Data centre companies seek clarity on dark fibre for captive networks

The data centre industry is calling for a clarification on regulations from the government to enable the use of dark fibre for captive networks, to improve ease of doing business (EoDB) at a time when the sector is poised for growth with increasing adoption of cloud and artificial intelligence.

The industry currently has to rely on leasing bandwidth for these purposes from licensed telecom service providers at a significant cost. While the government has been apprised of the issue, things have been moving at a snail’s pace, executives said.

“Due to existing regulatory uncertainty, licensees do not provide dark fibre to unlicensed enterprises like DCs (data centres),” Ashish Aggarwal, vice president and head of public policy at apex IT industry body Nasscom, told ET. “Dark fibre provisioning would offer a major fillip to EoDB in India. This would also be in line with the government's Digital India mission and creating EoDB for enterprises in India.”

India's data centre market is forecast to exceed 1,300 MW by the end of 2024 from about 1,048 MW at end-2023 and around 880 MW as of June 2023, a CBRE report said. According to a 2021 Nasscom report, India is expected to receive an average annual investment of $5 billion in the sector by 2025. Globally, the AI server market is expected to grow at a CAGR of 26.5% between 2024 and 2029 and reach $50.65 billion by 2029, as per a Research & Markets report.

Under the current regime, unified licence holders with access service authorisation (telecom operators) and virtual network operator licence holders can provide leased bandwidth or point-to-point connectivity to enterprises. The industry has been seeking clarification on whether these licensed holders are also permitted to provide dark fibre to enterprises.

Dark fibre refers to the optical fibre on which bandwidth is not leased from the network provider and data centres have full control of its management. This is important for captive use cases and may become crucial when, for instance, data centres want to expand beyond one building or campus to a nearby location across a public road.

The DWDM transmission equipment used for leased bandwidth is imported and hence can add several millions of dollars in costs, depending on the traffic which can go up to multiple terabytes, Aggarwal said. It also consumes space and power and imposes additional maintenance cost.

“Dark fibre or campus cross-connect policy is one of the issues which gets discussed often at multiple forums as a low hanging EoDB consideration which can reduce the cost of operations for enterprises when they grow from one data center to another in the nearby vicinity,” said Manoj Paul, managing director, Equinix India and co-chair, Assocham Data Center Council.

“Today, most other countries allow licensed carriers to provide campus cross connect or dark fibre to enterprises to connect IT devices between nearby data centres. In India, due to lack of dark fibre policy, telcos have to deploy expensive DWDM equipment to provide the required 10Gbps or 100Gbps connectivity, and enterprise then have to pay for these expensive links.”

While India has made huge strides in terms of growth of the data centre industry, it now needs to take the leap to become the data centre hub of the region or the world, Paul said.

With AI requirements increasing rapidly, India also has the opportunity to become an AI learning infrastructure deployment hub. Further improvement in EoDB and the availability of reliable fibre networks within the country are areas that need further emphasis for India to reach this potential, Paul added.

“As more and more businesses migrate from legacy systems to the cloud, and as AI computation rises, the need for data centres is going to get larger and more sophisticated. India cannot afford to lose this opportunity,” Aggarwal said.

“Recently, DoT (Department of Telecommunications) has recommended some significant progressive changes in RoW (right of way) policies in the newly notified Telecommunications Act 2023, and we are all hopeful for a favourable clarification on dark fibre also soon and the same to be incorporated in the Act,” Paul said.

Nasscom’s position is that changes to the Act are not required – a clarification from DoT would suffice.

The industry has been repeatedly making representations to the government to press for the issue.

Enabling flexibility for data centres to manage inter-data centre traffic like it is done globally, so that they can scale without associated cost, is crucial, Aggarwal said.

“Global experience suggests that India is one of very few countries which currently do not allow dark fibre to be provided to non-licensed enterprises. Hence, it needs to align with the global best practices (like, in the US, Singapore, Australia and the UK) where no regulatory restrictions are imposed on the use of dark fibre which does not involve offering connectivity to the public at large, that is, for ‘captive’ purposes (such as the creation of a private network),” he said.

The lowering of costs for data centres, if dark fibre for captive purposes is enabled, would even “relieve pressure” on India’s startup ecosystem, for whom connectivity costs may be a burden, a senior executive of a major data centre player said.

“If the cost of connectivity and compute goes lower, and these startups thrive and generate a bunch of unicorns, the economic impact of these things from a long-term perspective could be much more rewarding as well,” the executive said.

They added that the policy is a constraint from a consumer perspective and from a proliferation of digital services perspective.