Report   The Future For Wi Fi In India 20070205
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Report   The Future For Wi Fi In India 20070205 Report The Future For Wi Fi In India 20070205 Document Transcript

  • The Future for Wi-Fi® in India : Opportunities & Challenges Prepared by Tonse Telecom Sponsored by the Wi-Fi Alliance January 2007 © 2007 Wi-Fi Alliance. All rights reserved. Wi-Fi®, Wi-Fi Alliance®, Wi-Fi CERTIFIED®, the Wi-Fi CERTIFIED logo, and the Wi-Fi logo are registered trademarks of the Wi-Fi Alliance; and the Wi-Fi Alliance logo is a trademark of the Wi-Fi Alliance. WMM™, WPA™, WPA2™ and Wi-Fi ZONE™ are certification marks of the Wi-Fi Alliance. The following document, and the information contained herein regarding Wi-Fi Alliance programs and expected dates of launch, is subject to revision or removal at any time without notice. THIS DOCUMENT IS PROVIDED ON AN quot;AS ISquot; , quot;AS AVAILABLEquot; AND quot;WITH ALL FAULTSquot; BASIS. THE WI-FI ALLIANCE MAKES NO REPRESENTATIONS, WARRANTIES, CONDITIONS OR GUARANTEES AS TO THE USEFULNESS, QUALITY, SUITABILITY, TRUTH, ACCURACY OR COMPLETENESS OF THIS DOCUMENT AND THE INFORMATION CONTAINED IN THIS DOCUMENT.
  • Table of Contents Index of Figures and Tables 5 Executive Summary 6 Research Methodology 14 About Tonse Telecom 15 About The Wi-Fi Alliance 15 Chapter 1: Indian Internet Market: Background and State Of The Market Today 16 1.1 Background 16 1.1.1 Internet And Broadband Penetration 16 1.1.2 PC And Laptop Penetration 19 1.1.3 Hotspot Availability 21 1.1.4 Pricing Of Internet Access 22 1.2 Market Trends & Drivers 22 1.2.1 India’s Wi-Fi market 22 1.2.2 Wi-Fi User Segment: Home users 24 1.2.3 Wi-Fi User Segment: Enterprise Market 25 1.2.4 Wi-Fi Access Points: Public Domain Hotspots, Kiosks 27 1.2.5 Wi-Fi Public: Government Initiatives 28 1.2.6 Wi-Fi in Rural India: Rural Enterprise Wi-Fi Deployments 32 Chapter 2: Wi-Fi Ecosystem Players 34 2.1 Wi-Fi Semiconductor Vendors 35 2.2 Wi-Fi Equipment / Device / End-point Vendors 35 2.3 Systems Integrators/Solution Providers 36 2.4 Internet Service Providers (ISPs) 36 2
  • 2.5 Telecom Operators 37 Chapter 3: Wi-Fi Penetration: Opportunities and Enablers 38 3.1 Interoperability And Certification 38 3.1.1 India’s Wi-Fi Pre-certification for the Global Community 39 3.2 Security 40 3.3 Billing and Administration of Wi-Fi Hotspots 40 3.4 Quality of Service and Multimedia support 40 3.5 802.11n 41 3.6 Spectrum Allocation Issues & Updates 42 3.7 Combining With Other Technologies 42 3.8 Wi-Fi Mobile Convergence and Voice Over Wi-Fi 44 Chapter4: Indian Innovation in Wi-Fi 46 4.1 Esqube, Bangalore 46 4.2 Brovis Wireless, Chennai 46 4.3 Arada Systems, Bangalore 47 4.4 Indian Institute of Technology, Kanpur 47 4.5 Indian Institute of Technology, Chennai 48 Chapter 5: Market Opportunities 50 5.1 Home User Market 50 5.2 Enterprise Market 51 5.2.1 Retail Revolution 51 5.2.2 Hospitality Industry 53 5.3 Potential Growth Areas 53 5.3.1 Opportunities In Mobile Wi-Fi 53 3
  • 5.3.2 Organized Manufacturing 55 5.3.3 Medical Tourism 56 5.3.4 Media, Entertainment and The Digital Home 56 5.3.5 Booming Real-Estate 58 5.3.6 Horizontal innovation (All Sectors) – Low Cost Wi-Fi Computing 58 Chapter 6: Conclusions and Recommendations 60 6.1 Market highlights 60 6.2 Key Market Projections 60 6.3 Opportunities and Recommendations to Vendors and Manufacturers 60 Abbreviations 62 4
  • Index of Figures and Tables FIGURE Title Page number 1 Broadband Policy 2004 Projections 17 2 2004-5 Internet Users By Access 18 3 Broadband Connections (> 256 Kbps) 18 4 Internet Subscribers by Access (mil, Apr’06) 19 5 Desktop Shipments 20 6 Laptop Penetration 20 7 WLAN Network Gear Market 23 8 Wi-Fi Market 24 9 WLAN Market Revenues by Vendor 25 10 WLAN Market by Vendor 26 11 Percentage Increase in Laptop Usage 26 12 Wi-Fi Ecosystem Value Chain 35 13 Internet Subscribers by ISP, June 2006 37 14 Wi-Fi WiMAX Network 43 15 Wi-Fi Mobile Convergence 54 16 Wi-Fi Enabled Consumer Electronics 56 TABLE Title Page number 1 Per-hour Rates for Internet Access (Nov’06) 22 2 BSNL's Planned Wi-Fi hotspots 28 3 Government Wi-Fi Initiatives 31 5
  • Executive Summary The overall Indian Wi-Fi market (including WLAN hardware, systems integration and software services, not including embedded devices, laptops) is predicted to grow from the current $41.57 million to exceed $744 million by 2012 (CAGR of 61.4%). The necessary market drivers are in place to propel the growth, development and deployment of Wi-Fi into a mainstream technology across the country. As broadband wireless access grows, the WLAN network gear sector will exceed $275 • Million by 2011-12 (from the current $23.1 Million). The combined Wi-Fi market (described as consisting of WLAN networking gear, systems • integration, professional services and not including embedded devices and laptops) is expected to exceed $744 million by 2012 (CAGR of 61.4%). Background: With the Indian Ministry of Communications and Information Technology declaring 2007 as the Year of Broadband, the priorities are clearly set. The ensuing battle for market share currently on in the mobile space will likely spill over into broadband as a nation starved for connectivity will begin network roll outs. Over the next few years this will create a new digital India with ubiquitous broadband connectivity, both wireless and wired, teeming with an always-connected young generation that is mobile and empowered. At the forefront of this transformation will be a familiar wireless broadband technology: Wi-Fi. India’s current broadband subscriber base is still just about 2 million (November 2006), a far cry from the Broadband Policy which targeted 3 million connections by end of 2005 (falling short by 33% a year later). This is now set to change as the Government spearheads a strong broadband penetration into the country. The combined effect of a number of macro economic and social factors together with a large domestic demand seem poised to bring in a phenomenal growth in wireless broadband in India. This report is a detailed analysis on the current market scenario in India for Wi-Fi, its enablers, the market trends and applications within India. The report looks at what is coming ahead, how Wi-Fi and other technologies will co-exist, the opportunities and challenges moving forward. Wi-Fi is not new to India and has been deployed in enterprises, campuses and SOHO sectors for several years. However, now more than ever before it is clear that all the enablers for creating a sustained Wi-Fi network will emerge. The availability of a robust national data- network backbone remained somewhat unutilized all these years due to the following reasons: high costs of data circuits and generally high bandwidth costs. This has changed significantly in the last year with a general drop of over 70% in data link prices. 6
  • End-Point Proliferation: On the user side, a phenomenal 100% rise in laptop consumption over the last year is only an indication of shape of things to come. India Laptop Penetration Source: Tonse Telecom Dec 06 5.592 6.00 5.00 # of Units in 4.00 3.196 Millions 3.00 1.727 2.00 0.864 0.432 1.00 0.177 0.045 0.051 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Year As multi-national companies and Indian corporations continue to grow their Indian offices (expected growth in MNC hiring in tech sector to double in 2007) and global work-practices begin to be seen in India, the always-on connected professional is increasingly visible. Flexi- hours and home-office culture has set-in in the tech cities making laptop usage and home Wi-Fi a necessity. The small business enterprises are contributing significantly to the mobile work- force by becoming the fastest growing segment in laptop consumption. The Indian Government is considering halving excise duty on hardware (proposal status as of January 2007) which will likely bring in taxation level on par with China. Should this become a reality, PC and laptop costs will come down further increasing consumption even more. Undergraduate students and young professionals are picking up the laptop as their first computer purchase. This is a marked difference from the earlier days where desktop PCs was the trend. The PC segment continues to grow at about 22-24% per year but the laptop seems likely to continue to grow at 100% rates over the next two to three years. With an estimated 80% laptops shipped being Wi-Fi enabled, there will be a number of mobile Wi-Fi commuters in the cities. Although the near-term opportunity for Wi-Fi is primarily oriented toward traditional data applications (web surfing, email) via a PC, India’s mobile revolution has already generated a cellular subscriber population of 143 million (as of December 2006). Adding in excess of 5 million subscribers per month, India is likely to cross the 250 million mobile population within 2008. With 3G scheduled to be launched, a whole community of data-capable, multi-band smart phones mobile devices will enter the market. The country will see a proliferation of Wi-Fi end points over the next three years driving demand for ubiquitous wireless points of presence. 7
  • Enterprise Wireless Applications: India will witness innovative enterprise wireless business applications. One such example is the Roving Agent service where a ground staff of a domestic airline carries a Wi-Fi equipped device and prints off a boarding card for a traveler at a long line in the check-in counter. Or the convenience of paying petrol bills from the car via a credit card without having to walk up to the counter. As companies seek wireless solutions to gain a competitive edge, Wi-Fi applications on the manufacturing shop-floor, in warehouses and points-of-sale will drive faster and more accurate transactions. Globally, organized retail sector is one of the largest consumers of enterprise wireless solutions. This sector is just opening up in India, as the global retail giants jostle for shelf-space to lure the massive middle class. These growth areas will drive up demand for Wi-Fi applications. The growing Managed Services sector will extend into wireless enterprise as centralized servers will manage distant wired and wireless devices and applications for better control and improved operational efficiencies. Vehicular and goods control for transport and logistics organizations will continue to adopt wireless applications, many of which will be Wi-Fi powered. Government Initiatives: Government initiatives for unwiring the city (as in Pune and the Unwire Bangalore project) are ambitious attempts and strong indicators of government commitments to make wireless broadband a reality. These projects are a mix of WiMAX and Wi-Fi where WiMAX links up to the backbone and Wi-Fi points proliferate in the access segment from within enterprises and homes. The success of these projects depends on several factors including a viable public-private sector joint model, transparency and clear business ROI for private sector players. 8
  • Government Initiatives for State & Municipal Wi-Fi Network Deployments State/City Expressed Model Adm inistration Status - Dec06 Planned N/W Arch Most likely used Vendors Likely Business Challenges Objective Recom m ended Launch Application Model Bangalore City Increase Broadband Govt facilitates or State RFI Q1 2007 WiMAX backhaul Internet connectivity, E- No licensing, Unwire access/ Internet base enables Department of network, OFC mail access Internet Service IT / Rural backbone Providers invest in cooperatives Access Pune City Making Pune the IT Contracting-out Pune Municipal Purchase Mar-07 Link back to 1. By IT companies Intel-partner, Public Private 1. Spectrum allocation not decided Unwire capital of India model Coorporation tender National 2. Access for tourists other vendors Partnership 2. Urban poor Informatics Centre, (Commonwealth Youth not yet selected 3. Lack of handheld devices WiMax backbone Games 2008 being held 4. Sustainability issues network + WiFi in the city is expected to 5. Failed Public private hotspots bring in sports persons partnerships in the past and tourists to the city) 6. Strained relationship between Pune Municipal Corporation and Pune Chinchwad Municipal Corporation 7. Lack of adequate power back up Uttaranchal Rural+ Remote Public-private State Pilot WiMax 2-3 months Public Access , e-health, disaster Not decided on Public Private State Connectivity partnership government- project with for MoU WiMax backhaul management, IT jobs Partnership, Rural 1. Low e-literacy Department of Intel signing network Common Service 2. High cost of PCs and laptops IT, Panchayats Centres 3. Difficult terrain 4. Lack of initiative by government 5. Power back up issues Madhya Rural Connectivity Public-private State MoU signed, May-07 WiMAX backhaul E-commerce in rural Teledata Public Private 1. Bureaucratic delays partnership government- pilot project network areas similar to Indian Informatics Partnership, Rural 2. Power issues Pradesh State Department of first phase to Tobacco Company's e- +Motorola Common Service 3. Sustainability issues IT, Panchayats end in 6 chaupal kiosk model Centres 4. Low e-literacy, literacy months which promotes an e- 5. PC penetration low marketplace and directly connecting the farmers to the buyers. Rajasthan Rural Connectivity Public-private State MoU signed N/A WiMAX backhaul e-health, disaster Motorola Rural Common partnership government- network management, IT jobs, e- Service Centres 1. Difficult terrain State Department of learning 2. Low literacy IT, Panchayats 3. PC penetration low 4. Power backup issues 9
  • Innovation in Wi-Fi: Innovation is being driven by firms and academic institutions seized by the potential of Wi-Fi stemming from its speeds, lower cost and use of unlicensed spectrum. Cost-effective point-to- point and point-to-multipoint Wi-Fi solutions being developed and have begun to be deployed in a number of large campuses and rural areas. Top technology schools are driving research and prototype implementations on new MAC technologies that will use off-the-shelf Wi-Fi chipsets for rural broadband over 10-30kms ranges. Key Findings of this report: • Broadband wireless access will grow and subsequent WLAN network gear sector will exceed $275 Million by 2011-12 (from the current $23.1 Million). • The combined Wi-Fi market (described as consisting of WLAN networking gear, systems integration, software services and not including embedded devices and laptops) is expected to exceed $744 million by 2012. • The overall Wi-Fi market in India is still in its infancy and is on the cusp of a period of sustained growth. Growth inhibitors such as lack of bandwidth, low penetration of laptops and PDAs are fading away and a buoyant device market is projected. Tonse projects that the laptop market will double for the next two years and will exceed 5.5 million annual units by 2009-10. (Note: The WLAN market does not include embedded Wi-Fi chipsets in laptops, devices) India WLAN Network Gear Market Source: Tonse Telecom, Dec 06 279.24 300.0 Market Size in $M 250.0 199.46 200.0 137.56 150.0 91.70 100.0 59.16 36.98 11.33 18.44 23.11 50.0 2.67 0.0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Year 10
  • (Note: Wi-Fi market includes WLAN networks, systems integration, professional services and does not include Wi-Fi chip sets embedded in laptops, devices) India Wi-Fi Market Source: Tonse Telecom, Dec 06 744.017 800.0 Wi-Fi Market Size ($m) 516.633 600.0 342.333 400.0 207.317 123.810 200.0 80.014 41.578 0.0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Year • Increasing number of Wi-Fi end-points will drive public domain hotspots across the country. Hotspots in cafes and malls will grow but hotspot billing, and roaming related issues need to be resolved. • Early WiMAX trials will grow into full fledged deployments but they will be predominantly limited in backhaul for the next two years. Wi-Fi equipped laptops, smart-phones and devices will continue to feed off of these broadband wireless links through Wi-Fi access points at home/office and at hotspots. In the longer term, mobile WiMAX may bring additional methods of connectivity to India, and Wi-Fi will continue to complement WiMAX. 11
