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India Broadband Wireless and WiMAX Market Analysis and Forecasts
2006-2014, 2nd Edition

  • Publication Date:October 2007
  • Publisher:Maravedis
  • Product Type: Report
  • Pages:95

India Broadband Wireless and WiMAX Market Analysis and Forecasts 2006-2014, 2nd Edition

The broadband-hungry nation of India might just be waking up to realities. For starters, 2007 could well become the Preparatory Year of Wireless Broadband. Although the former Minister of Telecommunications in India proclaimed 2007 as the Year of Broadband for India, 2008 will instead become the Year of Wireless Broadband for India. Despite the unmet requirement to free bandwidth from various stakeholders, the key engines for broadband growth V the operators V are not willing to wait. Genuine Indian innovation is at work as vendors, operators, and system integrators are coming together like never before to work with whatever is available to trigger a bandwidth revolution.

Leading Indian private operators, as well as incumbents, are working together in narrow 12 MHz channels of 3.3-3.4 GHz to deploy WiMAX services where possible. Notable among these are Reliance, the master operator who currently operates the nations largest CDMA network of over 29 million subscribers (as of July 2007) and has already started commercial WiMAX services in Bangalore, and Aircel, the Maxis Communication Bernhard (Malaysia) owned ISP that has been providing WiMAX-based backhaul services and leased bandwidth for corporations for over a year.

The Big Carriers: Rearing to Go

A major trend is evident in that in September, two large carriers have brought out RFP/RFIs for Mobile WiMAX. BSNL will require upwards of 100,000 CPEs (with all options taken over two phases, this count can go up to 200,000) and 1000 base stations across the country. This is apart from a separate BWA/WiMAX requirement for commercial urban broadband that is in the works. VSNL, a Tata company, has also released an RFI for a large 802.16e -2005 based system for over 500,000 CPEs in a phased manner. (Note: An RFI does not mean a firm commitment to place purchase orders.)

Bharti Airtel is looking to spread BWA/WiMAX to 300 towns targeting 50,000 SME customers in 2007 using a combination of 3.3 -3.4 GHz and 5.8 GHz frequencies. BSNL, which launched the mother of all telco tenders for 60 million GSM line s in 2006, is in the early stages of drafting the RFP for what could become the largest ever BWA/WiMAX purchase requirement from a public -sector operator. The requirement is for 1000 base stations and 100,000 CPEs for a single project. Judging by some of the plans of Reliance, we believe that the companys extended plans include a massive requirement for 1 million CPEs over the next 12 months. Parts of the plan are already frozen, and vendor evaluations are undergoing completion. Of course, the realizatio n of the entire plan may be subject to political and technology issues such as rapid resolution of spectrum issues. However, we believe that in a worst case scenario, these projects will still move forward with at least 15% real deployment in the next 8 mo nths.

One of the impediments identified in our India BWA/WiMAX Report 2006 was that the WiMAX CPE pricing may become a strong barrier in early penetration of WiMAX services. Leading -edge Indian vendors, such as Telsima, breaking the price barrier by over 50% as early as Q2 2007, has broadened the possibilities. Reliance, unsurprisingly, has brought WiMAX closer to reality by adopting a market-friendly tariff plan that allows a subscriber to sign up at a minimal cost of about Rs 700 per month ($17) in Bangalore, where the service has first been launched. Reliance has always been a mass-market leader, and it is not surprising that the company is leading the way in taking broadband to the masses at the best prices possible.

BWA/WiMAX: It is Brewing Hot in Here

Tonse believes that the Indian BWA/WiMAX market will continue growing despite the roadblocks. We conservatively estimate that in the next 12 months, about 250,000 CPEs and about 5000 10 base stations will be sold in India. If some of the larger plans are realized, as many as 10,000-12,000 base stations and about 500,000 CPEs might be consumed by this bandwidth -starved nation. At current equipment costs and bulk discounts expected by Indian operators, the total CPE / BS equipment market for the year may be between $50 million and $120 million. This is a substantial jump over the last year and could signify the eventual emergence of one of the worlds top 3 WiMAX markets.

