Nokia Networks’ recent merger with Siemens has generated substantial interest in the telecom community. Expected to change the competitive landscape of the industry, the merger takes the combined entity to the number two spot in the mobile networks and services segment, and to the number three position in fixed networks. Ashish Chowdhary, head of Nokia Siemens Networks’ (NSN) India subregion, shares his views on the new dynamics of the company, its expansion plans and long-term goals. Excerpts…
What growth opportunities does the Indian telecom industry offer for telecom equipment manufacturers?
We believe that the Indian telecom sector’s growth story has just begun. The number of mobile and broadband subscribers is still extremely low, even compared to other emerging markets. The overall teledensity is still under 20 per cent, and in the rural areas, under 2 per cent. The broadband subscriber base is a mere 2.21 million. Overall, improving access to telecom infrastructure, particularly in the rural areas, throws up a huge opportunity for equipment manufacturers.
India has now achieved critical subscriber mass to drive the next wave of telecom growth, which will see the power of mobile and broadband communications delivered to rural consumers. Market segmentation strategies to deliver greater value are also in place. There is the adoption of latest technologies to deliver converged services by operators along with a demand for a host of new, rich communication and entertainment-based services from consumers. India will also emerge as a global manufacturing and services hub. The critical mass was important to build economies of scale in network equipment and device prices; establish strong competitive service providers; and create a robust local telecom ecosystem to address local and global demands.
What is your current level of business in India? How important is the country in NSN’s global growth plans?
India has been a strategic market for Nokia Networks and Siemens Communications in the past; it will continue to be so for the newly formed entity, NSN, as well.
The country offers tremendous opportunity not only as a market but also as a resource hub. The market has openings, both in the mobile as well as fixed IP broadband segments, with significantly low penetration levels. It also has an abundant pool of highly skilled technical manpower, and an outstanding outsourcing ecosystem and innovation pedigree.
What is NSN’s market position in the fixed and mobile segments and its future growth strategy?
Globally, NSN works with most of the top 100 operators as its customers, with a passion to help them address the challenges of a changing industry. Our current market position globally is that of a strong player: second in mobile networks and services, and third in fixed networks. The company starts as one of the top three telecom infrastructure providers (2006 calendar year pro forma revenues of about 17.1 billion euro), with a clear potential to be number one. Our global presence spans both the developed and new growth markets.
In India, NSN has inherited a strong market footprint from its earlier subsidiaries ?? its consolidated market share in India is 29.9 per cent, which takes us to the position of number one supplier for wireless infrastructure in India. The company is the leader in the managed services space in India, offering these services in 20 telecom circles, including 12 circles for Hutchison Essar and eight for Bharti Airtel. In addition, it will be offering services to seven greenfield circles of Hutch when the network is launched.
The Indian market is ideally suited for NSN as most major operators are integrated, offering fixed, mobile and broadband services. Over the next few years, the focus in India will be to grow our market share as we consolidate our existing footprint among local operators and build strategic partnerships with new ones. The key differentiator will be our end-to-end technology solutions and strong execution capabilities. With our world-class product portfolio and global capabilities, we also look forward to supporting the rollout of new technologies, for instance Wi-Max and 3G, in India.
Will the merger facilitate your ability to serve customers?
With the creation of NSN, we have an opportunity to build the right company to meet the needs of our customers today and well into the future. The combined mobile communications expertise of Nokia and Siemens, plus Siemens’ fixed-network expertise, are one of a kind in the industry, giving customers a distinct portfolio selection advantage for convergence and nextgeneration technologies. The partnership gives us unique insights into end-users and thus an ability to provide full end-to-end solutions. We have one of the world’s best R&D teams, advancing the development of best-in-class products for next-generation fixed and mobile network solutions.
Why should a large enterprise customer use your services vis-a -vis others?
NSN is ready to serve customers with a best-in-class portfolio, comprehensively covering both mobile and fixed markets. It will be underpinned by a strong presence in the growing services market, a very powerful global R&D team, and a huge global installed base. The proposed portfolio plan covers six future business units for NSN: radio access, service core and applications, operation support systems, broadband access, IP/transport and services. The company’s product portfolio is a result of the combined input of experts from Nokia and Siemens, and also incorporates prior customer feedback. Key considerations for the plan include an unwavering focus on the customer and the company’s large installed bases, plus a strong drive to harmonise platforms to ensure cost efficiency in increasingly tough markets.
Do you think India has missed the 3G bus?
India has not missed the 3G bus. 3G as a technology has evolved but local operators’ investments will be consumer need based. So the decision to have a GPRS/EDGE, 3G or HSPA network will depend on consumer segmentation and the operators’ services strategy.
It is important to remember that 3G is the foundation for building future high capacity IP-based networks for providing mobile and broadband services. It is the first and necessary step in the evolution journey to technologies such as high speed packet access (HSPA) and long-term evolution (LTE) .
What are your views on the future technologies best suited for India, particularly with respect to 3G or Wi-Max?
India is ideally suited to adopt the latest technology since it does not have massive legacy network investments. Keeping in mind the country’s geographic diversity, wireless is the ideal technology platform to deliver quick and cost-effective voice and broadband services to consumers. Two technologies ideally suited for India are WCDMA/HSPA and Wi-Max. We believe that WCDMA/HSPA, which are 3GSM technologies, and Wi-Max are not competing, but complementing, technologies. No single technology is superior and it is only the environment, application and business case that are the key deciding factors for choosing the appropriate technology. For example, operators already committed to the Third Generation Partnership Project (3GPP) evolution by having deployed GSM/EDGE networks may find it most efficient to offer broadband access and higher voice capacity through WCDMA/HSPA/LTE. At the same time, they have the option to complement their existing network with WiMax. Moreover, this would be very advantageous for end-users as the majority of high-end terminals in the market already support WCDMA/ HSPA. On the other hand, new greenfield operators not committed to any evolution path may prefer nationwide Wi-Max-based networks to offer both voice and data services through the Wi-Max network. The future of WiMax lies in the fact that it can prove to be an essential building block in meeting the demand for wireless broadband.
Do you agree with the view that India should leapfrog to 4G?
Before going on to 4G, it is important to understand its components. At the heart of 4G are all-IP end-to-end mobile networks based on open systems. These emerge from several different sources. Wi-Max has emerged out of the IEEE 802.16 committee, universal mobile telecommunications service (UMTS), and SAE/LTE out of 3GPP. It is expected that all these together serve as the basis for 4G networks. The base technologies, that is, 3G and Wi-Max, need to be successfully deployed and integrated seamlessly before we expect to upgrade the network to 4G. Therefore, the view of leapfrogging to 4G lacks clear understanding of the concept of 4G.
What are some of the immediate concerns that need to be tackled?
We don’t foresee any concerns. The most important sign to watch for is the inclination of the government. The Indian government clearly recognises that access to telecommunications is essential for socioeconomic development. It has done well to liberalise the sector and foster growth. 3G spectrum policy and pricing seem to be the only major pending issue, which will soon be addressed adequately. Overall, the government has the right outlook and approach to the sector.