  • Telco Wi-Fi WiMAX Network Point-2- Point OF Backhaul C WiMAX Base station WiMAX Subscriber Home Wi-Fi CPE Wi-Fi hotspot hotspot WiMAX Ethernet Base station Access point Café Wi-Fi Wi-Fi hotspot Ethernet Office Wi-Fi hotspot Hotel Wi-Fi Airport Wi-Fi hotspot hotspot Figure: A Typical Wi-Fi WiMAX Network • The Government’s strong push toward Broadband and ‘unwired-city’ initiatives will provide enablers for broadband Internet applications. As Internet penetration increases, on-line life styles will become more prevalent and wireless access will become more ubiquitous. India’s emerging content industry fuelled by Bollywood, cricket and music will feed a new generation of youth that will seamlessly use cellular and Wi-Fi networks to exchange files and upload personalized content. Nokia has introduced dual-mode Wi-Fi handsets, Motorola is contemplating release of a dual-band Wi-Fi cellular device in India in 2007. • Applications such as Voice over Wi-Fi (VoIP over Wi-Fi) continue to hold the key to even more turbulent market changes. But with VoIP being currently restricted, VoWi-Fi is not yet a reality in India. Once the restriction is lifted, a proliferation of dual band Wi-Fi–cellular devices would happen. • Wi-Fi certification and testing services will begin to grow in India targeting both Indian and overseas semiconductor, ISV as well as networking gear companies. Indian firms have already been developing Wi-Fi IP for the global market, and this sector will grow further. The innovations developed in India will address local applications as well as global markets. Opportunities and Recommendations There are clear opportunities in the hotspot market for full fledged billing, PIN/security • administration for users, and roaming solutions. Travelers to tier-2 towns would immensely benefit if Airport Authorities move from high • flat monthly rentals to revenue-shared models, enabling the system integrators to profitably run the hotspots. 12
  • There is a clear need to increase general awareness and education about the new Wi-Fi • solutions, standards and capabilities so corporate network heads/system Integrators can make better informed decisions and benefit vastly from them. There are alternative emerging technologies and it is important to ensure that the market is educated well enough to differentiate between benefits delivered today at current prices and what is likely to happen in future. Innovative enterprise applications adapted for the needs of the Indian enterprise will fly. • Wi-Fi based solutions have a great opportunity to provide appropriate wireless solution • at feasible prices for large tracts of rural India. In combination with long-haul wireless technologies such as WiMAX, Wi-Fi proliferation is bound to multiply and is ideal for quickly connecting rural communities. Wi-Fi is well suited to becoming a strong product differentiator for the millions of cellular • handsets that are being sold every month, as ‘attach rates’ rapidly climb up. In short, the emerging Indian broadband market is on the cusp of a huge growth curve. And Wi-Fi is perfectly positioned to provide instant broadband access today from devices that are already available, over unlicensed spectrum in a safe, secure and reliable manner. 13
  • Research Methodology Tonse Telecom followed a process of gathering and analyzing primary and secondary data in order to arrive at the conclusions presented at the end of this paper. The initial preparation involved carrying out extensive secondary research on the Indian Wi-Fi market, PC penetration, demographics, relevant economic data, publicly available information and players in the value chain to arrive at base market status. Tonse Telecom used internal databases as well as reports from industry associations for the data and statistics used in the report. To develop the whole market view, Tonse Telecom also looked at revenues, market share data and numbers provided by major vendors in the Indian market. Having identified the value chain for the Wi-Fi ecosystem, Tonse Telecom conducted extensive interviews with key people at the companies representing the value chain. Major equipment vendors (and channels) like Cisco-Linksys, Netgear, D-Link, and Symbol Technologies who are participating in the Indian market were also interviewed. Tonse Telecom also spoke to ISPs like Sify, RailTel, and Dishnet Wireless. Tonse Telecom set up separate discussions with top six system integrators in the country. The system integrators are involved in actual field implementations and understand the challenges and expectations of the corporate, SOHO and SME customers. This view was important and helped us validate and balance-out the overall findings. To cover the aspects of government initiatives, Tonse Telecom also spoke to key government officials who are driving the Wi-Fi initiatives in various cities covered in the report. Another aspect involved conducting research and interviews with prominent innovators in India contributing to the Wi-Fi ecosystem specifically for Indian market and globally. Tonse Telecom arrived at the conclusions by drawing up the big picture and then detailed analysis. Data and analysis was also discussed and validated with key visionaries in the industry. Tonse Telecom is confident that the reported data, analysis and conclusions are thorough, meaningful and valuable to the readers. 14
  • About Tonse Telecom Tonse Telecom is a recognized leader in India telecom intelligence. Tonse Telecom enables telecom equipment vendors, ISVs, infrastructure developers and investors for success in the Indian telecom marketplace. Tonse is a research, consulting and advisory services organization providing custom technology research, investment advisory services, strategy, independent reports and marketing services. Tonse Telecom is based in Bangalore, India. Tonse Telecom has onboard, a team of reputed senior industry executives and consultants who provide advisory services on specific projects. Tonse consultants covers a broad spectrum of emerging telecom technologies that include Wi-Fi, BWA / WiMAX, IMS, FMC and Triple Play, VoIP, Mobile VAS, End-device Applications and Mobile Content. About The Wi-Fi Alliance The Wi-Fi Alliance is a global, non-profit industry association of more than 300 member companies devoted to promoting the growth of wireless Local Area Networks (WLANs). With the aim of enhancing the user experience for mobile wireless devices, the Wi-Fi Alliance’s testing and certification programs ensure the interoperability of WLAN products based on the IEEE 802.11 specification. Since the introduction of the Wi-Fi Alliance’s certification program in March 2000, more than 3,000 products have been designated as Wi-Fi CERTIFIED™, encouraging the expanded use of Wi-Fi products and services across the consumer and enterprise markets. Wi-Fi®, Wi-Fi Alliance®, WMM®, the Wi-Fi CERTIFIED logo, the Wi-Fi logo, and the Wi-Fi ZONE logo are registered trademarks of the Wi-Fi Alliance; Wi-Fi CERTIFIED™, Wi-Fi Protected Setup™, Wi-Fi Protected Access (WPA)™, Wi-Fi Multimedia™, and the Wi-Fi Alliance logo are trademarks of the Wi-Fi Alliance. 15
  • Chapter 1. Indian Internet Market: Background and State of Market Highlights 2007 promises to be an important year for broadband and Wi-Fi in India. • Laptop sales expected to double this year, driving Wi-Fi. • After slowdown, hotspot deployment picking up. • Access charges on Wi-Fi vary widely from $0-3.3 per hour • Keen interest in Public Wi-Fi networks, but business model challenges exist. • Rural broadband demand is driving outdoor Wi-Fi solutions • 1.1 Background The year 2007 promises to be one of the important years for the growth of broadband and Internet penetration especially with regard to growth of Wi-Fi. The following sections discuss trends which are driving the growth. Policy enablers by the Government of India (GoI) • Current broadband and Internet penetration • PC and laptop penetrations across India • Increase in e-commerce and Internet based activities • Availability of Wi-Fi hotspots • Pricing of access to the Internet • 1.1.1 Internet And Broadband Penetration The Government of India (GoI), in 2004, defined one of the first ‘Broadband Policies’ of its kind in the world, by laying out a complete national mandate for broadband infrastructure. The policy targeted 3 million broadband connections in the country by end of 2005. By December 2005, the total broadband connections were only 835,000 and by November 2006 the number moved up to about 2 million: a massive shortfall of about 33% to targeted 3 million subscribers a year ago. Latest figures show that there around 2 million broadband connections in India. 16
  • Figure 1: The Indian Broadband Policy Projections (source:GoI) Faced with this formidable challenge of meeting broadband targets, the Indian Government is seriously looking at opening up the wireless access route to create the necessary broadband infrastructure across the country. In line with this, the public-sector giant and incumbent operator Bharat Sanchar Nigam Limited (BSNL) started offering 2 Mb/s download speeds to existing 256 KBPS ADSL customers in select cities from January 2007, for no additional charges. The Internet subscriber base itself is smaller and includes active Internet subscription accounts registered with ISPs (dial-up, broadband or other access)] and is all set to grow to a 100 million (source: IAMAI, 2005) by 2007-08. According to research report by Internet and Mobile Association of India (IAMAI), an industry body that tracks Internet activity in India, published in December 2005, Job Search is one of the top 5 key online activities that Indians do online [Email, Surfing, Chatting, Search and Job Search]. The number of people also going online for purposes from browsing, buying travel tickets, matrimonial ads and entertainment services has been growing at an incredible pace. Dial-up services are still popular among a large number of users. Dial-up service packages may cost between INR 10 ($0.22)/hour for a 10-hour Internet Access Plan to INR 500 ($11) for a 500 hour Internet Access Plan. The pricing for a DSL connection now has dropped consistently; example the pricing for a 256 KBPS ADSL link dropped from INR 500 ($11)/month to less than half that fee. A large and dominant dial-up access population has started shifting towards an always-on mode as is evident from the graph. 17
  • Internet Users by Access (2004-05) Source: IAM AI 57% 60% 47% 50% 36% 40% 2004 Internet User 28% 30% 2005 20% 13% 12% 10% 6% 10% 1% 1% 0% Dial-up ISDN Leased Line DSL/Cable VSAT Figure 2: Internet Users by Access (by %, 2004-05) The broadband connections depicted below are predominantly ADSL subscriptions. Of this Bharat Sanchar Nigam Ltd (BSNL)/Mahanagar Telephone Nigam Ltd (MTNL), a public sector company and India’s largest operator, share is about 70% with the rest accounted for by private operators like SIFY, Reliance and Tata Group. India Broadband Connections (>256 Kbps) Source: TRAI, ISPs Dec 06 2.5 Subsrciptions in 2 1.92 1.72 1.82 2 1.5 1.55 1.65 1.31 1.42 Millions 1.5 1.05 1 0.75 0.835 1 0.5 0 B Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul-06 Aug- Sep- Oct- Nov- 05 05 06 06 06 06 06 06 06 06 06 06 Year Figure 3: India Broadband Connections (mil, >256kbps) A small percentage of this includes metro Ethernet connections, offered by regional ISPs in select parts of India. The following graph depicts the broadband subscribers by access. The DSL broadband customer is an important driver of Wi-Fi segment in India because in most homes, the dial-up service is making way for ADSL and to Wireless Router / Wi-Fi access points (AP) as a wireless extension to the data service. 18
  • Current Internet Subscribers by Access Source: Tonse Telecom Estimates Apr 06 5 4.4 4 3 1.8 1.5 2 1.2 1 1 0.1 0 Broadband Dial up Cable Leas ed ISDN V SA Ts Mode of Access Internet Subs byAccess Figure 4: Internet Subscribers by Access (mil, Apr ’06) 1.1.2 PC and Laptop Penetration In most developed countries, the PC penetration happened before the Internet and mobile telephony arrived. However, in India, mobile penetration (for basic voice) has already exceeded PC penetration several fold. PC sales are growing at around 25% year to year. Notably laptop sales have been doubling. The annual PC sales in 2005-06 were below the 5 million mark. Forecasts for 2006-07 estimate that over 5.6 million PCs would be sold in India. It is important to note that the prices of PCs have been consistently falling. Dell Inc. has just announced setting up of a manufacturing facility near Chennai, a major metro in southern India, for making low cost PCs. The graph below shows annual PC additions across the country for the last 6 years. While the linkage to Wi-Fi growth from PC penetration is not a strong one in itself, increase in PC and broadband penetration especially with the policy push from the government, could be a big boost to Wi-Fi deployment, especially in rural India. 19
  • India - Desktop Shipments Source: M AIT IM RB Desktop Shipments 5600 6000 4615 5000 3633 in 1000s 4000 3036 2294 3000 1882 1671 1405 2000 1000 0 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 00 01 02 03 04 05 06* 07 Year Figure 5: India – Desktop Shipments The single most enabling factor for Wi-Fi in developed countries has been the rapid increase in laptop usage. Widespread laptop usage in India has not started yet, however growth signs are clear. In line with the prices of desktop computers, the prices of notebooks have also been dropping to $700-$1000, just about $200 more than the comparable desktop computer. This has led to a leap in the sales of laptops. According to the Manufacturers Association of Information technology (MAIT), an industry association of Indian manufacturers of technology and services, the laptop sales grew 94% during April to Sept 2005. During Q2 2006, 219,000 laptops were sold across all manufacturers (IDC report, 2006). According to MAIT announcement in December 2006, the laptops sold in India this year will double that of last resulting in 100% growth (total units sold to be 863,668 compared to 431,834 in 2005-06). Tonse Telecom estimates that laptop market will continue to grow impressively for the next three years and exceed 5.5 million units annually by 2009-10. India Laptop Penetration Source: Tonse Telecom Dec 06 5.592 6.00 5.00 # of Units in 4.00 3.196 Millions 3.00 1.727 2.00 0.864 0.432 1.00 0.177 0.045 0.051 0.00 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Year Figure 6: India laptop penetration (Tonse Telecom, Dec ’06)) 20
  • As prices continue to drop, more consumers will be motivated to buy laptops, because of advantages of mobility, space constraints, cost advantages, and this will drive demand for Wi-Fi networking. 1.1.3 Hotspot Availability The Wi-Fi hotspot market is in its infancy in India. In 2004, CIOL (Cyber India Online Limited) research indicated that the total number of public hotspots in India were about 250 of which 215 were located in the south Indian tech city of Bangalore. With the de-licensing of the 2.4 GHz spectrum in January 2005 for indoor and outdoor usage, the Wi-Fi segment received a boost. However, public hotspots have been slow in taking off. This is not surprising, because mobile computing is not as widespread in India as in the West. But that is all set to change now. Hotspot deployments are definitely on the rise and seem to be driven by the demands of a growing mobile community and workforce. Airports, hotels and cafes appear to be leading the way. Tata Group’s Tata Indicom has setup Wi-Fi hotspots in a number of cities including the four metros: New Delhi, Mumbai, Chennai and Kolkata. BSNL, the incumbent telecom giant, is in the process of setting up 300 hotspots in twenty-four cities, which includes a large number of tier-2 cities, where it will also be the broadband provider. Microsense, a leading Indian systems integrator and solution provider, told Tonse Telecom about their tie-up with BSNL to deploy the hotspots. According to Microsense, 100 have already been completed. BSNL’s hotspots will be located at hospitals, libraries, hotels, restaurants and other public places. The exact location of the hotspots in individual cities is under finalization. Though there are no formal estimates of the number of Wi-Fi hotspots in India, Tonse Telecom has estimated that there are about a 1000 hotspots functioning in India, at the present time, and the scenario is changing as we write this. The estimate comes from adding individual estimates across the categories. Most premium hotels are now deploying hotspots, and likewise some mid- range hotels. Airports are another definite category for hotspots. Café Coffee Day, a Starbucks-style coffee chain in India, has deployed Wi-Fi service for a fee (INR 30 ($0.60)/half- hour. In addition, exhibition grounds where trade fairs and conferences are held also have Wi-Fi hotspots. Previously, at least two major announcements had been made and not delivered. A single major Wi-Fi project from an ISP (such as RailTel for example), can dramatically change this scenario by adding several hundred Wi-Fi facilities in a single quarter. But it does indicate that since 2004, and the blitz of announcements from a few major ISPs, the numbers have grown. 21
