India has seen rapid digital transformation in the past couple of years. Technology has made inroads into almost all aspects of life with the emergence of digital entertainment and over-the-top (OTT) platforms, and the introduction of a plethora of applications to address the most basic needs of people. As per industry research, over 30 OTT players have emerged on the scene within a short span of time. The launch of the Smart Cities Mission has introduced new digital ways of conducting administrative tasks and delivering services to citizens. The Digital India initiative has provided a further thrust to digitalisation. All these developments have had two outcomes. First, they have facilitated the creation of a large digital infrastructure in the country. Second, a large amount of data is being generated from this infrastructure.
According to a market study, an average Indian subscriber of OTT platforms consumes around 10 GB data per month. This is by far the highest across the world. With the increasing mobile data traffic, the existing mobile spectrum may prove to be insufficient. Thus, there is a need to deploy more fibre. A look at the current status of fiberisation in India, deployment challenges and the way forward…
Current status of fiberisation
At present, only 30 per cent of mobile towers have fibre-enabled backhaul. This is significantly lower than global standards. In South Korea, 65-70 per cent of the sites have been fiberised while in the US, Japan and China, the level of fiberisation is 75-80 per cent. In terms of FTTH penetration, India has only 1.3 million FTTH households in comparison to over 350 million in China.
According to a recent report by ICRA, India’s per capita fibre coverage is around 0.09 km, way below its global counterparts. China’s per capita fibre coverage is 0.87 km while that of the US and Japan is more than 1.3 km.
Among operators, state-owned Bharat Sanchar Nigam Limited (BSNL) has the largest pan-India fibre base of nearly 800,000 route km. Reliance Jio has 325,000 route km of optic fibre cable (OFC) while Bharti Airtel has 250,000 route km and Vodafone Idea has 160,000 route km only. However, even collectively this is not enough to meet the ambitious targets of 100 per cent tower fiberisation under the National Digital Communications Policy, 2018.
In an effort to augment fibre connectivity in the country, telecom service providers are also turning to local cable operators for partnerships. Reliance Jio recently acquired a controlling stake in multi-system operators Hathway Cables and Den Network. The operator has also launched the JioGigaFiber service to provide fibre-to-the-home (FTTH) service to its consumers.
Challenges in the way
While the industry is making efforts to expand the fibre footprint, there have been several regulatory and operational challenges in the way. These include high taxes levied on the industry along with the potentially high pricing of spectrum. These high costs have proved to be a deterrent to investments in fibre network development.
Further, the high cost of land and delays in right-of-way (RoW) approvals can increase the overall fiberisation cost per km, potentially taking it up to as high as Rs 10 million per km in metros.
Fibre – a foundational stone for 5G
The launch of 5G will add to the enormous pool of data on existing networks. This is because 5G will usher in the age of a more connected world, enabling machine-to-machine communications and expanding the IoT ecosystem. To manage the quantum of data, quality infrastructure will have to be deployed across the length and breadth of the country. The expected surge in data traffic with the launch of 5G has increased the need for fiberisation manyfold.
According to the Tower and Infrastructure Providers Association, in order to make 5G a success story in India, it is essential to invest in network densification through provisioning of fibre, small cells and mobile towers. At present, fibre-based backhaul is still at a nascent stage in India. The OFC density is significantly inadequate both in urban and rural areas.
As per industry estimates, in order to have a robust 5G network across the country, there is a need to deploy 100 million fibre km OFC per year. Currently, the deployment rate is very slow at nearly 25 million fibre km a year. Moreover, just setting deployment targets is not enough. To make 5G a commercial success, it is imperative that fiberisation and densification of tower sites is done in a time-bound manner.
According to a report by Crisil, 5G will account for more than 70 per cent of fiberisation in India. Indian telecom companies may need investments of up to Rs 1 trillion for laying fibre networks over the next two to three years.
A smart city is essentially called smart because it comprises various such systems and software that run on algorithms and are able to function intelligently with minimal human intervention. This entire process of running a city using intelligent solutions and systems requires high speed data. This is where fibre comes in. Fibre provides the necessary backhaul support for the efficient functioning of city networks, and possibly the best means of handling and transmitting the large amount of data generated from these networks and systems. Reliability and speed are essential for the efficient functioning of smart cities and fibre can provide both. The kind of sensors that are installed for security and surveillance in a smart city are way too advanced and require high data transmitting speeds.
The way forward
In light of the role of fibre in the overall development of digital infrastructure, the government has recognised it as a strategic element for a high-speed data network. Going forward, the government aims to increase the fibre footprint from the current level of 1.5 million km to 7.5 million km by 2022, recording a fivefold jump. In addition, the NDCP 2018 aims to fiberise at least 60 per cent of telecom towers by 2022, thus accelerating the migration to 5G. However, setting goals is only the first step towards achieving a robust digital infrastructure. In addition to this, the government needs to take measures such as relaxation of stringent norms, reduction in the number of approvals required, and reduction of taxes and other such levies. It is also essential that the government comes up with a suitable package of incentives for operators so that they do not see fiberisation as a challenge, but as an opportunity.
As Indian enterprises adopt new technologies such as IoT, AI, machine learning, big data and blockchain, the consumption of data is only going to increase. In order to produce more data, a strong infrastructure, will be required, which can be built using fibre. According to ICRA, fibre density in India needs to increase at least fourfold. If this is achieved, the fibre business would evolve as a separate industry in some time, similar to the growth of the telecom tower segment in the past two decades. This provides an opportunity for various industry stakeholders to commence fibre roll-outs.