With the overall subscriber base in the country crossing the 700 million mark, the telecom sector continues to witness unabated growth. This high growth coupled with increasing competition in the telecom space is set to give an impetus to all the segments in the telecom value chain, particularly those related to telecom infrastructure. One such industry that has capitalised on this robust growth is the telecom transmission sector.

According to industry estimates, the transmission equipment market in the country has witnessed consistent growth, at a compound annual growth rate of 42.02 per cent from March 2006 to March 2010. Driven primarily by the expansion of existing telecom operators and network rollout by new operators, the transmission segment, at Rs 49.5 billion, witnessed a robust growth rate of 65 per cent, which is likely to be maintained over the next three years. Even in 2008-09, the transmission equipment market had grown by 54 per cent – from Rs 19.5 billion to Rs 30 billion – despite the global economic downturn.

The growth of the telecom sector has necessitated work expansion on the part of service providers. Apart from this, the expected launch of new technologies, including 3G and Wi-Max, has spurred growth in the transmission space.

Growth drivers

For the better part of the last decade, the demand for transmission was driven by state incumbents and private operators looking to expedite their network rollouts in order to achieve a pan-Indian presence. However, over the past 12-18 months, the strong demand witnessed in this segment has been driven by the entry of new players like S Tel, Uninor and Sistema Shyam TeleServices Limited, and operators gearing up for the launch of next-generation technologies like 3G and Wi-Max. While new players have set up transmission networks and taken the infrastructure-sharing route in order to shorten the time-to-market and reduce costs, existing operators are upgrading their networks, which were traditionally using copper as the key transmission medium.

The much-awaited launch of 3G and broadband wireless access (BWA) services in India has further propelled the growth in the transmission sector. The past year saw operators investing heavily in their network infrastructure to gear up for a speedy and successful launch of next-generation services.

The growing demand for broadband services in India is also fuelling the need for new transmission infrastructure. Government and private operators have been taking steps to increase internet/broadband penetration in India, which currently stands at a minuscule 0.74 per cent. The government is, for instance, planning to form a special purpose vehicle to roll out 500,000 km of optic fibre network to connect all gram panchayats in the country. Moreover, pan-Indian initiatives like a National Knowledge Network (an initiative to promote e-learning) driven by the government, will also act as growth drivers for the transmission equipment segment.

Key trends

The tremendous growth experienced by the transmission equipment industry in the past few years is expected to continue over the next three to five years. This trend could be largely attributed to the ongoing expansion and enhancements of the existing infrastructure; new network deployments into remote, uncharted areas; and the expected growth in demand for broadband, IPTV and mobile TV applications.

The dominant players in the transmission equipment segment are ECI Telecom, Tejas Networks and Huawei. Other major vendors with a significant presence in this space are Alcatel-Lucent and Ericsson. Some of the smaller vendors with a presence in this segment are Fibcom, Teracom, Ciena, UTStarcom and HFCL, Nokia Siemens Networks, ZTE and NEC Global.

One of the trends  in this segment is the sharing of transmission infrastructure. Encouraged by the success of passive-infrastructure sharing and in an attempt to further expedite network rollout, the Department of Telecommunications allowed sharing of active infrastructure, which includes transmission systems. Bharat Sanchar Nigam Limited recently took a step in this direction and decided to auction the surplus capacity on its long distance optic fibre network to private operators. The surplus bandwidth that the company plans to auction in two lots of 2.5 GB and 10 GB will open extra revenue streams for the state-owned operator. Also, Vodafone Essar and Idea Cellular have successfully implemented active sharing in the transmission segment on a large scale in the Bihar circle, since both companies were rolling out networks at the same time. Datacom Solutions has signed a 10-year infrastructure-sharing deal with Tata Teleservices Limited, according to which the latter will provide transmission services to the former. Etisalat DB and Reliance Communications have also entered into a similar deal. The concept, although at a nascent stage, is gradually picking up and is considered extremely viable in rural areas where traffic is low.

The demand for high speed and bandwidth-hungry applications has made optic fibre-based transmission necessary. Today, almost all telecom players are investing heavily in laying optic fibre cable networks across the country to successfully launch next-generation services as the high bandwidth capabilities needed to support 3G services can be achieved only by fibre networks. Optical platforms drive greater network efficiency and decrease operating costs as data traffic grows exponentially and revenue per bit declines.

Service providers have started making the transition from T1 to Ethernet as their cell site backhaul technology. It is cheaper to use Ethernet as a transport medium as the cost per bit is comparatively much better. Ethernet standards enable the interworking of time division multiplexing (TDM) payloads over synchronous digital hierarchical (SDH) networks. The technology, which facilitates easier usability and is cost effective, can be deployed through a packet optical transport (POTP) – also known as pure carrier Ethernet platforms. POTP, which combines packet, TDM and wavelength division multiplexing (WDM) technologies, is ideal for smooth transition in an existing network. On the other hand, pure packet platforms are more suitable for greenfield deployments.

Another trend that has emerged lately is that of interfacing Ethernet networks with optic fibre backbones, which helps achieve greater efficiency of data transmission. This method of transmission is rapidly being deployed for creating metropolitan area and wide area network (WAN) architecture.

Microwave media is increasingly being preferred by telecom operators. While optic fibre is used in the backbone and for high capacity routes, microwave-based transmission is being used to connect mobile base transceiver stations (BTSs). These systems are also being used as back-up for optic fibre and as backhaul for BTSs. Microwave links eliminate the cost of digging up roads for the fibre and also avoid delays on account of obtaining clearances from municipal departments.

Although microwave media is preferred by operators for faster network deployment and is more cost efficient in the short term, satellite technologies, like very small aperture terminals, are a cost-effective way of providing connectivity in areas with difficult terrain like hilly regions, forests and rural areas.

In recent times, the transmission equipment market has witnessed a significant shift towards packet-based networks. The transition has come with the shift in focus from access networks for subscribers to the enhancement of networks for multi-service delivery. Multi-delivery transport, which earlier consisted of SDH networks and metro area networks, is now shifting towards the packet transport network.

Operators have also started moving away from the more traditional multiplexing protocols and are migrating to new ones such as reconfigurable optic add-drop multiplexers. Synchronous optical networking and SDH, for instance, are widely used standardised multiplexing protocols.

The intra-city transmission capacity 3G networks that are initially going to be launched in urban areas will deploy WDM technology for upgrades. Moreover, some of the services like packetised voice and video, which are expected to take off with 3G and BWA coming in, need specific service level agreement parameters in place as these can be affected by latency and jitter. Operators are bringing up this requirement with backhaul infrastructure providers.  Also, as operators are migrating to IP-based networks, an IP backbone and Wi-Max backhaul will be widely required in new networks, complementing optical and microwave transmission.

Future outlook

With the advent of next-generation technologies, the planning and deployment of transmission architecture has become more complex. Moreover, once consumers start using the high-end services offered under 3G, the complexity of networks and end-user bandwidth needs are going to increase further. Thus, the telecom transmission sector is expected to ride on the telecom industry’s success and is slated to grow further with telecom operators increasingly investing in setting up and renewing their transmission infrastructure