WiMAX CPE prices have declined from $300 to about $140 without a full -feature set. Plain vanilla WiMAX CPE prices will drop below $100 by Q1 2008 for large quantities. Medium -size deployments (50,000 CPEs) will start materializing by December 2007, and large -scale deployments (100,000 CPEs) will have begun by March 2008. The rollouts of the se networks will be in a phased manner, as there will be a fair amount of time spent in radio -tuning, repositioning of towers, and addressing customer complaints.

The Land Grab for Access will Begin

1. The opportunity for the greenfield BWA/WiMAX operator i s interesting. While spectrum will be the biggest challenge, these aggressive players could create interesting niches through geography, targeting specific verticals such as SME, or offering a mix of broadband VAS(Value Added Services) as well as voice an d bundled data to shake the competition. The ongoing economic expansion has already created several such niches: retail chains, medical tourism, and tele-education, which are prime candidates for long -haul wireless IP applications.

2. At least one of these innovators is bound to chart a new path and shake up the restricted VoIP space in India. The large integrated service providers have not initiated the service because there is an adequate number of low-cost voice services today, starting with mobile service.

3. We expect that the new crop of Wireless ISPs may invest or co -invest in an international gateway and usher in more transparent pricing to the retail user. This could throw open the flood gates to competitive domestic bandwidth rates, which will bring do wn international calling and data service price points in general.

4. The incumbent ISPs will continue to adopt a heterogeneous mix of wired and wireless technologies where possible, to mix and match their legacy copper/fiber and air waves to deliver bits to the home with one objective: kill outbound churn and build market share. The wireless solution will again be a mix of licensed and unlicensed where possible, to provide an end-to-end solution.

The explosive VAS application revenue from the mobile world has demonstrated how important it is to begin service introduction early, above and beyond the transport fabric. The promising IPTV and interactive television are one step away once the pipes are laid. In some cases, such as IPTV, the content management platforms are ready and massive investments have been made in convergent billing solutions, including BSNLs recent order of $300 million dollars for a convergent billing platform. The challenge seems to have shifted to the place they least expected: the access, which has been their traditional strength.

Market Forecasts

In 2006, the BWA equipment market opportunity in India was a mere US$25 million, up from US$6 million in 2005, and was dominated by small deployments for backhaul applications to enterprises with outdoor equipment.

However, Maravedis and Tonse believe that with the upcomi ng spectrum opening, the certification of new equipment, and lower -cost CPEs, the annual 3.3 and 3.5 GHz equipment opportunity will increase from US$4 million in 2005 to a peak of US$280 million in 2014. Maravedis and Tonse estimate that the Internet subs criber population will grow from the current 10 million to above 48 million by 2011. The Internet user population in India will have exceeded 200 million. This will be made possible by lower -cost PCs and notebooks, CPEs below US$40, and cheaper broadband service.

Maravedis projects an accumulated 21 million BWA subscribers by 2014, counting both residential and business segments. WiMAX subscribers should represent the majority of this figure. Approximately 66% of the WiMAX subscribers will be mobile 802.1 6-2005, predominately residential, while fixed WiMAX will continue to be driven by large corporations and, to a lesser extent, by SME.

Conclusion and Recommendations

The Indian market for BWA/WiMAX will continue to be one of the most sought after markets for global equipment vendors. The nation promises to offer huge, consistently high growth for the next several years, judging by its extremely low broadband penetration rates (under 3 million for a population of 1.1 billion).

The government has initiated significant progress in resolving a chaotic spectrum scenario with too many interested parties (GSM lobby, CDMA interests, ISPs, incumbents, military, and other users) and a growing list of new applicants struggling to gain entry into the potentially luc rative telecom service business. However, much more needs to be done, and fast, if a semblance of a fair settlement is to be achieved. The 3G policy is already off by a year, and delays are spawning gaps in an extremely under-penetrated broadband market.

Several government agencies such as WPC, TRAI, and DoT are in disagreement on vital issues such as spectrum administration and management. WPC needs to move to a modern, automated, open operation and adopt a more consultative approach involving industry ex perts and ecosystem vendors to develop market -friendly policies. The entire spectrum-allocation and administration mechanism has to become holistic, more transparent, open, accessable, and market-friendly.

The governments approach to ISPs, cellular opera tors, and potential new license applicants needs to be fair. The ISP community appears to be reeling under a counterproductive license regime that requires special permits to provide most services.

