Here’s what’s driving India's optical transport market

India’s optical transport market is all set to soar on the back of upcoming 5G launches, the growing data center ecosystem and the evolving submarine space. 

Rising data consumption over the last few years has ensured that India remains one of the top optical transport markets globally. Indian data users consumed 12 GB of data every month in 2019 according to Ericsson’s June 2020 Mobility Report, with that figure forecast to hit 25 GB by 2025. Further, India continues to add new data users as almost 50% of the 1.3 billion population is yet to be connected. The aforementioned developments are further likely to give a boost to the market.

The data center surge 

One of the biggest reasons for the optical transport segment to grow in the country is India’s booming data center ecosystem as data consumption continues to grow and enterprises adopt the cloud as part of their digital transformation strategy. Further, data localization requirements demand that the data resides in the country.  

The Indian data center market was valued at $4.35 billion in 2021 and will reach $10.09 billion by 2027, according to Arizton Advisory and Intelligence research. Further, a recent report from analyst firm JLL says that the Indian data center industry’s capacity could double from 499 MW in the first half of 2021 to 1008 MW by 2023, positioning it as an important center for South-East Asia’s digital ecosystem. 

Several hyperscalers and major players are investing and building infrastructure in the country. For instance, internet giant Google, which already has a center in Mumbai, opened a center in the National Capital Region (NCR) recently. In addition, Microsoft has acquired land in Hyderabad to open another data center in the country. Further, Nxtra by Airtel, the data center arm of Bharti Airtel, plans to invest around $654 million over the next three years to scale its large and edge data center network. 

The government's policies are also helping drive the data center segment in the country. The Indian government announced in this year’s Union Budget that it would award infrastructure status to data centers, which is likely to boost investment in this sector. This will further drive demand for metro-level Data Center Interconnect (DCI) transport and also National Long Distance DCI. 

More subsea cables

TeleGeography, a research and consulting firm, recently revealed that used international bandwidth is expected to grow at a compound annual rate of 38% between 2021 and 2028 in India. This means that international bandwidth demand will increase ten times over this period. However, the country lacks sufficient capacity to match this demand. This will be addressed by six new submarine cables likely to enter the Indian market in the next two-to-three years, which will boost the demand for optical transport. 

New submarine cables are also likely to bring down the cost of bandwidth in the country, which continues to be higher when compared with other international routes. This is mainly because of the limited capacity availability and the controlled nature of Cable Landing Stations (CLS). Lower bandwidth costs can help boost the overall communications network while making the internet more accessible in the region. 

5G launch

Further, service providers are preparing their networks for the commercial launch of 5G services. The country will hold a 5G spectrum auction this month and the telcos are likely to launch 5G services by the end of the year. This is already pushing the demand for optical transport networks as the telcos invest in National Long Distance (NLD), metro and regional networks. 

Ciena, Nokia, Tejas Networks, ECI, Juniper Networks and Huawei are the key players in India’s optical transport market. Last year, India barred Chinese vendors from doing business in the country, which increased the market share of other players. Ciena and Nokia are believed to be the top two players in India’s optical transport market. With Huawei unable to do business in the country, the surge in demand will boost the revenue of other players. India is already a major market for most optical transport network players and the anticipated growth will increase the importance of India for all players.