T&M: Riding the Rollout  Wave

Let’s take a quick look at the key developments in the previous calendar
year. The two largest corporate houses in India–Tata and Reliance–announced
their mega-telecom plans, and also rolled out their services. On the other hand,
Bharti, BSNL, and Hutch consolidated their offerings and announced new launches.

Just one look at the developments and one can infer that telecom services–basic
or cellular, DLD or ILD–are going to pick up. The three big private groups
will clearly be focusing on customer acquisition and high-definition services.
And each of them is using the latest in technology–SDH, SDH over DWDM, DWDM,
TDMA/IP or CDMA 2000 1X. And they can achieve their objectives by having quality
networks and good network operating centers (NOCs) and central processing
offices. This means that test and measurement (T&M) products will be vital
in monitoring and managing the performance of the networks.

	The market has never been more active and promising
	It is expected to hit the Rs 250—275 crore mark this fiscal
	The push is coming not just from the communications sector, but also from broadcast and education
	Solutions, not boxes, have become the order of the day

An Attractive Market

The T&M market has never been more active, attractive, and promising.
The total size is difficult to comprehend at this time, but it is estimated that
it could hit the Rs 250-275 crore mark by end of March 2003. And the push is
coming not just from the communications sector, but also from broadcast and
education. Sales to defense and PSUs sectors have also been encouraging.

A major driver for the T&M industry has also been the easing of US
sanctions since October 2001. This has enabled global players like Agilent and
Tektronix to sell their products in India. Earlier, they were not able to sell
oscilloscopes with even 1G sample/second performance. Today, they can even sell
to agencies like Aeronautical Development Establishment, Electronics and Radar
Development Establishment, Bharat Electronics, HAL, DRDO, and ISRO, among
others. The licenses to supply get cleared in four to six weeks. Tektronix, for
example, had about 100 licenses cleared, after the sanctions were eased.
Similarly, Agilent introduced several high-performance spectrum analyzers for
cellular and aerospace/defense industries.

What Products Sell?

The products include spectrum analyzers, network analyzers, protocol
analyzers, optical time domain reflectometers (OTDR), optical spectrum analyzers
(OSA), plesiochronous digital hierarchy and synchronous digital hierarchy (PDH/SDH)
analyzers, and handheld testers.

Traditionally, BSNL and MTNL were the big customers in the communications
sector. But this fiscal, it could be Reliance as well. Market estimates suggest
that Reliance must be investing about $15—20 million on test, monitoring, and
management. While Bharti’s investment could be to the tune of $5 million, Tata’s
would be around $3 million. And most of the leading vendors like Agilent,
Acterna, and Tektronix have made significant wins.

Some of the large orders finalized last year included that of MTNL for 24
OTDR-Type B, 9 SDH analyzers STM1/4 and SDH Analyzers STM1/4/16; BSNL tender for
175 mini OTDRs, 20 WDM Analyzers, 38 OTDRs. These orders were close to Rs 70
crore. This year the investment on OTDRs has been slightly less, considering the
fact that most of the fiber backbone has already been built.

One significant change is that solutions, and not boxes, are the order of the
day. Even oscilloscopes are being sold with solutions built around them. Another
term doing rounds is ‘test and management’. Acterna’s whole strategy
revolves round test and management solutions. The solutions approach will
increasingly gain momentum as the service providers in the next level of
consolidation would be looking at network monitoring, QoS, and fraud/churn
management as some of the main ways to bring about service differentiation.

There has been a good deal of demand from the broadcasting sector. Today,
up-linking out of India is permitted. So Prasar Bharti is investing in DVB
terrestrial systems and converting analog to digital. Star and Sahara also have
very ambitious plans and so do other satellite channels like Sun and Eanadu.
This segment is dominated by Tektronix, with an estimated 90 percent marketshare.

Initially, there was a lot of buying from the software sector, which was
working in the development of products for GPRS, UMTS, and Bluetooth. But last
year, there was a lull in the procurement of solutions by this sector. Experts
believe that this is temporary and will slowly gain momentum in the next six to
eight months.

