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SYMBIOSIS INSTITUTE OF TELECOM MANAGEMENTThe Finest Telecom Business School

SITM ANNUAL TELECOM FORECAST 2009


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the point is to discover them

a ll truths are easy to understandonc e they a re d isc overed ;


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Prvision

Prvision - SITM Annual Telecom Forecast

- SITM Annual Telecom Forecast 2009Volume V, Issue I

provides a holistic andequitable view of the forthcoming developments in the telecomsector taking into account all the macro and micro economicfactors. The essence of this forecast report lies in the fact that itkeeps us in sync with the changing dynamics of the telecomecosystem which is transforming itself and has already stepped intothird generation technologies.

Giri HallurFaculty (Telecom), SITM

In no event shall Symbiosis Institute of Telecom Management, Pune;hereafterreferred to as SITM, be liable for any indirect, punitive, incidental, special orconsequential damages arising out of or in any way with any content (or anymaterial provided here under) whether biased or on contract, tort, strict liability orotherwise even ifSITMhas been advised of the possibility of the damages.

This document is the sole property ofSITM. No part of it maybe circulated, quoted,copied or otherwise reproduced without the written approval ofSITM.

Faculty In Charge

Disclaimer:

2008, Symbiosis Institute of Telecom Management.All rights reserved

ONLINE PARTNERS MEDIA PARTNERS

Alumni Mentors

Kundan DasStarent Networks

Manish JunejaInfosys Technologies

Aniruddha HarneTech Mahindra

Rahul SharmaTech Mahindra

Anand RaghavErnst & Young

Santosh S VErnst & Young

Rajeev JhaTata Communications

Sourabh SharmaHCL Technologies

Harish CHewlett Packard


NDEX

IDIRECTORS MESSAGE 3

EXECUTIVE SUMMARY 4

METHODOLOGY 6

ECONOMY 8

GLOBAL TELECOM 13

INDIAN TELECOM 18

TELECOM TECHNOLOGIES 21

MOBILITY 24

BROADBAND 27

TELECOM SOFTWARE 30

COMMUNICATION INFRASTRUCTURE 34

CONSUMER ELECTRONICS 38

SPECIAL FEATURE - CONVERGENCE 42

LIST OF FIGURES 46

ABBREVIATIONS 47

REFERENCES 47

ABOUT SITM 48

TEAM PREVISION 49

Industry Mentors

Statistical Consultant

Student In Charge

Student In Charge(Technology)

Student In Charge(Statistics)

Student In Charge(Marketing)

Graphic Designer

Sumant S. V.Deloitte Haskins & Sells

Anantalakshmi PrasadDeloitte Haskins & Sells

Asmita Chitnis

Associate Professor,Symbiosis Institute ofInternational Business

Malcolm Patel

Ananda

Rohit Mahto

Ravi Vasnani

Rohit Mahto


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We thank De loit teHaskins and Sel ls for

their contin ued

all ianc e and su pport inour effor ts

SITM is the first educational institution in Asiaimparting management education to aspiringtelecom managers. SITM has consistentlyendeavored to take up new initiatives in bothbusiness and research domains.

One such effort is Prvision, SITM's Annual

Telecom Forecast. Prvision is in its 6th yearand aims at providing the industry a neutraland insightful single point of view regardingthe emerging trends in the telecom sector forthe forthcoming year.

This involves accumulating inputs fromdetailed research into contemporary telecomtechnologies, telecom business and otherdeterminants of change and meticulously

analyzing them and forecasting futuretrends.

It is the only effort of its kind in the telecomdomain being attempted by a businessschool, which provides comprehensivecoverage over various domains in thetelecom sphere. It is a culmination of thecollective endeavor of SITM students with1500 man hours of efforts put in by them. Thestudent forecast team is guided by the SITMfaculty and some of our esteemed alumni.

We are fortunate to have Deloitte Haskins &Sells for their continued initiatives in bothbusiness and research domains. Throughthis publication I would like to inform you thatwe have moved to our new 300 acre campusat Lavale, Pune.

Virender KapoorDirectorSymbiosis Institute of Telecom Management

3

DIRECTORS MESSAGE

2008, Symbiosis Institute of Telecom Management, Pune


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ECONOMYThe economies of India, Russia and China areexpected to spearhead the global economic growth,reeling under the effects of US slowdown, surging oilprices and inflation. The recent surge in oil prices tosuccessive new highs continues to constitute a keyrisk that could impinge on the global economic

growth momentum in the period ahead though the oilprices are expected to move southwards. The USeconomy is expected to grow at a rate of less than1%, in the process adversely affecting the otherdependent economies. The Indian economycontinues to display strength, both in regard toexternal trade and domestic demand, though thegrowth is expected to decline to 7.6-7.8% onaccount of lower industrial growth, high crude oilprices and inflation. The Government is expected totighten the monetary policies to curb inflation.


EXECUTIVE SUMMARY

4

GLOBAL TELECOMIn the global scenario, Western Europe will see ahuge variance as far as IPTV deployment anduptake is concerned. France will see the highestsignups and Germany should see the least. InNorth America, growth of the MVNO market willstabilize as MVNO players will start cost-cutting

measures to retain their margins. Femtocell basedsolutions will also get deployed to optimize anoperators CAPEX. In South America, there will beintroduction of next-generation mobile broadbandservices, including high-speed mobile internetaccess, mobile TV and video, and mobile-music-related services. In Asia, Japan and South Koreaare the leading 3G markets. However, China, whichis still striving to make its place on the 3G map, willemerge as the big market, thanks to the 2008Beijing Olympics.

INDIAN TELECOMIndia outpacing China in net telephone subscriberadditions per month shows the growth for this sector.Fixed line subscriber base will witness continuousmarginal monthly reductions which will lead to abase of 36.24 mn at the end of Dec'09 resulting in apercentage decrease of 6.23% over July'08. Mobilesubscriber base is expected to reach a milestone of412.25 mn with a growth of 54% over July'08. Thetotal subscriber base is expected to reach 448.6 mn

witnessing a growth of 33.97% over July'08.Upcoming services like 3G and MNP are sure todrive the growth for the Indian telecom sector.

TELECOM TECHNOLOGIESThe IP/MPLS edge market is expected to growcontinuously with the availability of high endtechnology and low cost infrastructure. It isestimated that global market for carrier Ethernetequipment will reach around $3.9 bn mark by 2010at a CAGR of 33%. As fixed line substitution andgeneral shift towards mobile continues, broadbandvalue added services and increased capacity willbecome drivers for fixed line service providers to

upgrade to ADSL 2+. This will result in furtherdeployments of ADSL cables in India. As Indiaawaits the roll out of 3G due to delay in auction of3G spectrum, the natural path for evolution of GSMplayers will be WCDMA.


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MOBILITYOn the mobility front, India is growing at a veryfast pace, we expect the mobile subscriber baseto cross 412.12 million and an overallTeledensity of 38% by the end of 2009, where A,B, C and METRO circles are expected to becovering 35%, 40% 12% and 13% of the

subscriber base respectively. The current MVASmarket (as of June 2008) is Rs 5780 crores and itis expected to rise upto Rs. 9760 crores. Wepredict that the SMS volumes would cross the140 million mark in 2009 and in the near futurewill see more and more SMS based utilityapplications. He number of Wireless internetsubscribers grew from 18 mn in 2006 to 57.83mn by 2007 end; we predict that the wirelessinternet subscriber base will cross 130 mn markby first quarter of 2009.

COMMUNICATION INFRASTRUCTUREInfrastructure sharing has helped the telcos toreduce their capital expenditure and operating

expenses. Due to increasing focus onaccelerated roll-out of services in rural and semi-urban areas, approximately 85000-90000towers are expected to be set up in the next fiscalyear. EVDO technology will be one of the primedrivers for the Data card market. The VSATindustry is expected to record a growth of 20% to25% in the current fiscal year. Price wars areexpected due to entry of new DTH players whichwill attract new customers.

CONVERGENCEThe market for traditional telephony, whetherfixed or mobile, is so saturated that it can nolonger be a viable exclusive source of growth.On the other hand, telecom-media convergencehas brought about opportunities that could beconsiderable but that are fraught withuncertainty. Telecom operators in the future willhave to battle with a wide array of newcompetitors, including traditional media

companies, information technology players, andeven industries such as financial services.Differentiation has become more challenging,with technology being largely commoditized andaccessible to all players in the market. Toaddress this challenge, many operators willleverage telecom-media convergence todevelop a unique and sustainable competitiveadvantage in their markets. While there is nosilver bullet for success, operators that are ableto move quickly and capture the currently

underexploited content market will create asustainable competitive advantage in theirmarkets and possibly beyond.

BROADBANDThe year of broadband as it was called did notcome up to expectations due to facts like lowpenetration issues, cost of CPE, huge Capex fordeployment etc. but the upward move has juststarted. Although slowly but the broadband ispicking up and it is expected to change the waycommunication and information is usedcurrently. With operators like BSNL planning to

bridge the digital divide by coveringapproximately 1.5 lakh villages and 5000 citiesby next year it is expected that broadband ridingon technologies like WIMAX and VSAT will benext big thing in the communication and the totalsubscriber base is expected to reach above 8.5million subscribers by the end of second quarternext year.

