The telecom test and measurement (T&M) industry in India is witnessing a growth in demand owing to the unprecedented growth in data services. The recent focus on domestic manufacturing has further accelerated the need for T&M in the telecom space. However, a key challenge for T&M companies is to improve their test capabilities while keeping costs low. Industry experts discuss the trends, opportunities, challenges and future outlook for the telecom T&M industry…
How has the Indian telecom T&M industry evolved over the past few years?
Rahul Agarwal
The market for test and measurement equipment has grown over time, in tandem with growth in the telecom sector. The increasing subscriber base, deployment of next-generation technologies and unprecedented data traffic have resulted in increased network complexity, thereby necessitating the use of test equipment and measurement products to optimise networks. In addition, the increasing complexity of devices designed, produced and deployed in the industry demands expertise on the part of suppliers and users of the test equipment.
With the focus shifting towards improved connectivity and enhanced user experience, T&M is increasingly becoming critical not only for ensuring the delivery of quality devices and services, but also for complying with industry standards. A number of other industries, such as aerospace, defence, automotive, energy, medical, consumer electronics and semiconductors, also use T&M equipment for designing, manufacturing and deploying products and services, as well as for ensuring a high level of customer satisfaction.
Vishnu Goel
The Indian telecom T&M industry has undergone a number of transformations over the past five years. There have been major developments in technology, network architecture and organisation restructuring. Since telecom T&M is driven mainly by global vendors, the Indian procurement decisions were impacted accordingly. Overall, the growth of the industry has been slow, and the revenues do not reflect the changes and volatility that occurred in the operating environment during the period. As per recent estimates, the market size of the telecom T&M industry is $232 million, subject to category classification. T&M continues to remain critical for the success of its user organisations, which include service providers, network equipment manufacturers and telecom start-ups.
Sathish Gopalaiah
The T&M industry has closely mirrored the growth of the Indian telecom industry. The adoption of technology such as broadband wireless access and long term evolution (LTE), and various initiatives to support the deployment of network protocols have led to the evolution of the industry in India. T&M services are used for research and development (R&D), equipment production, deployment, network-device integration, and quality of service (QoS) assurance. While Indian operators’ investments in T&M still lags behind global operators, the trend in indigenous manufacturing is driving localisation in testing. Meanwhile, the industry is geared towards providing predictive solutions that are holistic in nature.
What are the current trends in T&M technologies and solutions across the world?
Vishnu Goel
T&M technologies cover hardware, which includes portable and modular systems and services (including the resident software). We had assessed and forecasted unprecedented changes for this decade (2010-20) as most of the major global corporations went through mergers, demergers and realignment of operations in home countries as well as abroad. The process of consolidation will continue through 2015.
Eventually, T&M companies will be of three types – pure play hardware, independent hardware/software and those with incremental business around T&M. It has also been forecasted that a lot of churning, aggregation and disaggregation will be witnessed before the industry reaches stability. Overall, there is a requirement for standardisation of equipment and norms along with T&M-centered professionals. Meanwhile, in telecom T&M, the key areas that need testing solutions are software-defined networking, fibre management, high grit chips, system on a chip (SoC), the internet of things, 5G and space communications.
Sathish Gopalaiah
T&M solutions globally cater to communications, defence and electronics sectors. Demand for solutions for the communications sector is driven primarily by the adoption of various standards and the proliferation of connected devices. A natural corollary of this growth is the electronics sector that caters to the same. The T&M is a critical input at all stages of the core product lifecycle. These stages are R&D (including interoperability), simulation and prototyping, production, deployment and service assurance. The growth in the communications market and telecom-enabled solutions is driving the global T&M industry. However, weakness in the global economy, particularly in China, may reduce investments in network deployments, which, in turn, may lead to a slowdown in growth rates witnessed in the past two years.
What are likely to be the key growth drivers in the Indian T&M industry in the coming years?
