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Indian telecom is moving at supersonic speed on the mobile front. We have outgrown China in terms of monthly mobile additions, and currently adding another 5.9 mn lines and the gap is expected to grow further. All this has brought good cheer to the mobile operators fraternity in the country, who are busy planning big, trying to maximize their share of the pie.
Large operators have mega plans for the next couple of years: Reliance Infocomm is planning to add 30-40 mn lines; BSNL, 45.5 mn lines; and Bharti, 60 mn lines. And being a leader, Bharti is also #1 in terms of the next phase of expansion. 
Bharti Airtel, the number one mobile operator (both on the subscriber and revenue front) in the country is not resting on its laurels. The company has mega plans and is aspiring for 100 mn customers by 2010, according to Sunil Bharti Mittal, CMD, Bharti Airtel. And in revenue terms the company is looking at $7-8 bn, he added.
In terms of coverage, Bharti Airtel still has a long way to go: having covered around 46% of the geography. Plans are to provide coverage to all towns and cities with a population of around 5,000 by March 2007. All this means a lot of business for companies like Ericsson and Nokia, the preferred infrastructure suppliers for Bharti Airtel.
Recently, Bharti Airtel has awarded Ericsson an estimated $1 bn contract, including expansion and an upgrade of its GSM/GPRS network and managed services. In addition, Ericsson will also supply, implement and maintain an Intelligent Network (IN) for Bharti's pre-paid subscriber base across all of its 23 circles in India.
According to an Ericsson spokesperson, a major portion of the deal is related to infrastructure expansion and not managed services. The deal also does not have a 3G component as Bharti is planning for another RFP for 3G infrastructure. The agreement is valid for three years whereby Ericsson will manage, design, develop, and deploy Bharti's network, including capacity and coverage in 15 regions.
| In terms of coverage, Bharti Airtel still has a long way to go: having covered around 46% of the geography |
This deal is also the single largest contract in Indian telecom and signifies that the telecom industry has matured over the years and is well on the way for an explosive growth. It is also expected that India will soon witness many such large deal announcements by other operators like BSNL, Hutchison Essar, Reliance Communications, and Tata Teleservices.
The Ericsson deal also has a flexible component as it takes care of the existing 2G/2.5G infrastructure which can be scaled up for 3G infrastructure in the future, with the deployment of IP soft switches as a common 2G/3G switching core, paving way for an all IP network.
“The deal highlights the key partnership role with Bharti Airtel and gives us a strong foothold in the Indian market. We will continue to share the success of the Indian mobile revolution, with continued hard work and dedication,” said Bimal Dayal, key account manager, Bharti Airtel, Ericsson India.
The Win-Win Model
The MCMS (Managed Capacity and Managed Services) model was a unique model two and a half years back but it has started gaining acceptability worldwide, as both operators as well as infrastructure providers benefit in the long run. Not only Bharti, others in the telecom space have also benefited from the whole exercise creating a win-win framework for both the parties.
| Bharti's partners' footprints |
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It was a new thought process and the focus was to reinvent the operator-vendor relationship and steer it into a “Strategic Partner” framework. This model has definitely helped Bharti as well as Ericsson and Nokia in creating an infrastructure that uses less resources and less amount of time for deployment.
The new contract reiterates the success of the MCMS model, and extension of the Bharti-Ericsson relationship for another three years is an endorsement to the fact that Ericsson partnership has yielded good results for the company.
The Nextgen Network
The new deal is also unique as it focuses on creating a platform for the future. This will not only help in delivering innovative products and services to customers but also help in reducing cost and introducing new services in a cost efficient way. It also marks Bharti as the first national operator to embrace mobile soft switch across its national footprint, and paving way for an all IP network. .
The Bharti-Ericsson combine have shown how future networks will be created based on convergence. The endorsement of mobile soft switch makes it easier for operators who are still unclear about their migration path as it helps in solving lot of technology obsolence problem.
There is an implicit understanding that networks of the future must run on a common IP-based backbone. This also has larger implications for the IT and telecom networks, which have been maintained separately in the past. With both networks converging and 'wireless' offering the benefit of mobility, telecom service providers such as Ericsson seems to have an edge vis-a-vis other infrastructure providers.
| The Bharti-Ericsson combine have shown how future networks will be created based on convergence |
“This is a landmark contract for the recognition of mobile soft switch technology in the Indian telecom industry. Ericsson has over 140 soft switch commercial contracts awarded globally (GSM, WCDMA & fixed networks) with the first commercial deployment of mobile soft switch going way back to 2003. We will be leveraging this experience for the benefit of our Indian customers,” said Mats Granryd, managing director, Ericsson India.
For faster roll-out of services in smaller towns and cities, Ericsson is planning to deploy some innovative telecom infrastructure products that are customized for the Indian market. In the past, the M&O (manage & operate) service delivery team has been responsible for this. In the month of August, the company rolled out approximately 1,150 BTSes. Recognizing such large scale roll-out in future, Ericsson has chosen India for a global operational excellence pilot in the M&O area, and is creating a unified global work force management system.
It would be interesting to see how infrastructure providers cope up with rural deployment challenges, a task not easy considering the vast geography of India. Also, these areas have infrastructure problems and it would not be easy even to maintain it. But, a service provider, who can administer it well, will be the winner in the next phase, as real growth is expected to come from these rural areas.
Pravin Prashant
pravinp@cybermedia.co.in
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