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2011 INDIA TELECOM TRENDS

Top trends:

• 3G
• MNP
• BWA, WiMax and LTE
• Increasing rural mobility
• Cloud, data center virtualization, and shift to all-IP network
• Infrastructure sharing, M&As and operator consolidation
• Smart-grid and green technology
• FMC, UC, managed services and M2M popularity
• Proliferation of smartphones, smart devices and local MNCs
• Security-as-a-Service
• VAS-the game changer

The past year has been an exciting one for the telecom industry. With the slow but sure emergence from the
plague of recession, operators decided to quickly enforce corrective telecom practices to up their falling
revenues.

With 3G finally surfacing on the Indian telecom horizon, giving way to 5 MHz of extra spectrum to 9 successful
operators, customers were promised an end to the inconsistent voice network, and additionally provided with a
plethora of data applications like live mobile TV, video calling, video and music streaming, video conferencing,
and much more. Tata DoCoMo being the first private player to have started 3G services, it remains to be seen
how 3G will catch up with enterprise and retail customers next year, when all other successful 3G operators are
likely to start services as well. Vendors have also decided to make hay when the sun shines-bringing in cheap
3G handsets, and offering the best of applications which are upgradable, and have security tags in place.

And of course there is BWA and MNP-the latter has been promised to customers for a long time now. This will
allow them to easily switch service networks, in order to get best quality. BWA, which was a step taken by the
government to significantly increase broadband penetration to all corners of the country, especially rural areas,
has not yet waved its magic wand but most experts are hopeful that WiMax, slated to come in by the first half
of 2011, will throw up some changes in the current broadband usage patterns. The far-reaching effects that
MNP will have on operators' ARPUs are to be seen in 2011, and also the stiff competition for lower-priced
services that will emerge as a result of this.

Tracking all these changes and more, we present to you the likely trends that are set to take the Indian
telecom industry by storm in the new year.

3G: According to Anuj Kapoor, country head, Telcordia, “3G mobile broadband for enterprise and retail
customers will reach capacity in 2011, and by the second-half of 2011 we are likely to see LTE as well, which
will compete directly with 3G. This will also lead to a highly competitive market for cross-bundling of voice and
data packages, instead of separate plans for each, and there will be higher use of a service creation
environment for quick responsiveness to the market.

Mobile advertising as a mode of subsidizing the service and as an added revenue stream will witness a boost,
and mobile payments will also increase, with higher speeds and restrictions on online payments being removed.
Besides, other applications like GPS and social networking will also pick up, with high-speed broadband.”
However, competitive pricing of 3G services will be a key to its uptake, and sachet pricing for various apps will
be ideal. Adds Syed Safawi, CEO, Wireless Business, Reliance Communications, “Innovative applications,
enhanced user experience, and decreasing prices of 3G enabled handsets would be the key drivers for mobile
broadband in India.”
MNP: As far as MNP is concerned, with 15 operators in the market, and now with the integration of 3G, there is
enough choice for customers in terms of a quality network provider. Says Natesh Mani, president, Consumer
Infrastructure Services, Sify Technologies, “Dynamics like MNP will kick in and will further challenge the life
cycle of the consumers. Operators will have to focus on better segmentation of market and retention of existing
base. Managing consumer experience and brand preference will be key.”

BWA, WiMax, Wi-Fi and LTE: According to Sanjay Nayak, CEO & MD, Tejas Networks, “The average
bandwidth consumed by a mobile broadband device is expected to grow by 10-15 times in the next few years.
With the majority of Indian telecom networks built for a predominant voice component of traffic, operators will
continue to adopt innovative solutions that extend the life of their existing network assets such as microwave
radios, optical transmission equipments and reuse of fiber on the ground to support data, VAS and content
services.”

With 20 MHz of spectrum in the hands of 6 players, it is yet to be decided whether the first broadband rollouts
will be for WiMax or LTE. However, most experts believe that WiMax will be rolled out first, and will slowly be
upgraded to TD-LTE. While Ericsson and NSN both feel that TD-LTE is gaining popularity as the technology of
choice, others argue that India still doesn't have an affordable LTE standard that matches with the rest of the
world, and, for now, will roll out WiMax.