TELECOM SOFTWAREToday the Telecom Software market is driven bythree major aspects CRM, Revenue Assuranceand ERP. Marketing automation is expected tobe the fastest growing segment of CRM,achieving an 11.2 percent CAGR through 2009.NGOSS, or Next Generation OSS, will be an

answer for a comprehensive, integratedframework for developing, procuring anddeploying operational and business supportsystems and Software. The worldwide marketfor Enterprise Applications is expected to grow to$36 billion by 2009.

CONSUMER ELECTRONICS

Consumer Electronics refers to a wide range ofelectronic equipments intended for everydayuse. These include Mobile Handsets, Laptops,Desktops, Digital Cameras and GamingConsoles. We predict 2008 will be the first yearwhen sales of laptops will exceed the sales ofdesktops. Innovations in technology and fallingprices are expected to further enhance thegrowth of Consumer Electronics.


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METHODOLOGY

6

Prvision - SITM Annual Telecom Forecast is in its 6th year, initiated in the year 2003, with the purposeof providing the industry a neutral and insightful single point of view regarding the emerging trends inthe telecom sector for the forthcoming year, after accumulating inputs from detailed research intocontemporary telecom technologies, telecom business and other determinants of change.

Prvision is a culmination of the collective endeavor of SITM students with 1500 man hours of efforts

put in by them. The student forecast team is guided by the SITM faculty and some of our esteemedalumni. It is the only effort of its kind in the telecom domain at this level, which provides comprehensivecoverage over various domains in the telecom sphere.

STATISTICAL MODELS USED FOR FORECASTING

Time Series Analys isA time series is a sequence of data points, measured typically at successive times, spaced at (oftenuniform) time intervals. Time series analysis comprises of methods that attempt to understand suchtime series. Time series forecasting is the use of a model to forecast future events based on knownpast events: to forecast future data points before they are measured.

Exponential SmoothingIn statistics, exponential smoothing refers to a particular type of moving average technique applied totime series data, either to produce smoothed data for presentation or to make forecasts.


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ExtrapolationThis model statistically extrapolates established pattern and/or existing relationship in order to predicttheir continuation, assuming that such pattern relationship will not change during the forecastingphase.

Linear ExtrapolationLinear extrapolation means creating a tangent line at the end of the known data and extending it

beyond that limit.

Polynomial ExtrapolationA polynomial curve can be created through the entire known data or just near the end. The resultingcurve can then be extended beyond the end of the known data. The resulting polynomial may be usedto extrapolate the data.

Trend AnalysisWhen a series of measurements of a process is treated as a time series, trend estimation is theapplication of statistical techniques to make and justify statements about trends in the data.

Regression AnalysisData regression analysis is a technique used for the modeling and analysis of numerical dataconsisting of values of a dependent variable (response variable) and of one or more independentvariables (explanatory variables).Linear Regression, y = a(x) + bNon-Linear Regression, log(y) = log(a) + x*log(b)

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ECONOMY

Globalization is transforming the face of the global economy. The economies of the nations areinterdependent on each other more than ever before. This vertical aims to analyze, forecast thegrowth rates of the various economies and the prominent growth drivers which are expected tosignificantly influence the economy.

SCOPE

ANALYSIS

GLOBAL ECONOMY

EXCHANGE RATES

YEN Vs DOLLAR

The slowdown in the Japanese economycoupled with high inflation and decreasedgrowth of exports are likely to put pressure on

Yen. USD/JPY rates are expected to remainin the range of 104-109 till the 3rd quarter of2008-09 and they are expected to weakenfurther in 1st quarter of 2009-10.

EURO Vs DOLLAR

European economies are struggling with thethreat of impending recession and along withthe prospects of high headline inflation. Thefear of high inflation may push the European

Central Bank to further tightening of monetarypolicy. But US and EU economies are veryhighly integrated which may not allow theEURO to depreciate in a significant way in thenear future. Hence EURO is expected toshow sideways movement in the near futurebut in the long run it is expected to depreciateagainst the US dollar.

EUR/USD rates are expected to remain in therange of 1.38-1.48 in the near future but in the

1st or 2nd quarter of year 2009-10 it isexpected to be in the range of 1.37-1.41.

FED RATES

Fed rates will remain on hold for a prolongedperiod. Continuous write downs by big USfinancial institutions and their incapability toraise more capital will force the Federal Bankto keep the rates at the current levels so thatfund raising exercises can be augmented.Key policy rates for the Federal Bank are

expected to remain at current levels till thefirst quarter of the year 2009-10.

CRUDE OIL

Rising crude oil prices have been a worry forthe entire world. Oil Prices along with foodprices is putting economies under severeinflationary pressures. Oil is always at thecenter of world polity and economy. The oildemand in the growing economies like China,India and others are likely to put morepressure on the supply and we expect the oilprices to be in the range of $95-105 per barrel

stby the end of 1 quarter of 2009-2010.

REGIONAL ANALYSIS

USA

Continuous weakening of US financialsystem and recessionary environment in thekey industrial sectors is going to keep the USGDP growth rates at a negligible level.Furthermore, the slowdown in the housingsector is expected to spread to the other key

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sectors such as aviation, FMCG and finance.Low employment growth rate and negligiblegrowth in the average salaries is going to cutthe consumer spending in a major way. Allthese factors are expected to impact US GDPgrowth rate adversely and we expect theGDP to grow by 0.8%.

CANADA

As the US slowdown continues, exportvolumes will stagnate and is expected topush the current account into a deficit. Thestock market has fallen sharply, triggered byfalling oil prices and fears over Canadianbanks' exposure to the depressed US retailbanking sector. We expect the GDP to growby 1% due to the resurgent inflation,

concerns about a slump in the housingmarket and the above stated factors.

EUROPE

EUROPEAN UNION

Economic outlook in Europe is deemed,however, to be affected by shrinking creditavailability, soaring food and oil prices and

the volatile economic performance of US inthe short term. Taking into account negativeimpact of the financial markets turmoil in thesummer of 2007, soaring commodity pricesand housing market shocks we expect 1.5-2% growth in the GDP which is higher thanthose of the other prominent economies likethe US and Japan. The growth however isunequal in the various member nations withthe global slowdown affecting a majornumber of nations.

UNITED KINGDOM

With developments in global financialmarkets curbing growth in the UK's importantfinancial services sector and tightening creditconditions for firms and households,domestic demand growth will slow sharply.The decline in the economic activity, risinginflation due to food and non-alcoholicbeverages and decline in the output growth in

the services sector by 0.8% in the first quarterof 2008 is indicative of the slow growth andwe expect the economy to grow by 1.8%.

LATIN AMERICA

MEXICO

Although domestic demand will becomemore important (assuming further gradualdeepening of domestic credit), Mexico'sgrowth path will continue to be dependent onthe US economic cycle, given strong linksbetween US and Mexican industry. This haseffects not only on gross fixed investment andexports, but on employment, wages andprivate consumption. Inflation is expected tobe significantly higher at the end of 2008 thanthe target ceiling rate of 4%. All the abovestated parameters are expected to pull downthe growth to 2.2-2.5%.

VENEZUELA

The government is unlikely to move towardsfull state control of the economy, but furthernationalization in strategic sectors will curbprivate investment. Venezuela is at the peakof another oil-fuelled boom. In the past, thesehave been followed by spectacular crashesas oil price falls however, with world oil pricesexpected to remain high for a prolonged

period, the economic cycle is likely to prove tobe more drawn out and we expect the GDP togrow by 5.5%.

BRIC

The group of nations Brazil, Russia, India andChina popularly referred to as BRIC is one ofthe fastest growing economies.

Brazilian economy is expected to decline on

account of stronger monetary tighteningwhich will weigh on domestic consumptiongrowth, which, coupled with the effect of

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sluggish growth in the US will pull theeconomy down to growth rate in the range4.6-5%. GDP grew by 5.4% in 2007, thefastest pace of expansion since 2004, but isexpected to decelerate over the projectionperiod. Private consumption continued to bethe main driver, aided by improving labor-

market conditions and still robust creditcreation. Investment rebounded strongly,helping to alleviate emerging capacityconstraints. Exports are performing well andthe trade surplus is shrinking fast dueessentially to rising imports, especially ofcapital goods and intermediate inputs.

Russia's economic growth in 2007 was

fueled by much higher oil prices. Real GDPgrowth of Russia is expected to slow in 2008-09 to 7.2% as a result of stagnating oilproduction, high inflation, monetarytightening and ongoing real currencyappreciation. Nevertheless, continued strongprivate demand growth should support a solidrate of expansion. High oil prices, capitalinflows and the effects of an earlier fiscalrelaxation are feeding inflationary pressures.Inflation should abate from the second half of

2008, as a result of a good harvest and atightening of monetary policy

Economic growth in China has easedslightly, to 10.6% year-on-year in the firstquarter of 2008. It is expected to slackenfurther over the remainder of 2008 and in2009, as the contribution from net exportsdeclines. Domestic demand growth isprojected to remain robust over the forecasthorizon, with buoyant incomes driving up

consumption. Inflation has increased sharply,driven by soaring food prices, but is expectedto ease somewhat going forward provided

food prices stabilize, offsetting rising non-agricultural prices. The consumer price inflationin China is expected to average 6.6% in 2008.The annual rate of inflation is expected to slow inthe second half of 2008 giving a timely boost tothe decelerating economic growth. Real GDPgrowth slowed to 10.1% year on year in the

second quarter of 2008, largely owing to asmaller contribution from net exports. We expectthe GDP to grow by 10% on account of theabove mentioned factors.

