WIRELINE INFRASTRUCTURE : A Slow Take-off

The growth of wireline over the last decade or so has not only been stagnant
but also negative, completely shrouded under the resounding growth of wireless.
We have an estimated 40 mn wireline subscribers across India predominantly
serviced by BSNL.

The status of broadband in India is a developing story which may have
significant outcomes over the next year or two. India's 2004 broadband policy
aims at 9 mn broadband connections and 18 mn Internet connections by 2007, and
20 mn broadband and 40 mn Internet subscribers by 2010.

Rapid growth of India's economy in the recent years and the dependence of key
industries on fast connections and high bandwidth has given rise to an emerging
nascent market for broadband equipment which may achieve higher growth rates
within a couple of years. By the end of 2006, the pace of broadband deployments
quickened. Broadband is a key focus area for all operators.

One of the key drivers for wireline growth is fixed line broadband using xDSL
technology. Unfortunately, India has been lagging behind in leveraging copper
networks convincingly to deliver high-speed ADSL/VDSL. This is probably because
of the very low PC penetration, assuming that the stepping stone application for
broadband is Internet usage. On the other hand, PC costs have been prohibitive
from a common man's perspective that its home penetration is still very low.

Although it is the chicken-and-egg story, we still have not lost much,
because the predominant number of fixed line users happen to be in urban areas
where PC penetration is better and high speed broadband is more than welcome at
affordable prices. However, if India has to achieve global scale and quality
broadband services of, say, 2 Mbps and beyond, then it has to critically look at
and assess its outside plant conditions and the quality of local loop.

Most of the copper that stands buried years ago could have deficiencies in
terms of multi-gauge cable, bridge-taps, load coils, inappropriate cabinets or
even inadequate grounding and shielding, which are critical barriers for trouble
free high-speed data services using xDSL technology.

The other scenario for wireline expansion is where the operator runs fiber to
the kerb or building, and runs copper in the last few hundred meters to the
subscriber. Operators like Reliance and Bharti deploy this architecture,
although the focus is not quite as high as wireless.

In either scenario, reliable connectivity infrastructure is an important
component of performance and customer experience. Some infrastructure companies
operate both in copper and fiber connectivity, including advanced technologies
like FTTx.

Technologies

A large portion of the broadband subscriber growth that has happened in the
recent times has been primarily on copper. But the issue with copper is that it
is limited, and the quality of most existing copper is not adequate to handle
DSL subscribers.

With a huge untapped market to be addressed, operators are looking at
deploying broadband wireless access technologies like WiMax. Not only are these
technologies quick to roll out, but are also ideal to cater to the Indian market
since they are end-to-end, based on IP and are spectral efficient supporting
features like SOFDMA, MIMO (Multiple Input Multiple Output), Beam forming using
smart antenna technologies, etc.

Broadband components would vary depending on the type of technology deployed.
So, for instance, in the case of DSL (Digital Subscriber Line), we have DSLAM/MSAP
(Multi Service Access Platform) in the access node.

In terms of the CPEs (Customer Premise Equipment), there are different
devices like ADSL, VDSL, etc. The fixed medium between the CPEs and the access
node is copper.

For higher bandwidth applications, we have FTTH/FTTX with GPON solution. This
comprises OLT (Optical line terminal) at the customer premise location and ONT
(Optical network Terminal) at the exchange location. Transmission medium here is
fiber.

Another technology through which broadband can be offered is cable TV/HFC
(Hybrid Fiber Coax Network) where the transmission medium is a coax cable. In
the case of WiMax 802.16 Rev E, some infrastructure companies have a WiMax BTS
and a WAC (wireless access controller), satellite-based VSAT technology is
another way of providing broadband.

Market Trends

In urban areas, India has corporate users who need high bandwidth for
various applications. Additionally, with Internet banking, e-commerce,
matrimonial portals, and e-ticketing (railways and airline) catching up,
residential users are also looking at adopting broadband in a big way.

In rural areas, the emphasis is on providing several applications to improve
the living standards of this segment. There is a focus on providing e-gov,
e-education, and e-medicine applications to remote rural areas, and broadband is
the key technology that can make this possible.

Operators demand low cost but easy to deploy solutions. Currently, a majority
of the broadband rollout has been happening on copper through ADSL technology.
Also, some operators are providing broadband through cable and fiber. But, with
limited copper and the need to pump up the broadband growth, operators are
looking at wireless access technologies.

India is a largely unpredictable market. With spectrum issues playing havoc
in the wireless segment, operators are still unclear on the broadband roadmap.
With cheaper options like WiMax Rev E available in the market, wireline, with
its higher QoS option, is an opportunity yet to be tapped.

TRAI, sometimes ago, released a revolutionary recommendation addressing
various issues for accelerating the growth of broadband and high-speed Internet
access in the country. It is expected that broadband access will experience
growth similar to that witnessed in mobile telephony if the critical area of
Local Loop Unbundling (LLU) is addressed.