Rahul Agarwal
Globally, telecom service providers are concentrating on mobile data traffic Wi-Fi offloading strategies. As mobile data is offloaded to Wi-Fi networks, customer experience can suffer and can also result in a churn, compelling service providers to invest in testing and monitoring solutions. In addition to this, service providers, both in India and around the world, will increasingly deploy Wi-Fi access points, resulting in an increase in demand for testing equipment, as products and networks have to be tested at every stage of the life cycle, in order to avoid customer churn.
Vishnu Goel
The Indian T&M industry will be driven by sectoral growth of its user industry. The key sectors in which T&M will witness increased demand are railways, power, defence and semiconductor industries as the government has announced ambitious programmes for these sectors. Since the plan outlays for projects in these sectors entail high capex, both hardware and services-oriented T&M companies will be benefitted. With the growth of local manufacturing subsidiaries to cater to infrastructure demands, the T&M revenues will also grow substantially.
Sathish Gopalaiah
India has seen an insatiable demand for data services. Companies are heavily investing in 4G deployments in addition to 2G/3G roll-outs. Evolving technology, such as LTE-Advanced and 5G, coupled with network virtualisation, has led to a huge demand for T&M products and services. The increased focus on the manufacturing of network equipment and devices has led to a greater demand. The government is emphasising the need for QoS, and network operators are differentiating themselves with an enhanced quality of experience. This is driving the demand for high quality and high reliability products that can be locally serviced.
Which telecom technologies and equipment demand the most stringent testing process and why?
Rahul Agarwal
One of the most important segments with respect to T&M is the mobile devices segment, which will continue to grow at a healthy rate as the Indian and global markets witness increased penetration and adoption of these devices.
The proliferation of such data-hungry devices, coupled with the consumption of data-intensive applications, will result in a huge volume of data traffic and lead to the adoption of next-generation technologies sooner than expected. In order to ensure an enhanced user experience, telecom infrastructure will be upgraded to adopt IP/Ethernet technologies. This will create opportunities for the mobile backhaul testing equipment industry to help optimise networks.
Vishnu Goel
In general, the technology content of the equipment, systems and components determines the complexity of their design and associated manufacturing process. T&M technologies are used to assure the quality of products, and increase their test productivity and competitiveness. Products that use higher frequency (Gbit chips, microwave and millimeter waves), multiple-input and multiple-output, fibre optics modules and lasers, work flow measurements in assembly line operations, and large defence operation centres predominantly consume T&M solutions. Moreover, high cost T&M solutions are used to conform to global test standards, reliability and calibration standards and software-intensive device tests.
Sathish Gopalaiah
Governments across the world have become acutely sensitive to national security issues surrounding communications networks. Therefore, network and device security testing and standards-compliance demand for the most stringent testing processes to be applied.
What are the issues and challenges related to the telecom T&M industry?
Rahul Agarwal
One of the challenges faced by testing equipment vendors is reducing testing time, which could result in significant cost savings for original equipment manufacturers. The end-users of testing equipment are not only aiming to reduce the testing time, but also to conduct more testing at lower costs through innovation, as they have not been able to transfer the increasing costs to consumers.
Vishnu Goel
The key challenges in the T&M industry pertain to the local manufacturing of T&M products and their efficient and effective use in the telecom sector. First, T&M can be effectively used in telecom only when all stakeholders view these technologies as an investment (not pure expenses) to get better quality, assurance and productivity of their own operations. Further, the better design and quality networks so gained will encourage more investment and mutually support each other. Second, manufacturing T&M products in India entails several challenges. “Make in India” for T&M requires entrepreneurial motivation, commitment and a favourable ecosystem. The two most important issues under local manufacturing are rapid prototyping for any hardware start-up and testing skills. The domestic T&M industry can grow if designs are made, co-assembled and tested locally, and marketed in India and abroad.
Sathish Gopalaiah
The T&M industry is subject to general economic conditions that affect the communications industry. Dependence on few key customers and a large number of T&M players is driving down prices, leading to reduced margins. With the returns on investments made by network operators in T&M-related products and services not being clearly identified, and technology and standards evolving rapidly, there is a rising pressure on revenue models.
(Sathish Gopalaiah’s responses reflect his personal views and are not necessarily those of his organisation.)