JAPAN

Japanese economy is struggling with theslowdown in the GDP growth and high inflation.Despite a stronger than expected GDP outturnin the first quarter of 2008, Japan's economic

outlook is weak. Central bank of Japan iscontinuously avoiding key interest hikes tosupport the growth. Continued rise of exportsfrom emerging Asian economies is expected tohamper the Japanese exports further. Weexpect the Japanese economy to grow by 1%.

VISTA NATIONS

In Vietnam very high inflation rate expected to be

in the range of 20% and above along with lowercredit expansion will offset the growth byindustrial expansion and the growth is expectedto be in the range of 6.5-7%.Massive foreign direct investment and solidprivate consumption growth will offset theinflationary trends in Indonesia and we expectthe GDP to grow by 5.5%.

The South African growth will be on the lowerside as global slowdown, high interest rates will

pull down the economy even as the investmentactivity gathers momentum. The powershortages are also expected to adversely affectthe economy and the GDP is expected to growby 3%.

In Turkey the business sector's successful post-crisis performance and employment creationcapacity has come under strain, independentlyfrom the domestic and international shocks ofearly 2008. Mounting competition from low-cost

countries and strong trend real currencyappreciation has severely weakened the trade-exposed sector. Domestic demand is expectedto be the only saving grace but the above stated



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factors along with a high inflation hoveringaround 10% is likely to bring down the GDPgrowth to 4.5%.

Argentina's strong growth rates over the pastfew years are expected to moderate over theforeseeable future and without a coherent

plan to shield the general public from the fall-out, political instability could return toArgentina over the medium term. Also theincreasing inflation and slower investmentscenario is expected to bring the GDP growthto 6%.

MIDDLE EAST AND AFRICA

In UAE, persistently high global oil prices will

maintain the current account surplus whichwill further be facilitated by robust growth innon oil sector though political instability withchange in power from Abu Dhabi (oil wealth)to Dubai (FDI) and steep inflation may causesome problem. We expect the GDP to growby 8.3%.

Nigeria is expected to witness a very high FDIin oil sector (US$2bn per year) andexceptionally high export earnings from oil. A

very attractive and promising telecom sectorwill be the key driver for growth and we expectthe GDP to be 6.5%.Tourism sector of Egypt will be the key driverfor growth. The tourism sector revenues andreceipts from Suez Canal will offset the largetrade deficit but the inflation (22%) will bringdown the public spending and we expect theeconomy to grow by 6.6-7%.

Fluctuation in the world prices of chief exports

of Kenya (tea and coffee) may createtremendous impact on economy. ThoughKenya has emerged as an attractivedestination for investment but political unrestand shortage in power production andcorruption in public sector are a very seriousthreat to growth in the economy. Hence weare predictinga 4.8% growth.

INDIAN ECONOMY

GDP

India's macroeconomic parameters aredisplaying ominous signs regarding the pace ofgrowth of Indian GDP. Due to high inflation, RBIis continuously adjusting the monetary policywhich has resulted in high interest rates. Highcrude oil prices, increasing trade deficit,increasing fiscal deficit, high interest rates, highinflation, low IIP growth, increased Governmentspending, uncertain export growth environmentdue to weaker US, Europe & Japaneseeconomies, their dwindling corporate profits,reduced general and public savings and henceshrinking investment cycle are the factors whichare expected to hurt Indian GDP growth in asignificant way. Thus we expect the GDP to growby 7.6-7.8%.

INDUSTRIAL SECTOR

Industrial sector (IIP Growth) recorded a growthof 11.6% in 2006-07 and 8.8% in the year 2007-08. For the April-July period, IIP growth stood at5.7%, which confirms the figures of slowing

growth. Due to high inflation, rising interestrates and rising raw material costs the industrialsector growth is expected to be furthersuppressed . High global commodity prices arefurther expected to pressurize industries withhigh import content. Manufacturing outputslowed to 5.3 per cent from 11.8 per cent duringthe same period. The consumer durable goodsand capital goods are the factors which arekeeping the industrial sector on the right trackwhich is reeling under the effect of slow growth

of the six infrastructure industries. Thus weforesee a 6.5% growth in the industrial sector.



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SERVICES SECTOR

Service sector recorded growth of 11.1% inthe year 2006-07 and it stood at 10.8% in theyear 2007-08. Due to impending recession inUS and European region, IT-ITES servicesare expected to struggle in the year 2008-09.Impending slowdown in general businessactivity and high inflation is going to affect thepurchasing power of general public in Indiawhich may adversely affect the service sectorgrowth in India. Service sector growth isexpected to be in the range of 9.25-9.5% inthe year 2008-09.

INFLATION

Currently inflation is running at a 13 yearshigh of 12.44 %( 15/08/08). High Governmentspending due to farm loan waiver andimplementation of sixth pay commissionreport, huge amount of under recoveries onaccount of fuel, food and fertilizer subsidy areexpected to flare up the aggregate demand

further. Inflation is expected to remainbetween 11-13% till December 2008 and itmay come down to the level of 9-9.5% by themonth of April 2009.It is expected to stabilizein the band of 7.5-8.5% by the month ofSeptember 2009.

MONETARY POLICY

RBI is expected to continue its monetarytightening exercise up till the 4th quarter of2008-09. Inflation is continuously hoveringabove the RBI`s bearable limit of 5.5-6.5%and it is expected to remain same in the nearfuture also. Further high fiscal deficit ofCentral Government is expected to createdpressure on the fund raising exercise of RBI.CRR is expected to increase to the level of9.5-9.75% from the current level of 9% andRepo Rate is expected to be further raised tothe level of 9.5% uptill the 4th quarter of 2008-09.

The global economic scenario is on a trace of recession, but it is expected to stabilize due todecrease in the crude oil prices and inflation. The global economy is also expected to ride on the

growth of the emerging economies like China, India and others. The continued rise ofdeveloping economies on the world stage will provide substantial potential opportunities foralready developed economies with, amongst other things, new markets for their exporters andinvestors.

CONCLUSION



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GLOBALTELECOM

Telecommunications is a burgeoning sector and this phenomenon has not gone unnoticed. Itsdriven by the fact that it is becoming a need and not a want for people and their businesses .Theobjective of our research is to study the prevailing telecom business environment in variousregions viz. North America, South America, Western Europe, Eastern Europe, Middle East,Africa and APAC.

SCOPE

ANALYSIS

WESTERN EUROPE

As Western European markets are matureand fully saturated in the voice and textsegments, there are only a limited number ofplayers and limited opportunities available tothem. The macro-level market trends drivingcarriers to outsource network operationsinclude hyper-competi t ive markets,

increasing focus on operational efficiency,greater service velocity and the desire tofocus on differentiated parts of the business.The ability to scale human capital, time-to-market improvement and opex savings arekey operational efficiency metrics whichoperators considering professional servicesare looking to achieve. The proven ability tomeet the minimum levels for these metrics iscritical as operators decide how much of thenetwork they can outsource. Mobile network

maturation is driving a shift in emphasis froma "build" to an "operate" mentality for thesecarriers. Mobile product estimates the currentnumber of mobile users split by prepaid andpostpaid, penetration rate, mobile servicerevenue split by voice and data, and usersand handset figures split by technology. Thesuccess of mobile network separation willdepend on the ability of partners to addressissues including cost allocation, technologystrategies and future investment. On similar

lines with Japan, most of these regions'Indexes boast somewhat higher wirelessthan wired percentages, proving the relativelyhigh 3G penetration in Europe. Denmark and

Belgium, however, are exceptions. That said,things there would change due to wirelessbroadband's higher growth. Some majortrends can be observed in the future arementioned below:

- T he r egi on' s mo bi le b ro ad ba ndpenetration is very significant asbroadband moves from fixed locations to

mobile ones, and could spread this trendto other regions.

- Western Europe will see huge varianceas far as IPTV deployment and uptake isconcerned. France will see the highestsignups and Germany should see theleast. Reasons for sluggishness of IPTVare poor pay TV penetration acrossEurope and poor LLU in certain markets.

- Despite a huge disparity across Europe,retail prices in Western Europeancountries continue to drop as usage isrising. As price elasticity and fixed-to-mobile substitution (FMS) are nearingtheir maximum exploitation capabilities,MNOs are shifting their focus toward costreduction to safeguard margins. On thedemand side, the focus of competition isshifting toward brand and distributionpower.

Western European MNOs have re-identified their core business, which isclearly related to the billing relationship

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with their customers. The aftermath is aclose focus on direct relationship withtheir customers than on indirect retailchannel.