  • 1.1.4 Pricing Of Internet Access In India Internet access pricing varies significantly in India depending on type of access, private or public and access mode (DSL/ Dial-up). Some 5-star hotels charge high rates of up to INR 150 per hour ($3.33) (with a minimum block of 6 hours) while a new crop of mid-range hotels have started offering Wi-Fi access free to customers as added value. Effective per-hour Rates for Internet Access mechanisms in Nov '06 in India Comparison Wi-Fi HotSpot Cyber-Café Dial-Up Dial-Up Dial-Up Dial-Up Broadband of Typical Net Access Net Access Peak Rates Off Peak Rates Peak-Rates Off peak Rates Unimited Rates in India Pre-Paid Pre-Paid Post-Paid Post-Paid Usage Pack Varies from Varies from Varies from Varies from Varies from Varies from Varies from In INR free (some hotels) Rs.20 - Rs.60 Rs.14.6 - Rs.32 Rs.4.8 - Rs.19 Rs.15 - Rs.30 Rs.7.2 - Rs.18 Rs.3.75 - Rs.5.83 to Rs.150 per hour per hour per hour per hour per hour per hour per hour In USD 0 - $3.33 $0.44 - $1.33 $0.32 -$0.71 $0.1 - $0.42 $0.33 -$0.66 $0.16 -$0.55 $0.08 - $0.13 per hour per hour per hour per hour per hour per hour per hour Tonse Telecom, Dec '06 Effective Rates from top 5 ISPs' select plans, computed on basis of 8hours/day of usage Info based on inputs from TRAI, industry, ISPs, hot-spot operators Table 1: Effective Internet Access Rates, Dec ‘06 1.2 Market Trends and Drivers The macro-economic trends in India are also driving increase in the adoption and consumption of Internet data, voice and video in various forms. In the following subsections, we describe the usage of Wi-Fi based Internet at home, in the enterprise, public hotspots, city/municipal networks, campus networks and rural deployments. 1.2.1 India’s Wi-Fi market India’s Wi-Fi market has an interesting set of components many of which are small today but have a huge promise of growth. A high level view of the market includes WLAN gear (this includes the Access Points, routers, PCMCIA and PCI cards for Wi-Fi connectivity) and a fairly large professional services component (this includes Wi-Fi pre-certification services, testing, customization and design services, custom application licensing and systems integration revenues from a variety of software services organizations). 22
  • India WLAN Network Gear Market Source: Tonse Telecom, Dec 06 279.24 300.0 250.0 Market Size in $M 199.46 200.0 137.56 150.0 91.70 100.0 59.16 36.98 50.0 11.33 18.44 23.11 2.67 0.0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Year Figure 7: India WLAN Network Market (Tonse Telecom Estimates, Dec ’06) (Source: 2002-05, CyberMedia Research) Tonse estimates strong growth in Wi-Fi market year on year for the next several years, pushing the market above $275 Million by 2011-12. The overall Wi-Fi market is growing at an even bigger pace and promises to take off as a whole host of professional and customization services are beginning to grow. In addition to existing Wi-Fi IP products and services, testing and certification, custom IP build-out, licensing revenues from specialized IP targeted at global verticals (such as the automobile industry, the retail segment, transport and logistics) are all beginning to be built in India for the global market. This market is estimated to grow into a $744.017 million by 2011-12. This estimate includes WLAN network gear, system integration services around these network deployments, custom software development and consulting, testing and certification services in the Wi-Fi space developed in India for both Indian and global customers. This estimate does not take into account embedded Wi-Fi components in laptops, embedded Wi-Fi devices such as handsets and consumer electronics. (Wi-Fi market estimates here do not include embedded chip sets in laptops and devices) 23
  • India Wi-Fi Market Source: Tonse Telecom, Dec 06 744.017 800.0 Wi-Fi Market Size ($m) 516.633 600.0 342.333 400.0 207.317 123.810 200.0 80.014 41.578 0.0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Year Figure 8: India Wi-Fi Market Estimates (Tonse Telecom, Jan’07) (Wi-Fi Market estimates do not include embedded chip sets in laptops and devices) The combined Wi-Fi superset market for India promises to be much larger as the smart phone segment and PDA like devices are just beginning to emerge. As the cellular market adds on an average 5 million new subscribers every month, dual-mode Wi-Fi equipped handsets are beginning to emerge. They are currently premium devices and are priced in excess of $400. According to one major chipset maker, the Wi-Fi ‘attach rate’ will likely touch 20% of the handsets sold by 2009-10. 1.2.2 Wi-Fi User Segment: Home users The Home User category is one of the fastest growing categories needing computing and communication infrastructure in India. The Broadband drivers come from the fundamental need to stay connected and benefits of on-line transactions compared to traditional alternatives. The general high growth economic drivers apply here at a macro economic level and are visible in the larger towns and metros. However families in smaller towns are beginning to budget the first home computer as well. The following factors are noteworthy: For the growing middle class in India, the home PC has become an important education • tool for the school-going generation. Commercial public-sector banks have already noticed this trend and are offering home- • PC loans that can be paid off on monthly basis. Private sector banks have special offers to purchase a PC for the home using credit cards. Incumbent ISPs such as BSNL identified this early and in Q1 2006 launched a • Broadband service + home PC through a tie-up with an Indian bank at a combined monthly payment of INR 500 ($11.1). In 2006, reduced Custom Duty on hardware further dropped PC prices bringing it down • to sub INR 25,000 ($555) improving affordability. Also, a number of domestic everyday transactions, (at least in the bigger cities such as • Bangalore, Mumbai, New Delhi, Chennai) such as payment of utility bills, travel planning and making train ticket reservations, most regular banking transactions such as fund 24
  • transfer and balance inquiry have entered mainstream allowing the convenience of on- line activity. Interestingly enough, the Internet and its applications are beginning to hold sway and • alter the traditional fabric of this ancient society. Traditional methods of marriage are changing. On-line matrimonial ads are a big draw and young people advertise profiles seeking partners in marriage. This has already gone mainstream and on-line matrimonial portals have become the most attractive sector for Venture Capital investment in the country. 1.2.3 Wi-Fi User Segment: Enterprise Market The enterprise market in India has been one of the primary consumers of Wi-Fi and it presents a good story of growth. Most of the Wi-Fi growth is happening in enterprises because that’s where the largest concentration of mobile computer users is. All the systems integrators Tonse Telecom interviewed reported to us that the enterprise market for their Wi-Fi offerings is growing from 2005. Enterprise Wi-Fi networks are being used to complement wired networks, and in some cases Wi-Fi is used for building-building connectivity. India WLAN Market Revenues by Vendor, 2004-6 Source: DQ, Cybermedia 12.0 10.0 9.1 10.0 Revenue M$ 8.0 5.8 4.9 6.0 4.4 4.0 2.2 2.0 1.3 0.9 0.9 2.0 0.0 Cisco D-Link Netgear Dax Others Vendor 2004-5 2005-6 Others: 3Com, Brovis, Compex, Multitech, Allied Telesyn, Proxim Figure 9: India WLAN Market (by vendor, 2004-06) 25
  • India WLAN Market by Vendor, 2005-6 Source: DQ, Cybermedia Revenues in million$ 4.4, 19% 0.9, 4% 10.0, 43% 2.0, 9% 5.8, 25% Cisco D-Link Netgear Dax Others Figure 10: India WLAN Market by vendor (2005-06, mil) The figures above show Wi-Fi sales for 2004-5 and 2005-6 by the major vendors and market share for 2005-6. Cisco/Linksys led the market in 2005-6 with revenues of around $10M, followed by D-Link and Netgear with $5.8M and $2M each. Notebook sales in enterprises have also been growing driving up Wi-Fi sales, particularly in smaller firms. According to Manufacturers Association of IT-Indian Market Research Bureau (MAIT IMRB) figures of June 2006, overall consumption of notebooks in the business sector grew by 143% in 2005-6 from 2004-5. Consumption in small enterprises (less than 10 employees) surged to 248%. In large businesses (50+ employees), notebook sales grew by 124% and in medium-sized (11-50 employees) by 96%. Percentage increase in laptop usage in enterprises Source: MAIT IMRB 248% 124% 250% 96% 200% Percentage 150% increase in 2005-6 100% from 2004-5 50% 0% Small (<10) Medium (11-50) Large (>50) Business size (no of employees) Figure 11: Percentage Increase in Laptop Usage in Enterprises 26
  • Going forward Tonse Telecom expects to continue to see high percentage increases in laptop sales in the small business segment. 1.2.4 Wi-Fi Access Points: Public domain Hotspots, Kiosks Wi-Fi hotspots in India are being implemented by systems integrators, ISPs, and some telecom operators. The hotspot market itself has evolved since the initial blitz of 2003-4 when there were number of announcements by two major ISPs – Chennai based Dishnet Wireless and Sify Corp. Both these firms are major players in the broadband consumer market. Dishnet Wireless had announced its plans to open 6000 hotspots and Sify announced its own rollout as well. This laid the ground for the expectation that several thousand hotspots would be created in the country during the ensuing span of 2-3 years. However, after those much hyped up announcements, the hotspot rollout plan fizzled out. Tonse Telecom has learnt that Sify has called off rolling out Wi-Fi hotspots citing lack of viability as the reason. Sify is instead continuing to offer its broadband offering to homes and businesses using a combination of fixed wireless for back-haul and cable-Internet for the local loop. Dishnet Wireless (DW) has also confirmed that it has called off its original hotspot rollout plan and is deploying hotspots now where the demand is certain. All the major systems integrators have reported to Tonse Telecom that their hotspot deployments have gone up by 20% since last year. Systems integrators are good a bellwether for hotspot deployments since in most cases, even when commissioning entities are ISPs, Telecom operators, or airports themselves, the actual implementation is done contractually by the SIs. In specific terms, the growth for hotspots in India is primarily through deployments in hotels, coffee chains, and airports. Major airports already have Wi-Fi hotspots, more airports are likely to join the league this year. Tonse Telecom learnt about a specific challenge faced by systems integrators. Airport authorities in tier-2 towns are currently charging hotspot providers high monthly flat rental fee, which is impacting profitability. Hotspot providers would prefer a revenue sharing arrangement with airport authorities instead of flat rates. While the premium hotels are convinced about the need for hotspots because of globe trotting travelers carrying laptops, the mid-range hotels were initially slower to install Wi-Fi because they had not been experiencing a concentration of laptop users at their hotels. Public sector telecom operators and service providers are also pushing forward with hotspot plans. As noted earlier, BSNL is in the process of setting up 300 hotspots in twenty-four cities. Each hotspot may cater to about 50 subscribers. 27
  • BSNL’s planned Wi-Fi hotspots No. of Sl. No. City Circle Hot spots 1 Bangalore Karnataka 36 2 Chennai Chennai 36 3 Kolkata Kolkata 36 4 Pune Maharashtra 24 5 Ulhashnagar Maharashtra 8 6 Dombivili Maharashtra 8 7 Kalyan Maharashtra 8 8 Hyderabad A.P. 24 9 Ahmedabad Gujarat 24 10 Lucknow UP(E) 12 11 Ernakulum Kerala 12 12 Ghaziabad UP(W) 8 13 Noida UP(W) 10 14 Faridabad Haryana 8 15 Gurgaon Haryana 10 16 Bhubaneshwar Orissa 4 17 Guwahati Assam 4 18 Ranchi Jharkhand 4 19 Patna Bihar 4 20 Indore M.P. 4 21 Coimbatore Tamil Nadu 4 22 Trichy Tamil Nadu 4 23 Madurai Tamil Nadu 4 24 Pondicherry Tamil Nadu 4 Total 300 Table 2: BSNL’s planned Wi-Fi Hotspots In early 2007, RailTel Corporation of India Ltd, a Public Sector Undertaking of Ministry of Indian Railways, is expected to launch its hotspot rollout for India’s railway stations. Railtel is planning to finish the year with 100 hotspots and says it plans to reach 500 in around 3 years. Railtel says it is aware that laptop penetration in the country is low and even lower at railway stations. To address this, Railtel plans to introduce Wi-Fi enabled Internet kiosks at stations for customers to do email, purchase tickets, check ticket status, and purchase Railtel services. In addition, Railtel says they are planning to extend the range of their hotspots to a km radius around the station for end users to pay and use. 1.2.5 Wi-Fi Public: Government Initiatives Wi-Fi networks are being looked upon as potential cost-efficient last mile connectivity solutions vis-à-vis traditional wired connectivity. According to some industry estimates, about 85% of 28
  • Indian villages, are within a 25 -30 km distance from an Optic Fiber termination point. However, the villages themselves lack well-penetrated and broadband-enabled telecom infrastructure. Several Indian state governments and city municipalities have announced state- or city-wide wireless networks in an alliance with a private partner. The central government has also emphasized on the importance of these programmes under the centrally funded State Wide Area Networks (SWAN) initiative. The Pune Municipal Corporation (PMC) announced the “Unwire Pune” project with Intel Technologies Ltd. as the chief technology and program management consultant. This project is aimed at delivering wireless connectivity to 400 sq. KMS of the city including adjacent areas of Pimpri and Chinchwad. The main aim behind the project is to provide seamless connectivity to citizens, businesses and academic institutions. Intel would be deploying the Wi-Fi and WiMAX technologies that are extensible, have high performance technical architecture and is suited to the PMC requirements. Intel would also be responsible for informing and educating the PMC through workshops and training programs. PMC has set apart an initial estimate of INR 70 Million ($1.6M) for the project. Apart from the push by the PMC, Intel chose to work on a network for Pune, over a lot of cities like Hyderabad and Bangalore, because of its small size. PMC is planning to build 10 WiMAX towers, 800 Wi-Fi hotspots in the city. According to specifications from PMC, the backbone wireless communication infrastructure network for the whole area considered would result in ubiquitous connectivity. Within 100 sq. km of the metropolis area the bandwidth available per user would be 128 KBPS. The PMC expects it to take about 12 months for the project to materialise. The technology to be used for Wi-Fi would be IEEE 802.11g (2.4 GHz) which provides a raw data rate of 54 Mb/s, with backward compatibility with 802.11b-only clients at 11 Mb/s. PMC plans for 99% uptime. Initially free access to low end users and charges to high end users (with high bandwidth usage) is being planned. The ISP hasn’t been decided yet. This major project follows various other Wi-Fi pilot projects in the city. Bangalore Unwired: The Government of Karnataka (GoK) is interested in a Bangalore (capital of state Karnataka) wireless network, and appears to be taking a more cautious approach compared to other initiatives in the country. For Bangalore Unwired, the GoK has decided not to invest in the network itself, and the Department of Information Technology (DIT) is acting as facilitator. The government has more or less decided on WiMAX for backhaul connections, and has left the choice of Wi-Fi for hotspots to the implementers. But DIT officials say that their decision to go forward and approve the project’s implementation will be based on whether they are convinced about the business models being proposed by applicants. These deliberations took place on Dec 11, with 5 solution providers who had been short-listed earlier this year. The DIT says that one or two solution providers will be selected by Jan 10, and they will be the lead implementers of the network. A technical committee chaired by Dr Sadagopan of the Indian Institute of Information Technology, Bangalore (IIITB), is proving guidance to the DIT for its facilitation. The status and fate of the project will likely be known by February 2007. The Madhya Pradesh state government has signed an ambitious memorandum in November 2006 with Motorola and Teledata Informatics as private partners for a wireless network that will likely include Wi-Fi components. This project will provide broadband connectivity to rural areas. The villages will be connected to district headquarters and Bhopal. The revenue from the 29
