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How Bharti Airtel, Vodafone taking IP route to counter Reliance Jio threat

Bharti Airtel and Vodafone, the country’s top two telecom carriers, have begun upgrading their networks to increase capacity and offer higher internet speeds. They have given new contracts to networking firms Juniper and Cisco to transform their respective legacy backhaul networks into pure so-called ‘IP-fied’ backhaul networks with latest Internet Protocol (IP) equipment, a person familiar with the matter said.

The move comes ahead of Mukesh Ambani-promoted Reliance Jio Infocomm’s expected commercial launch of 4G services before the end of 2016.

“The upgrade is currently urban focused,” the person cited earlier said, adding that the move will help Airtel and Vodafone’s 3G and 4G networks immensely, besides equipping their respective networks to cater to new emerging businesses such Internet of Things, over the top (OTT) applications, smart cities, video growth, and to support enterprise business.

While the transformation of legacy time-division multiplex (TDM) based core networks has been ongoing since last many years, the latest move is aimed at transforming the access and backhaul networks to full transform into IP networks, which will enable faster delivery of services and better data speeds.

Bharti Airtel declined to comment on the development. Vodafone had not replied to ET’s query on the matter till the time of going to press.

Industry executives said the trigger point of this transformation is the looming threat from Reliance Jio, which is better placed to offer data-led services. Notably, Jio has built a greenfield IP network to support its digital ecosystem, which comprises high-speed data network and a wide variety of content-based applications and services.

Airtel and Vodafone have already started offering commercial 4G services, while Jio is offering 4G services under a trial launch, and is likely to launch commercial services before the year’s end.

“This transformation will allow these telcos (Airtel and Vodafone) to optimise their networks, which will help in improving customer experience, thus leading to better monetisation,” another person familiar with the matter said.

After the upgrade, the two vendors will deploy all-IP switches, routers, firewalls along with specialised equipment for storage purposes.

Jio has created a legacy-free, next-generation voice and broadband network which can be seamlessly upgraded even to 5G and beyond. It claims that it will be the only company in the world providing digital services over an end-to-end all-IP network at this scale.

The new telco had earlier given one of the largest contracts to Cisco to build a complete end-to-end IP network. Cisco is currently providing IP equipment for Jio’s data centres, security solutions, and packet network.

Both Airtel and Vodafone have been strengthening their backbone wireline networks to handle growth in data and video traffic. Last year, ET had reported that these telcos had given multi-million dollar contracts to Chinese equipment vendor Huawei to upgrade and augment capacity of their wireline networks.

Analysts say the upgradation of backhaul to IP backhaul is aimed at offering better data products. They say the fiberization drive of telcos, coupled with the Jio threat, is driving the so-called ‘Ipfication’ of the complete networks of incumbent telcos.

“With the expected data boom, as well as with increased competitive intensity due to a new telco entrant’s launch with IP backhaul capabilities, key incumbents upgrading their backhaul to IP is an effort to help capitalise on the growth in data market, as well as address impending competitive dynamics,” said Rohan Dhamija, partner, head India, South Asia, at telecom consulting firm Analysys Mason.

Airtel has already launched its network transformation programme, called Project Leap, with an investment of Rs 60,000 crores over the next three years.

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