- While increasing their activities in thecustomer-facing side of the business,

mobile operators opted to outsource andshare part of their assets. Networksharing of active and passive elements ofthe radio access network (RAN),outsourcing of services, and the signingof operations management agreementstook place in virtually every WesternEuropean country between 2005 and2008.

- Major IP carriers have countered the

decline in revenues from traditionalservices through a programme ofacquisition and disposal, and bylaunching new wave product lines.However, it continues to have significantfinancial shortcomings.

EASTERN EUROPE

Eastern Europe is undergoing transf-ormation due to requirements to join theEuropean Union (EU) and the World TradeOrganisation (WTO). Markets have beenliberalized and incumbents privatized. Theonce perceived underdeveloped market hasreached saturation at some places. Mobileoperators are turning to data, as acquiringnew subscribers will be tough in saturatedmarkets.

Most of the networks are already 3G andthey are looking for options beyond 3G now

like HSDPA/HSPA. Mobile TV deployment isexpected to increase following a push fromthe success of DVB-H standard with DVB-Hdevelopments/trials underway in CzechRepublic, Hungary and Poland. With Appleforming partnership with three Russianoperators, and heightened competition

amongst the players along with innovativedata packages offered by the operators, mostof the 3G led subscriber growth will comefrom the Russian market.

FTTH/FTTB availability is expanding in allfive countries (Hungary, Slovenia, Slovakia,Czech Republic, Poland) with deploymentsby all manners of different players in thetelecoms market municipal governments,mobile network operators, fixed-line

alternative operators as well as incumbents,a trend that is expected to continue movinginto 2009.

NORTH AMERICA

Operators will channelize their effortstowards deployments and trial runs with clearfocus on LTE deployment and mobile WiMax

as long term technological evolution. Cableoperators like Time Warner, Comcast, andCharter will bundle-up their products with newservice offerings and therefore will tie-up withwireless service providers to counter theIPTV offerings from Wireless operators. Ruralbroadband subscribers will also increase asmany regional players are deploying wirelessbroadband through WiMax and also throughwireline medium like xDSL with triple playofferings. The roll out of fiber as preferred

access medium will increase due to unlimitedbandwidth and bandwidth-extensiveapplications demand from users.

Growth of MVNO market will stabilize asMVNO players will start cost-cuttingmeasures to retain their margins. Handsetmarkets will enable a lot of operators tomaintain falling revenues as well as increasetheir margins. Femtocell based solutions willalso get deployed to optimize an operators

CAPEX. A new business model involving LTEservice offerings from wireless operators andbroadband services from cable or fixed line

Figure 4 - WORLDWIDE DATA SERVICES REVENU



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operators will be a good value-proposition forall players in this strategic telecomecosystem.

The wireline broadband market is expected todip further in the foreseeable future. Thistrend is likely to continue as large markets of

the unsubscribed users, such as those in thelowest socioeconomic classes, are not likelyto adopt broadband if they haven't found aneed yet. Additionally the traditional ADSLand low-tier cable modem services will bevulnerable to replacement from HSPA,WiMAX and other high-bandwidth wirelesstechnologies that are beginning to hit themass market. To generate higher subscriberrevenue home network management,network security services, physical

security/monitoring services, networkstorage, elderly care/telemedicine, gamingand energy management could be thedifferentiating factor in operators..

IPTV is a global phenomenon. NorthAmerica, for example, will see a varied appro-ached by service providers. Across the board,consumers will get basic applications such asEPG, VoD and DVR with little involvement ofthird parties. However we foresee the

promise of true openness far frommaterializing in the coming year.

SOUTH AMERICA

Most telecom markets in Latin America havebeen privatized and liberalized. While privateinvestment has contributed to rapid growth inmobile and long distance telephony, fixed

lines have virtually ceased to grow, despite alow 18% teledensity. There will be intro-duction of next-generation mobile broadbandservices, including high-speed mobileinternet access, mobile TV and video, andmobile-music-related services.

The upgradation of existing 2G (GSM/GPRS/EDGE) network with the latest HSPAfunctionality will enable a smooth andefficient introduction of high-speed 3G(WCDMA/HSPA) services.

Regulatory changes in the 2.5GHz band will

make it technology neutral, supporting 3G orWiMAX .

MIDDLE EAST

Middle Eastern markets have embarked onthe process of liberalization and deregulationduring the last three years. World's telecomplayers are showing active interest in thisunderserved and cash rich market.Companies like Etisalat in UAE, Qtel in Qatarand Zain in Kuwait have benefitted fromacquiring new mobile licenses in the recentlyliberalized markets throughout the region.Also there is a need to liberalize the market asa requirement for joining the World TradeOrganization. In addition to mobile licensesthe fixed line telephony is also underliberalization. Competition will change theway the incumbents operate and they mightdiversify their current offerings to defendagainst the upcoming competition. Withmiddle eastern governments starting torealize the importance of telecommunicationin the developments of their economies, theyhope that liberalization will bring increaseddevelopment of infrastructure, increased tele-density, better quality of service, increasedcustomers choice and more attractivelypriced services, all of which put pressure onthe incumbents to stay ahead of competitionand prove beneficial to the customers.

APAC

With growing competition, convergenceintegrators are racing to redefine their productportfolios. The widespread availability ofservice options becomes irrelevant unless

Figure 5 - Global Mobile Video/ Broadcast TV Market



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providers can reach out to the rightcustomers and articulate the sellingproposition based on a deeper marketsegmentation approach. Convergenceintegrators continue to gear up theirinvestment in strategic locations includingAustralia, Hong Kong and Singapore, where

enterprises are in convergence mode. Thestory of IP convergence does not end here.As enterprises are increasing their interestin fast growing developing economies suchas China, India and Vietnam for businessexpansion and operational efficiency, pan-Asian convergence integrators render theirresources and support with enthusiasm.

Vietnam will soon be a goldmine forproviders looking for untapped oppo-

rtunities. Vietnam's state-owned tele-communications sector is expected to bethe primary user of a suite of ICTtechnologies and solutions.

Service availability changes over time asconvergence integrators move ahead withIP convergence strategies. Whether it is avertical or horizontal service expansion,supporting a new generation of IP servicescould prove challenging if convergence

integrators do not have the skills andexpertise required to support additionalservice components. Touchbase's intent toestablish its leadership in the unifiedcommunications (UC) arena is clear as theintegrator has deepened its partnershipswith Cisco, Microsoft and IBM to pursue theUC venture. The growth prospects seempromising as Touchbase is financiallybacked by one of its partners to exploitopportunities in emerging markets.

China Mobile recently completed its firstlarge-scale public tender of TD-SCDMAnetwork equipment, with a total value of 26.7bn Yuan (US$3.53 billion, based on anexchange rate of US$1 = 7.56 Yuan).Chinese telecom equipment manufacturersZTE and Datang are big winners, withcombined market share close to 75%.Ericsson is a surprising loser with less than1% market share. Motorola, Samsung and

Lucent (before merging with Alcatel) are biglosers without even bidding on the projectdue to a lack of infrastructure offerings for

TD-SCDMA. Compared with TD-SCDMAinfrastructure equipment, the TD-SCDMAterminal is still the weakest link in the TD-SCDMA ecosystem. Without the activeparticipation of handset market leaders Nokia,Motorola and Samsung, TD-SCDMA terminalswill not have a very attractive portfolio to gain

market share in the Chinese domestic handsetmarket. In the end, consumer adoption of TD-SCDMA will heavily rely on the device portfoliooffered by China Mobile.

Globally, CDMA2000 is growing at a slowpace. China Mobile's adoption of TD-SCDMAwill have a great impact on the 3Ginfrastructure market. We anticipate the TD-SCDMA subscriber base will easily exceed thatof CDMA2000 in China in the next 3 to 4 years.

However, it will take at least 7 to 8 years for TD-SCDMA to become the second-largest 3Gstandard in terms of subscriber numbers.

Mobile WiMax is expected to "monopolize themarket" in Japan, with the country's UQCommunications slated to be its largest WiMaxoperator.

Japan and South Korea are the leading 3Gmarkets in the region but soon, China, which is

still striving to make its place on the 3G map,will emerge as the big market, thanks to its2008 Beijing Olympics. Among the hotspots ofIPTV is South Korea, a country known forhaving the highest penetration rate ofbroadband Internet service in households .

- In Asia Pacific, Broadband wirelessaccess (BWA) solutions have sufferedeither an early demise or slow adoptiondue to the lack of standardization and poor

interoperability. As a result of this WiMAXhas generated much interest as the nextevolutionary data-voice enabler. Theassumptions for the uptake of WiMAXtechnology, particularly in developingareas, are based on the difficultiesinherent in deploying today's availablecompeting technologies.

- In Asia-Pacific, the FMC ecosystemconsists of a small number of service

providers scattered across a highlyskewed telecom landscape. While amajority of the markets across Asia aregradually transitioning to IP, the availability



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of high quality omnipresent telecominfrastructure in advanced markets suchas Japan, South Korea and Hong Konghave hastened the deployment of FMC-based services. Transitioning to IP, theavailability of high quality omnipresenttelecom infrastructure in advancedmarkets such as Japan, South Korea andHong Kong have hastened thedeployment of FMC-based services.