  • contract is expected to fh INR 600 Million ($13.3M) annually. The initial contract is set for a period of five years. Teledata Informatics has proposed to set up a continuum of telecom infrastructure, IT applications and a distributive system for providing an effective solution and improve socio-economic conditions in rural areas of the state. A sum of INR 1.5 Billion ($33.3M) will be invested by Teledata Informatics for the same. In the first phase (for six months) a specific project venture will be established with an operating hub at Bhopal. Connectivity will be provided at specific points in Bhopal and 200 points in rural areas. IT applications, services and logistics will be provided for. The Uttaranchal government has reportedly developed an alliance with Intel for a WiMAX based backhaul connectivity, and a model for the state is currently being developed. One WiMAX tower with four antennas in each direction covering a range of 20 KMS each is being proposed. The tower will four antennas one for each direction, and each providing for 128 KBPS Internet connections (reportedly free). The first phase would cover Dehradun and Champawat. Tehri and Chamoli would be covered in the second phase. The government is not pushing towards Wi-Fi hotspots at the local level and is leaving that to private organisations, though these hotspots would connect to the main WiMAX backhaul network. While it is reported in the press that Uttaranchal is working with Intel, no MoU has been signed. The state government does however want to set up a wireless backbone network within two years time. The Rajasthan government has signed a memorandum with Motorola in February 2006 for statewide deployment of wireless broadband infrastructure. The MOTOWi4 canopy network will provide for a wireless backbone grid system. The state IT department has refused to reveal any information on this project, saying that only after substantial work is done the details will be made public. Success Factors: The central opportunity metro Wi-Fi offers is that it can make Internet connectivity ubiquitous. The challenge for the Indian environment is creating the right business model. 1. While government-led initiatives to expand broadband access are encouraging, history tells us the government-led projects could unravel, lose steam, or stagnate at any time. Political and bureaucratic delays have often led to faulty or slow implementation. 2. A big infrastructural issue is the lack of a reliable power supply. Mobile devices are battery operated but battery life is a bottleneck, especially since the back-up power is not available sufficiently. Solar panels are feasible, but they tend to disproportionately add a cost to each access point that needs to be powered. 30
  • Government Initiatives for State & Municipal Wi-Fi Network Deployments State/City Expressed Model Administration Status - Dec06 Planned N/W Arch Most likely used Vendors Likely Business Objective Recommended Launch Application Model Bangalore City Increase Broadband Govt facilitates or State RFI Q1 2007 WiMAX backhaul Internet connectivity, E- No licensing, access/ Internet base enables Department of network, OFC mail access Internet Service Unwire IT / Rural backbone Providers invest in cooperatives Access Pune City Making Pune the IT Contracting-out Pune Municipal Purchase Mar-07 Link back to 1. By IT companies Intel-partner, Public Private capital of India model Coorporation tender National 2. Access for tourists other vendors Partnership Unwire Informatics Centre, (Commonwealth Youth not yet selected WiMax backbone Games 2008 being held network + WiFi in the city is expected to hotspots bring in sports persons and tourists to the city) Uttaranchal Rural+ Remote Public-private State Pilot WiMax 2-3 months Public Access , e-health, disaster Not decided on Public Private Connectivity partnership government- project with for MoU WiMax backhaul management, IT jobs Partnership, Rural State Department of Intel signing network Common Service IT, Panchayats Centres Madhya Rural Connectivity Public-private State MoU signed, May-07 WiMAX backhaul E-commerce in rural Teledata Public Private partnership government- pilot project network areas similar to Indian Informatics Partnership, Rural Pradesh State Department of first phase to Tobacco Company's e- +Motorola Common Service IT, Panchayats end in 6 chaupal kiosk model Centres months which promotes an e- marketplace and directly connecting the farmers to the buyers. Rajasthan Rural Connectivity Public-private State MoU signed N/A WiMAX backhaul e-health, disaster Motorola Rural Common partnership government- network management, IT jobs, e- Service Centres State Department of learning IT, Panchayats Table 3: Government Initiatives for State and Municipal Wi-Fi 31
  • 3. None of the initiatives have a clearly articulated business model yet. The model must result in sustainability of the project and allow for future network upgrades. Also, it is not clear that if costs will overrun budget and whether the taxpayers will be liable for paying excess costs. 4. For Pune, it has been openly stated that the pricing would be such that it is less than the current prices for broadband. Only for high bandwidth users, a price would be charged. This however, would mean that unless the project is a huge success, sustainability of the project would not be easy. 5. Socio-economic factors matter and it is not clear whether demand for access to the net will emerge from the broader society. The high costs of handheld devices could be a major hindrance, overall. The impoverished customer base everywhere would need special attention with tailored digital divide programs. The literacy rate even in a city like Pune is not 100%, which would cause further problems to mass adoption of the technology. Notes: The Indian telecom ministry and the Regulator (TRAI: Telecom Regulatory Authority of India) is probably one of the most progressive, forward-looking policy making bodies in the world. The pro-active approach, a strong industry focus with a social bias to reduce and eliminate the digital divide is truly commendable. The challenges are not trivial but the consumer-friendly approach of the Ministry and its pragmatic approach to creating a broadband connected India will go a long-way in making India a progressive digital economy in the twenty-first century. 1.2.6 Wi-Fi In Rural India: Rural Enterprise Wi-Fi deployments While broadband penetration in rural India is far lower than in urban India, in several parts of rural India, broadband needs over long ranges are being felt. These stem from growth in IT usage in industries as well as from development, NGO and government projects. The demand for long-haul broadband is disaggregated. The users, while being tech savvy, cannot afford expensive solutions, whether it is proprietary RF-based or soon-to-come WiMAX-based services. To address this need and leveraging the fact that Wi-Fi equipment have a huge cost advantage through economies of scale, a number of equipment makers have started selling longer-range solutions that are proprietary derivatives of 802.11 b/g equipment. Their primary goal is to help setup point-to-point, point-to-multipoint, and mesh networks. No performance is being offered, and the main value-add is outdoor functionality. Two examples are cited here. The Byrraju Foundation is a Non-Governmental Organization (NGO) providing services in the areas of healthcare, environment, sanitation, primary education, adult literacy and skills development, in the southern Indian state of Andhra Pradesh. The foundation is working in 156 villages in 5 districts of Andhra Pradesh - East Godavari, West Godavari, Krishna, Guntur and Ranga Reddy - and its projects involve roughly 800,000 people. In 2005, the foundation deployed an outdoor long-range wireless network in the West and East Godavari districts. The 802.11b network has 32 locations, covers roughly 500 sq.KMS, and includes point-to-point and point to multipoint links. A 2 Mb/s leased line connects the network from Bhimawaram to 32
  • Hyderabad, the headquarters of the NGO, and this is the gateway to the Internet. The network includes the town of Eluru, the district headquarters, from where the Alluri Sitaramaraju Medical College is offering a telemedicine service over the Wi-Fi network. The foundation says that three specialists are available each week to the villagers at designated hours. In addition, a pediatrician from New York and a gynecologist from Hyderabad are also consulting with the villagers. Other applications being run on this network include distance education (video conferencing), livelihoods training and agricultural extension services. The network was setup by the Chennai- based systems integrator Gemini Communications using Smartbridges equipment. Gurudutt Sugars, a sugar factory in rural Karnataka, also a southern state neighbouring Andhra Pradesh, setup an outdoor wireless network for their enterprise applications in 2005. The wireless network is roughly 10 square km in radius and is a point-to-multipoint network. Branches are connected to the head office using point-to-multipoint links. This is a line of sight (LOS) network built using equipment from Brovis Wireless, a Chennai-based equipment maker and innovator. All the links use outdoor antennas integrated with Brovis access points. This is an 802.11g data network, and a billing application is being used at the sugar factories over this network. The solutions being deployed for extended range rural wireless typically involve increased output power and specialized antenna elements. In addition, to handle the extra propagation delay due to the long distances (a few kilometers typically), the equipment makers typically change the default timeout settings at the Wi-Fi MAC layer. This helps TCP/IP applications run smoothly without much loss of throughput. Some vendors also note that they have made other changes to the 802.11 MAC to make it work for longer distances, and admit that interoperability with regular 802.11 b/g gear could be an issue such links. Tonse Telecom’s view is that innovative Wi-Fi based long-haul broadband offerings will continue to see deployment in the disaggregated and changing rural marketplace, given that there is scope for LOS links for at least a few kilometers of distance. Almost all the systems integrators we have interviewed have confirmed that they are seeing interest in these solutions. 33
  • Chapter 2. Wi-Fi Ecosystem Players Highlights • Customers have a range of choices from global and local brands for Wi-Fi gear. • India has Wi-Fi product/subsystem developers exporting to global and local equipment makers. • Mobile handset makers have begun adding Wi-Fi with more handsets and PDAs to launch in 2007. • Systems integrators (SIs) are key part of the Wi-Fi value-chain. • Broadband Internet Service Providers and Telecom Operators are deploying hotspots. India's Wi-Fi ecosystem reflects to some extent that of the rest of the world. Like in other countries, end consumers such as home and small business users get their Wi-Fi equipment directly through retail channels, which are often small computer shops or the new electronic retail outlets emerging in the bigger cities. Small businesses get serviced by systems integrators or value added resellers, Internet service providers or the telecom operators. While many large enterprises outsource infrastructure to systems integrators, in some larger enterprises, the internal IT divisions manage all the IT infrastructure as part of their overall planning, deployment and upgrade processes. This includes Wi-Fi networking. However, there are some key differences in the Indian Wi-Fi ecosystem. 1. Until recently India has not been a major centre for original Wi-Fi network equipment and chipset manufacturers themselves, even though chipset makers and independent software (IP) vendors have had major development centers here. This scenario is changing now. India's competencies in software, and integration had traditionally outweighed its progress in the semi- conductor development. As a result of this, Wi-Fi equipment sold in India has often been imported, and yet may have chipset and chip subsystems that were originally developed in India. This is particularly the case of the subsystem or chip developer selling their solution to an original equipment maker (OEM) in India who then sells their solution to a major network equipment brand. 2. India's systems integrators (SI’s) (or value added resellers) are a separate class of firms that occupy a key slot on the networking, and hence Wi-Fi ecosystem. Systems Integrators (SIs) specialize in deploying and managing IT infrastructure for enterprises and governments. 3. India has a separate tier of ISPs who sell Internet services and may not otherwise be telecom carriers (terrestrial or mobile). These ISPs have also ventured into Wi-Fi primarily through hotspot offerings. Allowing for these variations, the figure below describes India's Wi-Fi ecosystem, the different players in the value chain and their interdependencies. 34
  • Figure 12: Wi-Fi Ecosystem Snap Shot 2.1 Wi-Fi Semiconductor Vendors Independent software vendors usually include the major software outsourcing and services companies or smaller startups. These companies are now developing their own IP in the Wi-Fi space as protocol stacks, MAC and PHY layers, etc. Their customers are chip vendors, equipment makers etc. Players: Wipro Technologies is a major Wi-Fi intellectual property vendor in India. HelloSoft develops its Wi-Fi IP in India. Ittiam and ESQUBE are both Bangalore-headquartered firms developing Wi-Fi IP. Semiconductor and chipset players continue to be very few in India. The global technology companies - Atheros, Texas Instruments, Broadcom, Marvell, and others continue to dominate this segment. Some of these firms have their development centers and sales offices in India to cater to the growing crop of local equipment makers. Ittiam Systems, apart from being a Wi-Fi IP vendor, is among the pioneers and is developing low power Wi-Fi chipsets, as well as hardware IPs. 2.2 Wi-Fi Equipment / Device / End-point Vendors The Wi-Fi equipment vendor segment includes the global players - Netgear, D-Link and Cisco/Linksys, along with local equipment vendors - Dax networks and Brovis Wireless. Other smaller global firms like Smartbridges and Compex also sell equipment in India, but most source their software IPs and chipsets from local as well as global players. 35
