Wi-Fi in India: Enabling business, economic development

BANGALORE, INDIA: Today Wi-Fi is enabling innovative and flexible business operations, supporting economic development and improving quality of life across India. Wi-Fi’s performance, security and affordability, combined with growing access to broadband internet connectivity are contributing in India’s ongoing economic growth.

PC Ownership and Broadband Connectivity
In other geographic markets, Wi-Fi adoption has followed on the heels of a large installed base of computers and widespread broadband internet connectivity. Following economic liberalization policies adopted by the Indian government in 1991, Indian citizens started seeing growth in per capita income and a corresponding increase in spending power.

Computer sales in India starting showing impressive growth in 2002 powered by increased spending power and falling equipment prices. The Information Technology and Office Products Survey (ITOPS) industry report released by the Manufacturers Association for Information Technology (MAIT) reporting on the six months ending September 2008 shows lowered growth expectations for computer sales, but notebooks still account for about 25 percent of all computer sales in India, with notebook sales being split equally between the consumer and enterprise markets.

The preference for notebook computers is growing, and the trend is especially pronounced in small and medium-sized enterprises (SMEs) and smaller cities. In the six months ending September 2008, SMEs accounted for over 63 percent of the notebooks purchased by enterprises, and smaller cities contributed to three-fourths of the total notebook sales in the enterprise category.

Wi-Fi comes standard in nearly all notebook computers and as a result even with flat sales forecast for 2008-2009 the equipment base that includes Wi-Fi capability is substantial and growing.

The Indian government has made efforts to foster growth in broadband internet subscribers. The Telecom Regulatory Authority of India (TRAI) and Department of Telecom (DOT) have targeted increased broadband internet access for enterprises and home users as a critical driver to the socio-economic development of India.

The broadband policy of 2004 set a target of nine million broadband subscribers by end of 2007. While the current number is well short of the target, the broadband subscriber base has shown steady growth with a year-over-year growth rate similar to cellular subscribers.

A large part of this growth is driven by the enterprise segment - according to the ITOPS industry report for the six months ending September 2008 businesses account for 28 percent of entities using the internet. MAIT defines an entity as an “establishments/individual with internet connection; an entity may have multiple users. Business entities have embraced broadband connectivity – approximately 75 percent of business entities with internet access have broadband connections.

Also of note, Internet connectivity is extending into second-tier metropolitan areas with business connectivity approaching 50 percent in the top 16 metro areas.

Phones and Wi-Fi
Mobile handsets are a second likely path for Wi-Fi growth in India. As of February 2009, India has more than 375 million cellular subscribers, falling just behind China in terms of total subscribers. The number of new subscribers has been growing each month; in January 2009 thirteen million new subscribers were added. India is currently the fastest growing cellular market.

In the near term much of India’s cellular growth will come from network expansion in rural areas, driving a commensurate increase in sales of feature phones. In urban and semi-urban areas, sales of smart phones and data-capable phones are increasing as young professionals have come to see mobile phones as status symbols.

Wi-Fi technology is a highly desirable feature in the smart phone category worldwide and it is expected that as that segment becomes more established in India, sales of Wi-Fi capable phones will also grow.

Wi-Fi service providers see opportunity in the growing number of Wi-Fi enabled handsets. Providers like O-Zone Networks are launching initiatives offering citywide coverage with business models based on subscriber revenue. This emerging breed of Wi-Fi service provider was profiled in Wi-Fi Alliance’s March 2008 report titled: Wi-Fi Technology Enabling Economic and Social Development in Rural and Urban India.
Wi-Fi in the Enterprise

India’s enterprises require converged networks that can carry voice, video and data seamlessly and deliver throughput suitable for real-time communications. The reliability, security, scalability and performance of Wi-Fi networks support essential corporate applications in corporate home offices, and have allowed companies to expand operations into more remote locations. As companies expand operations and establish work sites outside major metropolitan locations, network connectivity and availability have proven to be an increasing challenge.

Hospitality, information technology (IT), IT enabled services (ITES) and business process outsourcing (BPO) industries are the main enterprise users of Wi-Fi. However, demand for Wi-Fi is also driven by industrial verticals like manufacturing, mining and other industries that own large facilities with many buildings.

