The domestic basic telephone network is expected to grow at a slow rate over the next few years owing to increased competition from cellular wireless services. The growth rate in voice service is likely to be lower compared with the pace of growth in the number of fixed lines.
In basic telecom services in the country, competition is lower in the residential customer segment than that in the business consumer category.
According to a Credit Rating Agency of India report, local access competition is likely to be witnessed more in the cellular services sector than in basic telephony.
The expectation is based on the likely rise in competition from cellular networks and sharp decline in prices of long distance national and international telephony services.
However, in a competitive environment, slower revenue growth for operators from voice services could be offset by increased revenues from higher speed data-related services and network access services.
During the first quarter of the current financial year (April-June 2006), basic subscription in the country, including fixed and fixed wireless, have declined to 47.6 million at the end of June. In comparison, the subscription rose 8.6 per cent during 2005-06 and 7.8 per cent during FY2005.
The decline this year was mainly because of the migration of many subscribers from fixed wireless to digital mobile subscriptions based on second-generation (2G) digital cellular networks - GSM (global system of mobile communications) and CDMA (code division multiple access).
Fixed subscribers accounted for 31 per cent of the total telephone connections at the end of June 2006, compared with 35.8 per cent at end-March 2006 and 46.9 per cent at end-March 2005.
