Will India Miss the 100mn Broadband Target by 2014?

India is set to miss broadband target of 100 mn subscribers by 2014. This is primarily because the BWA spectrum auction winners are delaying their rollouts thanks to the WiMax vs TD-LTE debate, their main focus on enterprises, and India's short-term regulatory policies.

BWA auctions concluded around the same time as 3G, yet with 3G services already being rolled out, there is still silence from the BWA winners on their rollout plans. Given the fact that they are sitting with double the amount of 3G spectrum, and are yet unlikely to meet the year-end broadband rollout targets, and adding to it the case of BSNL not actively rolling out broadband, a lot of speculation is running around-the chief of them being the debate between WiMax and TD-LTE, both of which are BWA-compatible.

According to Asheesh Pandia, communications manager, Siemens Enterprise, "Where Wimax focuses on greenfield fixed to mobile deployments, LTE aspires for incumbent deployments compatible to on-hand operations and networks. These would-be evolutionary frameworks are striving to merge into open IP unified communications, which in turn should result in the fusion of both at some point."

3G for LTE

With a mix of winners in the BWA auctions of vendors and operators, and especially with Mukesh Ambani's teaming up with Infotel, which won the maximum number of circles in the auctions, plans of all other operators are said to be influenced and awaiting the RIL-Infotel decision, after which they will follow suit. While operators may have differences of opinion on the kind of technology they want to use their BWA spectrum for, two operators in the same circle have to offer the same technology; so this will definitely be an important deciding factor.

Another factor of course is the ease of upgrading to LTE standards from 3G, following in the footsteps of most of the operators abroad. However, waiting for TD-LTE may mean another two to three years of spectrum, money, and technology sitting idle, which is unaffordable for any operator. The delay in broadband rollout is costing operators $0.3 mn-$1 mn everyday, according to amount of spectrum and circles, and a $10 mn revenue loss due to subscription, content delivery, apps, and more.

However, with a major foreign investor in the shape of Qualcomm offering huge financial aid and incentives for Indian carriers to wait for TD-LTE and, making them believe that this will help in bringing them on par with the world, which is currently conducting TD-LTE trials, there is a slight speculation that Indian operators and carriers may just wait. If this is the case, then the government's forethought in providing double the spectrum at half the price in an effort to increase broadband penetration in the country through WiMax will burn to ashes.

Remarks C S Rao, chairman, WiMax Forum India, "We are very concerned that after so much effort to have 3G and BWA auctions together, in order to increase broadband penetration in the country, Qualcomm throwing in the hat has instigated a war on which technology to use-putting India on the backfoot for other operators who have won. Two technology players cannot decide the fate of 50 mn subscribers. We are likely to be affected if services are not rolled out by the year-end, especially since the country already has enough passive infrastructure, backhaul, internet bandwidth, and enough broadband. We were thankful to operators for their interest and continue with our advocacy, canvassing and exposure to operators of international WiMax technology in use, but feel that should the government have enforced strict roll-out obligations, this confusion with which technology to go for, and holding the country to ransom meanwhile could have been prevented. If the government is really interested in increasing broadband penetration, issuing a proper time-frame and guidelines are a must."

Seconds an industry source, “Slots were not allotted properly, to begin with only two slots, has given advantage to a few players. In addition, the governments of most countries have taken a strong stand on what technology they support, unlike the Indian government which keeps on harping that it is technology agnostic. This is also a cause of the confusion in terms of technology adaption for operators and vendors. Just providing roll-out obligations are not the only thing-the government needs to create competition and give direction.”

Rao also belives that the government would have got 30% of revenues in the form of taxes for WiMax, but now it is too late to issue new obligations, as operators will react badly. At this juncture, he says that the government can only hold meetings with operators to stimulate broadband need and BWA rollouts or give some tax holidays, etc.

Broadband Targets Amiss?

While most of the industry agrees that there is some delay in rollout, most attribute it to equipment procurement and slow uptake of technology due to lack of experience.

