With high speed internet connectivity and seamless data flow becoming a necessity, demand for optic fibre networks is spiralling upwards. Optic fibre cable (OFC) demand in India is being led by a mix of segments, including telecom players, internet service providers and cable TV operators, along with utilities such as Indian Railways, oil and gas companies, and power transmission and distribution firms. Fibre growth in India is also being driven by the government’s Digital India push through initiatives such as BharatNet and the Smart Cities Mission. BharatNet Phase I, which was completed in December 2017, alone involved the laying of over 250,000 km of OFC. Phase II, which is scheduled to be completed by March 2019, will see another 400,000 km of OFC being installed. The Smart Cities Mission will also generate significant opportunities for the industry as OFC is fundamental to enabling services such as Wi-Fi, video surveillance and security, smart lighting, smart parking and smart traffic management. A look at the key segments driving demand for OFC in India…

Operators

Mobile networks are increasingly getting choked due to surges in data traffic. Ope­rators are hence being compelled to step up their investments in rolling out high capacity fibre networks to meet this burgeoning demand. They are expected to make significant investments in fiberising their backhaul networks to meet the high bandwidth requirements of 4G and 5G. Operators have stopped investing in 3G and are ramping up investments in 4G. The focus is on 4G site densification and on the fiberisation of these sites.

Meanwhile, the network transformation to 5G will also require deep fiberisation in the access network with high fibre counts. Each 5G fronthaul will require 1 fibre pair with a latency of 1 millisecond.

Operators are showing an interest in small cell deployment, which will result in demand for small cell fibre backhauling. The initial focus will be on urban and dense-urban areas of the top 10-15 cities. This will include high capacity locations such as business hubs, high-rise residential buildings, malls, airports and stations. Bh­ar­ti Airtel, Vodafone India and Idea Cell­u­lar have together deployed around 1,000 small cells so far.

FTTH deployments

Substantial OFC capacity will also be added to the last mile, as the uptake of video-on-demand grows. Urban households are demanding high speed internet content, particularly for web surfing and online streaming of services. This, in turn, is making fibre-to-the-x (FTTx) mainstream. Consequently, operators are roll­ing out extensive last-mile fibre networks to diversify their revenue streams. Bharti Airtel and Bharat Sanchar Nigam Limited (BSNL) are already offering attractive home broadband plans. The number of subscribers on Airtel’s fibre-to the-home (FTTH) service has increased at a compound annual growth rate of 12.6 per cent between 2015 and 2018. Voda­fone India has recently announced plans to provide converged fast broadband services in India. These would bundle wired FTTH broadband services with 3G/4G mobile services. Idea Cellular has also ventured into the wireline broadband space to provide ultra high speed broadband services, called Idea Broadband, to customers through FTTH. The services are currently available in select housing societies in Pune. Jio’s recent announcement of the launch of Jio GigaFibre will only make this space more competitive. Going forward, FTTH will work best with service and content bundling.

Government projects and state initiatives

The government’s BharatNet initiative is the world’s largest rural broadband connectivity project. It envisages a network of close to 700,000 km of OFC to provide broadband connectivity to the country’s 250,000 gram panchayats (GPs). Phase I of BharatNet has been completed, connecting 100,000 GPs as of December 2017. Phase II has been launched and is envisioned to be completed by March 2019.

Meanwhile, the Network for Spectrum (NFS) project is a pan-Indian OFC-based communication network being developed for the defence services. Under this project, an OFC network of around 60,000 km has been planned for connecting all the military stations of the army, air force and navy. The NFS has two key components, national long distance networks and access networks, with the planned OFC lengths under them being 45,000 km and 15,000 km respectively. As per the Depart­ment of Telecommunications (DoT), out of the total 57,545 km of OFC to be laid under the NFS project for the army, 50,221 km had been laid as of December 2017. Of the total 2,795 km of OFC to be laid for the navy, 961 km had been laid as of December 2017.

