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FY 2007-08 was a year of good business for both new and existing NLD players. The NLD market grew by 35.5% to Rs 9,732 crore during FY 2007-08, from Rs 7,186 crore in the last fiscal.

For operators, falling STD prices and growing competition between existing players have resulted in declining revenues from the NLD market. But an ever-increasing mobile subscribers base, and a significant increase in the minutes of usage are reasons why NLD players are not too worried. This indicates a very healthy future for the NLD segment.

The reduction of NLD license entry fee from Rs 100 crore to Rs 2.5 crore resulted in competition between new players that are going ahead to grab a share in the telecom segment by acquiring license for national long distance services.

Market Trends
The Indian market witnessed a resurgence of NLD services, where over a dozen new licenses were awarded for NLD operations. Migration to and deployment of NGN networks by NLD operators were the latest technology additions in FY 2007-08. Fiber networks also saw expansion and the trend will continue for this fiscal as well.

A few more of existing players will become pan India operators, as licenses for more circles are awarded to them. Till now, only two private operators besides the incumbent public operators have pan India footprints.

After fee reduction, another initiative in this direction was Trai issuing a consultation paper on carrier selection, which includes possibilities of allowing long distance service providers to issue calling cards. When implemented, carrier selection offers customers the ability of selecting a long distance carrier for their STD/ISD calls. This would enable long distance service providers to sell their service directly to consumers, earn more revenue, and expand their network to become more competitive.

Trai has also released a consultation paper on an issue related to Internet telephony to allow connectivity between PC and fixed and mobile phones. The move will reduce STD rates and reshape the management and execution of NLD. Use of Internet telephony for calling Public Switched Telephone Network (PSTN)/Public Land Mobile Network (PLMN) will generate competition in the NLD sector and enable the reduction in tariff for the benefit of subscribers.

Key Players
Among the existing players, the predominant position of BSNL remains unchallenged. Though BSNL witnessed a negative growth of -38.5%, it continued to lead the NLD business with revenue of Rs 2,870 crore. In order to bring benefits to subscribers across the country, BSNL reduced STD rates for its fixed line, as well as cellular subscribers by up to 50%. BSNL's tarrif cut comes after private operators like Bharti Airtel, Vodafone, and Reliance announced steep reduction in STD rates for their cellular subscribers.

Bharti Airtel was on the second spot with revenue of Rs 2,410 crore, and registered a growth of 132.9%. Bharti Airtel became a pan India operator, penetrating deeper into remote regions with increasing fiber rollout. It also registered an increase of 86% in traffic, and the highest quality termination.

Reliance Communications grabbed the third position with revenue of Rs 1,893 crore. Reliance Communications is in the process of completion of its huge network roll out program. They will soon be present in over 23,000 towns through their CDMA network and over 8,000 villages through their GSM network.

They have also commenced setting up GSM networks in 14 additional circles. In addition, Reliance has a unique asset of over 25,000 route kilometers of fiber optic cables installed in leading cities in India. Its total NLD traffic is 5,964 mn minutes.

Tata Communications captured the fourth position with a revenue of Rs 692 crore, a 37% growth over last fiscal's revenue of Rs 505 crore. Vodafone reported revenue of Rs 420 crore. Also, Vodafone and TTLM followed the trends, and reduced STD rates to the benefit of cellular subscribers.

Within a short period of getting the NLD license, in November, 2006, Idea has become an integrated player with its own optical fiber cable (OFC) backbone, and voice carriage infrastructure. For FY 2007-08, Idea Cellular registered revenue of Rs 354 crore. With nearly 22,000 km of OFC in various stages of being commissioned, Idea is poised to grow by manifolds.

Others like RailTel, Tulip, Sify,HCL Infinet, Aircel, and Spice Telecom etc contributed Rs 1,093 to the total NLD market.

After reduction in the entry fee, DoT was flooded with applications from players seeking NLD licenses. BT, Tulip, AT&T, Cable & Wireless, Sify, Aircel, Verizon, Spice Telecom, and MTNL are companies with an NLD license.

Spice Telecom has bagged the license to operate both NLD/ILD services by the DoT. With this move mobile operators join service providers like Airtel, Reliance, Tata Communications, and BSNL.

Cable & Wireless has also been granted NLD license from the Department of Telecommunication in February, 2008. And now the company intends to roll out a NGN, across India with managed IP services.

New and small players, however, are in a dilemma following the tariff cuts by established players, as they have been forced into a corner. These emerging players, which use NLD for routing the STD traffic and paying carriage fees for leading players, will now have to pay double the amount. And this hike in carriage fees is a major disadvantage for these new operators.

A Top Look
Though this is a very competitive industry marked by increasing total NLD minutes, most major access providers in the NLD industry have their own NLD operations and the number will increase within this year.

The Indian NLD market is grabbing a lot of global service providers. Indian operators are reshaping their strategies to and pull up their socks to exploit the incredible growth potential available. Quality of service, customer focus, and support and network roll out will be the key differentiators for any operators to keep them ahead in this business. With so many players in the foray, the Indian NLD segment can witness a booming future.

Arpita Prem
arpitap@cybermedia.co.in