How To Boost Indigenous Telecom

Domestic network equipment manufacturers are usually the last option for Indian operators. Reasons are many, varying from the lack of inter-operability to high cost of solutions, etc. (See TEMA Bats For Domestic Manufacturing and TEMA Favors Strong Regulation For Recovery.)

The domestic vendor industry accounts for only 3 percent of the country's telecom network equipment market. What can be done to ensure a consistent growth for this industry remains the question of the hour.

The Telecom Equipment Manufacturers Association (TEMA), the industry body, highlights a number of issues for the slow uptake of the industry which include a disappointing attitude of the government and a biased behavior of the GSM lobby, the Cellular Operators Association of India. (See IndiaWatch: COAI To Review TRAI's Tariff Theory, IndiaWatch: AUSPI Slams COAI and .)

"Government has failed to initiate concrete steps to understand the woes of the manufacturing sector and provide their addressal, while COAI's efforts resemble the British Raj when local industry was destroyed to promote British industries," says Ashok Agarwal, Director General, TEMA.

The players, however, still hold positive hopes from the operators and believe that the National Telecom Policy 2012 (NTP 2012) enabling access to low-cost working capital and tax holidays will enable Indian firms to boost manufacturing. (See PointRed Reveals Its LTE Plans and The Big Fight For LTE Deals.)

"Majority of our business comes from operators and our market share in the global 4G space has touched 38 percent as on March 31, 2012," says Balaji Kulothungan, CEO, PointRed Telecom Ltd. PointRed is a Bangalore-based 4G equipment developer and manufacturer and is part of Gemini Communications.

Many Indian manufacturers focus on the global market since margins in the Indian market are lower than the global market. This is another reason why the relationship between Indian operators and vendors can at best be described as indifferent.

"We have developed our own business model which is independent of the support from the government. Along with this we are in talks with global Original Equipment Manufacturers like Nokia Siemens Networks, Ericsson AB, Alcatel-Lucent, ZTE Corp. and Huawei Technologies Co. Ltd. for global relationships," says the spokesperson of Kavveri Telecom. The company is a global solution provider of telecom infrastructure and wireless products.

Industry experts, however, believe that Indian vendors will have to bring their offerings at par with foreign vendors to get a foothold in the Indian telecommunications industry. (See BSNL Inks GSM Deal With ZTE and Huawei Lands Bharti 4G Deal.)

"The experience as well as the end-to-end solutions portfolio is lacking in the Indian vendors. Why don't they sell to leading global operators if they are confident of their offerings?" says Rahul Gupta, analyst at Strategy Analytics Inc.

So where lies the possible solution to enable Indian vendors compete with foreign giants like NSN and Huawei?

Though the NTP 2012 advocates enhancing the telecom equipment manufacturing enough to meet 80 percent of the demand in the country by 2020, experts believe that enhancing production or taxing operators will not solve the issue alone. Efforts should be made to improve manufacturing skills and technical capabilities of the industry to offer more customized solutions. (See Cabinet Approves The NTP 2012, NTP 2012: New Guidelines Favor Incumbents and Roaming-Free India: The Flipside.)

"Quality in the world of telecom is considered above pricing and Indian players should focus more on Research and Development (R&D) as well as training of human resources to come up with offerings better than the foreign vendors," says Katyayan Gupta, Analyst at Forrester Research Inc.

He further adds that the government should assist the industry in setting up training schools like Cisco Systems Inc. which provides certification training. (See Cisco's Collaboration Push For Revenue Boost and Cisco To Acquire NDS For $5 bn.)

Agreeing to that, Navin Mishra, analyst at Cyber Media India Ltd. says that the primary focus of vendors should be on raising funds to make their offerings more efficient for operators since it's any operator's topmost priority.

Launch of 4G services and reduction in 3G tariffs by operators enable tremendous opportunities for vendors and it will be interesting to see what strategies Indian vendors adopt to fight against the foreign competition. (See NSN Gets Bharti's LTE Deal and Aircel To Launch 4G By Dec 2012.)

- Rimit Singh, Correspondent, Light Reading India