According to Satyen Gupta, ex-principal advisor, Trai, “India has missed the target. As of now, winners should start rolling out services by March, spectrum has been given to them, but after that it takes 5-6 months to finalise equipment orders, policies, installation, commissioning, testing, etc. In the case of 3G, the procurement process started much earlier, as operators began collecting equipment the day they knew about 3G auctions, which was faster as the infrastructure was already in place. Besides, if wireless and unbundling were used together, India would have met broadband targets.”

Tikona says that BWA rollouts will start during 2011, and that BWA alone could not have been enough to meet the country's broadband targets, particularly in its first year. Industry experts also believe that operators are just waiting for one to start, and then all the rest will follow suit.

Aircel, which bagged eight BWA circles, is still undecided about technologies. "We are still evaluating between WiMax and TD-LTE. We may take a decision shortly on the rollout plans," Gurdeep Singh, COO, Aircel, said.

According to Jagbir Singh, president and group CTO, Reliance Communications, which did not add any circles following the BWA auction, TD-LTE stands apart in terms of the choice of technology. There is a lot of traction of TD-LTE in China and in Japan and if India and China adopt this as the technology the worldwide volumes are then a foregone conclusion. Also since it is a logical extension of the current 3G technology with a fallback option on to the deployed 3G/GSM network, it makes the subscriber experience that much more seamless.

"In our view, HSPA+ would have much better chance of adoption by Indian telcos. Wireless high-speed data services are likely to flourish only if a range of BWA devices are available in the market at most affordable price levels for prospective price sensitive Indian consumers. The other major factor to be considered is the timeline for deployment. TD-LTE is yet to mature as a technology and also is not available in commercial sense. TD-LTE shall prevail and, we might see, for the first time India being one of the early adaptors of a new technology," Jagbir Singh added.

WiMax vs LTE

Yet another possibility is that of winners of both 3G and BWA, waiting to reap in moolah from 3G, which they can use to finance their BWA rollouts. Also, it is said that winners may first roll out WiMax and then upgrade to LTE when the technology compliant with its WiMax standard comes to India at an affordable price point, as both technologies are of very similar standards. Industry sources also feel that winners of BWA are sitting on 4G spectrum, and if they do not roll out services soon, they will be throwing away the chance to compete with 3G players, and take a strong lead in the market.

According to Rajan Mathews, director general, COAI, “I don't think there is a debate between WiMax and TD-LTE. All operators will look at backward—forward compatibility, and consumers won't be made to suffer.”

Another influencing decision may be alignment to vendors, which may make players like Bharti Airtel and Aircel more likely to wait for LTE, according to industry experts, as they would want to focus on a universal standard, which is FDD-LTE, not TD-LTE which we have at present and which only China is using. In this scenario, 3G will be used in areas where LTE is not in place.

According to Dilip Sahay, technical advisor, AUSPI, “There is a market for all. Today there are so many providers of high-speed broadband. Through roaming agreements and franchising, sharing is allowed, and the government may even allow sharing of spectrum in near future. However, the market will determine what is needed, and BWA also has to provide compatibility with the existing network.” Thus, an MVNO case, where BWA spectrum is leased out by operators who have not won in the auctions, is also a possibility.

Another case may be where WiMax plus Edge or WiMax plus CDMA, with roaming agreement with 2G operators, in circles where WiMax is present is used, while in the meantime vendors are asked to come up with a strategy to migrate to LTE in the next three years. An operator could also deploy LTE using BWA spectrum in dense urban pockets, 3G HSPA or EVDO in top cities, and continue with 2G elsewhere.

According to Vaibhav Mehta, VP, new business development, Elitecore Technologies, “We expect BWA winners to roll out WiMAX 16e service and gradually migrate to TD-LTE as both technologies are based on OFDMA standards. Hence, we believe there shall not be any further delay in rollout of WiMAX services in India.”

Qualcomm's Stand

In July 2010, Qualcomm announced Global Holding Corporation and Tulip Telecom as initial shareholders. The next goal is to attract one or more experienced 3G HSPA and/or EV-DO operator(s) into the venture for construction of an LTE network in compliance with the Indian government's roll-out requirements for the BWA spectrum and then to exit the venture. It is committed to a live demonstration of LTE in India before the end of 2010. Talking about competition with other winners, Qualcomm says, “We will work with 3G and BWA operators in order to enable a country-wide seamless mobile broadband experience for Indian consumers by leveraging 3G and LTE networks.”

