Bharti-Ericsson: Perfect Partnership

Indian telecom is moving at supersonic speed on the mobile front. We have
outgrown China in terms of monthly mobile additions, and currently adding
another 5.9 mn lines and the gap is expected to grow further. All this has
brought good cheer to the mobile operators fraternity in the country, who are
busy planning big, trying to maximize their share of the pie. 

Large operators have mega plans for the next couple of years: Reliance
Infocomm is planning to add 30-40 mn lines; BSNL, 45.5 mn lines; and Bharti, 60
mn lines. And being a leader, Bharti is also #1 in terms of the next phase of
expansion. 

Bharti Airtel, the number one mobile operator (both on the subscriber and
revenue front) in the country is not resting on its laurels. The company has
mega plans and is aspiring for 100 mn customers by 2010, according to Sunil
Bharti Mittal, CMD, Bharti Airtel. And in revenue terms the company is looking
at $7-8 bn, he added.

In terms of coverage, Bharti Airtel still has a long way to go: having
covered around 46% of the geography. Plans are to provide coverage to all towns
and cities with a population of around 5,000 by March 2007. All this means a lot
of business for companies like Ericsson and Nokia, the preferred infrastructure
suppliers for Bharti Airtel.

Recently, Bharti Airtel has awarded Ericsson an estimated $1 bn contract,
including expansion and an upgrade of its GSM/GPRS network and managed services.
In addition, Ericsson will also supply, implement and maintain an Intelligent
Network (IN) for Bharti's pre-paid subscriber base across all of its 23
circles in India.

According to an Ericsson spokesperson, a major portion of the deal is related
to infrastructure expansion and not managed services. The deal also does not
have a 3G component as Bharti is planning for another RFP for 3G infrastructure.
The agreement is valid for three years whereby Ericsson will manage, design,
develop, and deploy Bharti's network, including capacity and coverage in 15
regions.

This deal is also the single largest contract in Indian telecom and signifies
that the telecom industry has matured over the years and is well on the way for
an explosive growth. It is also expected that India will soon witness many such
large deal announcements by other operators like BSNL, Hutchison Essar, Reliance
Communications, and Tata Teleservices.    

The Ericsson deal also has a flexible component as it takes care of the
existing 2G/2.5G infrastructure which can be scaled up for 3G infrastructure in
the future, with the deployment of IP soft switches as a common 2G/3G switching
core, paving way for an all IP network.

“The deal highlights the key partnership role with Bharti Airtel and gives
us a strong foothold in the Indian market. We will continue to share the success
of the Indian mobile revolution, with continued hard work and dedication,”
said Bimal Dayal, key account manager, Bharti Airtel, Ericsson India.

The Win-Win Model

The MCMS (Managed Capacity and Managed Services) model was a unique model
two and a half years back but it has started gaining acceptability worldwide, as
both operators as well as infrastructure providers benefit in the long run. Not
only Bharti, others in the telecom space have also benefited from the whole
exercise creating a win-win framework for both the parties.

It was a new thought process and the focus was to reinvent the
operator-vendor relationship and steer it into a “Strategic Partner”
framework. This model has definitely helped Bharti as well as Ericsson and Nokia
in creating an infrastructure that uses less resources and less amount of time
for deployment. 

The new contract reiterates the success of the MCMS model, and extension of
the Bharti-Ericsson relationship for another three years is an endorsement to
the fact that Ericsson partnership has yielded good results for the company.

The Nextgen Network

The new deal is also unique as it focuses on creating a platform for the
future. This will not only help in delivering innovative products and services
to customers but also help in reducing cost and introducing new services in a
cost efficient way. It also marks Bharti as the first national operator to
embrace mobile soft switch across its national footprint, and paving way for an
all IP network. .

The Bharti-Ericsson combine have shown how future networks will be created
based on convergence. The endorsement of mobile soft switch makes it easier for
operators who are still unclear about their migration path as it helps in
solving lot of technology obsolence problem.

There is an implicit understanding that networks of the future must run on a
common IP-based backbone. This also has larger implications for the IT and
telecom networks, which have been maintained separately in the past. With both
networks converging and 'wireless' offering the benefit of mobility, telecom
service providers such as Ericsson seems to have an
edge vis-a-vis other infrastructure providers.

“This is a landmark contract for the recognition of mobile soft switch
technology in the Indian telecom industry. Ericsson has over 140 soft switch
commercial contracts awarded globally (GSM, WCDMA & fixed networks) with the
first commercial deployment of mobile soft switch going way back to 2003. We
will be leveraging this experience for the benefit of our Indian customers,”
said Mats Granryd, managing director, Ericsson India.

For faster roll-out of services in smaller towns and cities, Ericsson is
planning to deploy some innovative telecom infrastructure products that are
customized for the Indian market. In the past, the M&O (manage &
operate) service delivery team has been responsible for this. In the month of
August, the company rolled out approximately 1,150 BTSes. Recognizing such large
scale roll-out in future, Ericsson has chosen India for a global operational
excellence pilot in the M&O area, and is creating a unified global work
force management system.

It would be interesting to see how infrastructure providers cope up with
rural deployment challenges, a task not easy considering the vast geography of
India. Also, these areas have infrastructure problems and it would not be easy
even to maintain it. But, a service provider, who can administer it well, will
be the winner in the next phase, as real growth is expected to come from these
rural areas.

Pravin Prashant

pravinp@cybermedia.co.in