry continues to be categorized into Telecom Infra and Telecom Services. Within these two, there are segments that are further categorized into sub-segments. Each sub-segment has been sized and the three main players are identified in this survey. Being the first year of change in industry classification, it was not an easy task. There were challenges. We had to club some of the sub segments this year and create a category different from previous years to arrive at the size of the sub-segment as well as identify the leaders. For instance, in the Desk Phone category we have clubbed PSTN phones, Digital phones, IP phones and the SIP phones all together, for this year’s survey. We would like as much sub segmentation as possible in the subsequent surveys. Going ahead, in our roadmap even the smallest of small and niche segments will be identified, measured and the leadership identified. In 2014, the only parameter used in this survey is revenue. There were two broad phases of this survey – Secondary and Primary.

From the Editor’s Desk So, finally, the Voice&Data Telecom Industry analysis issue is in your hands. It was an exhaustive exercise for the V&D team (see survey methodology). This year, we re-looked at the survey framework and classification. It was our first such exercise since inception of the survey. We have been covering the India telecom industry from the last 20 years and, in fact, Voice&Data celebrates 20 years of telecom reportage this July. It was a perfect occasion for a rethink on what we deliver to our readers and how. One of the outcomes of this thinking is the magazine in your hands, where you will see changes in industry classification as compared to the previous years. We got on board Cyber Media Research (CMR), the analyst firm, to execute the survey in 2014. A virtual team including CMR (led by Faisal Kawoosa), V&D, and an independent analyst (Deepak Kumar) was constituted for the purpose. The exercise spanning across three months included primary and secondary research and further validation of the results with industry leaders. All put together took time and we have been running behind schedule on this. Many of you have been calling V&D with queries about 2014 industry survey issue. Thank you for waiting patiently for this issue. I would like to thank all the industry captains and leaders for extending support to the V&D team in this exercise sharing their expertise, information and of course, their valuable time. The outcome of the effort is in your hands. We look forward to your feedback. Nandita Singh nanditas@cybermedia.co.in

Secondary Research In the secondary research phase, all the available data and information through various journals, magazines and reports was used for forming the framework of the research. Voice&Data, being the pioneer of the industry reporting, has an immense knowledge bank, which was scanned through this research providing vital information about the structure and composition of the industry. During the study, CMR, covering the industry for over two decades also accessed its vast repository of industry reports that enriched the overall structure and framework of the survey.

Faisal Kawoosa Lead, Cyber Media Research

Deepak Kumar Independent Analyst

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 13

FY 2013-14

Overview Survey Methodology The secondary phase of research helped essentially in two ways of providing the published information available on a subject and also designing of the comprehensive but precise questionnaire. It also filled in information gaps when ever primary data was not available.

Structure and Classification of the Survey The entire telecom industry was classified in to two main categories of Telecom Infrastructure (Equipments, Solutions and Devices) and the Telecom Services (Voice, Data and Other Services).

Primary Research Primary research phase had two elements of structured survey and primary interactions. Through the structured survey, companies within the telecom industry were approached with a questionnaire administered via email. Not all the companies responded to this structured questionnaire, and some only partially responded. This was primary in context to revenue related questions. The second leg of the primary research was of primary interactions with select companies within each segment and sub-segment. CMR analysts reached out the CXO / senior level representatives of various companies â&#x20AC;&#x201C; vendors, solution providers, service providers, etc., to help understand the composition, performance, growth and other parameters of each of these segments and sub-segments. Based on these inputs together with the secondary research findings, estimates about the revenues of companies, subsegment and segment were calculated. This was further validated through interactions with industry experts.

Carrier Infra

Voice

Enterprise Communication

Data

User Devices

Other Services

Telecom Infra

Carrier Infra

This segment covers all the equipments, devices and solutions through which services are created, enabled, controlled and finally used. The entire telecom infrastructure is further categorized into three.

Carrier Infra comprises all the equipments, devices, software and services that an operator or a telecom carrier uses for creating and controlling a service. The sub-categories used in this survey are as defined in the below table. Towers and Power Solutions were further clubbed into Passive Infra for analysis.

Core & Access Carrier Networking

Towers

Software, Solutions & Consulting

Test & Measurement

Managed Services

Segment

Definition

Core and Access

MSCs, BTSs, BSCs, Radio Controllers, etc.

Towers

Passive Tower Infrastructure

OSS / BSS

Operation and Billing Support Software

Test & Measurement

Testing and Measurement equipments, tools and software

Power Solutions

UPS, DG Sets, Batteries, SMPS/IMPS/ Rectifiers, Panels, Cabinets, etc.

Software, Solution & Consulting

Application and software including consulting and design services for various ICT tasks. Also includes Service Delivery Platforms (SDP), etc.

Managed Services

Network Management, Network Optimisation, Network Layout, etc.

Carrier Networking

Switches, routers and passive components used in a carrier network

OSS/BSS Power Solutions

14 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

Overview Survey Methodology

Enterprise Communication An enterprise, typically, has data as well as voice network. In case of NGN telephony systems, there is a unified ICT network. Below figure categorizes the enterprise communications segments and sub-segments that were followed during this survey.

Below table defines each of the sub-segments within the Enterprise Communications segment.

Segment

Definition

Active Networking

Routers, Switches, WiFi, etc.

Structured Cabling Systems

Fiber, Cat 5, connectors, etc.

Desk Phones

PSTN, Digital, IP and SIP phones

PBX Systems

ePABX, Digital, IP and Hybrid PBXs

Audio / Video Conferencing

Audio and Video Conferencing standalone devices

Software and Applications

All software and applications used for securing the network as well as use various enterprise communications.

User Devices User devices are nothing but the actual interface between a user and a telecom service.

Telecom Services This segment clubs all kinds of services that are used by individuals as well as the enterprises. In this survey, these services were categorized into three.

Voice Services These include all kinds of voice services offered either through wireline or a wireless network. It includes all types of traffic of local, national and international voice.

Data Services Be it data access services for homes, offices or individuals on the go â&#x20AC;&#x201C; all is covered in this segment. This includes wired, wireless and satellite services used for data access. Besides it also includes data services across band of narrowband and broadband. It also includes the Broadband Wireless Access services.

Below table defines the composition of each of these subsegments.

Segment

Definition

Mobile Phones

Feature phones, Smart phones, Phablets, GSM, CDMA, etc.

Data Cards / Dongles

GSM, CDMA

Tablet PCs

WiFi, Cellular

16 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

Other Services These are all other services that are offered by an operator to individuals as well as the enterprises. It includes Value Added Services, Broadcast Services, Video on Demand, Software Services including Antivirus and Office Solutions. This survey also divides these services horizontally among the consumer telecom services and enterprise telecom services. Besides, it also presents the size of the services by Fixed and Wireless delivery.

FY 2013-14

Leaderboard by Segment

Top Companies Telecom Infra (Equipment & Solutions) Segment

Leader

Revenue (in ` crore)

Core & Access Equipments

Ericsson

Towers

Indus Towers

OSS / BSS

Amdocs

585

Test & Measurement

Agilent

377

Power Solutions

Delta

770

Managed Services

Nokia Networks (NSN)

2,110

Software, Solutions and Consulting

TCS

1,130

Carrier Networking

Cisco

1,289

Enterprise Active Networking

Cisco

3,961

Structured Cabling Systems

TE Connectivity

822

Desk Phones

Cisco

556

PBX Systems

Cisco

292

Mobile Phones

Samsung

Data Cards

Huawei

Tablets

Samsung

3,731 13,392

25,921 424 1,372

Telecom Services Segment

Leader

Revenue (in ` crore)

Mobile Services

Airtel

41,440

Fixed Line Services

BSNL

19,124

Internet Services

Airtel

13,519

Broadband Internet Services

BSNL

10,097

Broadband Wireless Access Services

Airtel

2,970

VSAT Services

Hughes

Enterprise Services

Tata Communications

179 17,450

V&D-CMR Telecom Industry Survey FY2013-14

India Telecom clocks R429,087 cr, grows 10.8% In FY 2013-14, Telecom Industry in India clocked Rs 429,087 crore in revenues recording a growth of 10.8% over previous fiscal. Telecom Services sector accounted for 54% of the industry revenues contributing Rs 233,793 crore to the total of Rs 429,087 crore. Rest came from Telecom Infra sector. Both Infra and Services recorded double digit, overall growth of over 10 percent, over the previous year. For every rupee spent on telecom infrastructure, the industry in India earned Rs 1.19, during FY 2013-14. Top 10 Telecom Infra companies accounted for 50% of the Infra revenue of Rs19,5249 and Top 10 Telecom Services companies contributed 42% in the total services revenue of Rs 42,9087. Telecos â&#x20AC;&#x201C; BSNL, MTNL and Tata Tele Services recorded a decline ranging from 3 to one percent. Among Telecom Infra companies Nokia registered an 18% decline, Ericsson contended with pretty much flat growth in FY 2013-14. User Devices, literally led the growth curve with a 17% YoY increase contributing a large chunk (Rs 93,675 crore) to the overall Telecom revenue. This growth largely came from smartphones in the mobile phone sub segment which recorded 18.5% YoY growth in FY 2013-14. Core & access equipment in carrier infra sub segment recorded the lowest overall growth of 2.5 percent which itself is the result of RJio mega rollout in the telecom industry. It shored up the topline of a number of telecom infra vendors. The challenges in the Telecom Services sector continue but the dynamic market is rapidly revolving to accommodate increased data focus being driven by mobile devices primarily. Mobile data services grew at a healthy clip of 30% and fixed line data services also had a double digit 13% YoY growth. Fixed line voice recorded a double digit decline of11% while mobile voice grew at 10%. Read on for comprehensive analysis.

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 17

FY 2013-14

Overview India Telecom

India Telecom Market Fy2013-14 54% Telecom Services

46% Telecom Infra

`429,087 crore Growth 10.8% For every rupee spent on telecom infrastructure, the industry earned revenue of `1.19 in India during FY 2013-14. V&D-CMR Telecom Industry Survey FY2013-14

Telecom Infra Market `195,294 crore Growth 11.6% 47.97%

User Devices

43.09%

Carrier Infra

Telecom Infra Market Growth Telecom Equipment Segment

8.94%

FY 2013-14

FY 2012-13

% Growth

Carrier Infra

84,160

79,361

Enterprise Communication

17,459

15,494

12.7%

User Devices

93,675

80,072

17%

195,294

174,927

11.6%

Total Telecom Equipment Market

Enterprise Communication Segment % Share in the overall Telecom Infra Sector FY 2013-14

18 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

V&D-CMR Telecom Industry Survey FY2013-14

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FY 2013-14

Overview India Telecom

Telecom Services Market Overall Other Services Revenue `8,183

`233,793 crore Growth 10%

3.5% Other

21.88%

Fixed Line Overall Fixed Services Revenue `51,145

54.11%

45.89%

72.25%

Fixed Voice Fixed Data

74.62%

Overall Wireless Services Revenue `174,465 crore

19.38%

Wireless (GSM+CDMA)

8.37% Mobile Services Voice

Mobile Data Services

Mobile VAS

Overall Telecom Services Revenue (FY 2013-14) `233,793 crore V&D-CMR Telecom Industry Survey FY2013-14

Market share split by Voice, Data & others services

Consumer Vs Enterprise Revenue Share

`22,149 `20,018

`57,914

`47,223

Other Services Data Services

`54,941

`42,049 Enterprise

`153,730

`145,130

Voice Services `178,852

`170,322

Consumer FY 2013-14

FY 2012-13

FY 2013-14

FY 2012-13

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 21

FY 2013-14

Overview India Telecom

India Telecom Market FY2013-14 Telecom Infra

FY 2013-14

FY 2012-13

% Growth

Carrier Infra Carrier Networks: Core and Access Equipments

12764

12458

2.50%

2148

1995

7.70%

47591

45211

5.30%

Passive Infra: Power Solutions

3450

2568

34.30%

Managed Services

5883

5389

9.20%

OSS / BSS

3250

3080

5.50%

Software, Solutions and Consulting

8055

7684

4.80%

Test & Measurement

1019

976

4.40%

84160

79361

6.00%

Enterprise Networking: Active

5839

5236

11.50%

Enterprise Networking: Structured Cabling Systems

2796

2356

18.70%

Communications Devices & Equipment: Desk Phones

2649

2431

9.00%

Communications Devices & Equipment: PBX Systems

1620

1466

10.50%

Communications Devices & Equipment: Audio Video Conferencing

685

635

7.90%

Software & Applications: Enterprise Security

2709

2368

14.40%

Software & Applications: Conferencing & Collaboration

1161

1002

15.90%

17459

15494

12.70%

87761

74079

18.50%

Tablets

4760

4734

0.50%

Data Cards

1154

1259

-8.30%

93675

80072

17.00%

195294

174927

11.60%

FY 2013-14

FY 2012-13

Voice

153,730

145,130

5.90%

Data

57,914

47,223

22.60%

Other Services

22,149

20,018

10.60%

233,793

212,371

10.10%

429,087

387,298

10.80%

Carrier Networks: Carrier Networking Passive Infra: Towers

Total Carrier Infra Enterprise Communications

Total Enterprise Communications User Devices Mobile Phones

Total User Devices Total Telecom Infra Market

Telecom Services

Total Telecom Services India Telecom Market (Infra & Services)

% Growth

V&D-CMR Telecom Industry Survey FY2013-14

22 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra

Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra Telecom Infra

Top 10 Telecom

Telecos Infra services

`195,294 crore Top 10 Telecom Infra Companies FY 2013-14

FY 2012-13

Rank

Company

Samsung

27,293

19,936

36.90%

Nokia

15,774

19,280

-18.20%

Indus Towers

13,922

13174

5.70%

Micromax

9,212

4,281

115.20%

Cisco

6,434

5,944

8.20%

Viom Networks

5,554

5,287

5.10%

Ericsson

5,391

5,407

-0.30%

Nokia Networks

5,211

5,055

3.10%

Bharti Infratel

4,999

4,465

12.00%

Huawei

4,802

3,924

22.40%

(Revenue in ` crore)

% Growth

V&D-CMR Telecom Industry Survey FY2013-14 A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 23

FY 2013-14

Top10 Telecom Infra Samsung

Retains Top Slot, Improves Lead In FY 2013-14, Samsung became the only smartphone vendor in India to have presence throughout the price spectrum â&#x20AC;&#x201D;BD Park President & CEO, Samsung India

Ran

it expanded its footprints in India to 2,000 exclusive brand stores under the franchise model of which 1,100 are smartphone cafe format. Samsung also started focusing on the small towns with population of less than a lakh to increase its sales in rural India where majority of the market is shifting from feature phones to smartphones. The company plans to open 3,000 to 4,000 exclusive outlets across rural Indian towns. Apart from offline distribution channel, it has strong presence in the online space too in partnership with almost all the leading e-commerce portals like Flipkart, Snapdeal, and Homeshop18, etc., Going forward it

Growth Chart `27,293 Revenue in `crore

36.9% `19,936

FY 2013-14

24 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

FY 2012-13

V&D-CMR Telecom Industry Survey FY2013-14

amsung retained its leadership position in FY 2013-14 in India in the user devices segment. Clocking close to 37% growth the company led the Voice&Data Top 10 equipment companiesâ&#x20AC;&#x2122; tally as well, and had a significant role in pulling up the overall industry YoY growth. The driver for this spectacular uptake is strong growth of smart devices in India, growth of 3G and evolving device usage patterns of end users in India, many of whom are either going for a device upgrade or are the first time smartphone users. During this fiscal, Samsung strengthened its galaxy line of smartphones catering to price points ranging from Rs 5,000 to Rs 50,000, making it the only smartphone vendor in India having its presence throughout the smartphone price spectrum. This helped Samsung reach out to a broad range of customers with different usage needs. Apart from the new launches the aggressive marketing campaign, buyback offers and other promotional activities pushed the sales further. It was the only handset vendor in India during FY 2013-14 with the maximum spend on its advertising beating players such as Apple, Sony and Nokia. As far as distribution is concerned,

might launch some of its models as an exclusive online partnership with a particular e-commerce portal, a trend which is catching up fast post the success of Motorola in India. In the tablet category, Samsung is catering to both consumer and the enterprise segment through the traditional distribution route with specific focus on verticals like education and BFSI and has a dedicated team looking after enterprise tablet sales. In FY 2013-14, the company also started domestic manufacturing of tablets and scaled up the production capacity of its smartphone manufacturing unit in Noida. Also, it entered in the arena of smart-wearables, launching its first ever smart watch. Samsung has struck the rights chords at the right time in the past one year and tasted success. However, going forward the company will face stiff competition from new entrants like Gionee and Xiaomi apart from tier-one brands such as Motorola and Nokia, which are breaching the lower price points for their smartphones. Now, Samsung will have to focus on reducing the time-to-market of new models and bringing in innovation at lower price points.

FY 2013-14

Top10 Telecom Infra Nokia

Going forward Nokia has its task cut out in the competitive India handset market â&#x20AC;&#x201D;P Balaji

VP & MD, Nokia India

Losing Ground?

k okia had a tough FY Ran 2013-14 in India as it struggles for a comeback in the India handset market. It was dethroned by Samsung the year before (FY12-13) in the overall handset market in India but still leads the feature phone market. For Nokia, the highlights of last fiscal primarily include its acquisition by Microsoft and the tax row over the Chennai plant in India. Overall, it went down by 18 percent YoY, but the companyâ&#x20AC;&#x2122;s smartphone market share increased by 5% as of Q1 of 2014, as it brought its Lumia range to new categories and new price points. Its entry level Lumia devices (Lumia 520 & Lumia 525) were a hit among consumers thereby making Windows No. 2 operating system in India. It also entered the tablet and the phablet category during last fiscal with the launch of Lumia 1320, 1520 in India. Apart from expanding portfolio in smartphone segment it also broadened its Asha range with new launches like Asha 500, 502 and 503 Growth Chart and also launched the new Asha OS that offered signature Nokia expe-18.2% riences like Nokia Music; and also de`19,280 livered a faster and `15,774 more intuitive mobile experience. The company brought FY 2013-14 FY 2012-13 innovation in the V&D-CMR Telecom Industry Survey FY2013-14

Revenue in `crore

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A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 25

FY 2013-14

Top10 Telecom Infra Nokia Indus Towers

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—B S Shantharaju CEO, Indus Towers

Builds on Shared Infra

Sharing of infrastructure along with its innovations in energy has resulted in substantial capex and opex savings for its customer list which includes just about every teleco in the country

26 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

V&D-CMR Telecom Industry Survey FY2013-14

ndus Towers has had a great year and maintains its leadership position in market share of number of towers as well as tenancy ratio. The company currently has over 112,000 towers and over 232,000 tenancies. It was incorporated with an objective to provide shared telecom infrastructure to telecom operators on a non-discriminatory basis. Sharing of Infrastructure along with its innovations in energy has resulted in substantial capex and opex savings for its customers. Through its Tower Operating Centre, the uptime has increased to 99.98% and Indus has also made rapid progress in its “green energy” solutions, reiterating the commitment on saving the environment. Within five years of its inception, Indus has gained more than 50% tenancy market share and has crossed 2.0x tenancy ratio. With sharing of tenancies, incumbents like Airtel and Vodafone grew by 14%-16% in terms of tenancies while their subscriber base grew by ~60% in the same period. New operators who had acquired their licenses in 2008 were able to quickly hit the ground running by sharing Indus’ existing infrastructure thus leading to significant capex savings Growth Chart and quick network roll outs. Similarly in 2010, during the 3G launch - 80% of 3G BTSs were enabled by Indus. Today, the company’s list includes just 5.7% about every teleco in the country –Airtel, `13,922 Vodafone, Idea, Aircel, BSNL, MTNL, MTS, R Jio, Reliance Communication, Tata Com`13,174 munication, Uninor and Videocon. So far, since inception Indus has received 30 National and 2 International FY 2013-14 FY 2012-13 Awards. Revenue in `crore

entry level feature phone segment with launches like 108 the lowest cost Nokia camera’ 109 the lowest cost internet phone; 105 the lowest cost color screen device; and 114 the lowest cost Facebook phone. Not only it worked on providing its end consumers with a bunch of new innovative feature in music, location and camera, it was equally focused on Enterprise segment and along with Microsoft focused on shifting business customers to Windows Phone by delivering great Microsoft business applications and services like Office, Exchange, SharePoint, Lync, Skype and Office 365 as well as business-level security. However, the number of apps on Windows store is still an area of concern. It has close to 275,000+ apps on the windows store, one-third of what its competing operating systems like Google and Apple have on their store. To address this issue, the company has launched marketing programs focused on its apps and developer community such as “Your wish is my App” and “DVLUP” initiative which is a unique rewards program for Windows Platform developers across 43 countries globally, designed to confront the industry-wide challenge of app discoverability and uses gamification as the pivot. Going forward Nokia has its task cut out in the competitive India handset market. It has to increase its portfolio of Lumia devices and bring these to lower price points. This apart, it has to address the app ecosystem on its Windows store and reduce the time-to-arrival of the popular apps on the Windows app store. The focus on vernacular apps and regionbased marketing can help in reaching wider audience. Also, it has to educate its customers and familiarize them with the Windows operating system in a market like India which is android dominated and most of consumers think smartphone is synonymous with android. To grow in a market like India where smartphone adoption is increasing at a fast rate, Nokia has to address the above mentioned issues with speed.

FY 2013-14

Top10 Telecom Infra Micromax

A Record Growth

Affordability has always been a key strength of Micromax devices and it banked on the same through its aggressive marketing campaign â&#x20AC;&#x201D;Vineet Taneja CEO, Micromax

end consumers. It also tied up with operators such as Tata Docomo, and Aircel to offer bundled data, voice and content packages. Apart from this, it also tied with MTS to launch a CDMA and GSM dual SIM smartphone called Canvas Blaze and also created the first ever phone that pays its consumers to watch ads - MAd phone. It launched aggressive digital and print media marketing campaign along with concerts to focus on youth of the country which is the primary target audience of the company. On the distribution front it expanded

Growth Chart

115.2%

`9,212 `4,281

FY 2013-14

FY 2012-13

V&D-CMR Telecom Industry Survey FY2013-14

Revenue in `crore

i c ro m ax re co rd e d a spectacular 115% growth in FY2013-14, driven by a booming smartphone market in India. The company claimed No 2 spot after Samsung in smartphones. It is ranked No 3 in overall handset market trailing just after Samsung and Nokia. As far as other product categories are concerned, it is ranked No 3 in India data card market and India tablet market during FY2013-14 with 14.5% and 9.5% market share, respectively, in terms of unit shipments. During FY2013-14, it expanded its presence across the SAARC markets including Bangladesh, Sri Lanka and Nepal and entered Russia during FY2013-14. Getting Hollywood actor Hugh Jackman as its brand ambassador was a big win for the company, during the fiscal. Affordability has always been a key strength of Micromax devices and it banked on the same through its aggressive marketing campaign. Micromax further strengthened its Canvas and Bolt series smartphone portfolio by launching models like A34, A67, Canvas Doodle, Canvas 2, Canvas 2 Plus during 2013-14 which were a huge hit among

Ran

its set-up of super stockists, distributors and retailers and at the same time tiedup with popular e-commerce portals in order to reach wider range of audience within the country. Its products are also available in all leading mobile stores like Croma, Ezone, Next, Reliance Digital, The Mobile Store, etc., It has also expanded its exclusive experience zones throughout the country. However, going forward the company will face stiff competition from Chinese handset players who were once the ODM (Original Design Manufacturer) partners of local handset vendors and are familiar with the strengths of the home grown brands like pricing and distribution and can use the same to their advantage. As average selling price of smartphone is declining and global brands like Samsung, Nokia, Motorola make their way in entry level smartphone segment, Micromax knows that pricing and affordability will no longer be the sustainable factor in India smartphone market. To counter the same, it needs to innovate quickly and at the same time ramp up its after sales service in the country especially in tier 2 and tier 3 cities.

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 27

FY 2013-14

Top10 Telecom Infra Cisco

Flexes SDN muscle Looking ahead, Cisco is banking on IoE-led strategies that will allow it to have a greater play in traditionally non-IT centric verticals as well —Dinesh Malkani President Sales, Cisco India & SAARC

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TelePresence MX endpoints, video software and Business Edition (BE) 6000, 7000, to target enterprise and commercial customers. The new products are aimed at giving organizations of all sizes, and all budgets, access to high-quality video and collaboration technologies.

Ready to ride SDN As more and more applications are running in the Cloud, the visibility of these applications is becoming a challenge for customers. Cisco Application Visibility Solutions help customers gain visibility into applications running in their networks, and their performance, and apply policy to improve application performance and control network resource usage. Software-Defined Network (SDN) has

8.2%

`6,434

`5,944

FY 2013-14

FY 2012-13

28 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

V&D-CMR Telecom Industry Survey FY2013-14

Growth Chart Revenue in `crore

he demand for Enterprise Networks, where Cisco is a leader to reckon with, is being driven by Mobility, Video, Cloud, Network Programmability (SDN) and IoE. The company expects wireless to emerge as a strong focus area in the coming year. As Gigabit WiFi becomes the norm, more and more tablets and smartphones will get connected to wireless networks, producing more data, pushing organizations to implement innovative technology solutions to increase employee satisfaction and productivity. “In fact, many small and large enterprises are looking to re-design their campus (Enterprise) and branch network (SMB) architecture so as to meet the network demands that trends like Gigabit WiFi will bring in,” says Dinesh Malkani, the head of Cisco India. Mobility is a key contributor for growth in the demand for video as compared to previous years. Users today are increasingly deploying video over both wired and wireless networks across a variety of devices. Hence the demand for dedicated video endpoints has increased. Also, as these are increasingly becoming affordable, Cisco updated its video system and endpoint lines, in a significant refresh of the company’s collaboration line during the year. As part of the release, Cisco introduced new

become a key focus area for Cisco. Cisco has expanded its Cisco Application Centric Infrastructure (ACI) solution by introducing the Cisco Application Policy Infrastructure Controller (APIC) Enterprise Module. The new Cisco Application Policy Infrastructure Controller (APIC) Enterprise Module also expands Cisco’s cloud strategy and vision. “Our cloud portfolio with new products and services – including a breakthrough hybrid cloud solution, dubbed Cisco InterCloud – paves the way for interoperable and highly secure public, private and hybrid clouds,” elaborates Malkani. Looking ahead, the company is banking on IoE-led strategies that will allow it to have a greater play in traditionally non-IT centric verticals as well – such as video surveillance and entertainment. Also, IoE combined with public-private partnerships where costs, risks and success are shared, will be key to solve infrastructure challenges in the country. Cisco is already working with multiple governments across states in India for smart city projects. The list includes 1,500 km-long Delhi-Mumbai industrial corridor and a project to connect all police stations in Haryana with an open source database along with projects in Kerala, Hyderabad and Bangalore.

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FY 2013-14

Top10 Telecom Infra Viom Networks

Covers Lost Ground & More age on its 42,000 pan India tower portfolio is Reliance Jip Infocomm. In 2012, in the aftermath, of cancellation of 122 licenses by Supreme Court, Viom Networks had suffered a major setback where

iom Networks, a Tata Teleservices and SREI Infrastructure joint venture, in FY 2013-14, recorded a topline growth of 5 percent over the previous fiscal. More importantly, the company crossed a profit milestone, touching Rs 100 crore. Its strategic relationships with all the leading telecom operators in India – Tata Teleservices, Bharti Airtel, Aircel, MTS, Vodafone, Idea, Uninor and BSNL among others – paid-off. Latest to lever-

Growth Chart

5.1%

`5,554

FY 2013-14

`5,287

FY 2012-13

almost 35 percent of its business simply evaporated. It has been quite a turnaround since then. Led by Syed Safawi, the company has strong equity support from Macquarie SBI Infrastructure Funded consortium, GIC Investments Pte, Singapore, IDFC Private Equity and Funderburk Mauritius (Oman Investment Fund) and takes pride in its “green” energy focus. “From a conventional tower company, we are transforming ourselves as an innovation-driven, data-centric infra solutions provider,” said Syed Safawi, CEO, Viom Networks talking about partnering with Reliance Jio to offer its countrywide network infrastructure. With this the company is set to gain scale. Reliance Jio related revenues will kick in FY 2014-15.

V&D-CMR Telecom Industry Survey FY2013-14

CEO, Viom Networks

Revenue in `crore

—Syed Safawi

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Ericsson

On the mobile broadband highway

n terms of employee base, India is the largest region for Ericsson, globally with 18,000 of its employees stationed in India. It did not lay-off staff even in the tough market, which perhaps is one of the reasons for its marginally negative growth. The company is expecting business to pick up steam. Ericsson’s confidence in the India market is not misplaced. Last fiscal, even with the industry grappling weak macroeconomic

Growth Chart

-0.3%

`5,391

`5,407

FY 2013-14

FY 2012-13

30 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

V&D-CMR Telecom Industry Survey FY2013-14

Head, Ericsson India

Revenue in `crore

—Chris Houghton

environment and other challenges, Ericsson grew its share in Managed Services with the implementation of $1 billion multi-year converged (wireline and wireless) managed services deal, the company had bagged in February 2013. Its initiatives to address the growth

in data consumption k across mobile netRan works continued through the year in operator engagements spanning – 2G, 3G and OSS/BSS. Some key initiatives included deploying Wi-Fi solutions for managing mobile broadband load on spectrum deficient networks and scaling internal OSS/BBS solutions to better monetize data services. With a stable new Government at the centre, talking about building a broadband highway and having plans to leverage technology in areas such as education and health among others, the business environment can only get better for Ericsson telecom industry biz.