- The birth of Asia-America Gateway cablesystem will complement existing highbandwidth cable systems in the AsiaPacific. In addition, the AAG cablesystem will provide the much-neededdiversity against traditional routes to theUS.

AFRICA

Traditionally the success story of neighborcountries is emulated in a growing country,but in the case of Africa duplicating thesuccess stories of UK and following their path

for migration may not be the right thing to do.The deployment of WiMAX as a solution forAfrica may not be such a good idea becauseof its need for power and its attractiveness fortheft. Just because 3G is the world standarddoesn't mean that it should be the investmentpath towards wireless Africa. Africa shouldlook towards fast growing economies ofeastern Europe for models like communityinitiatives, micro-financing and wirelessdeployments. The operators should be givenfreedom to experiment various hybridinfrastructure approaches so that they cancater to ICT needs of the society with aUnified license regime rather than penalizingthem for the same. Infrastructure sharingcould be a fair and financially efficientproposition. Thus Africa will require a lot ofinitiatives from government as well asoperators for fruitful development of thetelecom sector in the future.

Western Europe markets are mature and saturated in the voice and text segment. EasternEurope on the other hand is undergoing transformation and has reached saturation at someplaces which has led to mobile operators turning to data. The sole motive of North Americanmarket will be to gain market share and customers as new business models emerge. In SouthAmerica while private investment has helped rapid growth in mobile and long distancetelephony, fixed lines additions have reduced. Africa needs a lot of government support toflourish in this sector.

CONCLUSION



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INDIAN TELECOM

Indian Telecom addresses the trends pertaining to fixed and mobile communications, ruraltelephony, NLD & ILD, regulatory issues pertaining to 3G, WiMAX and MNP, and investmentpertaining to network. The main objective of this vertical is to predict fixed and mobile subscriberbase, overall teledensity, rural and urban teledensity, trends in 3G, WiMAX, infrastructuresharing, telecom retailing, handset manufacturing and network investments.

SCOPE

ANALYSIS

SUBSCRIBER BASE& TELE-DENSITY

India has seen an unprecedented growth inmobile telephony. Despite being one of thefastest growing telecom markets, there is stilla lot of ground to be covered and the race ison to achieve the numbers. With the entry ofnew players, incumbents are expanding their

horizons with new licenses and increasingtheir range of services and QoS in existingcircles. Handset prices are coming down andthey are now not just communicating devicesbut much more, with additional featuresavailable at affordable price. To put icing onthe cake the service providers are now goingfor bundled services.

The Government is encouraging Ruraltelephony with aid from USO funds andoperators are promoting telephony as more ofa utility. India has lowest calling rates and

tariffs as compared to other countries, whichis another major factor in driving theincreasing subscriber base. All these factorscumulatively contribute to the increasingsubscriber base and teledensity in urban andrural areas. On the other hand fixed linetelephones have seen a downturn due toreasons like easy availability of mobileservices, difficulties in last mile connectivity

for operators, etc. The only brighter side of afixed line is the increasing number of DSLsubscribers for broadband connectivity. Thusconsidering all this we predict that:

- Fixed line subscriber base will witnesscontinuous marginal monthly reductionswhich will lead to a base of 36.24 mn atthe end of Dec'09 resulting in a perc-entage decrease of 6.23 % over July'08.

- Mobile subscriber base is expected toreach a milestone of 412.25 mn with agrowth of 54% over July'08.

- The total subscriber base is expected toreach 448.6 mn witnessing a growth of33.97% over July'08.

- Continuous incentives by government tooperators for expanding rural coverage,innovative services, handset manu-

facturers bringing handsets in pricerange of Rs. 600 to Rs. 800 and incre-asing disbursal from USO fund will makerural teledensity to cross a 17.19 % mark



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by the end of 2009. In total, 141.17 mnrural connections are expected byDec'09.

- Various tariff schemes, various modes ofpayment for purchase of handsets andanticipation of 3G services will drive

urban teledensity to 87.38 % by the endof 2009.

FUTURE SERVICES

MNPThe announcement of guidelines for 3G andMNP were a milestone in the Indian telecomjourney. This announcement puts enormouspressure on operators to provide world class

services or loose their customers to theircompetitors. Thus, the GSM players andTRAI are at loggerheads over this issue andimplementation of MNP will be a matter ofchallenge. The time taken to port acustomer's number from one operator toanother was decided 3 weeks initially, whichwas too high and hence it may not bewelcome by customers. Other issues likeporting and routing methods are still greyareas. Also the grant of contract for centralclearing house will be a lengthy andcompl icated procedure taking intoconsideration cross holding and other suchmatters. Hence, the implementation is mostlikely to be enforced by the mid of next yeararound June.

3G SERVICE & APPLICATIONSThe much expected 3G auction is expectedto bring a fresh breath of air to the Indian

telecom sector. It has been delayed for a longperiod for one reason or another and nowwith the expectation of global players to beparticipating in the auction, 3G is the next bigthing. Subject to 3G spectrum auction whichis expected by the end of this year, theservices will be rolled out by the end of nextyear and initially 3G will be more of asubstitute to broadband rather than mobileinternet. It is expected to be in nascent stagefor the next 2 to 3 years, due to reasons like

customer awareness about the 3G services,availability of low cost 3G handsets,affordability of services etc. Various services

that the advent of 3G is expected to offer aremobile information, location based services,business solutions, mobile entertainment etc.All of these services will be a promoting pointfor 3G services once it gains someacceptance in the market.

TELECOM RETAILWith the growth in the telecom sector, thetelecom retailing is also seeing an uptake.Increasing subscribers, increasing portfolioof services by service providers and bundlingof services and increasing penetrationespecially in rural areas have contributed tothe increase in retailing of telecom relatedproducts like handsets, service centers etc.The increasing FDI in telecom retailing and

with major players like Reliance, Tata, andRPG moving into retailing of telecomproducts, the telecom retailing is traversing aforward path. The investments in 2009 in thissector are likely to increase substantially.Telecom retail sector is expected to do anoticeable contribution by 2009 in total retailsector.

NLD/ILDWith the increase in trans-pacific undersea

cables, the bandwidth crunch is not thatserious an issue and operators are activelyinvesting in these cable schemes to enhancetheir own services in an efficient manner.Operators like Bharti , who have invested inmore than 5 cable consortiums and BSNLhave plans to increase its presence in thisarea through further investments. The totaldemand for capacity is expected to doubleroughly over the next two years. With VoIPservices (Subject to regulatory grants) and

bundling of services, the demand forbandwidth will increase. This will also see anincreasing competition in the NLD and ILDmarket, with broadband providers alsocompeting with ILD and NLD operators forproviding services. Hence, the tariff rates forNLD and ILD are expected to decrease andbundled services are going to be the order ofthe day.

FIXED WiMAX

The Government is planning to auctionblocks of 700 Mhz and 3.3-3.6Ghz bandssubject to availability in the next year to offer



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Fixed Wimax in rural areas, but, due toreasons like high cost of CPE and WimaxServices, Fixed Wimax is expected to be aniche technology and services will be limitedto high end users and enterprises in urbanareas and subsidized services in ruralareas. It is expected to grow in tier 2 and tier3 cities on the roadmap to Pune andBangalore. Operators like Reliance, Tataand Idea Cellular are expected to invest inFixed Wimax to provide broadband servicesto business and high income residents inurban areas.

On the rural front, the Government isaggressively pushing to expand broadbandcoverage and thereby improving services

like education, healthcare,etc. Majorinvestments have already been announcedby operators like BSNL, RCOM, TTSL andequipment vendors are aggressive overtheir WiMAX CPE's and their costing. Due togovernment intervention and low density,cost of Wimax deployment in rural areas islow and hence operators are looking for amajority of market share by deployingservices as early as possible( subject to

availability of spectrum). This means that sansauction we can see the Fixed Wimax growingin rural and urban areas to a large extent by theend of next year.

USO FUNDSWith rural teledensity increasing beyondexpectations, the operators will be moreinclined to increase their operations in ruralmarket and hence there will be increase indisbursement of USO funds towards ruraloperations. The USO regime will also coverinternet and broadband coverage, where ISPsare also allowed to compete for subsidies fromUSO funds against the services provided inrural areas. This has broadened the scope ofUSO coverage from voice to voice and data,

both of them being equally important. But therehas been an opposition from CSP's on theissue of USO funds towards Broadbandoperators and while the issue is being resolvedthe disbursement for Broadband serviceproviders may decrease. In general there willbe increase in disbursement of USO funds tooperators and there will be a rise in servicesoffered to rural customers.

There is no doubt that there is huge potential in the current Indian market, but, effective planningand implementation will make way for a perfect story. The government should be careful indevising telecom policies of the country in order to ensure it reaches the 500 million subscribertarget by 2010. Spectrum availability and allocation remains an issue which needs to beaddressed. A lucid 3G policy would be beneficial as it would draw more FDI. Indian operatorsneed to upgrade their services and infrastructure as the introduction of MNP and foreign playersto the Indian market could mar their plans of customer acquisition and customer retention.

