Pages

Monday, June 28, 2010

Indian WiMAX Future Trend Analysis

India Broadband Wireless & WiMAX Market Analysis & Forecasts In 2008, Indian telecom continued to grow unmindful of any global economic meltdown or financial crisis. The mobile sector, in fact, broke all its previous records and added a robust 114 million cellular subscribers between January and December 2008. Leading into the New Year the streak continued, driven by new forces such as Reliance and Tata as the duo crossed over from CDMA to GSM, thus adding additional streams of new subscribers. Cellular subscriber additions are likely to push ARPUs further down in one of the lowest ARPU markets in the world, where up to 10 service providers compete for subscribers in some circles, thus raising concerns if the Indian mobile bandwagon may price itself out of sustainability at some point.

The broadband-hungry nation of India might just be waking up to realities. For starters, 2007 could well become the Preparatory Year of Wireless Broadband. Although the former Minister of Telecommunications in India proclaimed 2007 as the Year of Broadband for India, 2008 will instead become the Year of Wireless Broadband for India. Despite the unmet requirement to free bandwidth from various stakeholders, the key engines for broadband growth V the operators V are not willing to wait. Genuine Indian innovation is at work as vendors, operators, and system integrators are coming together like never before to work with whatever is available to trigger a bandwidth revolution.

In stark contrast, the Indian broadband sector continued to be filled with alternating moods of despair and hope as the government announced and postponed spectrum auctions with remarkable deftness. While the Year of Broadband campaigns remained on the agenda, service providers ended the year with more confusion than a clear BWA/WiMAX/3G strategy regarding where their businesses were headed. The top issue on every service providers' to-do list was: shore up more voice subscribers on 2G today - everything else can wait And so it did.
Some major facts
* The Indian BWA/WiMAX subscriber count added in the last year is well above 250,000.
* About 10,000 BWA/WiMAX base station sectors were deployed in 2008 alone.
* BWA/WiMAX ARPU for SMEs (small-to-mediumsized- enterprises) is in the range of Rs 2500 - Rs 5000 (US$50 to US$100)
* USB modem prices quoted to service providers in RFP responses were as low as US$35 - US$50 for even small volume shipments such as 150,000- 200,000.
* Effective charges applied by service providers to subscribers for stand alone CPEs ranged from free US$200, depending on tariff plans.
* Service provider approaches to BWA/WIMAX are mixed:
* BSNL, the incumbent with a clear lead time (likely one year) on pre-allocated pan-Indian 2.5GHz is likely to be the big driver of WiMAX.
* Operators such as Reliance and Tata have demonstrated what can be done by using slim 3.3GHz bands, and established the case for fixed WiMAX in India.
* Operators such as Bharti Airtel have taken demand-driven approach where they have extended coverage based on enterprise need/availability of fiber/DSL and feasibility of BWA/WiMAX.
* We estimate that WiMAX subscribers will reach 13.5 million by the end of 2013.
* By 2013, the non-WiMAX BWA subscriber count will be down to sub-million.

WiMAX has generated a lot of interest in India. Due to limited 3G spectrum and low broadband penetration, India is expected to be a key growth market for the technology. Many industry players believe that the allocation of broadband wireless access (BWA) spectrum to private sector operators, expected in 2Q10, will open up attractive opportunities for the technology in the country. However, our analysis suggests that WiMAX will only serve a niche market rather than dominating the field.


Leading Indian private operators, as well as incumbents, are working together in narrow 12 MHz channels of 3.3-3.4 GHz to deploy WiMAX services where possible. Notable among these are Reliance, the master operator who currently operates the nations largest CDMA network of over 29 million subscribers (as of July 2007) and has already started commercial WiMAX services in Bangalore, and Aircel, the Maxis Communication Bernhard (Malaysia) owned ISP that has been providing WiMAX-based backhaul services and leased bandwidth for corporations for over a year.

major trend is evident in that in September, two large carriers have brought out RFP/RFIs for Mobile WiMAX. BSNL will require upwards of 100,000 CPEs (with all options taken over two phases, this count can go up to 200,000) and 1000 base stations across the country. This is apart from a separate BWA/WiMAX requirement for commercial urban broadband that is in the works. VSNL, a Tata company, has also released an RFI for a large 802.16e -2005 based system for over 500,000 CPEs in a phased manner. (Note: An RFI does not mean a firm commitment to place purchase orders.)