FY 2013-14

Top10 Telecom Infra Nokia Networks

—Sandeep Girotra

VP & Head, India Region, Nokia Networks

Makes the most of IP-fication

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V&D-CMR Telecom Industry Survey FY2013-14

Revenue in `crore

iding on managed Services and IPfication of telecom networks Nokia Networks continued to witness momentum in business from various existing and new domains. The company overall bagged nine key deals with top operators in 2013 (Jan-Dec 2013), thus defending its market share and widening its portfolio. It signed a WiFi deal with 2 top operators; rolled out pan India IP RAN for a leading operator, implying 100% IP enabled radio access; entered into a security solution deal with a top operator; and Extended Customer Experience Management deal with Airtel for its Manesar unit. With mobile data growing at 92% Y-o-Y in India (as per NOKIA’s MBiT Index May 2013, the company has partnered and is partnering with operators (public and private) for making data the next growth driver and provide support services to cater to this growth. The primary driver of success and differentiation for telecos is a focused customer experience management (CEM) program as the industry has grown competitive over the years. Some of the telecos have already started IPfication in order to provide quality data experience to the consumers. As the Growth Chart network becomes more complex due to the multiplicity of technologies – 2G, 3.1% 3G, 4G it will become crucial for telecos to think of manag`5,211 `5,055 ing these networks with high degree of sophistication in auFY 2013-14 FY 2012-13 tomation.

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A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 31

FY 2013-14

Top10 Telecom Infra Bharti Infratel

Growth Acceleration In-the-Works! when floods hit Uttarakhand and the super cyclone Phailin hit the coastal belt of Orissa. Its robust processes helped restore operations in quick time ensuring vital telecom connectivity.

harti Infratel is India’s largest listed tower firm as it holds 42% equity in Indus Towers, which is a joint venture between Bharti, Vodafone India and Aditya Birla Telecom, which by itself India’s largest tower company. According to V&D-CMR estimates, Bharti Infratel owned and operated 35,905 towers with 69,137 colocations in 11 circles and clocked a 12 percent YoY growth in this business. The company did well during the stress test

Growth Chart

12.0%

`4,999

FY 2013-14

`4,465

FY 2012-13

Going ahead, heavy investments in spectrum will lead to aggressive rollout of 3G and LTE networks in the current FY. It augurs well for the tower infrastructure business with sharing of infrastructure picking up further, the business growth can only get accelerated. RJio tying up with Bharti Infratel is a case in point. Given, that the whole ecosystem is set to reach a higher level of maturity with more and more compatible smartphones and feature phones being available at lower price points, thereby further increasing data consumption tower segment will also evolve. There will be further consolidation to drive efficiencies in the telecom towers business and Bharti Infratel is said to be on the lookout of such opportunities.

V&D-CMR Telecom Industry Survey FY2013-14

MD & CEO, Bharti Infratel

Revenue in `crore

—DS Rawat

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Huawei

Bets on driving LTE market

hinese company Huawei has been scoring points on account of both technology innovation and India strategy. Its Atom Router is the tiniest ever router with capabilities of plug and play, high density of Integration, and low power consumption. The router can be used at Base stations (MBB), FBB routers & Datacenter locations. This plug & play router does not require any

Growth Chart

22.4%

`4,802

`3,924

FY 2013-14

FY 2012-13

32 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

V&D-CMR Telecom Industry Survey FY2013-14

CEO, Huawei India

Revenue in `crore

—Cai Liqun

separate power module space. It also supports rich features such as IP FPM, RFC2544, Y.1731, SDN oriented Access and Gateway Solution. Its NetEngine5000E cluster router (NE5000E) is the industry’s first 400G core router that delivers industry-leading huge capac-

10 Ran

ity, carrier-level availability and green design, which fully gu arantees th e network robustness, service flexibility and TCO saving for service providers. Huawei is aiming at $2 billion revenue from India by 2017. Plans include setting up a manufacturing unit for devices once volumes picks up. By 2017, Huawei is targeting about $600 million from its devices’ business in India, which includes smartphones and data dongles. This will account for 30 percent of Huawei’s revenues. The company plans to invest $300 million in its R&D centre in Bangalore, where it has already pumped in $150 million in the past three years.

Carrier Infra Carrier Infra Carrier Infra Carrier Infra Carrier Infra Carrier Infra Carrier Infra Carrier Infra Carrier Infra Carrier Infra

Carrier Infra Carrier Infra Carrier Infra Carrier Infra Carrier Infra

Carrier Networks.................................... Passive Infra.......................................... Managed Services................................. Test & Measurement.............................. OSS/BSS .............................................. Software, Solutions & Consulting (SSC)...................................

35 41 45 50 51 55

Carrier Infra

`84,160 crore Market Share: Carrier Infra by Sub Segment FY 2013-14

% Share

Carrier Networks Core & Access Equipments Carrier Networking

14,912 12,764 2,148

17.72%

Passive Infra Telecom Towers Power Solutions

51,041 47,591 3,450

60.65%

Managed Services

5,883

6.99%

OSS/BSS

3,250

3.86%

Software, Solutions & Consulting (SSC)

8,055

9.57%

Test & Measurement

1,019

1.21%

Segment

Total Carrier Infra Market

(Revenue in ` crore)

84,160 V&D-CMR Telecom Industry Survey FY2013-14 A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 33

FY 2013-14

Carrier Infra

Carrier Infra Test & Measurement

`1,019 Software, Solutions & Consulting

`8,055

OSS/BSS

`3,250 Managed Services

`5,883 Power Solutions

FY 2013-14 in ` crore

`3,450

Telecom Towers

`47,591

Carrier Networking

`2,148 Core & Access Equipments

`12,764 Overall Carrier Infra market ` 84,160 crore V&D-CMR Telecom Industry Survey FY2013-14

Test & Measurement

1.21%

Software, Solutions & Consulting

9.57%

OSS / BSS

15.17%

3.86% Managed Services

Power Solutions

6.99% 4.10%

Highlights

Core & Access Equipments

Overall carrier infra segment grew by 6%

2.55% Carrier Networking

Carrier Infra FY 2013-14 % Share of `84,160 crore 56.55% Teleocm Towers

V&D-CMR Telecom Industry Survey FY2013-14 34 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

clocking revenues of `84,160 crore in FY 2013-14 as against `79,361 crore in FY 2012-13. Passive Infra (Telecom Towers & Power Solutions) accounted for 60% of the revenue share and Carrier Networks (Core & Access Equipments and Carrier Networking) made up another 20% share in overall Carrier Infra segment revenue of `84,160 crore. Power Solutions, accounted in Passive Infra sub-segment, was the fastest growing subsegment. It recorded a YoY growth of 34%. All other sub-segments grew in single digits – Managed Services at 9.2% YoY growth was followed by Carrier Networking which recorded 7.7% YoY growth.

FY 2013-14

Carrier Infra Carrier Networks

Core & Access Equipments `12,764

`2,148

Carrier Networking

Total Carrier Network Market `14,912 crore V&D-CMR Telecom Industry Survey FY2013-14

It was a year of maintenance of the infrastructure and augmentation of services. It did not result in significant creation of new services. The massive telecom infrastructure that exists today in India needs to be sustained at thresholds of quality and service so that it ensures delivery of the services for which it has been created. In FY 2013-14, most of the activities and operator spend was related to keeping the networks up and running. At the same time, some of the underserved networks, for instance, 3G networks of several operators saw augmentation in terms of increased network quality and management as the efforts this year were to bring in efficiencies in the network for higher customer expectations and service delivery. Many of the operators including Airtel, Idea and Aircel invested in improving the 3G coverage in Tier II and III circles for increasing the customer servicing networks. But, these were incremental investments over and above the base investments done for the past few years, essentially to increase the monetization opportunities of these networks by enabling the consumers to use the services across several licensed circles. Another phenomenon that drove some investments into telecom infrastructure was â&#x20AC;&#x2DC;controlledâ&#x20AC;&#x2122; enablement of 4G/LTE networks. Many operators spent on laying their 4G networks in a limited manner, resulting into creation of infrastructure within a loop/sub-circle of a circle. However, these networks are not yet into production and are mostly being tested before formally being lit. Overall, in FY 2013-14, core and access equipment market was pegged at Rs 12,764 crore as against Rs 12,458 crore last fiscal showing an incremental growth of 2.5%. However, in FY 2014-15, this is going to achieve higher growth rates as operators have started rolling or near-rolling of 4G/LTE networks. This will be the game changer in the current year, along with continuous augmentation of 3G networks which is happening mostly in Tier II and III circles.

Top 3 Companies by Revenue Company

FY 2013-14 (in `crore)

Ericsson

3,731

Huawei

3,419

Nokia Networks

3,101

Others

2,513

Total

12,764

20% Others

29% Ericsson

24%

Nokia Networks

27% Huawei

Others include Alcatel Lucent, ZTE, C-DOT, Tejas

V&D-CMR Telecom Industry Survey FY2013-14

Core & Access Equipments

V&D-CMR Telecom Industry Survey FY2013-14

Company % Share in the overall Core & Access Equipment Revenue of `12,764 crore A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 35

FY 2013-14

Carrier Infra Carrier Networks

IP-fication needs of telcos, in the wake of 3G and 4G focus, remained key drivers of network investments

riven by a rapid growth in mobile data traffic and encouraging if not matching growth in 3G subscribers, telcos have been busy ramping up their networks to prepare for an imminent era of mobile data and broadband. As voice usage is hitting a plateau and the focus is shifted to data, all leading telcos, including Bharti Airtel, Vodafone, Reliance Jio Infocomm, Idea Cellular and Reliance Communications as well as others were busy with their respective new network rollout and expansion plans during the year. Reliance Jio is also the only pan-India operator for 4G services in the country, and is likely to launch the services in the beginning of 2015. The industry is already witnessing a momentum in 3G subscriber growth even as the service providers are sketching out their 4G network investment plans. Reliance Jio has already committed its 4G investments and so has Airtel, albeit on a smaller scale. Nevertheless, it already has 4G networks—and services—operational in select cities across India. In line with their clear 3G and growing 4G focus, telcos have been busy up-grading their corresponding networks, which has been the key driver for growth in the carrier equipment market segment. In a slow growth year, these investments have brought cheer—with mixed fortunes—for carrier equipment vendors ranging from Ericsson, Nokia Networks, Huawei, Alcatel Lucent, Ciena, Cisco, ZTE, Samsung and Infinera, among others.

Key Developments in 2013 In next few years, global vendors like Nokia Networks anticipate a 1,000-fold growth in capacity at ever lower costs, with maximum chunk of that coming from emerging markets like India. The telecom equipment maker is seeing India as a key investment region and plans a consistent focus to strengthen its offerings. The company is centering its strategy on getting business transformation deals through its network elements and innovations. 36 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company Cisco

1,289

Alcatel Lucent

601

107

Others

150

Total

2,148

Others include Juniper, Brocade V&D-CMR Telecom Industry Survey FY2013-14

Others

28% Alcatel Lucent

60% Cisco

V&D-CMR Telecom Industry Survey FY2013-14

Departure from Legacy

Carrier Networking

Company % Share in the overall carrier Networking Revenue of `2,148 crore Besides the network maintenance, operators did spend on the active as well as passive networking components of the telecom infrastructure primarily to support new services and higher throughputs. As the consumers started using high speed data services for consuming rich multimedia content, operators did spend in upgrading the switches and routers within their networks to support higher throughput rates of higher Giga Bit orders. On the passive network elements, spending was mostly attributed to fibre patch cords within data centres. Networking within carrier networks was the second highest growth rate segment within the Carrier Infrastructure segment registering a growth rate of 7.7%. This translated into revenues of Rs 2,148 crore as against Rs 1,995 crore for FY 2012-13.

FY 2013-14

Carrier Infra Carrier Networks

Nokia has been selected by Bharti Airtel for network deployment in Maharashtra and is also collaborating with other operators for making data a successful case for the Indian ecosystem. In 2013, the Finnish equipment vendor also bagged Wi-Fi deals from two incumbent telcos. The company is also focusing on reduction of carbon emissions and is assisting operators in deploying energybased solutions to improve their savings. Nokia has two global R&D centers in India. The Bengaluru center with 3,000 people supports 3G initiatives for the domestic market, especially the Flexi platform, while the Gurgaon center focuses on GSM/EDGE product management. Nokia Networks has also been selected by Telenor Group as a supplier for radio access equipment and professional services over a period of next five years. The telco is modernizing its existing 2G

and 3G networks and continuing to deploy LTE across Europe and Asia. Nokia Networks claims to serve 280 million telecom subscribers over 230,000 sites through its network gears. The company’s customer list includes Airtel, Vodafone, Aircel, BSNL, Idea, Tata, Uninor, Videocon, Defense and Railways. For the Swedish equipment vendor Ericsson, 2013 was not a particularly fabulous year in certain ways. For example, the company has largely been focusing on 3G market in India and is yet to announce any major win in the 4G market segment. A surprising part was that despite having a strong relationship with the country’s leading telco Bharti Airtel, Ericsson failed to secure any 4G contract from the telco. In fact, Huawei bagged Airtel’s 4G contract for Bangalore; ZTE for Kolkata, and Nokia for Maharashtra. Alcatel Lucent (ALU) was awarded the contract for modernizing domestic access network deals from Telenor

38 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

recently. As per the deal, Telenor is using ALU’s Motive Network Analyzer to continuously monitor broadband connections, provide efficient troubleshooting capabilities and optimize all of the connections being offered to its subscribers. The Paris-based network gear maker, however, is facing stiff competition in India. ALU’s performance in the India market has been watched, given that it is trying to strengthen its focus on IP and ultrahigh speed broadband access and taking measures to refinance its debt. Networking major Cisco, around mid-2013, announced that Vodafone India would be deploying its end-toend networking solutions to evolve to a complete IP-based architecture in India. Bharti Airtel had also deployed Cisco ASR 5500 routers earlier. Cisco had said its solutions would provide Vodafone with a multiservice convergence platform to serve Vodafone’s residential, business and mobile customers with a single network infrastructure, thereby lowering its capital and operating costs. On the technological front, an interesting development that garnered significant attention was that on the Software Defined Networking (SDN) front. Not many telecom operators have so far determined their strategies for moving to SDN. Yet, SDN was much discussed as an upcoming opportunity for carrier equipment vendors, so much so that Ciena and Ericsson entered into a strategic agreement with an eye on SDN. Under this partnership, Ericsson would be able to handle the investment of the IP aspect of the next-generation of networking whereas Ciena will handle the packetoptical space. As part of the collaboration, Ericsson’s strong foothold in the network management would be exploited for virtualized migration of service providers. Ericsson’s earlier acquisition of Telcordia and ConceptWave is expected to be used to further a competitive differentiation. For companies like Ciena, investing towards building the right kind of intelligence in the network has been a core focus area.

FY 2013-14

Carrier Infra Carrier Networks In 2013, global carrier equipment players also went on acquisition spree. Ericsson acquired the operations of Airvana, a supplier of EV-DO software; and BSS consulting and system integrator company Telcocell. The company believes that the market for networks is growing somewhere between three to five percent and more than five percent in services. Nevertheless, Ericsson did secure the Wi-Fi hotspots deal from Reliance Jio. Ericsson’s BelAir acquisition gave the company access to a strong carriergrade Wi-Fi portfolio, technological expertise, IPR, and established customer contracts and relationships. That has helped fortify the company’s position in carrier Wi-Fi. Both the European vendors Ericsson and Nokia, however, have been in an intense price battle with Chinese gear makers like Huawei and ZTE. India, which is a key market for Huawei in Asia-Pacific, contributes around $1bn to the company’s annual revenue. The Shenzen, China-based telecom equipment maker is investing in its R&D center and also plans to invest in local manufacturing through the support of Indian government. While both the Chinese players— Huawei and ZTE—continue to offer cost advantages to strengthen their positions in the India market, they have also been facing pressure on account of potential security threats. ZTE plans to open a global network operations center in the country to serve telecom operators in Asia and Africa. The company currently has around 1,500 employees in India and has a NOC facility in Gurgaon, through which it manages wireless network of Idea Cellular and Aircel’s NGN. It also manages networks of TTSL and SSTL.

Growth Drivers As the telecom operators move from 2G to 3G and LTE, they are emphasizing on deploying next-generation networks. Given the changing market dynamics and the rapidly evolving

Given the changing market dynamics and the rapidly evolving technologies in telecom, all the top telecom operators are trying to move towards a multiserviced single converged network technologies in telecom, all the top telecom operators are trying to move towards a multi-serviced single converged network. All this, combined with the strong emphasis on IPv4 and IPv6 migration, and the importance of improved customer experience has fuelled the need for modernizing the network for telcos. Additionally, government initiatives, improved regulatory scenario and new guidelines are further building a positive environment for the industry. Going by the statistics, the total number of 3G subscriber base has surpassed to 40 million and the average data usage has also grown by 100 MB. However, one of the major challenges faced by telcos is to expand the coverage area. Compared with 450,000 2G sites, India’s 3G sites are just about 90,000. In order to meet the growing data demand, telcos would need to improve their service offerings and invest rightly in the new technologies and network up-gradations. As data is becoming a key focus area, customers’ expectations of getting quality services at a reasonable price are also rising. To meet these twin objectives, telcos need to be ever more careful about their investments in infrastructure.

40 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

Challenges Ahead As India’s new government is preparing a blueprint to support the country’s domestic telecom equipment vendors, some of the global vendors believe that this would make an impact on their businesses. In terms of the 4G opportunity, telcos might delay or slow the expansion of their LTE networks due to a relatively weak LTE device ecosystem. Another key challenge could be a delayed cycle of investments. Since telcos are sitting on piles of debt and also would need money to participate in the upcoming spectrum auction, they may want to push their key network modernization investment for a while. Further, telcos would also be looking at technologies like SDN to lower their overall network costs, or in other words, using software to optimize the use of hardware.

What Next? Even though the next few years will continue to see 3G as a primary mobile broadband vehicle, the future belongs to 4G LTE and telcos would strategically start investing in 4G and building the infrastructure. In particular, Reliance Jio’s launch in 2015 is expected to set the pace for 4G network investments by other telcos as well. Telcos would also be looking to invest in their network infrastructure in such a way that it can help them migrate from 3G to 4G at a minimum cost and minimal effort. Equipment makers that are best aligned to this need, say, through carrier SDN and Network Function Virtualization (NFV) offerings, would be favored over others. Considering that both carriers and equipment makers are new to SDN, if not so much for NFV, it would be important to identify milestones that SDN could help telcos achieve to their business advantages. Equipment vendors, in turn, would need to design their SDN offerings carefully, so that their telco customers can reap significant and measurable benefits.

FY 2013-14

Carrier Infra Passive Infra

Leveraging Build-outs The tower companies turned their attention to improving the tenancy ratios, helped by infrastructure sharing deals through infrastructure sharing. The model, which was first lauded as a business innovation, has not necessarily lived up to its true potential though. The average tenancy continues to hover at just about 1.8.

Key Developments in 2013 The industry slowed down somewhat on the new build-outs front and was busy inking infrastructure sharing deals. Reliance Jio Infocomm emerged as a key driver of multiple tower sharing pacts. In June 2013, Reliance Jio and Reliance Communications signed an agreement for sharing of RComâ&#x20AC;&#x2122;s pan-India telecom tower infrastructure. The deal enabled access to around 45,000 towers of RCom to Reliance Jio. The former said it would generate revenues of around Rs 12,000 crore over the lifetime of the deal. For Reliance Jio, it marked a major step towards a number of tower sharing sign-ups, big and small. RCom went on to sign similar deals later with Bharti Airtel, Viom, ATC and Tower Vision.

`47,591 Telecom Towers

`3,450

Power Solutions

Total Passive Infra Market `51,041 crore V&D-CMR Telecom Industry Survey FY2013-14

elecom towers in India account for a bulk of the passive infrastructure in telecom, but only a small part of that is directly owned by the telcos themselves. This is unlike many other markets, where telcos still own a substantial part of the tower infrastructure. Indus Towers, which came into being as a joint venture of Bharti Airtel, Vodafone India and Idea Cellular, continues to be the largest telecom towers company globally. Then, there are still other infrastructure companies that came into being as spin-offs, with the likes of Bharti Infratel and Reliance Infratel being the prominent ones. Indian telcosâ&#x20AC;&#x2122; strategy of separating the tower infrastructure as separate entities has primarily been driven by the low-ARPU environment and a resulting need to leverage tower assets A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 41

Passive Infra

A Tenancy Challenge An interesting piece of statistics could be quite telling. India is estimated to have around 450,000 towers today, which could be comparable to what even China has—between 420,000 and 465,000, according to an investment bank report—across a mix of 2G, 3G and 4G mobile technologies. However, the number of Telecom Base Stations (BTSs) in India was estimated at around 810,000 while in China it is 2,538,000. This is clearly indicative that while India may not necessarily be short on the number of towers, it certainly is falling short from a utilization and tenancy point of view. While a recent Indus Towers release had said it has achieved a tenancy ratio of over two, some other players are at 1.8 or even lower. Also, Indus was at a ratio of 1.28 in 2008 and has taken around five years to reach the current levels. 42 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

Telecom Towers Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company Indus Towers

13,992

Viom Networks

5554

Bharti Infratel

4999

Others

23,046

Total Telecom Towers Market

47,597

Others include Essar Telecom, GTL, American Tower, Relliance Infra, BSNL-MTNL,

V&D-CMR Telecom Industry Survey FY2013-14

Another significant highlight of the year 2013 was a small but concrete step towards green towers. In April 2013, Indus Towers announced that it had completed 20,000 green sites across 15 telecom circles and had plans to complete another 10,000 green sites in 2013-14. As part of their national campaign called Indus Towers Green Sites Project, the company said it had declared six major cities namely Mumbai, Kolkata, Ahmedabad, Chandigarh, Palanpur and Gandhinagar as ‘Green’ where sites in the limits of municipal corporations would not be using diesel and relying just on grid power and other non-polluting backup sources. Indus had earlier bagged a Voice&Data Green Company of the Year Award too. This company said around 2,500 sites had been identified for solar power, of which 728 sites have already been installed. The company was also testing wind power and gas solutions, be it piped natural gas, LPG solutions or CNG-based solutions, and said it was even developing biomass solutions for telecom towers. Other companies have also been taking steps to strengthen their green portfolios, as directed by the government, base on TRAI recommendations, but the progress has been slow. The government had earlier mandated that at least 50 percent of all rural towers and 20 percent of all urban towers were to be on hybrid power, i.e., a combination of grid power and renewable energy technology, by 2015. Further, it stated a goal of 75 percent of the rural towers and 33 percent of the urban towers to have hybrid power by 2020. Given that the grid-power supply is not dependable and even unavailable sometimes, the telecom towers and sites have to be dependent on diesel gen-sets, not as an exception but almost as a rule. Industry estimates peg the spend on diesel to the tune of Rs 8,500 crore per annum. This makes the role of alternative power and backup technologies, including UPS and renewable-energy technologies, all the more important. Some of the companies focused on telecom power and backup systems include Emerson, Socomo, Amar Raja, Eaton, Delta and Eltek, among others.

V&D-CMR Telecom Industry Survey FY2013-14

FY 2013-14

Carrier Infra

29.4% Indus Towers

48.4% Others

11.7% 10.5% Bharti Infratel

Viom Network

Company % Share in the overall Telcom Towers Revenue of `47,591 crore This segment of the carrier equipment recorded diminished investments by operators besides adoption of network optimization strategies like shared infrastructure. However, as the operators continued to focus mainly on network augmentation in the FY 2013-14, the tower capacities were added by several operators as well as the independent tower companies. However, as the phenomena of shared infrastructure is on the rise in the country resulting in ‘Managed Tower Services’, the growth is expected to be higher for independent tower companies as compared to operators increasing tower footprints. For the FY 2013-14, the telecom tower business in the country was estimated at Rs 47,591 crore as compared to Rs 45,211 crore in the previous financial year. Thus the segment saw a growth of 5.3% by virtue of revenues. It is expected that several operators might divest from the tower business thus giving rise to a strong base of independent tower companies that will manage the towers for operators and allow shared infrastructure. At the same time as operators also start focusing on improving the indoor coverage of networks through micro-cellular architecture of Pico and Femto cells, the tower density might not proportionately increase with the expansion of networks in the country.

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FY 2013-14

Carrier Infra Passive Infra

What Next?

Power Solutions Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company Delta

770

Mahindra Power

680

Amara Raja

280

Others

1,590

Total Power Solutions Market

3,450

Others include Emerson, Pace HBL, Exide, Eicher, Crompton

22% Delta

46% Others

20% 12%

Mahindra Power

Amara Raja

V&D-CMR Telecom Industry Survey FY2013-14

Company % Share in the overall Power Solution Revenew `3,450 crore Within the existing business there was normal pace of growth with not much expansion happening and the business mainly grew through the addition of new sites as well as implementation of greener technology and solutions in FY 2013-14. The major reason for phenomenal increase in the business was RJio, which for the first time in India decided to use Lithium Ion batteries shooting up the growth by over 34%. Lithium Ion batteries are costlier compared to other alternatives, and this year RJio procured for the massive expansion of network. SMPS/IPMS (SMCS) and batteries continue to form the major chunk of business apart from DG Sets, etc., that are used to power operator networks. Development of suites to manage power and build heavy analytics solutions as well as centralized centers (NOC) figures in highlight of the year. Power Solutions generated revenue of Rs 3,450 crore in FY 201314 as compared to revenues of Rs 2,568 crore in the previous year. 44 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

Going forward, the tower industry is expected to keep working on improving the tenancy ratio. The deals that Reliance Jio has entered into with the tower companies as well as telcos would go a long way in making this happen. As of date, an estimated 180,000 towers have been covered through various RJio deals. These include 82,000 towers through Bharti Airtel, which also has a 42 percent stake in Indus Towers and 45,000 towers of Reliance Communications. Others include 42,000 towers of Viom, 11,000 towers of ATC, and 8,400 towers of Tower Vision. Another goal for the stakeholders would be to further raise the number of towers on hybrid power. This, however, would be easier said than done, given that the cost of deploying renewable energy systems, like solar, is still relatively higher than grid-based power. Tower companies alone wonâ&#x20AC;&#x2122;t be able to drive the economy of scale to bring prices down and would need government support to achieve the goals that have been outlined by TRAI. A third goal, and certainly not of a lesser importance, would be to bring down costs of deployments and operations. While the legacy towers may not be so amenable to delivering this goal, the greenfield deployments can be leveraged in a strategic manner. Use of low-cost and high-durability carbon fiber structures could make a differentiating impact in this regard. For example, the deployment of a traditional cell site would earlier cost anywhere between Rs 25 lakh and 45 lakh. However, the use of a carbon fiber tower could bring the costs down by multiple factors. Even though some low-cost towers are understood to have brought the range down to Rs 15 to Rs 20 lakh, it is still considered high in a low-tenancy environment. For example, GlobeLink Telecom, a US-based company says along with American Consulting Technology & Research, they have engineered and are co-developing the first heavy load structure made from carbon fiber. The environmentally responsible, noncorrosive, low conductive carbon material would offer a multitude of benefits. GlobeLink claims the ultra-light carbon fiber material is less than 10 percent the weight and twice the strength of steel. The lightweight structure reduces tower erection to hours versus days or weeks without the need of a heavy lift crane and has a lower wind load which permits a 50 percent reduction in the foundation requirement, a major cost item, it says. Tower companies could benefit by taking a two-pronged approach to lowering the overall cost of their greenfield deploymentsâ&#x20AC;&#x201D;while they could potentially bring down the costs of towers significantly, they could reinvest those savings on deployment of renewable energy technologies.This would not only help them to keep the overall capex low, but also reduce on the opex by way of significant savings on diesel in the long run. And it goes without saying that along the way, they would be meeting the TRAI-mandated goals for going green!

FY 2013-14

Carrier Infra Managed Services

Converged Infra Play Arrives A growing thinking among telcos that they would need to bring IT and network pieces closer, on a single platform, to derive greater business value out of the two investment sets becomes center stage

he increasing adoption of data services and growing complexities in the telecom networks have opened up new opportunities for managed services providers, but the multi-vendor approach being adopted by telcos has also made the business environment more challenging for the players. In India, the seeds of managed services were planted in the year 2004, when Bharti Airtel signed a network contract deal with Ericsson. Today, the managed services market has evolved and is very much process driven, with service level agreements (SLAs) continuing to serve as key assessment parameters.

Managed services models are being adopted by operators to reduce capex and for improving customer experience. Compelled by the shift from network centric approach to service centric approach, telcos have been exploring new and innovative delivery models.

Key Trends A new normal of telcos engaging multiple managed service providers for different telecom service areas or different technology segments is driven by a multitude of reasons. These include the need to get best-in-class equipment and skillsets

Managed Services Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company Nokia Networks

2,110

Ericsson

1,660

Huawei

1,383

Others

730

Total Managed Services Market

5,883

Others include Alcatel Lucent, ZTE, Accenture V&D-CMR Telecom Industry Survey FY2013-14

12%

Others

36%

24%

Nokia Networks

Huawei

28% Ericsson

V&D-CMR Telecom Industry Survey FY2013-14

Like other mature telecom markets, Managed Services is growing well in the country despite overall slow pace of the sector. In fact, one of the major factors attributed to the growth of Managed Services is to bring in operational efficiencies in the difficult times. Operators in India continued to sign deals of getting the services managed by third party players, mostly telecom solution providers. The operators continued to engage Managed Service Providers for more and more circles this year while there were also some replacement deals wherein an operator appointed a new service provider to replace the incumbent. Managed Services is still dominated by the cost factor and this remains the critical factor that an operator takes into account while selecting one. In India also, the preference is skewed towards low cost Managed Services providers while the premium service providers attempted to fight competition by offering increased value for every rupee spent by the operator. This meant inclusion of many new services extending the scope of Managed Services. It resulted in retention of the customers as well as maintaining of the order value in increasingly competitive market. Despite, competitive pressures, Managed Services segment witnessed the highest growth rate in FY 2013-14 within the carrier equipment and solutions category of the Telecom Equipment market. The market was pegged at Rs 9,129 crore as against Rs 8,422 crore registering a growth of 8.4% compared to the previous year.

