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Similar to the global trend, the wireline infrastructure market continues to decline in India as well. In the past, BSNL and
MTNL have been the biggest buyers of wireline infrastructure equipment. Besides the likes of Alcatel, Lucent and Siemens, that had benefited a host of domestic manufacturers. However, since 2001–02, wireline capacity addition by these operators has been slowing down. BSNL and MTNL together added 4.5 million capacity to serve additional wireline subscribers in 2002–03 and just 0.45 million in 2003–04, as compared with additions of 7.10 million and 6.70 million in 2000–01 and 2001–02, respectively. Instead both these operators directed their capital investments in their cellular businesses. The slowdown in the deployment of wireline networks has affected both the MNCs and domestic telecom equipment manufacturers. The affect has been more severe on the domestic manufacturers as their capabilities are largely on the wireline side. Also, availability of more cost-effective CDMA WLL technology also impacted wireline equipment vendors.

Surprisingly, despite all this, both BSNL and MTNL have added capacity. While BSNL added 1.1 million fixed lines, MTNL added around 0.4 million lines. The more significant investments by BSNL and MTNL were made in their wireline network for augmenting the quality and efficiency of the network. For instance, BSNL augmented its fixed network with equipment from UTStarcom. Among other things, the vendor was awarded contracts valued at $8.2 million for deployment of its Total Control(R) 1000 multi-service access platform and related equipment for the second phase of BSNL's National Internet Backbone project.

Private operators Bharti and Tata Teleservices also invested in adding capacity to their existing fixed line networks and expanding to new geographies. Bharti invested around Rs 213 crore in its fixed network services, buying equipment mostly from Siemens and Nortel.

However, despite all the noise, next generation switching failed to take off in 2004–05. Most operators either only did trials or adopted a wait and watch policy. The current year is expected to see some movement in this sector.

Faced with onslaught from wireless and the consequent decline in existing subscriber base, there is almost no need for operators for go for any significant expansion of fixed line network. As per the 10th Plan BSNL is supposed to add 3.8 million lines by 2007. However, this is highly unlikely as the state operator has not only huge unused capacity, but also its fixed line subscriber base has been declining rapidly. BSNL had lost 3.2 million fixed line subscribers in 2003–04. The state-owned company had lost 1.7 million subscribers the previous year.

According to VOICE&DATA estimates, the wireline switch market would be around Rs 400 crore in 2004–05, registring a growth of 38 percent. More than 50 per cent of this was accounted by purchases made by BSNL and MTNL. Alcatel, Ericsson, Nortel, Lucent, UTStarcom, Tekelec, Siemens and HFCL were the major suppliers. Siemens was the leading supplier for BSNL. It supplied around 0.51 million switching lines to BSNL. The vendor also supplied to Bharti. Ericsson was the main supplier to Reliance Infocomm. Overall 1.5 million were added during the year.

All operators are now focusing on rolling out their broadband network. As such, in the coming years most investments are going to happen in buying broadband equipment. Some of these investments already happened in 2004–05. Also, operators like BSNL and MTNL who own millions of last-mile copper loops, are likely to invest heavily in augmenting the copper infrastructure to make them broadband ready. Operators are also likely to focus more on deploying equipment that would enhance their ability to serve the more lucrative business customers.

Ravi Shekhar Pandey