Nortel India is gaining a firm foothold in the enterprise and managed services segment. The company now intends to focus strongly on Wi-Max. In an interview with tele.net, Ravi Chauhan, who recently took over as managing director, comments on the key technology trends in the sector, the growth opportunities in the Indian telecom industry and Nortel’s focus areas in the future. Excerpts…
What are the current worldwide technology trends in the telecom sector?
At the enterprise level, there is a convergence of voice and data. Unified communication system is an emerging technology that is becoming popular in the enterprise segment. We see new solutions every day. For example, in video conferencing, people can perpetually be on the conference bridge ?? anywhere in the office and even from home. In fact, Nortel is collaborating with Microsoft to create a multimedia communication system that can be loaded on desktops and laptops.
The other major trend that we see is that of managed services where you own, manage and run the entire customer contact technology of clients. This is a rapidly growing sector. Companies are expanding and moving into new facilities every six months. So, outsourcing customer services freezes management time and also helps reduce capital outlay. On the carrier front, there are technologies like Wi-Max. The Indian government’s target of 20 million broadband users by 2010 is quite possible with Wi-Max. Earlier this year, Forbes identified Wi-Max as one of the top 10 technologies destined to change the way we live. Wi-Max delivers high speed broadband to large areas that lack infrastructure and can be leveraged to provide rural connectivity. Wi-Max is particularly suitable for India simply because there are no zoning regulations, thereby making it easy to provide broadband bandwidth in a costeffective manner. Mobile Wi-Max introduces a powerful combination of OFDM and MIMO technologies, which will drive a whole new ecosystem of devices. Nortel is conducting trials in India and if things go our way, we expect commercial deployment by mid-2007.
How do you perceive the Indian telecom industry in terms of growth opportunities, especially for equipment manufacturers?
India has witnessed an exponential growth in mobile telephony and several opportunities are being thrown open by the adoption of new technologies like broadband and voice over internet protocol (VoIP), both by retail consumers and enterprises. IPTV has just arrived and 3G technology, which will allow mobile video streaming and other advanced applications, are just some other future technologies that are likely to become a way of life in India. The sector grew at the rate of 35 per cent per annum in 2005 and is likely to grow further in the years to come. For instance, the wireless segment, which was adding over 4 million subscribers per month last year, has lately been adding 6 million subscribers a month. The domestic demand for telecom equipment is estimated to be worth about $10 billion per annum from 2010 onwards, while the telecom equipment market is likely to grow at over 10 per cent (source: report by In-Sat research firm). The Indian market would be the fastest growing market in the Asia-Pacific region. We also see huge opportunity in the small, medium businesses (SMB) market in India, which has an estimated addressable market of $200 million. Moreover, the managed services market is estimated to be $100-$120 million annually.
Which segments, according to you, will do well in the coming years?
The SMB segment in India will grow at a rapid rate. SMB customers in India will benefit from both voice and data-enabled solutions backed by Nortel’s carrier-grade industry standards. Nortel recently expanded its product portfolio and introduced a new product range including switches, routers and access points. The specially designed offerings will provide customers simple, scalable and easy-to-use products at a very affordable price. Moreover, using Wi-Max, within a single area, one can have multiple customers, ranging from high-end corporates to SMB offices to the individual. So, it is a cost-effective proposition for the service provider.
How do the Indian service providers view Wi-Max?
Wi-Max can offer phenomenal bandwidth, coverage, flexibility, etc., and effectively cater to the customer’s increasing interest in multimedia content. Wi-Max has an IP core, and the economics of the technology are beneficial to all.
Wi-Max is available in two forms ?? 1.16 D, which is for fixed line and for which the demand will be more in the Indian market, and 2.16 E for mobile services ?? this will take time to evolve in India because it depends on handset capability, etc. as well.
What is the future after 3G?