Company % Share in the overall Managed Services Revenue of `5,883 crore A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 45

FY 2013-14

Carrier Infra Managed Services

corresponding to a technology and the desire to reduce spending through increased competition among vendors. Nevertheless, the telcos are also cautious that they don’t overstretch the multi-vendor model beyond a threshold, lest it becomes counterproductive, given that vendor management has got challenges and complexities of its own. Telcos, therefore, are also looking to optimize the number of managed service providers they engage with. The top managed services players in the country are Nokia Networks, Ericsson, Huawei, Alcatel Lucent and ZTE.

Top Deals Norway based Telenor, for instance has followed a completely outsourced model to achieve breakeven in six of its operating circles. The company has selected Alcatel Lucent to provide operational support and business transformation services for three circles of Gujrat, Maharashtra and Andhra Pradesh.

According to Alcatel Lucent, the agreement reaches beyond traditional managed services and helps put the operator on a transformational path that would enable its customers to experience quality services. Alcatel-Lucent also won a seven year end-to-end network managed services contract from the fixed and mobile services operator Reliance Communications. The deal covers Reliance’s operations in eastern and southern India. Valued at over $1 billion, the contract encompasses Alcatel-Lucent bringing together Reliance’s independent wireless and wireline teams to form a single network management organization. The vendor will also drive standardization of the tools, processes and best practices that are applied across Reliance’s businesses. The Swedish vendor carrier networking major Ericsson’s managed services portfolio in the country has also consistently grown, with close to 10 deals in its kitty. It has customer

46 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

engagements with telcos like Bharti Airtel, Aircel and Idea Cellular. Ericsson’s focus is on addressing opex needs, customer retention and innovative business models to increase revenues. In early 2013, the company secured $1bn worth of managed services contracts from Reliance Communications. As per the deal, the Swedish vendor will operate and manage the wireline and wireless networks for RCom’s northern and Western region in the country for seven years. Ericsson’s arch European competitor, the Finland-based Nokia Networks (formerly Nokia Solutions and Networks, and Nokia Siemens Networks) boasts of 15 years of strong experience in global managed services business. The company is working towards expanding the scope of its managed services agreements with top service providers. Overall, the vendor is managing around 160,000 base stations in the country and serves all the top telcos such as Vodafone, Bharti Airtel, Aircel, Idea Cellular and Tata Teleservices. The company also manages 175,000 transmission nodes and over 4,000 IP routers and switches—all multi-vendor and multiyear contracts. Nokia Networks has also come up with its predictive operations offering, which is designed to identify potential service degradations and outages with 95 percent accuracy. As part of its managed services portfolio, the service, as claimed by NSN, will enable telcos to improve quality by 15 percent. The managed services portfolio of Nokia Networks is delivered from its global delivery centers in India and Portugal. Chinese gear maker Huawei has adopted a new approach to offer managed services to telecom network operators. The Chinese vendor is working with Aircel, Tata, MTS and Bharti Airtel, among others for their managed services. In November, last year, Huawei along with ZTE, managed to get the Sistema Shyam Tele Services’ (SSTL)’s multi-vendor managed services contract. In another interesting develop-

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FY 2013-14

Carrier Infra Managed Services ment, Bharti Airtel, which famously introduced the concept of subcontracting by outsourcing its many non-core functions to IBM, decided to purchase the entire stake in its joint-venture with Alcatel-Lucent Managed Network Service India. The reason for the exit is speculated to be ALU’s declining profits and its desire to seek an exit route from non-profitable ventures.

With the sub segment getting more competitive, it would be tougher for the smaller vendors to enter and survive in this market

Growth Drivers As the telecom industry is evolving and mobile internet is taking center stage, there is a consistent pressure on operators to improve the returns on their investments while maintaining same or better service quality. This has led to a persistent evaluation from service providers to identify best practices to reduce their costs without falling. According to analysts, drivers of current phases of managed services are characterized by a greater focus by operators on how to adapt to the changing dynamics of the industry and position themselves better for future opportunities. It emphasizes that the key drivers that would contribute in the growth are network sharing and the emergence of over-the-top applications such as social networking. Managed service model offers telcos a great way to reduce costs, minimize investment and human capital and concentrate better on subscriber acquisition, retention and business development and growth. In a scenario, where capital investment requirements are on an alltime high, managed services are a tool to stay not just afloat but competitively relevant. The sector could perhaps take fresh cues from the IT sector, which has been reaping the rewards of outsourcing for longer. As the service providers are shifting more and more focus on the expansion of 3G services and the rollout of 4G services, the requirement for managed services will only further evolve. It helps telcos to focus on their core business needs, which could eventually drive their profitability.

What Next? Considering the growing competition and threats from OTT players, telcos will continue to look for strategic partners who could help them plan, deploy, realign and grow their networks by way of modernization and transformation processes. The usage of analytics tools is bound to grow and new SLAs are going to be written. While the telecom network managed services space is largely dominated by network equipment providers, IT services players like IBM, TCS, Wipro and Tech Mahindra are also constantly exploring avenues where their strengths in IT services could be leveraged. In order to tap the opportunity, Wipro is focusing strategically to develop telecom network service offerings to meet the changing requirements of various sets of communication service providers. In June 2014, Wipro won a managed services contract from Indian cable distribution company DEN Networks. Under the agreement, Wipro would be facilitating DEN Networks to streamline the deployment of its next generation services and provide quicker service activation, while also delivering accurate rating and billing and improved customer service experience. The managed services business is also increasingly about vendors competing on price as well as cost effectiveness. With the space getting more and more competitive, it would be tougher for the smaller vendors to enter and survive in this market. A study from ABI research

48 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

says that the top vendors have procured the benefits from an industry in rationalization turmoil. It says that globally, the top three vendors Ericsson, NSN and Huawei now together account for around 85 percent of total telecom managed services revenues and would continue to improve their execution skills. Further, the telcos are looking to adopt the cloud based services and concepts like software defined networking (SDN) and network function virtualization are grabbing their attentions. They are also realizing a strategic need to find a way to orchestrate between their IT and telecom networks, which have traditionally been mutually discrete and somewhat isolated systems. There is a growing thinking among telcos that they would need to bring IT and network pieces closer, on a single platform, to derive greater business value out of the two investment sets. A prevailing multi-vendor environment and telcos’ best-in-class approach implies that discrete parts of the network could be dominated by different vendors. Telcos’ need to better integrate and orchestrate these network pieces with the IT platforms would lead to new partnerships among the vendors coming into being. A recent example is the Ericsson and Ciena partnership, which included packet-optical distribution, converged IP-optical joint development and distribution as well as an SDN collaboration framework. Telcos’s strong desire to have a converged infrastructure play is best reflected in the Airtel’s captive Network Experience Center that went live in 2012 and also in Vodafone’s Super Network Operations Center that came into being recently in 2014. The Airtel facility enables monitoring of networks spanning mobile, DSL broadband, mcommerce, DTH, enterprise services and even international cables across its India and South Asia operations. The Vodafone SNOC would provide it with an integrated insight into the working of the telco’s 120,000 sites across the country.

FY 2013-14

Carrier Infra Test & Measurement

Year of Nominal Growth Since the investments in the overall infrastructure were nominal in comparison to that of previous years, the Test & Measurement market witnessed a nominal growth at 4.4% in FY 2013-14. The growth majorly came from telecom R&D and manufacturing within the country while operator networks that contributes the maximum to the Test & Measurement market in India did not contribute much. However, as the augmentation of networks is expected to continue and operators are strengthening their data as well as voice networks, both testing and measurement becomes a key element. At the same time, enablement and rollout of newer networks like 4G/LTE as well as the services like Video services, the networks need to be thoroughly tested and measured for performance and strength. This could result in the segment bouncing back by witnessing a higher single digit or early double digit growth in the year to come. At the same time, as focus is towards indigenization of products, including that of telecom equipments and devices, the R&D and manufacturing will see increased contribution to the overall Test & Measurement market in years to come. Test and Measurement market was estimated at Rs 1,019 crore for FY 2013-14 as against Rs 976 crore in fiscal 2012-13.

Test & Measurement `1,019

33%

37%

Others

11% Tektronics

Agilent

19% Rohde & Schwarz

V&D-CMR Telecom Industry Survey FY2013-14

Company % Share in the overall Test & Measurement Revenue of `1,019 crore

50 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

Test & Measurement Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company Agilent

377

Rohde & Schwarz

194

Tektronics

112

Others

336

Total Test & Measurement Market

1,019

Others include Spirent, Toshniwal, National Instruments, Fluke Networks, JDSU, Aishwarya, Yokogawa India V&D-CMR Telecom Industry Survey FY2013-14

FY 2013-14

Carrier Infra OSS/BSS

Driven by Transformation With the telcos headed into an era of converged networks and related service offerings, functions like mediation, charging and billing are undergoing makeover too

n telcos’ journey towards business transformation, driven by a rapid convergence of telecom and Internet, two parallel themes have been recurrent — IPfication, and, ITfication. While the former directly pertains to the carrier networks, the latter is perhaps best manifested in the OSS/BSS subsystems. The telecom networks have today become highly complex, with both legacy and new-generation services co-existing.

Within the mobile services segment itself, there are a multitude of networks including 2G, GPRS, EDGE, 3G and LTE. There also are carrier Wi-Fi and PSTN infrastructures with which interconnects are required. Going forward, the complexity is only bound to increase, especially for incumbents who need to recoup their investments in legacy networks like 2G even as they build nextgeneration networks like 4G. For example, 4G LTE doesn’t

Top 3 Companies by Revenue Company

18% Amdocs

FY 2013-14 (in `crore)

Amdocs

585

Comverse

488

CSG Systems

358

Others

1,820

Total Market

3,250

Others include Ericsson, IBM, Oracle, Alcatel Lucent, Subex, Huawei

56% Others

15% Comverse

11%

CSG Systems

V&D-CMR Telecom Industry Survey FY2013-14

OSS/BSS

V&D-CMR Telecom Industry Survey FY2013-14

OSS/BSS makes up 6.48% of the total carrier infra market of `84,160 crore

Company % Share in the overall OSS/BSS Revenue of `3,250 crore

In FY 2013-14 the operator investment within OSS / BSS segment primarily involved consolidation of database of customers. Due to the network rollouts happening in the country on the basis of circles as well as the services evolving over the period of time, operators have been managing several databases of customers – a single customer could figure in various database of the operator. As convergence has taken a leap and operators are serving multiple communication needs of a single consumer, it becomes important for operators to have a unified database across circles and services. It led to some good investments happening this financial year around OSS / BSS segment and it is expected that these will further pick up growth pace at increased rates in the FY 2014-15. In the year under review, FY 2013-14, the OSS / BSS segment grew 5.5% recording revenues of Rs 3250 crore. Another investment area within OSS / BSS segment was that of ensuring interoperability and integration of OSS / BSS solutions of several vendors used by a single operator. As an operator uses multiple vendors for different services and circles, it becomes important for the operator that these ‘islands’ of systems talk to each other for efficient service enablement. A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 51

FY 2013-14

Carrier Infra OSS/BSS support voice inherently, so telcos are looking at Circuit Switched Fall Back (CSFB) as a means to switch to 2G for delivering voice calls while LTE is used for data. This increases the complexity manifold for telcos and they need to ensure that there is no revenue leakage during the switchovers and also that the customer experience doesn’t really suffer due to that.

Key Developments Historically, the proprietary nature of OSS/BSS subsystems has posed a challenge for telcos. In simpler network environments, that was manageable, but in a heterogeneous network environment that poses a significant challenge. In an era where customer experience is the ultimate determining factor for the sustained success of telecom businesses, it is important that all the pieces of the OSS/BSS jigsaw are knitted well and have complete interoperability. Proprietary

OSS/BSS components are an antithesis to that, as they pose a deterrent to seamless interoperability. OSS/BSS players have started recognizing this need of telcos, who must be dynamically responsive to the demands of a market that is driven to change by Internet-led convergence forces. In recognition of that need, arch competitors Nokia Networks, Ericsson and Huawei came together to participate in OSS Interoperability Initiative (OSSii), which promotes interoperability between different OSS vendor’s equipment. The initiative has been seen as an important step forward, as it would not only help the telcos to reduce complexities in their network operations but also equip them to better tackle a multi-vendor network environment. It is understood that such an initiative would simplify the integration processes across diverse sub-systems and also increase the efficiency and speed at which

52 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

the resulting services are rolled out by the telcos. “OSSii is built on a set of principles of openness, fairness, reasonableness and non-discriminatory treatment,” stated the OSSii website. However, more far reaching and wider-scale benefits of such an initiative would kick in when other major OSS vendors like Alcatel Lucent, Oracle and Amdocs join in. In particular, Amdocs has been a major vendor that has been deployed by many a large telcos. For example, in 2013 it announced the completion of deployment of its customer relationship management (CRM) solution on Reliance Communications’ network, following a deal made in the year previous to that. The multi-million deal is for deploying AmdocsCustomer Management 8.1 Smart client on the RCom network and was Amdocs’ largest CRM deploymentwin, globally. The deployed solution

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FY 2013-14

Carrier Infra OSS/BSS can handle 15,000 CSRs and 1.5 million customer interactions daily. In another significant deal, Amdocs deployed its roaming billing solution on Vodafone India’s network, again Amdocs’ largest in the world. V&D-CMR Telecom industry survey FY2013-14 estimates Amdocs’ Market share at 18 percent. Comptelis another focused player in the India market has deployments with the leading telcos like Bharti Airtel, Vodafone India, Idea Cellular and Tata Teleservices and is working with the likes of IBM, TCS and Tech Mahindra to address its telco customer needs. The company also recognizes India as its single-largest market in terms of revenues, accounting for up to 10 percent of its revenues at a peak. Even in its last fiscal, India accounted for around 8.5 percent of Comptel’s revenues. The company opened its new India office at Noida, with an aim to cater to its India market better, while also leveraging the center to serve its global clients. It was also targeting a 20 percent growth in its employee base in India, in line with the scale-up of its India business. It focuses on predictive analysis a lot, apart from service fulfillment, and advanced policy control segments.

Growth Drivers The growing adoption of smartphones and the usage of apps has been a key and determining driver of OSS/BSS transformation and upgrades. Each app is different and often places demands on the network in a unique way. This is very much unlike voice and SMS-based services that behave in largely defined ways and could therefore be served well by legacy OSS/BSS systems. The rapid rise in social media adoption and apps usage have put significant demands on the underlying OSS/BSS systems and telcos, in their best business interests, have been responding. This would continue to drive transformations and upgrades. Also, with the new government in place, it is expected that a long-pending

Cloud and big data perhaps present an even bigger and wider window of opportunity for the OSS/BSS vendors clarity on mergers and acquisitions would arrive sooner than later. It is expected that M&As would pave the way for more concerted and strategic efforts by telcos to make improvements on the network infrastructure and customer experience fronts. M&As would also trigger the need for telcos to integrate and consolidate their billing, CRM and network management components, among various other OSS/ BSS sub-systems, as two merging telcos would not necessarily be the on the same platforms. In a likely consolidating market, players like Ericsson, Nokia and Huawei would hope that their interoperability bet would help them shape the market dynamics in their favor. At the same time, those like Amdocs would be looking to strategically increase their share of managed service business in OSS/ BSS. As of date, a bulk of its engagement comprises the regular products and services businesses.

What Next? With a growing share of smartphones, supported by 3G and upcoming 4G networks, apps will continue to drive transformation in the OSS/BSS segment. In particular, the growing usage of video-based apps as well as content on the mobile networks would demand networks to be more responsive and the quality of service to be more adaptive to various application needs. The OSS/BSS systems should be in sync and aligned with the customer experience needs of the network, as demanded by customers.

54 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

Machine2Machine (M2M) applications present a rising area of opportunity for OSS/BSS vendors. Interestingly, some of the M2M application areas, like smart metering for utilities, are also where OSS/ BSS vendors already have a play, especially in the billing segment. M2M would potentially kick in a transformation of the billing systems in the utilities segment as well, which could be doubly rewarding for the OSS/BSS players. IP-fication of the networks is a crying need for India’s telecom industry, especially as the telcos prepare to enter the era of 4G, led by LTE, which is best served by an IP Multimedia Subsystem (IMS) core. In fact, features like Voice over LTE (VoLTE), which could deliver vastly differentiated HD-quality voice to subscribers and help telcos score over over-the-top (OTT) players, could only be possible through an IMS-like layer underneath. It goes without saying that an LTE era would ultimately drive IP-fication, which in turn would drive an OSS/BSS transformation as well. Cloud and big data perhaps present an even bigger and wider window of opportunity for the OSS/BSS vendors. As more and more services, especially so in the enterprise business segment, are delivered by telcos over the cloud, pay-per-usage models for billing and selfservice portals for service activation, for example, would become applicable and drive new investments by telcos in the OSS/BSS systems. Use of big data and analytics, in conjunction with OSS/BSS, is bringing up a new dimension altogether. Developments in the emerging area of network function virtualization (NFV) is a key business driver that can significantly impact growth in the billing and convergent charging market. According to a global market research firm, virtualized real-time charging is regarded as one of the first steps towards NFV monetization, since the ability to monetize data flow in virtualized environments is critical and will need real-time business support capabilities.

Enterprise Communication Enterprise Communication Enterprise Communication Enterprise Communication Enterprise Communication Enterprise Communication Enterprise Communication Enterprise Communication

Enterprise Communication Enterprise Communication Enterprise Communication Enterprise Communication Enterprise Communication Enterprise Communication Enterprise Communication Enterprise Communication Enterprise Communication

Enterprise Communication Enterprise Communication Enterprise Communication Enterprise Communication

Enterprise Networking............................ 59 Structured Cabling................................. 62 Communication Equipments & Devices................................................... 64 Software & Applications......................... 67

Enterprise

Communication

`17,459 crore Market Share: Enterprise Communication by Sub Segment Segment Enterprise Networking Active Networking Components Structured Cabling Systems Communication Equipments & Devices Desk Phones PBX Systems Audio Video Conferencing Â Software & Applications Enterprise Security Conferencing & Collaboration Total Enterprise Communication Market

FY 2013-14

% Share

8,635 5,839 2,796 4,954 2,649 1,620 685 3,870 2,709 1,161 17,459

49% Â

(Revenue in ` crore)

28%

22%

V&D-CMR Telecom Industry Survey FY2013-14 A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 57

FY 2013-14

Enterprise Communication

Enterprise Communication Solutions & Applications

Juniper Networks

Communications Devices & Equipment

`4,954

15%

V&D-CMR Telecom Industry Survey FY2013-14

FY 2013-14 in `crore

`3,870

Others

10.2%

68%

Cisco

Enterprise Networking

`8,635

Overall Enterprise Communication market ` 17,459 crore V&D-CMR Telecom Industry Survey FY2013-14

Company % Share in the overall Active Networking Revenue of `5,839 crore

Active Networking Components 22%

Enterprise Communication FY 2013-14 % Market Share 49% 28% Communications Devices & Equipment

V&D-CMR Telecom Industry Survey FY2013-14

Solutions & Applications

Enterprise Networking

58 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company Cisco

3,961

596

Juniper Networks

380

Others

903

Total Active Networking Component maket

5,839

Others include Alcatel Lucent Enterprise, Brocade, SmartLink, DLink, Netgear, DAX V&D-CMR Telecom Industry Survey FY2013-14

Note: See Structured Cabling Top 3 Companies on page 61.

FY 2013-14

Enterprise Communication Enterprise Networking

Gets Out of the Box!

A gritty march of virtualization and cloud models into the hitherto forbidden realms of networking brought about a solutions-driven approach to the fore

he networking equipment industry continued to undergo a technology transformation, which reflected on the market dynamics as well. The players were busy realigning with the shifts that have been pushing the industry out of its legacy box models into the more agile and nimbler models such as those shaped by cloud and software defined networks. While almost all of the IT pieces, including servers, storage and applications, have been virtualized for quite some time now, the networking majors had managed to resist change for long, in the interest of their proprietary businesses. No more. With the maturing of network functions virtualization (NFV) algorithms and the likes of VMware putting their weights behind those developments, the change got inevitable.

Key Players & Developments Cisco: No other player’s market position is perhaps more threatened by the disruptive changes brought about by the new technological paradigms. No wonder, the networking major has been busy pulling up socks on various fronts and has been realigning with the rapidly evolving market expectations and needs. It was not only working on the offerings, but also worked to re-orient its key partners in preparation of securing business in a changing market ahead. It introduced the Cloud Services

`5,839

`2,796

Active Networking Components Structured Cabling Systems

Total Enterprise Networking Market is `17,459 crore V&D-CMR Telecom Industry Survey FY2013-14

Reseller program, primarily aimed at its Gold partners, and also announced three new business transformation certifications— Cisco Transformative Architecture Specialist, Cisco Business Value Specialist and Cisco Certified Business Value Practitioner. The company is initially eying its large Gold partners. This was seen as a strategic channel program, aimed at enabling key partners over the next three-to-five years. These moves came within months of Cisco having announced its SDN platform in mid-2013 and given a picture of its SDN roadmap, after the acquisition of the SDN specialist company Insieme. The SDN platform has two major components—the Application Policy Infrastructure Controller and the Nexus 9000 series of switches. Meanwhile, in a major management change in 2013, Naresh Wadhwa left Cisco India as its President and Country Manager to pursue entrepreneurial interests, which created a leadership vacuum. Jeff White was brought in as President India and Saarc. (White was to be replaced in June 2014 by Dinesh Malkani) Juniper: Juniper, which is the second most significant player in the networking segment after Cisco, and is particularly strong in the routers segment, was not untouched by the SDN waves. However, instead of attempting to develop a full suite of offerings by itself, the router major chose to ally with a partner that could offer more holistic software-based virtualization solutions

As the penetration of ICT within India SMB sector grows, the enterprise networking business also sees continued growth year on year. SMBs, essentially e-enabled business models are implementing sophisticated enterprise networks. Compared to active components, Structured Cabling System segment saw higher growth rate of 18.7% as against 11.5%. This is mainly attributed to the increased usage of fiber optic and other optic networking passive components within a network. Active Networking Components market stood at Rs 5,839 crore while the Structured Cabling Systems market was pegged at Rs 2,796 crore in FY 2013-14. SDN and Network Virtualization remain the two key technology trends that are witnessing higher attention and are likely to change the entire networking philosophy in years to come.

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 59

Enterprise Communication Enterprise Networking However, like Cisco and Juniper, HP too put forth its Virtual Application Networks (VAN) SDN Controller, which lay at the control layer of the SDN stack.

What Next?

for diverse network environments. In August 2013, Juniper Networks said it had expanded its partnership with VMware to deliver a broad range of solutions for unifying virtual and physical networks within a virtualized data center environment. These solutions, which will include VMware NSX L2 Gateway integration and VXLAN routing capabilities across access, aggregation, core and edge tiers of the data center network, will offer enterprise customers seamless management of workflows across virtualized and nonvirtualized systems. Juniper Networks said the VXLAN routing and gateway capabilities would enable both intra- and inter-data center solutions and accelerate the transition to software-defined networking. Juniper noted that the partnership between Juniper Networks and VMware represented a shared commitment to delivering simplified, flexible solutions that enable customers to more easily migrate to SDN as their business needs evolve. However, Juniper also had its own SDN building blocks in place, notably the JunosV Contrail, which it built over the intellectual property gained from its acquisition of Contrail Systems earlier. In May 2013, Juniper introduced JunosV

Contrail, as a family of products which includes the JunosV Contrail Controller, an open, standards-based controller for SDN. In line with the various SDN related announcements, Juniper, like Cisco, also made a number of updates to its Partner Advantage program, and sought to incentivize around aspects such as cloud, services and distribution. Hewlett Packard: Hewlett Packard (HP), which has historically been strong in SMB segment in the LAN market, saw SDN as a key opportunity to penetrate deeper into the enterprise segment, which has been a Cisco bastion. It devised new strategies around SDN to take on market leader Cisco. The IT behemoth, which also has its fingers in more pies than Cisco, took to an “app store” model to make its SDN proposition more attractive and open to customers as well as partners. Much like the mobile app stores, HP’s SDN app store creates a platform where partners could place their applications developed using HP’s SDN developer kit. The company then said a large number of partners including Intel, Microsoft, Samsung, PwC, Riverbed, Citrix, ShoreTel, SAP, Tech Mahindra, VMware and Websense had signed for the SDN developer kit.

60 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

While models like SDN and NFV are helping to punctuate the flow of the market streams, some of the larger themes—like the Internet of things—stay on course. In a significant recent development, Cisco announced a strategic engagement with the Electronics City Industries Association (ELCIA) in Bangalore to develop its first end-to-end Internet of Things (IoT) innovation hub in Asia. This collaboration will help establish the foundation for a new ecosystem to help Electronic System Design & Manufacturing companies and other companies of electronic city engaged in IoT product development. As part of this effort, Cisco will help provide the network infrastructure and expertise for testing and production of electronic product prototypes for an IoT enabled smart city environment. Through the ‘Living Lab’, ESDM start-ups and other electronic city companies can build solutions for City Infrastructure Management including Smart Parking, Smart CCTV Surveillance, Smart Street Lighting, Smart Water Management/Leak Detection and Community Messaging. The project will utilize the Cisco Smart+Connected City Wi-Fi solution that will help enable community Wi-Fi services and allow access to public utility offerings. ELCIA will also embed Cisco network equipment comprising access points, routers, switches, and other required hardware and software applications that will be connected to the smart city’s fiber-optic backbone network. The first phase of this smart city project will be rolled out in Electronics City and will serve as a replicable model for the rest of Bangalore as well as other cities in India. At the beginning of 2014, Juniper’s Managing Director for India and Saarc, Ravi Chauhan, left the company after a stint of four-and-a-half years while some senior managers from the India opera-

FY 2013-14 tions were also relieved. Ashish Dhawan, who was Country Manager, Enterprise, at Juniper India, was later given the charge as the Managing Director for the company’s India &Saarc operations. More recently, Juniper Networks appointed Candensworth as its distributor for India and South Asia. Cadensworth, which is a wholly owned subsidiary of distribution major Redington, became an authorized distributor of Juniper’s products and solutions and gain partnership benefits from Juniper’s Distributor Advantage program. Wi-Fi is becoming a more central and unified part of the emerging themes in networking. Where the players don’t have enough strengths in either LAN or WLAN, they are coming together to complement each other’s offerings in a more strategic and integrated manner. In one such significant move, Juniper Networks and Aruba Networks announced they signed a strategic agreement to deliver open, converged wired and wire-

SDN and Network Virtualization remain the two key technology trends that are witnessing higher attention and are likely to change the entire networking philosophy in years to come less network solutions, targeted at the mobility market. The partnership includes both joint development efforts and go-tomarket collaboration. Juniper said, as part of the collaboration, it is enabling technology partners like Aruba to take advantage of Juniper’s programmable silicon by making available key software elements and new

programmable APIs. Juniper and Aruba would be addressing mobility market trends with product-level integration that leverages open protocols and open APIs on Juniper switches and routers, and contextual data on users, devices, applications and location available from Aruba’s enterprise WLAN products, it said. In the Wi-Fi segment, an important development that took place in December 2013 was the ratification of the latest WLAN standard, 802.11ac. The standard gives Wi-Fi the teeth it has lacked due to the limitations present with the earlier standards. Some of the most significant features of 11ac include the speed, which could reach up to 1.3 Gbps, and the ultra-wideband channels, which could range from 40 MHz to as much as 160 MHz. Also, the standard used the uncluttered frequency band of 5 GHz unlike the earlier standards that mostly operated in 2.4 GHz frequencies, which are increasingly surrounded by various 3G and 4G frequencies.

39.4% Others

29.4% TE Connectivity

22.1% 9.1%

Schnedier

Molex Company % Share in the overall Structure Cabling Revenue of `2,796 crore

V&D-CMR Telecom Industry Survey FY2013-14

Structured Cabling Systems Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company TE Connectivity

822

Schnedier

618

Molex

254

Others

1,102

Total Structured Cabling Systems Market

2,796

Others include Commscope, DLink, R&M, Belden, Penduit, Belkin, DAX, Nexans, iball V&D-CMR Telecom Industry Survey FY2013-14

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 61

Enterprise Communication Structured Cabling

The Year of Drought? While growth remained subdued at large, the worst seemed to be over for an industry that accommodated more players than it could feed

he Structured Cabling market in India has been facing a few challenges in the recent years. Enterprises have been going slow on their expansion and related investment plans on account of weak market sentiment that continued to prevail. The currency fluctuations in the past and depreciation of the rupee only perpetuated the sentiments, even though the long-term potential of the economy continued to be promising. Also, an increased preference for Wi-Fi over LAN in select sectors, driven by cost optimization and mobility needs, impacted the scale of cabling installations. Towards the end of year 2013, things started to improve in certain sectors though. For example, the regulatory environment became more conducive for telecom. Meanwhile, trends like Bring Your Own Device(BYOD) prompted CIOs to improve both wired and wireless networks in the premises. This helped the structured cabling market, which has a key enabling role for both the networks. The growing preference for FTTX/ FTTH in pockets was another key driver for the structured cabling businesses in the country. Overall, around 20 vendors were competing for a share of the market. These included TE Connectivity, D Link, Commscope, Molex, Schneider, R&M, Sterlite, Levitan, Belden, Belkin, Panduit and Dax Networks, among few others.

