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The Indian Institute of Planning & Management GURGAON THESIS: “FUTURE OF WAN CONNECTIVITY IN INDIA”
The Indian Institute of Planning &
ManagementGURGAON
THESIS:
“FUTURE OF WAN
CONNECTIVITY IN INDIA”
THESIS SYNOPSIS
1. Research Objective: to analyze the future of WAN connectivity in India
2. Area of Research:
MPLS VPN (Virtual Private Network).
3. Title:
WAN Connectivity.
4. Literature Review:
I would be covering:
Companies profile
Services
Different Modes of connectivity
5. Research Methodology:
VPN & Its working
Types of VPN
Security levels
Protocols used in VPN
VPN as Intranet
Advantages and why VPN is preferred
Elements of VPN
I
ACKNOWLEDGEMENT
On my completion of my thesis report I would like to thanks and appreciate my guide Ms
Deepa Kuppuswamy for devoting her valuable time and supporting me through out my
research on my topic “FUTURE OF WAN CONNECTIVITY IN INDIA” and for her
valuable guidance and knowledge that she provided me which enabled me to complete
the project.
II
TABLE OF CONTENT
EXECUTIVE SUMMARY……………………………………… 1
1. COMPANY PROFILE………………………………………………. 2
1.1. Services Offered………………………………………………….. 3
2. LITERATURE REVIEW……………………………………………. 6
2.1. WAN Connectivity………………………………………………... 6
2.2. Different modes of WAN Connectivity……………………………8
2.2.a. Leased Line…………………………………………………8
2.2.b. VSAT………………………………………………………. 9
2.2.C. Radio Frequency…………………………………………… 11
2.2.d. WI MAX……………………………………………………12
2.2.e. VPN…………………………………………………….. …16
3. RESEARCH METHODOLOGY……………………………………. 29
4. WAN CONNECTIVITY MARKET ANALYSIS…………………...30
4.1. Market Overview……………………………………………….. 30
4.1.a. Industry Challenge………………………………………….31
4.1.b. Market Drivers……………………………………………… 31
4.1.c. Market Restraints……………………………………………. 32
4.1.d. Market Engineering Measurement Analysis……………….. 32
4.1.e. Revenue Forecasts……………………………………………33
4.1.f. Demand Analysis - by Vertical……………………………… 35
4.1.g. Demand Analysis - by Horizontal………………………….. 37
4.1.h. Application Trends………………………………………….. 39
4.1.i. Regulatory Trends…………………………………………… 40
4.1.j. Technology Trends………………………………………….. 41
4.1.k. Pricing Trends………………………………………………..41
4.1.l. Competitive Analysis…………………………………………42
4.1.m. Market Share Analysis………………………………………43
4.2. MPLS/IP VPN……………………………………………………45
4.2.a. Market Overview………………………………………….. 45
III
4.2.b. Revenue Forecast…………………………………………… 46
4.2.c. Market Share Analysis……………………………………… 48
4.3. Internet………………………………………………………….. 50
4.3.a. Market Overview………………………………………….. 50
4.3.b. Revenue Forecast…………………………………………… 50
4.3.c. Market Share Analysis………………………………………. 51
4.4. VSAT……………………………………………………………. 53
4.4.a. Market Overview………………………………………….. 53
4.4.b. Revenue Forecast…………………………………………… 53
4.4.c. Market Share Analysis……………………………………… 55
5. ANALYSIS & KEY FINDINGS…………………………………….. 57
6. BIBLIOGRAPHY……………………………………………………. 58
IV
EXECUTIVE SUMMARY
Since Future of WAN Connectivity is my major focus area, I started my report with the
Overview on WAN Connectivity, its current scenario followed by the different modes of
Connectivity used in India.
As per the most important and commonly used and preferred mode of connectivity in
corporate is MPLS VPN (according to my research and survey), report includes the
complete description for the same that is it’s working, Advantages and disadvantages,
why VPN is preferred, different types of VPN, its security level and etc.
For the future of WAN Connectivity, in analysis part it includes the Data service market
that is WAN market, its industry challenges, market drivers, market constraints, market
engineering measurement analysis, revenue forecasts, demand analysis both horizontal
and vertical, application, pricing, technology and regulatory trends, competitive analysis,
market share analysis.
In the data service market there are several modes of connectivity for which the analysis
is being included in the report. It includes the market overview, revenue forecast, and
market share analysis for the WAN Connectivity like MPLS, INTERNET & VSAT.
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1. Company Profile
TULIP TELECOM SERVICES LIMITED
BRIEF PROFILE OF THE COMPANY
Tulip Telecom Services Ltd (BSE/NSE: TULIP) is a data telecom service provider and
an IT Solutions provider that innovatively provides customers with networks and related
services. The company has four major lines of business, which are network integration
(NI), corporate data connectivity (MPLS VPN’s), rural connectivity and infrastructure
management services. This unique combination of services is what distinguishes Tulip
from its competitors who are either network integrators or telecom service providers.
With over 1500 employees across India, Tulip provides data connectivity to customers in
almost 800 cities across the country including the remotest of towns and cities. The
company has displayed robust growth since its inception and its IPO has been ranked as
one of the top five IPO’s since 2005 by CNBC’s www.moneycontrol.com With a market
capitalization in excess of Rs. 2000 Crores (USD 500 Million), Tulip is today one of the
largest corporates in its domain at present.
Tulip Telecom Services Ltd is the fourth largest network integrator as per Voice & Data
Magazine’s Networking Masters Issue. We also believe that Tulip is today, the largest
MPLS VPN Connectivity provider that has innovatively deployed a countrywide network
using wireless on the last mile. Developing countries like India have a limited telecom
infrastructure but their connectivity requirements are exactly similar to developed
countries. This gap in infrastructure can only be overcome by using wireless. Tulip has
deliberately and at considerable cost developed countrywide infrastructure to provide
data connectivity in the remotest of areas and this has yielded rich dividends for all
stakeholders.
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1.1 SERVICES OFFERED
1) Tulip Connect
Tulip provides both inter-city as well as intra-city connectivity based upon the clients’
requirements.
Tulip inter-city network is based on optical fiber cable provided by multiple service
providers. The network is created in mesh architecture so that if any link does fail, there
are multiple alternate routes available. Consequently, Tulip network has an inbuilt
redundancy and provides the highest levels of uptime. In addition, Tulip has expanded its
network reach to more than 800 cities in India and thus we can provide the connectivity
anywhere in India. The last mile connectivity is entirely based on wireless, using radio
frequency technology in Point-to-Point and Point-to-Multipoint applications. Licensed
frequencies are in major cities to overcome the interference issues.