Biggies Dominate

During the global downturn, T&M vendors grew on an average of 10—12
percent. But this year, they could be seeing close to 20—25 percent growth,
thanks to the growth in cellular, CDMA rollouts, new basic service rollouts, and
sinking of the fiber optic cables.

Agilent, Acterna, and Tektronix together account for 70 percent of the total
communications T&M business. As several of these players have different
financial years, the exact revenue figures have been difficult to arrive.
However, taking into account some of the major wins these three companies have
made, Agilent could be touching the Rs 100 crore mark from communications
T&M including services and software. Acterna would end up with Rs 55 crore
and Tektronix around Rs 35 crore.

While Agilent has a complete portfolio of solutions for all types of telecom
providers assisting through design, network optimization, technology migration,
and implementation from spectrum analyzers to network analyzers, to antenna
testing, Tektronix is very strong in protocol analyzers, besides other products.
It is believed that Tektronix has close to 85 percent of the market share in
this arena. Acterna is strong in OTDR and network analyzers. Both Agilent and
Acterna have been neck to neck in the OTDR race. Last year, Agilent bagged OTDR
orders worth Rs 10 crore from MTNL and BSNL. Acterna won orders from BSNL/MTNL
for WDM analyzers, OTDRs, and SDH analyzers.

Others like ICT, Fastech, Anirtsu, Seven Hills, Aishwarya Telecom, and
Trinity Electronics have also made significant inroads into BSNL/MTNL market.
Silently, ICT Electronics/Trend addressing PDH, SDH, and SONET technologies got
orders for SDH analyzers and also on the access side, supplied test solutions
for ATM, ISDN, DSL, etc. Fastech, which distributes Sunrise Telecom’s
solutions, is strong on the handheld side. On the RF side, Anirtsu too has some
good successes. Other majors like Sunrise, Nettest, and Fluke are present
through distributors. Some of the big-time distributors include AIMIL, Aplab,
Fastech, Forbes Gokak, Meera Agencies, Scientific Mes-Tek, and VXL. In the BSNL
tenders, ITI has also supplied SDH/PDH products. Interestingly, T&M business
is changing from tender-basis to rational investment procurement decision.
However, it will take time before T&M will be seen as a tool for justifying
the return on investment.

The industry has players looking at the optical and wireless domains. Look at
Acterna and Anritsu. They have traditionally been in the optic fiber T&M and
are consolidating the base there. Similarly, Rohde & Schwarz, strong in the
wireless T&M market is consolidating the base there.

With Internet and Internet-related services gaining momentum, DWDM is getting
deployed. VoIP is also on the anvil. So there would be an increased demand for
the OSAs.

And It’s Just the Tip...

Most of the vendors believe this is just the beginning. The telecom
revolution is yet to take off. The belief is that the likes of Bharti, Tata,
Reliance, and Hutchison, and those like GAIL and Power Grid are all there for
long innings. And it is not possible for them to roll out services without the
T&M products and solutions. T&M vendors also believe that service
providers will focus on their core business and leave the measurement and
management operations to T&M companies.

Service providers in the US are suffering and to reshape, they are
considering on outsourcing some of the backend operations. And why shouldn’t
the Indian telcos capitalize on this opportunity. The argument is that if banks
and FIs can do it, telcos can do it as well. Further, India is expected to serve
as the base for verification and validation and a lot of work in the
next-generation wireless can happen in the premises of companies like Sasken,
Wipro, Axes, Ubnetics, and Future Software.

They need the test solutions. Though the service provider segment is the
largest visible market for the test and measurement business, defense
communications will also need T&M solutions.

Today, after oscilloscopes, spectrum analyzers and network analyzers are
being seen as general-purpose T&M instruments. But the spectrum analyzer is
getting transformed from a general-purpose equipment to an application-specific
tester.

All major vendors–Agilent, Tektronix, and National
Instruments–have software development centers in India and are working with
other global development centers. If this trend pick up, India could become the
test bed for T&M solutions of the future.

Ch. Srinivas Rao