India is moving closer to the NTP’99 dream of achieving a tele-density of 7 by the year 2005 and 15 by the year 2010, from the present level of 4.5. To realize this dream, all the telecom service providers as well as utility companies in the country are talking about large-scale OFC deployments in the country for building telecom infrastructure. And things have started rolling out, with Reliance planning to deploy 60,000 km of OFC, Bharti opting for 24,000 km, VSNL for 17,000 km, Power Grid Corporation of India for 15,000 km, and Railtel for 25,000 km. There is no doubt that to deploy such a massive infrastructure, one expects an increased demand for optical transmission equipment, and this demand will continue for a couple of years.

Optical Transmission Equipment Players
All the major multinational players are present in the country either directly or indirectly. Nortel, Tellabs, and Sycamore represent the American continent; Alcatel, Marconi, and Siemens represent Europe, whereas Huawei and ZTE represent Asia. Also in the space are Indian players like Fibcom, ITI and HTL (a HFCL Group company). Except for Fibcom, most of them focussing on the SDH technology, whereas Nortel, Huawei, ZTE, Sycamore, Siemens, Alcatel, and Marconi are focussing on both SDH and DWDM technologies.

Nortel has been doing pretty well and it is expected that in fiscal 2002-03, it will lead the Indian optical transmission equipment race, with a market share of around 40 percent. The company has bagged large contracts from Reliance, Gas Authority of India Ltd (GAIL), and Bharti Telesonic.

	"The big question is: do we need 6–7 players?"
DD Rajdev,  managing director, Fibcom India

Deployment
Optical transmission equipment has been deployed by three kinds of service providers in the country. First, the incumbent operators like BSNL and MTNL. Second, the private operators who have opted for domestic long distance (DLD), like Bharti, Reliance, and Tata. Bharti has taken a lead and has deployed DLD in a limited way. Reliance has deployed half of the OFC planned, whereas VSNL still has a long way to go. Third, utility companies like GAIL, Railtel, and PGCIL that are looking for additional revenue streams by using right-of-way.

Slowdown has made an impact on the Indian service providers and the operators have scaled down their requirements, says Ramdev Sharma, head, product marketing, Huawei Technologies. So companies have moved from DWDM to SDH technology. In the last two years, there has been a lot of activity from the incumbent operators’ end to increase the capacity of the backbone as well as the delivery network. Currently, BSNL has an overall capacity of 326,271 rkm (as on 31 March 2002). The company has been buying a large amount of SDH equipment, and it is expected that there would be a decline in SDH demand right from the current fiscal. It is expected that the focus will now be more on enhancing the delivery network, and on STM-1 and STM-4 equipment. Even MTNL has upgraded its network to cater to any increase in traffic, and it seems there would only be a small incremental value this fiscal.

	"Infrastructure development will drive requirement"
Rajan Mehta, VP (service provider segment) Nortel Networks

Tata has to deploy backbone both on the basic services, in the new circles, and on the DLD front. Tata Teleservices, the basic services wing of Tata which has new licenses for Delhi, Gujarat, Karnataka and Tamil Nadu is planning to invest around Rs 80 crore in a time-frame of three years, in all the four circles. Fibcom has signed a three-year contract with Tata Teleservices and plans to supply STM-1, STM-4, and STM-16 equipment. Currently, the transmission network for basic services’ circles like Gujarat, Tamil Nadu, and Karnataka, is still with Marconi and the company is implementing the project.

VSNL, another Tata Group company, is implementing the domestic long distance project for Tata, and is planning to deploy a mix of SDH and DWDM. Plans are to deploy around 5,000 km of OFC in the current fiscal and around 7,000 km of OFC in the next fiscal. The company is yet to come out with the request for proposal (RFP) and it is expected that it will finalize the vendors, and a majority of the orders will be implemented in the current fiscal.

Reliance is really planning big, and plans are on to launch broadband network in 2,000 cities, by deploying 60,000 km of OFC in the country. Currently, the company has deployed around 30,000 km of OFC. Regarding optical transmission, Reliance is planning for DWDM in the core and SDH in the delivery and distribution network. It is also planning to deploy 64-channel STM-64 at the core backbone and SDH equipment like STM-1, STM-4, and STM-16 on the delivery and distribution network. Reliance has chosen Nortel for the core network and Fibcom for the delivery network.

Bharti has deployed around 18,000 km of OFC and plans are to deploy another 6,000 km in the years to come. Initially, for DLD, Bharti was planning to deploy DWDM technology but looking at the demand projections, it has opted for SDH. It has signed a long-term contract with Nortel, whereby the company has been supplying SDH equipment on a regular basis. On the basic services front, Bharti has opted for Siemens for Karnataka and Tamil Nadu, and the SDH order for Delhi and Haryana has been awarded to Alcatel.

In the utility sector, GAIL has been very active and the company has commissioned the first phase of the project. For the second phase, GAIL has opted for Nortel as the DWDM vendor. PGCIL is next in the race, and in a few weeks time, the company is planning to launch the Delhi-Mumbai link. In the first phase, it is planning to deploy around 2,700 km of which 700-km is underground and the rest is overhead. In the second phase, the company is planning to deploy another 12,000 km. Railtel, another utility company, is planning to deploy around 25,000 km of OFC, connecting around 2,500 cities by March 2003. The company has deployed around 12,000 km of OFC. It is planning to deploy STM-1 and STM-4 for delivery network and STM-16 for the backbone network.

The Market
It is difficult to forecast the optical transmission equipment market in India for the fiscal 2002-03, as projects are in different stages. In some of the projects, the companies are still in the tender or RFP stage. In some cases, the orders have been finalized but not delivered, and in other cases, orders have been delivered but are still in the implementation stage. There is a possibility of spillover to the next fiscal.

	"Slowdown has forced SPs and operators to scale down requirements"
Ramdev Sharma, head-product marketing, Huawei Technologies

In FY 2002-03, the optical transmission equipment market to be ordered and delivered in India, is estimated to be in the range of Rs 750–800 crore. This value does not include optical transmission equipment deployed by i2i submarine cable network connecting Chennai and Singapore. Though the probable order value will be on a higher side to the tune of Rs 892 crore. As some of the projects have a spillover effect, we have tried to nullify that. There is a strong possibility that BSNL’s order to the tune of Rs 226 crore might have that spillover effect, as products have to get type approval before the final shipment takes place.

According to industry estimates, the figure for FY 2001-02 was estimated to be around Rs 700 crore. So, the industry has shown a growth of around 7-14 percent and the trend will continue for at least a couple of years. New entrants Huawei and ZTE have done pretty well on the BSNL front.

The Catalysts
In India, the scope of infrastructure development is huge, and therefore there will be a huge requirement in the country, says Rajan Mehta, vice-president (service provider segment), Nortel Networks India. The drivers for the market will be the increase in the number of DELs, increase in Internet usage, increase in back office operations, and increase in software development centers, resulting in an increase in bandwidth, added Rajan.

DD Rajdev, managing director, Fibcom, feels that the catalyst for growth of optical in India is dependent on the spread of Internet, which is currently very low in India. He is of the view that Internet is one application, which can consume enormous bandwidth but one has also to look at new applications that are affordable.

"The service providers would be talking big but what comes on the ground is based on the revenue return that one gets. There will be an increase in bandwidth requirement but whether we need six or seven players or not is a big question mark," Rajdev says.

Pravin Prashant