• Highest levels of uptime with built-in redundancies
• One of the largest networks in the country
• Bandwidth on demand, upgrade in minutes
• Managed MPLS enabled network
• Immediate connectivity and co-location services
• World class design, converged voice, data, video network
• Single point for bandwidth and network equipment
• Minimum or no towers
2) Rural Connect:
Data connectivity is accepted to be one of the most important vehicles of growth. It is
however restricted to a few major cities. Seventy percent of India’s population lives in
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rural areas which are underdeveloped areas in terms of infrastructure. The key challenge
lies in deploying connectivity networks in terrain that is often hostile and has absence of
infrastructure of telecommunications. It is virtually impossible to provide connectivity on
copper throughout the country. Wireless on the other hand can be ideally used to provide
connectivity at a reasonable cost. This will permit the country to leapfrog generations of
telecom connectivity to bring the benefits of technology to the people Tulip provides
connectivity using wireless technology for access in the rural areas. Unlike other
solutions, that deliver limited bandwidth and are designed primarily for voice, our
solutions are IP based using wireless technology and deliver the highest quality of voice,
data and video. With the largest wireless rollout infrastructure and the combination of the
highest levels of networking skills, Tulip emerges as the automatic partner for rural and
beyond-the-metro connectivity. Akshaya: A role model for removal of digital divide and
E-Governance in developing countries.
3) Network Integration:
Tulip is not only strong in providing connectivity solutions but we also provide other
value added services such as:
• Facility Management Services
• Network Management
• Security Services
• Annual Maintenance Contracts
• Consultancy services
• Data Centre Services
Tulip provides these services to some of the biggest names in the industry. With major
specializations in the field of IT, Tulip are able to provide the highest levels of service to
our customers. Tulip is today rated as the 4th largest network integrator by Voice & Data
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Magazine. As per the magazine, Tulip has an 8.1% market shares of the Rs. 5,000 Crore
market.
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2. LITERATURE REVIEW
2.1 WAN CONNECTIVITY
Current Scenario
As per the survey, small businesses are showing interest in having WAN connectivity to
connect their branches and remote offices through leased line links, broadband, and to an
extent through VSAT and VPN. The wholesale/retail sector has taken the lead in
adopting WAN infrastructure with 54% of companies going in for WAN connectivity. It
is followed by professional/other services sector with 48%, BFSI segment with 46%,
manufacturing sector with 44%, IT/ITeS sector with 42%, and utilities/transportation/real
estate/construction segment with 41%.
Also, according to the survey, 45% of the small companies with a turnover between Rs
25 to 49 crores have WAN infrastructure in place, followed by 58% of the companies
with a turnover between Rs 50 to 75 crores, and 62% of the companies with the turnover
between Rs 76 to 100 crores.
Of 195 respondents, 36% of small businesses use leased line links, 28% broadband, and
8% VSAT. The segment that uses leased lines the most is the IT/ITeS vertical with 42%,
followed by professional/other services with 39%, manufacturing with 37%, BFSI
segment with 36%, wholesale/retail with 29%, and utilities/transportation/real
estate/construction vertical with 26%. As far as broadband is concerned, the
professional/other services sector uses it the most with 35%, followed by IT/ITeS with
33%, BFSI with 29%, wholesale/retail with 27%, manufacturing with 24%, and
utilities/transportation/real estate/construction with 22%.
In addition to the leased line connectivity there has been surge in adoption of
technologies such as VSAT and the VPN connectivity as the next preferred mode
amongst small business. Many of them have multiple locations and are opting for a VPN
connection along with leased line ISDN and dial-up. Further, VSAT services are used for
broadcast applications and enabling connectivity between remote factory locations.
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Others are using VSATs for application-specific purposes such as stock broking and for
rural connectivity where adequate infrastructure is not available.
From the investment perspective, if we look at each of the WAN technologies, out of 179
respondents, 7% of small businesses would be investing in both leased lines as well as
broadband, whereas, only 1% will invest in VSAT because of the cost factor (VSAT
prices are beyond the reach of most of the small business). Across all the verticals, it is
the utilities/transportation/real estate/construction sector that will invest more in leased
line and broadband with 25% and 17% respectively.
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2.2 Different Modes of WAN connectivity
1. Leased Lines
World without VPN In the 1960s’ and 70s’, when the use of computer was just a bit
fancy to most of the people, the so- called “Network” would only mean a connection
between two computers using telephone line communicating by command line.
A leased line is a telephone line that has been leased for private use. In some contexts,
it’s called a dedicated line. A leased line is usually contrasted with a switched line or
dial-up line. Typically, large companies rent leased lines from the telephone message
carriers to interconnect different geographic locations in their company. The
alternative is to buy and maintain their own private lines or to use the public switched
lines with secure message protocols.
Pros:
•Completely owned & controlled which means better control.
•Dedicated bandwidth - Predictable performance even in peak h rs.
• Dedicated Circuit - Highly secure NO threats of hacking and Intrusions.
Cons:
•High Initial capital cost for Infrastructure. Need to purchase Modems & Routers
• High operational cost
TELEPHONE LINE
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• Overhead of maintaining the uptime of Leased Lines. Some redundancy needs to be
built for better uptime.
• Does not support flexible bandwidth upgrade options?
• In housing network planning and Management
•Does not support Remote access; require separate remote access method & equipment.
• Need to build link redundancy, alternate routes ourselves on extra cost to eliminate risk
of downtimes/Link failures depending the strategic importance of the site.
2. V-Sat
To overcome the problems in leased line V-sat came into existence.
VSAT technology is a telecommunication system based on wireless satellite
technology. The term ‘VSAT’ stands for ‘Very Small Aperture Terminal’. As the
definition itself indicates, VSAT technology is made up of a small satellite earth
station and a typical antenna of 1.8 meter diameter.
There are three components in a VSAT network. The first is called the Master Earth
Station which is the network control center for the entire VSAT network. The
configuration, monitoring and management of the VSAT network are done at this
location.
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The Master Earth Station also has a large six-meter antenna, a fully redundant
electronics, self-contained backup power system, and a regulated air conditioning
system. This Master Earth Station is manned 24 x 7 days throughout the year. The
second component is the VSAT remote earth station. This is the hardware installed at
the customer’s premises that includes the outdoor unit (ODU), the indoor unit (IDU)
and the interfacility link (TEL). The VSAT outdoor unit consists of a standard 1.8
meter offset feed antenna, a solid state amplifier (SSPA), a Low Noise Amplifier
(LNA), and a Feedhorn. The indoor unit is a VCR-sized unit that houses the
communications electronics that includes interface with the customer’s equipment
such as computers or telephones. The TEL consists of coaxial cables that connect the
outdoor unit to the indoor unit. Between the VSAT earth stations are beamed through
the satellite. The VSAT system uses a geostationary satellite, which is orbiting at
36,000 km above the ground.
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VSAT technology offers many advantages
1. Ease of Implementation
2. Availability
3. Reliability
4. Network Management
5. Recovery
6. Security
7. Scalability
8. Flexibility
Disadvantages
1. Not suitable for latency-sensitive applications (roundtrip delay in access of l000ms)
2. Asymmetric bandwidth — Improportionate upstream & downstream data rates
3. Not suitable for real time application like Voice, Video & other interactive applications
4. Shared Media — Collusion based
5. High Apex & Capex. Which means it is very costly while installing and one have to
spend a lot for maintenance. That is the reasons some people reject it due to cost.
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3. Radio Frequency Technology: Wireless
Networking technology is based on the transmission of data through radio waves.
