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Fixed: Staying Put

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VoicenData Bureau
New Update

Despite the surrender of about 3.8 mn fixed lines during FY 2005-2006, the

fixed line services showed a growth of 12.6% in terms of its subscribers. The

total fixed line subscriber base stood at 50.5 mn, up from 44.9 mn in FY

2004-2005. This slow uptack was largely due to explosive growth of cellular

subscriber base, which touched 90.8 mn. BSNL, being the largest fixed line

operator, lost around 3.6 mn fixed line customers. MTNL, which witnessed about 2

lakh surrenders last year, managed to finally end up with the net addition of

32,000 subscribers. The shortfall was, however, compensated in a very small way

by the growth of fixed wireless phones. 

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Steady Progress



In terms of subscriber numbers, BSNL continued its lead in fixed services

with a market share of 73% and subscriber base of 36.7 mn. TTSL's fixed line

subscriber base stood at 4 mn with a market share of 8% at the end of FY

2005-2006.  

According to Voice&Data estimates, the total revenue for fixed services

during FY 2005-2006 was Rs 33,715 crore, showing a growth of about 3.1%. BSNL

maintained its first position in revenue terms but with a dismal growth rate of

mere 4.8%, mainly because of large-scale surrender of fixed line phones. It

managed a revenue of Rs 25,195 crore, up from Rs 24,030 crore it had during

2004-2005. Officially, BSNL accepts that it's losing approximately 30 lakh

customers every year. The reasons range from service consideration to

positioning of landline vis-à-vis mobile and FWP of CDMA providers.

To overcome this, BSNL invited advertising agencies to take the message

to the market and drive home the idea that landline offers distinct advantages

like voice clarity and broadband services. All these measures are aimed to

promote fixed line services, considering the business potential they hold. State

telcos, for instance, enjoyed high ARPU of around Rs 800 for fixed lines.

Obviously, the large-scale surrender of fixed

lines was a big jolt to the companies' overall business.

Top

Fixed Operators (Based on Revenue)

Rank

Operator

Revenue (in Rs crore)

Growth



(in %age)

Market Share (in

%age)

FY 2004-05

FY 2005-06

1

BSNL

24,030

25,195

4.8

74.7

2

MTNL

5,291

4,417

-16.5

13.1

3

Bharti

1,127

1,320

17.1

3.9

4

TTSL

900

1,081

20.1

3.2

5

TTML

627

713

13.7

2.1

6

Reliance Infocomm

393

589

49.9

1.7

7

HFCL

256

310

21.1

0.9

8

Shyam Tele

60

90

50.0

0.3

Total

32,684

33,715

3.1

100.0

V&D

Estimates

CyberMedia Research
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Among the private operators, Reliance Infocomm and Tata

Indicom continued their aggressive push of fixed wireless telephony and several

packages centered around this were launched during the year FY 2005-06. Bharti,

which provides fixed line services in 90 cities, made a gradual progress and

broadband services helped push the fixed phone numbers.

HFCL and Shyam Telecom continued their steady growth despite strong

rumors that they were up for sale.

The year FY 2005-06 also saw BSNL launching the much-awaited one tariff for

whole India (called One India plan) along with MTNL. To check the massive

surrender of fixed line phones, BSNL reduced the rental of fixed line services

from Rs 250 to Rs 180 per month.  BSNL

also tried out bundling of fixed line, broadband, and mobile connections. Tata

Indicom has continued its aggressive strategy for fixed wireless customers and

announced new tariff structure for calls from fixed to mobile. It also

introduced tariff plans for residential and business customers and also reduced

one-time entry cost to Rs 1,602.

Reliance Communications intending to extend the trend of falling mobile

tariffs to fixed wireless phones, announced new schemes for its fixed phone

service.  It extended the 'One

India' tariff scheme meant for mobile phones to fixed wireless phones. It also

announced a new zero rental, 'life time incoming free' scheme for its fixed

wireless customers.

