Bharat Sanchar Nigam Ltd Top 10 MTNL Lost Cause Cellular services grow 16.6% in 2010-11 www.bsnl.co.in

	BSNL is in the process of commissioning of a world class, multi-gigabit, multi-protocol, convergent IP infrastructure through National Internet Backbone-II (NIB-II), that will provide convergent services through the same backbone and broadband access network. The Broadband service will be available on DSL technology (on the same copper cable that is used for connecting telephone), on a countrywide basis spanning 198 cities. In terms of infrastructure for broadband services NIB-II would put India at par with more advanced nations. The services that would be supported includes always-on broadband access to the Internet for residential and business customers, Content based services, Video multicasting, Video-on-demand and Interactive gaming, Audio and Video conferencing, IP Telephony, Distance learning, Messaging: plain and feature rich, Multi-site MPLS VPNs with Quality of Service (QoS) guarantees. The subscribe will be able to access the above services through Subscriber Service Selection System (SSSS) portal. Key Objectives To provide high speed Internet connectivity (upto 8 Mbps) To provide Virtual Private Network (VPN) service to the broadband customers To provide dial VPN service to MPLS VPN customers. To provide multicast video services, video-on-demand, etc. through the Broadband Remote Access Server (BRAS). To provide a means to bill for the aforesaid services by either time-based or volume-based billing. It shall provide the customer with the option to select the services through web server To provide both pre-paid and post paid broadband services Technical Capability of the Backbone The Broadband Service will be given through the state of the art Multi Protocol Label Switching (MPLS) based IP Infrastructure, which is designed to provide reliable routes to cover all possible destinations within and outside the country. Layer 1 of the network will consist of a high speed Backbone comprising of 24 powerful Core Routers connected with high speed 2.5 Gbps(STM-16) links. The routers are located on the national DWDM network interfacing at STM-16 optical level to provide for high transmission speeds. What advantage does MPLS have over other Technologies? MPLS VPN is a technology that allows a service provider like BSNL to have complete control over parameters that are critical to offering its customers service guarantees with regard to bandwidth throughputs, latencies and availability. Services available through Broadband High speed Internet Access: This is the always-on Internet access service with speed ranging from 256 kbps to 8 Mbps. Multicasting: This is to provide video multicast services for application in distance education, telemedicine etc Dial VPN Service: This service allows remote users to access their private network securely over the NIB-II infrastructure. Video and Audio Conferencing: Content based Services: Like Video on Demand, Interactive Gaming, Live and time shifted TV What the customer needs in order to be able to use Broadband? BSNL's Bfone (Basic phone) connection Personel Computer with 10/100 Ethernet Port ADSL CPE (Customer Premise Equipment). This can be taken from BSNL at nominal rental per month. When is the service being launched The Broadband Service has been launched in Bangalore, Chennai, Hyderabad and Kolkata from 14th January 2005. Soon, it will be extended to more than 200 cities. Please click here for list of cities>> Does BSNL provide PC for broadband access BSNL has tied up with HCL Infosystems Ltd. to launch the BSNL HCL PC for BSNL broadband customers in the country. For further details about pricing and configuration please click here. How do I apply for a BSNL broadband connection For applying a broadband connection you may download the form from this page and submit the same at your nearest BSNL Customer Service Center. You may also apply online by clicking here.

It seems like nothing is going in favor of the state-run telecom firms like BSNL and MTNL. Despite tremendous support from government in all aspects, these companies have so far failed to leverage on that. MTNL, for instance, garnered revenue of `3,951 crore in FY11 showing a huge dip of -21.9% over `5,058 crore business it did in FY10. The company also posted a net loss of `2,826.95 crore in FY11 compared to `2,514.87 crore it suffered in FY10.

However this loss can be attributed to many factors besides just its performance over its core business. The company that is operational only in 2 telecom service areas is overstaffed with close to 50,000 employees compared to 15,000-20,000 for telcos having presence in all 22 circles. This is bound to impact the bottomline. The company incurred a wage bill of `1,704 crore for the year ended March 2011 against `1,968 crore for the previous financial year. The pension bill increased to `340 crore in 2010-11, against `261 crore a year ago.