Radio Frequency (RF) refers specifically to the electromagnetic field, or radio wave,
that is generated when an alternating current is put into an antenna. This field can be
used for wireless broadcasting and communications over a significant portion of the
electromagnetic radiation spectrum — from about 9 kilohertz (kHz) to thousands of
gigahertz (GHz) -- referred to as the RF spectrum. As the frequency is increased
beyond the RE spectrum, electromagnetic energy takes the form of infrared, visible
light, ultraviolet, X rays and gamma rays. Many types of wireless devices make use
of RF fields: radio, television, cell phones, satellite communication systems, etc. The
RF spectrum is divided into several ranges, or frequency bands. Each of these bands
represents an increase of frequency, corresponding to an order of magnitude. The
continuing evolution of digital technology sparked the development of spread
spectrum data communication radios. The conventional radio signal which these
devices use is referred to as narrow-band, which means that it contains all of its
power in a very narrow portion of the radio frequency bandwidth. However, as a
result of the very narrow frequency, these radios are often prone to interference.
Spread spectrum is a technique that takes a narrow band signal and spreads it over a
broader portion of the radio frequency band, offering the operational advantage of
being resistant to interference. Spread spectrum radios are inherently more noise
immune than conventional radios, thus they will operate with higher efficiency than
conventional technology. In performing spread spectrum, the transmitter takes the
input data and spreads it in a predefined method. Each receiver must understand this
predefined method and dispread the signal before the data can be interpreted.
Radios
Radios are wireless modems that convert digital signals coming from a computer into
radio frequency signals and reverse. Consequently, each radio has a data port and a
RF port. The radios are put on the mast together with an antenna. There are different
types of radios depending on different features such as the frequency band wherein
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the data has to be transmitted, indoor or outdoor radios. For Tulip Connect only
outdoor radios are used. Tulip sells the following radios: WIPLL radio, Radwin radio,
Proxim radio, Cisco Aironet, Witcom and Wi-Lan. Below you find a short summary
of the most required radios and their features.
Types of radio
a) WIPLL Radiol4:-
b) Radwn rado16:-
Advantages and Disadvantages of Wireless
Advantages:
1. Wireless offers flexibility to move with new technology that’s coming up.
2. Wireless always provides dedicated bandwidth. There is no contention or collision.
This means that the network will have the same performance even in peak periods.
3. Less network overheads because you don’t need to install a back-up connectivity
because Tulip already has inbuilt redundancy in its network.
4. Wireless networks are very reliable because they are not being influenced by weather
conditions or road construction. Therefore, with wireless connectivity an uptime of
99.5% can be guaranteed.
5. Low latency and less turnaround time will offer higher efficiency on applications.
6. Low implementation time (about 3 weeks) and low recurring cost.
7. Flexibility in selection of technology and in migration to new technology.
8. Wireless is an ideal connectivity option for remote locations and rural connectivity.
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Disadvantages:
1. The aerial range of wireless radios is limited to 50 km.
2. Sometimes need to construct a mast on the rooftop and thus need for the permission of
the landlord.
3. Recurring charges.
4. Interference in the unlicensed frequency bands. The solution however is to use a
licensed frequency band where no interference is possible.
5. Line of Sight is not always possible if the requirement of the mast height is too high.
6. The Line of Sight can be interrupted in rare cases if a higher building is constructed
between the two POPs.
4. WiMax
WiMax in India
WiMax aims to provide wireless data over long distances, in a variety ways, from point
to point links to full mobile cellular type excess. In comparison with Wi-Fi WiMax
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delivers long-range connectivity in kilometers. To put it simplify, WiMax provides
services to a cell phone and Wi-Fl is more analogous to a cordless phone.
The worldwide band used for WiMax is 2.5-2.7 Ghz, but in India this band is locked for
satellite based mobile and broadcast applications. The available band for WiMax in India
is spectrum in the 12 MHz, 3.3 to 3.4 GHz, and 5.8 GHz band range. But the players in
the market (Dishnet, Microsence, Aircel, and Intel) say that this range of spectrum is just
good enough for trials and not enough for full fledged or commercial city-wide wireless
roll outs. Indian government is yet to adopt the policy on WiMax spectrum and pricing
issues. There is relative spectrum scarcity in India because the Defense establishment is
unwilling to give up a wide band. Already in this year Pune has became India’s first city
to go wireless with the ‘Unwire Pune’ project. The connectivity starts with 20 square Km
area to 250 square Kms in the next few months. Soon it will be in Delhi, Chennai and
Bangalore. As per market predictions there are going to be 13 million WiMax subscribers
in India by end of 2012.
Pros and Cons of WiMax
Pros:
1. Point-to-Point WiMax Products
High data rate (50Mbits/sec or higher)
Long range (10 miles or more)
Low risk of interference
2. Point-to-Multipoint WiMax Products
Can work without line of sight.
Low-cost client radios.
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Low entry cost for service providers, so lots of competition and wide
coverage likely.
Smooth upgrade path from fixed to mobile access.
Low risk of interference.
Cons:
1. Point-to-Point WiMax Products
Require a line of sight.
Can link only two points.
2. Point-to-Multipoint WiMax Products
Subject to interference, but less so than proprietary microwave
radio.
Lower data rate and range.
No service guarantees possible.
May suffer interference from Wi-Fl and other networks.
Cost and regulatory barriers will mean later rollout than unlicensed.
Will initially lack mobility, unlike 3G and 802.20.
5. Virtual Private Network
A virtual private network (VPN) is a private data network that makes use of the public
telecommunication infrastructure, maintaining privacy through the use of a tunneling
protocol and security procedures. The idea of the VPN is to give the company the same
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capabilities at much lower cost by using the shared public infrastructure rather than a
private one.
A Virtual Private Network, or “VPN”, is a tunnel that carries private network traffic
from one endpoint system to another over a public network (such as the Internet) without
the traffic being aware that there are intermediate hops between the endpoints, or the
intermediate hops being aware they are carrying the network packets that are traversing
the tunnel. The tunnel may optionally compress and/or encrypt the data, providing
enhanced performance and some measure of security.
The “Virtual” part stems from the fact that you are constructing a private link over a
public network, rather than actually buying a direct hardwired link over leased lines. The
VPN allows you to pretend you are using a leased line or direct telephone call to
communicate between the endpoints.
VPN Connectivity
Brief Overview of How VPN Works:
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Two connections — one is made to the Internet and the second is made to the
VPN.
Datagram— contains data, destination and source information.
Firewalls — VPNs allow authorized users to pass through the firewalls.
Protocols — protocols create the VPN tunnels.
The world has changed a lot in the last couple of decades. Instead of simply dealing with
local or regional concerns, many businesses now have to think about global markets and
logistics. Many companies have facilities spread out across the country or around the
world, and there is one thing that all of them need: A way to maintain fast, secure and
reliable communications wherever their offices are.
Until fairly recently, this has meant the use of leased lines to maintain a wide area
network (WAN). Leased lines, ranging from ISDN (integrated services digital network,
128 Kbps) to 0C3 (Optical Carrier-3, 155 Mbps) fiber, provided a company with a way to
expand its private network beyond its immediate geographic area. A WAN had obvious
advantages over a public network like the Internet when it came to reliability,
performance and security. But maintaining a WAN, particularly when using leased lines,
can become quite expensive and often rises in cost as the distance between the offices
increases.
