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R&D Focus : Need to promote indigenous product development

October 29, 2012

The research and development (R&D) segment in India has had to grapple with inadequate funds and the lack of intellectual property rights (IPRs) creation. Over the past few years, however, there has been an increase in R&D activity by international and Indian companies. Industry experts share their views on the current status and key issues on the telecom R&D front…

Fredrik-JejdlingAshok-JhunjhunwalaSanjay-NayakSoumitra-Sana

What is the current status of R&D in the Indian telecom sector?

Fredrik Jejdling

There is an urgent need to promote telecom R&D, IPR creation and the indigenous development of products so that the telecom industry can achieve higher value addition while being self-reliant in various product categories. Over the past years, a few R&D and manufacturing companies have emerged in the country and demonstrated that world-class products can indeed be developed in India. At the same time, some key IPRs have been created in futuristic wireless technologies by R&D centres such as the Centre for Excellence in Wireless Technology and premier academic institutions such as the Indian Institutes of Technology (IITs), the Indian Institute of Science, and the Indian Institute of Information Technology, thereby demonstrating their capability in the telecom R&D space. Many global majors have established their R&D presence in the country due to the availability of quality talent and technological expertise.

Ericsson is committed to the growth of R&D and values Indian capabilities in this sector. We have 30,000 patents comprising one of the industry’s strongest portfolios. Ericsson India has three R&D centres located at Chennai, Gurgaon and Bengaluru. We are conducting R&D in areas like revenue management, IP and operations support systems.

The Bengaluru facility was set up in 2010 as part of the Ericsson India Global Center. The focus of the design centre is on accelerating Ericsson’s road map for the Multi-Service Edge Router product line.

Ashok Jhunjhunwala

While some amount of telecom-related product development was taking place in India at the Telecommunication Engineering Centre, the major thrust in R&D came with the establishment of the Centre for Development of Telematics (C-DOT) in 1995. Engineers at C-DOT undertook crucial research in fields like telecom switch development. The year 1991-92 saw some key work from IIT Madras in academic as well as research-oriented product development. It was at this time that time division multiplexing and time division multiple access systems were created in India, followed by the development of cordless systems and wireless local loop in 1994-95. The year 2000 saw the emergence of India-based companies like Tejas Networks.

So far, standards development has been limited in the country. However, with consistent and focused efforts in the next five years, India can reach a level where it would be considered one of the world’s serious R&D players. Currently, the Centre of Excellence in Wireless Technology is leading the development of next-generation standards for the telecom industry. The government has set up a new organisation, the Development Organization of Standards for Telecommunications in India (DOSTI), exclusively for developing standards for the telecom industry.

Sanjay Nayak

There has been limited R&D activity in the telecom sector so far, with very few companies engaging in end-to-end telecom product development in India. One of the factors responsible for the slow progress of R&D in the country has been the lack of financial incentives. At present, with no import duty on telecom products, Indian companies face a disability factor of up to 22 per cent against Chinese or US-based firms. As a result, there is limited motivation for companies to undertake R&D initiatives. Lack of focus on IPR creation within the country and the absence of economies of scale are other factors affecting R&D progress.

Despite these challenges, Tejas Networks has done well. It is one of the leading providers of telecom products in India and has been ranked among the global top 10 companies in the optical aggregation space.

Soumitra Sana

Nokia Siemens Networks’ Bengaluru Development Centre constitutes the pillar of the company’s global R&D set-up. It is Nokia Siemens Networks largest single technology centre in the world, and handles the complete product and project life cycle for several customers, both in India and abroad. It is also one of the four sites worldwide to host an end-to-end shared reference network, wherein there is substantial technology integration including customer-specific testing. The centre has been instrumental in developing several innovative products and solutions across key areas such as radio, core, operational and business support systems and customer experience management. It has conducted over 100 demonstrations and trials. Moreover, the company’s R&D centre in Hyderabad is working on long term evolution (LTE) and global services.

Given the rapid changes in technology, what are the challenges faced on the R&D front?

Fredrik Jejdling

R&D investments are usually aimed at long-term benefits keeping industry requirements in mind. With a rapidly changing ecosystem and business dynamics, the R&D environment has to evolve constantly. The production of scientific knowledge is shifting from individuals to groups, from single to multiple institutions, and from national to international arenas. In addition, researchers are networking across national and organisational borders for creating IPRs. Given the large Indian consumer base, the country should influence global standards to meet its requirements through a telecommunications standards development organisation (SDO).

 

Ashok Jhunjhunwala

Rapid changes in technology have both advantages as well as disadvantages with respect to R&D. The advantage is in terms of quick transformation of a communication theory into a product. At best, within three years, one can witness the product being launched in the market, which is not possible in fields other than telecom.

On the other hand, since technologies and products tend to get obsolete at a fast rate due to technological advances, researchers and developers have to innovate continuously. Therefore, a strong link between product and academia, and product development is essential in order to ensure consistent upgrades as well as new product launches.

Sanjay Nayak

One of the biggest challenges in R&D is choosing the right technology or standards to invest in.  The merits of a particular technology are based not only on its effectiveness as a solution to a particular problem for telecom networks, but also on the practicality of its implementation and the development of an ecosystem.

Also, today, the rate at which technologies get obsolete is significantly higher, which, in turn, is driving up R&D costs. This, however, can be an advantage for Indian R&D companies, which can afford to invest a lot of manpower in R&D and innovation to keep pace with the changes in technology, while maintaining low costs.

Soumitra Sana

Innovation starts with R&D and has the power to change the industry. The communications industry has shown incredible innovation in developing higher bit rates and greater efficiency in air interface as it moves from 3G to 4G and beyond.

