Amit Chawla Issue: India 2004
Article no.: 12
Topic: VoIP – Opening the Way for India
Author: Amit Chawla
Title: Executive Vice-President, Global Marketing
Organisation: Veraz Networks
PDF size: 76KB

About author

Mr Amit Chawla is the Executive Vice-President of Global Marketing and Member of the Board of Directors of Veraz Networks. Previously, as CEO of NexVerse Networks, Mr Chawla spearheaded the company’s merger with ECI Telecom’s NGTS division to create Veraz Networks, a leading provider of end-to-end Voice-over-Packet solutions. Before Veraz, Mr Chawla worked at Nortel Networks as the VP of Product Line Management, for Succession Networks. Mr Chawla began his career at Unisys in Canada. Mr Chawla holds a Masters of Science from the University of Manitoba, Canada, and a Bachelor of Science in Engineering from University College, University of London, England.

Article abstract

India has one of the top ten telephone networks in the world. Still, penetration is low and demand for basic telephony, national and international long distance, cellular and other services is high. India’s growth as a major provider of outsource services depends upon its communications. India has embraced VoIP, expanded its IP networks and increasingly uses IP phones for voice. The government is working to liberalise and deregulate India’s telecommunications sector to facilitate competition and the entry of new service providers.

Full Article

With over forty eight million phone lines, India’s telephone network is amongst the top ten networks in the world.Yet, according to the International Trade Administration (ITA), India has one of the lowest teledensity rates, 3.6 per cent, in Asia. This means out of one hundred people, less than four have a telephone. According to the ITA, however, India plans to improve its teledensity to 7 per cent by 2005 and 15 per cent by 2010. Teledensity in India’s rural areas is 0.5 per 100 people; the government plans to increase this to 4 per 100 by 2010. A total of 500,105 out of 607,491 villages have been provided with village public telephones (VPT), i.e. one telephone per village. Considering India’s population of 1 billion, achieving these objectives requires approximately 78 million telephone connections by 2005, and 175 million telephone connections by 2010 and tens of billions of dollars in investments. Meanwhile, India the second largest emerging economy in the world has one of the fastest growing telecommunications systems in the world. It has grown, on average, 20 per cent for each of the last four years. Financial experts believe the telecommunications industry offers the highest potential for investments in India. The highest growth demand is for basic phone lines, national and international long distance, and cellular services. Deregulation Two-and-a-half years ago, the Indian government decided to allow Internet service providers to offer IP telephony (Voice over Internet Protocol, or VoIP) in India. The government also deregulated India’s international long distance market at the same time. By deregulating the market, they created new opportunities, and new competition, for enhanced communications services such as call centre outsourcing and instant messaging. In little over two years, increased competition between incumbent and emerging carriers for national long distance, international long distance and local access over the broadband loop, persuaded carriers to turn to lower cost VoIP technology. This has spurred significant opportunities for innovative VoIP vendors. Carriers and service providers need innovative IP solutions to provide a backbone, an infrastructure, capable of offering many more voice and multi-media services than traditional, legacy and basic telephony systems. Accelerating the deregulation trend, the Telecom Regulatory Authority of India (TRAI) issued draft recommendations, on August 6, 2004, for a Unified Licensing Regime. This proposed regulatory regime ensures greater opportunities for IP telephony service providers. It states: “The key objective of the Unified Licensing/Authorisation Regime is to encourage free growth of new applications and services leveraging on the technological developments in the Information and Communication Technology (ICT) area. Other main objectives of the Unified Licensing Regime are to simplify the procedure of licensing in the telecom sector, ensure flexibility and efficient utilisation of resources keeping in mind technological developments, encourage efficient small operators to cover niche areas–in particular rural, remote and telecommunicatio-facilities-wise, less developed areas and to ensure easy entry, a level playing field and a ‘no- worse off’ situation for existing operators. India’s enterprises, not just its service providers, are embracing VoIP, expanding their IP networks, and installing IP phones for voice communication. This is a good sign for providers offering new VoIP enabled voice services. It is also good for customers that need the new services. VoIP also provides opportunities for innovative, efficient, service providers and carriers to host the new corporate services and applications in their own networks–this makes much of the Business Process Outsourcing (BPO) market possible. Call centre operators can either spend their capital on call centre systems and leased lines or they can pay to use turnkey hosted call centre solutions bundled with global VoIP communications. Hosted solutions enable outsourcing firms, particularly start-ups, to focus better on the growth of their business. Similarly, enterprise networks use VoIP to integrate voice and data communications on the network. Service providers that use VoIP can best serve these customers. Business customers are interested in immediate savings for long distance or international calls, and in flexible new services they can manage internally. IP based networks let providers offer subscribers such services as videoconferencing, calling