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The telecom services market has been moving up but same is not the case with ILD services in the country. Aggressive competition has led to a massive cut in prices resulting in declining ILD revenue both on voice as well as data. As per VOICE&DATA estimates, ILD services in financial year 2004-05 roped in Rs 3,830 crore, a drop of 12 percent in comparison to FY 2003-04 figures of Rs 4,346 crore.

The international connectivity market (which includes ATM, Frame Relay, IPLC, and IP-VPN and MPLS based IP-VPN service) is at around Rs 765 crore. This market has grown by 15 percent in terms of revenue but around 35-45 percent in volume terms. Though revenues have dropped, India's ILD traffic has increased considerably both incoming as well as outgoing.

FY 2004-05 was more of a consolidation phase for ILD service providers in the country. VSNL completed the acquisition of Tyco helping the company to spread its operations outside India. The company has also strengthened its India capacity by commissioning Tata Indicom Chennai Singapore Cable.

On the other hand, FLAG acquisition has helped Reliance Infocomm in making a worldwide presence. The company has also planned Falcon submarine cable planned to be commissioned by the last quarter of the current fiscal.

Drop in prices sets trends
With prices falling, Indian corporates are opting for high capacity bandwidth like DS3 and above and also consolidating on service providers. Companies are also looking at cable diversities across cable systems, routes, local loops and service providers so they can minimize their risk.

With networks becoming complex, corporates are moving towards managed services as customers do realize that they need to focus on their core competencies and not carry on being mini-telcos.

With prices dropping on the voice front, ILD service providers are increasing their attention to data services and international operations by launching subsidiaries in other countries. And both the operations are doing pretty well for all the ILD operators in the country. On services front, corporates have shown interest for IP-VPN and MPLS based IP-VPN service. Along with this the corporates are requesting for stringent service level agreements. On the international connectivity front, IT/ITES is the main catalyst followed by banking and manufacturing.

It's VSNL all the way
Both in NLD and ILD services, the service providers are numbered. Presently, there are only three players that are active in the market. Data Access, the fourth operator has been served a notice by the DoT regarding suspension of license. The company was active till July but after that it witnessed a fall. There have been management changes in the company.

V&D estimates  CyberMedia Research

Both incumbent operators and MTNL are also planning to start ILD services. MTNL has a LoI which was valid till 30 June 2004. On the other hand, BSNL has still not started this service as per DoT.

In terms of market share, VSNL is numero uno with market share of around 54 percent. The company has shown a dip in revenue and presently it is at Rs 2,080 crore. In terms of traffic, VSNL carried 3 billion minutes.

The International business has been thriving and VSNL continues to focus on this segment to align with its vision to be a global player.

The company is building on its international business through commercial launches and Tyco acquisition. Commercial traffic has commenced in Sri Lanka, UK, and US.

On the domestic front, VSNL launched new joint ventures with Cable & Wireless, NTT, and KDDI for IP-VPN service. The company also commissioned 3,175 km undersea cable link between Chennai and Singapore with a design capacity of 5.12 Terabits. Currently VSNL has activated 9 Gbps capacity.

VSNL has invested capex to the tune of Rs 1,000 crore of which majority capex was spent on Tata Indicom Chennai Singapore Cable. In the current year, the major capex is for Tyco acquisition, South Africa operations, and SMW-4 and the company is looking at a similar investment.

Bharti is at number two position with revenues of Rs 810 crore and has grown by around 60 percent. The company has done pretty well with i2i cable network and now provides cable diversity through Tata Indicom Chennai Singapore cable. The company has also entered into an agreement to join the South East-Middle East-Western Europe-4 (SEA-ME-WE-4) consortium.

Sea-Me-We-4 cable system links France to Singapore with Mumbai. The company has a design capacity of 1.28 Tbps. Upon commissioning, the cable system would play a key role in facilitating traffic to the Far East, Europe, and USA both via Atlantic and pacific route of India.

Reliance Infocomm is at number three position with revenues of Rs 655 crore. The company has become very aggressive on corporate data and also on prepaid international calling card.

In FY 2005-06, the company is investing in Falcon, a high-capacity resilient loop cable system installed to provide multiple landings throughout the Gulf region, with submarine links stretching from Middle East to Egypt in the west and to India in the east.

With the acquisition of FLAG, Reliance Infocomm now owns and operates a low latency global MPLS based IP network, which connects most of the world's principal international Internet exchanges.

International Players
Unlike ILD, international connectivity services in India have seen large number of operators doling out entire suite of services to cater to all corporate segments. The market is very aggressive and all operators have ambitious plans. Some of the operators present in the segment are AT&T, MCI, Cable & Wireless, SingTel, BT, Equant, Sprint, BT Infonet, NTT, KDDI, Orient Networks, PCCW, Sify and others.

BT: It's global MPLS IP-VPN is connected to BT's global MPLS network which has around 2500 plus customers, 60,000 customer connections, 2,000 new connections per month. It is the furthest reaching 'fully owned and operated' global MPLS infrastructure. Majority of BT's revenue comes from IPLC but there is some movement on MPLS part.

The company launched customer management centre in Pune to cater to India as well as Asia Pacific customers.

Cable & Wireless: It was the year of expansion as the company expanded its existing services. The company launched MPLS nodes at Bangalore, Chennai and Mumbai and also launched ATM node at Hyderabad. Plans are to expand MPLS to new cities. In revenue terms, the company has grown by around 55 percent ans signed customers like Ventura, RAC, SBI, and Norwich Union.

Majority of C&W India sales is on managed data services including MPLS, ATM and MPL.

The company has also started providing 24x7 remote security services from Bangalore and is presently catering to 130 global customers.

Equant: It was an excellent year for the company as the company grew by 100 percent in both customers as well as bandwidth. In FY 2004-05, the company signed with Agilent, Fidelity Investments, AXA, Swiss Reinsurance, and ST Microelectronics. The company ahs the widest bouquet of managed services which includes: managed MPLS IP VPN, Managed ATM, Managed FR, convergent services, and managed private line. The company claims to have the largest global data and IP network in the world.

SingTel: The company expanded its operations by opening a fifth center in Hyderabad and signed global accounts with Schenker and BMW.

The company has expanded its ATM/MPLS nodes in the country and has forged new tie-ups for manged MPLS services with Wiltel in the US, KPN and Telefonica in Europe and China Telecom.

Sprint: The company launched MPLS services in January 2005 with primary node in Mumbai with VPoPs in Delhi and Bangalore. Sprint's MPLS plan is consistent with the company strategy to serve the needs of multinationals. In terms of customers, the company has provided
services to a large multinational corporations with a strong presence in India.

Sify: With the help of Global Crossing alliance, the company provides MPLS-based IP networks. The company has signed up with Symbian, GECIS, Seaton India, and Equinox Global Services.

India is very competitive on International connectivity front but it lacks on ILD front. The time has come for implementation of Carrier Access Code (CAC) a long pending demand of the consumer and industry so that one can avail true benefits of competition.

Pravin Prashant