Financial Daily from THE HINDU group of publications
Monday, Jul 04, 2005
Info-Tech - Telecommunications
Fixed line telephony set to make a comeback Integrated operators plan major wireline expansion
Thomas K. Thomas
New Delhi , July 3
FIXED line telephony that had given way to mobile phones is now back in focus. Most of the integrated players including Reliance Infocomm, Bharti Tele-Ventures and Bharat Sanchar Nigam Ltd are betting big on wireline phones and are rolling out optical fibre cables with copper in the last mile across the country.
While Reliance officials said that the fixed line would become the company's mainstay in the long run, Bharti has spread its fixed line network to 14 circles from five. State-owned BSNL is all set to issue a major tender for installing IP (Internet Protocol)-based network across all its major exchanges around the country.
Even Mahanagar Telephone Nigam Ltd, which operates in Delhi and Mumbai, is introducing new features such as picture messaging and ringtones on its fixed line terminals to make it more interesting to consumers who have jumped on to the mobile bandwagon.
"With services like broadband, high speed Internet and triple play set to come in, fixed line is going to be a lucrative business in the years to come. At Bharti we are giving fixed line telephony the same focus as we are giving mobile phone," said Mr Badri Agarwal, President, Bharti Infotel.
Analysts point out that higher revenues from fixed line phones and decreasing cost of rolling out a wireline network is inducing operators to expand their strategy for fixed line business. On an average, the revenue per user for fixed line phone is around Rs 1,000 per month, which is almost double the average revenue per user (ARPU) being earned by mobile operators.
"Fixed line gets more revenues for operators and with dipping ARPUs in the mobile segment, it wont be long before operators go big on fixed line telephony," said a leading fixed line equipment vendor.
For instance, BSNL and MTNL, which have nearly 47 million fixed line users, get revenues of over Rs 40,000 crore every year compared to about Rs 25,000 crore earned by all the mobile operators with over 50 million subscribers.
The cost of rolling out a wireline network is also expected to fall by 60-70 per cent from around Rs 12,000 per line at present with the use of IP technology. This would make it comparable to the cost of a mobile network at Rs 5,000 per line. Industry estimates the fixed line subscriber base to double to nearly 85 million by 2007 and an exponential growth after that with the launch of triple play services which will enable users to make voice calls, access high speed Internet and enjoy television on a single wireline.
"Fixed line is here to stay. While a mobile phone can be compared to a wristwatch, a fixed line phone is like the clock on the wall. Private operators are already adding 3-4 lakh subscriber every month which will grow as broadband penetration improves," said Mr S.C. Khanna, General Secretary, Association of Unified Telecom Service Providers of India.
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