  • The dominant sales in the end-point vendor category are for laptops, which have Wi-Fi chipsets embedded. Dual-mode Wi-Fi/GSM mobile handsets are also a new entrant into the Indian Wi-Fi space. While the market for Voice over Wi-Fi (VoWi-Fi) is still under-developed, Nokia, at the time of writing this report is selling at least three models of its high-end handsets in India, that support Wi-Fi. Motorola is planning to launch Wi-Fi handsets in India in 2007. The consumer electronics market is beginning to emerging with handheld computers supporting Wi-Fi and MP3 audio Wi-Fi players just beginning to hit the market. At the moment, most or all of these products are high-end and will likely not see traction at a mass user level for the next two-three years. 2.3 Systems Integrators/Solution Providers India's systems integrators (SI), value added resellers (VARs) have spearheaded deployment of local and wide area networks and solutions in large and medium-scale enterprises since the 90s. Not surprisingly, they are today the key agents for Wi-Fi deployments. Major SI players in India include Wipro Infotech, Datacraft, HCL Comnet, Tulip and HCL Infosystems. This apart there are a number of other players, including GTL, CMC, Network Solutions, Microsense, Gemini Communication and Techser. Some of the smaller solution providers have started focusing on specific enterprise verticals for their Wi-Fi solution. Microsense for e.g., has signed agreements with BSNL to implement its hotspots, and also separately with Cafe Coffee Day for the hotspots at the Cafes. One central avenue of growth of Wi-Fi in India today is coming in the enterprise markets. This ranges from IT firms, large corporations, banks, and campuses. As the deployers of wired and wireless solutions for the enterprise market, SIs also deploy Wi-Fi networks in the sector. SIs are also the primary deployers of hotspots at airports, hotels, and restaurant chains. In addition, most major telecom operator and ISP-run hotspots are installed and maintained by SIs. Most SIs indicate that secure Wi-Fi, is more common, and gaining further ground in Enterprise deployments. According to the SIs we spoke to, more than 50% of their enterprises are using secure Wi-Fi. Public access hotspots deploy open access networks without security because of the desire to allow users to access the system, say the SIs. 2.4 Internet Service Providers (ISPs) India’s Internet service provider market has some major players who are not telecom operators. Like other countries, India has separate licensing system for ISPs, and a number of ISP-only firms are offering Internet access and bandwidth. Like elsewhere, ISPs in India started off with dial-up offerings, started moving to wired broadband connections and now increasingly to wireless routes to the home and enterprise. 36
  • Internet Subscribers by ISP, India Jun-06 Data: TRAI, ISPAI, Tonse 3,500,000 3,000,000 Subscribers 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 E d AY s L TI FY * L L sy an HC C N N L AR TN SI N W BS VS fo db IA BH H In M oa EL AT a Br at R H D BG ISPs Internet Subscribers Figure 13: Internet Subscribers by ISP (TRAI, Jun ’06) The figure above gives the overall Internet subscriber numbers by major ISPs. The public-sector Bharat Sanchar Nigam Limited (BSNL) is the market leader with nearly 3 million subscribers in total, of which 734,000 subscribers are broadband. Wi-Fi from the ISPs though is a different proposition to offering wired broadband to the home, in part because of the low level of laptop penetration. The major ISPs in India which have been big on Wi-Fi solutions have been Sify and Dishnet Wireless (DW). DW has since become Aircel, a tier-2 cellular provider. Both these ISPs attempted Internet access offerings through hotspots where end-users pay cybercafe-like rates for usage. Several ISPs have looked at Wi-Fi hotspots as a new business avenue to increase the sales of Internet access to end-users. As of now, Sify has gone back to selling broadband offerings to PC home users using cable operators as their local loop providers. In the meantime and as noted in section 1.2.4 a new player in the ISP space, Railtel is planning to deploy hotspots starting early 2007. 2.5 Telecom Operators The Telecom operators in India, have a major role in the Wi-Fi ecosystem in India and the government owned BSNL/MTNL still have a big market share. While their primary focus has been in providing voice services, since the telecom deregulation act of 1997, extensive competition has forced the operators to leverage their infrastructure and move up the value chain to provide data broadband services as well. As part of their broadband services, the operators are also providing Wi-Fi routers and access points to homes and small business. Increasingly, the telecom operators are also getting into hotspot deployments. 37
  • Chapter 3. Wi-Fi Penetration: Opportunities And Enablers Highlights • Wi-Fi is technology of choice for WLANs because of access speeds, cost, and range advantages. • Security is a key demand articulated in Enterprise networks, not yet in hotspots. • Administration, billing and seamless roaming at hotspots are avenues for improvement. • Wi-Fi pre-certification now available at Wipro Technologies, Bangalore. • 802.11n available will find early adopters amongst high-bandwidth users. • Delicensing of 5GHz spectrum bands for outdoor use likely in 2007, will boost prospects for 802.11n. • Wi-Fi enabled handsets are appearing and will potentially trigger a new wave of dual- mode converged devices. The relative low cost of access points, low-end routers and a number of ingenious systems integrators have resulted in Wi-Fi being welcomed in India. In this section we will go over a number of technology related aspects of Wi-Fi, as seen from the Indian vantage point. 3.1 Interoperability And Certification The importance of interoperability for any networking technology cannot be understated, more so in the Internet era than earlier. Networks, by their nature tend to grow with the organizations that use them. Easy-to-deploy, standards-based, interoperable Wi-Fi gear is all the more likely to help wireless networks scale up better, but still keep costs low. While compliance with the IEEE 802.11 standards is the baseline requirement for interoperability, interoperability for Wi-Fi equipment across manufacturers is currently established through the Wi-Fi Alliance’s Wi-Fi CERTIFIED™ program. More than 3,200 products have passed testing and are Wi-Fi CERTIFIED, enabling a positive user experience and the fast growth of the Wi-Fi market globally. In addition to the core MAC standards, 802.11 a and b/g and their operation in 2.4GHz and 5GHz bands, the certification program includes WPA2™ (Wi-Fi Protected Access 2) security certification, based on IEEE 802.11i. WPA2 testing became mandatory as of March 2006 for all Wi-Fi CERTIFIED devices. Other certification programs include: WMM® (Wi-Fi Multimedia), an optional program which tests Quality of Service (QoS) features, WMM® Power Save, which tests features that extend battery life in small form factor devices, and Converged Wireless Group – Radio Performance (in partnership with CTIA), which tests RF performance mapping of Wi-Fi radios in converged phones. In addition, Wi-Fi Alliance’s provides a certification for converged phones that includes core 802.11 a/b/g interoperability and security. A Voice over Wi-Fi certification program is planned to support interoperability of Voice over Wi-Fi handsets designed for use in the home and small office later in 2007. Currently, most Wi-Fi equipment makers selling in India are manufacturing outside India, and likewise are certifying their products outside India. 38
  • The systems integrators Tonse Telecom spoke to, most of whom deploy a variety of Wi-Fi brands – including D-Link, Netgear, Linksys and other smaller brands such as Airlink - have not raised any significant interoperability worries, at the moment. This may stem from the fact that Wi-Fi is still in early stages of widespread deployment in India, and it also likely that only a very small proportion of Wi-Fi gear is uncertified. However, there are two concerns in India regarding Wi-Fi interoperability. One, as Wi-Fi becomes more popular in India, uncertified clients or access points are likely to emerge in Wi-Fi networks and interoperability could be a challenge. Second, a number of smaller Wi-Fi equipment makers such as Brovis Wireless and Smartbridges have made extensions to the 802.11 MAC layer for their outdoor longer-range gear, both for point-to-point and point-to-multipoint links. Depending on the nature of changes made, interoperability issues could arise with regular access points. As a result, an outdoor long-range link may need the same gear on both sides of the link. Brovis Wireless, an Indian equipment maker offering wireless broadband solutions for the rural and long-range sectors, acknowledges that interoperability could be an issue. 3.1.1 India’s Wi-Fi Pre-certification for the Global Community In a separate development, India entered the Wi-Fi certification marketplace last year when the Wi-Fi Alliance signed an agreement with Wipro Technologies, a Bangalore-headquartered Indian IT-major to do Wi-Fi pre-certification. Wi-Fi pre-certification is aimed at helping Wi-Fi product developers to identify interoperability and standards issues with their products or features at an early stage itself. In turn this makes the final certification process more problem- free. Wipro’s Testing Services group is and will be pre-certifying a range of Wi-Fi products including software IP, silicon subsystems, chipsets, and Wi-Fi equipment including handsets and consumer electronics. The service is aimed partly at the Wi-Fi IP services that Wipro is already providing to the global Wi-Fi product community. In addition Wipro is also targeting India development centers (IDCs) of global Wi-Fi chipset vendors, subsystem vendors and OEMs. Further, Wipro is also offering the pre-certification service to native Indian Wi-Fi product development community as well. Differentiation and innovation: According to Wipro, highly qualified engineers are conducting the pre-certification tests and will work with product firms to help solve problems that arise during testing. Also, the highest demand for their pre-certification service will likely come from chipsets and mobile handset makers. According to Wipro, the new Wi-Fi pre-certification service will result in substantial cost savings for clients. IDCs will likely be able to save between 25-30% because they will not have to ship their products overseas for the service. For non-India based firms, the pre-certification is likely to be 15-20% cheaper, according to Wipro. 39
  • 3.2 Security Security is a key concern on any network. The Wi-Fi Alliance mandates support for WPA2 in equipment pursuing certification since March 2006, and this is considered the very latest generation of security standard for Wi-Fi networks. Tonse Telecom has learned from systems integrators that security on Wi-Fi is primarily being used in Enterprise networks. Here the older generation of Wi-Fi equipment (2003-4) is still set up to use WEP, which is the original security standard for Wi-Fi and has long been know to be insecure. Newer installations using recently shipped equipment are using WPA and WPA2 as well. By most accounts, it appears that enterprise networks are making a natural transition to using WPA2. Systems integrators using open Wi-Fi for outdoor point-to-multipoint links are aware that rogue devices could penetrate the network. To tackle this problem, they are using configurable MAC layer filters on the equipment to restrict access for only approved MAC addresses. In India’s hotspots however, Wi-Fi security solutions are not being deployed because of usability (key distribution) issues. Most systems integrators have confirmed to us that only 10-20% of their hotspot installations were running security of any kind. The primary issue seems to be that users want to connect seamlessly, and security is not as much a felt need here. Users in hotspots can employ solutions such as Virtual Private Networks (VPN) to protect their computing while online. The Wi-Fi Alliance has announced the launch of its Wi-Fi Protected Setup™ certification program for easier installation of security in home networks. At present this certification is optional for equipment makers, and it remains to be seen whether new systems with Wi-Fi Protected Setup will be used to do seamless security in the hotspot market. 3.3 Billing and Administration Of Wi-Fi Hotspots One of the major issues India’s hotspots are facing – particularly at airports and coffee chains - is billing. Systems integrators have reported to Tonse Telecom that in most cases pre-paid usage cards are being used to charge customers use of hotspots, but these solutions pose administrative difficulties, are not seamless, and sometimes do not work at all. A second problem is roaming accounts for travelers. Travelers are often reluctant to buy fixed slots of time from hotspot providers if they cannot use leftover in another airport elsewhere. At the time of writing of this report, national roaming accounts are yet to come on offer from hotspot providers at the airports. As we write this report, billing and roaming at India’s Wi-Fi hotspots remain in need of seamless solutions. This presents an opportunity to Wi-Fi solution providers. 3.4 Quality of Service and Multimedia support Since the original emergence of Wi-Fi on notebook computers and access points as a network interface technology, it’s utility has been so powerful that it has expanded presence worldwide into consumer electronics devices as well as phones. For low latency multimedia applications 40
  • such as voice (VoWi-Fi calls), video streaming and interactive gaming, QoS support in Wi-Fi equipment becomes critical, especially if access point congestion is likely. This is especially when Internet service providers and telecom carriers start providing the premium multimedia as well as voice services to consumers over Wi-Fi based last mile networks. IEEE’s 802.11e is the standards-based protocol for QoS over Wireless networks. The Wi-Fi Alliance’s WMM (Wi-Fi Multimedia) program is derived from 802.11e and is based on prioritizing different data streams with support at the 802.11 MAC layer. WMM allows a network owner to setup different priorities on Wi-Fi equipment for four predominant types of network traffic. - The highest priority is typically given to voice - The second highest to video - The third priority is for browsing, email and other best effort applications - The lowest priority may be used for background applications like printing. The WFA launched WMM in 2004. The Indian Wi-Fi marketplace is currently in an early stage of growth and has not yet witnessed significant demand for QoS features on Wi-Fi gear. Currently most enterprise and hotspot Wi-Fi networks are running in “best effort” mode. Wi-Fi networks operating in 802.11 b/g already provide throughputs of 5-22 Mbps. Some equipment vendors believe that QoS on Wi-Fi will become a necessity and will also drive up acceptance of Wi-Fi devices and networking gear. Change may be forthcoming in two areas. As video applications such as conferencing and streaming gain ground, it is possible that • Wi-Fi access points in themselves will be congested to the point of requiring QoS to protect latency sensitive applications. A second area is VoWi-Fi, i.e. VoIP over Wi-Fi. VoIP phone makers are also deploying • IP phones in enterprise Wi-Fi networks. Mobile handset makers have already started putting VoWi-Fi on select handsets and as such phones come into play in enterprise networks, WMM configurations may become necessary. Wipro’s pre-certification lab will be testing Wi-Fi subsystems and equipment, for compliance with WMM. 3.5 802.11n 802.11n builds upon the previous 802.11 standards by adding multiple-input multiple-output (MIMO) technology, which uses multiple transmitter and receiver antennas that increases the data throughput through spatial multiplexing and increases the range by exploiting the spatial diversity. With the proposed changes, the data throughput is estimated to reach 540 Mb/s requiring an even higher raw data rate at the physical layer. The spectrum of operation will remain 2.4GHz or 5 GHz. The powerful smart antenna technology will in fact double the range offered by currently available Wi-Fi equipments. According to the IEEE 802.11 working group project timelines, the 802.11n standard is not due for final approval until March 2008. Enterprises with already-deployed Wi-Fi networks but using high bandwidth applications such video streaming are likely to make the first move towards 802.11n. With its extended range and 41