As the popularity of the Internet grew, businesses turned to it as a means of extending
their own networks. First came intranets, which are password-protected sites designed
for use only by company employees. Now, many companies are creating their own VPN
(virtual private network) to accommodate the needs of remote and Employees and
distant offices.
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A typical VPN might have a main LAN at the corporate headquarters of a company, other
LANs at remote offices or facilities and individual users connecting from out in the field.
What Makes a VPN?
A well-designed VPN can greatly benefit a company. For example, it can:
Extend geographic connectivity
Improve security
Reduce operational costs versus traditional WAN
Reduce transit time and transportation costs for remote users
Improve productivity
Simplify network topology
Provide global networking opportunities
Provide telecommuter support
Provide broadband networking compatibility
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Provide faster ROT (return on investment) than traditional WAN
What features are needed in a well-designed VPN? It should incorporate:
Security
Reliability
Scalability
Network management
Policy management
The types of VPN:
1. Remote-Access VPN
2. Site-to-Site VPN
1. Remote-Access VPN
There are two common types of VPN. Remote-access, also called a virtual private dial-up
network (VPDN), is a user-to-LAN connection used by a company that has employees
who need to connect to the private network from various remote locations. Typically, a
corporation that wishes to set up a large remote-access VPN will outsource to an
enterprise service provider (ESP). The ESP sets up a network access server (NAS) and
provides the remote users with desktop client software for their computers. The
telecommuters can then dial a toll- free number to reach the NAS and use their VPN
client software to access the corporate network. A good example of a company that needs
a remote-access VPN would be a large firm with hundreds of sales people in the field.
Remoteaccess VPNs permit secure, encrypted connections between a company’s private
network and remote users through a third-party service provider.
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2. Site-to-Site VPN
Through the use of dedicated equipment and large-scale encryption, a company can
connect multiple fixed sites over a public network such as the Internet. Site-to-site VPNs
can be one of two types:
Intranet-based - If a company has one or more remote locations that they
wish to join in a single private network, they can create an intranet VPN to
connect LAN to LAN.
Extranet-based - When a company has a close relationship with another
company (for example, a partner, supplier or customer), they can build an
extranet VPN that connects LAN to LAN, and that allows all of the
various companies to work in a shared environment.
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Security Levels
Encryption: -
A way of coding the information in a file or e-mail message so that if it is intercepted by
a third party as it travels over a network it cannot be read. Only the persons sending and
receiving the information have the key and this makes it unreadable to anyone except the
intended persons Public Key Encryption Technique.
Encryption and Decryption
This is the way of encryption and decryption. Here the data encrypted during the
encryption process. And have been assured safe from the external factors.
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VPN as Intranet:
Services possible
The MPLS VPN network provides a common infrastructure for carrying a wide range of
services. Some of the most popular services include:
1. Multimedia Services: It is possible to distribute voice, video and data across the
MPLS VPN network, just as it’s done in a LAN environment. This service facilitates the
exchange of information rapidly between the various sections of the organization.
2. Intra Office Voice Calls: The MPLS VPN network is capable of carrying voice calls.
It gives high priority for voice thus ensuring QoS (Quality of service). This presents huge
savings for a company, especially if the volume of intra-office calls is high.
3. V0IP: The MPLS VPN network can carry VoIP traffic, which may also include the
service providers’ VoIP traffic.
4. Video Conferencing: The MPLS VPN network enables users to set up video
conferencing with certain equipment. This service is especially popular among
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enterprises as it saves time and travel costs. Universities can run a virtual campus through
interactive video sessions. Interconnection among Universities can greatly advance the
cause of research and development, as well as academic progress.
5. Data Transfer: High-speed data transfer is possible across this network. Since this is a
dedicated network, the delay is nonperceptible and error free. This is an ideal solution to
meet all the data transfer requirements of any organization.
6. E—mail: By setting up e-mail servers across their Internet, companies can transfer
mail using the MPLS VPN network. This eliminates the need for any other type of
official correspondence, while at the same time ensuring prompt delivery of information
which greatly enhances the speed and efficiency of workflow within an organization.
7. ERP: Many companies use ERP solutions for online business transactions with peer
companies, dealers, customers, branch offices, factories etc. Working online in this
manner requires highly robust and congestion free networks, which is made possible by
MPLS VPN networks of BSNL.
8. Access VPN: Employees, while on the move, may require to be constantly in touch
with their organization’s database for critical information, including product catalogue,
pricing, marketing material, inventory check etc. Such users can access their MPLS VPN
network through a dial-up Internet account, irrespective of their location.
9. Intranet There is hardly any organization which does not have its own intranet for
work flow management and for meeting their information requirements. Such intranet
solutions can be run across the MPLS VPN network thus enabling integration of
operations across the country.
10. Extranet: Companies may prefer to exchange information with other similar
companies to speed up business transactions. The MPLS VPN network is capable of
providing the extranet facility by interconnecting the VPNs, depending on the customer’s
requirement.
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11. Internet: Customers preferring a common infrastructure for internet and Internet
access can have access to the Internet via the MPLS VPN network. However, this will be
only according to the customer’s preference.
12. Multicast: One of the important new features that MPLS VPN offers is multicasting.
This is especially useful for applications such as video conferencing and customer
specific broadcasting.
Let’s suppose multiple customers at Chennai need to view a video clip being transmitted
from New Delhi. With multicast it is possible to send a single signal over a long distance,
which is replicated at the destination for multiple viewers. So after reaching Chennai, the
signal is replicated into multiple signals for further transmission to specific customers.
This saves bandwidth as multiple transmissions of the same video need not be sent from
the source. Moreover, customers can join and leave the multicast group as they please.
This solution is especially useful for services like Video on demand.
Why VPN is preferred?
VPNs offer many advantages over traditional leased line networks.
Some of the primary benefits are:
1. Lower cost than private networks
Elements of cost reduction include transport media, bandwidth, backbone equipment, and
operations. According to industry research, site-to-site connectivity costs are typically
reduced by 20-40 percent over domestic leased line networks. Cost reduction for client to
site dial access is even greater, in the 60-80 percent range.
2. More flexible and scalable network architecture
Enabling enterprises to more easily and cost effectively communicate with remote
offices, international locations, telecommuters, roaming mobile users, and external
partners as business requirements demand.
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3. Reduced management onus
The cost of management and upkeep of the network setup compared to owning and
operating a private network infrastructure is drastically reduced. Enterprises may
outsource some or all of their wide area networking functions to a service provider. This
enables enterprises to focus on core business objectives, instead of managing a WAN or
dial access network. Apart from providing these cost related advantages, VPNs also help
increase the productivity and improve working conditions for the enterprises.
Elements of a VPN
VPN solutions vary based on the breadth of features offered. A VPN platform must be
secure from intrusion and tampering, deliver real time mission-critical data in a reliable
and timely manner. At the same time it must be manageable across the enterprise. Unless
each of these requirements is addressed, the VPN solution is incomplete.
The essential elements of a VPN can be segmented into four broad categories:
• Security: Tunneling, encryption, packet authentication, user authentication, and access
control. The infrastructure should be capable of handling, reporting various security
threats, hacking attacks.