party ID, missed call tracking, unified messaging, multiple phone lines, and single mailbox retrieval for voicemail, fax, and e-mail. All of these services can be valuable to the business customer. Why is VoIP important? VoIP is in the headlines, but just what makes VoIP so popular? The overall cost savings for the carrier and the customer, are impressive. The ability to integrate wireline, wireless and multimedia, reduces the carriers’ need for multiple, diverse, overlay networks. Voice can also be effectively compressed, 8:1, thus multiplying the traffic the network can carry. Specific industry solutions, special applications, can increase the competitiveness of long distance service providers serving individuals and businesses alike. Further, there are significant CapEx reductions to consider. VoIP solutions can reduce capital expenditures by 40 to 60 per cent compared to a typical TDM network, depending on the network’s type and size. The cost reduction comes primarily from use of generic, third party, computing platforms versus dedicated, proprietary hardware shelves and platforms. This enables carriers to ride the price/performance curve offered by continual improvements in the computing industry and spend less for ongoing support and maintenance. Operating expenses can also be cut by 40 to 80 per cent. VoIP gateways, for example, can be deployed without additional personnel dedicated to maintenance; a legacy system requires a lot more shelf space, cost more for power, and requires round-the-clock support staff at each site. There are also timesaving factors to consider; it is much quicker to deploy a new IP-based network than to expand a traditional PSTN – Public Switched Telephone Network. In addition, with certain vendor solutions, carriers using an IP-based network and distributed softswitch architectures can develop and deploy new services faster than ever before.This can be a critical differentiator for providers and carriers looking for an innovative edge and that understand the revenue potential of new service offerings. Next-generation services and new voice driven IP-based applications are expected to be the next big revenue generating opportunities for providers and carriers. As such, carriers are looking for ways to introduce services that appeal to existing customers and attracting new ones. Not only will customers want a menu of services, they will also want the flexibility to control and manage new services on demand. Telecom operators need to react to user needs; those that plan ahead, seek out technology that lets them develop and deliver services-on-the-fly, will be the leaders and survivors. Carriers need to look for technology with off-the-shelf programmability. The programmable platforms used in softswitch architectures let carriers take advantage of a modular design, building block, approach to service creation. These platforms enable carriers to quickly and efficiently introduce new revenue-generating services and corner the competition. VoIP technology is maturing. The issues that plagued the technology in the past, such as latency, jitter, and packet loss, have been resolved and are now concerns of the past. Using VoIP, India’s service providers will be more competitive in the global marketplace, by rapidly deploying new end user services at lower cost. Convergence While VoIP is emerging around the globe, another telecom revolution–convergence–is developing. Convergence is the integration of wireline and wireless networks, the integration of local, national, and international long distance (NLD or ILD) networks, the integration of telephony and data networks; convergence is all of these things. When convergence truly comes about, we will see end-to-end IP networks, providing multimedia services over any type of media–wireline or wireless, fixed or mobile. In emerging markets where wireline teledensity is still low, such as in India, much PSTN growth will come through wireless/wireline convergence. Today, the Internet is just about ubiquitous, and many of the distance and time issues that have hampered international commerce have all but disappeared. This has created significant outsourcing opportunities for countries like India. As VoIP takes hold, location will become a non-issue. In fact, it will be possible to provide telecom services in a European city from a city in India or vice versa. The difference between wireline and wireless services will disappear, and service providers will be able to offer service anywhere using the best available network. Having an integrated, low OpEx, high customer satisfaction, VoIP-based network, to provide these services is the key to survival for service providers. Telecom is not solely about voice any more; it is about offering voice, data, and video together so that service providers can recover their investments faster. Such services need a new system, and new thinking, based on next-generation VoIP technology. Some form of wireless and wireline integration is inevitable; it provides the best of both fixed and wireless opportunities. Users like the convenience of wireless with the reliability and affordability of fixed network services. Conclusion According to the analysts, India can be a leader in VoIP services in a very short time. Market research firm Frost & Sullivan expects the Indian IP telephony market to reach $250.13 million by 2010, with an annual compound growth rate of 35 per cent. IDC Asia Pacific estimates that VoIP services in India are the second biggest such market, behind China, in the region. The iLocus Research group expects that VoIP will grab around 61 per cent of international long distance traffic by the year 2007. VoIP brings great opportunities for innovation and market leadership. Network, device and service convergence will soon be common, and, competitive, leading-edge solutions focused on new services will drive markets–and revenue opportunities –for both equipment and service providers.