"We will soon have a sound and efficient marketing division for Railtel"

04 December 2003, Voice And Data Site

RC Sharma, additional member (telecom), railway board, Ministry of Railways

What is the status of the Railtel network and what are your plans for FY 2004-05?
Presently, Railtel has laid 21,880 Rkm of OFC across the country. Out of this, 15,670 Rkm has been commissioned with minimum STM-1 electronics. Apart from this, Railtel has also built STM-4 based edge layer network for about 10,000 Rkm. Beyond this fiscal year, Railtel will be completing fiber-laying for about 28,000 Rkm. We will commission 22,000 Rkm of backbone network, which will initially be based on STM-16, by the middle of FY 2004-05.

What is the investment planned for the Railtel project and when do you plan to breakeven?
In terms of capital expenditure, it would be in the order of Rs 1,100 crore in addition to Rs 400 crore of assets, which is expected to be transferred from Indian Railways. By 2005, total revenue from all types of services is expected to be around Rs 500 crore and by 2008, the total revenue is expected to be around Rs 1,200 crore. So, we plan to break even by 2008.

In the absence of a good marketing arm, how do you plan to compete with DLD service providers?
I admit that being a PSU of Indian Railways, we are new in the area of marketing of telecom services compared to our competitors. We realize this and apart from building a sound marketing cell, we are also adopting innovative models like franchisee model and virtual network operator model for marketing of our services. In the near future, we will have a sound and efficient marketing division for Railtel.

You are targeting access providers like basic and cellular service providers, ISPs, cable TV providers and radio operators. What is the solution that you offer to these customers?
Railtel provides dark fibers, microwave tower space, bandwidth varying from 64 kbps to STM-4 to basic, cellular, national long distance service providers as well as ISPs. For ISPs, Railtel offers VPNs and IP leased lines. On the ILD front, Railtel offers international voice and IPLC (international private leased circuits) to corporates as well as retail customers. In all these business segments, Railtel will encourage sales and marketing through resellers/VNOs.

In the case of cable TV operators, Railtel will enter into a revenue sharing arrangement for extending cable TV signals to various cities in the country. With the DTH regime in place, this will become a significant revenue-generating stream for Railtel. We are already in communication with cable TV operators and an expression of interest to this effect has already been floated.

You are planning for an IP network. How is it going to help you in terms of service offerings as well as revenue generation?
Railtel is building an IP backbone covering about 22,000 Rkm. The IP network will have core and edge routers in 38 locations. To reap the benefits of IP countrywide, the company is extending IP through the access layer to cover 2,500 stations.

Railtel will primarily be a carrier’s carrier for IP services and will encourage small ISPs to use its network. Since Railtel has an extensive reach, therefore roping in smaller ISPs as well as directly launching its services will help the company generate substantial revenue from this segment.

It’s been five months since you launched a cyber café at the New Delhi Railway station based on the franchisee model. When are you planning to extend this service to other stations, given that you already have connectivity in many stations?
Railtel is extending a franchisee model for opening cyber café at other railway stations in the country. In fact, Railtel sales and marketing strategy revolves around appointing successful franchisees. The company has already floated an expression of interest for appointing franchisees for cyber cafés at railway stations. This is under evaluation and is expected to be finalized shortly. Railtel is also looking at VNOs for offering its services to the customers.

Railtel is also planning for a NLD and ILD license in future. How is this going to help you and what is the incremental revenue you are aiming at?
We are evaluating expected changes in the regulatory system with the coming of unified licensing. Since we are not in the access business we will offer NLD services only when carrier pre-selection is available.

However, it is worth pointing out that after laying 28,000 Rkm of OFC, Railtel will be connecting about 180 LDCAs, giving an edge over other operators in the NLD space. By laying about 40,000 Rkm of OFC that we have planned, Railtel will connect about 290 LDCAs.

Thus in the very first year of its launch of service, Railtel will be able to connect a substantial portion of LDCAs. This gives an edge over other operators as and when Railtel plans to enter into the NLD service. Since a major portion of NLD network goes into laying OFC and Railtel has already planned a huge OFC network, therefore, by launching NLD service, Railtel incremental expenditure would be much less and the revenue generation capability should increase significantly.

Moreover, Railtel is also building IP-based NLD as well as ILD network. Therefore, a substantial portion of the infrastructure will be used for both the services. For ILD, we are in discussion with international players. We are planning to enter the ILD space only after tying up with these players.

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