• Quality of Service (QoS): Queuing, network congestion avoidance, traffic shaping, and
packet classification. These components are important for providing reliable and timely
delivery of enterprise data. Also, they help define the Service Level Agreement (SLA) for
various enterprise VPNs across the SP backbone.
• Management: Enforcing security and QoS policies across the VPN. Once the SLA and
security policies have been defined, the monitoring, reporting and management tools for
the VPN have to be defined and implemented.
• Scalability: Ability to adapt the VPN to meet changing bandwidth and connectivity
needs. Moving forward based on the reporting and proactive monitoring of the VPN, the
26
SP and the enterprise need to assess the VPN and plan for the scalability and future traffic
and network growth.
Implementing these VPN components does not necessarily require replacement of
existing WAN infrastructure. However, it does call for “VPN-capable” platforms. For
example, for implementing a security component, the networking infrastructure should be
capable of supporting some kind of security mechanisms such as IPSec etc. Let’s discuss
about these different elements of a VPN in detail.
Security
Deploying WANs on a shared network makes security issues a prime concern.
Enterprises need to be assured that their VPNs are secure from perpetrators observing or
tampering with confidential data passing over the network and from unauthorized users
gaining access to network resources and proprietary information. Techniques such as
encryption, authentication, and access control guard against these security breaches.
There are 4 key components of VPN security.
• Tunnels and Encryption
• Packet Authentication
• Firewalls and Intrusion Detection
• User Authentication
These mechanisms complement each other, providing security at different points
throughout the network. VPN solutions must offer each of these security features to be
considered a viable solution for utilizing a public network infrastructure.
Tunnels and Encryption: VPNs employ encrypted tunnels to protect data from being
intercepted and viewed by unauthorized entities and to perform multi-protocol
encapsulation, if necessary. Tunnels provide logical, point-to-point connections across a
connectionless IP network, enabling application of advanced security features in a
connectionless environment. Encryption is applied to the tunneled connection to scramble
27
data, thus making data legible only to authorized senders and receivers. In applications
where security is less of a concern, tunnels can be employed without encryption to
provide multi-protocol support without privacy. Different technologies that VPN5
employ today are IPSec, Layer 2 Tunneling Protocol (L2TP), Layer 2 Forwarding (L2F),
and Generic Routing Encapsulation (GRE) for tunnel support, as well as the strongest
standard encryption technologies available, DES, and 3DES. Furthermore, for managing
security and encryption administration, VPNs should support major certificate authority
vendors, such as Version, Entrust, Netscape and so on.
28
3. RESEARCH METHODOLOGY
Primary Research: Primary data was collected through personal-
interviews/discussions with key personnel’s and key survey report of Frost
& Sullivan.
Secondary Research: Secondary was collected through Internet,
journals, magazines, articles, books, library, etc
Tools for Secondary research: Internet
Research Location: New Delhi
Research period: 12 weeks
Research constraints: Analysis confined only to the Delhi Region
29
4. WAN CONNECTIVITY MARKET ANALYSIS
4.1. Market Overview
Introduction to Enterprise Data Services Market
Most of the enterprises are scaling up their businesses and adopting enterprise
solutions to make the most of the existing opportunities. This makes it important
for enterprises to connect all its offices so that investments in solutions like ERP,
SCM, CRM and other applications can be fully leveraged.
The Indian Enterprise Data Services market experienced a growth of 21.3 percent
over 2005 and reached INR 5,255.8 Crore in 2006 from INR 4,332.6 Crore in
2005. The market is expected to reach INR 13,393.1 Crore by 2013, exhibiting a
CAGR of 14.3 percent.
The fastest growing connectivity solution is the MPLS based IP VPN. Currently,
MPLS Services market is in its nascent stage with a high growth rate. People are
turning towards MPLS as the service offers connectivity between all offices at
less expensive rates.
The software industry boom coupled with the exponentially growing business
process outsourcing (BPO) market has contributed immensely to the growth of
IPLC services market in India.
The pace of growth of the DLC market has slowed down. The reason for the
slowdown can be traced to the growth of cost-effective services such as MPLS
networks.
Major local participants offering Data services include VSNL, Bharti, and
Reliance Communication, BSNL and Tulip Telecom. Market deregulation and
tariff reductions have resulted in increased participation from global service
providers such as AT&T, BT, Orange Business Services (formerly Equant), and
Verizon Business.
30
4.1.a Industry Challenges
Rank Challenges1-2
Years
3-4
Years
5-7
Years
1Pricing pressure on Internet Service
Providers (ISPs)Medium Low Low
2 Customer satisfaction High Medium Low
3 Security Medium Low Low
4
Regulation – Currently, Voice over
Internet protocol is allowed only on the
same network
High Medium Low
5Development of new technologies and
enhancement of existing technologiesHigh Medium Low
Figure 2-1 Enterprise Data Services Market: Industry Challenges Ranked in Order of Impact (India), 2007-2013
4.1.b Market Drivers
Rank Driver 1-2 Years3-4
Years
5-7
Years
1Use of Enterprise Application Solutions by
Small and Medium Enterprises (SMEs)High High Medium
2 Increases adoption of Multiple Applications High High Medium
31
like ERP, CRM, etc by enterprises
3 High Reach and Price/Performance of VPN High Medium Medium
4 Low cost and scalability High Medium Low
5 Increased return of investment (RoI) Medium Low Low
6Outsourcing of the management of the
networkHigh High Medium
Figure 2-2 Enterprise Data Services Market: Market Drivers Ranked in Order of Impact (India), 2007-2013
4.1.c Market Restraints
Rank Restraint1-2
Years
3-4
Years
5-7
Years
1 Last Mile Connectivity High Medium Low
2 License Fee Medium Low Low
3 Bandwidth prices Medium Low Low
4
Resistance to adaptation of new technology
by enterprises due to investments in already
implemented alternative technologies
Medium Medium Low
5RBI Guidelines on Security for the BFSI
sectorHigh Medium Low
Figure 2-3 Enterprise Data Services Market: Market Restraints Ranked in Order of Impact (India), 2007-2013
4.1.d Market Engineering Measurement Analysis
32
Measurement Name Measurement Trend
Market age Growth Stage Increasing
Revenues (2006)INR 5,255.8
CroreIncreasing
Potential revenues (maximum future market
size,2013)
INR 13,393.1
CroreIncreasing
Base year market growth rate (2006) 21.3% Decreasing
Forecast period market growth rate (2007 –
2013)14.3% Decreasing
Price Sensitivity High Decreasing
Competitors (active market competitors in base
year)7 Increasing
Degree of competition High Increasing
Degree of technical change Medium Increasing
Market concentration (percentage of base year
market controlled by top
three competitors
58.2% Decreasing
Chart 2.1 shows the Market Engineering measurements for the Indian Enterprise Data Services Market
4.1.e Revenue Forecasts
Year Revenue (INR Crore) Growth Rate (%)
33
2005 4,332.6 -
2006 5,255.8 21.3
2007 6,291.3 19.7
2008 7,384.0 17.4
2009 8,534.2 15.6
2010 9,705.4 13.7
2011 10,904.8 12.4
2012 12,129.8 11.2
2013 13,393.1 10.4
Compound Annual Growth Rate (2006-2013): 14.3%
Figure 2-4 Enterprise Data Services Market: Revenue Forecasts (India), 2005-2013
34
0.0
2,000.0
4,000.0
6,000.0
8,000.0
10,000.0
12,000.0
14,000.0
16,000.0
2005 2006 2007 2008 2009 2010 2011 2012 2013
Year
Reve
nue (
INR
cro
res)
0%
5%
10%
15%
20%
25%
Gro
wth
Rate
Chart 2.2 Enterprise Data Services Market: Revenue Forecasts (India), 2005-2013
Key Highlights
The Enterprise Data services market is likely to grow from INR 5,255.8
Crore in 2006 to INR 13,393.1 Crore in 2013, registering a CAGR of 14.3
percent over the forecast period of 2006 to 2013.