According to Vaibhav Mehta, Elitecore, “WiMax will offer high bandwidth and speeds to encompass a new
generation of wireless services such as Mobile VoIP, Multimedia-based Mobile services (Presence,IM) and
multiple air interface support. Location-based services will integrate with wireless networks including WiFi and
WiMax to provide integrated applications usable in outdoor or dense urban environments. Some like Ruckus
Wireless are also of the opinion that Wi-Fi will offer last-mile connectivity, superceding WiMax, and LTE as well.

Rural Mobile Penetration: With over 200 mn rural subscribers, as of June 2010, having a 26.4% teledensity,
it is clear that the masses are catching up with the mobile mania, and operators are quick to cash in on this
with special low-priced schemes, crop and weather alerts, m-wallet and m-banking, e-learning through video on
mobile, telemedicine, e-government and multi-lingual applications.

While 3G may take a while to reach the masses, BWA, with the BSNL WiMax rollout project for rural broadband,
may come sooner providing data connectivity to far-flung reaches of the country. Remarks Nayak, “Multiple
government initiatives such as Rural Broadband, National Knowledge Network and USO Fund are expected to
close this gap by building high-capacity information highways with nationwide coverage. The network will be
future-proofed to support a full basket of applications to bridge the urban-rural divide.”

Cloud, Wireless and all-IP Network: According to NSN, “The market for cloud computing will grow and play
a fundamental role in re-shaping how telecom service providers offer apps to end users and how their internal
systems are implemented. Solution delivered through cloud technology may eliminate operator's need to invest
in its own IT infrastructure, personnel or premises in certain scenarios.” With data center virtualization being
routed through the cloud, a lot of traffic due to the data explosion can be plugged. Whether it is moving from a
private to a public cloud, sharing data centers with other operators or becoming a virtual cloud SP leasing out
services as an additional form of revenue, the cloud trend is fast catching up in the telecom space.

According to John Samuel,President-India, Verizon Business , “Building for peak capacity is yesterday's way to
manage IT resources. Today's smart CIO uses only those resources required to power his or her business. Plus,
with today's new IT delivery model centered on the cloud, enterprises need not make large investments in
capital equipment or additional IT resources.” Besides, as Vaibhav Mehta, VP, Elitecore says, “Operators have
realized the benefit of IP as a core for all communications related to voice, data and video and it will be the
preferred enabler to reduce cost and maximize resource utilization.” Wireless and fibre will thus be the
technology of choice, going forward.

According to NSN, “A smarter network will have a common core and common optical transport. This will be all
all-IP based and providing a combination of fixed and mobile access to meet all customer needs. It will be able
to deliver context-specific services according to the user profile and location, the device, and the application's
requirements. Not only will this bring more value to the user, but also differentiate the operator's offering from
over-the-top services.” The shift from IPv4 to IPv6 is also something to look out for.

Infrastructure Sharing and Consolidation: In a recent interview, Dr JS Sarma, chairman, Trai said,
“Looking at the scarcity of spectrum, some form of operator consolidation will be required in the long term to
preserve sustainability.” While M&As have ruled 2009-10, tower and infrastructure sharing has also caught up,
in an effort to reduce Capex and Opex, while maintaining quality. Says Kapoor, “Operator consolidation is
expected for those operators who haven't started services yet, but this will depend on the regulatory
environment. We have seen vendor consolidation at a global level, now we will see more operator consolidation
next year.” Agreeing with him, Safawi says, “2011 will be a year of consolidation since the lock-in period of
three years for the new operators will be over in Jan 2011, and thus this allows the promoters to sell their
stakes.”
An MVNO-based business model for operators who did not win 3G spectrum, or leasing out of 3G spectrum by
successful 3G operators may also be seen. M&As with global investors in the Indian market are set to increase,
with further liberalization of government policy. Besides, use of existing infrastructure, or infrastructure sharing
by companies will be the preferred mode to keep costs down and share latest technology.

