The speed of ICT infrastructure with technological innovation is going to redefine the role of cable and connectivity providers to become a complete ICT designer, in order to capture promising business opportunities for both fibre and cable solutions
Today, data network is becoming the backbone of every business from SMB to enterprise and as customers are becoming increasingly intolerable towards downtime, every organisation is aspiring to have a zero downtime platform. They are ready to make investments and deploy a solution that would reduce downtime. As long as companies continue to add more cabling to support wireless access points (APs) in their offices, it’s good news for cable and connectivity providers. There are promising business opportunities for both fibre and cable solution providers.
Holistically, system integrators form an indispensable part of the structured cabling business, which constitutes roughly five per cent of the total network infrastructure and promises to offer decent margins and repeat orders from customers. On the hindsight, proper installation and integration of ICT cabling infrastructure is one of the core areas where most of the cabling vendors are working closely with a specialised set of SIs.
The basic premise of structured cabling solution (SCS) is that it’s a lifeline for the entire IT network, that comes with 25 years of performance warranty. It is the foundation on which all other business activities depend. A properly designed, installed, and administered cabling system reduces costs through each phase of its lifecycle, covering installation, movement, addition, changes, maintenance and administration, which are the primary areas where standards compliant cabling SIs come into the force.
On the segmentation of structured cabling providers, Ninad Desai, District Chair, BICSI India shares, “The industry must accept the fact that it would be realised not in the active electronics segment, which has a typical life-span of three to five years; but in the plain passive elements of the ICT network cables and components that stay for a lifetime of the building. These passive components include network cables, connectors and accessories. More importantly, what matters is the vision that the ICT designer has for the future and the knowledge and credentials he possesses in the field of ICT passive infrastructure design.”
Nevertheless, demand from the market from across verticals – like IT, ITeS, manufacturing, hospitality, healthcare, retail and LFR, PSUs, government and R&D establishments – is fuelling the growth of structured cabling business.
The smart and non-volatile business
With the cabling market growing 20 to 30 per cent every year, the dynamics of the system integration business is fast changing. Traditionally, this market has been split into two sets of partners – distribution and mid to large turnkey system integrators. With the massive industrial growth and rapid infrastructure expansion, added with the maturity in customers’ understanding of structured cabling advantages, one can envisage a huge potential in India.
One of the Bengaluru-based and oldest SIs turned distributor, B Ananda Rao, CEO, Par Data Systems, reminisces, “While the structured cabling business dates back mid-1980s, we are associated with it since 1994. We share the space of distribution in SCS market/industry and we find this business more enterprising and non-volatile, compared to most of the other traditional verticals of IT hardware. Since we have been present for over 2.5 decades in this business, we have thorough understanding of market dynamics, the demands of SIs with whom we work with, managing huge product line, logistics, pricing and product positioning. This business sees a minimum of 15 per cent year-on-year growth, despite increasing competition, since the industry also is growing.”
Par Data Systems is a regional distributor for CommScope that is specialized in both SYSTIMAX and Netconnect range of solutions in copper and fibre. It caters to the enterprise segment for LAN, data centre and FTTX segments.
Similarly, Delhi based Spark Technologies – a regional distributor for CommScope and D-link – claims to mark a healthy growth of 15-20 per cent in last FY. “Despite of the sluggish market, we continue to see the momentum in distributorship,” adds Spark Technologies’ Managing Director, S Nautiyal.
Typically, a large section of integrators work closely with large oversees contractors or interior designers who pass on the deployment and integration task to local SIs. However, the market does have a challenge from small-time computer networking and electricians, who manage small scale deployments.
“We work 70 per cent with designers and 30 per cent of our business comes directly from customers. Slowly, we are seeing the later part of the business is more productive,” says Dhananjay Collur, Managing Director, Computer Factory India, a Bengaluru-based SI. The company has recently completed deployment of Xiaomi’s technology facility in the city and has been working with India Builder Corporation and various overseas contractors for managing global accounts and repeat customer orders.
Collur adds, “It is a known trend that customers opt for a single vendor for civil, electrical and networking front. Most electrical vendors may or may not provide installation according to market standards. In structured cabling, the stickiness of the customers is higher than any business. We get a large amount of repeat customer business. While interacting with customers, we tell them to choose networking as part of their IT and they should evaluate vendors who have sufficient experience and knowledge of IT services.”
Mumbai based Ketan Kothari, Managing Director, Sigma-Byte Computers, a large system integrator says, ” We are witnessing over 30% YOY growth for us in the SCS business for last 2 years though. In the absence of any industry certified growth numbers, I believe the industry seems to be growing at around 12-14% YOY.”
Copper vs fibre demand
Giving the perspective of uptake of copper over fibre cabling in the channel community, Delhi based Nishant Gupta, MD of Radiant Info Solution (which recently started distribution for R&M cabling solution for Delhi region), states, “Although copper cable is currently more popular and much more predominant in structured cabling systems and networks, fibre is quickly gaining momentum. Fiber-optic cable is favoured for applications that need high bandwidth, long distances, and complete immunity to electrical interference. Fibre is ideal for high data-rate systems such as Gigabit Ethernet, FDDI, multimedia, ATM, SONET, fibre channel, or any other network that require the transfer of large, bandwidth-consuming data files, particularly over long distances. Cat7 is the only cabling standard in copper that supports high-speed data transfers. But there is one limitation in Cat 7 over fibre. With fibre, you can connect two end-points within a distance of 45 km, but while using copper you can go only up to 100 metres. So, if you are planning to build a MAN, then there is no option other than going for fibre.”
