T&M: As They Like It

Progress doesn't come without a price. The Indian telecom industry-touted
as the fastest growing worldwide-is under ever-mounting pressure from
end-users today. Over the recent few years, the market has truly expanded.

In particular, mobile service providers have staged an eye-popping growth
show. And as if GSM-driven expansion wasn't good enough, CDMA services are
adding to the swell in subscriber base. That's progress.

The industry today comprises at least five pan-Indian service providers.
Subscribers have a choice as far as networks go-GSM, GPRS, EDGE, and CDMA.
Voice is no longer the only application. A host of data applications, including
SMS, e-mail, chat, MMS vie for users' attention.

That's progress too.

Now
the price: from an operator-driven market, it's become a subscriber-driven
market. Increased competition has led to part commoditization of services, which
in turn has resulted in a free fall in ARPU.

In other words, service providers' toplines are growing at a much lower
rate than the subscriber growth. Needless to say, bottomlines are faring even
worse.

Yet, QoS Must Go Up

Customer acquisition is a routine today. Marketing exercises, promos, VAS,
dealer networks, etc ensure that it happens. Customer retention and churn
management are not so given. The key to customer retention is quality of service
(QoS). No customer relationship management program can be successful without
having QoS blocks in place.

In this light, the role of the right test and measurement (T&M)
instruments becomes critical. It's surprising that the average T&M spend
by service providers continues to be abysmally low, despite the rising QoS
expectations of subscribers.

Industry watchers comment that the T&M spend of service providers is
merely one percent of the overall capex. This, however, is likely to go up once
service providers craft clearer strategies for improving network quality.

However, service providers may also choose to deal with the QoS issue by
taking the outsourcing recourse. Bharti is a case in point.

The results of Bharti's historic network outsourcing deal with Ericsson are
being keenly watched by the telecos and equipment vendors alike. Providing
quality assurance in all the 13 circles for which the deal is applicable is a
key deliverable for Ericsson.

If Outsourcing Picks Up...

Service providers may outsource more network management and QoS-related
functions, once the model becomes proven.

That may not have positive fallouts for T&M vendors. One, network
management service providers are likely to apply greater pressure on T&M
equipment prices.

Two, as this new class of service providers could be managing networks of
multiple operators, the shipment of T&M equipment will come down by a
factor.

While outsourcing of QoS-related functions is a potential proposition, not
everybody sees it happening, at least not in the near future.

In the longer run, the threat could get real mainly due to the increasing
complexity of the network and the associated cost of newer T&M equipment. In
some cases, the evolutionary nature of the network is responsible for the
complexity. In other cases, consolidation has contributed its bit. This is
unavoidable as market needs and not technological considerations guide
acquisitions.

With multiple technologies comes the need for multiple T&M equipment,
which pushes costs up. Outsourcing can be a tool for operators to safeguard
against such difficulties.

One way to address the problem and keep the market is to pack support for
multiple technologies in existing T&M instruments. The trend has already
started and will likely pick up, depending on the market dictats.

In this case, however, the T&M spend of service providers may continue to
hover at the existing levels. Back to square one, is it?

Deepak Kumar