More and more Internet service providers (ISPs) are now able to offer
MPLS/IP VPN services, as an increasing number of ISPs have obtained
unified licenses. MPLS/IP VPN is becoming a popular Data solution,
growing by nearly 42.2 percent in 2006. The MPLS/IP VPN revenue
contribution to the Enterprise Data market is expected to grow from INR
1,127.1 Crore in 2006 to INR 3,343.3 Crore by 2013 at a CAGR of 16.8
percent.
Legacy services like ATM and Frame Relay have started to show negative
growth, largely due to the mass migration to MPLS/IP VPN and other
connectivity solutions. The revenues generated from the ATM/FR market
35
are expected to decline from INR 120 Crore in 2006 to INR 76.3 Crore by
2013.
4.1.f Demand Analysis - by Verticals
Year BFSI IT/ITeS Manufacturing Retail MediaGovernment
and PSUsOthers Total
2005 1,039.8 1,100.5 571.9 164.6 286.0 671.6 498.2 4,332.6
2006 1,315.2 1,294.2 909.0 154.6 326.6 748.0 508.2 5,255.8
2007 1,509.9 1,698.6 811.6 270.5 402.6 1,006.6 591.4 6,291.3
2008 1,757.4 2,038.0 959.9 347.0 457.8 1,181.4 642.4 7,384.0
2009 2,014.1 2,415.2 1,126.5 435.2 512.1 1,339.9 691.3 8,534.2
2010 2,261.42,780.6 1,315.1 533.8 567.8 1,504.3 742.5 9,705.4
2011 2,497.23,162.4 1,526.7 632.5 616.1 1,679.3 790.6 10,904.8
2012 2,741.33,541.9 1,758.8 739.9 657.4 1,855.9 834.5 12,129.8
2013 2,993.4 3,937.6 1,995.6 857.2 696.4 2,033.1 879.9 13,393.1
CAGR* 12.5% 17.2% 11.9% 27.7% 11.4% 15.4% 8.2% 14.3%
Figure 2-5 Enterprise Data Services Market: Revenues by Verticals (India), 2005-2013, (INR Crore)
CAGR = Compound Annual Growth Rate (2006-2013) 14.3%
Others = Education, Airlines, Healthcare and Travel
36
0%
20%
40%
60%
80%
100%
2005 2006 2007 2008 2009 2010 2011 2012 2013
BFSI IT/ ITeS Manufacturing Retail Media Government & PSUs Others
Chart 2.3 Enterprise Data Services Market: Percent of Revenues by Verticals (India), 2005-1013
Key Highlights
BFSI and IT/ITeS services are the major users of Data Services
technology. The banks need IT infrastructure to be connected to all
branches/ATMs all the time. On the other hand the ITeS industry fuelled
by the BPO industry requires high speed connectivity to remain connected
with their clients.
The highest users of VPN services are the manufacturing and Services
industries. Sub segments especially consumer durables, heavy engineering
and FMCG are the biggest adopters of VPN to be connected real-time to
enable the usage of their enterprise applications from different
branches/offices.
37
4.1.g Demand Analysis - by Horizontals
Year Large Medium Small Total
2005 2,248.6 1,256.5 827.5 4,332.6
2006 2,843.9 1,540.4 871.6 5,255.8
2007 3,214.8 1,855.9 1,220.5 6,291.3
2008 3,751.1 2,185.7 1,447.3 7,384.0
2009 4,284.2 2,560.3 1,689.8 8,534.2
2010 4,833.3 2,931.0 1,941.1 9,705.4
2011 5,376.1 3,326.0 2,202.8 10,904.8
2012 5,907.2 3,736.0 2,486.6 12,129.8
2013 6,455.5 4,151.9 2,785.8 13,393.1
38
CAGR* 12.4% 15.2% 18.1% 14.3%
Figure 2-6 Enterprise Data Services Market: Revenues by Horizontals (India), 2005-2013, (INR Crore)
* CAGR = Compound Annual Growth Rate (2006-2013) (14.3%)
Key:
Large: Enterprises with more than 500 Employees
Medium: Enterprises with 100 to 499 Employees
Small: Enterprises with less than 100 Employees
0%
20%
40%
60%
80%
100%
2005 2006 2007 2008 2009 2010 2011 2012 2013
Large Medium Small
Chart 2.4 Enterprise Data Services Market: Percent of Revenues by Horizontals (India), 2005-1013
Key Highlights
39
In 2006, Large enterprises contributed around 54 percent of the total
market, whereas the Small and Medium Business contributed the
remaining 46 percent.
This mix is expected to change slightly during the forecast period with
SMB contribution increasing to around 52 percent in 2013. This is mainly
due to higher adoption of IT Services by the SMB segment, which would
require connectivity solutions.
4.1.h Application Trends
Key Highlights
Following are some of the applications that are expected to be taking
shape within the forecast period:
Enterprise Resource Planning (ERP)
Customer relationship management (CRM)
Supply chain management (SCM)
Sales force automation
40
Video based surveillance
Workflow automation
Cognos, a data warehousing and business intelligence platform
Today, a managed VPN network framework gives service providers a
compelling set of services that reach new corporate customers and take
maximum advantage of the efficiencies of Internet Protocol (IP). Voice
over IP and Video over IP features are offered to the VPN customers at
moderate increment in costs
Enterprise mobility solution gives remote users a secure access to
applications running on the VPN backbone. Companies have designed
industry specific products such as contact center solutions designed to
cater to the needs of the BPO industry. Apart from the available real- time
applications such as ERP packages and video conferencing on VPN, today
many more applications can run and their priorities can be adjusted.
4.1.i Regulatory Trends
Key Highlights
The reselling of IPLC is a much debated issue. The reselling has two
possible outcomes. One is the entry of several players especially foreign
41
players into the market. The other outcome would be reduced profits for
existing telecom players.
The reduction of price of NLD and ILD licenses from INR 100 Crore to
INR 2.5 Crore saw the entry of several new players in this market.
TRAI issued the following regulation for DLC in September 2007
A service provider can provide DLC and local lead for DLC
(copper, fiber, wireless) using any transmission technology, to
another service provider who in turn would provide leased circuits
to end subscribers.
All service providers with copper, fiber or wireless capacities that
are licensed to provide DLC, are obligated to share their facilities
with other service providers. Availability or otherwise of facilities
needs to be confirmed to the requesting service providers within 30
days.
