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The traditional TDM voice switch, the future of which has been a subject of intense debate over the last few years, still ‘stands strong’.

In India, where the network infrastructure build-up got accelerated in the last 10 years or so, the addition of switching capacity by Bharat Sanchar Nigam Ltd—as DoT first and DTS subsequently—has been really impressive in the first few years of reforms. That has slowed down in the last two years. So much so that in 2002–03, in the first nine months till 31 December 2002, the data for which was available, the addition was just about 2.4 million lines, as compared to
7.5 million in the preceding 12 months.

The total local switching capacity by the end of December 2002 was 49.8 million lines. Expectedly, there has been no tender for switching by BSNL in the entire fiscal 2002–03.

However, deployments by private operators and the boom in mobile telephony saved the day for switch manufacturers.

Keeping pace with the changes in the market place, Voice&Data has also estimated the market size this time, including the switching component of the wireless orders—both GSM and CDMA. There is no formula to do that. It is probably apt to share the methodology that we have followed. Three factors have been taken into account to calculate the percentage share of switching in the overall wireless equipment contracts—the type of technology (GSM or CDMA), the operator’s network design, and of course, the network rollout.

Some equipment companies have shared data with us, and some have shared the contracts and implementations. We have also taken some data from the service providers’ side. Based on all this input, the total voice switching market in 2002–03 has been estimated at Rs 1,588 crore. Lucent, with almost all major orders from private basic service providers, except Bharti, and its share of BSNL’s GSM as well as fixed line orders, emerged a clear leader with a revenue of Rs 605 crore and accounted for a market share of 38 percent. Alcatel, based largely on its supply to BSNL fixed line and Tata Teleservices/VSNL, emerged as No 2 with an estimated revenue of Rs 396 crore. Siemens, with BSNL’s fixed line orders, Bharti’s local and trunk orders, and a part of BSNL’s GSM switching order, emerged No. 3.

In fact, the addition of subscribers—and thus the switching capacity—on the mobile side had its effect on the switching market. Switching companies that do not have a presence in the mobile equipment market place (MSC), have all but lost out. While ITI’s share has gone down considerably, Fujitsu, and NEC have almost vanished from the market. Only Ericsson has a different story. Though it did score on the GSM front, it did not execute anything for BSNL or private fixed operators (except TAX for Reliance) in wireline. And it is not active in CDMA. However, as GSM networks keep on expanding, it will bounce back. That is something one cannot say for the rest.

V&D estimates CyberMedia Research

And that includes C-DOT manufacturers. BSNL, it seems, has also almost stopped procurement of C-DOT switches. Till 2000–01, C-DOT switches were procured regularly. In fact, in 2000–01, about 4.6 million C-DOT lines were procured, about ten percent more than the previous year. The government had promised to continue with the procurement.

Lucent was the only company that did well on all fronts—wireline for BSNL, wireline for private operators, GSM, and CDMA.

Operator Strategies
Both BSNL and MTNL followed a similar procurement plan. While for wireline, they continued to buy switches on a standalone basis, for GSM they followed the private operators’ strategies and went for bundled solutions.

V&D estimates CyberMedia Research

Bharti, for its fixed line network, followed a BSNL-like procurement policy and bought switching separately for its wireline network, albeit at a slightly higher price. Siemens, Bharti’s favourite, supplied the 250,000 odd lines that have been deployed.

The TAX contract of Bharti Telesonic was also placed on Siemens. Bharti’s fixed business did not deploy any CDMA lines. Bharti also followed a BSNL-like RLU-based network approach.

Both Tata Telservices and Reliance Infocomm followed similar procurement policies and went for CDMA equipment for wireless. Both the operators chose Lucent. For wireline, instead of a RLU/RSU approach, both the companies went for multi-access aggregators. Lucent supplied to Tata Teleservices. Reliance chose UTStarcom. These parts of the equipment, however, have not been included in our estimates.

The Pricing
For wireline, the switching prices have remained more or less static. BSNL, which last procured 2,045k lines in January 2002 at a rate of Rs 2,694 per line, placed a repeat order of 500k lines at a rate of Rs 2,454 per line. MTNL, on the other hand, bought 480k lines at the rate of Rs 2,857 per line and has completed tendering for another 294k lines (see table) at a rate of Rs 2,850 per line.

Bharti paid about Rs 2,900 per line to Siemens.

With BSNL procurement falling on the wireline front and with almost exit of companies like Fujitsu and NEC, and the rest of the players not really dependent on BSNL, unlike earlier days, Voice&Data expects the per line price to go up this year, when BSNL procures next. While Ericsson, Lucent, and Siemens can sustain that, it remains to be seen what Alcatel does. Alcatel has been almost out of the GSM or CDMA space. GSM, in which it has a deal with Koshika, was a wrong step and since then it has never been able to come back. Alcatel’s switching future will also, to some extent, depend on how it enters this market—directly or in partnership.

The Future
Whether traditional TDM switches would be affected by IP or any other similar technology is still an open debate. However, it is not going to make much difference in the next couple of years. What will decide a company’s success is its performance in the mobile market.

Shyamanuja Das