“We have evolved from just an optical solution provider to an end to end solution provider for digital networks”

KSR has spent his entire career at STL. “For good or bad, I have known only two places in my life – first it was at my parents’ and then STL,” he says with a chuckle. Since 1993 he has seen the ups and downs of India’s Telecommunications Sector as very few in the industry would have.

By KS Rao

Networks have transformed over time to become multimedia platforms. Demand for bandwidth and services have exploded. In the last few years networks metamorphosed from hardware-centric to software-driven - enabling dozens of applications.

In a freewheeling conversation with Voice & Data, KSR shared insights on the sector, the Make in India initiative, BhartNet, and STL’s own plans in the future.

Given the big focus on local manufacturing, Production Linked Incentives (PLI), and announcements in the Budget for supporting R&D, how do you feel this will benefit the industry and STL. In the last 6 months to a year, I have seen some concrete efforts being put by the Government to convert intent into action.

It’s visible from the recent Union Budget announcements, as well as some previous good reforms spearheaded by the Telecom Minister, whether it’s for the development of the 5G ecosystem or the PLI initiatives to increase the use of local technology in the industry. All of these moves are welcome and, in my opinion, will be a game-changer for the sector.

India would require at least 5-6 lakh kilometers of Fiber every year for the next 10 years and STL can help deliver this scale.

This Budget had three distinct areas of focus.

First, there is a strong emphasis on physical infrastructure. For example, in Gati shakti, there is the maximum allotment for infrastructure creation in seven different verticals. This is a critical point. Looking ahead, I believe that digital infrastructure should be a primary priority for India in order for it to make the transition to a digital economy.

Second, 5G has taken a very important place for the Government’s core processes while defining the budget for the next year. Third, there is a renewed emphasis on research and development. Unfortunately, the majority of research in the country currently takes place outside of India. When it comes to new technology domains, research and development become crucial.

If you’re venturing into new territory, you’ll need to put a lot of money into research and development. Even 5G is a work in progress. It necessitates significant investments in ecosystem development, products, and solutions. The majority of intellectual property (IP) is not located in India. There is a pressing need to reintroduce this. The USOF’s single effort of sponsoring R&D will provide value to our country.

The sum of all these will improve the way the industry looks at both investments and taking the business forward.

Of course, for effective implementation of the PLI scheme, the R&D benefits, there needs to be an alignment between all the concerned Ministries and departments.

STL is investing in Open RAN technologies for 5G. We want to simplify the network architecture for virtualization. In fact, we have programmable solutions for fiber-to-the-home solutions.

We are focusing on software applications for making 5 G-enabled IoT (Internet of Things).

This is a big area of focus. Huge investments are required in R&D. India is spending only about 0.7% of GDP on R&D today. This is a very low threshold for new technology development.

It is important to focus on improving this. A long-term view is crucial.

The policy environment will matter a lot if we are to achieve these goals. While incentives and benefits are fine, it has to be sustainable. PLI scheme has the promise of bringing about a long-term shift but several subjective conditions have to be fulfilled before qualification.

Our dependence on Chinese technology has reduced significantly. India has a great opportunity to leverage that. The Government should walk the extra mile as it did for the software industry 20 years ago like offering tax holidays, and income tax reductions.

For technology investments in 5G R&D, the software industry approach is needed. We should follow the approach of a ‘patent box. That means if you are creating an investment in technology that creates a patent, it becomes qualified for a special tax rate, tax holidays, etc. India has to grow its intellectual property corpus.

We have the knowledge, but unfortunately, most of our IP rests outside. That situation has to be changed.

The R&D allocation mentions 5G. Should there be say 30 or 40% of these allocations for other technologies?

If you look at 5G as a technology, what are we trying to achieve in the end? In the new digital world, with the current way of working, there are more and more devices getting connected, more people coming online.

So a very complicated network is evolving. 5G makes it better, 5G makes it easier.

But technology evolution will not occur unless there is a holistic view on infrastructure. Even if you set up 5G towers, if your backhaul is not strong, or your rural connectivity is not up to the mark there will remain a digital divide.

Today a large section of the country still does not have access to the Internet. This is where Bharat Net for rural connectivity comes in. The Government has rightly focused on this over the last few years. Even Telcos have a plan to reach rural areas, but in the end, all investments are validated by the return on investments.

So the whole spectrum of digital infrastructure needs to be looked at. For rural connectivity, a new model has required whether it is the Government or a wholesale entity investing in a national backbone or a neutral platform like what the UK has done. They created a neutral platform called Open Reach -- which is a fiber asset for the country. The backhaul fiber is used by all service providers in a non-discriminatory manner.

India has that opportunity too, having made significant progress on Bharat Net. Apart from public spending, India should look at revitalizing private spending. Telcos need to be spending more money on technology and customer experience rather than paying money for spectrum management or taxes.

Also, there have to be reformed in the ecosystem from a supplier perspective. For example, the right of way (ROW) policy is still complicated after all these decades. If you have to deploy a 5G small cell site in cities, it’s not an easy task.

Once you don’t get access, second you don’t have power and you don’t have fiber at the point. 5G small cells require fiber and power at the same point. Some of the reforms in policies in terms of how we access these cell sites in the last mile would be very important.