4.1.j Technology Trends
Key Highlights
42
MPLS VPN is gathering momentum due its ability to
Reduce cost through convergence of various networks
Enabling triple play through its efficient network management
Enabling providers to achieve high margins through its service
offerings that include multiservice support.
4.1.k Pricing Trends
In 2005, TRAI announced that the ceiling tariff for IPLC half-circuit in respect of
E1, DS-3 and STM-1 capacities were Rs 13 lakh, Rs 104 lakh and Rs.299 lakh per
annum, respectively. Operators are at liberty to offer tariffs that are lower than the
ceiling tariff. These ceiling tariffs resulted in a reduction of 35 percent, 71 percent
and 70 percent in tariffs for E1, DS-3 and STM-1 capacities, respectively (as
compared to the existing listed price prevalent in the market for the distant
destination, that is, India-USA).
Currently, data services pricing in India is higher than the regional average by
around 15 to 30 percent. Prices for the IPLC and other data solutions are expected
to reduce further due to higher competition in the market due to the entry of the
foreign players such BT and AT&T.
4.1.l Competitive Analysis
43
Number of competitors in the market
(2006)9
Types of competitors
Tier I players would be VSNL,
Reliance, Bharti and BSNL.
The market is concentrated between
these four players. The remaining 5
players hold a total of 28 percent of the
market only.
Distribution structure Direct contact with customers
Key verticals BFSI, IT/ITeS, Manufacturing,
Government
Competitive factors
Pricing
QoS
SLA
Application Support
Reliability
Service provider’s ability to upgrade
the network
Figure 2-7 Enterprise Data Services Market: Competitive Analysis (India)
44
4.1.m Market Share Analysis
Company
Share
(%)
VSNL 22.3
Reliance Communications 18.7
Bharti Airtel 17.1
BSNL 16.6
Tulip Telecom 6.0
Satyam Infoway (SIFY) 5.2
HCL Infinet 5.2
Hughes 4.0
MTNL 1.7
Others 3.0
Total 100.0
Figure 2-8 Enterprise Data Services Market: Company Market Share by Revenues (India)
Others include international players such as BT and AT&T
45
VSNL22.3%
Bharti17.1%
Reliance18.7%
BSNL16.6%
Sify5.2%
Tulip6.0%
HCL5.2%
Others3.0%
Hughes4.0%
MTNL1.7%
Chart 2.5 Enterprise Data Services Market: Company Market Share by Revenues (India)
Key Highlights
VSNL occupies the major market share, though other private companies
like Bharti and Reliance are slowly edging towards VSNL’s market share.
With the liberalization of several policies, the industry is seeing the entry
of foreign players like BT and AT&T into the Indian market. BT has
acquired NLD and ILD licenses in India to the tune of INR 5 Crore after
the Telecommunications ministry slashed the rates for NLD and ILD
licenses. BT hopes to contribute to the IT and ITeS sectors in India by
46
extending its MPLS network. This might help to lower bandwidth cost for
India’s software industry.
4.2. MPLS/IP VPN
4.2.a Market Overview
With the introduction of Multi Protocol Label Switching (MPLS) technology, the
data service market in India is experiencing a surge in demand. Since 2002, entry
of ISPs and private fixed line operators has addressed the bandwidth requirements
to a large extent. A virtual private network (VPN), varies significantly across
organizations, and is defined by its organization’s need to connect across
locations and run applications that require high bandwidth capacity used in
business processes.
The current VPN user segment is primarily composed of large enterprises. Among
the verticals, VPN is most popular in the manufacturing vertical. As per RBI
guidelines for online banking and e-commerce based services, banks and financial
institutions must avoid any direct connection between the Internet and their core
system. The best option available with banks is to place core network on IP VPN
for enhanced security features. Business process outsourcing (BPO) and
knowledge process outsourcing (KPO) are other upcoming verticals, which will
use VPN services.
During the forecast period, growth of IP/MPLS VPN is expected to be driven by
the small and medium enterprises (SME). Most of the service providers are
focusing on SMEs as they are spending on IT in a major way and looking for
connectivity solutions
47
4.2.b Revenue Forecasts
Year Revenue (INR Crore) Growth Rate (%)
2005 792.6 -
2006 1,127.1 42.2
2007 1,444.9 28.2
2008 1,784.5 23.5
2009 2,137.8 19.8
2010 2,460.6 15.1
2011 2,768.2 12.5
2012 3,053.3 10.3
2013 3,343.3 9.5
Compound Annual Growth Rate (2006-2013): 16.8%
Figure 2-18 MPLS/IP VPN Market: Revenue Forecasts (India), 2005-2013
48
Revenue Forecasts
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
2005 2006 2007 2008 2009 2010 2011 2012 2013
Year
Rev
enu
es (
INR
cro
res)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Gro
wth
Rat
e
C
hart 2.12 MPLS/IP VPN Market: Revenue Forecasts (India), 2005-2013
Key Highlights
In 2006, IP/MPLS VPN market reached INR 1,127 Crore exhibiting an
increase of 42.2 percent over 2005. This market is expected to reach INR
3,343 Crore in 2013, exhibiting a CAGR of 16.8 percent over the forecast
period. The market is expected to grow at a rate of 28.2 percent in the
current year
With the introduction of MPLS technology, security concerns have been
addressed, which partly explains the sudden surge in demand
Demand from Small and medium enterprises is one of the major drivers
for the growth in this market. Apart from the SME segment, the demand
for IP VPN is driven by Information Technology or Information
Technology Enabled Services (IT/ITES), Airlines, BFSI, and
Manufacturing enterprises. Large enterprises, which have already have
49
their own IP VPNs are installing data warehousing software, which adds
to the demand for bandwidth
4.2.c Market Share Analysis
Company
Share
(%)
Tulip Telecom 28.0
Sify 21.7
Reliance 21.0
Bharti 12.0
HCL 5.9
50
VSNL 5.2
BSNL 2.2
Others 4.1
Total 100.0
Figure 2-20 MPLS/IP VPN Market: Company Market Share by Revenues (India)
Others include international players such as BT and AT&T
VSNL5.2% Bharti
12.0%
Reliance21.0%
BSNL2.2%Sify
21.7%
Tulip IT28.0%
HCL5.9%
Others4.1%
Chart 2.13 MPLS/IP VPN Market: Company Market Share by Revenues (India)
Others include international players such as BT and AT&T
Key Highlights
Tulip Telecom is the market leader with a market share of 28.0 percent
market share, ahead of its nearest competitor Sify, with 21.7 percent. Tulip
Telecom has grown past Sify, which was the market leader until last year.
The growth exhibited by Tulip Telecom in 2006 was approximately 290
percent; the fastest in the industry.
51
In 2006, there were numerous activities in the MPLS/IP VPN market.
Tulip Telecom and Reliance have been the two most aggressive players in
the market and have gained significant market share over last year
Reliance and Bharti Airtel are third and fourth with 21.0 percent and 12.0
percent market share, respectively.
4.3. Internet
4.3.a Market Overview
With the higher adoption of IT by Small and Medium businesses in Tier two and
three cities and rural areas, the Internet Services market is expected to witness
slightly higher growth rate as experienced in the past.