Key Technologies Though Cat6a is considered as a major upgrade over the Cat6 standard and offers capabilities to support 10G speeds

in the 100-meter configurations, the uptake was limited, partly due to RoI considerations and partly due to lack of awareness. The deployment of more advanced standards like Cat7, which offer even more improved efficiency but for a cost, remained in early stages. On the other hand, majority of the datacenters are expected to use Cat 6a. Cat 6a is the evolution of UTP cabling to support 10G needs over longer lengths when compared to Cat 6. However, experts see no major advantages between Cat 6a and Cat7, which also has its own set of installation related challenges and physical specifications that have led to its deployment being limited to niches. Customers are more likely to move directly to Cat 8 later instead of testing the potential of Cat 7.

Major Players TE Connectivity invested an estimated Rs 300 crore to build its ninth manufacturing facility in India to tap local market and contribute to global exports. This new facility is being brought up near the Bangalore International Airport and it expected to be operational in 2014. At present, TE has over eight manufacturing facilities in India â&#x20AC;&#x201C; five in Bengaluru, two in Pune and one in Kochi. At the new plant in Bangalore, TE had said it would be designing and manufacturing next-generation connectivity solutions. These solutions would cater to needs of various industry verticals, with focus on automotive, aerospace, and defense.

62 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

TE Connectivity had, globally, acquired Deutsch last year, which is a provider of connectivity solutions for harsh environment applications. TE had also acquired ADC in 2010, which had strengthened its product portfolio. Commscope has been consistently exploring global markets to grow its revenues. In India, the company has some key client in the IT/ITeS, healthcare and hospitality sectors. It is offering its solution under two enterprise brandsâ&#x20AC;&#x201D;Systimax and Uniprise. In India, the company is expecting a significant uptake to meet the needs for higher speeds. Another major player D-Link, which has its major business coming from the copper solutions, has also launched new fiber-based solutions like OM4. Some of its major customers working with the company included NTPC, BARC, Western Railways, Jaipur National University, Kiran Jewels, Persistent Systems, Goa Airport, Reliance Infrastructure and Symbiosis Institute, among others. D-Link is offered wall mount enclosures designed for small networking, domestic application, audio-video, telecom, and lab applications, and are available from 4U to 15U variants with 400 mm, 4450 mm, 500 mm, and 600 mm configurations. Another major, R&M, was understood to have planned large projects in tier-2 and tier-3 cities. The industry saw a continued gradual shift from deploying regular cabling to intelligent cabling systems, as it gives complete visibility of the physical layer of the network to the enterprises.

FY 2013-14

Challenges While the market is expected to perform better in 2014, the industry is also battling with some challenges that require immediate attention. The volatility in copper prices, increased pricing pressures due to competition, and the presence of too many players are the key challenges that the industry is facing today. The industry is also finding it tough to meet fixed contract obligations due to currency fluctuations. The challenge is further compounded by the fact that a majority of the OEMs have their offices outside India and hence rise in import costs results in a vast increase in the cost of material, thus leading to higher cost of ownership. However, the situation on the currency front has stabilized in the recent months. Another dilemma being pointed out by experts is the lack of clarity on the role of copper in

times to come. While copper will continue to be a preferred choice for some time as it offers better RoI but when data centers migrate to beyond 40G, fiber will take center stage. The requirements set by customers are becoming more stringent. In particular, vendors are expected to align better to meet the RoI requirements.

Outlook Even though copper cabling has a dominant role in Indian Structured Cabling market, the long-term future is expected to be driven by fiber. In the fiber market segment, vendors would be majorly focusing on the last mile fiber to homes. This is principally because of a growing demand from the digital homes at residential complexes where a single service provider is expected to meet the demands of voice, data and video. In data centers, fiber is considered as an appropriate medium for supporting mission-critical applications. While installing optical fiber cables might be on an expensive side in the beginning, as compared to traditional solutions, it has its own future benefits, especially given the rapidly rising enterprise mobility needs and the consequent benefits of having fiber in the backbone. Fiber is also beneficial since it can be laid out for longer distances and is immune to electromagnetic interferences. This makes it useful in campus installations as well. The 4G rollouts are also likely to drive FTTH and FTTP adoptions, given the need to support Wi-Fi offloading in the enterprises. Fiber would be a preferred choice since it is better suited to meet the exponential data growth

associated with wireless broadband networks like 3G and 4G. The next 24 months are likely to see the flow of new investments, largely from tier2 and tier3 cities. Most of the demand is expected to be generated by increased government spending, real estate expansions and infrastructure developments. The industry is also likely to see another round of consolidation as the current market does not offer enough growth potential for more than eight to ten players. Overall, IT, telecom, IT-ITeS and Government are expected to be the major contributors to growth during the next 12 months. The underlying IT of the enterprises are also changing and so are the IT delivery models. There has been a growing focus on concepts like cloud computing, IP-based networks, virtualization and software defined networking. All this is driving the need to have more intelligent and responsive network infrastructures and structured cabling solutions would be expected to keep pace. The Governmentâ&#x20AC;&#x2122;s National Optical Fiber Network (NOFN) initiative, for which Bharat Broadband Nigam Limited (BBNL), has been assigned to connect 2,50,000 village panchayats with highspeed broadband could lead a range of direct as well as indirect businesses for the structured cabling players. The upcoming rollouts of new 4G networks will also contribute to growth, as will the commissioning of new data center projects. Telcos are expected to go aggressive with their plans to launch 4G LTE services around 2015. Greenfield majors like Reliance Jio Infocomm, which also has a pan-India license for 4G, plans to use fiber-to-the-home (FTTH) as well for providing rich indoor connectivity in 40 million homes. As floodgates of data are expected to open on various fronts, new set of challenges and opportunities are bound to emerge. 2014 may be the year for the structured cabling industry to strategize for the growth ahead.

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 63

Enterprise Communication Communication Equipment & Devices

`1,620 PBX Systems `685 Audio Video Conferencing

Total Communication Equipments & Devices Market is `4,954 crore V&D-CMR Telecom Industry Survey FY2013-14

Desk Phones 21%

Top 3 Companies by Revenue

Cisco

FY 2013-14 (in `crore)

Company Cisco

556

Avaya

318

Alcatel Lucent Enterpise

212

Others

1,563

Total Desk Phones Maket

2,649

Others include Snom, Grandstream, Panasonic, Siemens V&D-CMR Telecom Industry Survey FY2013-14

64 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

59% Others

12%

Avaya

V&D-CMR Telecom Industry Survey FY2013-14

`2,649 Desk Phones

Overall, IP-fication is the main trend to witness and enterprises are adopting more and more of IP-based devices and equipments. The credit goes to the National Telecom Policy of 2012. Other than the inherent call centre solution deployment industry verticals of IT/ITeS and BFSI, there is a change happening in adoption as new segments of real estate and hospitality are also commissioning their call centres for outward sales and proactive servicing. Majority of the revenues in Desk Phone market comes from IP Phones while the total installed base in the country is still dominated by the PSTN phones. Within the IP Phones segment Cisco, Avaya and Alcatel Lucent Enterprise are the three main players, PSTN / Digital Phones is still dominated by Panasonic, where there is no other major player after the exit of Beetel and failure of ITI. Mobile phones are affecting the desk phone market of enterprises as several organizations are not going for desk phone extensions. This is typically in the SOHO segment. PBX market revenues continue to be mainly contributed by IP-PBX sales in the country. However, as in the case of desk phones, this segment also has the maximum installed base of legacy systems including ePABX, etc. Audio-Video Conferencing solution market is facing a tough competition from the advent of social media applications that are heavily used across organizations for audio-video conferencing. Solutions such as Skype, Viber and Google Hangout are giving a serious competition to standalone conferencing market. Even, the client facing meetings are done through these platforms in several organizations, largely the SMB segment. PBX systems saw a growth of 10.5%, followed by Desk Phones with 9% growth and Audio-Video Conferencing Equipment with 7.9% growth for FY 2013-14 within this segment of Enterprise Communications.

Alcatel Lucent Enterpise Company % Share in the overall Desk Phones Revenue of `2,649 crore

FY 2013-14

Sum is Better than Parts

Avaya

Others

14%

The industry worked to achieve more seamless integration of IP voice and UC modules to meet enterprisesâ&#x20AC;&#x2122; business-centric communication needs he Enterprise Communications market, with each passing year, has been becoming a more closely-knit whole comprising the two broad discrete piecesâ&#x20AC;&#x201D; Enterprise Telephony, and Unified Communications & Collaboration (UC&C). Various events in 2013 made that progression more pronounced. Notably, two of the key enterprise telephony vendors, Mitel and Aastra, merged to form a single entity under the Mitel brand. The merger was estimated to have made the combined entity a Top-5 brand in the enterprise telephony segment. In another significant development, that more specifically reflected the blending of the telephony and UC segments, Siemens Enterprise Communications was rebranded as Unify. The new entity was timed well ahead of launch for its Project Ansible, a communications and collaboration platform that earned much acclaim from customers and analysts on previews. The platform is currently in beta and its general availability is due anytime soon.

15%

53%

Alcatel Lucent Enterprise

V&D-CMR Telecom Industry Survey FY2013-14

18% Cisco

Company % Share

PBX Systems Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company Cisco

292

Avaya

243

Alcatel Lucent Enterprise

227

Others

859

PBX Systems

1,620

Others include SingTel, Panasonic, NEC, Accord, Tadyran, Matrix, Coral Telecom V&D-CMR Telecom Industry Survey FY2013-14

Key Players & Trends Competition stayed intense in the Enterprise Communication market, with the presence of heavyweights like Cisco, Microsoft, Avaya, Google, Polycom and Siemens (now Unify) among others in-the-fray, with their diverse offerings ranging from enterprise voice to UC&C applications. Of late, Microsoft Lync has been gaining significant traction. At the same time, Cisco and Polycom are competing more aggressively in the video conferencing systems segment. Unified Communications & Collaboration (UC&C) platforms are now inseparable part of enterprise communication. Enterprises have also mostly deployed IP infrastructure to make the most of their UC&C investments, which have grown over time. With the essentials already in place, businesses are now weighA CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 65

FY 2013-14

Enterprise Communication Communication Equipment & Devices

mobile-based UC&C applications, among others. A key engagement subsystem of the broader UC&C system is social media. These social media platforms play an increasingly critical role in building brands and security loyalty from employees, customers and partners by way of communicating the right messages effectively. In addition, social media engagements also encourage a collaborative temperament to work towards the common organizational goals of innovation, business development and improvement of total customer experience. The new-age enterprise communication platforms are also letting organizations reduce the IT cost per employee with hosted and managed services. ing between the various vendor offerings so as to select the best-of-breed solutions for meeting their business goals. These include increasing productivity, improving customer satisfaction, and reducing cost. They are also putting due emphasis on the integration of the underlying processes and infrastructure, as the efficacy of the solutions also depends significantly on how well the legacy and new applications are assimilated.

Key Drivers The key driving factors that determine the use of UC&C along with enterprise telephony across various enterprise verticals are mobility, video, social business, and managed and hosted services. The number of mobile workers is increasing almost at an exponential scale, across all verticals, including healthcare, hospitality, logistics and transportation, IT and BSFI, though the scale of adoption would vary from one sector to another. The new generation of mobile workers, armed with smart devices and a host

The need to integrate the diverse sub-systems could also trigger a related need for consolidation in the industry of enterprise mobility apps, is highly productive even on the move. The rise of geographically dispersed workers to support the needs of an increasingly globalized economy requires that communication is also more collaborative. This has continued to be a driving factor for the enterprise communications market. Enterprises are also conscious of the need to ensure that as communication platforms move to an IP environment, they are not vulnerable to the usual information and IT security threats. As such, they also invested more in Mobile Data Management solutions and secure

66 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

What Next? Going forward, a greater integration of IP PBX and UC&C platforms would be expected. While some of the existing hosted platforms do offer certain UC stacks along with IP PBX, the features are not thorough enough, chiefly because the integrations are not as deep and wide as an enterprise-grade offering would need to be. The Unify Ansible, due for general availability in 2014, could prompt the industry into further integrating the various enterprise communication platforms. The need to integrate the diverse sub-systems could also trigger a related need for consolidation in the industry. In February 2014, Alcatel-Lucent received a binding offer for the acquisition of its Enterprise business. As a consequence it will move forward in exclusive discussions with Huaxin, an existing partner of Alcatel-Lucentâ&#x20AC;&#x2122;s Alcatel Shanghai Bell joint venture in China. The deal is expected to close in third quarter of 2014.

FY 2013-14

Enterprise Communication Software & Applications

Business beyond Endpoints While endpoint security continued to be a mainstay business, vulnerabilities in cloud, social media and mobility brought in new revenue streams

`2,709 `1,161

Enterprise Security Conferencing & Collaboration

Total Software & Applications Market is `3,870 crore V&D-CMR Telecom Industry Survey FY2013-14

ew business and technology models are ever driving organizations to implement robust yet scalable IT and communications infrastructure. The triggers are many—such as the need to engage with the customers better through channels like social media, and to drive organizational excellence through mobility and collaboration tools. While responding to these triggers helps organizations build competitive differentiators and advantages for themselves, it also creates new complexities and vulnerabilities across various layers of ICT infrastructure. In fact, the agility, capacity, performance and availability in an ICT infrastructure can be a double-edged sword. It could spawn a host of new entry and leakage points that could be exploited by external attackers when casually left open by internal people.

Key Players Solutions form an integral piece of enterprise communications. The two major segments include security and conferencing & collaboration solutions. Enterprise security continues to register growth as this is a critical unavoidable element to be deployed by all the enterprises irrespective of their size and nature of business. In FY 2013-14, the market grew at 14.4% registering revenues of Rs 2,709 crore. Here, the phenomenon of SAAS (Security as a Solution) is gaining traction and we shall see more and more vendors offering security solutions on this model essentially catering to SMBs for whom it will be cheap and easy to manage. The other set of solutions and applications used within enterprises are for Conferencing and Collaboration. At present, in India, this is skewed towards Conferencing and we are seeing slow adoption of collaboration, although, vendors are ready with their solutions. The recent advent of mobility within enterprises has further increased the complexity and once collaboration on mobile devices takes a definite route, this is going to be slow on adoption. However, conferencing – audio as well as video is going to register growth. Again, extension to mobility is critical here as well. Overall, Conferencing and Collaboration grew at 15.9% in FY 2013-14.

Though a contribution in security software market came from endpoint, the network security software as well as identification and access management segments grew while business from security software and security and vulnerability management applications remained by and large constant. Players like Symantec, Intel, and Trend Micro lead the endpoint security market though seeing tough competition from the local security software vendors in certain regions. Network security continued to see good growth as it witnessed market consolidation with Sourcefire acquired by Cisco, Stonesoft acquired by McAfee and Cyberoam acquired by Sophos. With changing landscape of cyber threats and growing adoption of disruptive technologies like mobility, virtualization and cloud is pushing security vendors to expand their network security solutions capabilities and merging of technologies, for example, virtualized firewalls; hardened OS for security appliance, and running firewalls with hypervisor.

Challenges In the more recent years, organizations have focused on innovations—in products, structures and processes—to achieve new growth markets and opportunities. The business impact of adopting models like cloud computing, mobility, big data and virtualization has been experienced by all organizations, big and small. At the same time, in the wake of major security breaches and attacks across the globe, network security for the connected A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 67

FY 2013-14

Enterprise Communication Software & Applications enterprise has become a serious area of concern. For example, migrating to the cloud from an in-premise model fundamentally changes the way IT security is to be addressed. The challenge is that organizations are still developing cloud security processes and solutions, which potentially gives hackers and attackers a wide window of opportunity. Likewise, a BYOD traction creates challenges around management and security of mobile devices, which must be addressed proactively by IT. Network security threats are also continuously evolving and expanding with added levels of sophistication with each passing phase. This has contributed to the rise in organized cyber crimes, with phishing syndicates innovating in no less measures to trick users into their traps. Lately, online attacks, comprising blended threats, hybrid attacks, and APTs, have increased in speed and sophistication exponentially. Further, spam emails are not generally a self-contained attack anymore, but rather a social engineering component of a larger attack. These are designed to convince a potential victim to interact with the web-based content, which could crack open an organization’s security system to an ill-intending hacker. All these developments have led the security vendors into continuously evaluating their products and enhancing protection features. Besides, there is a growing threat due to abuse of trust within organizations. Due to lack of a thorough control or visibility, insiders are able to take organization’s intellectual property in ways as simple as copying information on a pen drive or mailing it out of the organization’s network.

Key Developments In July of 2013, Cisco acquired Sourcefire Inc., a maker of network security hardware and software, for $2.7 billion. The

acquisition is considered to have worked positively for Cisco and strengthened its position in the security market. In India, reports suggested that the security team had doubled in size in the past couple of years. Palo Alto Networks was one player that became significantly more aggressive in India last year. It was reported to have hired 50-60 channel partners and was engaging them in roadshows to sensitize on security issues in tune with the enterprises focusing more on cloud, mobile and collaboration tools. The California-based company said it would be setting up regional offices in cities like Mumbai, Bangalore, Delhi and Chennai and also ramping up its team sizes. Until 2013, the company had a team of 15-18 people in India and up to 200 customers locally. The surveillance function at enterprise was getting more and more integrated with the broader enterprise security strategies. Terrorism, employee and company assets safety, and theft drove a growing demand for video surveillance in government, transportation, hospitality, and BFSI sectors. Organizations are changing gear from analog to IP-based surveillance. Urban security, hospitality, airport security, and education sectors are witnessing higher investments for installation, as well as upgrading the existing security surveillance infrastructure. Enterprises saw the benefits of integrating IP surveillance with IT security, including a single view of their security architectures, comprehensive and proactive monitoring, faster response time, greater interoperability, and reduced costs. At the same time, surveillance market is increasingly witnessing convergence with software platforms and access control solutions. Vendors like Tyco, Honeywell, Siemens, Bosch, and Milestone and so forth are developing next-generation surveillance solutions on IT platforms from IBM, Dell, and HP that is contributing to IT convergence.

What Next? In the coming years, Internet of things (IoT) and machine-to-machine (M2M) are going to be the growing focus areas for network security players. The industry has still not forgotten how the Stuxnet virus brought down Iran’s nuclear program to a screeching halt a few years ago. It has been feared that similar malware could potentially spew havoc on a wider variety of systems in a developing M2M era. In fact, a Symantec study findings release in 2013 said the Stuxnet virus had not fully been doused on the computer networks globally and its traces are still out in the wild. Experts have feared that in the hands of hackers, the virus or its ilk could wreck havoc for the countries’ smart grid and smart meter programs, among other potential damages. No wonder, vendors are gearing up to tackle the network security challenges of a fast approaching M2M era. 68 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

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ACTIONABLE INCISIVE ENTERTAINING

WHAT ELSE WOULD YOU EXPECT FROM AN INDUSTRY

User Devices User Devices User Devices User Devices User Devices User Devices User Devices User Devices User Devices User Devices

User Devices User Devices User Devices User Devices User Devices

User

Mobile Phones................................................... 73 Data Cards.......................................................... 78 Tablets................................................................. 80

Devices `93,675 crore Market Share: User Devices by Sub Segment Segment

FY 2013-14 (Revenue in ` crore)

% Share

87,761

94%

Data Cards

1,154

Tablets

4,760

Mobile Phones

Total User Devices Market

93,675 V&D-CMR Telecom Industry Survey FY2013-14

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 71

FY 2013-14

User Devices

User Devices Tablets Data Cards

FY 2013-14 in ` crore

`1,154

Data Cards Mobile Phones

`87,761

Mobile phones are the largest segment of telecom equipment market in India. Registering a growth of 18.5% by revenue, it stood at Rs 87,761 crore in FY 2013-14.

Tablets

User Devices FY 2013-14 % Share of `93,675 crore

94% Mobile Phones Overall User Devices market `93,675 crore V&D-CMR Telecom Industry Survey FY2013-14 72 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

V&D-CMR Telecom Industry Survey FY2013-14

`4,760

FY 2013-14

User Devices Mobile Phones

Mobile phones are the largest segment of telecom equipment market in India. Registering a growth of 18.5% by revenue, it stood at Rs 87,761 crore in FY 2013-14. As the smartphone adoption jumps from 10-12% in FY 201213 to 15-17% in FY 2013-14, the average selling price also goes up and hence the revenue size of the market. India brands became stronger in this fiscal eating up the share of Tier 1 brands like Nokia and Samsung. Domestic brands exhibiting strong growth included Micromax and Karbonn. Xolo, a distinct brand of Lava also made good inroads into the market. Manufacturing scenario saw a mixed trend in this year. While Micromax announced assembly of handsets in India along with Samsung applying for M-SIPs to increase its existing manufacturing capacity, Nokia manufacturing had serious issues ranging from taxation to re-alignment after the Microsoft acquisition.

Mobile Phones Top 3 Companies by Revenue Mobile Phones `87,761

Company

FY 2013-14 (in `crore)

Samsung

25,921

Nokia

15,775

Micromax

8,766

Others

37,299

Total Mobile Phone Market

87,761

Others include Apple, Karbonn, Lava, HTC, BlackBerry, Panasonic, Sony, Motorola, MTS, Videocon, Spice

30% Samsung

42% Others

18% 10% Total User Device Market is `93,675 crore. Mobile Phones contribute 94.6% of the Market. V&D-CMR Telecom Industry Survey FY2013-14

Nokia

V&D-CMR Telecom Industry Survey FY2013-14

Micromax Company % Share is the Mobile Phone Market of `87,761 crore A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 73

FY 2013-14

User Devices Mobile Phones

Smartphones Make it Big! A 172-percent leap in shipments pushed smartphones’ share from under seven percent in 2012 to over 16 percent in 2013.

he year 2013 marked a decisive acceleration towards the smartphone adoption in the India mobile phones market. While the feature phones segment saw a marginal decline at -0.2 percent—from a shipment of 206.5 million in 2012 to 206.1 million in 2013—the smartphone market grew a whopping 172.2 percent. Smartphone shipments in 2013 rose to 41.1 million from 15.1 million in 2012. This amounted to the share of smartphone shipments rising from 6.8 percent in 2012 to 16.6 percent in 2013. It was also the first year ever when

smartphones clocked a double-digit share of the overall mobile phone shipments.

Key Players Samsung continued to be the market leader for the smartphone segment, followed by Micromax, and Karbonn. However, Nokia still managed to stay put in the leadership position for the overall mobile phones market with 18.9 percent market share in shipment terms. It also continued to reign the feature phones market segment. Samsung was No. 2 with 13.8 percent shipment share while Micromax took the No. 3 spot with 10.3 percent share of the overall mobile

74 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

phones shipment in 2013. Also, 65.8 percent of the total smartphones shipped in the country were 3G smartphones during 2013.

Key Developments in 2013 A key reason behind the rapid development of the India smartphones market in 2013 was its penetration into lower price segments. Particularly, the homegrown smartphone vendors like Micromax, Karbonn and Lava consistently helped lower the entry price points for smartphones, launching scores of models in not just the sub-Rs 5,000 price segment but also in the sub-Rs 4,000 and under-Rs 3,000

We search for the insights of the Indian IT Industry...

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FY 2013-14

User Devices Mobile Phones price categories. It goes without saying that virtually all of these devices were on the Android platform. Since these price segments, which were mostly considered the feature phone bastions, comprised a large chunk of the shipments, offering smartphones in these price segments quickly gave a market share to smartphones that would have otherwise been hard to achieve. A significant development in 2013 that laid the foundation for increased competition in the smartphone market was Microsoft’s acquisition of Nokia’s devices division. It ensured that Nokia’s Lumia devices in particular would have the financial backing of one of the most cash-rich technology giants globally, one which was determined to make its Windows platform a success in the smallscreen segment this time around. From a mobile OS development perspective, two important global events in 2013 that bore significance for the further development of smartphone ecosystem in India were the launch of the KitKat version of the Android mobile OS platform and even more notably, the launch of the Firefox mobile operating system.

Major Launches Apple’s iPhone 5s and iPhone 5c were among the most awaited models, with

India brands became stronger in this fiscal eating up the share of Tier 1 brands like Nokia and Samsung

models in 2013. These included Lumia 520 and Lumia 720 in the second quarter, and the 41-megapixel Lumia 1020 as well as the phablet device Lumia 1520 in the last quarter of October-December. With these launches, combined with the previous Lumia models, Nokia was able to cover a much wider range of price segments, the result of which started showing in terms of a positive build-up in its market share.

What Next? Apple launching two models in one go the first time ever. Also, 5s became the first smartphone in India to carry a pricing of more than Rs 50,000 for the entry model. Samsung Galaxy Note 3, HTC One, Google Nexus 5, Moto X and Nokia 1020 also made big splashes. The most notable launch from Samsung was that of a much awaited Galaxy Note 3, which also grabbed much attention due to the accompanying launch of its smart watch Galaxy Gear. However, as it turned out later, the smart watch failed to enthuse the market, partly because it had a price tag on the higher side but also because the wearable device didn’t offer functionalities that would be compelling enough for the users. Nokia launched a number of Lumia

76 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

The smartphone market in India is poised to accelerate further, cannibalizing the feature phones segment in the process. And if the 2014 first quarter numbers are any indication then the process has already kick-started. A CyberMedia Research study showed that smartphone shipments recorded a jump of 219.4 percent in the first quarter of 2014. A total of 14.5 million smartphones were shipped out of a total of 58.9 million mobile phone units overall. This amounted to smartphone shipments grabbing a 24.6 percent market share of the mobile phone shipments. Not surprisingly, the feature phones saw a steeper negative decline of -6.5 percent over the year-ago quarter and clocked total shipment of 44.4 million units. Going forward, it is expected that the entry of Firefox-based smartphones would further expand the market in the lower price segments. Already, Indian brands including Intex and Spice have announced their Firefox-based smartphones in the sub-Rs 2,000 price segments. This has the potential to open up a whole new category of ultra-budget market segment. An Intex release earlier said its Firefox-based smartphone Cloud FX would be targeted at first-time smartphone users in tier 2 cities and rural areas and is expected to hit the market in first week of August. However, while the market is seeing volume growth in the middle and budget segments, it also has shown a good appetite for uptake in the premium and ultra-premium segments as well.

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User Devices Data Cards

Whiffs of Threat

Historically CDMA-dominated, the segment saw market positionsâ&#x20AC;&#x201D;and even the utility of data cardsâ&#x20AC;&#x201D;getting challenged as 3G ecosystem grew

`1,154

Data Cards

Total User Device Market is `93,675 crore Data Cards account for barely one percent of this V&D-CMR Telecom Industry Survey FY2013-14

With the rise of Broadband Mobile Wireless access in India, mainly through mobile phones, Data Cards, popularly known as Dongles, saw a major decline in the sales. Changing consumer preferences and declining costs of 3G devices led to the shift in consumer preferences. In FY 2013-14, Dongles saw a decline of -8.3% in revenues and the market was estimated at Rs 1,154 crore against Rs 1,259 crore last fiscal. However, with many operators expected to roll out 4G/LTE services coupled with non availability of breadth of 4G/LTE handsets and tablets, it is expected that the dongles market will bounce back this year with average selling prices going up as the shipments skew high towards 4G/LTE data cards. The open market dongles are expected to be on the rise as a proportion of total sales.

78 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

he India data cards market was faced with a growth challenge in 2013. A key threat seemed to come from smartphones, tablets and the ilk. With smartphones with the Wi-Fi hotspot feature becoming more affordable and commonplace, the need to carry an additional data card was no more a dire need for the users while on the move. In the year gone by, 3G smartphones with tethering features became available for prices as low as just over Rs 3,000. Moreover, with the telcos crashing down their mobile data prices, it was no longer cost prohibitive for customers to use their mobile phones as hotspots.

Key Trends & Players Top three players accounted for close to 75 percent of the market share in terms of units shipped during calendar year 2013. The top three players were ZTE, Huawei and Micromax, with ZTE and Huawei competing neck-to-neck for the top slot. Both had close to 30 percent market shares each. The overall shipments during 2013 were estimated to be at around 6.3 million units, which was significantly less than more than 8 million shipped during the previous year. While shipments in the first quarter of 2013 stood at around 1.14 million, the second quarter witnessed a sequential growth of

21% Others

37% Huawei

14% Micromax

28% ZTE

V&D-CMR Telecom Industry Survey FY2013-14

FY 2013-14 more than 60 percent, which took the market to 1.83 million units in the April-June period. However, this still was a decline of 16.8 percent when compared with the shipment in the corresponding quarter the year ago. According to market research firm CMR, this significant decline in overall data card shipments on a yearly basis was mainly because of declining shipments of CDMA data cards. On the other hand, there was a relatively higher growth rate of GSM data cards on account of fast increasing shipments of HSDPA 14.4, HSDPA+ 21.6 and LTE 100 data cards, it said. The numbers validated this finding. In the second quarter of 2012, for example, the GSM data card shipment was 0.67 million units while the CDMA cards had recorded a shipment of 1.53 million units. In the corresponding quarter of 2013, however, the distribution was literally reversed, with GSM data cards seeing shipment of 1.25 million and CDMA cards clocking shipment of 0.58 million units. In percentage terms, while CDMA data cards accounted for 69.5 percent share in Q2, 2012, it was the GSM units that formed 68.3 percent of the Q2, 2013 data card shipments. The relative growth of GSM in data cards also impacted the market shares of top two players in a major way. While in the CDMA segment, ZTE and Huawei had together contributed to 95 percent of the total shipments in the 2012 quarter under consideration, in GSM, the top three players – Huawei, Micromax and ZTE – together made up just about 65 percent of shipments in the corresponding period of 2013. The growth of GSM segment also bode well for a number of smaller players including Alcatel, iBall, Lava, Intex and Digisol, among others. The data card players also entered into bundling deals with telcos as well as smartphone and other device makers to shore up data card sales. Airtel’s launch of 4G into some more cities during 2013 helped the LTE data card segment, but the growth was not too significant to make a visible impact. At the close of 2013, the installed base of 4G data cards was understood to be just about 100,000 units.