Smart Grid and Green Technology: With ICT contributing 2% of the world's total carbon emissions, there is
an increased pressure on the industry to adopt green IT practices. The telecom sector on its part is working
hard towards this as well-with tower and infrastructure sharing, solar-powered BTS and mobile phones, and
much more. While the USO fund in rural areas is being used to promote solar and wind energy in rural areas,
carbon credits or direct subsidies by the government to operators could serve as a further incentive to greening
their operations. According to NSN, “86% of a mobile operator's total energy consumption typically occurs in
the network infrastructure. Improved energy efficiency and renewable energy are competitive factors because
they help communication SPs meet 3 objectives: expanding into areas with no grid or an unreliable grid supply,
reducing operating costs, and cutting greenhouse gas emissions to meet climate change targets.”

Adds Nayak, “Operators are deploying multi-functional equipments called Packet Optical Transport Platforms
(POTP) that integrate traditional stand-alone network elements into a single device to realize significant power
savings. Advanced features such as optical bypass of transit IP traffic, video multicasting, sub-wavelength
grooming and lambda switching are incorporated to realize energy efficient networks.”

Convergence and M2M: While FMC hasn't really caught up in India due to regulatory policies, this is set to
get a boost in the new year, with the uptake of high-speed unified communications and broadband and video
technology, making it possible to link one's office to one's home and use a mobile like a mini-office. Besides,
managed services are helping operators outsource network infrastructure maintenance to third-party service
providers, and concentrate on their core customer offerings. According to NSN, “Outsourcing complex
operations to expert vendors is the most effective route to the highest network quality, to improve operational
efficiency, to expand network coverage cost-effectively, and to enhance customer experience.”

Talking about how M2M applications will see a boost, Samuels says, “By 2014, it's estimated that more than 8
bn devices will be connected to the global Internet. Mobile devices with an IP address will be discoverable no
matter where they are located at a given point in time. M2M will help to enable a smart-grid evolution and
improve healthcare, specifically diagnosis and care.”

Growth of Smart Devices and Local MNCs: “India is becoming a regional hub, with expertise going from
local to global, like in the case of Bharti's acquisition of Zain,” says Kapoor.The local-global trend can also be
seen in the increase of local services being outsourced, and many companies calling themselves local MNCs
today. Talking about the growth of smart devices and its usage, Mani says, “Consumers will show higher
adoption of smartphones and Smartphone applications. App stores by device manufacturers and by operators
will be brand differentiators. consumers will have choices and more pull-based strategy will work for higher
adoption. New handheld devices like the Apple ipad tablet will kick in and influence the adoption positively. With
tablet PCs like Dell and Samsung Galaxy Tab giving the iPad a run for its money, smartphones will also continue
to have increased usage with 3G and emerging technology.

Security: A hot topic in recent times, the government has now agreed to set up a dedicated security lab with
experts to determine whether telecom equipment that are imported adhere to local security norms. However, it
has also been suggested that operators look at scalable security technology at the time of buying equipment
and keep frequent checks on their networks to prevent unlawful hacking. But there are other security concerns
as well. Says Kapoor, “Networks will have to be more geared up, and there will have to be more restrictions
from operators for over-the-top players to restrict blocking of direct revenue channel from third party to
consumer.”

According to NSN, “Integrated security-as-a-service into a service operator's operational support

VAS: Adding value and reducing the effect of falling ARPUs and stiff competition, VAS has been taken to a new
level and will keep on progressing with newer applications and apps stores, and with the coming in of 3G,
especially. Explains Safawi, “New Age VAS at a broad level is all about open systems, open networks,
democratic framework for partners and consumers and availability of the best products based on the
consumer's usage. In the new age VAS regime, the services will be provided under the verticals of access,
video, applications and gaming. It is likely that mobile phone would become the center of commercial
transactions and an infotainment gadget.” MVAS-that would include m-commerce, m-banking, m-trading (in
the near future), m-wallet, location-based offers and mobile TV at attractive prices are the most talked about
trends in the industry today.
Says Samuel, “Smarter, more portable devices combined with fourth-generation wireless networks and an
increased demand for workforce mobility and advanced mobile enterprise application platforms will make
business apps more attractive and popular. More powerful devices, backed by huge libraries of applications and
large developer communities will help businesses capitalize on LTE-based mobile broadband that offer mobile
computing experiences we can only begin to imagine.” Nayak agrees, “With mobile phones becoming a gateway
to Internet access, mobile social media applications for facebook, linked in and twitter will continue to
proliferate amongst the urban mid to high end segment.”