52
The Internet services market grew by 14.8 percent in 2006 and reached INR 983
Crore from INR 857 Crore in 2005. This market is expected to grow at a rate of
14.4 percent during the forecast period reaching INR 2,527 Crore by 2013.
With the Government’s target of 20 million broadband subscribers by 2010, the
Internet services market is expected to grow at a higher pace in next 2 years and
subsequently expected to show a slowing growth rate.
4.3.b Revenue Forecasts
Year Revenue (INR Crore) Growth Rate (%)
2005 856.6 -
2006 983.4 14.8
2007 1,144.7 16.4
2008 1,327.8 16.0
2009 1,532.3 15.4
2010 1,759.1 14.8
2011 2,007.1 14.1
2012 2,260.0 12.6
2013 2,526.7 11.8
Compound Annual Growth Rate (2006-2013): 14.4%
Figure 2-21 Internet Market: Revenue Forecasts (India), 2005-2013
53
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
2005 2006 2007 2008 2009 2010 2011 2012 2013
Year
Revenue (
INR C
rore
s)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Gro
wth
Rate
Chart 2.14 Internet Market: Revenue Forecasts (India), 2005-2013
4.3.c Market Share Analysis
Company
Share
(%)
BSNL 44.2
Bharti Airtel 25.6
Reliance 14.0
VSNL 10.7
Sify 3.1
MTNL 2.3
54
Total 100.0
Figure 2-23 Internet Market: Company Market Share by Revenues (India)
VSNL10.7%
Bharti25.6%
Reliance14.0%
BSNL44.2%
MTNL2.3%
Sify3.1%
Chart 2.15 Internet Market: Company Market Share by Revenues (India)
Key Highlights
The incumbent, BSNL, is the market leader with 44.2 percent market
share. BSNL is expected to remain the leader during the forecast period
mainly due to its presence in Tier two and three cities, regions where the
current growth is expected from.
Bharti Airtel, Reliance Communications and VSNL follow BSNL with
25.6 percent, 14.0 percent and 10.7 percent, respectively.
55
4.4. VSAT
4.4.a Market Overview
With the rapid growth of offsite ATMs and offices, mainly by Banking,
Manufacturing and IT/ITES verticals, the VSAT market is expected to exhibit
double digit growth rate over the forecast period.
VSAT market depends on the number of transponders available. Although VSAT
is a boon for remote areas that are highly inaccessible, the signals are weak and
latency is observed. However, this should be rectified by the recent launch of
INSAT 4CR. The INSAT series of satellites launched by the Indian Space
Research Organization (ISRO) are one the largest domestic satellite systems in
the Asia Pacific region. INSAT series has been primarily launched for the
purposes of entertainment, television broadcasting and meteorological services.
INSAT 4A and INSAT 4B have already been launched for the above said
purposes. INSAT 4CR is a replacement for INSAT 4C that was initially lost due
to the failure of GSLV-F02 in June 2006.
India's VSAT sector’s growth will come mainly from the myriad of small and
medium businesses that are flourishing as the country opens up its economy with
the liberalization of regulatory barriers to foreign players.
4.4.b Revenue Forecasts
Year Revenue (INR Crore) Growth Rate (%)
2005 551.0 -
2006 677.1 22.9
56
2007 801.7 18.4
2008 917.9 14.5
2009 1,036.4 12.9
2010 1,155.5 11.5
2011 1,250.3 8.2
2012 1,349.1 7.9
2013 1,436.7 6.5
Compound Annual Growth Rate (2006-2013): 11.3%
Figure 2-24 VSAT Market: Revenue Forecasts (India), 2005-2013
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
1,600.0
2005 2006 2007 2008 2009 2010 2011 2012 2013
Year
Revenues
(IN
R C
rore
s)
0%
5%
10%
15%
20%
25%
Gro
wth
Rate
Chart 2.16 VSAT Market: Revenue Forecasts (India), 2005-2013
57
Key Highlights
The VSAT market is likely to grow from INR 677 Crore in 2006 to INR
1,437 Crore in 2013, registering a CAGR of 11.3 percent over the forecast
period of 2007 to 2013.
Future growth in the corporate and enterprise VSAT segment will result
from the booming number of SMEs and the associated demand for easily
deployable, reliable broadband connections in areas underserved by
terrestrial services.
Growth of the VSAT market is also likely to be driven by the increasing
deployments of rural telecommunications, telemedicine and distance
education programs across the country. Rural telecommunications, in
particular, is expected to contribute significantly to growth in this
segment, as many rural communities in emerging markets still lack
modern telecommunication access. Most state governments in the country
have universal access programs that set aside funds and subsidies to tackle
this issue. Such developmental subsidies help to partially offset the initial
capital expenditure required to deploy wireless and satellite
infrastructures.
4.4.c Market Share Analysis
Company
Share
(%)
Hughes 31.2
HCL 31.0
Bharti Airtel 21.3
Others 16.6
58
Total 100.0
Figure 2-26 VSAT Market: Company Market Share by Revenues (India)
Bharti21.3%
HCL31.0%
Hughes31.2%
Others16.6%
Chart 2.17 VSAT Market: Company Market Share by Revenues (India)
Key Highlights
Hughes is the market leader with 31.2 percent of the total VSAT market.
HCL Comnet closely follows Hughes with 31.0 percent share.
Bharti (Televentures and Broadband) was ranked third with 21.3 percent.
The VSAT market is expected to face increased competition from
Telecom Service Providers as these companies are fast realising the
potential in the underserved areas and fast rolling out infrastructure to
reach these areas.
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5. ANALYSIS
On Analysis for the future of WAN Connectivity in India, according to my research and
survey certain Key findings are:
The wan connectivity market is expected to reach INR 13,393.1 Crore by 2013,
exhibiting a CAGR of 14.3 percent.
The MPLS/IP VPN revenue contribution to the Enterprise Data market is
expected to grow from INR 1,127.1 Crore to INR 3,343.3 Crore by 2013 at a
CAGR of 16.8 percent.
The revenues generated from the ATM/FR market are expected to decline from
INR 120 Crore to INR 76.3 Crore by 2013.
Prices for the IPLC and other data solutions are expected to reduce further due to
higher competition in the market due to the entry of the foreign players such BT
and AT&T.
The market for MPLS VPN is expected to grow at a rate of 28.2 percent in the
current year
The VSAT market is likely to grow from INR 677 to INR 1,437 Crore in 2013,
registering a CAGR of 11.3 percent over the forecast period of 2007 to 2013.
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6. Bibliography
Mainly complete research is being conducted from a helping source like
www.google.com
Primary sources
- FROST AND SULLIVAN
- CERTAIN TULIP INTERNAL SOURCES
Secondary sources
Web sites:
1. www.citeulike.org
2. www.icfshre.edu.sa
3. www.intradh.org
4. www.marketresearch.org
5. www.bussinessmonitor.com
6. www.howthingswork.com
7. www.tuliptel.com
Business magazines:
1. economist
2. data quest
3. PC Quest
4. I4D
5. Channel World
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Tables and data collection tools:
1. BMI Market survey
2. DCCI survey
3. FROST & SULLIVAN Survey
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