The communications industry is unique in its ability to innovate on a global scale as it can launch an idea and gain customer feedback more rapidly than most other industries. Without innovation, the industry would stagnate and decline. A vendor’s role is not just to create innovation, but to harness it for the benefit of consumers as the future of both vendors and their clients depends on it. However, the wireless communications industry is highly standardised, which makes innovation a challenge.

What role can the government play in encouraging telecom R&D in India?

Fredrik Jejdling

Focused and progressive policy developments by the government will go a long way in encouraging and supporting the country’s R&D environment. The government needs to focus on increasing grants, loans, tax benefits, etc., to initiate R&D efforts. Moreover, global collaboration and focus on international standards are crucial for supporting R&D initiatives.

The National Telecom Policy (NTP), 2012’s objective of developing national standards as well as contributing to and participating in evolving a global standard must be accorded top priority. Companies can work cohesively with the industry and the government by setting up a SDO to create a long-term innovation ecosystem. Moreover, researchers from India will also get an opportunity to gain mass market acceptance for their inventions. Ericsson supports the government’s commitment to promote R&D initiatives in the country.

Ashok Jhunjhunwala

The government can encourage R&D in the telecom space by offering generous funding. Telecom or electronic imports in India are second only to oil. Thus, there is a need to encourage indigenous development of test equipment and solutions. Besides, under the NTP, 2012 the government has established a SDO. It is also planning an entrepreneurship development fund to encourage establishment of new firms in the R&D domain. Preferential access for Indian products is another step in the right direction, which will encourage operators to buy from local manufacturers.

Sanjay Nayak

Unlike the telecom products of the past, which were hardware dominant and static in nature, today’s products are intelligent and dynamic. They are software driven and are based on dynamic hardware technology like field-programmable gate array, which enables the same hardware to be reprogrammed through software in order to deliver varying functionalities.

So, the government should encourage the creation of complete products and IPR within the country. Policy guidelines, such as preferential market access for Indian products as envisaged in the NTP, 2012, are essential to stimulate indigenous products and R&D by creating a market pull, using our domestic telecom growth. Since 40-60 per cent of value addition for products at present is due to R&D and IPR creation, this would directly boost telecom R&D in India. Other incentives such as increasing R&D grants, low-interest loans, tax breaks or tax holidays would certainly help to jump start companies in India. The government should also help Indian products to gain global acceptance through bilateral agreements, trade shows, and providing line of credit and aid-in-grant for telecom exports. Guidelines like the use of Indian products for strategic and security-sensitive applications will not only drive up the volumes of these products but will also strengthen national security.

Soumitra Sana

Collaboration is a vital component in creating innovation, and Nokia Siemens Networks works closely with partners from across the communications ecosystem. Joint research programmes undertaken together with top universities from around the globe focus on long-term developments and provide good opportunities to understand trends in technologies and research that may be impactful in the future.

Which countries are popular for advanced R&D in telecom?

 

Fredrik Jejdling

Countries across the world encourage the adoption of global standards through national representative bodies. International collaboration has been driving innovation, contributing to the growth of markets and protecting the health and safety of workers and the general public for centuries. In the telecom sector, traditional markets like North America, Europe and Japan are the leaders. In the Asia-Pacific region, China and India are increasingly contributing to global standardisation efforts while meeting their country’s needs for new technology and telecom equipment.

At Ericsson, we focus on creating new technologies, contributing to standardisation work and developing IPRs. To keep pace with our technology leadership, we invested SEK 32.6 billion including restructuring charges in R&D in 2011 as compared to SEK 29.9 billion in 2010 excluding restructuring charges.

By investing in R&D, Ericsson maintains its position as the key contributor in the development of open telecom standards. Since these standards are developed in an industry-wide collaboration to ensure multi-vendor interoperability, patent holders waive their monopolies and commit to licensing their part of the technology to other stakeholders. The company complies with fair, reasonable and non-discriminatory licensing, which provides incentives to make investments in the R&D space. It also allows new entrants to commercialise the technology at a reasonable cost.

Ashok Jhunjhunwala

The telecom R&D domain is no longer dominated by European countries. Today, countries such as Korea and Japan are strongly placed when it comes to R&D initiatives. China-based companies such as Huawei and ZTE as well as US-based Qualcomm and Cisco are key players in the R&D space.

Sanjay Nayak

Traditionally, a lot of telecom product development used to take place in Europe, Japan and the US. Today, however, most of the growth in the sector is being driven by developing countries. These markets have cost points that are radically different from the West. At the same time, while the markets in the West are flat or exhibit slow growth, service providers still need to invest in new technologies in order to upgrade their networks. India has the advantage of a huge talent pool of trained professionals in the telecom and software space.

Due to these factors, both developing and developed countries are looking towards India and China with respect to design and development of next-generation telecom equipment with the latest technology while meeting telecom players’ challenging price targets. While China has opted for a manufacturing-led approach, India has the unique opportunity to take an R&D-led approach, leveraging its highly cost-efficient and abundant technical manpower for building its telecom product industry. This approach will enable India to become a global force in telecom products going forward.

 

Soumitra Sana

Nokia Siemens Networks has R&D centres in China, Finland, Greece, India, Israel Italy, Portugal, Poland and the US. The centres focus on R&D in wireless and wireline communications solutions and solutions based on copper as well as fibre-based next-generation optical access. In April 2011, the company acquired the majority of the wireless network assets of Motorola Solutions, adding to its technology prowess. Globally, NSN has spent Euro 2.2 billion on R&D and intends to spend around Euro 2 billion on the same in 2012.

 
 

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