The second half of 2010 in India was abuzz with discussion of several possiblities for BWA licensees regarding whether to deploy TD-LTE, WiMAX, or a hybrid-type network (supporting WiMAX in the initial stage with a migration path to TD-LTE). These speculations have been laid to rest with license holders now leaning towards TD-LTE. Indian bigwig Reliance Industries Ltd. (RIL) has selected TD-LTE for rolling out its nationwide BWA network. Ever since RIL issued its first press release mentioning “a single 20 MHz TDD spectrum when used with LTE has the potential of providing greater capacity when compared with existing communication infrastructure in the country,” Maravedis predicted it would deploy TD-LTE; there was no reference to WiMAX in the press release.

In November 2010 RIL showcased the results from its first field trial of TD-LTE technology using ST Ericsson dongles. The operator said it had achieved 80 Mbps downlink and 20 Mbps uplink speeds during the trial. It also reported full mobility with delivery of applications such as HD multimedia streaming; LIVE TV was demonstrated with on-the-go speeds of 50 and 70 kilometers per hour, as well as a seamless handover among the number of LTE base station sectors.

RIL is reported to be testing kits from Ericsson, Huawei and Alcatel-Lucent, although it is not yet clear if it intends to select a single vendor or split the contract between multiple partners. It is close to selecting the vendors for a US$1 billion TD-LTE rollout, with a decision anticipated in the next couple of months.

Maravedis predicts RIL will have a tough time launching a commercial BWA service using TD- LTE in India until the end of 2011. The fundamental question is whether there is a TD-LTE solution that can go into deployment today to meet the broadband needs of Indian consumers at an affordable price? Current prices of  LTE devices are way too high (starting at US$100 for USB dongles) for the average Indian consumer. The curve of device prices to reach below US$30 (the price an Indian consumer can afford) would be on par as that witnessed by WiMAX, and thus may take up to 18-24 months to reach that level. Because of this, Indian operators are expected to develop an initial strategy of targeting business users.

From an economic perspective Chinese vendors (Huawei & ZTE) are usually cheaper, but they have faced some legal trouble when entering the Indian market due to security concerns from the government and competition between the two countries. When price is a concern and the most price competitive vendors face roadblocks entering the market, TD-LTE adoption may evolve even slower than expected.

It will be interesting to watch – at least in the beginning – how chipset vendors manage to offer cheap LTE chipsets so the resulting device price is suitable for the Indian economy. Qualcomm is not the only chipset vendor, so the results of efforts made by the company to foster TD-LTE adoption in India will also be enjoyed by other players.

RIL's decision to deploy TD-LTE rather than WiMAX is likely to be followed by the other major BWA spectrum holders, such as Bharti Airtel and Aircel. One of our industry sources has informed us that Augere, another Indian BWA licensee, has decided to go with LTE. Tikona, which bagged five circles in the BWA auctions, has already revealed that it will adopt LTE.

It will be in BWA license holders’ best interest to opt for vendor financing. Although major operators like RIL and Bharti Airtel can fund deployments, vendor financing arrangements provide additional confidence that the vendor will deliver networks that work well. It can also result in a substantial cost advantage over the duration of the financing. This tends to lock in the supplier, which is the obvious objective during this formative stage of TD-LTE trials and deployments.

Given the latest HSPA evolutions announced and the maturity of that technology, 3G licensees in India can directly compete with BWA licensees, since TD-LTE devices will be more expensive and it will take another few months for the first ones to appear in the worldwide market. TATA Communications, by complementing its 3G deployment with residential WiMAX offload, could have the opporutnity to attract customers early and engage them by developing appealing value-added services – in particular, voice, since VoLTE is still far from becoming a reality in that market. After the 2G scandal in India, providing voice services over 3G is a good way to attract and secure new customers. 

There is a possibility that nationwide licensee RIL can sell wholesale services to other BWA licensees like Augere and Tikona who would be willing to expand to other circles. Augere won spectrum in one circle, while Tikona obtained spectrum in five circles in the Indian BWA auction. Augere has funding from Orange and is in a good position to expand to other circles in India. On the other hand, Tikona received approval to increase foreign investment in the company up to 74% in March 2010. Tikona’s investors include Goldman Sachs Investment Partners,  Indivision India Partners, Oak India Investments, and L&T Infrastructure Finance.

With RIL opting for TD-LTE, WiMAX advocates are now betting high on the BSNL’s WiMAX plans in India. BSNL is set to receive a US$524 million grant to complete the rollout of a WiMAX network in rural areas, having informed the government that it would only continue the buildout with additional compensation for the project. BSNL, which acquired the BWA spectrum almost a year ago, has not been able to take advantage of the lead it had over private players due to delays in finalising the tender.

BSNL has made its franchises contractually commit to converting to LTE in the event that the other operators in the country support the standard. There certainly does seem to be cause for concern for WiMAX advocates now that RIL has decided to deploy TD-LTE. However, considering that BSNL is the only operator in India who has been very active rolling out WiMAX, and that it has major plans and government support, we expect it to be a late entrant (no earlier than 2012) to the LTE market.

Author:By Basharat Ashai, Market Analyst, APAC & MEA