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Top

Fixed Operators (Based on Subscribers)

Rank

Operator

Subscribers

Growth



(in %age)

Market Share



(in %age)

FY 2004-05

FY 2005-06

1

BSNL



35,733,640



36,774,950

2.9

72.7

2

TTSL



1,829,070



4,023,932

120.0

8.0

3

MTNL



4,075,340



3,821,252

-6.2

7.6

4

Reliance Comm



1,310,799



3,134,975

139.2

6.2

5

Bharti



857,262



1,346,740

57.1

2.6

6

TTML



749,478



1,042,947

39.2

2.1

7

HFCL



193,533



256,278

32.4

0.5

8

Shyam Tele



157,073



172,767

10.0

0.3

Total



44,906,195



50,573,841

12.6

100.0

V&D

Estimates

CyberMedia Research

On the issue of treatment of fixed wireless services, TDSAT

dismissed Reliance's appeal holding cordless to be a limited mobile service.

Reliance went ahead and filed an appeal before the Supreme Court. DoT directed

all service providers including fixed line providers to set up a consumer

grievance redressal mechanism and publicize this.

Reliance

Info and Tata continued their aggressive push of their fixed wireless

services
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FWP Makes Deeper Inroads



Reliance and Tata aggressively pushed their fixed wireless telephony.

Reliance renamed its fixed line brand as Hello. Earlier it was called IndiaPhone.

Tata went ballistic with its Walky phones and spent crores of rupees in

advertising to promote this product. Even BSNL and MTNL aggressively pushed

their fixed wireless services and had their shares of success. The total fixed

wireless subscribers as of March 2006 stood at 6,614,120.

All Eyes on big Customers



With consumer fixed line demand depleting fast, all the operators including

the incumbents continued their aggressive strategy to rope in corporate

customers. All the operators pushed the other value-added services such as

centrex and audio conferencing. BSNL started its dedicated 1500 customer care

number to cater to the queries of the corporate customers. The BSNL general

managers have been empowered to directly negotiate tariff for corporate

customers. MTNL also put in place specialized units in Delhi and Mumbai for

looking after corporates, including but not limited to PSUs. The company

improved its customer relation management. 

Comparative

statement of the performance of basic service providers in meeting the key

benchmarks

Sl. No.

Parameter

Benchmarks

% of service

providers not meeting the benchmarks

Q.E. March 2005

Q.E.March 2006

Out of 63

Out of 73

1

New connections after

registration of demand

100% in 7 Days

65.07%

90.41%

2

Fault incidences per

100/subs/month

<5

44.44%

17.80%

3

Fault repaired by next

working day

>90%

15.87%

9.58%

4

Mean Time To Repair

< 8Hrs

33.33%

38.35%

5

Metering & billing

credibility - % of bills

< 0.1%

23.80%

27.39%

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But in terms of customer acquisition, it was the private

operators Bharti, Reliance, and Tata who managed to corner most of the leading

corporate customers including the large BPOs. BSNL and MTNL, however, by virtue

of being state enterprises, remained the favorite of state PSUs and banks.

The Union

Budget enhanced allocations under USOF for rural connectivity by 25% to Rs

1,500 crore

Rural Telephony Push



The government started Bharat Nirman initiative to connect the unconnected

66,822 revenue villages in the country with VPT by November 2007. Out of these

villages, connectivity in 14,183 remote villages will be provided through

digital satellite phone terminals. Capital and operational expenditure for these

VPTs will be met out of the Universal Services Obligation Fund (USOF).

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Considering the low rural teledensity of 2, the government through its Budget

2006-07 showed its commitment to rural telephony by enhancing allocations under

USOF for rural connectivity by 25% to Rs 1,500 crore.

It also proposed to roll out 50 million phones in the next three years to

ensure phone on demand. In 2005-06, USOF had received Rs 1,200 crore from the

finance ministry. 

Outlook



Reliance's launch of consumer broadband is going to give a major fillip to

the fixed line services considering the kind of pan-India network that the

company has. Similarly, as Tatas spread its network across the country and

launch new services, the market for fixed line telephony will continue to grow.

FY 2006-07 could witness a revival of fixed line's fortunes, considering the

aggressive rollout of broadband services and a host of value-added services.

This includes triple-play and IPTV services. BSNL also plans to make fixed line

attractive by providing more feature-rich phones and providing CLIP to all

phones.

Sudesh Prasad



sudeshp@cybermedia.co.in

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