VoIP-based calling is a revenue challenge: Survey

NEW DELHI, INDIA: VoIP (Voice over Internet Protocol)-based calling is a major revenue challenge to the telecom operators, says a survey by Voice&Data.

The increase in the popularity of formal as well as informal (and illegal) Internet telephony operators (for both inbound and outbound internal calls), who bypass the licensed operators, is eating into the revenues of the telecom players, the survey added.

However, analyst firm Ovum had suggested that mobile operators must embrace VoIP and attempting to block mobile VoIP is not a viable long-term strategy for the operators. 

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“Subscribers can today make very cheap or virtually free calls, albeit poor voice quality, to and from India. The government needs to check the growth of these companies to ensure the growth of ILD operators in India,” it said.

Negative growth for fixed line phone business

Voice&Data's survey of Indian Telecom Industry 2010 also said that 2009-10 was another year of negative growth for the fixed line phone business in India, with revenues dropping by nearly a quarter (23.3 per cent) to Rs 18,900 crore.

While the top three fixed line players — BSNL, MTNL and Bharti Airtel — reported a revenue decline, others like Reliance Communications, TTSL and TTML posted growth in revenues, according to the survey.

The survey said that BSNL saw a major drop in its revenues for the second consecutive year to end the year with Rs. 30,240 crore, a drop of 14 percent, even though the company’s mobile subscriber base grew by a third to touch 70 million.

The International Long Distance (ILD) segment posted a 17.3 per cent growth to touch revenue of Rs. 17,600 crore, thanks to a booming subscriber base of almost 600 million. While Tata Communications (erstwhile VSNL) grew 12.7 per cent, Reliance Communications and BSNL grew at 4.1 per cent and 4.6 per cent respectively. What was noteworthy was the 1 per cent dip in Airtel's ILD revenue, substantially due to price drops, the survey said.

The ILD segment grew as Indian telecom operators increased their presence in foreign markets. This brought additional ILD revenue for domestic operators. With falling rates there has been a substantial growth of inbound voice traffic into India, the survey added.

It also said that the National Long Distance (NLD) market too bore the brunt of the price war as it recorded revenues of Rs.16,400 crore a growth of 13.6 per cent in 2009-10 compared to 48 per cent in 2008-09.

According to Voice&Data estimates, the two PSU players — MTNL and BSNL, who have the first mover advantage in the 3G space — seeded the market by adding 1.8 million subscribers.

Broadband, the fifth large segment of the telecom services space, posted revenues of Rs. 9,000 crore recording a growth of 20 per cent over last year. Both BSNL and MTNL saw 57.3 per cent and 92 per cent growth in their broadband revenues respectively.

Govt target likely to fall short

The Indian Government’s target of 20 million broadband connections by 2010 is likely to fall short with the year ending with just 8.75 million subscribers. Here also, the top 30 cities contributed nearly 60 per cent to all the broadband subscribers.

The only saving grace appears to be the addition of 149.03 million subscribers for wireless data services on smart hand-held devices that recorded a jump of 47.41 per cent in the 12-month period ended December 2009.

The popularity of Value added services (VAS), that include the basic SMS, ring-tone downloads, navigation aids and mobile payment features, picked up during 2009-10. The vast potential of the Indian market kept the VAS providers on their toes to build content and services focused on the Indian market.

The VAS business, fast growing in terms of number of players, is highly competitive leading to wafer thin margins. And with 3G coming in, this space is likely to get even more competitive and exciting, the survey added.