The competition is hotting up in the telecom wireless in local loop (WLL) equipment market. With the growth in cellular services flattening out, the market _ estimated between $1.2 billion and $1.6 billion (Rs 5,160-6,880 crore) over the next five years _ is perhaps the only segment that telecom vendors feel will take off.
WLL equipment relies on wireless technologies to link telephones to the closest exchange and eliminates the need to draw wires or cables. Operators have been opting for WLL systems because of the low deployment time and ease of installation.
Vendors like Siemens, Motorola, Lucent, Qualcomm and a handful of Korean companies are in talks with private basic telecom operators and the department of telecommunications (DoT). Apart from the initial contracts, the vendors are also targeting repeat orders.
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The domestic WLL market is estimated to be between 1.5 and 2 million subscribers. This is based on vendors' expectations that 20-25 per cent of all new lines being rolled out will use WLL technologies.
Therefore, at a cost of some $800 (Rs 34,400) per subscriber, the market is expected to accrue vendors $1.2-1.4 billion (Rs 5,160-6,880 crore).
Major vendors like Motorola, Qualcomm and others are targeting 20 per cent each of this market. In fact, Siemens Public Communications Networks Ltd has said in the past that it is targeting 25 per cent market of the Indian market. Players like Qualcomm and Lucent Technologies are making aggressive offers to basic telecom operators with attractive financing terms.
Three of the seven basic telecom operators have signed contracts for purchase of equipment, including WLL systems, while another three are in the last stage of finalising deals.
The three deals that have already been concluded are: Bharti Telenet (in Madhya Pradesh) with Alcatel and Motorola; Tata Teleservices (Andhra Pradesh) with Lucent Technologies; and Shyam Telecom (Rajasthan) with Qualcomm.
Reliance Telecom (Gujarat), Hughes Ispat (Maharashtra) and Essar Commvision (Punjab) are in the final stages of negotiations with equipment vendors. Reliance has shortlisted four vendors, Siemens, Alcatel, Lucent and Ericsson, with which it is expected to negotiate further.
Hughes Ispat has reportedly decided to grant the order for implementing the switching system or exchange to NEC of Japan and the WLL solution to Hughes Electronics.
This is the only TDMA (time division multiple access) system contract in India, with all the other companies plumping for a CDMA (code division multiple access) solution. The latter is claimed to be more cost-effective.
Essar Commvision also has decided in principle to place a contract with Qualcomm. Techno Telecom, the basic telecom licensee in Bihar, has not started discussions with equipment vendors yet.