Key drivers for the next wave of fiberisation
India’s telecom industry has made significant progress in recent years, with the growth in parameters such as 4G data consumption and mobile data subscribers surpassing expectations. However, progress in optical fibre cable (OFC) roll-out, right of way (RoW) and fiberisation has been relatively sluggish.
5G and data consumption
India is witnessing a significant increase in 5G adoption, with its deployment spanning 28 states, eight union territories and 700 districts with 115,000 base transceiver stations (BTSs) and 200,000 sites. Mobile data consumption in India has surged almost 100x, increasing from 300 MB per user per month in 2015 to 20 GB per user per month in recent times and is expected to reach 50 GB by 2027. Mobile data subscribers have also grown from 100 million to 900 million during this period. Additionally, it is projected that 5G subscribers will reach 500 million, with a penetration rate of 40 per cent, by 2027. Given these trends, the growth of 5G and escalating data consumption will serve as crucial drivers for the next wave of fiberisation.
India has approximately 870,000 points of presence (PoPs) across the four telecom operators. During financial year 2022, Reliance Jio had the highest number of PoPs (284,000), followed by Bharti Airtel (238,000) and Vodafone Idea Limited (Vi) (185,000). The total number of PoPs is expected to reach approximately 1.04 million by financial year 2028, with Jio constituting the largest share (366,000) while 75 per cent of Jio’s PoPs are projected to be fiberised, up from the present 62 per cent, owing to significant investments in last-mile fiberisation. Meanwhile, Airtel and Vi’s PoP fiberisation currently stands at 33 per cent and 15 per cent, respectively, presenting an opportunity for both companies to double their efforts for PoP fiberisation.
Countries such as Thailand and Malaysia are ahead, with 90 per cent and 80 per cent of towers fiberised, respectively, as compared to India’s mere 35 per cent. Additionally, the fibre km (fkm) per capita in the country is significantly lower at 0.09, compared to Japan’s 1.35, the US’s 1.34 and China’s 1.3. Fiberised backhaul is essential to make 5G feasible.
The government has undertaken various initiatives to accelerate the growth of OFC networks. The recent amendment to the Indian Telegraph RoW Rules, 2016, provides a single window for all RoW clearances and specifies a nominal charge for utilising street furniture for OFC deployment. Other key measures taken by the government include launch of the Gati Shakti Sanchar portal, introduction of a common duct policy, release of fee guidelines and improvement in infrastructure security.
The government aims to increase tower fiberisation to 70 per cent by 2024-25 by laying 5 million km of fibre under the National Broadband Mission. To achieve this, fibre deployment will need to increase 2-3x from the current market rate of 16-18 million fkm per year.
Emerging business models
Industry leaders are exploring various business models, primarily the fibre-as-a-service model, wherein a wholesale fibre provider builds, maintains and operates the fibre optic network, offering the same infrastructure to multiple customers who require high speed internet connectivity or related services; and the bandwidth-as-a-service model, which is a service-based approach where the provider deploys and maintains the fibre optic infrastructure along with active node and manages the complete bandwidth delivery and network operations as a virtualised service. Other emerging models include open access networks, wherein a neutral provider owns and operates the infrastructure while multiple service providers lease the network capacity; data centre connectivity, which leverages OFC to efficiently transfer huge volumes of data, enabling collaboration and interconnection between various data centres; and smart city solutions, which deploy OFC as a backbone for high speed connectivity.
Key challenges and future outlook
RoW, complex regulatory hurdles and high upfront costs remain the key challenges in OFC network deployment in the country. To address these issues, several measures are being taken by the central government, such as a centralised process for obtaining RoW permissions and streamlining of regulatory frameworks. However, these need to be implemented on ground as well, along with streng thened security measures to protect the fibre infrastructure. To ensure affordability, it is essential to introduce new financing models and make overhead fibre more viable to optimise costs and the time to market.
Going forward, the OFC industry is poised for significant growth, driven by the increasing demand for data connectivity, development of smart cities and digital transformation projects, rise of localised data centres and expansion of edge computing infrastructure.
Based on a presentation by Kunal Bajaj, Chief Executive Officer and Co-Founder, CloudExtel, at tele.net’s conference on “OFC Networks in India”