The Northeast remains one of the most difficult markets for Indian telecom operators, largely on account of the issues they face in establishing infrastructure in the region. However, as it remains largely untapped and less competitive when compared to metros and Category A circles, it is a market brimming with potential. According to data from the Telecom Regulatory Authority of India (TRAI) the Northeast and Assam circles combined had 16.13 million subscribers in rural areas as against 12.27 subscribers in urban areas as of June 2015. Meanwhile, the Assam circle’s total teledensity was 55.05 per cent, while the Northeast circle’s was 77.16 per cent during the same period. This indicates the slow growth of telecommunications in the Northeast as compared to the rest of India. While the provision of 2G services in this region has largely been driven by government support, operators are now keen on venturing into the 3G/4G space on account of the encouraging uptake of data services. Meanwhile, the government has directed its 2G efforts towards uncovered and inaccessible areas, and has also initiated projects for meeting the broadband demand.
tele.net takes a look at the initiatives of the government as well as telecom operators in boosting communications services in the region, along with the challenges they are likely to face…
In September 2014, the cabinet cleared the proposal for implementing a comprehensive telecom development plan for the Northeast. The proposal entailed an estimated expenditure of Rs 53.36 billion, to be provided by the Universal Service Obligation [USO] Fund. This project aims to provide 2G mobile connectivity to uncovered villages and on national highways. It includes the establishment of about 6,673 towers, covering 8,621 out of 9,190 unconnected villages. It also includes the setting up of 321 telecom towers on national highways. The physical progress in this regard, however, has not yet been documented. Meanwhile, under the government’s flagship broadband project, BharatNet, only 15 gram panchayats in Tripura had received connectivity as of June 2015.
The latest government project in the Northeast involves establishing structural links for bandwidth transmission from Bangladesh to meet the region’s broadband requirements. This project has been developed to create an alternative optical fibre cable (OFC) link in light of the cable damages in Agartala and Guwahati due to natural calamities. It is aimed at establishing OFC connectivity between Agartala and Cox’s Bazaar in Bangladesh. This link is being laid by Bangladesh Submarine Cable Company Limited (BSCCL), an arm of Bangladesh Telecommunications Company Limited (BTCL), from Akhaura Integrated Check Post (near Agartala) to Brahmanberia (a BTCL point of presence in Bangladesh near Agartala). Meanwhile, state-run Bharat Sanchar Nigam Limited (BSNL) will rent internet bandwidth from BSCCL, allowing the latter to earn revenues of up to Rs 82.7 million per year. The project’s estimated capex is Rs 191.4 million.
According to BSCCL, the two companies set up structural links for bandwidth transmission on November 16, 2015, connecting BTCL’s OFC at the Zero Point of the border. However, the trial transmission was delayed as the Indian counterpart could not complete the necessary technical preparations to receive bandwidth. BSCCL has initiated trials for transmitting bandwidth to India through the Akhaura-Agartala frontier. Commercial transmission will begin during December 2015. According to officials, the deal can be extended for two more years while the bandwidth price can be reviewed after a year.
The government has also proposed the establishment of OFC connectivity between Agartala and Kolkata, via Dhaka. The estimated capex for this project is about Rs 128.7 million, while the estimated opex per annum is about Rs 60 million. Even for this project, BSNL will hire bandwidth from BTCL. Meanwhile, Assam as well as Meghalaya have also shown interest in importing bandwidth from Bangladesh.
With the steadily improving telecom reach, key operators are entering the next-generation network (NGN) space in the Northeast. Airtel kick-started 4G services in the area in a June 2015, concentrating on testing services before actually provisioning them. It started offering the services two or three months after conducting trials. Just like its other 4G launches, Airtel offered customers in the region complimentary upgrades to 4G at 3G prices, and partnered with Samsung for 4G devices. Its 4G services have been launched in Shillong, Meghalaya; Tawang, Arunachal Pradesh; and Kohima and Dimapur, Nagaland. They have been made available across a range of smart devices, including mobile phones, dongles, 4G hotspots and Wi-Fi dongles.
Meanwhile, BSNL set up its NGN network as a means of improving its landline business in the Northeast. Its IP-based NGN provides additional high speed broadband facilities to its landline customers. Its usage is set to increase as consumers now prefer using mobile internet. The NGN has also improved BSNL’s reach, coverage and provisioning of broadband services in the region.
Recently, even Vodafone launched 3G services in the Assam and Northeast circles after it came to light that its data traffic in the region had been growing at a pace of 80 per cent year on year. In the two circles, data revenue accounts for around 16 per cent of the company’s total revenue. Vodafone claims to have invested around Rs 5 billion in upgrading and augmenting its network for rolling out 3G. It was finally able to launch these services in the region as it had acquired 3G spectrum in the March 2015 auction. The company further stated that it had set up over 115 new 2G sites and 248 3G sites in the two circles, while augmenting the capacity of more than 150 sites in 2015.
Even a smaller operator like Aircel has introduced 4G Wi-Fi for its enterprise customers in Guwahati. It is currently working on expanding its 3G services in the Assam circle. While the provision of 3G and 4G is a welcome move, the region currently relies heavily on 2G. This is the reason operators like Airtel and Vodafone are looking to tap Reliance Communications’ 2G users as the latter’s licences in the 900 MHz spectrum band are ending in December 2015.
While the provision of 2G services in the Northeast has largely been driven by government support, operators are now keen to venture into the 3G/4G space given the encouraging uptake of data services.
While operators have increased their efforts to tap the Northeast’s potential, several barriers to the establishment of infrastructure have delayed service launches. Setting up base transceiver stations as well as OFC in the Northeast’s hilly terrain is a mammoth task, while road connectivity and access to power in some areas is almost non-existent. This severely impedes the maintenance of telecom infrastructure. Landslides and road-widening work often lead to fibre cuts, thereby causing services to be disrupted. Insurgency-related activity poses another problem. In some states, the movement of personnel is restricted during night hours, delaying the operations and maintenance work essential for telecom services.
According to industry experts, sharing infrastructure is a plausible solution for overcoming these issues. It allows capex and opex savings by reducing power consumption and maintenance costs. State support is also essential for reducing the regulatory hurdles involved in setting up infrastructure. Coordinated state government efforts to prevent damage to OFC networks during road expansion, resolve right-of-way issues and facilitate the creation of OFC infrastructure along existing transmission lines and electricity distribution poles will play a major role in improving connectivity in the region.
The recent arrangement between Bangladesh and BSNL will cater to the Northeast’s immediate data requirements. Along with this, 3G and 4G expansion, coupled with the availability of low-cost smartphones, will augur well for operators. However, the USO Fund and BharatNet’s efforts to improve rural connectivity will need to be ramped up to ensure that the government’s targets are met.