Building World Class Telecom Facilities

One of the supposed goals of the new telecom policy of 1994 was the development of world class production. However, even after the Department of Telecom (DoT) has started ordering equipment from the telecom majors — Siemens, Alcatel, Ericsson, Lucent (formerly AT&T) — all they have set up in India are mere assembly shops. Even though, DoT does not give any special preference for public sector Indian Telephone Industries (ITI), the only production facility that is not a glorified trading centre remains ITI. In the meantime, the future of India’s telecom production looks bleak as ITI can not find technology partners for the next generation of telecom switches. The curious part is that India is not only one of the world’s largest future markets but also has won global recognition in switch design. However, this recognition is not translating into a concrete program of integrated planning and development of India’ potential as a global supplier of world class telecom equipment — supposedly one of the goals of the new telecom policy.

Before we go into the technical breakthroughs achieved in India, let us take a look at the overall telecom sector itself. Globally, there are virtually seven major telecom suppliers. Apart from the four suppliers mentioned above, there is ITT of US and a couple of Japanese companies — NEC and Oki. Virtually, the entire switching market is controlled by their switches. A telecom parlance, a switch is what is conventionally called the exchange — it is the heart of the telephone system.  ITI manufactures switches of Alcatel design. The only exception to this dominance, are the switches designed by C-DOT. However, with the advent of wireless telephony — both fixed and mobile — there are other players that have entered the wireless switching market. Motorola and Qualcom are two major players in cellular mobile telephony, apart from the other switch manufacturers listed above.

If we look at the prospective global markets, India ranks only after China as a future market. Though the current telephone coverage is very poor, only about 1 per 100, the sheer size of the population and the future prospects make this a very attractive long term market. Therefore, India has a market power unmatched by almost all other developing countries.

The Chinese have used their market strength to insist that the telecom majors have joint ventures with Chinese entities and set up local manufacturing facility. Thus, they have leveraged their market to get technology and world class manufacturing facility. They have also allowed multiple technologies in their network to provide the requisite competition and not get frozen into an obsolete technology in case their choice of technology partner was wrong. Thus, most of their telecom equipment is now produced locally and they have the ability to market advanced telecom products world-wide.

Indian scenario has two significant difference with the Chinese one. India already had ITI, a production facility that has a high order of competence. In C-DOT, it has switch design capabilities that are available in no other developing country. And as we shall see later, in wireless communications, India has made an unique breakthrough in micro cellular switches that even the telecom majors are lagging behind.

If we look at the Indian scenario in conventional digital switching, a synergetic plan between C-DOT and ITI is the only solution. After the deliberate policy under the erstwhile Congress(I) Government and Sukh Ram of promoting multi-nationals and the private sector at the expense of the public sector, ITI is today on a weaker ground in bargaining with MNCs for technology. It may not be known that ITI had a clause in its technology agreement with Alcatel that Alcatel will not enter in any other agreement with another party in India. However, when Alcatel entered into an agreement with Modis — to form the Modi Alcatel — ITI was prevented by the Ministry of Communications under Sukh Ram from exercising their right of going to court and barring Alcatel. Not only was ITI made to compete with assembly shops set under the new telecom policy, they were charged higher prices for equipment they required from Alcatel, their technology partners, while the same equipment was made available at much lower prices to Modi Alcatel. It is interesting to note that under the Sukh Ram regime, ITI was making huge losses as orders were being given only to the Minister’s favourite parties, Himachal Futuristic being only one of them. After, his departure, ITI has made a tidy profit this year.

After allowing MNCs wholly owned companies or subsidiaries in India, the earlier policy of bartering advanced technology for the Indian market is no longer viable. Thus, if ITI has to survive, the only route to take is using indigenously developed switching technology. In this, India has the unique advantage of being virtually the only developing country to have indigenously developed a state of the art switch.

