The Indian telecom industry has witnessed rapid development over the past decade. With the growing adoption of voice services, operators made huge investments in their TDM infrastructure, which resulted in significant network expansion. This opened up immense business opportunities for the test and measurement (T&M) industry. Moreover, with the entry of several new players in the market, there was significant growth in infrastructure and demand for T&M products.

However, between 2011 and 2013, policy and regulatory uncertainties affected the investment scenario in the sector and as a result, slowed down the demand for T&M instruments. The situation subsequently improved as the uptake of data services increased, which compelled operators to not only expand their networks but also augment capacities. A growing number of operators are deploying new data technologies – 3G and long term evolution (LTE) – which is driving the demand for testing equipment. Further, with the rising demand for better quality of service (QoS), there is increasing pressure on operators to enhance the end-user experience. Therefore, testing equipment has become important not only to ensure high QoS but also to comply with government regulations.

Current trends

Currently, most operators are either ramping up their 3G networks or rolling out LTE networks. For instance, Bharti Airtel and Reliance Jio Infocomm Limited have been aggressively rolling out 4G networks across the country. Bharti Airtel, Vodafone India and Idea Cellular are also augmenting their 3G network coverage and capacity across the licensed circles. The network roll-out not only caters to next-generation technologies but also supports legacy 2G technology to prevent disruption in telecom services. This has resulted in operators demanding testing equipment that supports both legacy and next-generation technologies.

To this end, several vendors have started offering testing products that are flexible and scalable. They have also launched equipment that requires minimal software upgrades and can be further used for testing different technologies. In fact, many measurement applications are usually upgraded through software, which not only reduces the obsolescence of the equipment but also increases the return on investment for operators. The use of single testing equipment that caters to multiple technologies also minimises the need to train personnel, which significantly reduces operational expenditure. Also, testing equipment today comes with many unlockable features, which enhance the functionality of the product. These features in T&M equipment result in higher demand from telecom operators.

In addition, there is an increasing trend of vendors launching testing equipment with multiple functionalities. This enables operators to carry out several tests and prevents potential network breakdowns, thereby reducing opex. However, with more functions and features, the cost of equipment also rises, which deters operators from buying it. In fact, many Indian operators in the past have leased testing equipment for their networks rather than buying it, so as to reduce their capex.

Opportunities

Operators are increasingly implementing new technologies not only to remain competitive but also to gain consumer confidence. For instance, many operators are now deploying Wi-Fi data offloading, in-building solutions and small cells, among others, to support the growing data traffic on macro tower sites. These technologies create network complexities and bring in new challenges. They also provide tremendous growth opportunities for T&M vendors and necessitate making investments in research and development, and introduces innovative products that are both cost-effective and future-proof.

The deployment of voice over LTE (VoLTE) technology will also open up many opportunities for the T&M industry. With operators deploying a combination of voice and data networks, ensuring seamless handover as well as the quality of VoLTE services will be critical from an operator’s perspective, as QoS issues could act as a damper for future subscriber acquisitions. Meanwhile, T&M vendors will be required to develop VoLTE-specific products that can be used to test for quality, reliability and security.

In order to optimise network opex, operators are seriously considering deploying software defined networking (SDN) and network function virtualisation (NFV) in the near future. This would require T&M vendors to modify their existing equipment or launch new products to support the virtualisation of networks. Also, T&M vendors will need to ensure interoperability and standardisation for cloud-based applications.

Another interesting opportunity that has emerged for T&M vendors is to set up their manufacturing facilities and testing laboratories in India so as to meet the demands of Indian operators. In 2014, the government mandated telecom operators to get their network equipment tested in laboratories located in India due to the security risks associated with foreign testing facilities and equipment. Therefore, operators will be left with no option but to get their network equipment certified in India.

Key challenges

One of the biggest challenges faced by T&M vendors is to keep pace with the evolving technology in the telecom sector. Although the country is yet to witness the full-scale deployment of 3G networks, 4G networks are being rolled out aggressively and 5G technology is already being talked about. In such a scenario, there is increasing pressure on vendors to launch quality products in a short span of time. Another challenge faced by vendors is to offer products that entail a shorter testing time as operators are trying to gain a competitive edge over their peers in launching 4G.

An immature device ecosystem with respect to LTE networks for the 2300 MHz band is another bottleneck. Given that countries are currently using different spectrum bands for launching LTE, there is not much harmonisation with regard to the 4G ecosystem as compared to 2G and 3G technologies. In this scenario, mobile handset vendors are launching different devices for 4G technology in different countries, which has increased the complexity of developing one-size-fits-all testing products. Consequently, it has become difficult for T&M vendors to develop equipment that can test different spectrum bands and devices for the same technology.

Also, while there is a higher availability of testing equipment that is suitable for multiple technologies, its high cost can act as a deterrent for many operators. With most operators witnessing a fall in revenues on account of a rapid decline in voice sales and slow monetisation of data services, they are primarily focusing on optimising their operational costs. Therefore, these operators are likely to lay more emphasis on the costs rather than benefits while selecting multi-technology testing equipment. Nevertheless, in the future, rigorous innovations will help vendors reduce their prices and maintain the quality of products.

Future outlook

The Indian T&M market is poised for significant growth in the near future, given the large investments being made by operators on 4G network roll-out as well as by the government for optical fibre network deployment. Given this, the Indian T&M market is expected to grow at a compound annual growth rate of 13 per cent between 2015 and 2019. Service providers have already started setting up 4G networks and awarding huge testing contracts so as to ensure an optimum user experience from the beginning. This trend will gain momentum as more players begin to deploy 4G networks.

Moreover, with the government’s Make in India initiative, T&M vendors might be more inclined to set up manufacturing facilities in the country so as to benefit from low-cost labour and high demand for such equipment. In addition, vendors can look forward to the opportunity of making India a hub for data network T&M equipment because India and China, the world’s two biggest markets in terms of subscriber numbers, are witnessing exponential growth in data traffic, which is likely to surge going forward.