Infotel eyes partnerships, own network to launch 4G this year

Written by Nikita Upadhyay | Nikita Upadhyay | Mumbai | Updated: Jan 13 2012, 06:30am hrs
Reliance Industries subsidiary Infotel Broadband Services (IBSL) will lay its own fibre optic network in some cities and tie up with mobile telephony operators in others to provide high-speed fourth generation (4G) broadband connections this year, a person familiar with the development said. IBSL was the only company to secure a nationwide broadband wireless access (BWA) licence to provide 4G services in an auction last year.

The company will partner in cities which are geographically challenging to lay cables, a move that would cut costs, the same person said. Fibre optic networks connect telecom towers within cities to carry signals and provides higher speed.

IBSL is pursuing an economically prudent strategy of deploying a judicious mix of owned and partnered assets, said a spokesperson. IBSL has, and continues to be, engaged in discussions with numerous potential partners where a partnered approach creates win-win-win opportunities for IBSL, its customers and its partners.

Given the strategic and confidential nature of ongoing discussions, we are unable to confirm or comment on any specific discussion, he added.

Owning and sharing an optic fibre network is different from RILs strategy when it laid thousands of kilometres of optic fibre across India for Reliance Communications in 2003. Until September, RCom had 1.90 lakh route kilometres of fibre optic cables.

It is not known whether Mukesh Ambani will share RComs optic fibre network now controlled by younger brother Anil Ambani, although analysts say it will be a win-win situation for both.

This will not just give RIL access to a pan-India network and save on capex significantly, but will also secure revenues for RCom which could bring some relief from its debt woes, said an analyst with a foreign brokerage.

Laying optic fibre is expensive as fibre prices and labour costs rise and due to rising charges payable to government known as right of way. The company will share fibre networks in states like Maharashtra, Kerala and Andhra Pradesh.

It will be a one-time investment but it will be a valuable asset which can be monetised in future, the person with direct knowledge of the RILs plan said.

Data rates will crash significantly and it will disrupt telecom operators business case for 3G, said another analyst with a domestic brokerage requesting anonymity.

Early years of 4G will be dominated by enterprise subscribers followed by slow pick-up in individual subscribers volume by 2015-2016. We have forecast consumer subscribers to account for only a small proportion by 2016, said Nitin Bhas, research analyst, Juniper Research, a global provider of mobile research and analysis of future technologies. Typically, we expect LTE to be deployed initially in metro areas and in India, we expect its deployment will be focused on key business districts to service high-end business users.

Infotel seems to follow the strategy of Verizon Wireless, the largest mobile service provider in the US, to roll out 4G by using FiOS service, a bundled internet access, voice, and television service which operates over a fibre-optic network. However, in India, BWA licences do not allow operators to provide voice services.

Device-makers and network managers say 4G operators can simultaneously provide broadband access and roll out networks.

Doubling fibre presence in metros where it is now 15-20% will take two to three years, said Sanjay Dhawan, VP, Ericsson India. An operator can

typically start rolling out 4G services and at the same time keep building fibre optic network simultaneously.

Infotels rivals are also enhancing fibre capacity. We have expanded our optic fibre capacity by almost 4 to 6 times in areas where we launched 3G, said an operator who has launched 3G services. State-owned BSNL owns the largest fibre network, followed by RCom.

Bandwidth need is expected to rise as operators roll out 3G and 4G based on long-term evolution (LTE) which provides faster speed to broadband users.

Till date, our fibre optic network is being monetised by carrying voice signals, fixed line, DSL, enterprise and other data requirements, said another operator who has won BWA licence. Adoption of technologies like 3G and 4G will further increase bandwidth requirement and upgradation of fibre optic networks.

India lags behind in optic fibre rollout even as

demand increases by eight million fibre kilometres every year compared with 70-80 m fibre kilometre

in China.

Total optic fibre laid is around 35 million fibre kilometre in India as compared to Chinas 300 million fibre kilometers. Globally, 1.3 billion fibre kilometres are laid, says Vishal Aggarwal, investor relations head at optic fibre maker Sterlite Technologies.