Fixed Line: Pursuit in Gloom

The telecom industry's prominent communication mode-voice traffic, has been continuously witnessing a substantial shift from fixed line connections to mobile connections. The downtrend has been predominantly due to the decreasing mobile prices and is further expected to reduce owing to the mammoth demand for mobile services synced with value added services like data and video. Since 2004, wireline market is constantly diminishing from 40.92 mn to 37 mn in March 2010 and was 35.09 mn in December 2010. It has now stagnated with a total subscriber base of 34.71 mn at the end of FY11. The overall wireline teledensity in India has declined to 2.91%. The urban teledensity is 7.26% and the rural teledensity is 1.04%.

Wireline Revenue

The market size of fixed line is pegged at `11,206 crore in FY11 as against `13,276 crore in FY10. And it showed a negative growth of 15.6%. Of the key fixed line players, BSNL's revenue has declined to `7,070 crore from `8,340 crore in FY10; MTNL stands at second position with revenues of `1,528 crore and Bharti airtel is the third leading player with revenues of `1,050 crore. TTSL, RCOM, and TTML have shown an increase in their revenues.

Market Share Based on Subscribers

The stagnation of fixed line is depicted lucidly from its dwindled subscriber base between March 2010-11 with a dipped growth rate of 6.23%. The total subscribers in FY10 were 37.02 mn which dipped to 34.71 mn in FY11. All private players-Bharti Airtel, Reliance Communications, Tata Teleservices (TTSL), Tata Teleservices Maharashtra (TTML) and HFCL Infotel have cataloged a positive growth in the number of fixed line subscribers, as on FY11.

BSNL holds a lion's share in fixed line space with 72.4% market share. In FY11, BSNL had a wireline subscriber base of 25.2 mn as against 27.8 mn in FY10 and its growth rate has declined to 9.36%. The next prominent player in terms of fixed line subscribers is MTNL. Its subscriber base has also diminished to 3.46 mn in FY11 from 3.49 mn in FY10, with a reduced growth rate of 0.9% and the market share of 10%.

Airtel's wireline subscribers have risen from 3 mn in March 2010 to 3.2 mn in March 2011. It shows a growth rate of 7.46% with a market share of 9.5%. The market share of RCom was 3.5% and its growth rate was 4.8% in FY11. Subscribers have increased from 1.17 mn in FY10 to 1.23 mn in FY11. TTSL and TTML's market share was 3.6% and 0.4%, respectively, in FY11. TTSL's growth rate in FY11 was 1.8%, the subscribers were 1.29 mn and correspondingly it was 1.26 mn last year. In FY11, the subscriber's base of TTML augmented to 16,852 from 13,000 comparatively to last year. Quadrant Televentures which operates only in Punjab circle expanded its subscribers to 1.8 lakh in FY11 from 1.7 lakh as against last year. There has been 9.5% growth rate in FY11 and its market share was 0.5% based on the subscribers' data.

Wireline Buzz

In the recent years, BSNL has become a forerunner on the technology front. It now has an access to digital new technology switching network. The company offers FLPP telephony service for PCOs and also provides FLPP prepaid over postpaid service on telephone connections. BSNL has launched 38,141 telephone exchanges in rural areas and 112 mn direct exchange lines (including fixed+WLL+CMTS) across the country as on December 31, 2010.

The other prominent PSU, MTNL, provides dial-up internet services, broadband service, triple play services including VoIP, high-speed internet and IPTV on broadband network. A host of value added services extended by MTNL are call waiting, call forwarding, wake up calls, absent subscriber service, caller identification, friend and family, night talk, call conference, voice mail, automatic changed number announcement, computerized fault booking/payment system, etc. It has introduced various schemes to attract new landline subscribers and sustain existing landline base. MTNL's strategy-looking for organic and inorganic growth opportunities in overseas market particularly in African region to overcome its constraints of limited growth in Delhi and Mumbai. MTNL intends to roll out WiMAX, NGN based fixed services, fixed mobile convergent services, etc.

Bharti Airtel offers fixed line services in 87 cities across the country, along with broadband and data services. The VAS for fixed line service offerings by the company include parallel ringing, hello tunes, Airtel live, live aarti, live radio mirchi, live astro, call forwarding, conferencing, centrex, etc. For B2B customers, Airtel offer business critical services like toll-free, hosted mail, tally and various ERP bundles. Airtel's prominent strategy with regard to fixed line is to 'going deeper rather than wider' by focusing on cities that have larger revenue potential. Airtel is eying on SMB and SME segment in the wireline space.

