The wireless revolution in the Indian telecom sector pushed the traditional fixed line mode of communication to the background. Most operators focused on strengthening their microwave networks which had a better reach, and were more cost effective and easier to roll out vis-à-vis wireline networks. Consequently, the Indian telecom cable industry witnessed sluggish growth and limited demand for components such as copper cables.

However, the Indian cable industry has now reached an inflection point and is set to witness significant expansion in the future. This growth will be largely driven by the deployment of optic fibre cables (OFC), which is considered to be an improved mode of data transmission as compared to the traditional copper-based cable. The increasing demand for bandwidth-intensive applications has made it important for operators to upgrade their backhaul networks with fibre. With the emergence of triple-play services as a key revenue source, several operators have entered the fibre-to-the-home (FTTH) space and are ramping up their networks. The government’s focus on improving broadband connectivity and the project to connect 250,000 gram panchayats through optic fibre by 2015 will also provide a fillip to the OFC segment. Increasing data centre capacity will also contribute to the demand for multimode OFC and specialised fibre with lesser fibre count.

In addition, the feeder cable market has witnessed significant growth and will continue to expand as more operators launch commercial services in rural areas. Feeder cables are used as a high frequency transmission medium in telecom towers. These cables carry high frequency signals between antennas and base stations. In the coming years, the demand in this segment will grow on account of tower roll-outs in rural areas, network upgradation in urban areas to improve the quality of service (QoS) and focus on new areas such as in-building solutions.

Industry structure and size

The Indian telecom cable market was valued at Rs 15 billion in 2012-13. The domestic market was valued at Rs 11.6 billion and exports accounted for Rs 3.4 billion. While the domestic telecom cable manufacturing market is highly fragmented, key players such as Sterlite, the MP Birla Group (including Vindhya Telelinks Limited and Birla Ericsson Optical Limited), Finolex Cables, and Aksh Optifibre (including Aksh Technologies) constitute a major part of the total market share. During 2012-13, Sterlite Technologies continued to lead the market with its telecom division reporting a turnover of around Rs 9.28 billion.

OFC’s share in the industry’s total market value has been increasing on a yearly basis. During 2011-12, the OFC segment accounted for about 36 per cent market share, which grew to about 39 per cent in 2012-13. This growth has been a result of the replacement demand for copper cables or jelly filled telephone cable (JFTC). The share of JFTC in the total market decreased from Rs 1.1 billion to Rs 750 million between 2011-12 and 2012-13.

Procurement in the domestic market is primarily led by operators such as Vodafone India, Bharti Airtel, Tata Teleservices Limited, Reliance Communications (RCOM) and Idea Cellular, which are focusing on strengthening their backhaul networks. PSUs such as Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) have also been replacing their ageing copper networks with fibre. Further, the railways, companies like GAIL (India) Limited and Power Grid Corporation of India Limited, and multiple system operators are also key buyers in the cable market.

Meanwhile, the Indian market’s fibre manufacturing capacity is increasing. The domestic market accounted for about 76 per cent of the telecom cable market during 2012-13, as compared to its 70 per cent and 60 per cent contribution during 2011-12 and 2010-11 respectively. As per industry estimates, the market’s capacity is growing by over 30 million fibre km per year. Thus, the country is poised to meet the requirements for upcoming OFC projects domestically.

Indigenous sourcing of OFC has strengthened the domestic market, promoted research and development and ensured the availability of high quality innovative products that match the requirements of the Indian industry. Moreover, locally manufactured equipment involves fewer security-related risks and issues. So far, the government’s initiatives in the domestic cable manufacturing space have been limited with no concrete policies or frameworks in this regard. However, the Department of Telecommunications is planning to amend the licence conditions of telecom operators to make it mandatory for them to buy security-sensitive telecom products from local manufacturers in the future.

OFC gains prominence

Of late, there has been a significant increase in the demand for data services. According to a study undertaken by Nokia Siemens Networks, mobile data traffic nearly doubled in 2012. Non-voice services (data and SMS) currently contribute 15-20 per cent to telecom operators’ total revenues, almost double as compared to 10 per cent in 2009. The share of data revenues in total non-voice revenues has increased from 35 per cent to 55 per cent during this period.

However, the spectrum available with operators for providing data services is limited and will not be adequate to meet future service demand. Operators were allocated only 5 MHz of 3G spectrum each, a part of which is also being utilised to support voice services in order to avoid call drops in metro and category A circles. In this scenario, OFC, with its virtually infinite bandwidth capacity, will prove to be a major game changer in the industry.