Company % Share is the Data Cards Market of `1,154 crore

Data Cards Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company Huawei

424

ZTE

320

Micromax

165

Others

245

Total Data Card Market

1,154

Others include iball, SmartLink, Teracom, Binatone, Beeline, DLink, Lava, Mercury V&D-CMR Telecom Industry Survey FY2013-14

What Next? Reinventing the market has become a crying need. On a positive note, there have been early signs of service providers working to give data cards a fresh lease of life. In the year gone by, data cards that don’t necessarily need to be plugged into USB drives of PCs and that could be plugged into regular power sockets became commonplace. In 2014, the stakeholders have been seen taking a step further. For example, MTS recently launched its MTS MBlazePower Wi-Fi, which is a Wi-Fi router bundled with a 5200 mAh battery bank. The dongle could be used to serve as a hotspot to connect for up to six devices and also charge various mobile devices including mobile phones, cameras and gaming consoles. A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 79

User Devices Tablets

Pulled Down by Oversupply? Vendors pumped up shipments in anticipation of demand, which seemed to taper-off as the year passed by

`4,760

Tablets

Total User Device Market is `93,675 crore. Tablets is 5 % of this market V&D-CMR Telecom Industry Survey FY2013-14

One of the most hyped products; Tables saw a flat market in FY 2013-14. The actual growth was 0.56%. Emergence of Phablets within Smartphones as a successful product category among individual consumers along with halt of government initiatives and ambiguity about use cases of Tablets within the enterprises marred the expected prospects of this promising product. Another important factor that resulted in temporary decline of the market was the decision of government to allow only BIS certified Tablets to be sold in the market. This caused exit/temporary stoppage of supplies from many low end brands thus misbalancing the market.

80 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

ll is well that ends well, they say. By that count, not all was well for the India tablets market in 2013, as the shipments ended on a rather somber note in the last quarter of the calendar year. So, while the smartphone market performance during the year could easily be described as spectacular, the tablets market came up with an average show by comparison. The market managed to rake in a shipment of 4.2 million units in the calendar year. In FY 2013-14, it was pretty much flat, clocking a growth of less than one percent at 0.5% over the previous year.

Major Developments The year started on a strong note. It is understood that the buyback schemes during the early quarters helped push the unit shipments but that also led to saturating the demand faster, which in turn led to a subdued market later. In a significant development, as noted by CMR analysts, the enterprise market showed a good uptake of tablets, accounting for around 20 percent of the shipment share in the third quarter of the year. Moreover, while Android continued to dominate the segments, analysts said the Windows-based tablets are expected to see traction after more vendors committed to the Windows platform.

Key Players The leading tablet vendors were Samsung, Lenovo, Datawind, Micromax and Apple, with Datawind making it to the No. 3 rank in the July-September period of 2013 on the back of strong shipments during the quarter, according to CyberMedia Research data. While the top 3 vendors accounted for 43.4 percent share of the shipments in the April-June quarter, it came down to 40.7 percent in the July-September period. Though this doesnâ&#x20AC;&#x2122;t necessarily confirm a trend, the market nevertheless showed signs of getting more fragmented, with at least 13 vendors shipping 20,000 or more units in a given quarter. In the higher price segments of Rs 20,000 and above, there is a clear preference for Samsung tablets, followed by Apple devices.

FY 2013-14

Tablets 29%

43%

Samsung

Others

21% Apple

7% Lenovo Company % Share in the overall Tablet Market of `4,760 crore

V&D-CMR Telecom Industry Survey FY2013-14

Top 3 Companies by Revenue Company Samsung

FY 2013-14 (in `crore) 1,372

Apple

986

Lenovo

325

Others

2,077

Total Tablet Market

4,760

Other include Micromax, Carbonn, HP, Datawind, Acer, Asus, HCL, Sony, Penta, Dell, Google, Huawei, iball, Lava, LG V&D-CMR Telecom Industry Survey FY2013-14

What Next? The demand for tablets has not quite kept pace with the supply, which was reflected in the fact that unit shipments started tapering off during the last quarter of 2013 itself. The decline into the first quarter of 2014 got steeper, with unit shipments amounting to 746,643 in the January-March period. This was a quarter-on-quarter decline of 27.7 percent over the shipment of 1.03 million in the October-December quarter of 2013 and a year-on-year decline of 17.5 percent when compared to 905,594 units shipped in the January-March quarter of 2013. The growth in the phablets market has already showed signs of impacting the seven-inch tablets sub-segment. If this trend gathers more steam then overall tablets shipment would also be impacted more. A key inhibitor of growth has also been a lack of innovation by the vendors. There have been little changes in the form factor and ergonomics of the tablets, other than the screen sizes. Another area of opportunity is the enterprise segment, as also indicated by the fact that enterprise category accounted for up to 20 percent of the tablets shipment in 2013. However, to make growth in this segment a sustained phenomenon, the vendors would need to have vertical-specific solutions around their product offerings. This calls for a need to contribute towards the development of an ecosystem of partners who could come up with a wide body of enterprise-focused mobility apps. A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 81

Telecom Services Telecom Services Telecom Services Telecom Services Telecom Services Telecom Services Telecom Services Telecom Services

Telecom Services Telecom Services Telecom Services Telecom Services Telecom Services Telecom Services Telecom Services Telecom Services Telecom Services

Telecom Services Telecom Services Telecom Services Telecom Services Telecom Services

Telecom

services `233,793 crore Top 10 Telecom Services Companies FY 2013-14

FY 2012-13

Rank

Company

Airtel

57,556

52,386

9.9%

Vodafone

37,606

33,282

13.0%

Idea

26,504

22,595

17.3%

BSNL

25,498

26,396

-3.4%

Rcom

22,321

21,778

2.5%

Tata Communications

17,450

15,310

14.0%

Tata Teleservices

10,452

10,770

-3.0%

Aircel

11,294

9,817

15.0%

MTNL

3,392

3,429

-1.1%

Uninor

2,543

2,095

21.4%

214,616

197,858

8.5%

Total Top 10 Company Revenue

(Revenue in ` crore)

% Growth

V&D-CMR Telecom Industry Survey FY2013-14

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 83

FY 2013-14

Top10 Telecom Services Bharti Airtel

A rejig that delivered! Triggered by falling KPIs, a leadership change at the helm virtually led to a management exodus, but the bet paid off —Gopal Vittal MD & CEO, Airtel

Ran

the reins did the company managed to end an era of 15 successive quarters of declining profits. (It also went on to cut down the size of its deal with IBM by more than a half when it came for a renewal in 2014, while also letting other vendors in as partners.) Some of the key decisions that helped bring about a much needed upturn in net profits included, what obviously was a massification approach to monetizing the 3G investments, which drove the launch of plans like Rs 1 video download, followed by Re 1 entertainment store. As part of its move to raise customer stickiness by way of creating more transparency in its offerings, Airtel launched its MyPlan in October 2013.

Growth Chart `57,556 Revenue in `crore

9.9% `52,386

FY 2013-14

84 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

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ndia’s largest telco by subscribers as well as revenues was more focused on improving its business and operational key performance indicators (KPIs) and less on growing subscriber numbers, which anyways kept adding up. A declining net profit for more than 10 quarters in a row had made the telco sit up and take note seriously. The leading integrated services major underwent a major organizational transformation, with some of the old horses, including CEO Sanjay Kapoor, exiting the ranks to make way for fresh blood in the likes of the new CEO Gopal Vittal. A battery of senior management exits took place, spread over the year. These included Amrita Gangotra, Director of IT for India and South Asia; Drew Kelton, President – Enterprise Services Business; S Ashokan, Head of Supply Chain, and Vineet Taneja, Director – Operations for South India and Sri Lanka. Krish Shankar, Executive Director of human resources; K Srinivas, President – B2C, India and South Asia and Bharat Bambawale, Global Brand Director also left. However, the most high-profile exit of all was that of Jai Menon, who had orchestrated a trendsetting model of outsourcing in telecom when driving a $750 million deal with IBM way back in 2004. Almost a year after Vittal had taken up

Airtel also partnered with Google to come out with Free Zone, a Googlepowered service that allowed Airtel users to access Google mobile services, including Search and Gmail on the go at no data costs. In early 2013, Airtel also launched its mEducation suite of offerings, which included services such as English Guru, Campus Search, Scholarship Alert, Career Counselling and Ask an Expert, among others. Airtel also took further small but important steps in the area of 4G, as it launched its services in the cities of Chandigarh, Mohali and Panchkula in March 2013. It also entered a landmark infrastructure sharing deal with emerging arch rival Reliance JioInfocomm, which also signaled a greater intent to share passive infrastructure in mutual interests. The two companies signed an Indefeasible Right to Use (IRU) Agreement, under which Bharti would provide Reliance Jio data capacity on its i2i submarine cable. Bharti Airtel is expected to focus on further strengthening its business KPIs through 2014 and further deleverage its balance sheet, as it is faced with the need to be better prepared for the upcoming competition from RJio in 2015.

FY 2013-14

Top10 Telecom Services Vodafone

Springboards in place! Amidst business as usual, the No. 2 telco worked to equip itself for the next round of growth, with focus on customer experience —Marten Pieters MD & CEO, Vodafone India

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While a somewhat cautious Vodafone India was initially relatively slow to grow its 3G presence in the country, the rollouts gain more acceleration as the year went by. The company was part of an inter-circle 3G roaming pact with Bharti Airtel and Idea Cellular to offer 3G services in circles but the pact remained ineffective. Vodafone India added ICICI Bank in India as the banking partner in April 2013 for its M-Pesa service, for which HDFC Bank has been its first partner. The telco also leveraged its global M2M service capabilities to build differentiations across its enterprise service offerings. As a glimpse of what Vodafone could be offering in the area of M2M in India,

Growth Chart

`37,606

13.0%

`33,282

FY 2013-14

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V&D-CMR Telecom Industry Survey FY2013-14

Revenue in `crore

or the world’s second largest mobile service provider, there were two key pieces of news in India—a good one and a bad one. The good news was that Vodafone got a major government clearance to raise stake in Indian subsidiary, just a few months after the UK-headquartered telecom major announced its ‘Project Spring’ program. (No later than April 2014, the India unit would have become a wholly owned subsidiary, which would ensure that returns from a bumped-up capex would stay, and would be fully leveraged by the company.) Securing the clearance for raising stake in India subsidiary added fuel to the rising speculations that the industry is gearing up for a phase of consolidation and that global players like Vodafone would be eying the opportunities strategically, with a wholly owned subsidiary being a foundational step forward. The bad news was that the issue of Rs 11,200 crore retro tax pending against the company stayed unresolved—and a stalemate continues till date. In 2012, India government had changed rules to bring Vodafone’s 2007 acquisition of Hutchison Whampoa’s stake in Hutchison Essar under the tax net.

it recently partnered with Cambridge-based software design company Cyan to tap into the smart metering market in India. The two parties have signed an agreement that would effectively enable them to go to market together and submit proposals to customers with smart metering market needs or plans. The two companies would also develop and deliver the solution as a managed service. Vodafone India also focused more on raising the bar on the customer experience front in an integrated and wholesome manner. In a significant step in this direction, the company invested in the creation of a new super network operations center (SNOC), which also housed a super network experience center (SNEC). While the SNOC gave Vodafone what it termed as the “single source of truth” for the health of its network, the SNEC enables its enterprise service customers to witness what the suite of Vodafone’s solutions offers to them and how it actually works. As an example of how the SNEC would work to facilitate customer decision making, the smart metering solution jointly offered by Vodafone and Cyan would be demonstrated at the SNEC facility.

FY 2013-14

Top10 Telecom Services Idea Cellular

Upwardly Mobile In a year when many others shrank, a doubledigit subscriber growth rewarded the company with gains in market share—and ranking —Himanshu Kapania MD, Idea Cellular

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million subscribers during the year and clocking a growth of 12.93 percent, as per Telecom Regulatory Authority of India (TRAI) numbers. The No. 3 telco, which had 128.69 million subscribers at the close of 2013, also garnered 14.52 percent share of the total wireless subscribers for the period. Idea continued to carry out its marketing messages effectively, with its “No Idea, Get Idea” campaign turning out to be of an evergreen genre. Moreover, its repeat sponsorship and association with a highly successful KBC TV show, continued to strengthen the brand across various telecom service areas, particularly in the central and western parts of India. Idea was awarded the CNBC Sto-

Growth Chart

17.3% `26,504

`22,595 FY 2013-14

FY 2012-13

V&D-CMR Telecom Industry Survey FY2013-14

Revenue in `crore

he Aditya Birla Grouppromoted company not only rose sharply to close the ranks and ended the year with a convincing No. 3 ranking, both in terms of overall subscribers as well as revenues, but was also the biggest gainer from mobile number portability (MNP). Industry and government reports said that Idea Cellular led the MNP gain by a wide margin for the year ended December 2013, followed by Vodafone India and Bharti Airtel. Idea also led the tally when it came to the percentage of rural subscribers, with 54.69 percent of its subscribers coming from rural India (followed by Vodafone at 53.67 percent and Bharti Airtel at 44.68 percent, though Vodafone is fast catching up with a heightened focus on growing its rural subscriber base). The company received the Amity Telecom Excellence Award for The Best Rural Services Provider of the Year 2013. Idea Cellular’s 3G rollouts and uptake also enabled it to emerge as the fifth largest Internet service provider by subscribers. It also was the No. 5 broadband service provider by subscribers at the close of 2013. Overall, Idea recorded an industry leading subscriber growth for the year ended December 2013, adding 14.74

ryboard Brand Campaign of the Year Award for the Honey Bunny campaign, which was launched along with KBC’s 2013 season. Around 52 percent of Idea’s subscribers came from its top five circles of Maharashtra, Madhya Pradesh, Andhra Pradesh, UP (W) and Gujarat, while the next five circles of Kerala, UP(E), Karnataka, Bihar and Punjab gave it another 27 percent of its subscribers. Put together, the top 10 circles accounted for 79 percent of Idea’s share in 2013. In terms of the subscriber share, it also enjoyed relatively high shares in the circles of Madhya Pradesh, Maharashtra, Kerala, UP(W) and Haryana. The high shares in these circles may significantly be attributed to its relatively strong 3G presence in these circles. Idea has its 3G spectrum for 12 circles and also has an inter-circle 3G roaming pact with Bharti Airtel and Vodafone for most of the other circles, only exception being Orissa where none of the three operators were able to secure a 3G license. While Idea has made impressive gains in the mobile services segment, the areas where it is yet to demonstrate strategic focus are wireline services and data centers, both of which are important to have a strong enterprise service play.

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FY 2013-14

Top10 Telecom Services BSNL

The wait goes on! The state-run telecom behemoth completed one more year in the shadow of its past glory, with a north-bound movement not yet in sight —AN Rai CMD, BSNL

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the top five circles by subscribers for BSNL were UP(E), Tamil Nadu (including Chennai), Andhra Pradesh, Kerala and Karnataka. However, in terms of subscriber shares, the top circles were Kerala, Himachal Pradesh, North East, Haryana, and Punjab. In the fixed narrowband segment too, BSNL led with 84.30 percent subscriber share and 3.19 million subscribers, followed by YOU Broadband at 0.17 million subscribers and Bharti at 0.08 million subscribers, as per TRAI. It has often been argued that one of the main reasons behind BSNL’s poor financial performance in the recent years has been an oversized employee

`25,498

FY 2013-14

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-3.4% `26,396

FY 2012-13

V&D-CMR Telecom Industry Survey FY2013-14

Growth Chart Revenue in `crore

t has been quite a climb-down for Bharat Sanchar Nigam Limited (BSNL) from being the No. 1 telco in 2003 to No. 4 in the span of a decade. Not only Bharti Airtel upstaged it for the top slot, and Vodafone (earlier Hutch) surpassed it as well, others like Idea Cellular overtook it from a much lower rank in the Voice&Data Top 10 tally. The last year showed no end to a continued state of decline. The staterun telco went one more notch down, mainly as Idea surged past with an industry leading subscriber growth. Arguably, the PSTN and wireline broadband segments continue to hold a silver lining for BSNL, which retained its leadership in these segments by huge margins. While it held a subscriber share of 66 percent with about 18.94 million wireline subscribers as per TRAI data, it suffered an annual subscriber decline of close to 10 percent—from 21.04 million in December 2012 to 18.94 million in 2013. State-run operator BSNL led the fixed broadband market segment with a 71.91 percent market share and a total of 13.18 million broadband subscribers, followed by Bharti Airtel at 1.47 million subscribers and MTNL at 1.11 million subscribers. In the mobile market segment,

base, when compared with the private-sector telcos. The argument could only be half the truth. It is also important to note that when it comes to serving a large and widely dispersed base of wireline customers then a larger employee base is a necessity. A solution probably lies in leveraging the human resource better by way of identifying new potential wireline customers and bringing them to the services fold. Enterprise and business customer segments could be the focus areas in this regard. The complexities in its strategic decision making processes, which are further affected by tender-driven vendor selection processes that could get frustratingly slow and unpredictable, further blunt the competitiveness of the company. In the past, some ambitious multimillion GSM line tenders have not been able to come to a logical conclusion. More recently, the National Fiber Optical Network (NOFN) project, in which BSNL has been a key stakeholder, too has suffered its share of delays and setbacks. However, with a strong government at the center, it is expected that the decision making process would be positively affected.

FY 2013-14

Top ten Services Reliance Communications

Weighed Down Once a poster child of India’s telecom industry, RCom is yet to get out of debt woods and breathe fire again —Vinod Sawhny CEO, Reliance Communications

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subscribers on its network. It had 24.34 percent of its subscribers coming from the rural market segment, as compared to BSNL’s 33.81 percent, Idea Cellular’s 54.69 percent, Vodafone’s 53.69 percent and Bharti Airtel’s 45.44 percent, as of December 2013. One of its strength areas continued to be wireline—and even more specifically and importantly, the enterprise services segment, where it continued to be a market leader in specific categories. RCom’s enterprise service offerings include leased circuits (both domestic as well as international) and MPLS IP VPNs and FTTx, among other connectivity offerings. It is also the strongest player in third-party data centers, with its Reliance Data Center division having a massive

2.5% `22,321 `21,778 FY 2013-14

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V&D-CMR Telecom Industry Survey FY2013-14

Growth Chart Revenue in `crore

t was not a particularly great year for Reliance Communications. Not that the Anil Ambani-led telco was lacking in terms of its offerings, it’s just that the debt burden continued to be a drag that the company worked hard to shrug off. The telco saw an overall wireless subscriber de-growth of 1.08 percent. While that caused some genuine concerns, industry analysts also noted that there were upsides to that. The top five telecom circles for Reliance Communications by number of subscribers were Madhya Pradesh, Bihar, UP (E), Delhi and West Bengal. The next five circles were Maharashtra, Gujarat, Karnataka, Tamil Nadu (including Chennai) and Mumbai. In terms of subscriber share, its five best circles were Madhya Pradesh, Mumbai, Himachal Pradesh, Delhi and West Bengal. The fact that it had strong presence and subscriber shares in both the top metros of Mumbai and Delhi speaks positively of the telco despite erosion in its subscribers numbers, which is also mostly attributed to a conscious scrubbing of inactive subscribers on its network. The telco has a strong focus on urban centers, including the metros. In fact, among all the top five operators, it had the lowest incidence of rural

6,50,000 sq. ft. of hosting space, spread across nine level-3 data centers at multiple locations. RCom’s key competitors across the suite of its enterprise service offerings are only a few—the likes of Tata Communications, Sify, Bharti Airtel and BSNL. However, in the data center segment, there also are more focused competitors like Netmagic and CtrlS, among others. In the meantime, infrastructure sharing deals with Reliance Jio Infocomm came as whiffs of fresh respites for RCom that has been pressured due to the debt it had taken to fund its 3G spectrum wins a few years ago. In April 2013, Reliance Jio signed a first deal with RCom to use the latter’s inter-city fiber network. In August, the two companies entered yet another agreement to share the telecom towers infrastructure. More recently, in 2014, the two parties have further extended their cooperation to include RCom’s intra-city optic fiber network across India. On the leadership front, RCom roped in Airtel’s erstwhile head of Mobility as its new CEO in February 2014. The country’s fourth-largest mobile service provider by subscribers is understood to be gearing up for a next round of growth in a dataled era.

FY 2013-14

Top10 Telecom Services Tata Communications

Offerings Refreshed

s a leading wholesale voice carrier, Tata Communications worked to add newgeneration capabilities to support needs of carriers globally and announced the launch of Voice Business Apps, a new suite of hosted tools and managed services designed to help service providers run their international voice business offerings, more efficiently and profitably. The company also launched its multi-

Growth Chart

14.0%

`17,450

`15,310

FY 2013-14

FY 2012-13

Telepresence room. In another significant step, k Ran Tata Communications announced in May 2013 that it would delist, deregister and terminate its ADR program (on NYSE) as among other reasons, the ADR program had not developed the trading volumes or liquidity initially hoped for. In addition, it said the new SEBI guidelines which said that ADRs were not to be considered when calculating the percentage of public shareholding, was a reason. The company completed the delisting process in June 2013. In early 2014, Tata Communications took a significant step forward in the area of LTE by announcing its network readiness to supply Voice over LTE calling (VoLTE) to its global community of IPXconnected service providers.

V&D-CMR Telecom Industry Survey FY2013-14

MD & CEO, Tata Communications

Revenue in `crore

â&#x20AC;&#x201D;Vinod Kumar

device compatible cloud-based video conferencing service jamveeconferencing, which it said allowed users to take part in a video meeting from any location via a desktop computer, laptop, tablet, smartphone or a dedicated

Tata Teleservices

Cost of Uncertainty

he subscriber base of Tata Teleservices, which operates the Tata Docomo brand, declined for the second year in a row as the telco continued to let go its customers in a stiffly competitive market that seemed to demand consolidation. In 2013, its subscriber base shrunk 9.04 percent to 63.27 million, from 69.56 million a year ago. In the previous year, it had declined 16.69 percent, from an

Growth Chart

-3.0%

`10,452

`10,770

FY 2013-14

FY 2012-13

V&D-CMR Telecom Industry Survey FY2013-14

MD, Tata Teleservices

Revenue in `crore

â&#x20AC;&#x201D;Srinath Narasimhan

earlier base of 83.49 million. The top five circles for Tata Tele by number of subscribers were Andhra Pradesh, Maharashtra, Karnataka and Tamil Nadu (including Chennai). Together, these accounted for 43.7 percent of its total base while the next five circles made up for another 26.3 percent.

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The company went through a hostile environment in the aftermath of Supreme Court 2012 cancellation of 122 licenses spread across a number of telecom players. It was only towards the end of 2013 that the company could start re-focusing on subscriber growth, the results of which became visible as early as the January-March quarter of 2014 when the company recorded its first positive growth after several negative quarters in a row. The company has also innovatively been approaching its data card business, which too had suffered in 2012-13 but is now bouncing back to health. Its Japanese partner NTT Docomo, however, has decided to part ways and Tata Tele will most likely buy the stake back.

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FY 2013-14

Top10 Telecom Services Aircel

Gathering Mass

CEO, Aircel

he Chennai-based operator grew its subscriber base by a modest 5.63 percent in 2013 over the previous year, after having earlier scaled down its operations in a number of its circles, given a highly competitive scenario. The top five circles by number of subscribers for Aircel were Tamil Nadu (including Chennai), UP (E), Bihar, Rajasthan and Assam, which together comprised 60 percent of Aircel’s subscriber base. The next

Growth Chart Revenue in `crore

—Kaizad Heerjee

15.0%

`11,294

FY 2013-14

`9,817

FY 2012-13

followed by Assam, North East, J&K and Orissa. k Ran In December 2013, ZTE said it had entered in an agreement with Aircel to deploy 4G LTE services in India. In the first stage, it said, the LTE deployment would be for Chennai, Rest of Tamil Nadu (RoTN) and a few other business critical circles. As this issue goes to press, in a somewhat sudden development, Aircel launched its 4G services in the four circles of Andhra Pradesh, Assam, Bihar and Orissa. It had won the second largest number of BWA licenses in the auctions earlier. The 4G launch is a bold move from Aircel, as it lets the telco steal a notional edge over Reliance Jio Infocomm, which is due to launch its 4G services in 2015.

V&D-CMR Telecom Industry Survey FY2013-14

five circles accounted for another 23 percent of the base. In terms of subscriber share, Tamil Nadu (including Chennai) was Aircel’s most significant circle, where the telco had a subscriber share of 30 percent. This was

MTNL

Not Quite Hungry

he state-run telecom service provider Mahanagar Telephone Nigam Limited (MTNL) continued to be a significant wireline PSTN player in the two metro circles of Delhi and Mumbai where it operates. To its credit, it even managed to secure a small annual subscriber growth of 2.4 percent in the wireline segment, growing from a relatively small base of 3.46 million in 2012 to 3.54 million in 2013.

GrowthShare Chart Market

-1.1%

`3,392

`3,429

FY 2013-14

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CMD, MTNL

Revenue in `crore

—P.K.Purwar

In the fixed-line internet segment too, MTNL was at No. 3 with 1.11 million subscribers and 6.06 percent subscriber share. (For a perspective, segment leader BSNL had a subscriber share of 71.9 percent while the next player Bharti Airtel had an 8.02 percent share.) Between its two circles, Delhi gave

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MTNL the majority of its subscribers, both in the fixed-line and wireless segments. For example, around 71 percent of MTNL’s wireless subscribers came from Delhi. MTNL, however, continued to have a somewhat weak position in both mobile voice and broadband segments. In the Delhi circle, for example, its wireless subscriber share was a mere 6.06 percent while for the Mumbai circle it was even lower at 3.4 percent. The enterprise services segment continued to serve MTNL as a strength area, though it has faced increased challenge from the private-sector players in the recent years and its market share.

FY 2013-14

Top10 Telecom Services Uninor

A Comeback Star

ninor made an impressive comeback after having lost all but just one of its pan-India telecom licenses due to an earlier Supreme Court order and having shrunk its presence to a mere six circles. Its fresh operational circles were Andhra Pradesh, Maharashtra, Gujarat, UP (W), UP (E) and Bihar & Jharkhand. More importantly, it announced having achieved breakeven across all its operational circles, while also noting a 17 percent rise in average revenue per user (ARPU). This also gave the operator further

Growth Chart

21.4%

`2,543

`2,095

FY 2013-14

FY 2012-13

V&D-CMR Telecom Industry Survey FY2013-14

CEO, Uninor

promotional means to achieve high returns with relatively low budgets. It successfully attempted innovative means, such as appointing auto drivers as its sales representatives in the Maharashtra region to augment its market presence. In 2013, Uninor suffered a 21.5 percent decline in its subscriber base, which came down from 41.52 million in December 2012 to 32.78 million at the end of 2013 (as a result of the trim-down). However, a closer look showed it arrested the decline in the April-June 2013 period itself and has been growing steadily since then. Recently, in the February 2014 auctions, it won additional spectrum for four of its existing six circles, namely Andhra Pradesh, UP (W), UP (E) and Bihar & Jharkhand, while also securing spectrum for a new circle of Assam.

Revenue in `crore

—Morten Karlsen Sorby

confidence in its Indian subsidiary and announce a 30 percent exk Ran pansion of its network sites, with the aim of reaching 50 million additional population across its circles. The operator has been much lauded for breaking even in record time, using lean, smart and innovative marketing and

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Telecom Services

23.50% Enteprise Services

9.47% Other Services 76.50% Consumer Services

24.77% Data Services

Overall Telecom Services Revenue (FY 2013-14) `233,793 crore

65.75% Voice Services

Overall Telecom Services Revenue (FY 2013-14) `233,793 crore

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FY 2013-14

Voice Voice services continue to be the main revenue contributor in Telecom services. In FY 2013-14, it registered a growth of 5.9% compared to previous year. The main reason attributed to the increase could be due to increase in tariffs and the new subscriber additions. There were 933 million subscribers at the end of March 2014. In FY 2013-14, it contributed 65.8% to the overall telecom services revenues as compared to 68.3% in the previous financial year. This implies shift in terms of revenue towards other services including data services. Fixed voice segment continues to register a negative growth and this year it was -11.1%. However, in the mobile voice segment the growth was 10.6% compared to previous FY 2012-13. Although the TRAI released QoS parameters do not suggest any major quality issues, but customers are facing call drops, etc. In the metro circles this is because of choked bandwidth as the data services consumption is growing and in other circles the network is yet to achieve optimization. Operators will have to continue investing in improving voice networks as well for few more years as voice will continue to contribute the significant proportion of the revenues although at a slow/declining growth rate. In addition to this, voice is the â&#x20AC;&#x2DC;real timeâ&#x20AC;&#x2122; service through which a customer tangibly can perceive the network quality. As the data tariffs continue to decline, particularly on the 3G networks, the voice traffic over radio network will continue to see a drop with the invasion of applications such as Viber, for example, even in the local and NLD segments.

