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The fixed phones market fared better in FY 2004–05 with the rise in sales of FWTs. Both Reliance and Tata Indicom  popularized their FWTs in the market. According to V&D estimates, market size was Rs 1,883 crore in FY 2004–05. The overall market has grown by around 127 percent. This includes the sale of FWT units, which contributed most in an otherwise depressed market.

In the past few years, with explosive growth in the mobile handsets market, fixed phones have not had many takers. With VoIP catching on and a large number of IP phones being shipped to India, fixed phones have dipped in numbers. In contrast to mobile services, growth of demand for fixed services has been tepid. The number of fixed service subscribers increased by just 2.5 percent in FY 2004–05. In the first half of FY 2004–05, subscriber base for fixed services increased by around 1.1 million, driven by increased penetration and higher demand for fixed wireless services.

Major consumers like BSNL/MTNL are now onto the cellular bandwagon. As their demand for fixed phones was low, the market too stayed low in FY 2003–04 and FY 2004–05.

Following the trend of past few years, fixed phones market went down in terms of number of units sold and sales revenue. Especially with the mobile handset price war, customers opted for mobiles instead of fixed lines.

India's mobile telephone subscribers surpassed fixed telephone subscribers in October 2004. This was a clear indicator as to where the market is headed. For the first time, mobile terminals generated more profits than fixed telephony services.

FY 2004–05 ended with around 51.44 million mobile subscribers, in comparison to 43.96 million fixed telephony customers.

The only player who seems to be increasing its production targets is Bharti Teletech. Most other players are looking at CDMA mobile or GSM options to sustain growth. Only FWT contributed big numbers to the segment. This happened as PSU, BFSI, manufacturing, and SOHO segments are still high users of fixed phones and are slowly transitioning to the next phase of feature-rich fixed terminals.

The Vendors
LG leads the market with 68 percent market share followed by Axesstel hits 16 percent share. LG has done pretty well in Reliance Infocomm whereas Axesstel has done well in Tata Telecom. Bharti Teletech had about 10 percent growth in the sale of phones with around five million units in FY 2004–05. It is also evaluating GSM handsets manufacturing in the near future.

Aiming at a turnover of over Rs 200 crore in the next fiscal, it plans to sell 10 million phones over the next four years. It has two factories (in Ludhiana and Goa) with capacities of three and two million units per annum respectively. The introduction of 2.4 Ghz band cordless phones gave a boost to the company's fixed-line telephone business.

Panasonic, another big player, is also looking at shifting its focus to mobile handsets in India, as the fixed-phone market will not generate the desired revenues. Panasonic is targeting $60 million revenue in 2005 through mobile phone sales from in India. In a bid to capitalize on the Indian telecom boom, the company set up an India headquarter which was launched in May 2005.

Future Trend
There is an expected trend of mobile phone features being adopted by fixed-phone vendors to regain lost market. Globally, manufacturers are adding features like text and picture messaging to wired phones to attract and retain customers, and eke out a share of the massive messaging market, thus far ruled by mobile carriers only.

Players are toying with more features and capabilities on the fixed handsets to offer a mobile experience. FWT is, in a way, a step towards offering mobile experience through fixed terminals. We will soon see corded phones that can send and receive SMS, and even SMS-capable phones with color screens. Companies will soon be producing fixed-line phones with integrated cameras and offer landline photo messaging to the customers.

FWTs are gaining ground as it offers Internet access and will do better in years to come.

Minu Sirsalewala