This startup is using abandoned gas pipelines from 1800s to ease telecom traffic via network as a service

• CloudExtel took over old gas pipelines, excavated and cleaned them and laid over 200 kilometres of fibre in South Bombay.
  
• The pipeline-turned-telecom assets gave way to their dark fibre leasing business but its co-founder wants to convert it into a full-stack NaaS company.
  
• “We’re able to build out our network infrastructure and offer that on a service basis to our customers,” Bajaj told Business Insider India.
  

CloudExtel was founded in 2014 but its story had started unfolding much earlier – when The Gilded Age was playing out in British-ruled Bombay and even before electricity was in use. A company called Bombay Gas used to supply gas via pipes to Bombay buildings and to even power street lights. The company stopped gas distribution in the mid-80s and the pipes were lying unused since then.

That was until 2014 – when Kunal Bajaj, a telecom sector veteran and former partner- India director of consulting firm Analysys Mason, was introduced to the promoters of Bombay Gas – the Hamilton and Company group. The firm, which had since diversified into real estate and others, wanted to convert the company’s gas pipelines into telecom assets.

As CloudExtel was formed, it took over the old gas pipelines, began excavation, cleaned them up and laid over 200 kilometres of fibre in South Bombay. Since the fibre is laid under footpaths and bridges inside cast-iron pipelines, it provides an added layer of security.

The pipeline-turned-telecom assets gave way to the company’s dark fibre leasing business – where the service provider offers the fibre optic infrastructure but the customer operates it. Some of its customers include Airtel, PGCIL, Railtel, Sify, Tata Communications and Vodafone Idea.

Bajaj, who had seen the market evolve from the bare minimum net speeds of the 2G era to the high-speeds of 3G and 4G, had bigger plans beyond just geographic expansion for the company. He wanted to build a network-as-a-service operation – a model where customers rent networking infrastructure and services through a cloud-like subscription-based model.

“So, I came to them with the idea that rather than just thinking about building out a fibre business, we should actually think about building out an entire network-as-a-service (NaaS) full- stack operation,” Bajaj, who is also the co-founder of CloudExtel, told Business Insider India.

Unblocking networks

While India needs underground fibre – which is tough to lay and maintain amidst the many roadblocks telecom companies encounter, the sector itself faces a multitude of challenges when it comes to providing high-speed data services to an increasingly demanding customer base.

India’s large population and its high density in most urban and even semi-urban areas has presented network challenges for telcos and ISPs. And this is the problem that CloudExtel wants to solve.

“There is the traditional way of serving these (crowded) areas with the macro sites and large towers. But at some point, those macro sites get completely choked and the capacity limits are reached and telcos need to be able to provide additional capacity in that high-density area. You then need to go from the very top of a tall building with a large site and you need to have a miniaturised site, which is at a lower height closer to where the actual traffic consumption is,” explained Bajaj.

In addition to laying over 4,000 kilometres of fibre across cities, CloudExtel added 4,000 small cell sites across 325 cities and towns. In addition, it provides services like virtual networks that take it from providing infrastructure-as-a-service to NaaS.

It leverages fibre-to-the-home (FTTH) with single platform end-to-end services that build, plan and maintain networks for telcos and internet service providers that target homes and SMEs.

“So we take some of the hardest parts of that telecom network and we build it out on behalf of the telcos, ISPs and content providers. We focus on very difficult-to-solve types of problems, where high-network capacity is required or where it’s very difficult getting fibre into the ground or buildings and homes. We’re able to build out our network infrastructures and offer that on a service basis to our customers,” said Bajaj.

CloudExtel believes that a time will come when telecom companies will outsource most or all of their infrastructure needs, paving the way for network-as-a-service or NaaS companies such as themselves. Global players like Cisco and IBM are also players in the NaaS space.

“We are delivering a completely virtualized network to our customers. We can compare it to Amazon Web Services or Google Cloud, which have taken over from companies building, owning and maintaining their own data centres. I'm not saying that the telecom network or the telecom industry is ready to be completely virtualized or share all these stations and microsites, but this is the first step in that process, in that direction,” Bajaj said.

A new era beckons

CloudExtel has been bootstrapped until now and funded internally off the balance sheets. Even with the substantial set of assets, it still calls itself a startup. “So I still consider ourselves a startup because we have not yet achieved even one-tenth of what we believe we can achieve,” Bajaj said.

Even as India is on the cusp of 5G network launches, Bajaj believes that the definition of network speeds is evolving, with more and more new technologies coming in. And infrastructure companies such as CloudExtel will have to stay ahead of the innovation cycle.

“We're launching 5G today, but work on 5G actually started 10 years ago. That's kind of the timelines on which this kind of sector really works. 5G is going to be very largely about the ability to deploy small cells and provide dense network capacity and good network signals in very busy or very high traffic areas. That can basically be done on the back of only small cells being put very close to end-customers right on traffic junctions and high-density venues,” Bajaj said.

Even as technology evolves, the number of high bandwidth applications like connected TVs, AR and VR-based shopping, in addition to metaverse etc. are multiplying at a rate that is faster than the time taken to build the infrastructure needed to handle it.

“I think the biggest challenge we face is we don't have fixed-line infrastructure prominently available in the country. So, with rising capacity requirements and throughput requirements, telcos will always find it difficult to keep up pace with what the industry demands. That was really the genesis of the idea eight years ago,” Bajaj says.

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