There is an urgent need from the Indian equipment vendor market for policy makers (DoT and the Ministry) to introduce methods to encourage small technology start -ups to survive and grow in the domestic telecom markets. Eventually such initiatives could allow telecom companies from India to become global.

India can become one of the largest BWA/WiMAX markets. To take advantage of the opportunity, the authorities have to introduce a plan to bring small tech start -ups into the local market instead of them having to compete against large global vendors. This would foster a rich native-vendor ecosystem in this space. If done appropriately,this could enable technology exports from India to exceed even those of the software industry.

  • 1.0 Overview of India's Telecom Market
    • 1.1 Background
    • 1.2 Chronology of Key Events that Shaped the Broadband Industry
    • 1.3 State of the Telecom Market
      • 1.3.1 Top Trends in Indian Telecom in 2006 (January to December)
      • 1.3.2 Top Trends in Indian Telecom in 2007 (January to Augu st)
    • 1.4 Telecom Market Structure in India
      • 1.4.1 Changing Socio-demographics: New Areas of Demand
  • 2.0 Internet Market in India
    • 2.1 Background
      • 2.1.1 ISP License Scope: Current Abe rrations and TRAI Recommendations
      • 2.1.2 What the ISPs are Complaining about: Competitive Access
      • 2.1.3 What is Currently Allowed in IP Telephony in India
      • 2.1.4 Illegal IP Activities that have been Observed in India
      • 2.1.5 TRAI's Recommendations on Review of Internet Services (May 2007)
    • 2.2 Internet Access: Shifting Patterns
      • 2.2.1 Cable Access to the Net
      • 2.2.2 Wi-Fi Hot Spots
    • 2.3 Broadband Scenarios
    • 2.4 Broadband Market Enablers
  • 3.0 Broadband Wireless Access
    • 3.1 Drivers for Broadband Wireless Access
      • 3.1.1 Wi-Fi Hotspot Availability
      • 3.1.2 New Drivers: Emerging Home User Segment
      • 3.1.3 Alternative Wireless Data Access
      • 3.1.4 Early WiMAX Service Introduction in India
    • 3.2 Opportunities for WiMAX in India
      • 3.2.1 Government Initiatives
      • 3.2.2 State Wide Area Networks (SWAN) Project
    • 3.3 Challenges for Growth of WiMAX Industry in India
      • 3.3.1 Domestic PC Penetration, Income Levels, and Literacy
      • 3.3.2 Rural India: Basic Voice Connectivity is a Top Priority
      • 3.3.3 Alternative Broadband Technologies
      • 3.3.4 Spectrum Challenges
  • 4.0 Regulatory Environment
    • 4.1 Government Entities
      • 4.1.1 TRAI - Telecom Regulatory Authority of India
      • 4.1.2 DoT - Department of Telecommunication
      • 4.1.3 WPC - Wireless Planning and Coordination Wing
      • 4.1.4 TEC - Telecommunications Engineering Centre
    • 4.2 Spectrum Debate
      • 4.2.1 TRAI BWA Spectrum Recommendations (September 2006) and Updates
      • 4.2.2 Current Ownership in 3.3 -3.4 GHz Band
      • 4.2.3 Spectrum Bands Sought for BWA/WiMAX Usage
    • 4.3 General BWA Recommendation
    • 4.4 Pricing Structure for Spectrum (2.3-5.8 GHz) as Charged by WPC India
  • 5.0 BWA/WiMAX Service Provider Analysis
    • 5.1 VSNL
    • 5.2 Reliance Communications
    • 5.3 SIFY
    • 5.4 BSNL
    • 5.5 Bharti Airtel
    • 5.6 MTNL
    • 5.7 Railtel
    • 5.8 Aircel
    • 5.9 HCL Infinet
    • 5.10 Emerging Wireless ISPs
  • 6.0 BWA/WiMAX Equipment Vendor Analysis
    • 6.1 Airspan
    • 6.2 Alvarion
    • 6.3 Aperto Networks
    • 6.4 Beceem
    • 6.5 C-DOT Alcatel Research Center (CARC)
    • 6.6 Navini Networks
    • 6.7 Nortel
    • 6.8 Intel
    • 6.9 Redline Communications
    • 6.10 POSDATA
    • 6.11 Proxim
    • 6.12 Sloka
    • 6.13 Telsima
  • 7.0 Emerging BWA/WiMAX System Integrators and Service Provid ers in India
