Cables are the crucial infrastructure backbone of an economy, the critical elements that wire up the length and breadth of the country as telecom and power networks. The Indian cables industry offers lucrative scope for stable revenue streams to manufacturers of both power and telecom cables. The report is an application of various Business marketing concepts with respect to the telecom cable industry in India. As an introductory background, the report outlines the structure of Indian Telecom Sector.
Emphasis has been given to the telecom cables sector going by its higher percentage of contribution to market consumption (more than 65% of the US$ 1. 2 billion cables market). (Indian Cable Industry- Emerging Opportunities) TELECOM SECTOR- OVERVIEW India’s telecommunication system is one of the oldest in the world – operational from 1851. It is owned and operated by the Central Government (till 1991 – 92) and governed by Indian Telegraph Act (ITA) 1885 and Wireless Telegraphy Act 1933. Telecom sector in India evolved after the regulations made competition enter this industry.
The National Telecom Policy (NTP) Act 99’ which deregulated the Group of Telecom (GoT), raising Foreign Direct Investment (FDI) limit to 74% was followed by successive policies by Telecom regulatory authority of India (TRAI). The result was declining calling rates, additional Value added services (VAS) and net benefit to the end users. Competition made the sector better. TELECOM CABLES-TYPES POLYETHYLENE INSULATED JELLY-FILLED (PIJF) CABLE PIJF is an assembly of a number of pairs of copper wires. The gap between the pairs of wires is filled with petroleum jelly to reduce noise and transmission losses.
Each line has two wires—one for incoming and the other for outgoing. There are two types of PIJF cables in use—solid PIJF cable and foamed PIJF cable. In case of the solid PIJF cable, the conductor is insulated with solid polyethylene. This type of cable is presently used in the DoT network. In case of foamed PIJF cable, the conductor insulation is foamed to form a cellular cross-section, with a suitable foaming agent. OPTICAL FIBER CABLES (OFC) CABLE OFC offers almost unlimited bandwidth and unique advantages over all previously developed transmission media.
OFCs are no longer dominant only in the transport network or feeder line but have penetrated to a large extent in the subscriber loop as well. With fiber, one can transmit narrowband, wideband and broadband communication services to the end-subscriber through POTS, ISDN phone, video phone, and video-conferencing. Most of the private service providers are focusing more to provide fiber to the building. Following is a brief comparison of the two cables types: Polyethylene Insulated Jelly- Filled Cable (PIJF)Optical Fibre Cables (OFC) ?
Very widely used in the telecom sector in India. However world over, JFTCs have been replaced by OFCs. ?JFTCs used for the subscribers’ loop – connects subscriber’s terminal to nearest telephone junction. ?JFTC come in different pairs, range from 10 – 2, 400 pairs ?Maintenance cost of JFTCs is five times more than that of OFCs ?Fault rate of JFTC – 11 faults/ 100 lines / month. ?Used for networks on the trunk route where high speed and large bandwidth is required. ?OFC is more efficient – higher bandwidth, capable of transmitting voice, data text, graphics, etc. Durability of OFC is around 40 years as compared to 20 – 25 years of JFTC. ?Average fault rate of OFC is only 2 faults/ 100 lines / month ?However OFC is more expensive than JFTC. Highly uneconomical to use OFCs where traffic is low – underutilisation. Hence, JFTC continues to be used instead of OFC to connect the junction box to subscriber’s instrument CURRENT SCENARIO Transmission in the networks is becoming more and more digital and the need for broadband access has resulted in OFC increasingly becoming the transmission medium of choice with inherent capacity to transmit all forms f communication. This is bolstered by the fact that there has been a constant rise in copper prices in the last few years driven primarily due to the shortage of the supply, thereby shifting the focus of wireline market to OFC. India became the world’s third largest domestic OFC market in the year 2009-10. On the backdrop of the government’s initiates of bringing broadband to every Indian household and an initial target of 20 million broadband subscribers by 2010, the telecom cable segment is at the point of inflexion. Telecom Cables: 2010-11-A Watershed Year )The increasing usage of smart phones in the country and introduction of new applications will provide requisite impetus to the industry. All of this is translating into an exponential growth which would give rise to the need of a robust and expandable network capability. MARKET DYNAMICS The market for telecom cables showcased negative growth in 2009-10 and stood at an estimated Rs. 1060 crore, recording a dip of approximately 18. 4 percent from Rs. 1300 crore in 2008-09.
The decline in sales may partly be attributed to the non-procurement of ribbon cables. In 2008-09, BSNL had procured Rs. 150 crore of ribbon cables (48F, 96F and 288F). There are indications that there shall be no procurement of this product in 2010-11 too. The optical fiber segment contributed to 82. 5 percent (Rs. 875 crore) of the market share, PIJF accounted for 9. 4 percent (Rs. 100 crore), while the balance 8. 1 percent (Rs. 85 crore) was accounted for by CATV/MSO segment. The buyers for the PIJF segment were BSNL (Rs. 5 crore) for circles, MTNL (Rs. 25 crore) procured 2. 8 lckm for the network being laid for Commonwealth Games, Reliance (Rs. 5 crore), and Bharti (Rs. 55 crore). The vendors for PIJF are Finolex, Sudarshan, Delton Cables, UM Cables, Golconda, LK, SPMT, KEC, Paramount Wire, Paramount Communications, Surana, VTL, Birla Ericsson, Sriram, CKM, Polycab, Singla , Sterlite, Himalaya Cables and Uniflex. Sterlite Technologies led the pack with a turnover of Rs. 272 crore, out of which OFC business was Rs. 175 crore and PIJF was Rs. 7 crore. M. P. Birla Group, comprising of Birla Ericsson and Vindhya Telelinks, was in the second slot with a domestic turnover of Rs. 197 crore, the OFC business accounted for Rs. 100 crore and PIJF accounted for Rs. 97 crore. MARKET SEGMENTATION The Segmentation of Indian Telecom Cables Market is primarily done in two ways: PRODUCT SPECIFIC SEGMENTATION The Telecom cables market can be segmented into: ?PIJF Telecom Cables – The Petroleum Insulated Jelly Filled telecom cables are also known as JFTC (Jelly Filled telecom Cables).
They are used for the subscribers’ loop – connect subscriber’s terminal to nearest telephone junction. ?Optical Fibre Cables (OFCs) – OFC offers almost unlimited bandwidth and unique advantages over all previously developed transmission media. They are used for networks on the trunk route where high speed and large bandwidth is required. ?CATV/MSO Cables – This is Cable Television/Multiple Systems Operator Segment. Cable television operators use OF cables in the backhaul, from their hubs to an aggregation point. OF cable demand from this segment is expected to increase over the next five years.
As we see above the optical fiber segment contributed to 82. 5 percent (Rs. 875 crore) of the market share, PIJF accounted for 9. 4 percent (Rs. 100 crore), while the balance 8. 1 percent (Rs. 85 crore) was accounted for by CATV/MSO segment. CUSTOMER – BASED SEGMENTATION On the basis of the different set of customers the telecom cables market caters to, the segment is divided as: ? DoT (Department of Telecommunications) ?Railways ?Defence ?Gas and Power Plants ?Public Sector Undertakings (PSUs) – Major ones are BSNL, MTNL ? Private Operators (of basic services)