Rollout of BWA

While many in the industry feel that consumers will lose out as enterprises whose demand for high-speed broadband is much higher, will reap the benefits of BWA first, another question is how will operators fulfill the promise of widespread broadband penetration, when rural areas are likely to get high-speed broadband only two to three years down the line?

According to Tikona, “We are confident that the introduction of BWA services will have a positive impact on both, the enterprise and home segment. The initial capabilities of the BWA technologies are more likely suited to service the requirements of the home segment than that of enterprise. Tikona Digital Networks would focus on both the segments and leverage the potential of the BWA technologies to create maximum value for all end users of both segments.”

Since broadband is available on 2G and 3G also, industry representatives believe that there will be a simultaneous rollout for urban and rural areas. According to Rajan Mathews, director general, COAI, “I don't think operators can afford the luxury of phased rollout. Instead, they will make use of a segmented approach for urban and rural areas, although there will be a quicker uptake of data access in urban areas. With the help of USO Fund, broadband will be rolled out in rural areas, as well.”

Another aspect is that enterprise customers will be small in number (2-3 mn), whereas consumers may add up to 60 mn users, providing more revenue. Thus, there will be differential pricing for domestic, enterprise and consumer, according to need and broadband packs, while rural areas will have different pricing models. The top 75 cities with 20 mn subscribers will first get access, and later this will spread to smaller towns. However, BWA may not necessarily aid 3G, as one would be used for voice needs more, and the other more for data needs, with different technologies and variables for each.

Availability of WiMax Products

According to CS Rao, “WiMax and dual-mode phones are available by Samsung and HTC, and currently 295 devices are available with the WiMax Forum for WiMax services. We are just awaiting for technology to be rolled out.”

However, the industry does not expect local manufacturing of WiMax equipment as a possibility in India, at least for the next two to four years, due to lack of IP rights and R&D for manufacturing.

However, according to Tikona, “It's not an issue of availability of products alone. What is required is a strong global ecosystem comprising service providers globally, chip makers, device makers, infra vendors, large volumes, and competitive cost points for any technology to be adopted by an operator, be it LTE or WiMax.”

Last-mile Connectivity With Wi-Fi

Providing another twist to the tale, some industry sources believe that ultimately it is only Wi-Fi which will offer last-mile connectivity, even when WiMax and LTE networks are choked.

According to Manjit Singh, MD, Ruckus Wireless, India & SAARC, “WiMax that is touted to solve the connectivity gap, has problems due to uneven distribution of customer base and practically no phones are available with in-built WiMax. Wi-Fi is fast becoming the preferred technology used as the last mile for wireless broadband access. This is possible because 90% of client devices are Wi-Fi ready. The arrival of 802.11n has made Wi-Fi broadband more suitable to emerging markets and to serve municipalities with higher throughput, more affordably.”

Ruckus Wireless which is providing a Wi-Fi broadband router to Tikona, offers the first end-to-end 802.11n Wi-Fi system for carriers looking to capitalize on explosive mobile Internet growth. This solution offers 3G offloading and wholesaling, last mile wireless broadband access, and managed WLAN services. It is believed that Wi-Fi which has been in existence for longer, can be more easily upgraded to from 3G networks, and will help to de-congest data loaded networks. Also, devices for Wi-fi broadband are already available in abundance. While most Wi-Fi chipsets currently support the 802.11n standard, it is believed that the 802.11ac and 802.11ad standards will eventually become the predominant technology.

V&D Views

How to Achieve Targets?

India should put stringent roll-out obligations for BWA and other broadband players. The government could use a part of the Rs 26,000+ crore auction money for ensuring 100% broadband penetration. Telcos should be encouraged to offer services to retail customers across the country. At present, even large players do not have 100% broadband penetration in key cities like Mumbai, Bangalore, Chennai, and Delhi. The government can put a pre-condition-operators should achieve 100% penetration in 500 top towns-to participate in future spectrum auctions

berylm@cybermedia.co.in