C-DOT was set up, undoubtedly due to the close ties that Sam Pitroda was able to build with Rajiv Gandhi. This speaks volumes about the nature of bureaucracy in this country — that the only way a new initiative can be taken is if you are close to the Prime Minister. Unfortunately, Pitroda went well beyond his technological sphere and started dabbling in Congress(I)’s election manifestos and such, thus losing out when Rajiv Gandhi was voted out. However, there is little doubt that C-DOT is largely his vision and his initiative. C-DOT had promised a switch in 36 months and within 36 crore. That it took longer and cost much more has been a criticism against C-DOT. The success of C-DOT, however, is that the C-DOT switch was developed at a fraction of the cost of any such switch developed by MNCs  and is available at much lower costs. As it is a modular switch — a large switch is built up of a number of smaller switches — it can be deployed for a large range of demands. And finally, it does not require air conditioning and can be installed under harsh ambient conditions. It is not surprising, therefore that the C-DOT switches have been a huge success, particularly in small towns and rural areas, providing the consumers in these areas with state of the art features hitherto restricted to only urban areas. Today, more than half the switches in the Indian telecom network are of C-DOT design.

The second important breakthrough in the Indian context has been the development of micro-cellular switches by Ashok Jhunjunwala’s group in Indian Institute of Technology, Madras. This group has successfully pioneered a development in cellular switching that the global majors such as Motorola have not followed. The global majors have concentrated their resources on developing centralised cellular switches of large capacity — switches that can handle up to 10,000 cellular lines. Thus, the cellular technology has tended to run parallel to the land based telecom system, as a 10,000 line switch needs a large spread and can not be easily used to complement the land based network. However, with micro-cellular switches, small demands can be addressed and then coupled to the existing land based network. This permits not only better coverage, but also allow hybrid — land and cellular — networks, which could be much cheaper than competing land and wireless/cellular networks. The technology is also available at one third the cost of such technology from the MNCs. Jhunjhunwala’s group was funded by Analog Devices, which was interested in use of their components in wireless switching and found India as a cheap but highly competent research centre to do this task.

The technology from Jhunjhunwala’s group is currently being tested widely by a host of countries and has received trial orders from France, China, Brazil, etc. However, DoT, has not considered this technology for deployment even though it has passed all tests. Expectedly, companies such as Motorola and their “admirers” in DoT have mounted a vicious campaign against Jhunjhunwala’s technology. After all, if such a technology is firmly backed by the Indian Government, it spells danger for the MNCs, not only in India but also abroad.

Let us take a look at the possibilities in the Indian telecom scenario. We have developed our own switch designs that are now fully tested and operational all over the country. We have in ITI, fully developed production capabilities of global quality. We have made a remarkable breakthrough in micro-cellular switches that is currently drawing global attention. And we have one of the largest telecom markets in the world. The obvious conclusion is that India has all the elements in place for becoming a major global telecom player.

Yet, the reality is completely different from the potential. The Ministry of Communications has decided that it will promote any switch manufacturer and will not insist that it has comprehensive manufacturing facilities in the country. It will allow fully owned subsidiaries which could act only as assembly shops and pass on screw driver technology. That ITI will be hitherto starved of technology is to be seen as an inevitable result of globalisation and not the concern of the Ministry of Communications. So instead of India becoming a global player, we are likely to be a recipient of foreign technology at very high costs. Even if Jhunjhunwala’s technology comes to India, it will be through foreign MNC channels and with its high technology rent. This is the reality of the current globalisation drive, bereft as it is of any vision of how to leverage our strengths to technological advances.

India can be a global player in technology if it is only willing to get its act together. In spite of very little support, India routinely produces technological breakthroughs. What is lacking is the vision that we can be amongst the world’s best and an integrated plan combining our market strength, our production facilities and our research capabilities, most of which is in the public sector. This is true Swadeshi and not the BJP version of handing over the public sector to Indian private sector and allowing it a monopoly over the Indian market.