Nokia Siemens Networks Awarded Broadband Network Contract from BSNL

Nokia Siemens Networks today announced that it has won a contract from incumbent Indian operator BSNL to deploy broadband access across 7,000 Indian villages. The contract is a part of the greenfield rural tender from BSNL. The new access network’s high bandwidth will allow BSNL to deliver high data and triple-play services such as video-on-demand, video-multi-cast, IP TV, video conferencing and VPN among others to its customers. The network will also enable BSNL to provide connectivity to CSCs (Community Service Centres) and other e-governance locations. The two-year agreement includes supply, installation and commissioning, training and annual maintenance for five years. As part of the contract, Nokia Siemens Networks is deploying its Gigabit Ethernet-capable IP DSLAMs Surpass hiX5625 (Digital Subscriber Line Access Multiplexers) and chassis-based access switch (Surpass hiD6615). Nokia Siemens Networks will also supply end-user devices that will enable BSNL to provide speeds of up to 24 Mbps for ADSL2+ subscribers over its existing copper infrastructure. The first phase of new-lines deployment will be completed by the first quarter of 2008. This is the second rural broadband access tender BSNL has awarded to Nokia Siemens Networks. The company is also, in parallel, deploying urban broadband access for BSNL across 15 circles. The first phase of that roll-out is in the advance stages of completion for 800,000 ports.

Outlook and Implications

• Low Penetration of Broadband: Development of broadband internet services in India had been extremely slow until recently. At the end of June 2007, the number of broadband internet subscribers (with a download speed of 256 Kbps or more) stood at only 2.4 million, in a country with a population of more than 1.1 billion. The extremely immature state of the market can be explained by the fact that both incumbent local operators BSNL and MTNL had in the past held back from making major investments in broadband access infrastructure. Also, as local LLU is not regulated in India, BSNL and MTNL are not compelled to open their access networks to competitors. Both incumbent and private operators had, on the whole, been more engaged in rolling out mobile phone infrastructure than channelling major investment into the broadband internet sector. As a result, growth in the broadband market generally has suffered.
• Government Rural Broadband Project: To tackle the sluggish growth of broadband internet services, the Department of Telecommunications (DoT) has finalised a five-phase strategy to provide broadband to all the villages using the Universal Service Obligation Fund (USOF). BSNL will cover about a tenth of the project, around 60,000 villages. Private telecoms operators will be chosen to cover the rest of the villages. The winners will be decided on the basis of the least subsidy sought through a bidding process. BSNL has started the first phase of its share in the project, which involves providing high-speed internet connection to 20,000 villages. This phase of the BSNL project has already received funding worth 1.7 billion rupees (US$41.1 million) from the Department of Information Technology (DIT). For the second phase, BSNL will receive 1.6 billion rupees worth of assistance to cover 40,000 villages (see India: 17 August 2007: BSNL Starts Rural Broadband Project).
• High Hopes for WiMAX: Given that fixed-line infrastructure is widely underdeveloped in the Indian rural areas, wireless broadband technology could offer a solution for enabling mass-market adoption of broadband internet services. The Indian government, however, has yet to allocate spectrum for WiMAX service provision. The authorities are currently examining the telecoms regulator's recommendations on spectrum allocation to operators for 3G mobile services and WiMAX before coming out with a policy. The Ministry of Communications has set a target of providing 6.5 million broadband connections by this year-end and 20 million by the end of 2010. Given the fact that the country had only 2.4 million broadband connections at end-June, both the government and telecoms companies have high hopes for WiMAX, which would help offer wireless broadband access in rural areas where provision for wired connections is difficult.