    • 7.1 Microsense
    • 7.2 Convergent Networks
    • 7.3 Gemini Communication
    • 7.4 ORG Informatics
    • 7.5 Spanco Telesystems and Solutions
    • 7.6 Infozech
    • 7.7 Indian Tech Companies that are Members of the WiMAX Forum
    • 7.8 Summary of Service Provider Expectations for WiMAX in India for 2007
  • 8.0 Market Forecasts 2007-2014
  • List of Exhibits
    • Exhibit 1. Map of India and surrounding territory
    • Exhibit 2. Market structure of leading carriers in India
    • Exhibit 3. Fixed and mobile subscriber growth
    • Exhibit 4. Fixed telephony subscriber growth
    • Exhibit 5. Widening rural and urban tele-density gap
    • Exhibit 6. GSM operator subscriber base as of July 2007
    • Exhibit 7. Growth of fixed, GSM, and CDMA subscri bers in 2007
    • Exhibit 8. Falling mobile ARPU over the last 6 years
    • Exhibit 9. Indian Internet subscriber base
    • Exhibit 10. Subscriber counts of top ISPs
    • Exhibit 11. Internet subscriber base, by technology
    • Exhibit 12. Operators providing Internet access via cable
    • Exhibit 13. BSNL's planned Wi -Fi hot spots, count by city
    • Exhibit 14. Effective per-hour Internet rates, India
    • Exhibit 15. Growth in broadband connections in India
    • Exhibit 16. Growth in broadband subscriber market share, by carrier
    • Exhibit 17. Growth in desktop shipments in India
    • Exhibit 18. Subscriber projections underlying broadband policy of India in 2004
    • Exhibit 19. Spectrum assignments in the 3.3 -3.4 GHz band
    • Exhibit 20. Government-operated spectrum sought for release
    • Exhibit 21. GSM subscriber -based spectrum allocation criteria
    • Exhibit 22. CDMA subscriber -based spectrum allocation criteria
    • Exhibit 23. GSM and CDMA subscribers, spectrum, and channels
    • Exhibit 24. Spectrum pricing in India
    • Exhibit 25. Universal Service Obligation (USO) Fund financials
    • Exhibit 26. Reliance WiMAX tariffs and charges
    • Exhibit 27. BSNL vital statistics
    • Exhibit 28. BSNL WiMAX trial locations
    • Exhibit 29. Equipment requirements of BSNL WiMAX tender
    • Exhibit 30. Specifications of BSNL broadband tariff, June 2007
    • Exhibit 31. MTNL vital statistics
    • Exhibit 32. Indian companies in the WiMAX Forum
    • Exhibit 33. Hypothetical BWA requirements analysis for Mumbai
    • Exhibit 34. PC shipment forecast, through 2012
    • Exhibit 35. Wireless notebook and PDA shipment forecast, through 2012
    • Exhibit 36. WiMAX wireless notebook and PDA shipment forecast
    • Exhibit 37. Wireless notebook and PDA cumulative forecast, through 2012
    • Exhibit 38. BWA and WiMAX base station annual shipments
    • Exhibit 39. Trends in pricing and deployment of CPE for BWA and WiMAX
    • Exhibit 40. Forecast of shipments of standalone BWA CPE versus WiMAX wireless notebooks and PDAs
    • Exhibit 41. Forecast sales volume of BS and CPE for BWA and WiMAX
    • Exhibit 42. WiMAX chip market forecast
    • Exhibit 43. Cumulative sales forecast for equipment supporting BWA and WiMAX
    • Exhibit 44. Sales forecast for WiMAX equipment, with and without chips
    • Exhibit 45. Annual BWA/WiMAX equipment sales forecast, by frequency band
    • Exhibit 46. WiMAX equipment penetration fo recast, as a percentage of BWA shipments
    • Exhibit 47. WiMAX standalone CPE shipment forecast
    • Exhibit 48. WiMAX base station shipment forecast
    • Exhibit 49. Annual subscriber forecast for BWA and WiMAX
    • Exhibit 50. Cumulative subscriber forecast for BWA and WiMAX
    • Exhibit 51. Annual WiMAX subscriber forecast, fixed versus mobile
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