  • higher data throughput, 802.11n, when it becomes available will also provide a much better solution for citywide/municipal Wi-Fi deployments. The challenges for some rural Wi-Fi deployments could also be likely be addressed by 802.11n with a combination of WiMAX for backhaul connections. The opportunities presented by 802.11n are enormous in India as the costs of the new equipment start becoming comparable to 802.11b/g equipments. Currently, India is also seeing new deployments of 802.11g networks in enterprises, restaurants and hotels. System Integrators expect the broader Indian Wi-Fi user market to start adopting 802.11n in the 2-3 years after the availability of standardized equipment. 3.6 Spectrum Allocation Issues and Updates In India, the 2.4 GHz band is de-licensed for indoor and outdoor use, while the 5GHz band is de-licensed only for indoor use. Wi-Fi b/g equipment used in India is predominantly the 2.4GHz band. The government de-licensed 2.4GHz band in January 2005 for indoor-outdoor usage in any wireless radio equipment, as long as the equipment met certain performance parameters. The 5.150 – 5.350 GHz and 5.725 – 5.875 GHz bands have been de-licensed only for indoor usage. In Sep 2006, The Telecom Regulatory Authority of India (TRAI), in its Recommendations of Spectrum Allocation and Pricing for 3G and Broadband Wireless Access services, recommended the following with respect to the outdoor usage of 5 GHz band: “Use of 5.150- 5.350 GHz and 5.725 – 5.825 GHz bands may be allowed on a technology neutral, non- protected, non-exclusive basis as de-licensed bands in also the outdoor deployments of terrestrial wireless technologies.” The WPC (Wireless Planning Commission) of the Ministry of Communications also clarified that this could be considered on a case-to-case basis. In December 2006, it was reported that the government will open up 5.1 GHz for wireless access. Also, a 50 Mhz range in the 5.825 GHz - 5.875 GHz band is to be de-licensed soon for outdoor Wi-Fi services, according to the government. 3.7 Combining With Other Technologies Wi-Fi is the only standards-based wireless communication technology that is in the unlicensed spectrum that can offer speeds at tens of megabits per second (and soon in excess of 100 Mbps) for local networking, and is sophisticated enough to support a broad range of applications. Being in the unlicensed space allows Wi-Fi solutions to be autonomously deployed and this makes Wi-Fi inherently disruptive over current wire-line solutions. In the personal area network scenario, for interconnectivity between equipment such as mobile phones, computers, headsets, and audio systems over very short-ranges, Bluetooth continues to be a prominent technology. WiMAX, GPRS, and 3G technologies continue to dominate the discussions of ISPs, operators, policy regulators and common public. However, none of these will be available for easy deployment for the mass users, as much as Wi-Fi, from the standpoints of cost, ease-of - deployment and adoption rates. WiMAX is a new standard and is in the licensed spectrum. 42
  • Economies of scale for WiMAX are still further away and its adoption rate at the consumer level in India is going to be low over the near term. A typical scenario involving the combined technologies of Wi-Fi and WiMAX is shown below. Wi-Fi and WiMAX status in India Telco Wi-Fi WiMAX Network Point-2- OF Point C Backhaul WiMAX Base station WiMAX Subscriber Home Wi-Fi CPE Wi-Fi hotspot hotspot WiMAX Ethernet Base station Access point Café Wi-Fi Wi-Fi hotspot Ethernet Office Wi-Fi hotspot Hotel Wi-Fi Airport Wi-Fi hotspot hotspot Figure 14: Co-existence of WiMAX and Wi-Fi networks • Wi-Fi is the technology of choice for WLANs in homes, offices and campuses because it is mature, available, low-cost, easy to deploy, and involves autonomous setup (does not need a carrier). • WiMAX is not competitive to Wi-Fi for the LAN market. WiMAX CPEs and end-point devices likely to remain expensive for a few years. • WiMAX likely to work as carrier/backhaul broadband technology for the next 3-5 years; it will also be used to interconnect connect to Wi-Fi hotspots. In the longer term, mobile WiMAX will bring additional connectivity options to India, and Wi-Fi will continue to complement the technology. 43
  • • Metro Wi-Fi solutions are moving towards a Wi-Fi / WiMAX hybrid solution topology. • Wi-Fi and WiMAX will work in tandem; WiMAX deployments in the backhaul (in rural networks where it helps connect the nearest OFC termination) will actually trigger the proliferation of Wi-Fi devices. In the metros, WiMAX could help decongest the broadband network or provide redundancy to existing E1 lines. In both cases, WiMAX will have a positive impact on connectivity and proliferation of Wi-Fi devices. • Innovative long-range outdoor Wi-Fi solutions will outpace WiMAX until WiMAX cost comes down. 3.8 Wi-Fi Mobile Convergence and Voice over Wi-Fi In markets such as Europe where both mobile penetration and Wi-Fi penetration are already substantial, Wi-Fi as a last mile broadband wireless technology and mobile GSM handsets have started converging. Three, a UK telecom operator, has already announced a new X-series plan for dual-mode Wi-Fi / mobile handset users where they will pay flat rates per month for voice and data services. This will include regular mobile calls, VoWi-Fi calls, Internet browsing and Internet voice/messenger services offered by Skype, Yahoo or Google. A second converged services model that is on offer in some countries in Europe involves telecom operators offering broadband to the home along with a Wi-Fi access point, and a Wi-Fi phone. These services would not have come about if not for an important and positive regulation. VoIP calls are allowed to be made to landlines and conventional cellular phones. This has created fertile ground for VoWi-Fi phone services to take off. India on the other hand, is in a different situation. While VoIP calls to VoIP destinations are allowed, VoIP calls cannot terminate on landlines or cell phones. Telecom carriers have supported this policy. At the time of writing, it is not known when the Indian government will lift this restriction. Even if this restriction was lifted, there is another factor. Carrier revenue models from VoWi-Fi calls are not clear. If two dual-mode handset users near Wi-Fi hotspots switch their phones to Wi-Fi mode, all they need is broadband access through their Wi-Fi interfaces, and a voice client like Skype or Yahoo mobile to ‘call’ each other. Carriers are aware of this, and are unlikely to support VoWi-Fi unless they are able to bundle it as part of their own voice and data offerings. The mobile operators already have voice and data offerings for mobile handset users through their existing infrastructure (GPRS and GPRS/EDGE with 3G on the horizon), where the revenue model is clear, call rates are already among the lowest in the world and costs have already been sunk. So it does not appear likely that they will encourage VoWi-Fi with open arms. Ultimately, there is also a proportion factor at play for the carriers in the India. With call rates being among the lowest in the world, carriers are allocating most of their time to growing the subscriber base by the millions each month. Mobile connections have surged to the point where India tops the globe in month-to-month growth of new mobile phone users. At the time of writing this report, India had 143.2 million users, set to overtake Russia in 2007. India’s operators appear to be busy going about accomplishing their goals of bringing tens of millions hitherto non-consumers of basic voice services (unreached by the landline network) into their subscriber 44
  • base. There is now a significant proportion of homes in India where a mobile handset is the first ever phone. Third, most of these new mobile connections being added are low-end phones. Wi-Fi handsets are still relatively high-end devices, because using the Wi-Fi interface on the phone will require application software which takes up more memory and processor cycles. Dual-mode Wi-Fi / mobile handsets are in the market, and they are very expensive. The lowest priced Nokia dual- mode Wi-Fi handset on sale in India is a good INR 18,000 ($400). It is unlikely that VoWi-Fi will take off at this handset price. Motorola says it is also planning to launch dual-mode Wi-Fi handsets to the India market in 2007. In sum, Wi-Fi / mobile convergence and the overall VoWi-Fi situation is India is open at the moment. Three interrelated factors -- regulation, business model and cost of handsets -- are holding the big opportunity at bay, and the situation is likely to evolve over the next few years. In the meantime, though, with the expansion of broadband access within the enterprise as well as at home, some VoWi-Fi may start happening as early as 2007. These may be corporate executives with VoWi-Fi phones or dual-mode phones calling within the enterprise, or advanced broadband users (from India’s growing broadband subscriber base) who call other Skype /VoIP client users. 45
  • Chapter 4: Indian Innovation in Wi-Fi Highlights • Innovation being driven by firms and research teams attached to academic institutions. • Wi-Fi innovator ESQUBE voted one of “Top 100 Promising Firms in Asia” by Red Herring. • Cost-effective point-to-point and point-to-multipoint Wi-Fi solutions being developed and deployed for large campuses and rural areas. • New MAC technologies being developed to use off-the-shelf Wi-Fi chipsets for rural broadband over 10-30KMS ranges. The growth of the Indian economy, experience in developing products for the global markets, enormous supply of engineering talent, presence of top engineering institutions along with increase in availability of funding, has created many new innovators in the telecom and wireless space. In this section, we profile a few of these who are developing intellectual property as well as products for the Wi-Fi ecosystem. 4.1 ESQUBE, Bangalore Founded by engineering faculty at the Indian Institute of Science, Bangalore, ESQUBE develops IP and products in the areas of VoIP/IP Telephone, Speech and Audio, Wireless, Voice enabled PBXes. In the wireless technology space ESQUBE has developed IP cores and PHYs for MIMO-WLAN: 802.11n standards based products. Further, ESQUBE has been successful in innovating a demo VoWi-Fi system as well. It provides network planning tools for WiMAX and Wi-Fi, wireless OFDM transceivers and has provisional patents filed for some of its IP. With the expected take off of the 802.11n technology in 2007-8, ESQUBE has enormous potential. Not surprisingly, ESQUBE was selected by Red Herring as one of the top 100 promising companies in Asia. 4.2 Brovis Wireless, Chennai Brovis Wireless is a Cupertino, USA based Wi-Fi equipment maker with a major presence in India and focus on wireless connectivity for India and Asia. Brovis has a number of solutions for the urban and rural connectivity markets in India, including last mile and backhaul. Brovis has developed its own extensions of Wi-Fi equipment for point-to-point, point-to- multipoint and mesh applications for campuses and rural areas. One of Brovis’ specializations is indoor-outdoor Wi-Fi equipment integration, and these are being deployed in campuses and to connect buildings without cabling worries. Brovis told Tonse Telecom that their the point-to-point Wi-Fi long haul solutions are also seeing demand for rural broadband. Brovis is one of the equipment makers responding directly to the demand for low-cost long-range wireless being felt in rural areas today. 46
  • 4.3 Arada Systems, Bangalore Arada Systems is an entrepreneurial company with a leading team from the leader in Wi-Fi semiconductor, Atheros Communications. It is a Silicon Valley (Sunnyvale) startup with a Bangalore development center where core development work is done. Arada Systems aims to expand the markets of wireless broadband based on Atheros' chipsets, and provides licensing of Atheros' extensive technology, provide services, testing programs as well as intellectual property software solutions designed to add 802.11 to various emerging markets. As Wi-Fi is expanding beyond basic connectivity to enterprises, outdoor links, metro-scale broadband, automobile, industrial and automation markets, Arada says it is focusing on providing Wi-Fi solutions for equipment makers to serve these markets. Arada Systems has a customer base of over 100 and has a very strategic relationship with Atheros. Arada Systems is focused on emerging markets and cutting edge uses of Wi-Fi. Examples include improving power in Wi-Fi implementations, 300+ Mbps applications using Wi-Fi's next generation technology (802.11n), and implementing the WAVE (Wireless Access for the Vehicular Environment) protocol for automotive applications (802.11p). 4.4 Indian Institute of Technology (IIT), Kanpur Two major research institutions in India, IIT-Kanpur and IIT-Chennai are working on improvements to leverage Wi-Fi based chipsets and equipment for longer-range applications. IIT-K’s Department of Computer Science and Engineering has been engaged in developing a different MAC layer instead of the 802.11 MAC to better handle outdoor applications, but on top of the 802.11 PHY. For point-to-point links, IIK has developed and prototyped what they call the 2P MAC. For point- to-multipoint links, the SRAWAN (Sectorized Rural Area Wireless Access Network) MAC protocol has been prototyped. In essence, instead of 802.11 CSMA/CA, both these MACs protocols use time division multiplexing (TDM) for access. CSMA/CA is a match only for indoor scenarios where a few users contend for access and are mobile within. For outdoor wireless networks, propagation delays are much greater, and the nodes themselves may not be mobile. According to researchers at IIT-Kanpur, a contention resolution mechanism may not be even necessary, and instead a TDM-based mechanism may work better to allocate access. As it turns out, this is also the philosophy used in WiMAX 802.16 MAC, and indeed the SRAWAN specification is a derivative of the 802.16 MAC. IIT-K has prototyped the 2P and SRAWAN MAC protocols over the 802.11 PHY using off-the- shelf Wi-Fi hardware. The SRAWAN point-to-multipoint MAC prototype has been developed in collaboration with Zazu Networks, a Wi-Fi startup based in Bangalore. Zazu has since become Arada Systems (see previous section). The prototype uses the Atheros chipset. IIT-K students have made driver and HAL (Hardware Abstraction Layer) level changes to implement SRAWAN over the Atheros chipset. For the 2P MAC implementation, IIT-K students have modified the HostAP driver for the Prism chipset to disable the CSMA/CA. Further development of the 2P MAC technology into a fully validated prototype will require a company’s participation that IITK has not yet lined up. 47
  • IIT-K has since done limited trials of the equipment in the Digital Gangetic Plains (DGP) project for point-to-point and point-to-multipoint links. The SRAWAN implementation is currently getting ready to undergo performance evaluation. IIT-K says that after the evaluations the technology will be productisable. From a standardization perspective, there is no process currently underway at IIT-K to specify these MACs at the IEEE. 4.5 Indian Institute of Technology, Chennai In a parallel development to the one at IIT-Kanpur, IIT-Chennai’s Centre of Excellence in Wireless Technology (CEWIT) has also proposed a TDM-based MAC layer protocol over the 802.11 PHY. Called WiFi Rural extension (WiFiRe), the effort is aimed at leveraging the easy availability of Wi-Fi RF chipsets in order to provide long-range communications (15-20 Kms) for rural areas. The key idea in WiFiRe is to replace the 802.11b MAC mechanisms with a new protocol more suitable for long-ranges, while continuing to use the 802.11b PHY support. WiFiRe is defined for a star topology with a base station (BS) typically located at a Point of Presence (PoP) and subscriber terminals (ST) in surrounding villages. There will be sectorized antennas at the BS and a directional antenna at each ST. The WiFiRe MAC is time-division duplex (TDD) over a single 802.11b channel. The January 2007 issue of the IEEE Communications Magazine will carry a paper on this work. The Telecommunications and Computer Networking (TENET) group at IIT-Chennai is another organization that has a long history of pioneering innovations in the telecommunications arena, some of which are already deployed in India's telecom infrastructure today. The TENET group is working on an implementation-level Wi-Fi innovation for rural broadband. TENET has developed a unique mesh wireless layer-3 IP router called the Multiport Wireless Access System (MWAS) that has three Wi-Fi 802.11 b/g ports, and one Ethernet port. The device is based on a Texas Instruments Wi-Fi chipset. The premise of their work is that many villages in India tend to be only a few kilometers from each other, and LOS propagation is achievable without expensive antenna towers. Antenna towers become expensive typically at heights of 30 meters or more, but with enough radiated power, and a 15 meter tall mast, Wi-Fi signals can reach 1-2 KMS of LOS easily. The router is externally mountable on a mast, and three separate antenna elements can be attached to the three Wi-Fi ports. At the moment, the router supports 11 Mb/s on all ports, and any one Wi-Fi port can support 54 mb/s. The router also supports SNMP and network management software. The channels of operation in the 2.4 GHz band are also programmable. TENET has designed the MWAS router to be used as regular access point that connects to an Ethernet network, or as a mesh router. In a typical mesh router configuration, the router will be mounted on a mast with all three Wi-Fi ports connected via directional antennas going in three different directions (to connect to peer Wi-Fi routers in nearby villages). In a different configuration, two Wi-Fi ports could be connected into the mesh, and the third port could have an omni-directional antenna to be used for local Wi-Fi based broadband access at the host village. 48