Bharti Airtel is looking to spread BWA/WiMAX to 300 towns targeting 50,000 SME customers in 2007 using a combination of 3.3 -3.4 GHz and 5.8 GHz frequencies. BSNL, which launched the mother of all telco tenders for 60 million GSM line s in 2006, is in the early stages of drafting the RFP for what could become the largest ever BWA/WiMAX purchase requirement from a public -sector operator. The requirement is for 1000 base stations and 100,000 CPEs for a single project. Judging by some of the plans of Reliance, we believe that the companys extended plans include a massive requirement for 1 million CPEs over the next 12 months. Parts of the plan are already frozen, and vendor evaluations are undergoing completion. Of course, the realizatio n of the entire plan may be subject to political and technology issues such as rapid resolution of spectrum issues. However, we believe that in a worst case scenario, these projects will still move forward with at least 15% real deployment in the next 8 mo nths.

Market Forecasts

In 2006, the BWA equipment market opportunity in India was a mere US$25 million, up from US$6 million in 2005, and was dominated by small deployments for backhaul applications to enterprises with outdoor equipment.

However, Maravedis and Tonse believe that with the upcomi ng spectrum opening, the certification of new equipment, and lower -cost CPEs, the annual 3.3 and 3.5 GHz equipment opportunity will increase from US$4 million in 2005 to a peak of US$280 million in 2014. Maravedis and Tonse estimate that the Internet subs criber population will grow from the current 10 million to above 48 million by 2011. The Internet user population in India will have exceeded 200 million. This will be made possible by lower -cost PCs and notebooks, CPEs below US$40, and cheaper broadband service.

Maravedis projects an accumulated 21 million BWA subscribers by 2014, counting both residential and business segments. WiMAX subscribers should represent the majority of this figure. Approximately 66% of the WiMAX subscribers will be mobile 802.1 6-2005, predominately residential, while fixed WiMAX will continue to be driven by large corporations and, to a lesser extent, by SME.

One of the impediments identified in our India BWA/WiMAX Report 2006 was that the WiMAX CPE pricing may become a strong barrier in early penetration of WiMAX services. Leading -edge Indian vendors, such as Telsima, breaking the price barrier by over 50% as early as Q2 2007, has broadened the possibilities. Reliance, unsurprisingly, has brought WiMAX closer to reality by adopting a market-friendly tariff plan that allows a subscriber to sign up at a minimal cost of about Rs 700 per month ($17) in Bangalore, where the service has first been launched. Reliance has always been a mass-market leader, and it is not surprising that the company is leading the way in taking broadband to the masses at the best prices possible.

Recommendations
The Indian market for BWA/WiMAX will continue to be one of the most sought after markets for global equipment vendors. The nation promises to offer huge, consistently high growth for the next several years, judging by its extremely low broadband penetration rates (under 3 million for a population of 1.1 billion).

The government has initiated significant progress in resolving a chaotic spectrum scenario with too many interested parties (GSM lobby, CDMA interests, ISPs, incumbents, military, and other users) and a growing list of new applicants struggling to gain entry into the potentially luc rative telecom service business. However, much more needs to be done, and fast, if a semblance of a fair settlement is to be achieved. The 3G policy is already off by a year, and delays are spawning gaps in an extremely under-penetrated broadband market.

Several government agencies such as WPC, TRAI, and DoT are in disagreement on vital issues such as spectrum administration and management. WPC needs to move to a modern, automated, open operation and adopt a more consultative approach involving industry ex perts and ecosystem vendors to develop market -friendly policies. The entire spectrum-allocation and administration mechanism has to become holistic, more transparent, open, accessable, and market-friendly.

The governments approach to ISPs, cellular opera tors, and potential new license applicants needs to be fair. The ISP community appears to be reeling under a counterproductive license regime that requires special permits to provide most services.

There is an urgent need from the Indian equipment vendor market for policy makers (DoT and the Ministry) to introduce methods to encourage small technology start -ups to survive and grow in the domestic telecom markets. Eventually such initiatives could allow telecom companies from India to become global.

India can become one of the largest BWA/WiMAX markets. To take advantage of the opportunity, the authorities have to introduce a plan to bring small tech start -ups into the local market instead of them having to compete against large global vendors. This would foster a rich native-vendor ecosystem in this space. If done appropriately,this could enable technology exports from India to exceed even those of the software industry.

No comments:

Post a Comment

Related Posts with Thumbnails

WiMAX

Visitors from 01-03-2010

Free counters!
eXTReMe Tracker