Broadband is emerging as a critical component of the digital economy. India is undergoing a major digital shift as enterprises across various industry verticals gear up to adopt next-generation network (NGN) technologies and concepts such as internet of things (IoT), machine learning, machine-to-machine (M2M) communications, augmented reality, virtual reality and 5G. These technologies, with dramatic benefits in terms of speed and functionality, will enhance the scope of applications and services such as videoconferencing, e-governance, e-education, e-health, and smart grids.
As per Deloitte’s Global Analysis, India has crossed the inflection point for hyper-data usage, which happens when smartphone penetration crosses 25-30 per cent. India is the largest consumer of mobile data globally, using 3.4 GB per month. To put this in perspective, it is more than the combined consumption of the US and China. With the growing adoption of smartphones and connected devices, this consumption will only move north. To assume that wireless networks alone will be able to handle such huge data volumes is not right.
Large-scale deployment of fibre will be a prerequisite for catering to the surging data demand, given its high bandwidth-carrying capacity – it can carry virtually unlimited data over long distances and can withstand extreme weather and terrain conditions. Fibre, already a dominant technology in core and transport networks, is globally being deployed for undersea cables, national long distance communication, domestic transmission and enterprise connectivity.
That said, it cannot be denied that a huge gap exists in the country’s fibre infrastructure vis-à-vis that in other countries. While India has deployed only about 100 million km of fibre so far, the US has installed over 400 million km for a population that is less than one-third of India’s. Further, China has over 1 billion km of fibre network. While India deploys only 15 million km of fibre per year, China adds about 150 million km. Also, the quantum of fibre laid underground in India is less than 7 per cent that in the US and about 10 per cent that in China. Further, as against 80 per cent of towers connected with fibre in China, only 20 per cent are currently fibre connected in India. Consequently, the existing 250 million Indian 4G subscribers are largely underserved. In such a scenario, expanding fibre optic networks across the country is the most optimal solution.
Building digital infrastructure is at the heart of the National Digital Communications Policy (NDCP), 2018, recently approved by the union cabinet. The policy recognises the role of optic fibre networks in ushering in a digital era in the country. The policy talks about giving telecom optic fibre cable the status of a public utility. Further, a national fibre authority will be formed for coordination among central, state and local authorities to remove approval barriers and create open access NGNs. Besides, the government has built a fibre network spanning 274,246 km under the BharatNet project. The government is also recognising the importance of fibre-to-the-home. The Telecom Regulatory Authority of India has recently stated that it plans to issue a consultation paper on fast fiberisation.
Suitable right-of-way-(RoW) rules are a key enabler for expediting the deployment of optical fibre infrastructure, but delays in approvals and excessive RoW charges are adversely impacting business viability. Some other important challenges, such as shortage of skilled manpower to follow standard practices, provision for secure storage of excess cable, excess fibre bending and splice loss in dusty environments, are also impeding fibre deployment.
The way forward
Enhanced fibre connectivity could be a game changer for India in its attempt to be at the forefront of 5G roll-outs. For 5G, 100 per cent of the towers would need to be fiberised. Further, while 5G is likely to bring down the requirement for macro towers, the installation of micro towers and street furniture will rise sharply, resulting in significant optic fibre and wireless fibre connectivity requirements.
According to EY estimates, India’s digital economy is expected to grow to $1 trillion by 2022, leading to the creation of 10 million jobs. Further, during 2017-22, broadband connections are expected to grow by 25 per cent to reach approximately 90 per cent of the population.
Given that deep fibre penetration is vital for the roll-out of all next-generation digital technologies, India needs to accord greater importance to the deployment of fibre. This, in turn, will open up investment opportunities for institutional investors with a long-term investment vision. Investments in optic fibre networks can be structured as core infrastructure investments, similar to other asset classes based on long-term lease contracts with the network operator.