  • Most Wi-Fi gear on the market today typically have one WLAN port. If three different directions from a village need to be connected at 11 Mb/s speeds independently, three Wi-Fi boxes would need to be pulled together and used. The advantage of the TENET router, say its designers, that it is a compact and flexible device. At the same time, the mesh router can be used as a regular access point, indoors. The MWAS router is not yet ready to become a product for the rural market. TENET has used off-the-shelf TI chipsets and these come with the 802.11 MAC and PHY bundled. To make the Wi-Fi port work for longer distances, one key change needs to be done to the MAC layer's ack- timeout setting. This needs to go from the default of 20 micro-seconds to 40 MS or so. TENET has not been able to do this yet, but says any equipment maker who licenses the chipset vendor's solution will be able to do this anyway. Without this change, the MAC layer will timeout much sooner (since it is designed for short-range propagation delays) and will disrupt TCP/IP applications, in turn hurting performance. With that change, TENET says there is enough link budget on the device to allow communication at up to 3 square km, LOS. According to researchers, TENET is in discussion with a private firm to productize the MWAS system. Summary: In what might become a trend, basic research springing from the academic institutes has started getting incubated into start-ups in the industry. Indian talent is finally beginning to deliver product technologies for domestic as well as global markets. It is clear now that emerging markets will become large consumers of Wi-Fi in the coming years and domestic IP development will catalyze the whole process. 49
  • Chapter 5: Market Opportunities for Wi-Fi Highlights • Organized Retail is just opening up in India and is a significant user of wireless computing solutions. • World-class manufacturing facilities in the telecom and automotive sectors being setup in India are being Wi-Fi enabled. • Health care seeking tourists are driving demand for Wi-Fi equipped hotels; hospitals are gearing up to provide the best in connectivity. • Mobile Wi-Fi will grow as handset markets use Wi-Fi for product differentiation and ISPs find innovative business models. • Wi-Fi entering home, portable and mobile entertainment sectors. Falling consumer electronics prices and a content hungry and tech-savvy younger generation are driving change. • Wi-Fi penetration in conferences/convention centers going up. • Expanding and new office complexes will create additional demand for Wi-Fi connectivity for visitors, vendors and consultants and employees. A number of market opportunities for Wi-Fi technology are emerging as the Indian economy continues to grow above 8% per year. The upcoming retail revolution, expansion in organized manufacturing and the hospitality sector including medical tourism are some key sectors. Yet another opportunity for Wi-Fi could arise from innovations being attempted to drive the overall costs of computing down. We will outline these in this chapter. Indian youth continue to drive the needs especially in the media/entertainment vertical. Cell phones are particularly popular, and have become devices not just for communication but for value added services like gaming, music, mobile chats, and m-commerce. Entrenched experience in mobility from cell phone usage, will continue to drive the need for access to high- speed wireless Internet services not just for business needs but also for entertainment needs for the younger generation. A recent news article in Business Standard reports laptop sales are also being driven by purchases by youth between 18-30 years. Meanwhile MP3 players like the Apple iPod are becoming popular given the popularity of Bollywood movies and music. (See section 5.3.4) 5.1 Home User Market Rising income levels from dual-income families are creating rising disposable funds available to expend on a second home computer or a laptop. New employees including those recently out of school get laptops on their first jobs. The expectation is not just to increase productivity at the workplace but also to provide access to employees to connect to their workplace from home through VPN networks. For some employees in the IT industry, working from home/flexible hours are made available so as to allow more work-life balance. Many of these families with 50
  • double incomes also have multiple home PCs for children/personal use, where a Wi-Fi network at home provides ease of use and flexibility. The proliferation of mobile phones especially among the youth has created opportunities in the mobile entertainment space. These include mobile gaming, music, and movie downloads. Consumer electronics giants are beginning to sell systems in India that can play Internet streaming audio through Wi-Fi or beam audio through Wi-Fi in the home to speakers. 5.2 Enterprise Market Indian enterprises are seeing growth in their existing business as well as new opportunities and growth areas with the expansion of the Indian economy, changing demographics and rise in income levels. In the following subsections, we describe growth of Wi-Fi adoption in areas like retail, hospitality and airline sectors. 5.2.1 Retail Revolution Global retail giant Wal-Mart has signed a joint venture partnership with India’s leading telecom private sector player Bharti Group. The Bharti-Wal-Mart relationship was formalized in December 2006 and the first stores are likely to open by Q3 2007. Other retail giants Tesco, Target and some European players are also in advanced discussions to enter the business. Germany’s Metro and India’s own Food World, Fab Mall and others are already investing in building-out their respective brand franchises in India. All of this is expected to usher in a major retail revolution in India. According to industry estimates, the country will add about 50 million sq. feet of retail space and will cross the $21.5B mark from the current size of $7.5B between now and 2010. Worldwide, the retail vertical is a large user of automation solutions particularly wireless computing tools. Symbol Technologies (recently acquired by Motorola), is a global leader in providing end-to-end wireless business solutions in this sector. The emergence of the retail revolution in India is likely to be a major driver of enterprise Wi-Fi solutions in India. The Wi-Fi solutions would cover basic short distance data access applications and also drive automated inventory management, order processing automation, shelf-replacement, security solutions and vendor management. Symbol in India is already gearing up for addressing this emerging sector and is in advanced talks with the Reliance Group. Reliance Group, India’s largest private sector conglomerate, is a global leader in petrochemicals, oil and gas plants, textiles and telecom. Symbol’s solution in these sectors is a highly customized end-to-end suite which includes point- of-sale terminals, custom hand-held devices that could send information to back-end systems and at the same time allow finer controls such as secure transactions, power management of the battery on the hand-held device, remote diagnostics and management of the hundreds of devices in disparate store locations through sophisticated Network Management solutions. The entire retail enterprise opportunity is going to be a significant driver for Wi-Fi in India. 51
  • Examples of Applications of Wi-Fi in Retail 1. Airport Wireless check-in Counter on the move: Since the opening up of the Indian aviation sector for private domestic airlines, the Indian skies have witnessed a sea change in air travel populace. The emergence of budget airlines and ‘hopping flights’ between smaller towns have revolutionized air-travel and making it possible for a large population to move-up from train travel to air-travel paying only a reasonable difference in prices. One of the more recent entrants into this sector is Kingfisher Airlines, which has become the fastest growing domestic airline in India in less than 2 years. In September 2006, Kingfisher introduced the Roving Agent, an innovative Wi-Fi application where Wi-Fi device-equipped ground staff walks around the check-in counter enabling travelers carrying only cabin-bags (no check-in luggage) to use their e-tickets to check-in without having to wait in long lines. The usual wait in a major city airport such as Mumbai or New Delhi during rush hours can be long. This causes a rush at the check-in counters. The Roving Agent is equipped with a wireless device and a hip-strung ticket printer. The device scans the passenger’s e- ticket, zaps the Passenger ticket number/bar code via a Wi-Fi Access Point to the ticketing server and on authorization, prints out a Boarding pass right there as the passenger in waiting in line. This slashes waiting time and has dramatically improved customer service. So much so that established competitor Jet Airways introduced similar service in December 2006. 2. Retail mobile POS in gas stations: A similar example has been demonstrated by Shell, the world leading petroleum and energy conglomerate in its new chain of gasoline retail outlets in India. As Shell expands its new chain of retail petrol/diesel outlets in towns across India, there are some refreshing changes one can notice in these gas stations. They are larger, spacious and have a convenience store attached in each of the outlets. But even more important is the comfort the customer now enjoys in paying for gas via his credit card from the car/motorcycle without having to park and walk- up to the counter. Here again, the Shell service agent carries a mobile Point of Sale (POS) mobile device, Wi-Fi equipped and a ticket printer around his belt. The agent swipes customer credit card along the card reader slot of the device, which authenticates via Wi-Fi to an Access Point, located in the convenience store and the transaction is completed over air. The customer signs the printed ticket and drives away without having to get off his vehicle. This is an excellent example of how aggressive new players embrace wireless technology to introduce productivity enhancement, increase customer satisfaction levels and upstage entrenched players in a competitive market. 52
  • 5.2.2 Hospitality Industry The high growth economy has created a huge demand for business hotel rooms and conference centers. The hotel industry is only beginning to wake up to the Wi-Fi opportunity. The top hotels do provide Wi-Fi connectivity but it is the large-medium and upper-medium range hotels that are now beginning to look at wireless Internet connectivity. Brand new hotels, which had no prior infrastructure, are capitalizing on this new need for Internet connectivity for business travel. Many of them are now installing new Wi-Fi networks. An example in point is the new brand of medium range hotels - ‘Smart Inn’ launched by the Talera group of hotels which offer rooms at INR 850/night (~$20/night) which includes free Wi-Fi. In a conversation, the director of the Talera Group of Hotels confirmed that they chose to deploy a simple network with 4-5 access points/50 rooms as an added convenience for business travelers. The overall cost of a deployment of that size, hardly exceeds INR 50000 (~$1100). To cite another example, GRT Grand in Chennai, a 4-star hotel, has set up free Wi-Fi in their 133-room hotel with about 99% coverage, they say. The decision to make it free of cost was to offer it as an added service to customers and guests of customers. They have not publicized their Wi-Fi (a la cyber café) but people coming into the hotel for any reason can use it. The lowest room rent at this hotel is INR 4500 per night ($100). Tonse Telecom found that in some deluxe five-star hotels, Internet facility via Wi-Fi varies from INR 200 – INR 500 per hour ($4.4 to $11.1) and many of them agree that roughly about 60% of the guests use Internet access. Some of the hotels earn between INR 50,000 – INR 75000 per day from Internet access alone ($1110 - $1656) and is doubling every year. The increasing laptop penetration and falling prices of Wi-Fi gear together with competitiveness among hotels to differentiate their services will drive Wi-Fi penetration in hotels/conferences/ convention centers in the country. We expect that in the next two years at least 50% of events/ exhibitions/conferences in the country will provide Wi-Fi access either at a nominal fee or free of charge. 5.3 Potential Growth Areas 5.3.1 Opportunities in Mobile Wi-Fi The cell phone is fast becoming the central platform of mobility for the majority in India, with mobile-PDA usage rising steadily over the last few years. Seen in that light, in addition to laptops, the mobile phone could also become a Wi-Fi driver in India. Wi-Fi usage on India's mobile phones is likely going to be driven both by voice (VoWi-Fi) as well as data/broadband applications. At the moment, the business models for both voice and broadband services over Wi-Fi phones are not clear, for reasons we explained in section 3.6. As a result of this, the new generation of Wi-Fi phone users is likely to be a niche. There may be two opportunities here. One, ISPs could look for revenue models at hotspots for mobile Wi-Fi users as opposed only to laptop users. Specialized ISPs and operators can offer 53
  • broadband services to such mobile travelers at hotspots and Wi-Fi enabled homes. It is more likely that a flat rate based revenue model (charging for broadband access on the phone) may emerge for this niche of Wi-Fi phone users first, offering them a step up from GPRS/Edge or CDMA-Data. This may need to happen before widespread adoption of Wi-Fi for broadband could happen on cell phones. Also, broadband speeds for Wi-Fi cell phones will easily exceed speeds from 3G data services, and 3G is not yet a reality in India. Wi-Fi is already here, and is growing. So the opportunity for mobile Wi-Fi could just be a matter of a few operators working out an entry level business model for the early adopters and scaling up from there. `` ConvergenceWi-Fi Mobile Vision` Convergence Home Wi-Fi Café network hotspot Office Wi-Fi network PLMN Towers Airport Hotel hotspot Figure 15: Wi-Fi Mobile Convergence The second factor is linked to handset makers. Handset makers have used Bluetooth and infrared ports as product differentiators, and these handset prices have steadily come down. It is likely that Wi-Fi will also used as a differentiator, and Wi-Fi aware users (those who have Wi-Fi enabled homes and offices) may start making purchasing decisions based on such features -- even if they do not plan on using the features right away. One major chipset maker expects that ‘attach-rate’ of Wi-Fi on cell phones in India could touch 20% over the coming years -- which puts the potential for Wi-Fi on handsets to nearly 10 million in the medium term. It may be 54
