Fibre deployment in India has surged in recent years, triggering a dramatic increase in demand. The deployment of optic fibre cable (OFC) has made inroads into subscriber access with fibreto-the-home networks, as well as cable TV and other applications.
These developments have occurred owing to the broadband initiatives undertaken by both public and private operators. Apart from the big players such as Bharat Sanchar Nigam Limited (BSNL), Bharti Airtel, Reliance Communications Limited, and Tata Teleservices Limited (TTSL), India can boast another three networks deployed by national utility players RailTel, GailTel and Power Grid.
The internet and telecom boom witnessed at the beginning of the new millennium prompted the idea that the railways could spin off its OFC network into a separate commercial venture.
Consequently, in 2000, RailTel Corporation of India was established as a 100 per cent subsidiary of the Ministry of Railways for meeting the railways’ communication needs.
GailTel was set up primarily to drive GAIL’s own data and telecommunications business using its own backbone, laid through its gas pipelines across the country.
Similarly, Power Grid Corporation of India Limited (PGCIL) also diversified into the telecom business, synergic with power transmission, to mobilise its resources. Its OFC network is laid overhead, on its extra high voltage transmission lines.
Over time, the thrust to expand their telecom operations moved beyond fulfilling their own needs, with the three utilities venturing into the core telecom business. In 2006, the three utilities were granted national long distance (NLD) licences.
RailTel
RailTel has come a long way since 200102, when its revenues were a mere Rs 4.5 million. In 2006-07, it generated revenues of around Rs 1,160 million and booked a net profit of Rs 332.8 million.
The reversal in fortunes is significant, given that the government had last year identified RailTel as among the 89 underperforming public sector units. To maintain this revenue trend, the company has been diversifying its coverage and services.
It plans to increase its OFC network to 43,000 route km by the end of 2008, covering more than 3,500 railway stations. The company has over 31,000 route km of OFC, which connects over 2,896 towns. In 2006-07, around 1,919 route km was laid and 421 stations added on the OFC network.
The company is also planning to install Wi-Fi systems using local area networks (LANs) at about 500 railway stations. This facility ?? currently restricted to international airports ?? will be available at Bangalore station by November 2007. Once in operation, the system will provide internet and cyber café facilities not only at the stations but within at least a 1 km radius around the station where it is installed.
For the venture, RailTel has signed a memorandum of agreement with Airlink, a Bangalore-based company. For train operations and control, the Railways is in the process of shifting its passenger reservation system, freight operations information system, and unreserved ticketing system on the OFC and MPLS network of RailTel.
With these efforts, the company expects huge cost savings as all these applications will be transferred to a unified IP network which will be highly efficient and scalable.
RailTel recently opened its first railway station cyber café at Western Railway’s Mumbai Central station. Twelve more cyber cafés are being built, scheduled for completion by the next financial year. In the first phase, RailTel will provide cyber cafés at 82 stations.
Leveraging its technical expertise in networking, RailTel has started the process of connecting the Railway Board with zonal railways, production units, central training institutes and other railway units through video conferencing. The connectivity between these offices is on RailTel’s stateof-the-art MPLS-IP backbone.
RailTel is planning to launch NLD services and has already signed an interusage connect (IUC) agreement with major telecom operators like Bharti Airtel, Idea Cellular, TTSL, Tata Teleservices Maharashtra Limited (TTML), and Himachal Futuristic Communications Limited (HFCL), among others.
The NLD infrastructure, which is currently under implementation, will be based on state-of-the-art next-generation network (NGN) technology and will enable operators to offer cheaper NLD services to subscribers using RailTel’s NLD network.
RailTel is now planning to launch intercircle calling services for operators who do not have NLD licences or who have licences but do not have the infrastructure to support it.
RailTel has also signed an agreement with Sify Limited whereby Sify will lease and sell RailTel’s excess bandwidth capacity to telecom operators. The internet service provider will also use RailTel’s OFC network to provide integrated end-to-end solutions to consumers and corporates over a common internet backbone infrastructure. The agreement will enable RailTel to earn revenues through the better use of its telecom network infrastructure.
The company is also targeting multilocation corporate houses and industries, which can use their network and connect their establishments across the country.
Meanwhile, the company is also negotiating with the power ministry and GAIL to combine their optic fibre networks.This would enable them to merge and form a single NLD service operator to enter the commercial telecom space.
