Wireline Resurrection

The fixed phone industry in India is on a verge of extinction. There are only 31.43 million total wireline subscribers according to the Telecom Regulatory Authority of India (TRAI) as on June 30, 2012, compared to a whopping 934.09 million wireless subscribers which is more than 30 times that of the wired subscriber base. (See Gurdeep Singh Is RCom's New Wireless Chief, Intex Launches 3G Wireless Data Card and Beetel Launches Wireless Hotspot.)

The two telecom PSUs, Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL), dominate the fixed market with BSNL having a 69-percent market share. While the two PSUs together have 80 percent of the market, the other players in the segment are Bharti Airtel Ltd., Vodafone India, Reliance Communications Ltd. and Tata Teleservices Ltd. (See BSNL Inks GSM Deal With ZTE, BSNL's Last Shot To Save CDMA and IndiaWatch: BSNL Picks Network Vendors.)

Looking at the above figures, it appears the fixed phone industry is counting its last days. The question of the hour, hence, is what are the possible ways to aid this ailing industry.

Let's look at what industry experts have to say on this:

"There is no value addition in Plain Old Telephone System (POTS) compared to mobiles which possess several other features. Also, a cordless phone, despite being license free, runs on 2.4 GHz network which creates electromagnetic interference and is not preferred by consumers," says Anil Prakash, President, Telecom Users Group of India.

On the positive side, he adds, a new technology called Digital Enhanced Cordless Telecommunications (DECT) for which the sector regulator TRAI is in consultations holds potential to change the fortunes of the landline industry. (See IndiaWatch: TDSAT Stays TRAI's Order On MNP, IndiaWatch: TRAI Offers Aid To BSNL and IndiaWatch: TRAI Backs 200 SMSs Limit.)

"TRAI is in a consultation process to recommend the use of DECT with no license as in the case of 2.4 GHz. Once it is approved, there will be tremendous growth of the fixed-line, both in homes and enterprises, since it provides an enhanced voice capability along with data services," adds Prakash.

The DECT technology has been adopted by most countries in Asia and South America, and is primarily used in homes and in small-and-medium office systems. It is designed to work with many other types of networks such as PSTN, ISDN and GSM. (See GSMA: India Auction Still Expensive, BSNL Inks GSM Deal With ZTE and IndiaWatch: COAI Wants TTSL's GSM Cancellation.)

Another important factor which can fuel the growth in this segment is the broadband service which requires a home phone connection for implementation. This, however, experts believe will require huge investments and new strategies.

"The operators will have to roll-out optical fiber network to cater to the surge in demand of broadband. Also, a consumer in a metro likes to have a similar connectivity experience at his home as in his office. That is where the home broadband can play a key role since it is available at a much cheaper price compared to the wireless broadband," says Katyayan Gupta, analyst at Forrester Research Inc.

Fiber optic connectivity across the nation, however, will require significant investments which will be a daunting task for the cash-strapped operators.

"The fixed phone operators should focus on customizing the high-speed broadband service in metros, while the far-flung areas should continued to be covered via wireless as high-speed data service is not in the requirement list of rural consumers," adds Gupta.

Agreeing to that Satyen Gupta, ex-Principal Advisor to TRAI and Secretary General of Next Generation Networks Forum, says that broadband can play a pivotal role for not just saving but also expanding the industry but operators are blindly focusing on the mobile wireless segment only.

"Out of the 28-million and 3-million fixed phones currently owned by BSNL and MTNL respectively, only 7 million of BSNL and 1 million of MTNL landline connections have a DSL broadband. Both PSUs are focusing on the mobile segment and have completely discarded the fixed-line business," says Gupta.

"If all the lines are converted into broadband, there won't be any surrenders of the wired phone connections. The two PSUs should go for Local Loop Unbundling (LLU) in which data services can be availed from other ISPs if they dont have enough resources to provide DSL connections," adds Gupta.

Fixed phone services no doubt appear centuries behind compared to the mobile wireless but an innovative strategy and focus on the industry, particularly on broadband services which can be provided at a much cheaper rate and are more consistent compared to wireless broadband, can overhaul the current situation of the landline industry.

- Rimit Singh, Correspondent Light Reading India