Around 40-45% of the revenue is contributed from enterprise fixed line business segment for Tata Teleservices. Value added services offered by TTSL for fixed line consumers comprise of conferencing, unified communications, ringtones, call back service alert, multi-party conference, Caller Ring Back Tunes (CRBT), and short digit dialing to enhance the usage of wireline subscribers. For the next fiscal, Tata Teleservices' growth strategy for fixed line services would be largely revolving around 3 major aspects. Firstly, aggressive acquisitions and protection of current base. TTSL is targeting an aggressive acquisitions strategy for churning out customer base of current incumbent operators. It will leverage on its extensive fixed line network coverage. Besides, it is also focusing to retain and up-sell to its existing customers of fixed line services to build upon the solid base. Secondly, with the launch of new products/services, it has started offering various innovative services such as similar pilot number solutions, budget call services, etc. It aims to offer multiple differentiators for fixed line service business. Lastly, the growth in collaborative suite and services like toll-free services, audio conference services, managed videoconference services were used as a growth engine for incremental business in TTSL's fixed line business. It intends to offer sticky services which increase the MoU and usage of existing service offerings.

Reliance Communications offer innovative landline phones like hands-free talking and sleek telephone instrument. To enhance the user experience, it has employed 'intelligent FSK telephony' along with STD and global calling card. It comes with features like next-gen caller ID, delayed hotline, navigation keys, and remote phone management to lock or unlock STD/ISD facility or hotline settings. Rcom's array of value added services in wireline space consists of voice products like E1 DID, centrex, PBX trunks, one office duo, toll-free, audio conferencing, etc.

VPT and PCO

As many as 5,77,671 villages had access to Village Public Telephone (VPT) as on January 2011, out of the total 5,93,601 villages across the country. UPA government in its annual report for FY11 committed to extend public telephone services to every village under Bharat Nirman. Until now, the government has offered broadband connectivity to more than 97,500 villages under its target of connecting 2.5 lakh village panchayats by 2012. Union Ministry of Communication and Information Technology intends to provide all the village panchayats with broadband connectivity by 2012 and village public telephone facility to all the villages by the end of 2011. BSNL has set up VPTs in around 5.70 lakh villages as on December 31, 2010. During FY11, it covered over 4,167 villages. As per the USO tender, BSNL was awarded 62,302 villages and as on December 31, 2010, it covered around 42,358 villages. The remaining VPTs are planned to be established by February 2012. Department of Telecommunication (DoT) aims to provide telephone facility on-demand in tribal areas and public telephone systems in all tribal villages as per Tribal Sub Plan (TSP). Under TSP, DoT has launched 10 telephone exchanges between January and December 31, 2010. The total number of Public Call Offices (PCO) have declined to 3.34 mn at the end of December 2010 from 3.52 mn in September 2010.

Trends

Though we can reach a state of 100% mobile teledensity, yet the fixed line or landline will be much sought-after by the enterprises. Enterprises would anytime prefer a host of fixed line phones, its services, and fixed line broadband for the day-to-day affairs of the business because it ensures permanent connection and in the case of broadband, it will be a guaranteed bandwidth with speeds. This helps in connecting all offices and remote workers. It will be easier to add connections anytime and up to 50 people can share the same line. Fixed line phones will always be sought-after because it comes with various advantages such as IP telephony solutions which can be integrated with a choice of soft phone desktop applications. It will also help in tracking employees and will assure that the right people are communicating in the right channels, at the right time.

Notwithstanding the stagnation of fixed line services in India and worldwide, it is apparently gaining access to a few technological and behavioral trends in these years in several parts of the world and India. Service providers are bundling broadband and IPTV of late, to retain and to attract fixed line customer base. VoIP services when integrated into fixed line services will enhance the uptake of fixed line. But unfortunately, VoIP is engulfed with some regulatory issues which needs to be sorted out. Operators are providing fixed line services along with the broadband connections, hence broadband penetration will most probably enhance the fixed line services market. Broadband service is the only silver lining to wireline uptake and in the next 5 years, revenues from broadband services will significantly contribute to the overall growth of fixed line services in India, according to the industry perception. Under the Rural Wireline Broadband Scheme, BSNL will extend 888,832 wireline broadband connections to individual users and government institutions and will set up 28,672 kiosks by 2014. With this strategy, the fixed line connection is expected to rise. Will fixed line arise from the ashes like a phoenix and fly or will it further submerge due to mobile phones, is yet to be watched.

Malini N
malinin@cybermedia.co.in