GailTel
On the strength of its pipeline network, GailTel has built up a strong OFC network for leasing bandwidth as a carrier’s carrier. GailTel, the telecom arm of GAIL, has a more than 13,000 route km network, offering bandwidth for telecom service providers across 175 locations in Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Uttar Pradesh, Andhra Pradesh, Tamil Nadu, Karnataka, Kerala, Haryana and Delhi. GailTel has four access partners in Maharashtra, Delhi and Gujarat, and currently serves 24 customers which include the leading telecommunication companies in India.
During 2005-06, the company posted a net loss of Rs 18.2 million. Its revenues increased 38.9 per cent from Rs 180 million in 2005-06 to Rs 253.6 million in 2006-07. Its EBITDA increased 67 per cent from Rs 60 million in 2005-06 to Rs 100 million in 2006-07.
GailTel’s high speed OFC network extends to well over 200 cities. The company’s future plans include creating a highly reliable OFC-based city access network in association with GAIL’s joint venture partners such as Indraprastha Gas, Bhagyanagar Gas, Mahanagar Gas, and Central UP Gas along the city gas pipeline network.
It is also looking to venturing into triple-play services (video-on-demand, VoIP, internet) through strategic tie-ups with value-added service providers.
Using its NLD licence, GailTel intends to market the intercircle traffic of cellular operators. It also intends to meet the connectivity requirements of corporate houses through leased lines and VPN solutions.
Power Grid
Building an optic fibre telecommunications network by wrapping the OFC around its overhead power lines, PGCIL, a state-owned power major, made its foray into the telecom business in 2003.
The company has already established about 19,500 route km of optic fibre connecting various cities. PGCIL’s power transmission network is of 50,000 route km.
Most of PGCIL’s optic fibre backbone network is laid on extra high voltage power transmission lines, and consequently offers a distinct advantage over underground optic fibre networks in terms of robustness and being rodentand termite-proof.
PGCIL’s telecom division earned revenues of Rs 770 million in 2006-07, contributing about 2 per cent to PGCIL’s total revenue for the year.
The company runs its business by selling and leasing end-to-end bandwidth to telecom service providers. As of December 2006, PGCIL had Rs 1 billion worth of contracts in hand for bandwidth selling and had spent over Rs 9 billion on setting up the fibre network.
While the company has connectivity in all the major cities, its main strength is its cable network in remote areas such as the Northeast, Jammu & Kashmir, and Himachal Pradesh.
PGCIL obtained an NLD licence in July 2006. The licence is intended to widen its business horizons because it allows the company to provide connectivity for e-governance and state-wide area network applications to the corporate sector, banks, financial institutions, educational and research institutions, defence services, and various union and state government departments.
The company is also contemplating extending its existing bandwidth to hospitals for telemedicine services and to the entertainment industry. In a significant development, it has tied up with large IT and telecom multinationals to provide customised value-added services to offer complete ICT solutions.
Apart from the NLD licence, the company has an internet service provider Category A licence. It leases bandwidth to 41 clients, including Vodafone-Essar, Aircel, Bharat Sanchar Nigam Limited, Idea Cellular, Infosys, National Informatics Centre and others. Given the high growth in telecom usage, PGCIL is expected to find more customers in the near future.
PGCIL is now planning to spin off its telecom business into a separate entity.The company is betting big on its telecom business and expects to break even in 2008-09 by attaining a topline of Rs 1.2 billion.
The company is also looking to foray into the mobile towers business to utilise its optic fibre network, which is in huge demand from telecom operators. The company’s board is, however, yet to give its approval to the proposal.
The Rs 10 billion dream
A reduction in licence fees and revenuesharing agreements from 15 per cent to 6 per cent has enabled the three players to come together to address the growing demand for broadband.
In a move to synergise their telecom operations, GailTel, RailTel and PGCIL have formed a consortium called Triveni to counter rivals together. As part of this strategic alliance, the companies will share one another’s network and therefore serve a wider market. This will involve pooling their resources for better management and customer satisfaction.
With a presence across the length and breadth of the country, the consortium aims to target the enterprise segment by providing VPN, broadband and managed services.
It has set a revenue target of Rs 10 billion, to be achieved by 2008. The integrated network of the three utilities covers more than 60,000 route km and is expected to grow to 75,000 route km by 2008 when ongoing work is completed. This gigantic network will have more than 2,300 points of presence by 2008.
With such a formidable network backbone, the three utilities seem well placed to achieve their Rs 10 billion ambition.
