Tracks of Tomorrow

Long Distance will see Action Before

Local Services

Though the National Telecom

Policy (NTP) 1999 was a letter of intent for initiating action in the vacant telecom

circles, little has happened on that front. However, just the announcement of opening up

of national long-distance services by 1 January 2000 has resulted in a lot of activities

in that segment. Though a significant growth in local services is not expected soon, a lot

of infrastructure will be deployed. It is expected that the DoT itself will lead the

action. Indian Railways, public sector utilities like GAIL and Power Grid Corp., a JV of

TCIL and IRCON, and a few selected private companies will supplement its efforts. The

private companies to watch out for are the Reliance and the Tatas. Bharti is also likely

to leverage its position as the basic service licence holder for the strategic circle of

Madhya Pradesh. However, it is likely to keep itself in a few circles.

Apart from the Railways, which

has floated a tender for building an optical fibre network on Build, Own, Operate, Lease

(BOOL) basis, none of the other players are expected to be ready with their infrastructure

this year. The Railways might complete work in certain sections and make them available

for carrying high-speed traffic soon after the long-distance is opened.

Access will Continue to Remain a Problem

Despite the hue and cry over

problems in the local loop, access is likely to remain a bottleneck for the next two

years. Though the reach of telecommunications will grow and there will be a significant

growth in number of



DELs, bandwidth in access will remain a bottleneck.

Growth in Internet usage, coupled

with availability of bandwidth for long-distance, will push up the demand for bandwidth in

the local loop, which operators will find difficult to meet. Cable data networks will be

used primarily for giving Internet access. These networks will not go mainstream primarily

because of two reasons. One, cable networks are not interconnected. Two, their deployment

is driven more by convenience and quicker expected return on investment rather than

long-term business plans. However, the basic service provider might use cable in certain

cases to deliver multimedia traffic.

As few new local basic service

providers are expected to enter the arena till the end of the year 2000, the DoT will

remain the only major access provider. MTNL is likely to be the first to invest in

new-generation access technologies.

Corporate WAN Deployment will see Rapid

Growth

A sharp drop in tariffs for

long-distance high-speed leased lines, burgeoning growth in data communications and

messaging usage, availability of a number of value-added network

services, and deployment of

large-scale infrastructure for long-distance communications after the sector is opened for

competition, will drive the deployment of WANs.

While leased lines will initially

grow at the cost of VSATs, the demand for connecting all locations to a corporate WAN will

ensure that businesses go for a mix and match of technologies. VSATs will be deployed in

areas where leased line connectivity is not available.

The growth in deployment of WANs

will push up sales of products like WAN switches, routers, leased-line modems, and

voice/data multiplexers. In fact, in 1999-2000 and the subsequent year, WAN products will

see one of the highest growths among all segments.

The State Govts will Spend Heavily on

Communications

Many state governments have

announced policies to take technology to the common man. Gujarat, Maharashtra, Andhra

Pradesh, Tamil Nadu, Karnataka, Madhya Pradesh, Haryana, and Orissa have announced

concrete projects to utilise IT for the benefit of their people. Most of these projects

are envisaged to be on a state-wide basis. For convenience, most of these projects are

planned to be centrally managed and will be completely networked. That will require large

investments in communications infrastructure. Since wired media takes time to deploy, many

such projects are expected to be using a mix of satellite and terrestrial radio

communications technologies.

Call Centres to Boom

Despite little customer

orientation in the Indian businesses, call centre—primarily a customer service

application—is expected to be a big business in India in the next three-four years.

The activities will start in the current year.

India will see initial deployment

of call centres in three distinct segments. The service industry like banking, telecom,

and travel/airlines that have been investing on call centres will continue their

investment and will go for upgrading to newer technologies. A major virgin area that is

likely to be hot in the next two years is the government sector. All the new projects that

the Central Government and the state governments are planning for bettering governance

will have to deploy help desks. With little computer literacy, non-availability of Indian

language computing, and the mind-block to speak to a machine, computer-based systems, and

IVR systems will not be able to satisfy the needs of the ordinary citizens. Call centre

being the only hi-tech application with a human operator will have more acceptance with

the people.

The third segment to drive the

market will be the offshore call centres set up by the MNCs to direct their global calls

to India. The drop in international E1 line rates has fuelled this. India has got all the

other advantages for having such call centres—namely low manpower cost, abundant

supply of English speaking workforce, technical and software skills, and a favourable time

zone. Two big call centres have come up already and the third is in the offing. If some

more come through this year, it will have become a big booming by the next year, probably

even bigger than software.

Turnkey will be the Hottest Opportunity

Area

With the opening of national

long-distance services, major long-distance telecom routes will be built by the new

service providers. That will see large turnkey contracts being signed by companies. In

fact, this will account for the highest growth area in 2000-2001. Utilities like GAIL and

Power Grid, Indian Railways, and private companies entering into the lucrative

long-distance business will build optical fibre, microwave, and satellite networks.

Companies having experience in turnkey projects will have a better chance of succeeding.

The organi-sations to watch out for are HFCL, Puncom, Punj Lloyd, L&T, TCIL, and hold

your breath, DoT. If a rumour is to be believed, DoT itself is trying to set up a

commercial turnkey and consultancy division.

Good Days are still far for Equipment

Vendors

Whenever a new communication

service sector is opened up for new participants, the equipment vendors have a good time

selling infrastructure equipment. With the NTP’99 promising to open the vacant

circles for licensing, there was hope that the slowdown in the non-DoT infrastructure

equipment market would be reversed. However, with the new licensing modalities nowhere in

sight—thanks to the fall of the BJP



government and the mini war at the border—that seems a distant dream. The cellular
operators, suffering from financial crunch, are also not expanding their networks. Most

equipment vendors looking for doing business with the private operators are likely to be

disappointed.

However, those who have

market-ready products for the DoT and the ISPs will do some business. While DoT will

accelerate investment in network, ISPs will go for the bare minimum for the time

being—because of both cash problems and the cautious attitude in the wake of so much

uncertainty. It seems the equipment providers will have to wait till the third quarter of

2000-2001 for getting major businesses.

Exponential Growth for Internet Usage,

But Not for ISP Revenues

The Internet has arrived in

India. With no entry barrier, hundreds of ISPs have entered this service and have taken

the Internet to such areas as Bareilly, Palakkad, Vishakhapatnam, Durgapur, etc. This is

an unstoppable force. The Internet is not just any other communication technology. Once

people get to use the Internet, there has been no reversal anywhere in India. And it is

least likely in an infotainment-hungry nation like India.

The Internet, as a medium, gives

information, entertainment, and communications. And is available for a low price. It is

likely to see a boom in subscriber base even this year, when few private ISPs have

launched their services. The actual user-base is three-four times more than the accounts

sold.

However, the bad news—though

it is hardly news—is that the ISPs will earn little. Though many are today looking

beyond plain access, it is not easy for them to sell anything extra for a cost. Most of

the subscribers will go—and pay—only for plain access. A simple Internet access

gives much more than anyone imagined till a year back. After a couple of years of

innovation, risk, and confusion, a shakeout is imminent. But that is another story.