Rise of the homegrown telecom infrastructure

In 2023, the Centre announced that Bharat Sanchar Nigam Limited (BSNL), the government-owned telecom operator, will soon deploy a completely Indigenous technology stack for its operational telecom network. Now nearing completion, the move has highlighted why building Indigenous telecommunications infrastructure is key for India going forward.

But before delving into the necessity of indigenous telecommunications infrastructure, it is essential to understand the overall telecom industry. Most telecommunications networks require core infrastructure to work in any geography. With communications emerging as a critical service in any nation worldwide and the balance of currently prevalent global geopolitics, this core infrastructure is highly sensitive.

“As we build the foundation of 6G, developing and deploying our tech stack will help tune network standards of 4G, 5G and beyond to India’s requirements.”- N GANAPATHY SUBRAMANIAM, Non-Executive Chairman & Non-Independent Director, Tejas Networks

This service’s sensitivity comes from the fact that personal data is one of the most valuable common currencies in the world today. A nation’s communications network’s failure to remain secure can enable foreign entities to hack into it, spread misinformation, and cause endless chaos in everyday use cases.

ENTER, MADE IN INDIA EQUIPMENT

India’s largest technology services outsourcing firm, Tata Consultancy Services (TCS), procured a deal from BSNL in 2023 to deploy a 4G network for the incumbent telco. The USD 1.83-billion deal, one of the largest telecom deployment deals in IT services over the past two years, involved indigenisation of network technology using solutions from the group company Tejas Networks.

However, it is important to note that the move came when, since 2019, the state-run BSNL had defaulted on salaries twice due to lack of cash flow after years of struggling operationally. The situation worsened in 2016 as Mukesh Ambani’s Reliance Industries entered the telecom sector with Reliance Jio Infocomm. The move drastically reduced the telecom tariff, especially for mobile data, and made voice calling completely free in the country. Sunil Bharti Mittal’s Bharti Airtel soon followed suit.

Through this journey, over the past year, the central government’s allocation of Rs 82,916 crore (USD 9.9 billion) in fiscal support for the revival of the beleaguered BSNL came with the caveat of developing India’s indigenous technology stack for the 4G network.

Speaking about the decision, a senior industry official privy to developments within the telecom ministry and BSNL said on condition of anonymity, “Building its own telecom infrastructure stack is critical for India’s safety, and the Centre is keen on reducing its dependency on technology solutions from other geographies—especially China. As a result, India has decided to leverage BSNL’s turnaround story to invest in the ‘Made in India’ telecommunications stack since it technically cannot instruct private operators to invest in infrastructure R&D.”

India decided to leverage BSNL’s turnaround story to invest in the ‘Made in India’ stack since it cannot instruct private operators to invest in infrastructure R&D.

This investment, as stakeholders underline, is crucial. Recently, in October, media reports cited N Ganapathy Subramaniam, former Chief Operating Officer (COO) of TCS and current Chairman of Tejas Networks: “The indigenisation push for telecom infrastructure is something that was on the government’s cards for a while now, and at some point, we had to do it since there’s no reason for India not to have its own tech stack and remain reliant on other nations. As we build up to the foundation of 6G networks by around 2030, developing and deploying our tech stack will help tune network standards of 4G, 5G and beyond to India’s own requirements.”

The starting point of deploying India’s own technology stack with 4G networks is crucial since 4G is expected to continue playing a key role globally and in India until the end of this decade. A June 2024 report by Swedish telecommunications major Ericsson underlined that by 2029, while the consumption of 4G services is expected to decline, India will likely still have 410 million 4G users. This would make for over 31% of India’s projected telecommunications subscribers by 2029, which Ericsson expects would be 1.3 billion.

The shift towards 4G users in India is prevalent right now as well. In July and August, with Reliance Jio and Bharti Airtel increasing 4G tariff by up to 21% and BSNL’s network deployment commencing, 5.3 million users ported to BSNL’s network within just two months—as per data from the Telecom Regulatory Authority of India. Industry experts highlight that this marks a clear demand for 4G services, which users see as adequate for most Internet-based streaming services.

GEOPOLITICAL SENSITIVITY

The onset of US-China geopolitical tensions in 2017 has raised questions regarding digital espionage. The US government alleged that China’s telecom network infrastructure providers, Huawei and ZTE, built ‘backdoors’ into the network infrastructure, enabling the Chinese government to tap into sensitive information in the US.

India, too, has been vigilant regarding this threat. While infrastructure providers such as Ericsson, USA’s Cisco and Finland’s Nokia come from more trustworthy geographies, industry experts have highlighted that trade tensions due to global allegiances and politics may arise at any point—making geographical reliance on nations an increasingly sensitive topic.

A senior industry executive with one of the top five global consultancy firms, who consults the Centre on telecom deployments, said, “It is important to build the telecom infrastructure stack today. Foundational 4G infrastructure can be easily upgraded for 5G networks in the future. It reduces India’s geopolitical dependency on China or any other nation. This would be helpful because, by the time 6G networks come, Indian telecom infrastructure makers will have ample technical know-how to iron out any kinks in the network deployment and build upon the tech stack that we have today. We can start building upon infrastructure to serve the world in the future.”

The executive added that doing this would also enable India to negotiate better terms with global companies than it currently has.

Media reports have also highlighted this. Reports from April this year cited telecom industry bodies stating that the telecom sector’s imports of infrastructure and equipment accounted for 40% of all imports from China by India. This represents a huge import bill substitution opportunity with developing an indigenous telecommunications infrastructure stack in India.

This, furthermore, leaves India with the opportunity to build its competitive market for telecom hardware. For instance, while Tejas Networks received a fillip thanks to its Tata group affiliation for the BSNL contract, the deal is a sign of positive things to come for other firms, too. These include Sterlite Technologies (STL) and HFCL, both publicly listed.

A second area of focus that can be further developed is defence contracts. Defence agencies often prefer Indigenous technologies for deployment in their countries to technologies imported from abroad. This pushes companies to develop Indigenous intellectual properties, which could be another big business area for companies like STL and HFCL.

Key areas that could be further indigenised include undersea cables, which carry national significance in the long run. The push to build local infrastructure is underway, which could be remembered as a key moment in India’s telecom infrastructure journey.

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