  • reasonable to expect that in 2 years, Wi-Fi enabled phones may be available in the sub INR 5000 range ($100), at the same level of prices GPRS-enabled phones are available today. 5.3.2 Organized Manufacturing Within the liberalized economic regime, the Indian government has opened up several sectors of the economy for foreign direct investment (FDI). Two sectors attached to the core industry that are attracting very high interest from foreign owned corporations are automobile and telecom manufacturing. Buoyed by an unprecedented domestic demand in the Indian market, these sectors are growing by leaps year after year. The Government recently further liberalized these sectors and there is a healthy competition between state governments to attract more FDI. A result of this is that Chennai, the south Indian historic city (formerly called Madras) has become the new manufacturing hub with a string of automobile Multi-national Companies (MNCs) and telecom equipment MNCs choosing to locate their production facilities in this state. One of the earliest manufacturing facilities to become a fully Wi-Fi equipped production centre was LG Electronics India Limited (LGEIL), Indian subsidiary of the Korean LG. LGEIL’s Noida is fully Wi-Fi equipped with 500+ employees carrying Wi-Fi enabled notebooks in the campus that is wireless equipped. In May 2006, a new facility in Pune has come up which is also Wi-Fi equipped. Hero Honda Motors, one of India’s top manufacturer of motorcycles and a leading exporter to global markets, has deployed a Wi-Fi based Inventory and parts control solution that has tripled the sales turnover in a given period of time and virtually slashed wrong shipments or errors to zero. Hyundai Motors, the Korean Multi-national and India’s leading foreign producer of small cars, in its India manufacturing plant, has deployed Wi-Fi solution at the automobile delivery yard where the delivery agent drives by with a Wi-Fi device that tracks the automobile ID of every car (waiting to be shipped to showrooms) via a scanner and sends the information to Delivery system, enabling faster car delivery. Domestic Telecom Manufacturing: According to Telecom Equipment Manufacturers Association of India (TEMA), Indian equipment manufacturing is set to grow threefold to $18B in the next 3 years from $6B in 2006. For the year 2007, the Ministry has already received a manufacturing commitment of $1.5B and fresh proposals of $2B among several large scale investments. Cisco has made a commitment of $1B investment including IP phone production facility in Chennai, while Alcatel has committed to $200M investment every year for the next few years. These are expected to be world-class manufacturing facilities geared to produce for both local and global markets. Shop-floor automation and work-flow, inventory and material handling are expected to be fully automated with computer controlled special purpose machines and enterprise wireless networks managing production schedules and assembly lines. We expect 55
  • that these facilities will become a major driver for enterprise applications including Wi-Fi networks on and off the shop-floor, in the campus and across the offices. Current deployments of Wi-Fi in manufacturing facilities indicate an approximate distribution of 1 Access Point for every 10 laptop users. Although this might significantly vary depending on type of Enterprise applications deployed and level of automation in the plant, we believe that this sector would add significantly to growth of Wi-Fi in the enterprise in India. 5.3.3 Medical Tourism It does appear that India may actually be turning out to be a major destination for health related travel. At least about six new hospital chains have come up across the country offering contemporary medical facilities providing world-class healthcare services including open-heart surgery, oral health related surgeries, organ transplant and other complications at reasonable rates compared to those in the West. The result is that there has been a steady rise in the in- flow of foreign ‘health tourists’ into India many of who come in groups which is often a batch of 24 or so elderly citizens to a prescribed hospital in Bangalore or Pune for stay for about 3-4 weeks, get all medical tests done, medical treatments taken care of and some of them even spend a brief week or so holidaying in popular tourist locations before heading back to their homeland. These tourists are driving demand for good quality hotel rooms/lodges that are Wi-Fi equipped and hospitals are gearing up to provide the best in connectivity for both data and voice services for their in-patient guests. This is an interesting and unexpected driver for the Wi-Fi market and is currently in its infancy but with the sector getting increasing attention globally, this is likely to fuel further growth. 5.3.4 Media, Entertainment And The Digital home Figure 16:Wi-Fi Enabled Consumer Electronics: Nikon Coolpix, Sony PlayStation Personal, Nokia Internet 770 Tablet [Nikon is a trademark of Nikon Corporation, PLAYSTATIONquot; is a registered trademark of Sony Computer Entertainment, Nokia is a registered trademark of Nokia Corporation] 56
  • One of the sectors that is seeing rapid growth in the Indian economy is consumer electronics. This $22B sector has seen double digit growth this year, according to the Confederation of Indian Industry (CII) with most television and audio equipment makers reporting a surge in sales due the World Cup 2006, followed by the festive season of October-November. Some industry estimates say sector growth could reach $160B by 2016. Prices of televisions and audio systems having been falling steadily, with a further fall expected in early 2007, as we write this report. The related media and entertainment industry is also thriving on the current economic upswing and has recorded revenues of INR 222 Billion ($5B), up by 13 percent, from last year, according CII-KPMG. The media and entertainment industry are expected to grow annually at almost 18 per cent to reach around INR 371 Billion ($8.2B) by 2010. A largely young, gadget-friendly Indian population – especially the growing tech workforce -- will stay wired (or wireless) via their handhelds / mobile phones downloading movie and other content via wireless broadband networks in public domain hotspots, on campuses, in enterprises and everywhere. The big driver for mobile content in India is undoubtedly Bollywood music and it is no wonder that cellular operators are making hay while the music world shines. Movie song ringtones are downloaded by the mobile community in India at a phenomenal 1 million ring tones a day. Once the broadband infrastructure falls in place and Wi-Fi devices proliferate it is likely that broadband content will continue to get downloaded via these new devices. Some of this growth is likely to result in Wi-Fi enhanced home electronics and the mobile consumer. In part due to Wi-Fi's economies of scale (low cost chipsets) and open standards, Wi-Fi technology has already started penetrating flat screen/LCD televisions, audio/media MP3 players, cameras, and mobile handsets. A number of products ranging from Wi-Fi flat screen televisions to Wi-Fi-only Skype phones are being launched in India in late 2006 and during 2007. Epigon, a Bangalore-based multimedia product and OEM firm has announced joint plans with Silicon Image, a California firm, to launch an HDTV-ready flat screen TV (LCD) with Wi-Fi streaming by mid 2007. The 20quot; piece is expected to be localized for the Indian multi-lingual market and be priced at less INR 19000 ($420). The target audience is likely to be new consumers with DVD players who want nicely-priced HDTV quality flat screen, broadband homes who want to stream network video feeds to their TVs, as well as second television and third screen in other rooms. Earlier this year, consumer electronics giant Philips announced its agreement with a 802.11n chipset maker to weave in Wi-Fi technology into its HDTV product line. That product is expected to be available in India as well, though it may be a high-end TV. Towards the end of 2006, a number of Wi-Fi handsets are being launched targeted at Skype users in India. AsusTek Computer, the Taiwan-headquartered computer equipment maker has announced its Wi-Fi 802.11 b+g Skype phone and music player in December. The AiGuru S1 will reportedly retail for INR 7700 ($170). The handset allows the user to play PC music using 57
  • Wi-Fi connectivity and make Skype calls on the handset at the same time. Netgear's Wi-Fi Skype phone has also been launched in India for Skype users, at INR 17,000 ($377). The early adopters of these handsets will likely be globally connected younger generation as well as die-hard Skype users who want to Skype-call their friends and family in India and abroad without having to use their PCs. The Skype phones will not replace regular GSM/CDMA handsets, because these handsets will not be able call landline and cell numbers in India. As we write this report, the implication is clear. As the consumer electronics grows even further and prices continue to fall, more Wi-Fi consumption a substantial portion of Wi-Fi usage may come from this sector. Particular markets to look out for are the home and portable entertainment sectors as well as specialized Wi-Fi phones. The growth in broadband as well as Wi-Fi hotspots will further catalyze some of this usage. 5.3.5 Booming Real Estate / Property Markets Demand for commercial property space in India continues to grow as hi-tech towns such as Bangalore, Noida/New Delhi, Hyderabad and Pune lead the pack with huge year-on-year additions. According to property consulting company DTZ Debenham Tie Leung’s 2006 study, Bangalore alone is adding 11 million square feet of office space in 2006, compared with 9.5 million square feet in 2005, making it the third-highest office space absorber in the world. But in terms of highest growth rates of office space added over the previous year in any Indian city, the top place belongs to Noida, a New Delhi suburb with a total office space absorption of 8 million square feet over last year’s 2.36 million square feet (3.4 times the previous year). This is only part of the nationwide rush for business space as even second tier towns are beginning to respond with steep demand for land. The bulk of this demand is driven by fast growing Information Technology (IT) companies and Information Technology Enabled Services industry (ITES). Tonse expects that the rapid growth of intra-office data networks will continue to have a high- speed wired LAN backbone with generous spread of Access Points that ensure wireless connectivity for laptop users. The sheer spread of campuses in these modern office complexes will create additional demand for wireless connectivity allowing visitors, vendors and consultants and employees to have ubiquitous access instantly. Wi-Fi being the natural choice for the purpose it is likely to continuously grow. 5.3.6 Horizontal Innovation (All Sectors) – Low Cost Wi-Fi Enabled Computing A separate factor that has the potential to drive up demand for Wi-Fi networking is a special focus on driving down the cost of computing itself for the Indian market. Novatium, a Chennai based company has developed a thin-client based netPC product, which has an Ethernet network interface and a Wi-Fi interface built in to it. The product sells for around $100 without a monitor, costs $175 with one, and needs a server to logon to run applications and services. A key requirement for the netPC is a broadband connection of 512K-1 Mbps to the server. One of the usage scenarios for the product proposed 58
  • by Novatium is where the netPC could be offered by a telecom or cable TV network operator as part of their broadband solution for a monthly rental. Steadily falling broadband access costs and increasing speeds could give a fillip to thin-client- type solutions. Novatium’s approach is also indicative of the diversity of energies and efforts at play in India to drive down the costs of technology and barriers for access to computing. This unique approach could trigger a complete new paradigm in building the new generation low-cost compute device and could be another of India’s offering into the global market place. 59
  • Chapter 6: Conclusions and Recommendations 6.1 Market Highlights The Indian Wi-Fi market is on the cusp of a huge growth curve that is being triggered by a dramatic increase in laptop penetration, mobile devices and reduced broadband rates. Coupled with a steep fall in broadband rates, the existing market inhibitors are rapidly disappearing. The booming economy is consuming massive real estate for office property, global multinationals are investing in automobile and telecom manufacturing facilities and the retail sector is opening up: all of which will drive Wi-Fi based equipment sales, enterprise wireless business applications and productivity solutions. The Indian software and services sector will find a completely new driver with Wi-Fi IP development, Certification and Testing services for the global Wi-Fi chip-set and gear vendors, prototyping services and systems integration. The combined macro-economic factors are thrusting new growth factors hitherto not seen together. A new sense of consumerism is evident as a young generation growing up on mobile lifestyle is looking for personalization and community building in an always-on, connected world. 6.2 Key Market Projections: The combined Wi-Fi market (described as consisting of WLAN networking gear, systems integration, professional services and not including embedded devices and laptops) is expected to grow into $744 million by 2012 (CAGR of 61.4%). In 2005, Indian WLAN market (described as consisting of wireless LAN network gear) stood at $23.11 million This is expected to grow into a $275M market by 2012. The laptop penetration is expected to double in 2007 and eventually exceed 5.5 million units by 2010. As the number of Internet users grow in India Wi-Fi is expected to become ubiquitous across the metros and start emerging in smaller towns as well. 6.3 Opportunities and Recommendations to Vendors and Manufacturers The Indian hotspot market is on the cusp of a period of sustained growth. There are • clear opportunities for full fledged billing, PIN / security administration for hotspot users, and roaming solutions. Also, a more appropriate model around the hotspot (something similar to the Indian STD/ISD PCO or long-distance public calling office) needs to be developed making it a more attractive proposition to run a franchise or manage one. Airports Authority of India and such other Government agencies need to be advised to • revise currently high-monthly flat-rate rentals (to lower rates) charged to Wi-Fi solution developers so as to encourage Wi-Fi penetration. As 802.11n chip sets begin to emerge and device/solution developers race to get • product to market, their certification / testing and integration services can now be done in India. Device developers can benefit from faster service and more value as these centers can provide testing, integration and custom application development in one location. There is a clear need to increase general awareness and education about the new Wi-Fi • solutions, standards and capabilities so corporate network heads/System Integrators can 60
  • make better informed decisions and benefit vastly from them. There are alternative emerging technologies and it is important to ensure that the market is educated well enough to differentiate between benefits delivered today at current prices and what is likely to happen in future. Large tracts of rural India are yet to find an appropriate wireless solution at feasible • prices. Wi-Fi based solutions have a great opportunity to provide the right solution to deliver benefits. Enterprise wireless business applications will emerge that can address both India and • global markets. There is an opportunity in building those applications in India and deploying worldwide. VoWi-Fi (VoIP) market is currently regulated. Once the sector opens up, this opportunity • will be extremely large. There are Fixed Mobile Convergence and other important issues that need to be resolved. Wi-Fi will become a strong product differentiator for the millions of cellular handsets that • are being sold every month, as ‘attach rates’ rapidly grow up. The government has enabled the opportunity in this Year of Broadband and it is now up • to the industry and global eco-system in general to address the needs and effectively wireless-broadband India. Disclaimer: All product names are trademarks or registered trademarks of respective corporations 61
  • Abbreviations ADSL - Asynchronous DSL • B2B - Business to Business • B2C - Business to Consumer • BSNL - Bharat Sanchar Nigam Ltd • CII – Confederation of Indian Industry • CSMA/CD - Carrier Sense Multiple Access/ Collision Detection • DSL - Digital Subscriber Line • DW - Dishnet Wireless • EMI - Equal Monthly Installments • IMAI - Internet & Mobile Association of India • ISP - Internet Service Provider • ISV - Independent Software Vendor • LOS - Line of Sight • MAC - Media Access Layer • MAIT - Manufacturers Association of Information Technology • MIMO-WLAN - Multiple In Multiple Out Wireless Local Area Network • MTNL - Mahanagar Telephone Nigam Ltd • NGO - Non-governmental Organizations • OFDM - Orthogonal Frequency Division Multiplexing • P2MP - Point to Multi-point • P2P - Point to Point • PSTN - Public Switched Telephone Network • PSU - Public Sector Unit • QoS - Quality of Service • SI - Systems Integrator • VAR - Value Added Resellers • VoIP - Voice over Internet Protocol • VSNL - Videsh Sanchar Nigam Ltd • WEP - Wired Equivalent Privacy • WPA - Wi-Fi Protected Access • WPC - Wireless Planning Commission (of Ministry of Communication, India) • 62