According to industry reports, India optical fibre cable’s (OFC) market stood at $881.5 million in 2019, and is projected to grow at a compound annual growth rate of 19.7 per cent to reach $2.1 billion by 2024. That said, India’s OFC industry has a long road ahead. At present, the fibre footprint in the country stands at around 3 million km, against the target of 5 million km by 2024 set by the National Broadband Mission (NBM). Further, the country’s average fibre to tower ratio stands at 32 per cent, against the target of 70 per cent by 2024, envisaged by the Department of Telecommunications.

Growth in OFC manufacturing

Of late, India’s OFC manufacturing has picked up pace owing to the increase in digital demand, driven by the adoption of 3G, 4G and fibre-to-the-home (FTTH) technologies. Other bandwidth-intensive applications used by businesses and enterprises have only provided an impetus to its growth. Besides, the launch of fibre-intensive programmes and missions by the government, such as BharatNet, the Smart Cities Mission and NBM, along with the expected entry of 5G, has increased the demand for OFC manufacturing.

Impact of digital revolution

The ongoing digital revolution in the country, driven by emerging technologies such as AR, VR, IoT, AI and 5G, has resulted in the generation of a huge amount of data. Data traffic is expected to grow from the current 12 GB per user per month to 23 GB per user per month by 2023. To manage this high data usage, there is a need for larger and multiple data centres, where data can be stored and processed. This, in turn, is adding to fibre demand as OFC can support higher data rates and error-free transmission of data over longer distances.

Covid-19 impact

Over the past one year, the Covid-19 crisis has led to a sudden, unprecedented surge in demand for high speed connectivity. Thus, a strong network infrastructure is needed to back up the high speed network, be it on wireless or wireline technology. This entails a large-scale fibre roll-out, interconnecting all cities and states across the country, from data centres to the customer location.

Emerging business models

New business models are emerging as communication service providers are transforming into digital service providers. Further, they are shifting from proprietary to open network systems and from wireless to FTTX systems. The range of solutions is not static as technological change continually generates new opportunities and undermines traditional business models.

Fibre business models can be broadly categorised by end user type:

  • Business-to-business: Dark fibre and enterprise fibre
  • Business-to-consumer: Fibre-to-the-node and FTTH

Undersea cables

Undersea cables are part of cross-border infrastructure business models. They connect the national networks of two or more countries.

National long distance

This is a national infrastructure business model, under which connectivity is established between states/cities. A national backbone is the collection of high capacity links and nodes, connecting dispersed regional and local networks throughout the country.

Rural areas

For rural areas, the service provider should select different models to provide internet through copper and wireless options. These include point-to-point broadband wireless access (P2P BWA), 3G and 4G.

Dense urban areas

In urban areas, interconnecting towers, point-of-presence or its connecting internet services for an enterprise, fibre-to-the-tower or FTTH are viable options.

5G

The OFC density in India, both in urban and rural areas, is inadequate, and a special focus for its densification in a time-bound manner is essential for 5G deployments.

Challenges and the way ahead

Capital investments and funding constraints

To build infrastructure in order to support the 5G ecosystem, there is an investment requirement of $60 billion-$70 billion. However, with aggressive competition and tariff wars, revenues are reducing, thus making investments in infrastructure a big challenge. To resolve this, the public-private partnership model is being adopted in India. Besides, innovative models such as the deferred payment hybrid annuity model can be applied for broadband as well.

Deployment challenges

Besides funding issues, operational challenges have impacted the growth of the OFC market. These challenges include right-of-way (RoW) issues, high RoW charges and lack of uniform policy implementation. Further, there is resistance from local public and authorities. To overcome this, administrative guidelines addressing RoW challenges are required to ensure multiples clearances at the ground level.

Going forward, the stakeholders in the OFC market should prioritise the fiberisation of towers as the next requirement for data is expected to come from the enterprise network as they will be deciding 5G use cases.

Based on a presentation by Murtuza Onali Kachwala, Managing Director, Protiviti India