So in my view, I think this is not only a PLI and R&D issue, this is about boosting the 5G ecosystem from an implementation perspective.

Recently there was a postponement of the BharatNet tender. STL has been one of the active participants. What are your views on this delay?

From an intended vision of the Honorable Prime Minister and the Government of India, BhartNet is absolutely a great concept because this will serve to address the digital divide. Having said that, I think it has gone through a series of changes and evolutions in the last 5 years. The original thought was just connecting fiber to the village without any end objective. Then it was corrected. It was mapped to bandwidth requirements with throughputs of 10mbps to 100mbps. Even then utilization did not happen. Now we are saying that we need to focus both on infrastructure and utilization. The private sector is required for this. That is where BharatNet PPP has come in.

The whole idea is to make sure rural citizens get a benefit out of this. Creating infrastructure alone does not help. It has to be driven by consumption and creating demand. Why Telcos have not spent enough money in creating bandwidth in rural areas as much as for urban, is because of low yields. People cannot afford to pay for bandwidth there. Bharat net had to address this.

For rural connectivity, a new model is required. Whether it is the Government or another wholesale entity investing in a national backbone, a neutral platform is needed.

The recent PPP model expected the bidder to drive the demand while the funding was done by the Government. But serious players did not find this attractive. They are now re-thinking about it.

In my view, the government is in a favorable situation to make the right decision. The right model to implement has to be debated. We have examples like OpenReach.

Our recommendation has always been that the government has a significant role in creating a national backbone. Fiber is a key asset. It is a digital highway. Your information highways should be under government control. The only thing is the way it is being implemented. Government agencies do not have the competencies to build, manage and maintain such networks. We are recommending that the Government should create a wholesale entity.

For example, India has several fiber assets. Telcos have their own networks. BSNL has 7 lakh km of fiber in the ground. Some are in good condition, some are not in good condition. There is also RailTel, Powergrid etc. Then there is Bharatnet's first and second phases – where some investments have happened and networks have been deployed.

If all of this is pooled together as a government asset, it can be made into a wholesale entity, with a key focus on rural connectivity. That is true BharatNet.

Once you do this, the resources allotted by the government (40-50 thousand crores) can be utilized by this company to Invite competent technology partners and players to design and maintain the network.

Government is the owner of the asset and an investor. BharatNet is a great opportunity, one of the largest assets for the country. There are many international PE funds, ready to invest in fiber for long-term returns.

Service level agreements can be laid down for the technology partners. With SLAs, I’m sure a number of services will proliferate. Applications from education, health, agriculture, or e-commerce will flourish. These are not reaching the rural population today because of poor networks.

We are in the final stages of completing the network for the Indian Navy and this is the largest end to end communication network built by anyone in this country.

What would be STL’s role in all of this

As a company, if you have seen, we have evolved from just an optical solution provider to an end-to-end solution provider for digital networks. We are both in the wireline and wireless. We are now a technology player with investments in open source solutions, programmable networks, etc.

Our role in the BharatNet program would be in 3 phases: First is definitely providing the right inputs for a national program because we have exposure to international markets. We have analyzed it, we have provided what ought to be the right model and we have been advocating this very strongly, both in terms of industry platforms, and separately as STL alone. This is one aspect.

Second, if this network has to be built, it needs to be built by very strong and competent technology-backed companies. It cannot be just a manpower contract. Because this network has to be built for the next 50 years. STL is ideal for designing the network, building the network, and managing the network. That is what we’ve been doing for BharatNet in some States as well as in large defense networks. We also do networks of Telcos. That is our role.

The third is that a network becomes a service. Private participation beyond just involving in designing, building, and managing. Some private parties may want to invest together with the Government. This is the PPP model. This is similar to what happened in Highways. The Government had land and invited private parties to provide services.

They discovered the costs together. Government can invest the bulk of the capital and the rest can be by the private party. Against the share of the private party, there can be a set of obligations or SLAs to fulfill. And they manage it for the next few years. In this model, Capex is discovered through a process. I think we will be interested to see this model in BharatNet.

How many miles of fiber does STL already have in the ground under management and under construction right now.

We would have built close to 1 lakh kilometers of fiber network in the country so far for Telcos, Government, and other entities in the last 10 odd years. Now we are moving in the direction of building this large-scale digital infrastructure in India and across the world.

India would require at least 5-6 lakh kilometers of Fiber every year for the next 10 years and STL can help deliver this scale.

Underground implementation of fiber is still a difficult task. Apart from ROW, there are viability challenges. But if 5-6 lakh kilometers have to be built over the next ten years, we can scale up our capabilities and capacities for that. We are present in almost all states across the country and very well positioned in both design and deployment.

The Indian Navy had placed an order on STL a few years ago. Is this still a work in progress or now ready?

This is now in the final stages of commissioning and handover. This network, I would say, is the largest end-to-end communication network that has been built by anybody across such a large geographical spread.

We are very proud of that. We are deploying this across 33 locations, building data centers, adding network equipment, transmission, adding applications, and connecting their local area management. In the next couple of months, we will be handing it over to the Indian Navy.

Rao is Chief Corporate Officer, STL

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