Fixedline: Time to Bid Adieu?

Traditional landline services is losing its hope since the advent of the wireless telephone. It is just getting worse and worse due to the affordability and proliferation of mobile. Although a few services such as triple play-broadband internet, voice, and video over an IP network-may bring some cheer to fixedline services, yet it is hard to gain traction and increase revenues.

The fixed services market is pegged at `12,148 crore in FY12. Wireline Subscriber Base According to the estimates by VOICE&DATA, the total wireline subscribers have declined from 34.7 mn in March 2011 to 33.4 mn in 2012. Its growth rate dipped by 3.7% in the fiscal 2012. The overall wireline teledensity is 2.66% as on March 2012; urban and rural teledensity being 6.67% and 0.88%, respectively, according to Trai.

In terms of subscribers, BSNL has a market share of 71.2%, its subscribers have declined from 25.2 mn in March 2011 to 23.8 mn in March 2012. MTNL's market share is 10.3%, its subscriber base reduced to 3.4 mn in March 2012 from 3.5 mn last year. The fixedline services market share of Bhart airtel is 10%, based on the subscribers. Reliance, Tata (Tata Teleservices and Tata Maharashtra Teleservices) have over 3.7% and 4.1% market share, respectively. While Quadrant and Sistema Shyam Teleservices have 0.6% and 0.1% market share, respectively as on March 2012. According to a report by Telecom Regulatory Authority of India, Public Call Office (PCO) connections in India are 2.37 mn, as on December 31, 2011. BSNL, MTNL, Bharti airtel have installed 1.19 mn, 0.16 mn, and 0.05 mn, respectively. Quadrant has 0.01 mn and Sistema has 0.02 mn PCO installations. Tata and Reliance Communications have installed 0.67 and 0.27 mn. At the end of December 2011, there were 5.832 lakh VPTs across 593,731 inhabited villages in the country.

There is an unprecedented growth in the wireless space and its subscribers are growing at a compounded annual growth rate (CAGR) of 57.1% since 2004. On the contrary, fixed wireline is declining steadily. Enterprises Regime in Fixedline Fixedline is still breathing only due to the demand from business needs, ie, from enterprises and SOHO; connections to homes is on the verge of its last breath. Enterprises would anytime prefer a host of fixedline phones, its services, and fixedline 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 speed. 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. Fixedline 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.

Service providers are bundling broadband and IPTV of late, to retain and to attract fixedline customer base. VoIP services when integrated into fixedline services will enhance the uptake of fixedline. But unfortunately, VoIP is engulfed with some regulatory issues which need to be sorted out. Operators are providing fixedline services along with the broadband connections, hence broadband penetration will most probably enhance the fixedline 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 fixedline services in India, according to the industry perception. Fixedline Services Revenue from voice services will continue to dominate the overall fixedline services in India but its contribution is expected to go down significantly. The connection and calling revenue is falling slowly. Revenue from broadband services is significantly contributing to the overall growth of fixedline services in India, with a growth of 25% from 2008 to 2013. High-end fixed telephones which are even wireless uses broadband modems that offer high-speed internet connection, bypassing the telephone system. The fixed phone segment is consistently innovating products with value added features like internet browsing, text/picture messaging, or integrated camera to attract consumers. Its other features include polyphonic ringtones. Also, FM radio is becoming increasingly popular as customers are looking for additional features on their fixedline phones. In the cordless phone segment, the thrust is on sleek and slim models with features like phone book, 3-way conference calls, and 2.4 GHz digital technology.

The pubic sector undertaking BSNL has launched video telephony service in association with Sai Infosystems (SIS) in order to woo landline service customers. The cost of video telephone starts from `14,900 up to `34,900. This service can be availed only by broadband connections. As it is pretty high for starters, the company is also supplying them on a monthly rent basis. BSNL also offers Voice and Video over Broadband (VVoBB). The public sector operator MTNL launched the 'number retention facility' in Mumbai to woo corporate fixedline services in 2010. This service enables Mumbai's fixedline subscribers to retain their existing landline numbers in case of shifting their landline phone from one telephone exchange area to other telephone exchange area, anywhere in Mumbai, Navi Mumbai, Thane, Panvel, and Uran MTNL fixedline service area. The subscriber also gets 2 telephone numbers (one existing and one new) on his same landline phone. In May 2012, the company launched SMS based missed call alert service on landline in association with USA based company Universal Software. As the growth has reduced considerably in the Delhi and Mumbai regions, the company is eyeing overseas market particularly in African region to gain organic and inorganic growth opportunities. MTNL intends to roll out WiMax, NGN based fixed services, fixed mobile convergent services, etc.

Airtel provides customized bundled plans. It also offers digital voice solutions along with IP. airtel offers centrex services, hosted contact center, dialport, direct exchange line, managed ISD, unique directory number services, etc. Corporate services include short-digit dialing, direct inward dialing, 3-way conferencing, voice mail, call pick, parallel ringing, and auto callback. airtel's prominent strategy with regard to fixedline 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. Reliance Communications offers high-end features, attractive tariff plans on landline phones. Features include-phonebook, call history, 3-way conference, caller ID, ringtone, ringer volume, LCD contrast, voicemail, speaker phone, etc. Besides, it also provides, delayed hotline which is programmable to automatically call a predefined number, remote phone management which can lock or unlock STD/ISD facility, and hotline settings.

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. Tata brand offers landline services based on the state-of-the-art optical fiber cable based backbone in order to enable the network to handle higher capacities of load as compared to ordinary cables and at much higher transmission speeds.

Tata Teleservices (Maharashtra) (TTML) is offering landline services since 1998. It commenced full mobility wireless services on the CDMA-1X platform in 2004-05. Quadrant Televentures (formerly HFCL Infotel) operates in Punjab telecom circle. Not just in India, the replacement of fixedline phone by mobile phones is a worldwide trend. In recent years, although landline services have become more efficient in terms of quality of services and landline network quality, yet it has failed to bring in hope. There has been an improvement in QoS for wireline as well. Average percentage of calls answered by the wireline operators (voice-to-voice) within 60 seconds across the country increased from 88.8% in 2006 to more than 95% by March 2011. The Indian retail consumer brings less hope to fixedline services market, however, there would be huge demand from enterprises. And hence the fixedline service market may not vanish in the near future despite its incessantly declining trend in the market.