5G gambit: Cisco focuses on telecom segment, sees big opportunity in India

Rapid digitisation is opening up new opportunities for every player, irrespective of the industry they are in. Some are thinking in terms of how it can help them drive competitive advantage; some are exploring new revenue streams; others are looking at ways it can help them step into newer markets. 

As the buzz around 5G technology intensifies, Cisco, maker of networking hardware, telecommunications equipment and other high-technology services and products, sees a big opportunity in India. For the company, 5G translates into quicker digitisation and more business through enterprise partnerships. The reason is simple: Globally Cisco is moving away from a hardware centric focus towards software and automation, driving more intelligence into every architecture and network it is building. “We are focusing towards software subscription, recurring revenue and automation,” B Raghavendran, managing director, partner organisation, Cisco India & SAARC, has told the media in an interview earlier this year. 

“We’re saying that 5G will thrive, if you can create value from it,” says Sanjay Kaul, head of Asia Pacific & Japan, service provider business, Cisco. “In India, we know how badly debt-ridden the telcos are. Now is the time to get some cash back in, and start getting paid for the capital you have been investing.”
 

Kaul adds that while telecom companies would need to make upfront investments to set up their 5G networks, they would eventually be able to recoup the entire investment, with 70 per cent of their revenues coming from enterprises. “In enterprises, we have 70 per cent market share, and we know what they want. If you take a network of service providers and combine it with enterprise ones, whether that’s a bank or a factory or a utility, you’re going to make it efficient and create a huge amount of value. And then you can take the value and share with the ecosystem,” Kaul added. 

Korea tops the list of countries that have successfully deployed 5G, followed by China, and Japan that would go live soon. The US, Australia, Singapore, Philippines, Thailand and New Zealand are the other countries at different stages of testing or deployment of 5G. Kaul believes India will soon get there. “We believe it’s just the beginning because digitisation is happening. The average consumer is consuming 13 gigabytes (of data) a month. We believe this is going to go double in the next three to four years with 5G. Digitisation fuels our business,” he says.

By some estimates, setting up 5G networks would require $70 billion worth of investments in India. The promise of 5G lies in greater bandwidth which will enable applications in different areas, beyond voice, data and streaming services. 

India is among Cisco’s top 10 markets globally, with close to 20,000 employees, and it has huge research and development operations here as well. The networking giant is focused on six main areas in India — routing, data centres and compute, mobility, security, unified communication (collaboration, tele-presence etc), security and a portfolio for the media, entertainment and broadcasting industry.

Cisco is among the top data centre players in India, along with Dell Inc and Hewlett Packard. “Vendors will have to prove their localised data centre capabilities along with comprehensive security, which will become a key factor for vendor evaluation and selection. Regulated cross-border transfers are also likely to increase demand for private cloud. Building a local data centre will mean additional investments for local as well as global players. Apart from privacy and compliance mandates, ensuring end-to-end security will be paramount,” said Rishu Sharma, principal analyst, cloud & artificial intelligence, IDC India. 

Kaul says Cisco is “pretty big on security,” and as businesses move into the digital world, and operators move into 4G and 5G, security would be an important requirement. This leads us to its next focus area. 

An area where data centre and data centric businesses are facing a challenge is that of data localisation or keeping sensitive data within the country. What does Cisco think about the growing consensus around data localisation, especially for its data centre business? “India is a large country and needs to protect its data and citizens. But there are some applications which are non-critical. I think we shouldn’t be stringent about making them go to public clouds. We don’t want to store offshore critical applications such as billing, customer data and so on. We want that secure in Indian data centres, hopefully at the premise of a telco. So we promote multi cloud, not public cloud or private cloud,” Kaul said. 

Cisco is also a big player in the smart cities space, where it has done work in cities such as Jaipur, Nagpur, Mumbai and some work is on in Haryana and a couple of other states. The deployment of 5G networks will speed up several of these smart cities’ applications. “There is tangible work happening in these areas. To be honest, three years back we had a lot of costs. We didn’t see revenues. The last two years we’ve seen decent revenues coming out of smart cities,” Kaul says.