Fixed voice revenue to decline

by CXO News Desk    Jul 18, 2012

broadbandThe Indian consumer fixed services market that comprises consumer fixed voice, internet and broadband services is expected to reach Rs 240 billion in 2012, according to a recent Gartner study. This is a 2 percent increase from 2011 revenue of Rs 235 billion. Of the total fixed services market, the consumer fixed voice revenue is forecast to reach Rs 148 billion in 2012, a 7 percent decline from 2011. The study indicated that from 2012 to 2016, the fixed voice revenue will further decline by 25 percent.

The usage of mobile technology and services has resulted in the decline in fixed voice revenue. According to Neha Gupta, Senior Research Analyst at Gartner, “As voice traffic continues to shift to mobile, consumer voice lines have decreased and so have usage levels. Prices will continue to remain more or less constant. In the future, decreased average revenue per unit (ARPU) levels, coupled with a low user base, will lead to decreased voice revenue.”

Gupta said that consumers will abandon their fixed lines even as service providers increasingly bundle broadband and IPTV to retain their fixed line customers.

This year, the Indian consumer fixed line services market will see growth from broadband and internet access sectors, which will collectively grow to Rs. 92 billion. It is expected that the household broadband penetration will cross 6 percent. The broadband market continues to be dominated by DSL, which accounted for 87 percent of all the broadband connections in 2011, and is expected to grow 18 percent in 2012.

Gupta stated that there has been slower than expected growth of fixed broadband services owing to the slow roll out of fixed broadband infrastructure. While some operators have rolled-out FTTx or Ethernet cables, much of the investment focus has been in wireless services.

As per the Gartner report, fixed line broadband penetration will remain in single digits till 2016. Wireless broadband services are expected to help bridge the demand and supply gap to some extent, especially in markets that are not covered by copper telephone lines. On the other hand, fixed broadband prices are forecast to decrease with more service providers are tapping consumers in the rural areas.

The report also noted that while broadband has taken over dial-up as the primary access technology, it will continue to be widely available outside the major metropolitan areas. It has been noted that dial-up accounted for almost 42 percent of total Internet accounts at the end of 2011.