Data Data services continue to be the key focus of wired as well as wireless operators. The segment drives the investments of the operators into network enhancements and optimizations. Data services contributed 24.8% of the total revenues for the operators in FY 2013-14 as compared to 22.2% in FY 2012-13. While fixed as well as wireless data services registered growth in revenues, it was 30.6% in case of wireless services while in fixed it was 13.1%. Overall, data services grew at 22.6% YoY. In the fixed services, data revenues become very critical as the consumers continue to use fixed line connection mainly for broadband services. However, as the wireless technologies, in particular, broadband wireless access technologies grow and mature in the country, there is going to be a direct impact on the revenues of the fixed line operators affecting their balance sheets adversely. Looking at the trend of strengthening the broadband wireless access (BWA) network, fixed line operators must focus on fiber rollouts as well as enriching the enterprise services portfolio. Services to be considered by the operators would include SIP Trunking services for the enterprises.

Segment % Growth by Revenue Service Wireless (GSM+CDMA) Fixed Line Others Overall Telecom Services Revenue

FY 2013-14 (in ` crore)

FY 2012-13 (in ` crore)

% Growth

174,465

153,164

13.9%

51,145

51,882

1.4%

8,183

7,325

11.7%

233,793

212,371

10.1%

V&D-CMR Telecom Industry Survey FY2013-14

Wireless Services % Growth by Revenue Wireless (GSM+CDMA)

FY 2013-14 (in ` crore)

FY 2012-13 (in ` crore)

% Growth

Mobile Services Voice

126,056

114,000

10.6%

Mobile Data Services

33,813

25,890

30.6%

Mobile VAS

14,596

13,274

10%

174,465

153,164

13.9%

Total Wireless Services Revenue

V&D-CMR Telecom Industry Survey FY2013-14

Fixed Services % Growth by Revenue Fixed Services

FY 2013-14 (in ` crore)

FY 2012-13 (in ` crore)

% Growth

Fixed Voice Services

27,674

31,130

-11.10%

Fixed Data Services

23,471

20,752

13.10%

Total Fixed Services Revenue

51,145

51,882

-1.40%

V&D-CMR Telecom Industry Survey FY2013-14

VSAT VSAT services continued to exhibit a growth of 8.4% in terms of revenue in FY 2013-14, where the key driver is installation of VSATs within BFSI segment. This year onwards, TRAI revised the threshold speed of Internet to qualify as Broadband Internet by taking it up from 256 Kbps to 512 Kbps. An estimated 215 million Internet users will be there in India by the end of FY 2013-14, of which over 160 million would access the Internet through wireless technologies including Mobile phones, Dongles, WiMAX, VSAT, etc. Of these users, around 61 million were broadband internet users while fixed narrow band Internet users were estimated at 3.5 million.

Other Services Value added services and broadcast services continue to grow in terms of overall YoY revenue increase. In FY 2013-14, Other A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 95

FY 2013-14

Telecom Services Service Segment % Growth by FY 2013-14 Voice Services

Data Services

Other Services

5.90%

22.60% `153,730

FY 2013-14

`145,130

FY 2012-13

`22,149 `57,914

`47,223

FY 2013-14

FY 2012-13

Overall Telecom Service Revenue grew 10% from `212,371 crore to ` 233,793 crore in FY2013-14 V&D-CMR Telecom Industry Survey FY2013-14

Consumer Services

Enteprise Services 5.00% 30.70% `54,941

`178,852

`170,322

FY 2013-14

FY 2012-13

Services generated revenues of Rs 22,149 crore registering a 10.6% growth as compared to the previous year. However, in terms of contributing to the overall telecom services, it remained flat at around 9.5%. VAS is getting badly affected at the cost of increased data services revenue. Although, in case of mobile VAS, it still did register a growth of 10% in FY 2013-14, but more and more apps become available at the disposal of an average consumer, the VAS revenues are unlikely to maintain a growth momentum. Changing communication patterns, like Whatsapp instead of SMS, etc. are bound to hit the VAS revenues for the operators. VAS exhibited a flat contribution to the overall telecom services revenue in FY 2013-14 at 6.3%.

10.60%

FY 2013-14

`42,049

FY 2012-13

To continue growth in other services, one of the areas that the operators need to strengthen is broadcast services and roll out high grade video services that could stand the high competition, mainly coming from DTH operators. Also, mobile TV needs a serious attention from the operators to allow the services grow. In addition to broadcast, operators need to bring in more and more applications, be it for smartphones or for the enterprise use by way of developing them or partnering with the application and software developers.

Enterprise Services Enterprise services in India are an underserved market. Somehow, due to mobile wave riding on the India Telecom for over two decades now, enterprise services

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FY 2013-14

`20,018

FY 2012-13

have altogether been ignored and the services being offered by the operators in India to the enterprises are no comparison to what they enjoy in other mature telecom markets. IP and SIP-based services are yet to see a growth trajectory in India and looking at the composition of the India enterprises, which is dominated by the huge SMB base, such services mean a lot of value for the enterprises. Some of the direct benefits that enterprises are going to reap include, minimal CAPEX investment in equipments, usage-based pricing models, easy scalability and upgradability, etc. However, the position has improved remarkably in FY 2013-14 compared to the previous financial year. In FY 2013-14, the enterprise communications segment saw 31% growth in terms of revenue. In terms of revenue contribution to the overall telecom services, it has gone up to 23.5% as compared to 19.8% in the previous financial year. Many operators like Airtel, Vodafone and Tata Communications are bullish about the growth and are expecting to increase revenues by 1.5x to 2x in coming few years. Increased adoption of Mobility, Data Centres, Cloud Computing, Virtualization, IoT (Internet of Things), Smart Technologies and Enterprises and other such emerging trends for the India Inc. are going to open up new opportunities for operators to serve enterprises and increase their revenue proportion coming out of enterprise segment.

Voice Services Voice Services Voice Services Voice Services Voice Services Voice Services Voice Services Voice Services Voice Services Voice Services

Voice Services Voice Services Voice Services Voice Services Voice Services

Voice

Services Voice Services Voice Services Voice Services Voice Services Voice Services

Voice Services Voice Services Voice Services Voice Services Voice Services Voice Services Voice Services Voice Services Voice Services Voice Services

Fixed . .....................................................................99 Mobile..................................................................101 Internet Telephony ......................................103

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FY 2013-14

Voice Services Fixed

Makeover to Bring Growth Back Even simple steps like reducing downtimes and mean-timeto-repair could make PSTN attractive to not just business segments but also to households Fixed Services (Voice and Data) Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company BSNL

19,124

Tata Communications

17,450

Airtel

6,332

Others

8,239

Total Revenues

Others include MTNL, Vodafone, Relliance, HFCL, Shyam Telecom V&D-CMR Telecom Industry Survey FY2013-14

16.1% Others

37.4%

12.4%

BSNL

Airtel

34.1% Tata Comm

V&D-CMR Telecom Industry Survey FY2013-14

nce a mainstay of telecom in India, PSTN services have been on a never ending decline for close to a decade now. From having a subscriber base of 42 million in December 2003, India has seen its wireline subscriber base shrink to about 28.9 million at the close of 2013, from 30.79 million in the corresponding period of 2012, as per the numbers released by Telecom Regulatory Authority of India. This amounts to a negative growth of 6.17 percent. Efforts to grow the PSTN wireline base have yielded little result with customers of both the state-run operators—Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL)—continuing to surrender their subscriptions in favor of mobile services. The leading PSTN service provider BSNL saw an annual decline of close to 10 percent in its subscriber base—from 21.04 million in December 2012 to 18.94 million in December 2013. MTNL managed to squeeze in a small annual growth of 2.3 percent on a relatively much smaller base of 3.46 million than BSNL. Nevertheless, the BSNL and MTNL combine continues to have the largest share of 77.8 percent of the wireline sub-

51,145

Company % Share in the overall Fixed Service Revenue of `51,145 crore A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 99

FY 2013-14

Voice Services Fixed scriber base in the country, with BSNL alone accounting for close to 66 percent at 18.94 million wireline subscribers. MTNL was next at 3.54 million subscribers, followed by Airtel at 3.35 million, Tata at 1.51 million and Reliance Communications at 1.24 million subscribers. Others included Quadrant, Sistema and Vodafone which put together had 0.32 million subscribers as of December 2013 according to TRAI.

Growth Inhibitors While PSTN services have mostly suffered decline due to a cannibalization by mobile services, there have been other reasons for the decline as well. It is also notable that while a private sector player like Airtel has been able to grow its wireline subscriber base bit by bit, the incumbents BSNL and MTNL have not been able to contain the churn of their wireline customers. The argument, that a migration of customers from wireline to mobile is expected and inevitable, therefore is considered inadequate by industry watchers. The fact that the state-run operators have lost market shares in their mobile businesses too is considered a key pointer of strategic gaps, which if duly addressed, could result into a positive impact for the wireline segment. One of the reasons for customers surrendering their PSTN subscriptions has been the poor quality of service, especially in the event of a downtime. In smaller towns and rural areas, when the wires get broken or cut, there often is a crippling lack of manpower to identify and visit the affected site, due to various reach and logistics issues. There also is a lack of best practices in the way the wires are laid out in far flung areas, which actually points at a lack of trained resources. By addressing these gaps, a part of customer churn, which is triggered by frequent downtimes and poor rate of repairs and subsequent delays, can quickly be plugged. This itself could help slow the rate at which the PSTN churn has been happening.

While a private sector player like Airtel has been able to grow its wireline subscriber base bit by bit, the incumbents BSNL and MTNL have not been able to contain the churn of their wireline customers Having said that, it is also argued that even the private operators have not been able to grow their wireline footprints and subscriber bases in a significant way. A key inhibitor in this regard is considered to be the right of way (RoW) issue, wherein there is no uniform policy that facilitates laying of cables by telcos across various states or telecom service areas. To compound the matter, much of the telecom industry has been reeling under huge debts, ever since the first 3G auction in 2010. This has severely limited the capacity of telcos to invest in the expansion of wireline networks in the country. Since mobile services are considered a relatively much lower hanging market segment and can be rapidly scaled up to meet new subscriber additions, telcos have been focused on their mobile service investments. By comparison, wireline networks take longer time to deploy and services also take longer to be provisioned, telcos have historically gone slow on ramping up their wireline networks.

What Next? The impact of mobile voice on PSTN has been severe so far and it is not a blow from which the segment can recover easily. To arrest the decline in the PSTN services, the first most important step would be to effect a rise in the BSNL

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and MTNL subscriber numbers. As of now, even though the private operators are able to register small gains in their subscriber numbers, a negative growth in the relatively large subscriber base of incumbents more than offsets that positive growth. The government may need to evaluate if measures like business process transformation or organizational restructuring would be required or if steps like strengthening the channel networks and enabling the partners would work better. Then there remains a long-pending consideration for unbundling of the local loop, which had been advocated quite strongly at least around six to seven years ago but which has got ignored in the want of any concrete response from the key stakeholders. At one point of time the counter argument was that it would negatively impact the PSTN business of the incumbents. However, in the face of the decline that the segment has anyways suffered, the argument hardly has a basis and there could be significant merit in re-energizing a discussion on unbundling the local loop. While mobile services have already played a decisive role in revolutionizing telecom in the country and would continue to be the primary communication vehicle for the masses, the strategic role of wireline in the deeper and wider context of telecom for the economy at large can never be emphasized enough. If due measures are taken to address even the operational weaknesses (like frequent downtimes) and inefficiencies (such as long mean time to repair) then at least a part of the PSTN churn could be arrested. The next step, of course, would be to bring growth back to the segment. While the business and commercial segment would offer the most suited ground for PSTN growth, the potential latent with households in the higher and mid socioeconomic segments may need to be tested and measures be defined accordingly.

FY 2013-14

Voice Services Mobile

Northbound Again! Subscriber growth came back to the industry, along with some pricing power to telcos, which helped push ARPUs up Wireless (GSM+CDMA) (Voice and Data) Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company Airtel

41,440

Vodafone

33,093

Idea

22,455

Others

65,188

Key Developments in 2013

Others include all mobile players

The year 2013 was that of a growth for the mobile service industry in India, after a year-on-year subscriber de-growth in 2012. The subscriber growth, however, was less than a modest 1.81 percent annually. In the preceding year, the wireless subscriptions had declined 4.62 percent. More importantly, the leading players seemed to get some pricing power back as they increased tariffs incrementally during the year. The blended average revenue per user (ARPU) for GSM service providers rose to Rs 112 at the close of 2013, as compared with Rs 98 in the year-ago comparable period. In terms of prepaid versus postpaid break-up, while the prepaid ARPU averaged at Rs 98 postpaid ARPU stood at Rs 456 in December 2013. Mobile service providers also realized an improved usage of their networks during the year, with the minutes of usage (MoU) averaging at 379 minutes per subscriber per month for GSM and 230 minutes per subscribers per month for CDMA. While CDMA MoUs remained flat over the preceding year, the GSM MoU went up by an average of 20 minutes, compared with 350 minutes per subscriber per month in 2012, according to TRAI data. Urban tele-density showed signs of over saturation as it de-grew 0.65 percent to reach 149.90 in December 2013 from 144.95 in December 2012. However, rural tele-density was far from saturated and grew 7.06 percent to reach 41.70 in December 2013 from 39.85 in December 2012. Not surprisingly, telcos have been getting more focused on the rural segment in search of future growth for their mobile voice services.

Total Revenues

174,465 V&D-CMR Telecom Industry Survey FY2013-14

23.75% Airtel

37.36% Others

18.97% Vodafone

12.87%

V&D-CMR Telecom Industry Survey FY2013-14

obile voice continues to command the lionâ&#x20AC;&#x2122;s share of telecom services in India, both from a subscriber as well as revenue standpoint. As of December 2013, according to Telecom Regulatory Authority of India (TRAI), there were a total of 886.30 million wireless subscribers in India. This wireless subscriber base comprised 824.06 million GSM subscribers while the remaining 62.24 million were on CDMA, a fraction of which is also understood to comprise fixed-wireless subscribers (also termed as wireless in local loop or WLL). Mobile voice was understood to have contributed an estimated 85 percent of mobile operatorsâ&#x20AC;&#x2122; total annual revenues in 2013.

Idea Company % Share in the overall Mobile Services Revenue of `174,465 crore

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FY 2013-14

Voice Services Mobile

Key Players Bharti Airtel continued to be the market leader, followed by Vodafone India, Idea Cellular and Reliance Communications. Other players during the year were BSNL, Aircel, Tata Teleservices, Uninor, SSTL, Videocon, MTNL, Loop and Quadrant. In a very significant development of the year, Idea Cellular displaced Reliance Communications to become the third-largest player in terms of mobile subscriber base. Idea also recorded the highest subscriber growth of 12.93 percent over the preceding year while RCom saw a marginal decline of 1.08 percent in its base. The decline was largely caused as RCom was understood to have undertaken a drive to scrub its inactive subscribers. Other telcos had also previously carried out similar exercises. Market leader Bharti Airtel clocked an annual growth of 9.07 percent in subscriber additions which took its total mobile subscriber base to 198.41 million at the close of 2013, as compared with 181.91 million in 2012. Vodafone’s subscriber base grew 8.77 percent to 160.41 million in 2013, from 147.48 million in 2012. In terms of focus on rural areas, TRAI said Idea continued to have the highest proportion of rural subscribers at 54.69 percent, followed by Vodafone at 53.67 percent of their total subscribers.

Spectrum Usage The mobile voice service providers are using a mix of spectrum bands to offer their respective GSM and CDMA services. The frequencies being used are in the bands of 900 MHz and 1800 MHz for GSM and 800 MHz for CDMA. The likes of Bharti Airtel, Vodafone, Idea Cellular and Aircel are GSM-only service providers while those like Reliance Communications and BSNL have both GSM and CDMA networks in place. SSTL continues to be the only pure-play CDMA player. While these spectrum bands are mostly being used to provide 2G voice (as also 2G, GPRS and EDGE data) services, going forward, given that telecom service

MNP Gathered More Steam As per the data reported by TRAI from the service providers, by the end of December 2013 about 109.37 million subscribers had submitted their requests to different service providers for porting their mobile number. In MNP Zone-I (Northern & Western India), maximum number of requests have been received in Rajasthan (about 10.97 million) followed by Gujarat (about 9.45 million) whereas in MNP Zone-II (Southern & Eastern) maximum number of requests have been received in Karnataka (about 12.54 million) followed by Andhra Pradesh Service area (about 10.04 million). In the month of December 2013, total number of subscribers who have submitted their request for MNP is 2.50 million. The status of MNP requests in various service areas is given below (as of December 2013):

Zone 1 Service Area

Zone 2

No. of Porting Requests

Service Area

Delhi

4,026,208

Andhra Pradesh

Gujarat

9,447,677

Assam

Himachal Pradesh Haryana Jammu & Kashmir

383,578 4,077,022 19,796

Bihar Karnataka

No. of Porting Requests 10,036,831 394,728 2,508,507 12,539,582

Kerala

4,307,094

Maharashtra

8,741,980

Kolkata

2,403,264

Mumbai

4,449,915

Madhya Pradesh

6,219,842

Punjab

3,727,175

North East

Rajasthan

10,965,519

187,845

Orissa

2,301,464

Uttar Pradesh – East

6,160,699

Tamil Nadu

6,447,447

Uttar Pradesh – West

6,013,630

West Bengal

4,013,585

Total

58,013,199

Total (Zone 1 + Zone 2) Net Addition in Dec. 2013

Total

51,360,189 109,373,388 2,498,576

Source: TRAI

licenses have been delinked from spectrum licenses, the 2G spectrum is much likely to be used by telcos to offer mobile broadband services, chiefly 4G LTE. The liberalization of spectrum would go a long way in making that a reality.

What Next? Even though the service providers would be leaving no stones unturned to build their data revenue streams, they cannot afford to pay any less attention on the mobile voice business in the foreseeable future. No wonder that players like Uninor were largely focused on voice for much of 2013 and only after stabilizing

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on that front did they start rolling out their data strategies. On the other hand, SSTL, which offers services under the MTS brand and which has had a greater focus on data, has started making its intentions clear about growing its voice business. Going forward, even with the development of 4G LTE, 2G voice has got a visible role to play. In fact, the only operator, Bharti Airtel, to have launched LTE in select cities so far, has started using the Circuit Switched Fall-Back technology that essentially switches back to 2G to offer voice for the LTE mobile subscribers.

FY 2013-14

Voice Services Internet Telephony

The Empire Strikes Back? The telco-OTT partnerships could be the beginning of a new development that could potentially challenge and disrupt the ISP-driven models

he IP/Internet telephony landscape is more complicated than it appears to be. It is also a segment that can be potentially much disruptive to telcosâ&#x20AC;&#x2122; traditional voice service businesses, with a number of over the top (OTT) voice service providers vying for a piece of the hugely lucrative voice pie.

The ISP Players The genesis and rise of this segment in India is easily traced back to the VoIP offerings that internet service providers (ISPs) came up with in the early 2000s. Due to a lack of regulatory clarity then,

it led to a bitter controversy that ensued and lasted between the telcos and the ISPs. It was settled after a ruling that an operator with an ISP license could not terminate VoIP calls over PSTN networks. This also led to players like Sify taking a unified service license later to comply with the modified regulatory guidelines and requirements. According to Telecom Regulatory Authority of India (TRAI), as many as 33 ISPs were offering Internet telephony in India, as of December 2013 (see table). TRAI said the total outgoing minutes of usage recorded for Internet telephony stood at 319 million in 2013, as compared

with 260 million minutes in 2012. The players listed by TRAI included Tata Teleservices, Sify, Tata Communications and BSNL, among others.

The OTT Players The key OTT providers include the more established players like Skype, Viber and Nimbuzz but also the likes of Fring and Tango. Further, messaging apps providers like WhatsApp, WeChat and Line are also in the fray through the voice messaging and chat features. BlackBerry also joined in later with its BBM Voice launch while WhatsApp is expected to launch its calling feature in 2014.

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FY 2013-14

Voice Services Internet Telephony Towards the end of 2013, Viber made a significant inroad into India by entering into a tie-up with leading telco Bharti Airtel for its â&#x20AC;&#x2DC;Viber Outâ&#x20AC;&#x2122; offering. Viber is offering significantly lower rates than Skype for calling to mobile and landline numbers, with packs starting Rs 70 for postpaid Airtel users. This potentially gives Viber an important edge over Skype, which accepts payout only in select currencies including USD, Euro and HK dollars. The service, however, is costlier than a similar service offered through a Spectranet-Nimbuzz tie-up.

List of Internet Service Providers Providing Internet Telephony Service Sl. No

Name of the ISP

Alliance Broadband Services Pvt. Ltd.

Apna Telelink Ltd.

Asianet Satellite Communications Ltd.

Bharat Sanchar Nigam Ltd.

Blazenet Ltd.

City Online Services Ltd

Citycom Networks Pvt. Ltd.

What Next?

Cordia LT Communications Pvt Ltd

The primary demand for the service, whether offered by telcos or ISPs or through OTTs, is in the international calling segment. This is obvious, given that the international call rates are still considerably high, which leads to a considerable volume of the communication happening on app-to-app (like Skype-toSkype) platform using Wi-Fi or over the PCs. OTT and telco based IP/Internet calling offers the added flexibility of using the mobile access devices to call international numbers at significantly lower costs than the standard carrier rates. It is a win-win for the operator as well as the users, for a good part of their communication needs, especially when less-than-toll quality is an acceptable solution to the user. For the telcos too, such offerings are a good way to get back some of the traffic they would have otherwise lost to app-to-app calls. For the pure-play ISPs, it makes the greatest business sense, as it helps them add an attractive revenue stream to their existing offerings. Going forward, as the 3G and 4G subscriber base and usage grows significantly, the telco-OTT segment is expected to see a faster growth, especially if telcos decide to give it a greater thrust. The flexibility of operator billing would be a determining factor, apart from pricing, in which OTT app is able to cover more ground in this segment faster than the competition. This also has the potential for telcos to win back some of the lost ground to ISPs more than a decade ago.

Data Infosys Ltd.

delDSL Internet Pvt Ltd

Digital2Virtual ISP Pvt. Ltd.

Dishnet Wireless Ltd

Fast Lynx Internet Service Pvt Ltd.

Indusind Media & Communications Limited (In2cable (I) Ltd.)

Karuturi Telecom Private Limited (Estel Communications Pvt. Ltd).

Manipal Ecommerce Ltd.

My Own Infotech Pvt. Ltd

Novanet Ltd.

Oistel Telecom Pvt. Ltd.

Opto Network Pvt. Ltd.

Ortel Communication Ltd.

Pipetel Communications Pvt. Ltd.

Pulse Telesystems Pvt. Ltd.

QBC Infotech Pvt. Ltd.

Sify Technologies Ltd.

Swiftmail Communications Ltd.

Tata Communications Limited

Tata Teleservices(Maharashtra) Ltd.

Trikon Electronics Pvt. Ltd.

Tulip Telecom Limited (Tulip IT Services Ltd.)

VIVA Communications Pvt Ltd (Mylai Karpagambal Information Systems (P) Ltd)

World Phone Internet Services Pvt Ltd

You Broadband & Cable India Private Limited

Source: TRAI

104 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

Data Services Data Services Data Services Data Services Data Services Data Services Data Services Data Services Data Services Data Services

Data Services Data Services Data Services Data Services Data Services Data Services Data Services Data Services Data Services Data Services Market

Data Services Data Services Data Services Data Services Data Services

Wireline Broadband .....................................106 Mobile Broadband..........................................108 Enterprise..........................................................110

Data

Services `57,914 crore Internet Services Airtel

49%

Others

15%

Vodafone

12.4% BSNL

Company % Share in the overall Internet Service Revenue of `57,284 crore

V&D-CMR Telecom Industry Survey FY2013-14

23.6%

Top 3 Companies by Revenue Company Airtel

FY 2013-14 (in `crore) 13,519

Vodafone

8,593

BSNL

7,103

Others

28,069

Total Revenues

57,284

Others include all 2G, 3G, and â&#x20AC;&#x2DC;Fixedline Narrowband and aboveâ&#x20AC;&#x2122; operators V&D-CMR Telecom Industry Survey FY2013-14

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Data Services Wireline Broadband

Growth is Beyond DSL DSL continues to serve as the dominant broadband access technology, but the stakeholders will need to leverage tech options like cable to grow faster Broadband Internet Services Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company BSNL

10,097

Airtel

7,442

Idea

4,352

Others

14,771

Total Revenues

36,662

Others include all 3G and above and Fixed Broadband operators

ixed-line Internet and broadband in India have, year after year, been elusive targets. The Broadband Policy of 2004 had set a goal of achieving 9 million broadband users and 18 million Internet users for the year 2007, and of 20 million broadband users and 40 million Internet users for the year 2010. None of that, however, was achieved, even when the broadband was defined as a 256 kbps always-on Internet connection only. Several arguments have been put forth on why the broadband targets have been hard to achieve. One of the key reasons cited is that the fixed-line PSTN subscriptions, which are the principal vehicle for carrying DSL-based broadband connections into offices and homes, have been on a continued decline for the past several years. It is argued that this decline has, in turn, directly impacted the growth of DSL connections. Another argument has been that the relatively low PC user base in India acts as an inhibitor for adoption and usage of fixedline broadband. Also, while there is a relatively higher incidence of smart phones, which could be effectively used to access the Internet over a fixed-wireless network like Wi-Fi, that alone is not enough to catalyze the growth of Wi-Fi as a broadband last mile. Smartphone usage over Wi-Fi also happens more when PCs are used in the first place.

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27.54%

37.36 Others 40.29%

BSNL

Others

20.30% Airtel

11.87% Idea Company % Share in the overall Broadband Internet Services Revenue of `36,662 crore

V&D-CMR Telecom Industry Survey FY2013-14

FY 2013-14

Key Developments Even as the industry closed the year 2012 at 25.33 million Internet subscribers and 14.98 million broadband subscribers (which were still way short of the 2010 targets), the Department of Telecom (DoT) took a rather bold decision of revising the qualifying speed for broadband to 512 kbps, vide a July 2013 notification. While this didnâ&#x20AC;&#x2122;t necessarily lead to a rise in broadband numbers under the new definition, it did have some positive impact on the state of broadband quality in the country. Most significantly, TRAI reported at the end of December 2013 stated that the minimum download speed has been increased from 256 kbps to 512 kbps. The total fixed-line broadband subscribers were reported at 14.54 million in 2013, according to TRAI. State-run operator BSNL led the fixed broadband market segment with a 71.91 percent market share and a total of 13.18 million broadband subscribers, followed by Bharti Airtel at 1.47 million subscribers and MTNL at 1.11 million subscribers. Their subscriber shares stood at 8.02 percent and 6.06 percent, respectively. You Broadband and Hathway Cable were the other significant players, with 2.07 percent and 2.02 percent subscriber shares, respectively. Other players accounted for the remaining 9.93 percent of the broadband subscribers, as per TRAI data at the close of 2013. In the fixed narrowband segment too, BSNL led with 84.30 percent subscriber share and 3.19 million subscribers, followed by YOU Broadband at 0.17 million subscribers and Bharti at 0.08 million subscribers, as per TRAI. Digital subscriber line (DSL) continues to be the dominant access technology used in the country for providing fixed broadband services and prior to the change in broadband definition (to a speed of 512 kbps), DSL constituted 84.82 percent of the total broadband subscribers, followed by Ethernet LAN (6.09 percent) and cable modem (5.24

ISP

Category

Service Area

Bharat Sanchar Nigam Ltd.

All India

Reliance Communications Infrastructure Ltd

All India

Mahanagar Telephone Nigam Ltd.

Delhi & Mumbai

Bharti Airtel Ltd.

All India

Hathway Cable & Datacom Pvt. Ltd.

All India

You Broadband & Cable India Pvt Limited

All India

Tikona Digital Networks Pvt Ltd

All India

Beam Telecom Pvt. Ltd.

Andhra Pradesh

Tata Communications Limited

All India

Asianet Satellite Communications Ltd.

Kerala

Source: TRAI (not listed in the order of subscriber share)

While DSL would continue to lead as the primary vehicle of fixedline broadband delivery, other access technologies like cable have much potential that can be tapped into. percent). Fiber and leased lines were the other fixed broadband technologies. Fixed wireless technologies like Wi-Fi were also being used by some service providers as a key access technology.

What Next? While DSL would continue to lead as the primary vehicle of fixed-line broadband delivery, other access technologies like cable have much potential that can be tapped into. It is important to note in this context that one of the key factors limiting the development of the last-mile access infrastructure has been the right of way (RoW) issue.

Recently, it was reported in the mainstream media that DoT was considering to create a special ISP license category for the cable TV operators. Analysts have argued that such a move could potentially unlock a vast pool of last-mile fixed-line resource that could be leveraged to deliver broadband into millions of new households in the small towns and even in the rural areas. Special ISP licenses for cable TV operators could bring them into the telecom fold and thus equip them with the regulatory approvals for providing broadband services to their existing subscribers, at least in principle, to begin with. It is estimated that cable TV operators serve around 100 million households, most of which are uncovered by broadband. This could also help address the RoW issue effectively. Another important segment that has much potential to grow, while successfully addressing the RoW issue as well, is the fixed-wireless access segment of Wi-Fi. Newer Wi-Fi access technologies like 802.11n and 802.11ac could successfully help address the last-mile access challenges for a wide range of demographic distributions, both in the metros and tier 1 cities as well as in tier 2-3 cities and towns.

