Connectivity Services : Managed Connections

There is a huge opportunity for the players in connectivity services.
According to Gartner, despite slower IT services market growth projections in
the short-term, India and China will continue to be the fastest-growing IT
services markets in the region, growing by more than 17% during the next five
years. India's connectivity market is expected to be 24 bn in 2010-11.

In a turbulent economic scenario, when high quality services have to be
served with the right mix of cost optimization, the connectivity service
providers are focusing on mitigating customers' fears by selling their services
that ensure enhanced business adaptability, scalability and lower risk of
obsolescence.

Cost is driving the trends here as well. Today, more and more multi-site
global companies are saving costs by outsourcing their network requirements to
the experts. Much more of this realization has come into being after the global
credit crisis. The continued focus on reducing costs and complexity, together
with the need to concentrate on their core competencies, has resulted in many
companies looking to outsource various aspects of the design, implementation and
management of their IT and telecom systems. This is how managed network services
have come in vogue.

Rural connectivity is the mission for all telcos, who believe their entry is
obstructed by innumerable challenges but there is a pot of gold to be dug from
there.

Story till Now

A number of players are active in providing companies worldwide offer
solutions that enable them to network their offices within India and across the
globe. They provide them infrastructure to run business critical applications
and means to connect with their customers, vendors and employees. These services
include Internet, MPLS-VPN, domestic and international private leased circuits,
satellite services (VSAT), audio and video-conferencing, data center services,
managed network services, corporate value added services, EPBX, Centrex, contact
center solutions, toll free services, and mobile enterprise enabling solutions.

Voice over IP has reduced the voice communication cost drastically, making
the PC to PC call almost free. On the same network, video can also be available
leading to a concept of unified communications with data, voice and video
running on the same network.

A huge interest has been observed toward unified communications and
telepresence which provides ultra-high quality videoconferencing. Across the
board, companies with multi-site presence domestically and globally have taken a
call to embrace such services and technologies as they spend a lot of time and
capital on travel. From a business model standpoint, most of the enterprises are
opting for opex, and pay per use model.

The Ethernet Era

Many companies are at the moment providing services on TDM/TDMA, FTDMA,
MFTDMA, SCPC, DAMA and PAMA technologies in KU and C bands. They are looking at
upgrading their technologies to the latest available features to meet the
present day needs. But these traditional technologies are likely to be taken
over by TDMA mesh. Due to lower operational costs the TDMA mesh technology is
set to play a significant role in designing the solutions for the larger
bandwidth requirements. This in turn will give a boost to bandwidth-hungry
applications.

New developments that appear close on the horizon are the Ethernet and
Gigabit Ethernet technologies that are expected to make a major impact. These
will replace the traditional STM4, STM16 kind of TDM links. This will make the
networks much more optimized and flexible. MPLS-VPN has long been a last mile
solution for wireline networks, but in the near future a mass movement toward
wireless infrastructure and WiMax is likely to take off as the best-suited last
mile solution.

There are some specialized services on offer for non-core business of
enterprises. Service providers are offering innovative IT solutions on IP
platform (21CN).

Many players are now focusing on the next generation service oriented
architecture based on ITIL version 3 to manage the client IT infrastructure
including connectivity.

Experts panel

David Nishball, president enterprise services, Bharti Airtel Sudhir Narang, MD, BT India Kamal Nath, country sales manager, India, HCL Comnet PJ Nath, executive president, Sify Enterprise Service Shailendra Badoni, COO, Datacraft

Vying for More

The demand is increasing from various industry verticals, and it provides
diversified growth. There is a higher acceptance of VSATs as a broadband access
medium by a much larger addressable market of SMEs that will provide additional
growth compared to the traditional enterprise and government segments. The
industry aims at touching 85,000 VSATs on the shared hub in FY 2008-09, and
1,000,000 VSATs in three years time.

Though the per MB cost of connectivity has come down, the requirement of
secure and reliable solutions is not yet accomplished. Enterprises are always
demanding improvement in user application experience and prefer fully managed
and single SLAs by service providers.

Cost of services can be pruned by ensuring that the junk traffic is filtered
at the LAN level, while not crossing WAN. Hardware costs have already been on
the decline since the past few years.

Satellite bandwidth availability for VSAT has always raised concerns for
enterprises. Other regulatory constraints keep from exploiting the benefits of
VoIP to the fullest. Tough terrains and terrestrial infrastructure is yet
another challenge for this segment. VSATs continue to be the preferred media for
SCADA type applications that need relatively smaller bandwidth to operate.

Road to Rural

Rural India has come across as a significant growth driver and we will
continue to harness the power of telecom to trigger rural productivity. Rural
development initiatives like e-governance, e-health and e-education will receive
significant impetus once operators roll out 3G networks, facilitating high-speed
wireless broadband. There have been large scale-mission critical projects aimed
at empowering the rural populace. Due to cost and geographical limitations,
wireless technologies like WiMax and VSAT will play an important role in
improving rural connectivity.

Rural connectivity will lead to some interesting trends. Hybrid services that
combine more than one technology leading to cost effectiveness will be
excessively used. There will be growth in shared hub services model for
delivering services for VSAT service providers. There will be a need for
mission-critical backup connectivity for primary connectivity medium such as
leased lines and MPLS.

Once the rural road is opened to connectivity, small bandwidth and simple but
robust CPE (Customer Premise Equipment) will be in great demand. At present,
lack of enough volume traffic and poor RoI are big roadblocks.

Heena Jhingan

heenaj@cybermedia.co.in