CONCLUSION



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TECHNOLOGIES

The advent of technology in the Telecom sector facilitates the provisioning of newer and costeffective services and helps in meeting the demands of the consumers for the same, by makingthem easily accessible. The telecom technology vertical focuses on these changing markettrends and its impact on the growth of the Telecom sector across the globe.The TelecomTechnology vertically encompasses the Core, Access and Transmission verticals.

SCOPE

ANALYSIS

CORE

ETHERNETAsia, North America and Europe continue todrive investment in technology which has ledto rapid growth of global Ethernet markets forthe last 3 years. Factors like shift towards IPbased services, low cost and scalability aredriving this rapid development. As large

emerging markets like India, China, Brazil,Russia etc continue to deploy networkinfrastructure, they would account for half ofthe new communication connections in next 5years. With these countries leapfrogging overlegacy infrastructure, Ethernet will play anincreasing role in this rapid growth driven byfactors like low cost, lower complexity, fasternetwork deployment, rapid service creationand high Quality of Service. It is estimatedthat global market for carrier Ethernet

equipment will reach around $3.9 bn mark by2010 at a CAGR of 33%.

MPLSThe IP/MPLS edge market is expected togrow continuously with the availability of highend technology and low cost infrastructure.Conventional edge routing and multipleservices on edge routing are two areas wheremaximum growth is to be seen withincreasing consolidation plans between

service providers and vendors. Networkconsolidation plan puts cost reduction andnew service introduction on top priority ofimportant parameter op ex, service providers

require vendors to support and increasenumber of services on common IP/MPLSplatform to harmonize and co-exist withlegacy network that service providerscurrently possess. As a result there will be anincrease in investment in multiple services onedge routing.

IMS

The IP multimedia subsystem is still the mostpreferred next generation architecture. It isstill a key priority for converged fixed andmobile operators who are well into their all IPnetwork transformation projects witheventual convergence at service core layeras their ultimate goal. However, web 2.0 istaken for value proposition currently. The IMSimplementation and transformation will takeapproximately 10-15 years to materialize withvarious impediments such as use of IP v6,Infrastructure deployment towards all IPnetworks in phase-wise manner etc. On theother hand, fixed line operators will be mostaggressive in adopting IMS elements.However they will be adopting softwaredriven migration path towards IMS withadditional investments in SIP based softswitches and media gateway driven solutionsfor a phase wise evolution towards NGNarchitecture.

ACCESSDSL (ADSL/VDSL)Commoditization of band width and growing

TELECOM



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demand for higher bit rates for bandwidthhungry applications and increasingawareness of fiber capacity and advantageshave pushed operators towards deployingfiber and there has been a general shifttowards FTTH rather than upgrading theexisting lines to ADSL 2+ standards.

Moreover with DOCSIS 3.0 released anddeployed ADSL, faces a stiff competition inglobal markets. In India the delay in roll out of3G services and WiMAX operations havegiven a chance to fixed line operators toupgrade existing lines to ADSL 2 standards.As fixed line substitution and general shifttowards mobile continues, broadband valueadded services and increased capacity willbecome drivers for fixed line serviceproviders to upgrade to ADSL 2+ and make

their mark in the market. This will result infurther deployments of ADSL cables in India.

GPRS/ EDGEWith the delay in 3G rollout services likeGPRS and EDGE have a scope fordevelopment especially in India. The numberof subscriber using these services is not veryhigh. GPRS is not so popular in India as 50%

of the handsets sold in India are low costhandsets( i.e. below $50). These phones arenot GPRS enabled. Also the phones withGPRS have a problem of navigation.Customers prefer easy navigation and easysearching of content on phones, which is notthe case with phones available in the marketcurrently. The handset manufacturers haveso far considered giving subsidies only to thehandsets, they should look towardspreloading applications as per local needs.

WCDMAThe year 2008 saw some great movement in

WCDMA segment. Operators in LatinAmerica have launched 3G with WCDMAwith a great hype. Though there are stillquestions about the reality, one thing is forcertain that some operators are pretty seriousregarding their 3G services and WCDMA isgoing to be their preferred path for evolution

from the existing GSM technology. There hasbeen a slow uptake in the Latin Americanmarket for the WCDMA services owing tofactors like availability of spectrum, consumerfamiliarity with mobile data services etc.Presently WCDMA active commercialnetworks in Latin American countries focusmore on providing connectivity to laptopsrather than providing new services. Withincreasing consumer awareness regardingadvantages of WCDMA like High Data Speed

with Mobile Internet Access, mobility,multimedia facilities, video conferencing etc.there will be a huge number of takers forWCDMA.

As India awaits the roll out of 3G due to delayin auction of 3G spectrum, the natural path forevolution of GSM players will be WCDMA.While the CDMA players plan to move to EV-DO, one possible option for them will be tomigrate to GSM. We believe that 3G will kick

off by the end of next year, but it will be a nichemarket for coming 2 to3 years owing tocertain reasons like availability of low end 3Gdevices, customer familiarity with mobile dataservices. Initially 3G will be promoted as analternative form of broadband access ratherthan a new service as consumers are still notcompletely aware of high speed data serviceson mobile and also due to lack of availabilityof low end handsets with 3G capabilities.When more operators promote low end

handsets in addition to mobile broadbandservices then the WCDMA services will pickup and start growing at a rapid pace.

HSDPAHSDPA with increased data rates and greatersystem capacity is next in line of evolutionfrom WCDMA. Improved end user expe-rience and minor alteration to existingWCDMA architecture will be the major driverfor operators to upgrade to HSDPA. For some

operators who start late on their 3G rolloutmay even leapfrog into HSDPA due to higherdata rates and low up gradation costs fromWCDMA.



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WiMAXWiMAX uptake has a unique set of potential,opportunities and challenges in the emergingmarkets. WiMAX is used as an alternate wayto serve areas that cannot use traditionalwireline networks. And the target market forwimax is lucrative enough to have boosted

the expectations for the technology. Howeverthe WiMAX deployments have been slowerthan what the hype suggests owing to factorslike regulatory issues and low buying powerof consumers that stand to benefit the mostfrom technology. There are some examplesof commercial uses of this technologyalthough some of them are only as an accesstechnology and not as a mobile platform.

Currently the highest demand for wireless

broadband comes from high end markets,corporations and some SMEs with high techneeds. However, there is a pent up demand inareas that lack access to develop wirelineservices. Some of the major inhibitors ofgrowth of WiMAX are availability ofspectrum, regulatory and legal issues, limitedaccess to computers in rural areas and cost ofCPEs, lack of spending power for WiMAXservices etc. Despite this, countries likeMexico, Chile, China etc have rolled out

WiMAX services with varying success. Thistechnology has found a friend in developmentplans of several emerging economiesincluding Latin America, China and India.Hence further deployment of fixed Wimax inLatin America and Mobile Wimax in China isexpected to grow rapidly.

India has more than 70% Indian householdswithout access to fixed line telephony whichmeans these households have no last mile

connectivity and providing DSL to them is amomentous task. Also with no last lineunbundling WiMAX provides as an

alternative to reach to customer in an efficientmanner and thus the WiMAX deploymentsare expected to pick up if government createsa favourable policy framework to enable theadoption of new wireless standard. Due tolow PC penetration and country specificmobile broadband framework it makes a

nationwide rollout of WIMAX prohibitive. Alsodue to spectrum limitation the rural coverageusing WiMAX will be limited. Hence due to allthese factors It is expected that india will have6.9 million subscribers by the end of 2011unless government intervenes with somepositive influence.

TRANSMISSION

DWDMWith the advent of new technologies andbandwidth hungry applications, there is anever increasing demand of bandwidth in themarket. Thankfully due to increase in FDI andlaying of transpacific cables to overcomebandwidth crunch it has mobilized thebandwidth market and DWDM remains thepreferred technology for transmission. Evenwith operators migrating towards 4G networkthe transmission is expected to be supported

by DWDM. India has seen major investmentsin fiber optics mainly by public sectororganizations and they are adopting DWDM.


A lot of the technologies mentioned above will see immense growth due to factors like low cost,lower complexity and faster network deployment. GPRS is not widely used due to the low endphones used by the cost sensitive Indian consumers. Increasing demand for higher bit rates forbandwidth hungry applications and awareness of fibres have pushed operators to move tofibers. Wimax is emerging to be a far more trusted alternative as compared to fixed lines. The

Indian scene will be exciting to watch out in the Wimax space but the real challenge would beconsumer pricing and speedy roll outs by operators.

CONCLUSION


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MOBILITY

India's galloping wireless industry, the world's fastest growing mobile market, undergoeschanges year on year with every year outpacing the previous one. This report endeavors to bringforth foreseeable trends in the field of mobility focusing on key drivers and some of the factorsinstrumental in propelling the mobile industry in the current scenario that are Revenue,Subscriber Base, Mobile Density, ARPU, and MVAS.

SCOPE

ANALYSIS

COUNTRY TRENDS

The mobile subscriber base is expected tocross 412.12 million by the end of 2009 withthe overall mobile density reaching 38%.Themaximum growth is expected in 'B' and 'C'circles, we also expect B circle to cover 40%of the subscriber base while 'METRO', A andC circle are expected to cover 13%, 35% and

12% respectively by the end of the year 2009.

