Andy Evans,CTO, Cable & Wireless Europe, Asia and USA
April 15, 2008
-
Present in India since 1995, Cable & Wireless (CW), a UK-based communications company, was recently awarded licences to offer international and national long distance services. On a recent visit to India, Andy Evans, chief technology officer, Cable & Wireless Europe, Asia and the US, spoke to tele.net about the bandwidth market, CW's strategies for India and the key issues facing the telecom sector. Excerpts...
What are the key technology trends internationally?
There are so many. However, one of the big trends in our business is the increasing desire of large companies to leverage local talent pools. Clearly, this has been driving IT offshoring and business process offshoring in India for some time. We think this trend will not only continue but will diversify geographically as well. We see Indian BPO companies leveraging other job opportunities and that is good for us as they will need advanced and reliable communications services, which is our value proposition.
The continued growth of mobile services, which will be a driver for teledensity, will create opportunities for us. Mobile service providers are important customers of ours in the UK market. For instance, we recently won a deal from Vodafone to carry all its voice transfers in the UK. Similarly, we see significant opportunities in the Indian market.
The other global technology trend is IP. Since our platform industry in India is engineered to be a multi-service one, it can handle data, voice, video and contact centre services with very high quality. We can now do dynamic load balancing across multiple geographic centres and can also integrate voice recognition with contact centre applications. We are looking at bringing these capabilities to India as well.This is again, a part of the overall global trend to serve all service types over IP.
Which of these trends, in your opinion, is most relevant to India?
Basically, I picked trends that I thought would be particularly relevant for India. In addition, Wi-Max will emerge as an access technology as the country lacks an extensive copper infrastructure. Wi-Max is not likely to be a core technology in markets that have developed copper infrastructure because Wi-Max customer premises equipment (CPE) costs are about ten times higher than DSL rates.Hence, the technology is still limited to small business services. Over time however, as volumes grow with Wi-Max, CPE costs will come down and the economics will improve. As Wi-Max services are rolled out by operators, the volume of traffic and services in India will increase, thereby creating opportunities for international services as well.
What kind of enterprise and carrier solutions can a consumer expect from CW?
Our business is focused on serving the needs of large multinational companies. Our value proposition is about reliability and service. For instance, when the SEA-ME-WE 4 and Flag cables broke down at the same time, we restored services to all our customers within 24 hours. Big customers like banks, BPOs and systems integrators cannot afford to have their networking services down. For them, it is very important to have services that are engineered to be highly available. That comes down to having diversity of international connectivity over the main cable systems. We will initially have five connections out of India, and more will be added by the end of summer. Diversity of international transport is necessary to survive multiple cable breaks. Our architecture in India includes Ciena core directors, Cisco 12K routers and Alcatel 7750 PEs, which can offer advance mesh protection and delivery of reliable services even in the event of multiple cable breaks. We already serve the top 15 BPOs in India apart from key customers such as the State Bank of India, HCL and Mphasis. These customers need a partner that will deliver reliable service as they cannot afford to have the network down because the business revenue line stops.
How significant is the Indian telecom market for the company?
We laid the first cable to India in 1870. We have already established three points of presence (PoPs) in India. Recently, we have been awarded national and international long distance licences, in anticipation of which we had been building our Indian network for sometime. India has been a very important base for our operations since 1995 when we established our organisation here. Today we have close to 1,000 colleagues in the country. About a third of the employees are in our captive operations and the remaining are through outsourced partners. In fact, India is important to us from three points of view.First, it is a strong potential voice market.Second, we have been running managed services for a number of our Asian customers out of India, wherein management and control is done from our Indian captive centre. Third, our UK-based operations are leveraging BPO opportunities.
Given the intense competition in the Indian long distance segment, what will be CW's strategy for the Indian market?
Our strategy is to focus on delivering high service levels at economic costs. We are winning a number of deals here and it is this differentiation that will prove to be important as we go forward. We are targeting larger companies like banks, systems integrators and BPOs, and are not directly addressing the small and medium enterprise (SME) segment or the residential segment. We serve the resellers who target the SME segment. Our focus is on large enterprises; that is where our strength lies.
What is your view with regard to the Indian bandwidth market? Given that bandwidth prices are still high in the country, how will this impact CW's business?
High bandwidth prices are just a reflection of the large cost of building international submarine cables to India and the amount of bandwidth demand in the country. But I think this will change because, as bandwidth demand rises, it would be possible to serve that demand at a lower unit cost.Also, more submarine cables will be brought to India. This will essentially bring down bandwidth costs.
What are the tariff trends likely to be in the long distance segment?
Long distance tariff trends are influenced by the cost of international bandwidth. It costs a huge amount of money to build sub-sea cables. For instance, it would cost more than half a billion dollars to build a cable from the UK to India. So, the price of international bandwidth is driven by the cost of these cables. The cables have infinite capacity because the capacity of modern fibres is high; it is way above anything the Indian market would want at this point in time. This means that the unit cost of bandwidth is essentially driven by the bandwidth demand coming out of India. As the demand for bandwidth rises, the unit cost of bandwidth will fall. The rate at which bandwidth demand rises is simply driven by access networks. So, as mobile and access networks are built out and as traffic volumes grow, the unit price of international bandwidth will come down. This trend will play out in India just as it has in almost every other market that has gone through deregulation. It is good for the economy because it means that in 10 years' time, international bandwidth will be available in more abundant quantities at much lower costs.
What is CW's forte in the developed market and what portion of the global long distance market is accounted for by the company?
The UK is by far the biggest market for us. We account for approximately 13 per cent of that market. Besides, the US and European markets are also important for us. We have won a number of big deals with US-based technology companies for their regional or international connectivity needs in some of these growth markets.
What are the key issues that remain in the Indian telecom market?
The quality of local infrastructure is one issue. The local infrastructure, particularly fixed line infrastructure, has always been a constraint in the Indian market. While wireless services will be good for increasing teledensity and providing cellular communication services, we tend to serve large companies that need more bandwidth than wireless services can provide. So, I still think there is a need to increase the fixed line infrastructure in India-both fibre and copper-at least in the major networks in areas where India is aiming to grow its BPO and IT capabilities.
In addition, the number and diversity of international cables is not as good as it needs to be. For instance, although we can get to the UK from India eastbound across the Pacific and through Asia, most big companies do not like services to be routed that way as it increases latency and can affect the performance of their applications. This suggests that a lot of diversity is needed. I do think that over time more cables will be needed not just from the capacity point of view but also from a diversity point of view. So, reliability, diversity, latency and capacity will drive the construction of new cable infrastructure in India.
Where would you place the Indian telecom market vis-a-vis other emerging markets like China?
While India is one of the highest growth markets, it is smaller in scale than China. The latter has historically been further ahead than India and, of course, has access to Hong Kong, which has always had a very advanced telecom market and is seen as a gateway to China. So, not only telecom infrastructure but fixed infrastructure of other kinds such as power infrastructure and roads are more developed in China. I think more investment is needed in India. For example, in basic road transport infrastructure, we see great advances being made in Delhi but some of the other Indian cities could do with more roads and bridges. And that again, will be an enabler of economic development.