One reason why DSL (digital subscriber loop) didn't make enough inroads was
the monopolistic bottleneck in the critical local loop of the incumbent carrier.
A large share of this local loop is owned by MTNL and BSNL.

Unbundling refers to the process in which incumbent carriers lease, wholly or
in part, the local loop components of their telecommunications network to other
carriers or service providers. The LLU, in principle, provides new entrants
access to the local loop and encourages the provisioning of complimentary
broadband services.

The government had set a target of 9 mn broadband subscribers by 2007 and 50
mn by 2010. In fact, the government had declared the Year 2007 as the 'Year of
Broadband'. The broadband subscriber base stands at around 2.9 mn as of date.
But with the wireless industry embroiled in speculation over wireless spectrum
for the best part of 2007, the focus was lost.

With the clarity over spectrum issues coming, it is hoped that attention
would again be on broadband and with the target of 20 mn subscribers (as
suggested in the 2004 Broadband Policy) by 2010, operators have realized that
there is a need to expedite the rollout of broadband further. As of date, around
85% deployments are on the DSL technology.

With bandwidth requirements set to grow manifolds, fiber-based technologies
like GPON (Gigabit Passive Optical Network) and EPON (Ethernet PON) are also
being considered by operators. But, to cater to the targets set by the
government, we would also need to look at BWA (Broadband Wireless Access)
technologies like WiMax Rev E, which not only provides high data throughputs,
but also supports mobility, a feature that would be relevant for the corporate
segment.

Pricing Issues

In India, income is unequally distributed, with the top 5-10% of the
population having a far higher income than the average. For this relatively
small group, broadband is more affordable and they stand to benefit from
services-like IPTV-that the broadband networks of the future will carry. TRAI
has pointed out that incumbents have not been able to fully utilize their
infrastructure themselves. This is proved by the fact that despite broadband
prices moving down to match that of dial-up services, the number of broadband
subscribers is still only a seventh of Internet subscribers.

Hence, the supply of broadband simply has not been able to keep up with the
demand. The implication is that once broadband coverage catches up with Internet
coverage, a majority of Internet subscribers should turn to broadband. The
number of broadband subscribers could, therefore, increase quickly by a few
million in the near term.

The main limiting factor for Internet and broadband penetration has been PC
penetration. Purchasing a PC remains out of reach for the vast majority of
India's population, which still has an average per-capita income of about $3,400
in PPP terms per year (according to the 2005 estimate).

The growth of broadband is set to be in line with the growth in wireless
access technologies such as 802.16e. Operators can look at concentrating on such
wireless technologies along with a focus on optical access such as FTTx, etc.
WiMax will contribute to the deployment of broadband in the region, to improve
broadband penetration in areas with low population density and difficult access.

Wireline infrastructure providers feel that mobile operators should go for an
optimized combination of wireless/wired access technologies and innovative
services which can accelerate broadband adoption in India. They should also
define an end-to-end architecture to serve very heterogeneous user segments with
leapfrog to new technologies (DSL, FTTH, WiMAX, IP) and innovative business
models built into them.

Bearing in mind that the existing local loop is something that was
established over a period of 50-60 years-much before the advent of xDSL
technology-the quality of the local loop is a critical factor of reliable
broadband services. For instance, multi-gauge cable, bridge-taps and load-coils
introduced into the network over time are onerous obstructions for DSL, actually
reducing the threshold of quality as compared to voice services. It is,
therefore, important that the local loop is upgraded in terms of the
connectivity infrastructure and the best practices of grounding and shielding.

In recent years and with increasing momentum, incumbent operators in Western
Europe and the UK, North America and in some countries of East Asia have been
transitioning from internal experimentation, lab trials and limited external
trials among friendly customers, into scaled production IPTV deployments. The
largest deployments in the world are now found in these regions. In India, too,
operators have been following the same path and the market is experiencing
similar trends.

In some regions, most notably in the US, IPTV deployments happened later for
the large operators than it did for US independents and Canadian ILECs, which
were pioneering video services as early as the late 1990s. This was before the
advent of all IP broadband networks or true high-speed access. Additionally,
enabling technology platforms-including middleware, video encoding, content
protection, test-and-measurement, and end-to-end IT software platforms-have
evolved significantly.

In order to offer TV services, operators must assemble, deploy and manage a
highly interdependent ecosystem consisting of networks, computing systems,
content processing systems, customer premises devices, and software.

As a result of the evolution of these systems and enabling technologies, as
well as the emergence of new service and business models, the increasing
sophistication level of consumers and rising expectations of operators, it has
become even more important of the choice of solutions.

The policy regarding broadband is still under review and might take some time
before the complete picture emerges although initiatives like last mile bundling
have definitely painted a brighter picture.

India has in many ways led innovative business models, one of which is the
managed services networks widely implemented by Bharti in the Wireless GSM
space. Perhaps a similar model in the wireline space would open several
technology options and deliver profitable wireline broadband growth turning it
explosive in the not too distant future.

Baburajan K

baburajank@cybermedia.co.in