FY 2002-2003 was a particularly good year for the T&M industry. With the wire-line operators in the country making huge capital investments to put their network backbones in place, the demand for T&M requirement went up. Traditionally, BSNL and MTNL have been the bulk buyers. But during FY 2002–03, the two largest business houses in India, Tata and Reliance, made significant investments in T&M. Since the network build-up phase is the one where the need and investment on the T&M gear is the highest, the wired line segment procured optical and transmission test products. On the other hand, growth in the wireless segment was mostly confined to capacity augmentation and upgradation of existing networks. Network planning and management tools were bought in this space.

l Market Shares: With a lot of all-round activity in the telco space, the T&M industry is estimated to have registered a 34 percent growth over the previous year. The total size of the T&M communications market was estimated to be Rs 295 crore during FY 2002–03. Apart from the service provider sector, the broadcast industry also bought T&M solutions in a big way. The defense and the PSU sectors continued to procure a good deal of T&M equipments. The estimated buying by the service providers was close to 56 percent of the total business, while that by the manufacturing and the defense sectors was 11.9 percent and 10.2 percent respectively. The broadcasting industry accounted for 7.8 percent share.

Agilent, Acterna, Tektronix, Rhode & Schwarz, and Anritsu are the top five players in the business. Together, they account for about 82 percent of the communications T&M market. Agilent is the largest T&M supplier with an estimated business of Rs 100 crore, followed by Acterna at Rs 61 crore and Tektronix at Rs 32 crore. A global T&M vendor, Agilent has a comprehensive range of solutions including spectrum analyzers, network analyzers, and antenna testers, and also offers design, network optimization, technology migration, and implementation services. While Acterna is strong in OTDRs and network analyzers, Tektronix is very strong in protocol analyzers. Acterna is focused on the optical, access, and IP space. Tektronix is the clear leader in protocol analyzers space with close to 85 percent market share.

Rhode & Schwarz and Anritsu are strong in the RF and microwave T&M equipment business. This part of the equipment business in the country has been close to Rs 130 crore. While Agilent is estimated to have 45 percent of the market share in that segment, Rhode & Schwarz and Anritsu command about 25 percent and 6 percent market share respectively.

Others in the industry—ICT, Fastech, Seven Hills, Aishwarya Telecom, and Trinity Electronics—have big customers in the government sector. ICT Electronics/Trend address the PDH, SDH, and SONET technologies, and have bagged orders for SDH analyzers, and ATM, ISDN, and DSL testing solutions. Majors like Sunrise, Nettest, and Fluke are present through distributors. For example, Fastech distributes Sunrise Telecom’s solutions and is strong on the hand-held side. Other large distributors include AIMIL, Aplab, Forbes Gokak, Meera Agencies, Scientific Mes-Tek, and VXL.

l Trends and Drivers: The spending on T&M as part of the network costs is dismally low in India. While globally, the cost of T&M equipment is 5–8 percent of the total network cost, in India, the figure is as low as 0.1 percent. Indications are that the T&M spend will go up in the coming years. More so because the new service providers are still in the rollout phase.

Companies are still seeing T&M investment as expenditure. However, in future, they will see it as an investment as they will be required to differentiate on quality, better customer service, reliable networks and increased productivity.

Earlier, sanctions were a major hindrance in the growth and propagation of T&M. It must be remembered here that the major suppliers of T&M equipment are global vendors, primarily those from the US. And the easing of the US sanctions since October 2001 has enabled them to sell a much broader range of products. During the sanctions phase, even the sale of an oscilloscope with 1G sample per second performance was prohibited. Post the sanctions, vendors can today sell to agencies like Aeronautical Development Establishment, the Electronics and Radar Development Establishment, Bharat Electronics, HAL, DRDO, and ISRO. Today, the clearances to supply products are accomplished in four to six weeks time. Since the easing of sanctions, major vendors from the US have got several hundred clearances for their equipment.

Another concern is the duty structure. Though some sops and concessions have been made for import of network equipment over the last couple of years, T&M equipment has had no major concessions. The duty structure is still as high as 51 percent for some products. More than the duty concessions and fiscal provisions, the T&M industry believes that there has to be a paradigm shift in the minds of the CTOs and the CEOs.

As mentioned earlier, service providers were the biggest buyers of T&M equipment. They bought spectrum analyzers, network analyzers, protocol analyzers, optical time domain reflectometers (OTDR), optical spectrum analyzers (OSA) and plesiochronous digital hierarchy and synchronous digital hierarchy (PDH/SDH) analyzers and handheld testers. BSNL and MTNL were the big customers and they will continue to remain too. During FY 2002–03, the new basic service providers and the ILD and DLD operators helped promote the case of the T&M industry. Reliance was one of the biggest buyers. It is estimated to have invested about $15 million on test, monitoring, and management equipment. Bharti’s investment is estimated to be $5 million and that of Tata, around $3 million. Most of the large vendors have had significant wins.

Besides operators, the broadcasting players have also been procuring T&M equipment. This has been facilitated following the government’s open-sky policy and the permission to uplink out of India. Prasar Bharti has invested in DVB terrestrial systems and in converting their old analog to digital. Star, Sahara, Sun, and Eenadu have also invested significantly. This sector alone has invested close to Rs 23 crore during the year. Several software and hardware companies like Federal and Wizworks are developing products like cable TV modems and are buying T&M equipment. Tektronix is a clear leader and is estimated to have 90 percent share of the market.

The telecom segment will be the most promising for T&M vendors for a couple of reasons. One, with the deregulation, the number of operators is increasing as well as maturing. Further, the thrust today is on teledensity. As a result, the emphasis will now be on quality of services. So the potential market for T&M equipment is likely to scale up. The signs are potent now.

Before deregulation, T&M vendors were totally dependent on the government type of projects. Primarily, the L1 business dominated the T&M equipment. It meant bulk purchase of hardware where vendors had no choice but to quote the lowest. Things have changed now after the entry of the private sector and corporatization of BSNL. There has been rationalization in procurement.

Another noticeable trend is in solutions. Large vendors are pushing solutions rather than boxes. Even oscilloscopes are being sold with solutions built around them. Tektronix has sold many such solutions. Similarly, Acterna is talking about test and management solutions. And this solutions approach will gain further ground.