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Despite the surrender of about 3.8 mn fixed lines during FY 2005-2006, the fixed line services showed a growth of 12.6% in terms of its subscribers. The total fixed line subscriber base stood at 50.5 mn, up from 44.9 mn in FY 2004-2005. This slow uptack was largely due to explosive growth of cellular subscriber base, which touched 90.8 mn. BSNL, being the largest fixed line operator, lost around 3.6 mn fixed line customers. MTNL, which witnessed about 2 lakh surrenders last year, managed to finally end up with the net addition of 32,000 subscribers. The shortfall was, however, compensated in a very small way by the growth of fixed wireless phones. 

Steady Progress
In terms of subscriber numbers, BSNL continued its lead in fixed services with a market share of 73% and subscriber base of 36.7 mn. TTSL's fixed line subscriber base stood at 4 mn with a market share of 8% at the end of FY 2005-2006.  

According to Voice&Data estimates, the total revenue for fixed services during FY 2005-2006 was Rs 33,715 crore, showing a growth of about 3.1%. BSNL maintained its first position in revenue terms but with a dismal growth rate of mere 4.8%, mainly because of large-scale surrender of fixed line phones. It managed a revenue of Rs 25,195 crore, up from Rs 24,030 crore it had during 2004-2005. Officially, BSNL accepts that it's losing approximately 30 lakh customers every year. The reasons range from service consideration to positioning of landline vis-ŕ-vis mobile and FWP of CDMA providers.  To overcome this, BSNL invited advertising agencies to take the message to the market and drive home the idea that landline offers distinct advantages like voice clarity and broadband services. All these measures are aimed to promote fixed line services, considering the business potential they hold. State telcos, for instance, enjoyed high ARPU of around Rs 800 for fixed lines. Obviously, the large-scale surrender of fixed  lines was a big jolt to the companies' overall business.

Among the private operators, Reliance Infocomm and Tata Indicom continued their aggressive push of fixed wireless telephony and several packages centered around this were launched during the year FY 2005-06. Bharti, which provides fixed line services in 90 cities, made a gradual progress and broadband services helped push the fixed phone numbers.  HFCL and Shyam Telecom continued their steady growth despite strong rumors that they were up for sale.

The year FY 2005-06 also saw BSNL launching the much-awaited one tariff for whole India (called One India plan) along with MTNL. To check the massive surrender of fixed line phones, BSNL reduced the rental of fixed line services from Rs 250 to Rs 180 per month.  BSNL also tried out bundling of fixed line, broadband, and mobile connections. Tata Indicom has continued its aggressive strategy for fixed wireless customers and announced new tariff structure for calls from fixed to mobile. It also introduced tariff plans for residential and business customers and also reduced one-time entry cost to Rs 1,602.

Reliance Communications intending to extend the trend of falling mobile tariffs to fixed wireless phones, announced new schemes for its fixed phone service.  It extended the 'One India' tariff scheme meant for mobile phones to fixed wireless phones. It also announced a new zero rental, 'life time incoming free' scheme for its fixed wireless customers.

On the issue of treatment of fixed wireless services, TDSAT dismissed Reliance's appeal holding cordless to be a limited mobile service. Reliance went ahead and filed an appeal before the Supreme Court. DoT directed all service providers including fixed line providers to set up a consumer grievance redressal mechanism and publicize this.

FWP Makes Deeper Inroads
Reliance and Tata aggressively pushed their fixed wireless telephony. Reliance renamed its fixed line brand as Hello. Earlier it was called IndiaPhone. Tata went ballistic with its Walky phones and spent crores of rupees in advertising to promote this product. Even BSNL and MTNL aggressively pushed their fixed wireless services and had their shares of success. The total fixed wireless subscribers as of March 2006 stood at 6,614,120.

All Eyes on big Customers
With consumer fixed line demand depleting fast, all the operators including the incumbents continued their aggressive strategy to rope in corporate customers. All the operators pushed the other value-added services such as centrex and audio conferencing. BSNL started its dedicated 1500 customer care number to cater to the queries of the corporate customers. The BSNL general managers have been empowered to directly negotiate tariff for corporate customers. MTNL also put in place specialized units in Delhi and Mumbai for looking after corporates, including but not limited to PSUs. The company improved its customer relation management. 

But in terms of customer acquisition, it was the private operators Bharti, Reliance, and Tata who managed to corner most of the leading corporate customers including the large BPOs. BSNL and MTNL, however, by virtue of being state enterprises, remained the favorite of state PSUs and banks.

The Union Budget enhanced allocations under USOF for rural connectivity by 25% to Rs 1,500 crore

Rural Telephony Push
The government started Bharat Nirman initiative to connect the unconnected 66,822 revenue villages in the country with VPT by November 2007. Out of these villages, connectivity in 14,183 remote villages will be provided through digital satellite phone terminals. Capital and operational expenditure for these VPTs will be met out of the Universal Services Obligation Fund (USOF).

Considering the low rural teledensity of 2, the government through its Budget 2006-07 showed its commitment to rural telephony by enhancing allocations under USOF for rural connectivity by 25% to Rs 1,500 crore.  It also proposed to roll out 50 million phones in the next three years to ensure phone on demand. In 2005-06, USOF had received Rs 1,200 crore from the finance ministry. 

Outlook
Reliance's launch of consumer broadband is going to give a major fillip to the fixed line services considering the kind of pan-India network that the company has. Similarly, as Tatas spread its network across the country and launch new services, the market for fixed line telephony will continue to grow. FY 2006-07 could witness a revival of fixed line's fortunes, considering the aggressive rollout of broadband services and a host of value-added services. This includes triple-play and IPTV services. BSNL also plans to make fixed line attractive by providing more feature-rich phones and providing CLIP to all phones.

Sudesh Prasad
sudeshp@cybermedia.co.in