In FY 2002–03, the optical transmission equipment market in India was estimated to be around Rs 783 crore. While estimating the market, we did not take the BSNL deal as it has spilled into the next fiscal and is currently undergoing type approval. The BSNL DWDM is a large deal with the order value being in the range of Rs 226 crore. In the case of the VSNL deal, we have taken a small portion of the total value as the project was bagged by NEC in February 2003 and is expected to be over in another couple of months. In the overall estimation of  the transmission equipment market, we have not taken the submarine cable deal of i2i, a JV of SingTel and the Bharti Group. Others include companies like Nokia, ECI, and Fiberhome Telecommunications Technologies. Since Voice&Data is estimating the market for the first time, it is quite difficult to estimate the growth over the previous fiscal.

In FY 2002–03, a large number of SDH projects got completed vis-ŕ-vis DWDM. Voice&Data estimates that SDH will contribute 65–70 percent whereas DWDM will contribute 30–35 percent. It is expected that in FY 2003–04, the SDH:DWDM ration will be about 55:45 as BSNL has already bought around Rs 226 crore of DWDM in FY 2002–03 and this will be implemented in 2003–04.

If we look at the worldwide optical transmission market, the top three players are Alcatel, Lucent, and Nortel. But if we concentrate on the Indian market, then only Nortel is active in the market and has done exceptionally well. Lucent and Alcatel on the contrary are hardly visible. The reason for the other two not being present can be attributed to lower prices and lower margins. Prices have also fallen further with the coming of Chinese players like Huawei and ZTE. In the transmission market, Chinese players have done well on the incumbent front. But these would be accounted in FY 2003–04.

Among the top three players in the optical-transmission space, only Nortel has done exceptionally well in the Indian market, whereas others have not even made their presence felt. The company led the Indian market by bagging a majority of large deals announced in FY 2002–03. Siemens bagged a small portion of the Bharti order and Marconi bagged the Tata Teleservices order. Alcatel was unable to bag any major deal in the optical-transmission space.

There have been new players like Fiber Home Technologies Group from China and ECI from Israel. Fiber Home Technologies Group has executed some projects for GAIL and is looking for a right partner in the country so as to focus on utility companies. On the other hand, ECI has done some business with cellular operators. Initially, the company had L&T and NDC as its partners in India. But with NDC pulling out of India, the company has tied up with Clovertel. Currently, the ECI focus in India is restricted to cellular service providers.

In terms of marketshare, Nortel is a clear leader with around 41 percent market share. It netted transmission revenues of around Rs 322 crore. The company has a dominant share in the Indian market. Fibcom, a JV of Tellabs, IFU, and ITI has done well by netting a revenue of Rs 150 crore and a market share of around 19 percent. Fibcom has a strong foothold in the Railways as well as the oil and gas sector where there is a good deal of transmission equipment deployment. Others in the top five include Siemens—7.5 percent, Tellabs—6.4 percent, and ITI—5.7 percent. Chinese companies Huawei and ZTE did not do well this time as their BSNL order will only be executed in FY 2003–04. Companies like Marconi, NEC, and Tejas also did some business from India.

Fiber Home is focusing on both DWDM and SDH products. The company has executed lot of big projects in China and wants to replicate it in India. It is presently focussing on railways and utility sector. ECI is focussing on private telcos.

Reliance Infocomm is building a large nationwide backbone, which will cover 2,000 cities and almost all the villages. In terms of OFC, the company has deployed 90,000 Rkm. On the other hand, VSNL gave a large order to NEC for constructing its nationwide backbone. VSNL is in the process of rolling out 5,000 km of network and plans are on for a 12,000 km network. Even Bharti expanded its network in all the major cities and is presently covering around 24,000 km. With a drop in STD/ISD tariff, BSNL’s traffic has increased. In order to accommodate the increase in traffic, the company has bought large quantities of DWDM equipment.

Even the public utility companies are either augmenting or setting up their networks. In FY 2002–03, Railtel, GAIL, and PGCIL were very aggressive in their rollouts. Railtel was deploying OFC in around 11,000 km whereas GAIL deployed a good amount of OFC in FY 2002–03.

India has some of the lowest prices (almost at par with that of China). If one compares the prices of optical transmission equipment, they were the same as in FY 2001–02. The prices had reached rock bottom in FY 2001–02. But if one looks at SDH and DWDM prices, there has not been much change in SDH but DWDM prices have reduced by around 15–20 percent with the coming of Chinese players like Huawei and ZTE. And the Chinese players have become very aggressive in pricing.

The majority of transmission equipment was bought by long-distance carriers and public utility companies. Cellular and basic service providers also contributed a small portion to the overall kitty. Railways, as well as, oil and gas were some other verticals that placed orders.

In FY 2003–04, the optical transmission equipment market will drop or remain stagnant. Much will depend on how Reliance expands its geography and the number of new subscribers that get added every month. BSNL would be the largest contributor to the overall pie as it is planning to buy SDH equipment and the existing DWDM order will also get completed this fiscal. Expansion orders will be released from Bharti, Tata, and other cellular operators.

Prices of SDH and DWDM equipment will remain constant. Major changes in pricing strategies are unlikely. However, Chinese companies will give a good fight to Nortel in new tenders.

Meanwhile, there have been talks about metro networks, which are very popular in the US and Europe. There is a possibility of some deployment in 2003–04 or 2004–05. The network will help in providing multiple services like TDM, ATM, Ethernet, and data services.

Currently, the capacity is not large and even the prices are on a higher side. So, operators opt for CWDM as it reduces the cost of deployment while providing similar functionality.