Telecom Boom in India? Fiber to the home provides welcome boost

Optics and photonics are playing an important role in India’s economic development, thanks in large part to progress in the telecommunications industry. Here we explore the recent growth in the industry and look at some of the major players and the technology they offer.

Gary Boas, Contributing Editor, [email protected]

The telecom sector in India has seen tremendous growth in the past decade, particularly following a series of government efforts in the 1990s. These began in earnest with the announcement of the first National Telecom Policy in 1994 and continued with the establishment of the Telecom Regulatory Authority of India Act in 1997 and the introduction of the second National Telecom Policy in mid-1999. Additional efforts in the early part of the past decade paved the way for a boom in the past several years. This witnessed investments of $8.5 billion in the telecom sector, $5.5 million of which came in the form of Foreign Direct Investment, or FDI.

Much of the attention in this sector – indeed, much of the growth – has focused on the area of wireless telephony. With no subscriber base at all 10 years ago, India had roughly 359 million subscribers by 2009 and has been adding 10 million more every month. This makes it the second largest market in the world after China.

Companies believed this growth would continue unabated and committed to tremendous overcapacity, assuming that the market would take care of it. It didn’t, and the telecom sector is now suffering the consequences. Last November, India’s Business Standard cited a report by Credit Suisse, Race to the Bottom, that predicted a “severe margin contraction” and a drop in earnings per share of companies. The telecom boom of the late aught years is beginning to look a lot like a bubble.

Ready for growth

The telecom sector in India isn’t yet down for the count, however. Observers are keeping a close eye on fiber to the home (FTTH) and other, similar applications. The market for FTTH is growing rapidly. The FTTH Worldwide Market & Technology Forecast, 2006-2011, published by Heavy Reading, a market research organization in New York, reports that about 11 million homes were connected to fiber at the end of 2006, and that this should grow to roughly 86 million homes by the end of 2011 – approximately 5 percent of the households in the world. Demand for FTTH is especially strong in countries such as China, Russia and India.

FTTH and other FTTx applications are fast becoming the dominant drivers for the optical fiber industry, particularly in developed economies such as the US, where they account for more than 50 percent of the total demand. Thus, importantly, the rolling out of FTTH in India and other countries could provide a significant boost to the industry.

Providers have identified a variety of applications that will drive demand for FTTH in India, noting specifically the “quadruple play” of high-speed broadband Internet access, high-definition video, unlimited telephony and real-time surveillance. In the home, consumers will enjoy Internet protocol television (IPTV), interactive TV, high-definition TV, voice over Internet protocol, IP-enabled (smart) appliances and home security systems with remote monitoring. Never mind the improved speed and quality of Internet-based file sharing, music and movie downloads, multiplayer online gaming and more.

Businesses also will find advantage in fiber-based applications, they say; for example, in telepresence and next-generation videoconferencing. Interactive distance learning and telemedicine also would benefit from the implementation of FTTx networks.

Some analysts believe that IPTV will be the key driver of FTTH. Others contend that, because of the cost of the content, IPTV will not be especially profitable but rather will serve as a sort of “gateway service” to subscribers. At the 2010 Asia Pacific FTTH Council conference – held May 25-26, 2010, in Seoul, South Korea, executives suggested that a broad range of new services likely will drive the fiber-to-the-home market. For example, improvements in videoconferencing facilitated by FTTH networks will open up a host of Skype-like opportunities for communicating with friends and family.

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Operators deploying FTTH networks

In 2009, incumbent operator Bharat Sanchar Nigam Ltd. (BSNL) and Aksh Optifibre Ltd., both of New Delhi, launched the country’s first FTTH service, providing triple-play (voice-video-data) services with high-definition content to more than 35,000 customers in six districts of Rajasthan: Jaipur, Jodhpur, Udaipur, Ajmer, Kota and Alwar. The services include IPTV, high-definition TV, 3-D TV, video-on-demand, bandwidth-on-demand and videoconferencing. The service was built on Gigabit passive optical network (GPON) technology. The optical fiber will replace the “last mile” lines connecting exchanges to the home. Currently, these are almost entirely copper-based.

The operator has plans to deploy FTTH in 105 cities across the country, initially focusing on a particular segment of the market. “For FTTH services, we are targeting high-end customers who have been getting our Internet and IPTV services in our unlimited package of broadband on copper lines,” K. Sudhakar, general manager of core network at BSNL, was recently quoted by India’s Voice&Data magazine. “At least 10 percent of our present broadband customers will be targeted in the initial phase.”

Also last year, fixed broadband infrastructure provider Radius Infratel Pvt. Ltd. of New Delhi began to connect Indian homes with high-speed fiber access using fiber technology from Ericsson, a provider of technology and services to telecom operators. In a 3000-unit complex near New Delhi, residents now have access to high-definition, personalized IPTV, video-on-demand and other such services. They also can download music, movies and other content at speeds of 100 Mb/s and can jump online using wi-fi connections in the complex’s many common areas and gardens.

At the same time, Ericsson’s high-speed fiber-access solution, including GPON, has enabled automated lighting, electricity bill payment and security services.

Rashmi Soni, the company’s head of internal communications, media and analysts relations, notes that the rollout was made possible by India’s geography and population distribution. “Movement of a strong middle class (young generation/youth population) and trends toward gated community complexes actually [proved a] catalyst for FTTH based on Open access,” he stated in an e-mail.

The solution was well received – by the residents, the real estate and property management companies involved, and the service providers and operators – and Radius and Ericsson now have signed a new agreement to extend the fiber access to 600,000 households and businesses, again providing a range of entertainment, building management and home automation services, with Internet speeds of up to 100 Mb/s.

The companies are only getting started. Ericsson expects 2 million homes to be connected by FTTH by 2015, Soni said.

The end-to-end solution is based on Ericsson’s EDA 1500 GPON system and uses Ribbonet air-blown fiber and Micronet microcable solutions for efficient rollout of the passive fiber network. The company also will provide systems integration, consulting, and training and support services for Radius.