Overall, telecom, IT, ITeS, and government sectors are expected to be the major contributors to the growth of structured cabling business during the next 12 months. “The underlying IT of enterprises is also changing and so are the IT delivery models. There has been a growing focus on concepts like cloud computing, IP-based networks, virtualisation, and software-defined networking. All this is driving the need to have more intelligent and responsive network infrastructure and structured cabling solutions would be expected to keep pace,” says Rao.
“We now see that applications and computing devices are demanding greater performance. I think we are on the edge of a frontier for copper and a transition to fibre, which is really exciting. More and more wireless technologies are demanding higher performance in the underlying backhaul network, in many cases demanding more power. We are excited about delivery of power over Ethernet (PoE), the high-quality controls and the high bandwidth that those technologies require. I think it does demand a lot more in the sophistication of modern wiring technologies for supporting the move to wireless,” says Gupta.
In terms of technology, the Indian cabling market trends are at par with the global market and may, in some cases, even surpass international trends. More and more ITeS installations, knowledge centres, BPOs with a high number of MACs, and their need for tracking IT in real time, huge deployment of intelligent cabling or physical layer management (PLM), are leading to a sizeable growth in the adoption of this technology. Although it is still small in terms of the number of deployments, intelligent cabling is finding wider acceptance.
On the government front, the National Optical Fiber Network (NOFN) initiative, for which Bharat Broadband Nigam (BBNL), has been assigned to connect 2,50,000 village panchayats with high-speed broadband, could lead a range of direct as well as indirect business for the structured cabling players. The upcoming roll-out of new 5G network will also contribute to the growth, as will the commissioning of new data centre projects.
“Intelligent cabling is an attractive proposition for us, as it promises to reduce the cost of network ownership by solving issues like unplanned downtime, inefficient manual moves, adds and changes, redundant ports, inaccurate records, etc. It increases network management efficiency and network security considerably. Today, both fibre and copper have major advances in bandwidth capability to support the next generation of LANs at 10G,” informs Gupta.
“As floodgates of data are expected to open on various fronts, a new set of challenges and opportunities are bound to emerge. 2019 may be the year for structured cabling players to strategise for the growth ahead,” points out Nautiyal.
Fibre is the future
Fibre optic is the dominant type of cable for connecting separate buildings on campuses and connecting floor distributors to building distributors. Because of its high cost on the LAN equipment side, it has been limited to the backbone. If we compare the cost of a fibre port on the active equipment and that of gigabit copper port on the active equipment, fibre is almost six times higher. Although, a large section of integrators agree to this viewpoint that structured cabling will continue to contribute 10-15 per cent y-o-y growth, the emergence of wireless technologies into the mainstream may bring some negative impact on the cabling industry.
Structured cabling and connectivity vendors see wireless as a logical adjunct to the wired network, and many have expanded their product offerings with end-to-end wireless systems. A significant market trend in India is that providers of wiring infrastructure have expanded their offerings as widespread wireless LAN deployment appears inevitable. Many are starting out with distributed wireless systems that are likely to evolve as technology continues to evolve.
“On one hand, the market seems to be shrinking, particularly for copper SCS due to technological revolutions like cloud, data centre, hyper data centre and 5G revolution, etc; at the same time, the industry is offering offset for growth. Fibre is going to be the big future of this industry,” opines Rao.
However, the path to fibre for SIs is not a cakewalk. Optical fibre is more expensive to install, and requires a greater understanding than copper wiring, but it can pay for itself by creating opportunities to cut other costs, ensuring better connections, and future-proofing the structured cabling system.
“Accommodating new convergent technologies is an everyday challenge for SIs and network cabling companies. Whether you have an analog system or a top-of-the-line optical fibre network, it’s important to understand the science behind the technology,” highlights Collur, one of the veterans in structured cabling business.
“Larger enterprises are investing and adapting fibre solutions due to new-age and bandwidth-hungry applications. These specialised links across main switches and specialised servers or SANs cannot be sufficed by copper solutions. We have enough competition with vendors selling cable connectors and jacks. When we speak about intelligence solutions and data centre efficiency, we hold the edge,” Gupta emphasises.
Skills for handling next-gen networks
It is becoming a widely known fact in the ICT cabling industry that an end-to-end infrastructure solution is the right way forward. However historically, many still focus only on cable performance when making infrastructure decisions. Clients and their solution providers today are more interested in the category of cabling that’s going to be put in place. However, the importance of installation practices and implementation of the right test procedures as significant contributors to the end-to-end infrastructure performance still finds few takers.
The proper installation and integration of ICT cabling infrastructure is required, more to support the ever demanding needs of the enterprise cabling infrastructure of today and beyond. Hence, it becomes a more daunting task than ever before and more, so due to the work culture of giving adherence to standards and industry best practices taking a back seat.
“It is not only the challenge of the complexity of infrastructure, but the paucity of quality installers that ensures the implementation of industry best practices. The need, therefore, is to have quality ICT designers, managers and installers who understand and practice, rather than just keep doing the traditional way. The ICT industry, therefore, needs programs that aim to address these challenges and equip professionals with the right tools in terms of knowledge about the ICT cabling technology,” suggests Desai.
“We expect our business to grow by another 25 to 30% in SCS market in the FY 19-20. We have been investing in specialized standards-based training for our field teams and Industry certifications for our Pre-Sales and Project management teams. We have added more than 100 people to the workforce and have enhanced our delivery capabilities significantly. With these additions, we have more than 400 people on a roll with another 300 on a full-time contract with us, informs Kothari.
There is a new way of thinking for smaller players to emerge. It’s no longer about boxes, but about ports and software. Players are looking more and more at providing customised end-to-end cabling solutions. With 10G over UTP, PoE and intelligent cabling technologies gaining acceptance, cabling installations are becoming more skill-based. Following the right installation practices and adherence to standards is important when it comes to new applications that require higher data rate transfers. In order to stay ahead in the race, the industry has given priority to staff retention and training.