ARPUGoing by the number of mobile phonesubscribers, India has become the world'sfastest growing region. The GSM ARPUincreased by 1.15% in Q1 2008 over Q4 2007while the CDMA ARPU decreased by 9.6% in

the same period. Looking at the ARPU trendsit is forecasted that the blended ARPU forGSM and CDMA would decline to a value ofRs. 225 and Rs. 130 in the year 2009

respectively. The market adoption of Wirelessinternet will add to the Data ARPU.

Those Telcos eyeing to become a volumebased player will face tradeoffs betweenCustomer Subscription/Retention vis--visQuality of Service. Although falling ARPUcoupled with low tariffs will force operators tolook at other revenue streams in mobile

services. Other than just voice, operators seedata services and converged services as thenext big revenue generator for them.

MOBILE VALUE ADDED SERVICES

The current MVAS market (as of June 2008)is of Rs 5780 crores. P2P SMS contributes Rs2140 crores to the MVAS market and thisgoes only to the operators (the balance Rs3640 crores is divided between the differentstakeholders including th operators.). Rs2312 crores come from CRBT/RT while thebalance Rs 1329 crores is divided amongstthe other services. It is expected that theMVAS market will exceed a figure of Rs 9760crores by second quarter of 2009. MVAScurrently contributes around 9 % to theoperator's revenue. It is expected to increaseto 10.4 % in the next 1 year and 12% by June2010.CRBT (caller ring-back tones)constitutes bulk of the VAS market share at40%. Other data includes e-mail, games, on-deck content etc.



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Undoubtedly, entertainment such as Indianfilm, pop music and video as well as cricketare the most important components of non-voice revenue and have contributedsignificantly to operators' kitty. But even afterseeing significant growth, entertainment hasnot seen much adoption beyond CRBTs and

ringtones, and cricket is restricted only tomatch scores through SMS alerts. 3Gnetworks would drive services such as MMS,mobile banking, mobile internet, mobile e-mail, mobile advertising and mobileshopping. However, 3G alone cannot boostthe Indian operators' non-voice servicerevenue.

We forecast that the SMS volumes wouldcross the 140 million mark in 2009 and willsee more and more SMS based utilityapplications in the near future. Operatorswould also seek for Voice portal/ IVR basedservices to overcome the language barrier ofSMS.

The mobile gaming market saw aggressivegrowth in the year 2007-08; the market grewat 40%. It is expected that with the availability

of data enabled handsets as well as operatortaken initiatives related to pricing as well asnetwork up gradation we would see a similargrowth and the market would reach to a figureof Rs 450 Crore in the consecutive year.

WIRELESS INTERNET

The number of Wireless internet subscribersgrew from 18 mn in 2006 to 57.83 mn by 2007

end; we predict that the wireless internetsubscriber base will cross 130 mn mark by1st quarter 2009. In the forecasted period we

would be able to see the following changes inthe mobile internet zone:

- The Telcos would try to improvise on thecontent rather than engaging in speedbattles.

- The internet and the content basedcompanies focusing on small screen sizehandset based mobile internet businesswould like to push for innovativestrategies such as Interactions defined inshorter sessions, rendering web contentfor improved display on a limited screen,m o r e c o m m u n i c a t i o n s - c e n t r i capplications, with less use of rich formatssuch as video, and the location-awareservices.

- Operators are looking forward to a highernumber of API's to accommodate morenumber of A2P to cater to their strategictie-ups and partnerships. This wouldbolster the 2G revenues.

- With the emergence of 3G based hand-sets we predict that the content woulddiverge rather than converge between thebig and small screen size handsets.

- Telcos would depend on customizedMobile advertising to further the growthof Wireless internet thereby creating thedemand. We predict that the mobileadvertising market revenue wouldexceed the figure of Rs. 55 Crores by2009.

ENTERPRISE MOBILITY

Large / Medium enterprises in India are wellconnected by fixed networks. Integrated



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communications services are consideredimportant to improve productivity, they will beearly adopters of mobile wireless servicesincluding enterprise level core applications.Blackberry will continue to lead the mobilepush mail services market; however,Microsoft Windows based platforms have the

head start in the number of devices sold. Buteven with these developments, initialhandset cost can still be a big deterrent forSME / SOHO adoption. In the future while e-mail and PIM would become dominant, thenew wave would emerge around integrationof mobility with the CRM, SCM, SFA andWFA.

In the coming year, Enterprises would movemore towards SIP based architecture for their

Voice telephony, as well as Video-conferencing solutions. Efforts will be madeto provide presence based unifiedcommunications in the enterprise space.Many corporations would go for deployingUnified communications to transform theirinternal business processes, empower

employees with approved businessapplications and improve overall customerservice quality. Videoconferencing vendorslike Polycom, Aethra, Sony, Cisco andRadvision would look towards deploying theirtelepresence solutions. However, there is apotential for enterprise based HD videoconferencing services. The principalHardware based Videoconferencing vendorssuch as Polycom and Cisco would find this tobe a major detriment.

Significant developments in Value added Services, emergence of new content based serviceslike mobile search, gaming, banking, and m-commerce applications would augment the growthin the consumer mobility segment. The true essence of mobility would be fully captured by therich Enterprise applications that will be realised in the coming year due to the uptake of servicessuch as Unified Communications; presence based video telephony and Enterprise Telephony.

CONCLUSION



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BROADBAND

This vertical focuses on both Wired & Wireless Broadband in India by covering the demand andsupply side of Broadband with its impact on the Broadband Equipment market. Predictions aredone for both the Enterprise & the Retail Broadband markets along with the key technologieswhich will impact the Broadband landscape over the next one year.

SCOPE

ANALYSIS

SUBSCRIBER BASE &TECHNOLOGY WISE DISTRIBUTION

The Internet and broadband market hasmade the move, although a bit slow butdefinitely on the positive side. With increasingawareness amongst the customers, thedemand for services like online gaming, videodownload and multimedia content, which may

require high or low bandwidth has grown,increase in availability of services has addedto that demand. Although there are somemajor concerns like the cost of operation andmaintenance, cost of CPE, low penetration inrural and urban population and low computerliteracy which are to be addressed. Someinitiatives like the last mile unbundling,decreasing the cost of computers etc. havealso been slow on the uptake.

Analysis has shown that in places withexisting wireline infrastructure, the cost ofrolling out DSL is significantly lower thansetting up a WiMAX infrastructure fromscratch. This is largely due to the lower cost ofDSL equipment as well as the availability ofDSLAMs4 with 1520 ports, which lower thecost of enabling even the remote, ruralexchanges. The cost of setting up a WiMAXbase station, on the other hand, can be up to1.5 times higher than enabling an exchange

for DSL. ADSL is having a CPE cost of $90and WiMAX CPE costs as much as $140.Another crucial element is the high spectrumcharges that a service provider needs to pay

to provide its service to its clients. Hence it isobvious that WiMAX is costly over ADSL. Forenterprise segment security is the majorconcern for WiMAX. Hence with the existingsetup already present ADSL is cheaper andseems to be better option with fixed linetelephones. On the other hand with most ofthe operators worldwide using spectrumbetween 3.3-3.8, 2.3-2.7 & 5-6 GHz, Indian

operators have 2*6Mhz of availablespectrum. As per recommendation wimaxspectrum will be auctioned and will be readyfor use by nov 2009 by 3 operator with 10*2Mhz. Till this happens the spectrum is lessand hence the per BTS customer mapping toits cost makes it highly costly affair.We expect the broadband subscriber base tobe more than 8.5 million by the end of junenext year.



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WIMAX

WiMAX devices and networks are availablenow for deployment worldwide deliveringbest in class broadband services at a cost to

consumers significantly lower than any othertechnology. Also with factors like lack ofrobust infrastructure, embedded mobilewimax in mobile PCs and dual modecellular/wimax devices or handsets will drivethe wimax volumes. The latest TRAIrecommendation talks about the auction in2.3-2.6 Ghz band and the reserve licensefee is doubled to 1010crores for an ISP whoapply for a PAN India wimax spectrum. InIndia because of the poor rural infrastructure

the adoption of wimax is easier and also thenew amendments by DoT policies will helponly the serious players to take part in theauction of the frequency. The serviceprovided will be of global standards. Eventhough the price of laptop with embeddedhardware and high capex for a PAN Indiacoverage would slow the wimax adoption inthe initial phases it is expected to pick uplater. The wimax forum is expected to comeup with a comprehensive global roaming

plan by the end of 2008. With the operatorslike Tata comm.. and Sify taking on the wimaxdeployments we expect the uptake of wimaxin a big way atleast in the enterprise andurban markets.