Leading system integrators report that a large number of Indian enterprises have adopted Wi-Fi for the productivity benefits associated with wireless connectivity. Most enterprise customers we spoke to confirmed use of Wi-Fi at the work place to allow their employees freedom of working away from their desks.

The infrastructure challenges in India have also created enterprise adoption patterns for Wi-Fi that address specific enterprise needs. In countries with almost ubiquitous broadband, most enterprises had wired LAN in place and wireless LAN (WLAN) was added later to enhance productivity. However, in emerging countries such as India, small/medium enterprises are completely doing away with wired LAN.

So they do have a broadband connection (Leased Line, DSL or other broadband connection) coming to office, which then is shared via only Wi-Fi without wired LAN connectivity at all. Many small and medium enterprises are housed in buildings that have no in-built provisions for Local Area Networking cabling and choose Wi-Fi to overcome this problem as well.

Long-Distance Wi-Fi
In addition to these traditional uses of Wi-Fi technology, innovative Indian enterprises are deploying Wi-Fi for long-distance point-to-point links to extend their networks to remote locations where fixed line broadband services are either not available or prohibitively expensive.

By erecting towers and directional antennae, these enterprises are able to achieve links over 40 kilometers with throughputs up to 10 Mbps. By comparison a leased line that might typically serve a small or medium sized enterprise delivers 2, 4 or 8 Mbps throughput. Long-range Wi-Fi can match or exceed these throughput levels at a compelling price.

Gridharan G. Vidi, who is founder and CEO of Yugae Technologies (networking and wireless solution and services provider for campus and building outdoor point-point or point-multipoint Wi-Fi) tells us that they have seen many long range Wi-Fi requirements from customers who have branch offices or warehouses outside the city limit but headquarters within.

Wi-Fi effectively addresses the problem of non-availability of leased line connections on the outskirts of city provided that power and line-of-sight (LOS) requirements are addressed.

Wi-Fi Market Size
From our discussions with major system integrators and wireless local area network (WLAN) solution providers, the outlook for the Wi-Fi market is very positive. Systems integrators report that a majority of enterprise customers are setting up wireless networks based on 802.11 standards to allow their employees some level of mobility (working in conference rooms, café, colleagues’ desk etc).

For the small office / home office (SOHO) market, Wi-Fi is mainly used to share the broadband connection among a number of users.

More hotels, airports, and convention centers have begun offering Wi-Fi access to their patrons. End users now expect free Wi-Fi access at these places which is causing a reexamination of revenue and business models. Industry leaders tell us that significant investment is taking place in the installation and expansion of public/private hot-spots.

There are also efforts underway to unwire two cities in India (Bangalore and Pune) but the project has been experiencing some delays due to non-technical reasons.

With the availability 802.11n draft products, many small/medium enterprises are slowly moving to completely unwired infrastructures for their office LANs. The ratification of the IEEE 802.11n standard is certain to enhance wireless communications for businesses and consumers of all types.

It promises throughputs comparable with wire-line Fast Ethernet and improved range. For the network operator, that translates into lower hardware expenditures for both internal wiring and access points. While most of the current enterprise deployments are 802.11b/g, they are actively considering 802.11n for future deployments.

We see continued growth for Wi-Fi in the coming years. The wireless networks of today are capable of delivering voice, video and data simultaneously. With growing popularity of notebook computers in business customers and rapid rise in broadband connectivity among the enterprises, WLAN gear such as wireless routers, access points, Wi-Fi dongles are expected to enjoy very healthy growth in India. As Wi-Fi based service providers start managed Wi-Fi networks as clouds over pockets of metros, targeting mobile data users.

The Wi-Fi market in India should comfortably exceed $1 billion by 2011-2012. This estimate represents an increase from our March 2008 projection of more than 12% and includes wireless network gear, professional services, system integration but excludes Wi-Fi chip sets embedded in laptops and devices. We also expect this segment will now begin to attract private equity investments from global financial houses and the sector will assume more respectability as the emerging markets such as India will become battlefront for broadband and wireless data service providers.