Utilities

Apart from telecom operators, agencies such as RailTel, Power Grid Corporation of India (Powergrid) and GailTel together have an OFC capacity of over 150,000 km. RailTel owns a pan-Indian OFC network through its exclusive right of way (RoW) along railway tracks (it has RoW along 63,000 km of railway tracks, which pass through 7,000 stations across the country). While the key objective of this network is to serve the communication needs of Indian Railways, RailTel has created significant excess bandwidth on this network, which is now being offered to telecom companies as well as enterprise users. Going forward, RailTel plans to cover the entire rail route across the country with its high speed OFC backbone network. The ongoing massive Wi-Fi project, RailWire, will also require a robust OFC backhaul.

Meanwhile, power utilities have also built an OFC-based communication network by wrapping the fibre cables around their overhead power lines. Powergrid has used optic ground wire (OPGW) technology to roll out its fibre network in a live-line environment and synchronous digital hierarchy-based transmission equipment for building backbone communication systems. Earth wires in the company’s transmission lines have been replaced by OPGW with 24-fibre cables. Powergrid plans to use OPGW in all upcoming trans­mission lines of 132 kV and above.

Gas utilities are laying OFC in the same trench buried with a gas pipeline. This fibre is being used to meet their own communication requirements, such as for real-time monitoring of pipes for leakage. In recent years, gas companies have also started leasing excess capacities and bandwidth to telecom tower companies, and service provi­ders for additional revenues. GAIL is considering signing an MoU with interested service providers for the sharing of fibre and ducts on a long-term basis through the existing right of use in new and upcoming pipelines. The company also plans to lease out its OFC network to telecom operators to help them provide internet services in various upcoming smart cities.

Cable TV and DTH providers

The government’s drive to digitise the cable TV industry has resulted in cable op­erators switching from coaxial cable to OFC in the last mile. It is expected that by 2020, around 12 per cent of the revenue for the OFC market will come from cable multiple service operators. For cable operators, fibre deployments come at a lower total cost of ownership and provide a better return on the initial investment than DOCSIS 3.1. Although migrating to DOCSIS 3.1 can be achieved at the same cost, it requires continued investments even at later stages. Moreover, fibre offers symmetrical upload and download speeds, which is not possible with coaxial cables.

On the downside, the government has not permitted infrastructure sharing in the cable TV sector despite recommendations by the Telecom Regulatory Authority of India in this regard. Moreover, subscribers are increasingly considering other options for consuming content. For instance, IPTV is finding new takers with lower data costs, increased smartphone penetration and content creation.

Overcoming challenges

While the growing data consumption levels make the OFC market look attractive, regulatory challenges pose a threat to the rapid deployment of fibre by operators and service providers. There is an urgent need for strict implementation of the RoW rules, as no major success cases have emerged even after a year of the notification of the rules. Operators are still struggling to make a rational business case for the exorbitant charges levied by various state agencies. Even state-run operators like BSNL have faced difficulties while dealing with the municipalities.

Moreover, there is a lack of strong administrative and legal provisions for compensation in case of cable cuts or damage by government agencies or private third parties. RoW policies do not provide clear guidelines on restoration costs that companies deploying fibre need to incur. In urban areas, local bodies use this as a revenue generating mechanism and thus levy high costs solely for the purpose of restoration of fibre.

Market outlook

As India embarks on the path to digital empowerment, OFC will serve as the foundation for this transformation. It will play a pivotal role in making the Digital India vision a reality, and will be instrumental in the success of programmes like the Smart Cities Mission and the Bharat­Net project.

Further, the ongoing competition amongst operators will create a need for network enhancements over the next three to five years. The incumbents will continue to step up their investments to improve network quality and customer service. The densification of 4G networks and the introduction of 5G will also bolster fibre demand, as 100 per cent site fiberisation will become critical to enabling next-generation wireless services. Going forward, with the advent of new data-centric technologies, fibre will continue to get closer to the actual point of consumption. FTTx will emerge as one of the key revenue-driving services for operators.

In a bid to focus attention on the de­mand drivers of OFC and take stock of emerging opportunities, tele.net recently organised a conference, “OFC Networks in India”. This section presents the key takeaways from the conference and highlights the growth trends in the OFC space, key government and private sector initiatives, the major issues and challenges, and the market potential.

Akanksha Mahajan Marwah