OFC has several advantages over rival technologies. It offers improved bandwidth, QoS and network security, and lower transmission losses as compared to the wireless medium. OFC also offers higher long distance coverage, and is lighter and smaller than copper cables. Further, copper pricing has witnessed significant fluctuations in recent years. The depreciating Indian rupee and price fluctuations on the London Metal Exchange are other challenges in stabilising copper prices. While the overall costs associated with copper are lower than those of fibre, OFC, which supports long distance and high speed data traffic, will witness huge demand in the coming years.

Currently, fibre networks are increasingly being deployed in the backhaul segment to cater to the increasing wireless subscriber base, which has grown by 8-10 times in the past five years. Fibre backhaul will be key to offering long term evolution (LTE) services in the future as the microwave backhaul slots available with operators cannot support the required bandwidth. This will require LTE service providers to deploy fibre at each base transceiver station before launching broadband wireless access services.

In the access network segment, FTTH services will drive the demand for OFC. Most developed and developing countries are opting for FTTH technology for providing broadband services. State-owned operators BSNL and MTNL have both taken initiatives to roll out nationwide FTTH, triple-play, and high speed broadband services; and to offer improved QoS. Increasing bandwidth usage coupled with FTTH installations has been driving IPTV growth in India since 2006, when MTNL introduced the service. The emergence of IPTV in India as a medium for TV viewing has provided consumers several choices. It offers non-linear TV viewing, video-on-demand or time shifted TV at users’ leisure.

Moreover, for a country like India, which has an average TV viewing time of 16 hours, combining entertainment content with communication over FTTH networks offers a strong business model. Besides bringing in synergies, it significantly reduces overall back-end costs.

Going forward, fibre to the x (FTTx) will evolve as an important concept. The convergence of various devices and media to provide a seamless experience has resulted in the “any stream to any screen” phenomenon. Users are increasingly looking for on-the-go high speed broadband, high definition video, unlimited anywhere telephony and real-time surveillance, which is driving FTTx deployments in India.

Operator status and strategies

Currently, the country has about 1 million route km of optic fibre for telecom services and transmitting information. BSNL, with an installed capacity of over 65,000 route km of OFC, has the largest fibre network. Amongst private operators, Bharti Airtel has a large fibre network including 171,610 route km of national OFC and a global network of 225,000 route km, covering 50 countries and five continents. Idea Cellular has an OFC network of 74,000 km, while Vodafone India’s fibre network spans about 120,000 km.

The launch of 3G services has resulted in an exponential increase in data traffic, thereby putting pressure on operators’ existing wireless networks. This pressure will increase with the commercialisation of 4G services in the country, and, therefore, several operators have made significant investments in strengthening their OFC infrastructure to complement their wireless networks and manage backhaul.  For instance, Bharti Airtel has reportedly spent around $500 million in building next-generation cable systems in the past five years. Also, Idea Cellular, in partnership with Huawei Technologies, has announced the commercial deployment of an optic fibre that will support data transmission at up to 8 Tbps.

With almost every operator reserving a large part of future capex for fibre deployment, the concept of sharing fibre infrastructure is gaining ground. Reliance Industries Limited-owned Reliance Jio Infocomm has signed an agreement with RCOM to share the latter’s 120,000 km of fibre infrastructure. The agreement has provided Reliance Jio access to ready infrastructure, thereby leading to time and cost savings (in developing new infrastructure). In turn, RCOM will gain access to Reliance Jio’s infrastructure which will be developed in the future.

Also, Bharti Airtel is planning to create a single entity, in partnership with other operators, to manage fibre network infrastructure. The entity will be formed on lines similar to Indus Towers and will help in addressing redundancy needs in OFC networks by apportioning capacity to telecom operators. Fibre sharing would be more prevalent in the backhaul space than in the last mile segment.

Innovation and technological advancements

Over the past few years, optic fibre-based communication has undergone several key advancements. These include the introduction of micro bend fibre and new drop cable for FTTH network deployment. Further, technological innovation has decreased signal degradation, thereby reducing the requirements for repeaters on the network. Fibre laying technology has also undergone significant development over the years. Introduction of the horizontal directional drilling method has facilitated fibre deployment in urban areas, where open trenching is a challenge due to factors such as the presence of multiple utilities, narrow roads, public inconvenience, and- traffic- and security-related issues.

Moreover, the radio frequency (RF) feeder cable segment has been constantly evolving in terms of design. Traditional RF cables are made of copper. However, variants such as aluminium cables, foam filled cables and hybrid cables are being introduced due to factors such as fluctuating copper prices and low efficiency of RF cables. Further, smooth wall aluminium cables offer lower signal losses and are cheaper than traditional RF cables.

 The way forward