Presently, operators in the Indian wireless space are vying with each other to offer the lowest offerings in terms of tariffs and schemes. We do not believe that this price war can serve as an effective long-term differentiator. Value-added services (VAS) such as speed dialling, corporate dialling and ringtones are the emerging trend and will serve as the differentiating platform. Worldwide, Nortel leads the IVR platform market. Telecom service providers have begun looking for scope of business beyond voice. 3G is suitable for voice add-ons and going a step ahead, 4G is designed to carry data and enables video streaming and synergy of VoIP. Thus, 4G can ensure superior user experience. Also, 4G technology is cost effective due to low infrastructure costs in terms of setting up base stations etc. It is not about good or bad technology any more, it’s about good or bad economics. We also feel that technology should be appropriate and correspond to the customer’s requirements. Therefore, whether it is 3G, WCDMA or Wi-Max, it depends on the customers’ needs and we believe in providing products and solutions that the customer wants. We are technology agnostic since we offer both CDMA and GSM in our portfolio for service providers and enterprises.
How would you compare India with other South Asian countries in terms of technology adoption?
The speed of technology adoption in India has been increasing over the past couple of years. Today, organisations are offering simplified communication solutions and are vying with each other to fulfil consumer demands of additional features and value add-ons. Communications in India are stimulating new income possibilities for people through a wide range of businesses that either did not exist before or are now able to significantly expand their reach both within India and in global markets. It is essential for any economy targeting growth in IT and knowledge-based industries to establish and maintain worldclass telecom infrastructure.
What is Nortel’s thrust in India? How would you compare its performance with other global equipment manufacturers?
Nortel is focused on harnessing technology to make business simple for our service provider customers as well as the enterprises they serve. These services can increase productivity for geographically dispersed teams by providing ubiquitous access to telephony and multimedia applications regardless of the communications device or physical location. Our focus areas and leadership platforms in India are:
GSM: Nortel has set up 10,000 base stations for BSNL in India ?? the single largest supplier for BSNL so far.
GSM-R: We have been leading the market globally in this technology. Countries like the UK, Spain, France, Germany and China use Nortel’s GSM-R technology in their railway systems. Eastern Railways will be the first GSM-R to be operational in the country.
CDMA: While we are not the leaders in CDMA in India, we have the largest number of service providers on EV-DO globally. Out of a total of 33 service providers on EV-DO, 20 are on Nortel’s EV-DO Rev. A.
Wi-Max: Wi-Max is the most promising emerging technology in the broadband wireless access industry. Not only does it provide very good performance and spectral efficiency, but also ?? and this is quite unique ?? the capability to deploy a network that serves both mobile and fixed users. Nortel’s Wi-Max products will be designed to allow wireless and wireline carriers, cable providers, media companies and other ISPs to deliver broadband connectivity to consumers and enterprise users by leveraging existing networks and last mile wireless links.
They will also complement and extend the reach of existing 3G cellular networks and accommodate greenfield service providers with newly acquired spectrum. The real growth in Wi-Max will start in 2008 and 2009.
Enterprise: Nortel is also aggressively addressing the unified communication needs of enterprise customers. This is an exciting market and it is witnessing rapid growth in India. Apart from this, we have recently announced the establishment of the Nortel Technology Excellence Centre (NTEC) in Bangalore, focused on new product design, development and testing to deliver greater cost benefits to customers worldwide.
BPO: Nortel has garnered leadership positions in India’s optical transport market and in the enterprise arena, especially in the premier enterprise space of call centre and business process outsourcing (BPO). It has also firmly established its footprint in the managed services arena with the five-year managed services deal signed recently with the Bharti Group.
Rural penetration: With more than 70 per cent of the Indian population living in the rural areas, rural connectivity is a necessity. Wireless services can be deployed with less infrastructure and lower costs. When wireless communications are brought to these remote areas, they often bring telephone service for the first time and that foundation can lead to improved standards of living through online access to education, medical care as well as commerce and global trade. Nortel is also addressing the communication requirements of the government and the defence sector in India.
Our performance: Nortel has always demonstrated strategic excellence in product innovation, marketing and sales strategies, which have resulted in the largest gain in market share over the past two-three years. Nortel Networks has consistently gained the most revenue market share in the world SSL VPN products market. Our technologies and their established channels have allowed Nortel to surge forward in terms of market share.
What are the main concerns that need to be tackled?
In any country, it is difficult to limit technological growth and its exploitation. In such a scenario regulation is important, but once a decision has been taken, implementation must follow speedily or we may miss the bus altogether.