WI-FI

As the notebook consumption drives upto aphenomenal 21% of the total PC consumed

in the first half of 2008 against a fadingdesktop growth of 3% and with 90-95% ofnotebooks with built-in wi-fi, the promise of

wireless connectivity is becoming reality. Alsothe mobile phone user base outgrows allprojections as the mobile phone is becomingthe most ubiquitous personal accessory weare seeing a growing number of themcarrying wi-fi capability. Also with expressallocation for e-governance schemes such as

SWAN(State Wide Area Network) the Wi-Fifuture looks to be bright. But there are somedeterrents, major of them are lack ofseamless roaming scheme and variablequality of service experienced by the user.Some of the initiatives that are being taken inthe wifi scenario are announcement of IndianRailways to wifi enable all the importantroutes, some companies going for a wifienabled campuses and even shops andcafes following their footsteps.

VSAT

A huge potential is seen in the VSAT market,this is because various states have launchedtheir state wide area network, but not allstates have the kind of infrastructurerequired, hence VSAT will play a major role.Also some small and medium retails would bewilling to use this technology for enhancing

their businesses. Even Distant education ispossible through VSAT. It can also be used incellular backhaul segment, where satelliteprovides a backhaul to locations that are notreachable by microwave or fiber, therebyincreasing rural penetration. VSAT hasevolved but its ineffectiveness in reach lies interms of its cost. This is a highly costly affair.The cost depends upon the usage hence ismore effective on light applications. To reachthe remotest of remote locations VSAT is the

key.

RURAL

With various drivers like last mile connectivityfrom optical POP, low income level ingeograph ica l ly d ispersed v i l lages,deployment of wimax in lower frequencybands for large range and want of killerapplications like telemedicines, tele-

education etc, wimax is going to be the futuretechnology for rural penetration. After mobilitycomes into picture wimax will acquire its true



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colors. With equipments which could utilizespectrum better and also tend to usespectrum over 7Ghz could spur wimax into adomain which will parallel even fiber in thefuture. BSNL and other operators with aidfrom USO funds plan to expand their base ofoperation from current reach to an estimate

of 1.5 lakh villages and more than 5000cities by the end of next year.

BACKHAUL

The fiber is a costly option which may/may notbe available for the backhaul network. In sucha context Wimax and VSAT can be a goodoption for a company to deploy to provideconnectivity present everywhere. Implem-

entation of high data technology like Wimax(Licensed/unlicensed Bands), i- burst canhelp in giving Backhaul link. Efficient Use ofSpectrum for Wimax will boost usage of Wimaxas backhaul networks.

The dream of achieving 20 mn broadband subscribers by 2010 seems like a mirage at thismoment. If this dream has to be realized rural India will have to play an integral role. The rural

area does not have enough penetration of PCs which is driven by the point as there is lack ofawareness. When we look at the broadband scenario throughout India the broadbandinfrastructure does not seem to be tantamount to the present requirements. Therefore thereshould be incentives provided by government to operators for improving infrastructure andsupport them in setting base in rural areas.. Deploying copper cable or fiber optics will not beconducive in terms of ROI and cost effectiveness. Therefore Wimax will be more propitious.However the biggest impediment would be non availability of spectrum at affordable costs.Government should ensure that the Indian operators wake up to the opportunities broadbandprovides to them and utilize it to the utmost. In the mobile revolution in India since there were noIndian operators ready to deploy networks and telecom infrastructure, the opportunity was takenup by Foreign companies. Taking this as a learning experience the government should ready

themselves for the Broadband revolution and reap its benefits.

CONCLUSION



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TELECOM

Telecom software is used at the back end of the IT infrastructure of telecom companies. It alsoincludes client side softwares like mobile OS and user applications. The latest trends in thetelecom software market, including Mobile Applications, OSS/BSS & System Integration, arepredicted under the scope of this vertical.

SCOPE

ANALYSIS

CRM

IT shops have begun integrating customerrelationship management platforms with thetraditional e-commerce solutions. Integratingthese platforms can lower ,order processingbelow $1 per transaction. Thus a bigintegration in this domain is widely expectedto meet the enterprise needs.

Retaining customers and enhancingrelationships with customers is the mostimportant goal of companies, with 'attractingnew customers' every second. Thus anotherboosting factor for CRM applications.

Marketing automation is expected to be thefastest growing segment of CRM, achievingan 11.2 percent CAGR through 2009. One ofthe recent changes in the market is that the

hybrid on-premise/on-demand model isbecoming a reality.

Expected growth of CRM market is 11.3 per-cent in 2009, to $9.3 billion.The leading on-demand CRM vendors will find themselvesunder increased pressure both from smallerhosted solution providers and established on-premise vendors offering on-demandsoftware versions.The implications are thatsubscription prices could decrease,

particularly among the less-differentiatedentry-level solutions.

OSS/BSS

Operators are looking for integrated orderingand customer management, billing andbalance management, and revenueenablement coupled with an extendible andflexible architecture.

NGOSS, or New Generation OSS, will be an

answer for a comprehensive, integratedframework for developing, procuring anddeploying operational and business supportsystems and software, available as a toolkit ofindustry-agreed speci f ica t ions andguidelines that cover key business andtechnical areas. NGOSS will be an enabler toach ieve unp receden ted l eve l s o finteroperability. With a total new face ofOSS/BSS to cope with, operators willupgrade their BSS/OSS infrastructure. In

India particularly where the domestic marketis being dominated by the MNCs.

After the introduction of multi-playconvergence, telecom operators have moredata than before from a wide range of BSSsystems. Getting all this divergent data into asingle repository to enable convergentbusiness intelligence is becoming the normfor leading telecom operators. Thus the nextera will see the opportunity which is to take

convergent business intelligence to the nextlevel and integrate network OSS data withBSS data for all networks and service. Indian

SOFTWARE



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OSS/BSS market will continue to grow at 6-7% CAGR globally with the Indian marketgrowing much faster.OSS/BSS market will continue to grow at 6-7% CAGR globally with the Indian marketgrowing much faster.

Operators currently face significant oper-ational challenges when attempting to roll-out new services such as Virtual PrivateNetworks (VPN), Internet Protocol Television(IPTV), and Voice over Internet Protocol(VoIP). To meet the upcoming challenge,upgradation of existing infrastructure will bethe top priority along with the single view ofnetwork ,services and customer.

SDP will evolve from basic content delivery to

architecture for integrating legacy and IP-based network services in order to drive newrevenue by exposing the communicationsnetwork to third-party application developers.

SOA

India is set to be the fastest growing SOAmarket in Asia. It is expected to grow at acompound annual growth rate (CAGR) of

49% from 2006-2009. Driving forces for SOAin 2009 will be:

- Composite applications scenario in theorganizations, which is always verycomplex.

- Highly competitive market will forceenterprises to adopt SOA in order to bemore agile and responsive.

- Management is now very conscious ofreturns on IT investment.

Through the SOA, telcos will focus to build anapplication that allows service subscribers toaccess their account information residing onvarious OSS and BSS. CommunicationsService Providers (CSPs) will focus on theSOA approach to automate the fulfillmentprocesses for their telecommunicationsservices such as DSL, VoIP or IPTV. The

major benefits from SOA in telecom willinclude swift generation and deployment ofmobility enhanced applications and providing

operators with new avenues for increasedrevenues through greater usage of theService Layer application.

BUSINESS INTELLIGENCE

The world wide BI tools software market isexpecting a five year compounded annualgrowth of 7.3% through 2009.The overallrevenue from BI is expected to be $7.2 bnthrough worldwide license and maintenance.The EBIS sub segment is expected to growunder 1.5 bn in 2009 with a CAGR of 7.4%.The data warehouse and CPM suites will bemore strategic to the ERP vendors than theactual ERP modules . Partnership andalliances will grow the pie for BI services. The

database embedded BI server market willexperience a higher growth rate of 15-16%and stand alone BI software's market willexperience a growth rate up to 10%. Thequery, reporting, analysis market will outgrowthe advanced analytics market in 2009.American market will continue to be thelargest with a slight downfall from a share of52.9% in the BI tools revenue.

REVENUE ASSURANCE

The number of products offered by telcoshave increased from the typical ten tohundreds because of the move from voice todata, fixed to mobile and debit model to acredit model, naming a few. The practice ofrevenue management in telecom is alsobecoming increasingly important. Althoughwe constantly hear about cost-cuttingstrategies, the revenue side of the equation is

of equal significance. In order to implementan efficient strategic revenue managementfunction, telcos will make a huge investmenttowards prevention of revenue leakage.Quality assurance and revenue assurancewill be key ingredients in increasing anoperator's ARPU. The inherent cost ofdeveloping comprehensive revenueassurance capabilities will increasedramatically during 2009.The shrinkingmargins for telecom services are forcing

network operators to deploy revenueassurance more aggressively.



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BILLING AND MEDIATION

Heavyweight BSS/OSS vendors likeAmdocs, Oracle, LHS and systemsintegrators like Tech Mahindra, Wipro willcontinue to engage themselves in OSS andBSS transformation projects, major system

rationalization projects and projectsspecifically geared towards improvingcustomer experience. However the vendorswould take up projects to make the carriersrealize and eliminate the biggest hurdle ofach ieving n imble serv ice de l iveryarchitecture with their siloed, disparate BSSand OSS systems. In the face of rapidbroadband penetration and Web 2.0-oriented business scenarios, the criticalbilling model changes will be incorporated to

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