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Data Services Mobile Broadband

3G Tariff Cuts Did the Magic! Mobile internet and broadband witnessed phenomenal uptake on the back of tariff cuts, setting the tone for further growth Broadband Wireless Access Services Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company Airtel

2,970

Idea

2,145

Reliance

1,320

Others

10,064

Total Revenues

16,498

Others include Aircel, Vodafone, MTNL, Tata Tele, Uninor, BSNL

hile wireline internet and broadband have continued to fall short of the targets set by the National Broadband Policy of 2004, the growth of mobile broadband has been promising if not phenomenal. According to the Telecom Regulatory Authority of India (TRAI), there were 219.92 million mobile wireless Internet subscribers, of which 40.66 million were broadband subscribers while the remaining (179.65 million) subscribers were on narrowband. The mobile broadband subscribers predominantly comprised 3G and 4G subscribers. It may be noted that the definition of broadband was changed in 2013, and only connections with 512 kbps of downlink speeds were categorized under broadband, as against earlier definition that made connections with speeds of 256 kbps eligible for broadband. Top 5 mobile service providers accounted for 33.83 million mobile broadband subscribers, which accounted for around 84 percent of the total mobile broadband subscriber base.

Key Players Bharti Airtel, Indiaâ&#x20AC;&#x2122;s largest mobile service provider, not surprisingly, was also the leading service provider in terms of mobile broadband subscribers at 9.70 million at the end of December 2013. Most of these subscribers were on 3G while just about 0.1 million subscribers were on 4G LTE networks. Airtel also 108 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

18% Airtel

13% 61%

Idea

Others

8% Reliance

V&D-CMR Telecom Industry Survey FY2013-14

Company % Share in the overall Broadband Wireless Access Services Revenue of `16,498 crore

FY 2013-14 happened to be the only service provider with 4G mobile broadband subscribers, as all other players are yet to roll out their commercial 4G LTE networks. Airtel also led the narrowband mobile Internet segment at around 44.90 million subscribers. Overall, it accounted for a total of 54.62 million mobile Internet subscribers. Reliance Communications, at 6.98 million subscribers, was the second largest mobile broadband provider, followed by BSNL at 6.08 million, Idea Cellular at 5.86 million and Vodafone at 5.20 million subscribers, as per a Voice&Data analysis of TRAI data released for the year ended December 2013. However, when it comes to the more generic mobile Internet base then Vodafone was the second largest operator at 45.65 million subscribers, followed by Reliance Communications at around 36 million subscribers. Airtel launched 4G LTE services in the tri-cities of Chandigarh, Mohali and Panchkula in March 2013, having earlier launched the service in Kolkata, Bangalore and Pune in 2012.

Key Developments &Challenges In a bid to shore up its 3G subscriber numbers, Reliance Communications took the exceptional step of slashing its 3G data tariff lower than even its 2G packs. In mid2013, RCom announced 3G data packs at Rs 123 for 1 GB, Rs 246 for 2 GB and Rs 492 for 4 GB for both smartphone and tablet users. This was the telcoâ&#x20AC;&#x2122;s second major 3G price drop within a span of a year. The incumbent Airtel had also earlier cut its 3G rates by a significant 70 percent, bringing its prepaid browsing charges down from 10 paisa per KB to 3 paisa per KB. Others, including RCom and Idea Cellular, had also followed suite. Vodafone had gone a step further and slashed its 3G tariffs by 80 percent, thus effectively bringing down its browsing charges from 10 paisa per KB to 2 paisa per KB for prepaid users. As it turned out, these price cuts were to provide a much-needed boost to the uptake of 3G data services in the country.

3G will continue to remain the growth driver for mobile broadband in 2014 According to a Nokia Networks (then NSN) study later, the 3G data traffic leapt by 146 percent, surpassing the world average that is roughly doubling every year. 2G data traffic, by comparison, grew 59 percent over the same period. Overall, 2G and 3G services taken together, an 87 percent rise in data traffic during 2013 was noted. The impact of 3G traffic growth can be gauged by the fact that even though narrowband mobile Internet subscribers accounted for an estimated 80 percent of the overall mobile Internet subscriber base, it accounted for just around 57 percent of the total internet traffic. According to the Nokia Mbit Index study, 3G drove mobile data growth in 2013 as it generated 43 percent of the total network traffic. This was when 3G subscribers formed less than 20 percent of the mobile internet user base during the year. The Nokia MBit Index study confirmed the role of 3G as a catalyst for mobile internet, noting that 3G users continued to consume more data on average than 2G users. In December 2013, a 3G user consumed 532 megabyte of data compared to 146 megabyte consumption over 2G, it said. The study also pointed out that tariff reductions in 3G services in early 2013 led to an increased migration of high-end 2G customers to 3G. While the impact of 3G tariff reduction was an industry positive, the industry still faced significant challenges when it came to ramping up 3G subscriber numbers in an accelerated manner. While the relatively low penetration of smart phones was a limiting factor, a continued tiff with DoT on the inter-operator 3G roaming pact further impacted the 3G growth. (Airtel, Vodafone and Idea had earlier entered into a pact to offer 3G services in the license areas common to the three operators.) In a significant development in April 2013, a Delhi High Court panel quashed

an earlier judgment that had brought respite to the three operators. The judgment had prevented the government from stopping 3G services of Airtel in circles where it did not have the license but was offering services by leveraging the tri-party agreement. The issue could not be resolved through 2013, which continued to impact the uptake of 3G.

What Next? Smartphones are a key driver of 3G growth, and recent trends have shown that the share of smartphones in the mobile phone shipments has been on a steady rise. This trend is expected to further strengthen throughout 2014 and beyond as well. Moreover, the 4G device ecosystem is also expected to develop further in India, albeit not very significantly until 2015, when the greenfield 4G behemoth Reliance Jio Infocomm has also scheduled its long-awaited launch. 3G will continue to remain the growth driver for mobile broadband in 2014, even as Airtel take some more baby steps to grow its 4G presence incrementally and other telcos thrash out their 4G network plans. However, to realize the greater potential of 3G-based mobile broadband, operators would need to consider ramping up of their 3G cell site presence. The Nokia Mbit Index study had, for example, said that on average, 20 to 25 percent additional sites would be needed to cover the cities that are not yet covered in category A and B. In the metros also, additional sites would be needed to enhance coverage. On the inter-operator 3G roaming pact front, however, the curtains are yet to be fully drawn. Although in April 2014, a telecom tribunal TDSAT bench upheld the plea of telcos on inter-operator roaming, DoT is reported to be seeking legal opinion on the TDSAT ruling. Meanwhile, in another development, RCom signed 3G roaming pacts with Tata Teleservices and Aircel. It is also expected that once the clarity of spectrum sharing emerges, the uncertainties and ambiguities would go away, to the benefit of mobile broadband in the country.

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 109

Data Services Enterprise

Agility Is New Demand Driver

Striving to become more responsive to their customer needs, enterprises opened up more to the Ethernet and MPLS solutions and delivery models like cloud

Enterprise Services Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company Tata Communications

17,450

Airtel

5,756

BSNL

5,099

Others

26,636

Total Revenues

54,941

Others include all Fixed and mobile operators, and Tulip Telecom

31.8% 48.5%

Tata Comm

Others

10.5% Airtel

9.3%

V&D-CMR Telecom Industry Survey FY2013-14

BSNL Company % Share in the overall Enterprise Services Revenue of `54,941 crore 110 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

he continued global focus on India as an emerging economy, despite a slowed GDP growth rate in the recent years, coupled with a growing domestic market across various verticals, kept the enterprise data services in good health, though growth was not ubiquitous and always a given. The economic pressures weighed on the enterprises, which drove enterprises to do more with their network investments. The unsaid need to transform and become more agile and responsive to the demands of their customers, in turn, made enterprises favor the more dynamic data connectivity options over the relatively fixed ones. This implied that wherever possible, enterprises preferred to go for connectivity services based on MPLS and Ethernet technologies that could serve more bandwidth options to suit the different budgetary constraints of enterprises, as compared to the options like TDM-based leased lines that offered relatively smaller range of bandwidth choices. Moreover, the circuitswitched nature of legacy services made them less agile and cost effective for enterprises than the packet-switched nature of the new-generation services.

Leading Players Enterprise services are a relatively smaller but also less crowded business segment for service providers. The key telcos focused on this segment are Bharti Airtel, BSNL, Reliance Communications and Tata Communications. Their suite of offerings include: domestic leased circuits, international leased circuits, MPLS VPN and Ethernet-based services, among others. Most of these players also offer a wide range of thirdparty data center services and have also been working to strengthen their cloud service portfolios. Some of the leading IT service providers, ISPs and pure-play data center service providers like Sify, Wipro and Netmagic also compete with the telcos in various sub-segments of enterprise data services, most of which can be offered in two flavorsâ&#x20AC;&#x201D;as stock services and as managed services.

FY 2013-14

What Next? Going forward, the role of data centers is expected to become more and more important in the delivery of various enterprise data and connectivity services. Next-generation models like Cloud, Network Function Virtualization and Software Defined Networking would help make data centers play a pivotal role in

VSAT Services Top 3 Companies by Revenue FY 2013-14 (in `crore)

Company Hughes

179

Airtel

142

Nelco (Tatanet)

110

Others

198

Total Revenues

630

Others include BSNL V&D-CMR Telecom Industry Survey FY2013-14

31.5% Others

17.5% Nelco (Tatanet)

28.4% Hughes

22.6% Airtel

V&D-CMR Telecom Industry Survey FY2013-14

For Airtel, the quarter ended December 2013 was particularly good and represented a growth of 13.9 percent to Rs 1,69.5 crore as compared to Rs 1,421.9 crore in the corresponding quarter last year. EBITDA stood at Rs 413.9 crore during the quarter as compared to Rs 215.4 crore in the corresponding quarter last year, a growth of 92.1 percent. The increase in EBITDA during the quarter was also helped by a one-time settlement with other carriers and bad debt recoveries from customers. During the quarter, the company said, it also tactically reduced the lower margin voice business. Tata Communications also performed well during the year. Tata Communications had said in an earlier filing that revenue from leased circuits (international and national) and Indefeasible Rights of Use (IRUs) increased from Rs 1,301.5 crore in fiscal 2012 to Rs 1,644.6 crore in fiscal 2013. The increase was predominantly due to growth in revenues from other service providers and the addition of new circuits, it said. Indefeasible rights of use refers to the companyâ&#x20AC;&#x2122;s right to exclusively use a substantial portion of the capacity in the cables for substantially all of the economic lives of the cables. Revenues from Internet leased lines had increased from Rs 589.8 crore in fiscal 2012 to Rs 726.5 crore in fiscal 2013. The increase was predominantly due to growth in revenues from enterprise customers and the addition of new circuits. Also, Internet data center revenues grew to Rs 378.1 crore in fiscal 2013 from Rs 350.3 crore in fiscal 2012 mainly due to an increase in the companyâ&#x20AC;&#x2122;s data center capacity globally and increased sales to customers, it had noted in the filing. Reliance Communications boasted of a corporate clientele of over 39,000 Indian and multinational corporations, including small and medium enterprises and over 830 global, regional and domestic carriers. The enterprise customer base of the company included 880 of the top 1,000 enterprises in India, it said. In next 3-5 years, RCom had noted in its last annual report that it would be lining up a host of high end products for internet connectivity for specific industry segments, like BFSI and retail keeping in view varying needs of various segments. It also said it was in an advanced stage of launching a unique IPV6 solution in the market. RCom also said it would continue to strengthen its focus on the SMB market, to provide cost optimized and efficient connectivity options to SMB and enterprise customers. It used a strategy to setup a focused unit for the Government segment, which it said had paid off well and would continue to be a growth driver, given that the government is expected to continue investing in automation and digitization.

Company % Share in the overall VSAT Revenue of `630 crore

the delivery as well as management of the services. As data center and cloud-based delivery models mature, enterprises could be looking forward to automated provisioning of services though web-based dashboards, among other such offerings. As such, telcos would be looking at their data center businesses more strategically than ever before. Players like Tata Communications and Bharti Airtel were understood to have considered plans to grow their data center businesses into separate entities, though there have not been any concrete announcements from them in this regard. Nevertheless, this continues to be a strong thought process in the top echelons of the industry. A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 111

Other Services Other Services Other Services Other Services Other Services Other Services Other Services Other Services Other Services Other Services

Other Services Other Services Other Services Other Services Other Services

Other

Services `8,183 crore VAS.........................................................................114 Mobile wallet..................................................116 OTT.........................................................................119

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 113

Other Services VAS

In Search of New Pastures A parched industry set out to tap into revenue streams beyond the ABCâ&#x20AC;&#x201D;of astrology, Bollywood and cricket

he Value Added Services (VAS) ecosystem in India has entered into a transformational phase, with many of the traditional VAS services having been replaced by new utilitybased services and mobile apps causing disruptions of unprecedented scale. There was a time, when VAS was largely centered on services like callerring-back-tones (CRBT), IVR, astrology, Bollywood and cricket. However, the speedy adoption of new age and high speed broadband technologies and the consequent consumer adoption for apps compelled VAS players to expand and renovate with new offerings in the utility based services segments like health, education and citizen services or mobile marketing, M2M and managed services. While entertainment continues to hold the major portion of revenues, the rollout of high speed broadband services has also boosted the prospects for offerings like m-commerce and m-payments. Overall, growth in the sector is expected to be fuelled by mobile internet, with data estimated to add 54 percent to the mobile VAS revenues by 2015. The growing handset penetration and new collaboration models are expected to further drive the market, making it a $9.5 billion market by 2015, up from $4.9 billion in 2012, according to a report by Wipro Technologies and Internet and Mobile Association (IAMAI) of India. As the revenues from voice come under pressure, the carriers are exploring new collaboration models and making efforts to build a strong ecosystem for new VAS models.

Major Players in India Bengaluru based OnMobile Global continues to be a leading value added services company. It offers different services on a range of content management, content aggregation and distribution, m-commerce solutions, missed call alert and voice SMS among others. The company launched a new cloud platform called C3 or Consumer Communication Cloud. The platform allows end users to access their phone contacts, SMS and MMS messages and call logs on any device and any screen, even without a SIM.

114 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

As part of its global expansion, the company also won a large deal with MTN, the largest operator in Middle East and Africa, with 200 million users. It is also collaborating with various health and education providers to provide consumers quality information in vernacular languages. Another key player, One 97 communication is extensively focusing on mobile marketing and plans expansion in Asia and Africa. The companyâ&#x20AC;&#x2122;s ecommerce based Paytm brand has seen strong growth and is driving its revenues. Through Paytm, it offers diversified ecommerce services like recharges for data cards, DTH services, toll cards, mobiles, landlines and bus tickets, etc. It has collaborated with multiple brands and is entering into more such partnerships on revenue sharing models. Then there are also companies like Handygo, which is experimenting with the e-book opportunity and is trying to create a niche in that segment. Last year, the company introduced its Rockstand brand, which is an e-book and e-magazine application for mobile and tablet platform. The company is collaborating with various device vendors to pre-install the application and help curb pirated content of leading domestic and international authors. Some of the other prominent VAS names in the industry include Comviva, Mauj Mobile, mCarbon, Netxcell and IMI Mobile, among others.

Technology Trends The Indian VAS players are considering various alternatives to strengthen their revenue streams as the traditional ones have been drying up. Helped by the mobile internet boom and the availability of budget smartphones, a consumer today

FY 2013-14 is no more dependent on SMS codes to get the news updates, or to download wallpapers and get the cricket scores. The VAS providers are therefore turning to new application areas, where they can develop specific apps to meet the new needs of customers in a rapidly transforming services landscape. Example services could be to help parents find out whether the child has reached school or enabling the elderly people to keep track of their health checkup timeline. However, isolated efforts may not suffice for the sector to flourish and grow. According to an IAMAI report, to realize the market’s full potential, the industry requires a collaborative effort cutting across mobile network operators, telecom equipment vendors and mobile service content providers.

Challenges The single-most significant impact on VAS industry came after TRAI’s regulatory guideline that required VAS companies to get explicit consent from subscribers prior to them subscribing to a VAS. The guideline impacted the business of VAS companies since they needed to find out new ways to slot in consumers, based on their exclusive preferences. Clearly, a lot of focus has been towards improving the quality of content and service offering. There is also an increasing traction on operators collaborating more and more with VAS players in the form of opening their billing channels and helping them with marketing support to ensure they are on the right track. In one such move, Vodafone India decided to launch Vodafone Developer Platform (VDP), which enabled partners and app developers to connect seamlessly with the operator in order to offer operator billing, thus paving the way for millions of Vodafone’s customers to pay for an app or a content using their mobile service subscriptions. These kinds of initiatives can help the industry gain more momentum as these options give customers a ready access to wide range of applications with the easyto-use operator billing option.

The VAS industry is also facing additional challenges in terms of collaborating with the ecosystem partners like aggregators, developers, telcos and content owners Challenges One of the growing challenges the industry is facing today is lack of innovation in processes like personalization, billing and localization. This has also been recognized by Gartner, according to which the prospects of many applications generating revenue is negligible. Gartner further estimates that 94.5 percent of downloads will be for free apps by 2017. Out of the total paid applications, about 90 percent are downloaded less than 500 times per day and make less than $1,250 a day, it says. This forecast clearly signifies that those VAS providers, who are largely building their strategy around creation of applications, will have to think hard on the usability of the applications for the consumer. Additionally, the VAS industry is also facing additional challenges in terms of collaborating with the ecosystem partners like aggregators, developers, telcos and content owners. Most of them have been working in silos for too long. This has hampered the growth prospects of the industry since there is no clear direction for the partners. Another key growth impediment is the absence of a unified body for advocating the needs of the industry to various stakeholders and decision makers, including the government. Third, while a lot of startups in the VAS sector have emerged, not many are able to consistently invest in innovation and R&D. As the market models adopted by VAS players in India have historically revolved

around volumes, they are finding it hard to rework their business models.

What Next? Globally too, despite the growth of data services, mobile VAS revenues are consistently suffering a decline. However, in spite of the decline, the higher revenue share being awarded to content providers is encouraging VAS players to innovate and differentiate. In India, despite some of the operators like Vodafone taking initial steps, the revenue shares are still largely leaning towards operators. Vodafone currently encourages VAS players to offer innovative offerings by offering higher revenue shares to the VAS companies, if the telco itself can generate higher revenues from the offering. While in most of the mature markets like Europe and Japan, content owners get 70 percent of revenues while operators take 30 percent, in India it has been reverse for a long period of time. However, with the revenues from voice hitting a plateau, a shift is happening and in the coming years one would see more telecom operators coming out with better revenue sharing models to incentivize innovations in VAS. In India, a large chunk of VAS offerings are still around music, SMS and ringtones. However, as the smartphone penetration is surging, consumers expect different kinds of services over their devices. With a pan India availability of 3G services mostly in place and the 4G rollouts expected to gather momentum around 2015, video is going to be a next big thing in the country. Going forward, telcos are expected to enter into collaborations with video distributors for related services. In one such partnership, Techzone, the aggregator, developer, publisher and distributor of entertainment content had partnered with Aircel to offer mobile video download as a VAS service. More recently, Tata Teleservices launched its “YouTube Recharge” plan in partnership with YouTube and Apalya Technologies. About 40 percent of traffic on YouTube is estimated to come from mobile phones and tablets now, and the share is expected to rise in the coming years.

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 115

Other Services Mobile Wallet

Focus on Subscriber Gains Growing the active user base and increasing the volume and value of transactions will be the next frontier

he mobile wallets segment, which now has 29 players that are registered with Reserve Bank of India under the Semi-Closed System Payment Instruments category, saw a good traction and increased competitive landscape last year. As many as seven new players entered the fray in 2013 as they were awarded the RBI licenses. These were Citrus Payment Solutions, Idea Mobile Commerce Services, One97 Communications, One Mobikwik Systems, QuikCilver Solutions, Reliance Payment Solution and Tech Mahindra – two of these being telcos.

Bharti Airtel’s Airtel Money and Vodafone’s M-Pesa are the leading telcobranded mobile wallet services in India With this, five of the leading telcos have secured licenses to offer mobile wallet services and services of four—Airtel, Vodafone, Idea and Tata—are already

116 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

live. Reliance Jio Infocomm is scheduled to commercially launch in 2015 and its mobile wallet service is also expected to go live then. There was much focus on growing the subscriber base and extending coverage of mobile wallet services to more cities.

Market Dynamics The telcos have been trying to gain market share from the pure-play wallet service providers, some of whom, like Itz Cash, have been active in the India market for long. While the massive base of some of the leading mobile service providers in India

FY 2013-14 gives them a scale, it doesn’t necessarily turn that scale to their mobile-wallet business advantage also. Specifically, given that India is primarily a prepaid market (which makes switching service providers common if not rampant), mobile wallet users tend to avoid operator lock-ins if given an option. On the other hand, pure-play mobile wallet service providers lack the brand power (and the credibility that comes along for a strong brand), something that the big telcos have on their side.

Subscribers & Usage Bharti Airtel’s Airtel Money and Vodafone’s M-Pesa are the leading telco-branded mobile wallet services in India. Bharti reported 1.3 million subscribers and Rs 1,238 crore worth of transactions for Airtel Money at the close of 2013. The transaction value saw a steep rise of close to 90 percent in the October-December quarter of 2013 over the preceding quarter of July-September.

Vodafone India was understood to have 300,000 registered customers and 30,000 agents. Tata Docomo’s service, mRupee, also reportedly had around 300,000 customers, with the company having announced plans to ramp up presence to 26 cities across India. Among the pure-play mobile wallet service providers, Itz Cash, Oxicash and Mobikwik have gained good footholds in the market, at least on the subscriber acquisition and channel development front. Oxigenis estimated to have over 150,000 customer touch points, in terms of retail outlets and chains. Mobikwik too has grown its registered user base quickly, within a short span of launching its services. However, not all of the registered mobile wallet users are necessarily active users also.

What Next? The competition is expected to stay high, despite the fact that only a

handful of players would be clocking the Rs 1,000-crore transaction value mark, which by itself is not a sizable number. Given that a mobile wallet service provider’s chain earns less than 1.5 percent on the total value of the transaction, a transaction value of Rs 1,000 crore hardly makes a venture profitable. Going forward, however, the subscriber and active user base is expected to rise, partly helped by the growing adoption of smartphones which make it easier for users to transact through the apps that can be downloaded on their devices. It would also be important for mobile wallet service providers to grow the volume of their merchant partnerships, so as to make the services more frequently usable for subscribers. Right now, the bulk of the service usage is on transactions like mobile recharges and bill payments.

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 117

FY 2013-14

Other Services Mobile Wallet Name of Licensee

Prepaid Payment Instrument

Issue Date & Validity

Airtel M Commerce Services Ltd.

Pre-paid payment instruments known as Stored Value Card Wallet (SCW)

30.06.2010 (Valid upto 29.06.2015)

Atom Technologies Ltd

Pre-paid payment instruments

Citrus Payment Solutions Pvt. Ltd.

Pre-paid payment instruments known as ‘Citrus Virtual Wallet’

DigitSecure India Pvt Ltd

Pre-paid payment instruments known as ‘HotRemit’

Edenred (India) Pvt Ltd – nee Accor Services Pvt. Ltd.

Meal vouchers and gift vouchers in the form of ‘paper vouchers’

GI Technology Pvt Ltd

Pre-paid payment instruments known as ‘I Cash Card (ICC)’

Idea Mobile Commerce Services Ltd.

Pre-paid payment instruments

India Transact Services Ltd

Pre-paid payment instruments

Itz Cash Card Ltd.

Pre-paid payment instruments

MMP Mobi Wallet Payment Systems Ltd

Pre-paid payment instruments known as ‘mRupee’

Mobile Commerce Solutions Ltd

Pre-paid payment instruments

Muthoot Vehicle & Asset Finance Ltd.

Pre-paid payment instruments only

My Mobile Payments Ltd

Pre-paid payment instruments known as ‘Money-on-Mobile’

One97 Communications Ltd.

Mobile based Pre-paid payment instruments (M- Wallet)

One Mobikwik Systems Pvt Ltd

Prepaid Payment Instruments known as ‘Mobikwik Wallet’

Oxigen Services (India) Pvt. Ltd.

Pre-paid payment instruments known as ‘Oxigen Wallets’

PayMate India Pvt. Ltd

Pre-paid payment instruments known as “Paymate Wallet”

Pay Point India Network Pvt Ltd

Pre-paid payment instruments known as ‘ Pay Pointz ‘

Pyro Telecommunications Ltd.

Pre-paid payment instruments

QwikCilver Solutions Pvt. Ltd.

Pre-paid payment instruments

Reliance Payment Solution Ltd

Pre-paid payment instruments known as ‘Jio Money’

Smart Payment Solutions Pvt. Ltd.

Pre-paid payment instruments known as ‘PayCash’

Sodexo SVC India Pvt. Ltd

Tech Mahindra Ltd

Transaction Analysts (India) Pvt Ltd.

UAE Exchange & Financial Services Ltd.

UTI Infrastructure Technology and Services Ltd.

Y-Cash Software Solutions Pvt Ltd

ZipCash Card Services Pvt. Ltd.

30.06.2010 (Valid upto 30.06.2014) 18.10.2013 (Valid upto 18.10.2018) 23.07.2012 (Valid upto 22.07.2014) 29.10.2009 (Valid upto 31.10.2014) 29.10.2009 (Valid upto 31.10.2018) 25.11.2013 (Valid upto 24.11.2018) 30.05.2014 (Valid upto 31.05.2019) 25.08.2009 (Valid upto 24.08.2015) 30.12.2011 (Valid upto 31.12.2015) 08.11.2012 (Valid upto 07.11.2014) 29.10.2009 (Valid upto 31.12.2018) 24.10.2011 (Valid upto 31.10.2018) 07.08.2013 (Valid upto 06.08.2018) 18.07.2013 (Valid upto 17.07.2018) 18.01.2010 (Valid upto 31.12.2018) 28.04.2010 (Valid upto 30.04.2016) 03.04.2012 (Valid upto 02.10.2014) 30.01.2014 (Valid upto 31.03.2019) 06.08.2013 (Valid upto 05.08.2018) 18.09.2013 (Valid upto 17.09.2018) 30.06.2010 (Valid upto 31.12.2018)

Meal vouchers and gift vouchers in the form of ‘paper based vouchers’ 25.08.2009 and ‘Smartcard’ or ‘Smart Meal Card’ 19.09.2013 Pre-paid payment instruments (m-wallet) known as ‘MoboMoney’ (Valid upto 18.09.2018) 07.03.2014 (Valid upto Pre-paid payment instruments 31.03.2019) 29.10.2009 (Valid upto Pre-paid payment instruments known as ‘Silver Card’ and ‘Gold Card’ 31.10.2014) Pre-paid payment instruments known as National Common Mobility 21.03.2014 (Valid upto Card (NCMC) 31.03.2019) 15.03.2012 (Valid upto Pre-paid payment instruments known as ‘Y-PayCash’ 14.03.2016) 29.10.2009 (Valid upto Pre-paid payment instruments known as ‘ZipCash Coupons’ 31.10.2018)

118 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

FY 2013-14

Other Services OTT

Partnering with Frenemies Telcos responded better to the OTT threats and took to monetizing usage over the networks through direct partnerships

he rapid march of a range of over the top (OTT) service providers posed both a threat and an opportunity for the mobile service providers. The telcos that were quicker to focus on the opportunities were also open to collaborating more with the OTT providers. The collaborations were mostly with OTT majors like Twitter and Facebook, partly because these players drove much of the Internet access traffic onto the 2G as well as 3G mobile networks in India and partly because the subscribers were anyways using telcos’ networks to access OTT services. The OTT usage was no longer limited to content access and social networking but also extended to chat and messaging services, which started eating into the SMS revenues of telcos. Worse, voice was not being spared either, with OTT applications like Skype and Viber used for international calling, in particular. In fact, Facebook’s India user base has literally swelled multifold over the past three years, between 2010 and 2013. India surpassed the 80-million mark for monthly active Facebook users around mid of 2013, becoming in the process the No. 2 Facebook using nation after US. LinkedIn clocked 20 million registered users while Twitter was estimated to have in excess of 30 million users in India. Vodafone India offered a free Twitter pack for a period of three months starting July 29, 2013, to both its prepaid and postpaid mobile subscribers. The offer, though, was valid only when Twitter was accessed using the native or default browser and charges were applicable when users clicked a link on Twitter that took them to any other website. Before Vodafone, Reliance Communi-

cations had also run a similar free Twitter offer, during the Indian Premier League season, presumably with the aim to bump up its mobile Internet user base and uptake. Even earlier in the year, Facebook tied up with Airtel and Reliance Communications (as part of its tie-ups with telcos globally) for offering Facebook messaging to the telcos’ subscribers for discounted rates. Towards the end of 2013, in December to be more exact, Bharti Airtel joined the league of telcos globally who joined hands with Viber for the Viber Out service, an equivalent of Skype’s paid OTT calling service to the landline and mobile phones.

What Next? Going forward, the collaborations between telcos and OTTs are only expected to become deeper, wider and more long-term in nature. The two parties have been exploring ever new models to gain revenue and market shares in their respective segments.

For telcos, it’s currently about growing their 3G subscriber base and usage, while for OTTs it’s ultimately about gaining greater share of the Internet advertising revenues in emerging markets like India. A recent tie-up between Tata Teleservices, YouTube and Apalya Technologies was done to announce a new video plan called YouTube Recharge. The plan aims to bring down the mobile YouTube viewing cost by as much as 50 percent. A release accompanying the announcement also noted that about 40 percent of traffic on YouTube came from mobile devices. Given that advertising is Google’s key source of revenues from YouTube and is directly related to the number of videos viewed on YouTube, it serves its interests if users watch more videos, which in turn prompts more users opting for the service on the telco’s network. The coming months will see more such innovative telco-OTT tie-ups taking place.

