Telecom operators, manufacturers spar over importing PON equipment

Operators want to import PON equipment to meet the broadband targets, makers say have enough capacity

A bitter battle is brewing between telecom operators and equipment makers over the contentious issue of importing passive optical network (PON) equipment, which is installed in premises as well as in the exchange and is crucial for enabling high speed fixed broadband in homes.

The Telecom Equipment and Services Export Council (TEPC) — set up to promote telecom exports — has sided with equipment makers in rubbishing claims by telecom operators that the former are unable to supply them with the 80 lakh PON equipment which they require in the next year.

Given this inability, telecom operators would like permission to import the equipment. This permission is currently on hold through various government orders.  

The TEPC says that, based on industry feedback, domestic manufacturers are fully capable of meeting demand and say this has been confirmed by companies such as the Tata-controlled Tejas Network, Nokia, Alphion, C-Dot, and Syrotech. However, their equipment is more expensive than what is available from China where the government supports companies.

Telcos are adamant that the lack of availability from domestic players, combined with their inability to import, is jeopardising the country achieving the aggressive targets fixed for the rolling out of fixed broadband which received a huge fillip after the Covid-19 lockdown.

For instance, Bharti Airtel is looking at launching fibre-to-home broadband in over 2,000 cities and towns by 2025 and reaching over 40 million home passes. Reliance Jio plans to reach 50 million households in a few years.

After border tensions broke out between China and India, the government, under its ‘trusted sources’ policy for telecom equipment announced in 2020 and its mandatory testing and certification rules, has put clearances for PON equipment on hold. Without these clearances, imports are impossible.

Telcos say the bulk of the low-value PON equipment is manufactured in China and there are only a few other units in other Asian countries but these cannot match the Chinese prices.

But the TEPC argues that, as the design for the equipment is offered by C-Dot, companies get it manufactured from EMS players and there is no shortage of capacity.

“The problem is that operators have not even given any firm orders or even conveyed their requirements in advance so that the industry can be ready. No one will manufacture and keep the equipment on the shelf if orders are not placed,” said a member of the TEPC.  

Telecom gear makers say they could give a more competitive price if operators were willing to give them bulk orders that would give them economies of scale.

The council does concede, however, that domestic equipment makers suffer from a price disadvantage stemming from the fact that Chinese companies are not only supported by their government but also offer cheap credit lines.

“Yes, India also has its telecom Production Linked Incentive scheme but it has just started so its benefits will come only later,” said the same TEPC member.

The TEPC has also been pushing for PON equipment to have an HS code (required for import and export) so that it cannot enter the country through the back door by being classified under a different code.

The council is hoping for a meeting soon with the Department of Telecommunications to resolve the issue of adequate supplies of PON equipment.