A CyberMedia Publication | voicendata.com | July 2014 | VOICE&DATA | 119

RIICO - ELCINA Electronics Manufacturing Cluster Bhiwadi - Mahindra World City Jaipur

Pr e s e nt

ESDM Investors’ Meet 2014 Enabling Investment, Growth & Prosperity through Electronics

august 26, new delhi India’s “sunshine state” emerges as a key business and industry destination

what’s going for rajasthan… Strategic Location (Ease of Access): Close proximity to (and comprising 23% of) the Delhi National Capital Region (Delhi NCR), the second largest urban agglomeration of the world. Quality Infrastructure (Low Set-up Cost): Approx 1,500 km Dedicated Freight Corridor (DFC) in alignment with the Delhi-Mumbai Industrial Corridor (DMIC), of which 46% area lies within Rajasthan. Skills (Competitive Manpower Costs): Home to a number of medicine, technology and management institutions. Healthy Industrial Climate (Stable Policy Environment and Good Labour Relations): SEZs, IT Parks and Industrial Estates of Rajasthan host the “Who’s-Who” of industry from around the globe – BASF, BMW, Honda, TTK Healthcare, Federal Mogul, Lincoln Electric, Cap Gemini, Infosys, Mastek, Wipro Technologies and many others. High Share of India GDP (Captive Market): Rs. 513,688 crore in terms of nominal GDP during FY 2013-14, making Rajasthan 8th largest among India’s “Top 10 States” (Source: Planning Commission of India). Population of nearly 70 million (Census 2011), with a per capita GDP of Rs. 53,735 in FY 2011-12 – an attractive consumer market in its own right. reGister at http://cmrindia.com/esdm-investors-meet-2014_register/, if electronics is a strategic element of your business growth and expansion strategy. alternately, please write to mkaur@cmrindia.com to block your seat.

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Pr i nt an d on li n e M e dia Partn e rs

Policy View Point

—Inderpreet Kaur

Go after International Best Practices

Senior Analyst, Telecoms Research, Ovum

Inderpreet Kaur is a Senior Analyst in Ovum’s Telecoms Research practice in Hyderabad. She primarily focuses on telecoms regulations and OTT-Telco partnership strategies. She has worked on various projects including the benchmarking of interconnect rates in Europe and the Middle East, tracking the award of spectrum globally, and authoring country-level regulatory overviews.

fter two decades of liberalization of the telecoms market and establishment of a semi-autonomous body for the regulation of the sector, India still falls behind many other Asian economies in terms of adopting best practice policy measures that can help develop the country’s telecoms infrastructure and services markets. India is the second largest telecoms market in the world, after China, and like many other Asian markets has good potential for growth. After witnessing a period of slower revenue growth, Indian mobile operators collectively generated US$ 7.9bn in the last quarter of 2013 representing quarter-on-quarter (Q-o-Q) growth of 30.5%. While growth has returned to the Indian telecoms market, overpriced spectrum, huge taxes, and other penalties imposed by the Department of Telecommunications (DoT) have left most of the operators under tremendous debt pressure. The country has struggled to establish a strong regulatory regime for telecoms; however, the new government’s emphasis on bringing transparency to the political framework through the introduction of e-governance leaves us with the hope that major policy initiatives will help in establishing long-term, stable, predictable, and investor-friendly system.

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A more independent regulator will be able to offer predictability to the investors Unlike many regulators in Europe, the Telecom Regulatory Authority of India (TRAI) is dependent on the DoT for framing key sector-specific regulations and policies. The TRAI is only responsible for the implementation of regulatory policies and has a consultative role in policy formulation. Ovum believes, as has been the case in many developed markets, it is essential from a policy perspective that India creates a regulatory body which is completely independent of the government’s political influence in order to foster a regulatory environment which is less vulnerable to political changes and can offer more predictability to investors and operators alike. Also, as seen on many occasions, DoT has been known to override TRAI’s recommendations. However, the presence of an independent tribunal body, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), where stakeholders can challenge the NRA’s decision, has certainly lent some strength to the overall regulatory framework. TDSAT’s recent ruling on upholding DoT’s decision on 3G intra-circle roaming pacts emphasizes the importance of an independent tribunal body in providing credibility to the NRA’s decisions and guaranteeing a

FY 2013-14 good degree of certainty and consistency in the regulatory process. We see TDSAT’s ruling as a major pro-industry measure, which will help in improving the adoption of 3G services in India. Frequent reviews of the relevant telecoms markets will help devise appropriate regulations Another area where we believe the regulator and DoT have not matched international best practice is the timely review of defined relevant markets. There is no set time frame for the review of certain relevant markets in order to identify players with significant market power (SMP) and impose regulatory remedies. As a result, regulations have failed to keep up with the changing technology in both voice and broadband markets. It is even more essential that TRAI undertakes timely market analysis in order to devise appropriate and proportionate regulation or remove outdated obligations, given the recent progress made by the country towards the development of the next generation network (NGN). The set of services that will become relevant in the NGN context will require more frequent reviews and updates to the country’s interconnection policy. The TRAI still uses a partially costbased model (fully allocated cost (FAC) model) to calculate mobile termination charges, unlike many other regulators

It is essential from a policy perspective that India creates a regulatory body which is completely independent of the government’s political influence in order to foster a regulatory environment which is less vulnerable to political changes and can offer more predictability to investors and operators alike. in the region who now have adopted variants of a long-run incremental cost (LRIC) model. The LRIC approach takes into consideration the incremental costs of providing an additional unit of a service over current levels and over a defined future period of time. It, therefore, represents costs that are both forward-looking and incremental, and reflects real economic costs of pro-

viding interconnection. While India has among the lowest mobile termination rates (MTRs) in the Asian region, the adoption of LRIC based costing model will further help the regulator in building efficiency, leading to the lowest cost based termination charges. Public-private collaboration is a must to address the long-standing issue of last mile connectivity Low penetration of fixed broadband services and a huge rural and urban digital divide are other areas of concern for the TRAI. DSL on copper wire is the most dominant method of Internet access in India. The incumbent’s copper network is a bottleneck facility for proving broadband services in the rural and remote areas. The regulator has not imposed any obligations on the incumbent to unbundle access to its last mile for providing competitive services. While we don’t advocate any such remedies in a market that lacks fixed-line infrastructure, Ovum believes that the main challenge lies with the fact that both the NRA and government policy initiatives still do not recognize the need to invest in the local access required to connect end-users; policy makers have been overlooking this fundamental issue. The DoT’s national optical fiber network (NOFN) plan, which is expected to offset some of the challenges it faced in improving the penetration of broadband in rural parts of the country, does not offer a full proof solution for last mile connectivity. The plan, which focuses on the middle mile fiber layout, will enable delivery of high-speed broadband only to village councils. We believe that large-scale adoption of data services in the rural market will require creating an awareness of availability and encouraging uptake of broadband services as well as extending the last mile. The solution to this would require innovative business models built through stronger collaboration between the government and the private sector entities, and perhaps a greater reliance on wireless infrastructure.

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FY 2013-14

Policy View Point Spectrum liberalization is the way forward in Indiaâ&#x20AC;&#x2122;s mobile broadband journey In the present scenario, we also expect broadband growth in India to leverage more from its wireless infrastructure. The TRAI should focus on developing the mobile infrastructure, especially from the point of view of using wireless as an alternative to deliver last mile connectivity. To achieve this, the regulator has recently concluded spectrum auctions in the 900MHz and 1800MHz bands. Moreover, the government is planning to auction additional spectrum in the 800MHz band in 2014, along with the planned release of 700MHz band for mobile communications in 2015. The award of spectrum in sub-1 GHz bands, with better propagation characteristics, can provide the muchneeded impetus for the growth of mobile broadband in rural areas with very low population densities. In urban markets, operators are progressing well towards developing the next generation broadband infrastructure using LTE technology. Mobile operators are using the broadband

It is essential that TRAI undertakes timely market analysis in order to devise appropriate and proportionate regulation or remove outdated obligations, given the recent progress made by the country towards the development of the next generation network. wireless access (BWA) spectrum awarded in 2010 to launch TD-LTE services. Until now, lack of handsets and network equipment for the TD-LTE standard restrained the companies from offering services using the technology. But this has slowly started to change as the device eco-system has

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begun to mature. Despite the fact that government has already indicated the introduction of new policy measures relevant to spectrum sharing, number portability, and further frequency auctions, there are specific issues the regulator needs to address before India sees a substantial growth in the demand for broadband services. The TRAI is yet to confirm its position on the re-farming of the 900/1800MHz bands, which can help it ensure a more level-playing field in allocations and release more spectrum for commercial use. While we understand spectrum refarming or redistribution of the entire 900MHz band will be complex in India, the National Telecom Policy (NTP) 2012 ensures re-farming will be unavoidable for GSM incumbents after the 20-year mobile permits expire. In the long run, we would expect the regulator to establish a policy framework that focuses on more stable licensing terms, clear taxation policies to gain investor confidence, and a roadmap for future spectrum auctions. vndedit@cybermedia.co.in

FY 2013-14

Policy View Point

â&#x20AC;&#x201D;Rajan S Mathews Director General, COAI

There is an urgent need to rationalize the taxes and levies in the sector, which aggregate presently to 30 percent of the revenues earned by telecom companies as compared to about 5% in other Asia-Pacific (APAC) countries

Right Policy Mix is Key

he last year was a mixed bag for the Indian Telecom Industry. The year saw movement towards greater stability in policy making as well as an even-handed approach in the regulatory environment. On the regulatory front, the industry felt heartened by the willingness of TRAI to address the financial condition of the sector, most particularly in its directive on VAS, national roaming and its recommendations on spectrum pricing, SUC and spectrum trading. The governmentâ&#x20AC;&#x2122;s decisions to enable 100 percent FDI in the sector, provide directions for M&A and support spectrum

trading were welcome steps. However, there are still many issues that the government needs to consider and resolve for the smooth development of this vital sector. A long term clear, stable, predictable, development oriented and investor friendly policy regime which recognizes the long term nature of the investments and project maturity requirements of the telecom sector are still to be addressed by the government and regulators. The most significant activity for the industry last year was the spectrum auctions. After the last two auctions failed, mainly owing to the unreasonably high reserve prices set by the government, the beginning of 2014 witnessed successful auction of spectrum. The DoT auctioned spectrum in 900 MHz and 1800 MHz bands based on the revised reserve price, which garnered a total amount of 612 billion (US$10billion). However, going forward there is a need for a clear roadmap for future auctions/further release of spectrum in various bands. In India, contiguous spectrum is not available with the operators today because spectrum has been allocated at various times in small chunks to the existing operators and hence the current allocation is non-contiguous. It would be absolutely essential that rearrangement of frequency spots is carried out between the DoT/WPC and the operators to ensure contiguity of spectrum. Without this, roll out of 3G, 4G/LTE networks and services will be impaired.

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Policy View Point To boost investments into the financially ailing sector, a series of steps were taken last year. The much awaited M&A guidelines were issued in February 2014 which said that the merged entity’s market share should not exceed 50 percent. The guidelines are welcome in that they afford additional clarity on the subject. Such clarity will enhance the ability to undertake M&A activity for the industry. However, the step up in spectrum acquired outside of the auction process to market price is an area of concern that needs to be addressed. The government’s decisions to enable 100 percent FDI in the sector provided a much-needed boost to investor sentiment of the fund-starved industry. We also expect that reasonable and practical guidelines on spectrum trading and spectrum sharing will be operationalized this year. The year also saw heightened activity from some vested interest groups/individuals around misleading claims on EMF emissions from mobile tower antennae and handsets. This resulted in increasing fear and concern among citizens. To counter this, COAI and DoT worked to address these factual inaccuracies on EMF. In August 2013, the DoT issued Advisory Guidelines for state governments on clearance for installation of mobile towers. The DoT was in discussions with the industry and the state governments for finalization of these guidelines. The document advised all the state governments to follow these norms so that there is a uniform approach on the issue, and which should be adopted by all the state government across the country. Additionally, 25 leading academicians from the prestigious IITs and IISc in India, in a submission to the DoT, urged the government to exercise caution to avoid ad-hoc decisions regarding restrictions of mobile tower locations and avoid unnecessary panic and fear among citizens. The academicians laid emphasis on the fact that the World Health Organization (WHO) itself has stated –“...considering the very low exposure levels and research

results collected; there is no convincing scientific evidence which shows weak EMF emissions from mobile phone towers cause any health effect.” The expert committee report submitted in January 2014, constituted by the Lucknow bench of Allahabad High Court too found no substance in the noise about the effects of EMF emissions. The matter of what the industry perceived as “erroneous and inappropriately high level of penalties” imposed by the TERM Cells for what they interpreted as non-compliance to the DoT/ EMF norms, was taken up with the government and as a result of several substantiated representations by the industry, the DoT issued a new penalty regime for EMF. This circular of DoT brought much desired clarity in terms of the various dates for compliance and on many of the filed issues. The International Common Criteria Conference (ICCC) 2013 was held at Orlando, Florida in September 2013. CC Administration had announced the recognition of “Common Criteria - Recognition Arrangement” (CC-RA) to India at this event. This was done after the completion of the CCRA audit of the Indian

The concern is regarding the multiple audits by multiple agencies (DoT, TRAI, SEBI and now CAG), increasing the costs and time to operators and also increasing the scope of CAG to private entities. This ruling will become a larger issue for Corporate India and not just for mobile operators.

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Scheme and India has now become an “authorizing” nation from a “consuming” nation. This will enable India to join the league of a select group of nations that have been accorded the CCRA status of this internationally recognized security regime under the CC programme. This means that India, through STQC, has now been authorized to certify independent Testing labs in India that wish to certify IT Equipment for compliance with global “common criteria” standards. In order to ensure that India developed and registered IPR are properly monetized and included in global standards, it was imperative to set up an Indian Standards body to represent India’s interests in various international standards bodies such as ITU, 3GPP, IEEE, ETSI, etc. COAI led the Standards Initiatives along with TCOEs, 23 Indian Industries, 20 MNCs, 3 Industry Associations, 10 premier Academic Institutes and R&D organizations that are actively working towards the telecom standardization activities. Thus, the Telecom Standards Development Society, India (TSDSI)was formed on 7th January 2014. The TSDSI comprises representatives from the govt., telcos, manufacturing companies, technical services companies R&D organizations and academic institutions on a common platform. TSDSI strives to follow the best practices of knowledge sharing, consultations and consensus building to make standards which address special needs of the Indian consumers and help equipment manufacturers and operators fulfil those needs in ways that are beneficial to both. At the same time, in a setback for the industry, the Hon’ble Supreme Court allowed the Comptroller and Auditor General (CAG) of India to audit the receipts of telecom operators that share revenue with the government for use of spectrum. Although the SC has also upheld the limitation on the audit imposed by the Delhi HC order, i.e., CAG has limited scope to audit only that revenue on which government fees is computed, yet, we believe that the order is far-reaching and will slow down the working of the sector.

FY 2013-14 The concern is regarding the multiple audits by multiple agencies (DoT, TRAI, SEBI and now CAG), increasing the costs and time to operators and also increasing the scope of CAG to private entities. This ruling will become a larger issue for Corporate India and not just for mobile operators. We hope that the CAG will undertake its audits in the light of these concerns. With the new Government taking charge,we are hopeful of getting the much required policy and regulatory support to help maintain a long term clear, stable, predictable, developmentoriented and investor friendly policy regime, which recognizes the long term nature of the investments and long project maturity requirements of the telecom sector. On priority, the government should make available to the industry, all spectrum in all the bands (e.g. 2100 MHz, 1800 MHz, 800 MHz and 700 MHz) presently lying unutilized by various government agencies in conformity with globally harmonized bands and should

provide a clear road-map for spectrum availability in the future. Also, the government will have to realise that there is an urgent need to rationalize the taxes and levies in the sector, which aggregate presently to 30 percent of the revenues earned by telecom companies as compared to about 5% in other Asia-Pacific (APAC) countries. License fees and spectrum usage charge (SUC) account for about 12% of adjusted gross revenue (AGR). Introducing a flat SUC (Spectrum Usage Charge) of 1% should provide some relief to the operators. The USO Fund levy (Universal Service Obligation Fund) of 5% should also be gradually reduced to 1% as operators meet the revised contractual roll out obligations which now covers the rural areas. The government should also facilitate faster infrastructure rollouts through uniform procedures/approvals and low cost Right of Way charges on telecom towers, OFCs etc. which make real the benefits of the â&#x20AC;&#x153;Infrastructureâ&#x20AC;? status provided to the industry.

We believe that with positive changes, the telecom industry will see a significant growth from 3G to 4G, along with increase in network coverage and competition in coming years. Operators are also exploring new business model like mobile money, M2M, surveillance, cloud storage, OTT messaging, authentication services and mobile advertising. The key areas of long term policy focus would be stable license terms & conditions, effective M&A, reasonable security arrangements, Carbon Footprint oriented Green Telecom targets, taxation and roadmap for future technologies, etc. We hope to see much better times this year with such Policy and Regulatory initiatives by the government and TRAI which will have long term benefits for the industry. COAI is committed to working closely with the government to ensure that the interests of the customers and the investors in the industry are developed, protected and enhanced. Rajan S Mathews vndedit@cybermedia.co.in

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NEWS Bytes

New Government to NOFN by 2017, public telecos to be revived thrive on E-governance: In his first press conference, after taking charge, Telecom Minister Ravi Shankar Prasad stated that the government is scrutinizing spectrum sharing, trading and allocation for the Pranab Mukherjee betterment of the subscribers. He optimistically talked about the rollout of high-impact The government will aim to revive “Brand India” riding on 5Ts of Tradition, Talent, Tourism, Trade and Technology. ICT will play a crucial role in the working of the new government as it will be used to drive re-engineering of government processes to improve service delivery and program implementation, said President Pranab Mukherjee while laying out the Narendra Modi government’s plan for the next five years in the joint session of Parliament. “E-governance brings empowerment, equity and efficiency. We will strive to provide Wi-Fi zones in critical public areas in the next five years,” he said. In the ICT sector, broadband, spectrum, FDI, e-governance, content, e-library, digitization, cyber threats, among others will be the key focus areas.The National e-Governance Plan (NeGP) will be expanded to cover every government office from the centre to the panchayat, to provide a wide variety of services to citizens. In the education sector, the government will launch broadband highway and will make schools e-enabled in a phased manner. It will launch a national mission “e-Bhasha” to develop digital vernacular content and disseminate classic literature in different languages.

NOFN project that will connect 2,50,000 gram panchayats through the national optic fiber network by 2015, and that the government will target 50,000 gram panchayats this fiscal itself. However, the ambitious project is likely to hit execution issues. Later at the NOFN first review meeting under the new government, 2017 was indicated as the reasonable time frame for this project, given the magnitude of work involved. Prasad also assured that a monitoring procedure to improve the quality of services would be set up for reviving the struggling state-run telcos Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam. For this, he met the senior management of the two companies and asked them to strictly follow the timelines for the revival. This will be followed by setting up of an NOC (Network Operations Center) in Sanchar Bhawan to monitor both MTNL and BSNL which recorded a net loss of Rs 5,321 crore and Rs 8,198 crore respectively.

Telecom Commission approves full MNP

Inching closer to the new government’s vision of ‘one number, one nation’, the Telecom Commission in its first meet gave in-principal approval to full Mobile Number Portability (MNP). Full mobile number portability will allow subscribers to retain their numbers even if they move on to any other part of the country. Currently, it is confined to the same service area only. A subscriber needs to have separate mobile number if he moves to some other state or else s/he needs to pay roaming charges. Telecom Regulatory Authority of India, TRAI, has suggested that operators should be given six months from the date of approval of full portability for making the requisite changes. At he same meeting, the Telecom Commission also cleared government user network (GUN) over the National Optical Fibre Network which will provide broadband connectivity to 2.5 lakh gram panchayats by March 2017.

Electronic manufacturing cluster to be set up in Odisha

The Odisha government is setting up a Greenfield Electronic Manufacturing Cluster (EMC) at Khurda district of the state that would house over 100 electronics manufacturing units. The cost of the project is estimated at over Rs 200 crore. The aggregate investment in the cluster is projected to be close to Rs 1000 crore, which includes investment by individual units in plant, machinery and park infrastructure. Under the Electronic Manufacturing Clusters Scheme of Department of Electronics and Information Technology (DeitY), Government of India, the state government is establishing it in association with IESA (India Electronics and Semiconductor Association), the premier trade body representing the Indian electronic system design and manufacturing (ESDM) industry. The project will generate 10,000-12,000 jobs. Vishal Kumar Dev, CMD, IDCO (Odisha Industrial Infrastructure Development Corporation) said, “The state government is committed towards the development of the ESDM sector and both IDCO & OCAC (Odisha Computer Application Centre) are lending admirable support for the project. Also, the recently announced state IT policy-2014 will provide attractive incentives for the sector.” The proposed Greenfield cluster will encompass common facilities for production support services like tool room, test and measurement labs, incubation centre, training centre, and would also have provisions for common infrastructure support such as power, water and ETP for the investors. 130 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

RJI pushes 4G launch to 2015

Reliance Jio Infocomm (RJI) has announced the roll out its much-awaited 4G services in phases in 2015, with an overall investment of Rs 70,000 crore. RIL (the parent company of RJIL) Chairman Mukesh Ambani said at the company’s annual general meeting, “Limited field trials for Jio’s 4G services were under way, expanded field trials for the future proof and world class services will begin in August and carry on till the early 2015.” Initially the plan is to cover 5,000 towns and cities and 215,000 villages. Gradually, the network will cover over 600,000 villages, he explained. As per DoT guidelines, the company needs to launch 4G services before 2015 as it acquired broadband wireless access (BWA) licenses in 2010. After paying an amount of Rs 1,658 crore, Jio had secured the unified license from DoT last October, which enabled it to offer voice, data and other services under a single license. But the move was challenged by other telecom companies in the Supreme Court, as earlier a telco had to obtain separate licenses for separate services. Earlier in May, RJio began the rollout of the mobile network and Wi-Fi hotspot services in 8 locations at Ahmedabad and 9 locations at Baroda and Surat regions of Gujarat on a pilot basis. “The company estimates that around 55,000 devices are utilizing using Reliance Jio’s hotspot services, which are currently being offered for a limited period of 72 hours. It also allows users to reactivate their service after expiration for extended use,” a report said. According to research firm Credit Suisse, Reliance Jio is likely to use between 30,00045,000 mobile towers by the time it would start its 4G services. For the rollout, it has its own 30,000 towers while it plans to lease around 70,000 towers, including smaller cell sites on single poles. Every month RJIO is rolling out 2,500-3,000 base stations across the country. Recently, the company entered into its sixth tower sharing pact with Ascend Telecom. Before that it signed similar deals with Bharti Airtel, Reliance Communications, Viom Towers and ATC India for using their tower infrastructures. With all these, the company will have access to about 1,92,500 sites. At the launch, RJio’s network will be three times larger than that of all the companies that started operations in 2009-10, Credit Suisse said. The company is in talks with major handset makers to offer 4G smartphones starting at about $150 per unit.

RCom’s arm to pump in $200 mn in submarine link Global Cloud Xchange, a subsidiary of telecom operator Reliance Communications, has said it would invest $200 mn for laying 5,000 km long undersea cable network between Mumbai and Singapore. Bill Barney, chief executive officer of Global Cloud Exchange, said: “This interconnection exchange (ICX) cable will enable us to become the largest cable providers connecting Europe with Asia. It will also provide a 20 percent growth in assets and help us tap emerging markets, like Sri Lanka.” He also informed that the company has tied up with other three equity partners for the project and their names will be disclosed by the third quarter of 2014. This ICX cable infrastructure is part of the company’s strategy to provide a direct subsea route to bridge the gap in the emerging markets corridor, and to provide a direct Mumbai-Singapore route in order to subside current outage prone terrestrial routes between Mumbai and Chennai. The network between Mumbai and Singapore would have a branch landing in Thiruvananthapuram and Chennai. The submarine cable network would take at least 18-19 months to start operations and would start delivering revenues only after 16 months.

RCom launches 3G in five more circles Following TDSAT’s order of allowing inter-circle 3G roaming across India, Reliance Communications has launched its 3G services in five more telecom circles—Karnataka, Andhra Pradesh, Tamil Nadu, Kerala and UP-Eas t. With this, the company will be covering 80 percent of the country’s 3G data revenue market and incremental smar tphone sales. Targeted at corporate, SME and highvalue customer market, the services will be available from June 20, 2014. “As India’s youngest pan-India GSM operator, we are committed to improving the quality of our customer mix, and our extended 3G presence will help us attract a disproportionate share of customers in the high-value corporate and SME segments,” said Gurdeep Singh, Chief Executive Officer, Consumer Business, Reliance Communications, said. In April 2014, the telecom tribunal TDSAT ruled that operators which have started providing 3G facilities but have not won spectrum in certain circles can also provide the next generation services in the same circle. Reliance Communications entered into agreements in April with Tata Teleservices and Aircel to offer 3G services to GSM customers across the country. The company has also recently launched its ‘One India, One Rate Plans’ that would offer free roaming to its both pre-paid and post-paid customers.

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NEWS Bytes

Vodafone state-of-the-art ops center opens in Pune Loop users face Vodafone India has launched its Super Network Operations Centre (SNOC) and Super 24-hour ordeal on Network Experience Centre (SNEC) in Pune to provide better business communication Vodafone network solutions to its enterprise customers. The SNOC will monitor Vodafone’s more than 120,000 sites that enable network coverage across 22 circles remotely under one roof. Spread across 40,000 sq. feet with a housing capacity of 600, the SNOC is equipped with amenities such as CO2 monitoring system, specialized photo-hydro ionization (PHI) cells with modern access control, and energy efficient fixtures. “Our SNOC can improve customer experience and service quality in real time. We have brought alive the benefits of telecom and IT convergence in this center for the first time,” said Vishant Vora, Director –Technology, Vodafone India. On the other hand, SNEC, spread over 2,500 sq.ft, will showcase the complete suite of total communication solutions comprising wireline and mobility offerings and other Machine-to-Machine solutions. According to Naveen Chopra, Director, Vodafone Business Services, “The stimulating environment of SNEC is ideal to gain a deeper understanding of the unique needs of each enterprise customer and to share with them how Vodafone Business Services can par tner to offer innovative solutions.”

Telenor to shell out Rs 780 cr for Uninor

Norway-based Telenor is mulling to up its stake in its Indian telecom unit Uninor to 100%, with an additional investment of Rs 780 crore. The Telenor Group has filed an application with the Foreign Investment Promotion Board (FIPB) of the Government of India, seeking approval for an additional investment of Rs 780 crores to raise ownership in Uninor to 100%. Earlier, similar steps were taken by Vodafone India and Russia’s Sistema to raise their stakes in their Indian subsidiaries following government’s approval last year for a 100 per cent foreign direct investment in the telecom sector. Currently, Telenor holds 74% ownership in its Indian business unit, with these investments it is planning to acquire the remaining stake held by Lakshdeep Investments. FIPB last year approved Telenor’s application for a Rs 1,000 crore investment into the company for an additional stake of 25 per cent. At that point of time, the group raised its stake from 49% to 74%. In addition, Uninor will be making an investment of Rs 500 crore towards expansion of its network and distribution infrastructure by 30%. Out of this, Rs 300 crore will be deployed for additional sites and Rs 200 crore on network upgradation and other IT deployments. Telenor’s India operations have participated in two separate spectrum auctions to acquire airwaves in the range of 5Mhz to 7.2 Mhz in seven circles that together represent more than half of India’s population. As part of the network expansion, Uninor is deploying 5,000 additional network sites in its six circles—UP West, UP East, Bihar (including Jharkhand), Maharashtra and Goa, Andhra Pradesh and Gujarat. 132 | VOICE&DATA | July 2014 | voicendata.com | A CyberMedia Publication

Telecom operator Vodafone India stopped all incoming calls made to its network from Loop Mobile numbers due to non-payment of dues before the matter was resolved in 24 hours. An operator is liable to pay interconnect dues to other operators on whose network a call is made. As per TRAI, an operator needs to pay 10 paise a minute as calltermination charges to the operator of the network where it ends. Country’s largest telecom operator Bharti Airtel is in the process of acquiring Loop Mobile in a Rs 700-crore deal. With this, Bharti Airtel will get Loop’s 3 mn subscribers, 400 telecom towers, optic fiber connecting the towers, and its electronic equipment. Post acquisition, Bharti Airtel will have more than 7.1 mn users in Mumbai, pushing Vodafone India, which had over 6.9 mn users at the end of November, to the second spot in the city.

DoT rejects Vodafone’s proposal for license extension In what could be a blow to Vodafone, the Department of Telecommunications (DoT) has rejected the telecom operator’s plea for extension of license period in seven circles post their expiry in December 2015. The department has suggested Vodafone to transform its permits into unified licenses and purchase spectrum in the auction slated to be held later this year. Vodafone had applied for renewal of its licenses in seven circles – Maharashtra, Gujarat, UP (East), Kerala, Tamil Nadu, Haryana and Rajasthan – for another 10 years. DoT has said, “Circumstances have materially changed” since the original licenses were granted in 1995 and there is no immediate need for an extension of the licenses.” Earlier, the company had requested for spectrum as its 900 MHz mobile airwaves were getting expired, just before the spectrum auction in Delhi, Mumbai and Kolkata but the government rejected its demand even then which prompted Vodafone to compete for spectrum acquisition.

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