Though MTNL is one of the first 2 telcos provided with 3G spectrum, and the company had already made the 3G services available in its 2 operating circles, it has so far not seen much success. By the end of FY10, MTNL had managed to acquire only 250,000 3G subscribers. On an yearly basis, the revenue from its cellular services declined from `705.5 crore in FY10 to `648.8 crore. Overall, the voice ARPU for MTNL has come down to `260 in FY11 from `303 in FY10.

Though MTNL has not done remarkably well in its voice business, the company has taken few long strides in pushing its data services. In the last fiscal year, MTNL had seen major uptake in 3G services and subscriptions, mostly on the data front. Earlier the data usage in both its services areas was around 50 GB per day. But by the end of FY11, it had grown to 1,400 to 1,500 GB data usage in each city. The company's data ARPU of its broadband services for FY11 was `573 compared to `618 in FY10. It's a good sign that the company, though late, realized that it needs to bank on enterprise services in order to make up for its poor performance in cellular business.

The company had taken few steps in that regard during the last year. MTNL has started connecting around 86 CGHS hospitals in Delhi and providing backbone to them. Though revenue from this is not that significant, but it is a continuous revenue stream without any investments from MTNL's side. They are also connecting all the police stations in Delhi through its IP-MPLS network to provide them seamless connectivity for voice, data, and video. The company is also working on connecting Universities of Delhi and Mumbai through its network. It has also tied up with few device makers like Nokia, Samsung, and Micromax to make its services more accessible to its customers. Overall, MTNL had made `343 crore from the enterprise segment in FY11.

MTNL is the first company to float the idea of 3G roaming, wherein it will share a part of its network with private companies and the telcos who do not have 3G license in Delhi or Mumbai can utilize MTNL's network and offer their services. BSNL, which received BWA spectrum at the same time as MTNL, launched WiMax services in the country but MTNL so far has refrained from this. The company is mulling of going the LTE route instead of WiMax.

So far, marketing and customer care have been the company's main bottlenecks and the company is planning to synergize operations with BSNL and proposed to form a joint venture called Millennium Telecom (MTL). This new entity is expected to be the marketing and customer care arm for the enterprise segment of both MTNL and BSNL.

This has been revealed in Voice&Data 100 (V&D100), the second volume of the survey by the leading Telecom industry journal Voice&Data. Telecom services revenue include revenue from cellular, fixed line, National Long Distance (NLD), International Long Distance (ILD), broadband, VSAT services.

The cellular services market, the largest among all the communication services offered in the country, grew at 16.6% to cross the Rs 100,000 crore revenue milestone (Rs 102,230 crore) in FY2010-11 from Rs 87,680 crore a year before.

The fixed lines and revenues, the only significant means of telecommunications until mid 1990s continued decline both in terms of number of connections and revenues (Rs 11602 crore, YoY decline of 15.6%).

Commenting on the way ahead for the telecom industry as it struggles to deliver in an ever evolving policy roll out Mr. Ibrahim Ahmad, Group Editor of Voice&Data said, “The recent tariff hike will help the industry invest in telecom infrastructure that delivers better customer experience through improved quality of service.”

Active subscribers cross 501 Mn as SIM cards swell to 812 Mn
Even though the telecom regulator reported India's mobile subscription base at 812 million at the end of March 2011, that number includes a large base of inactive subscriptions. This includes those who are in the 'grace period' after their SIM validity has lapsed, with them having not charged their SIM cards for months or even years.

The active subscribers, represented by the figure in the VLR (visitor location database), reported by TRAI was at 574 million. Using a very conservative estimate of multi-SIM usage at just under 15% (1.15 SIMs per user) Voice&Data estimated the actual active user base in India at 501 million, for March 2011. This growth indicates huge untapped market for the mobile operators.

Three mobile operators--Bharti, Reliance and Vodafone--now boast of a subscriber base of over 100 million each. The subscriber base for fixed line in the country is languishing at 34.71 million.
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Even though most top cities have statistically achieved near 100% mobile penetration Voice&Data estimates that nearly 20% of the mobile subscribers are inactive. The journal from CyberMedia, the largest specialty publishers in south Asia, reveals that in 2010-11 nearly three-fifths of the new additions came from rural areas. Voice&Data expects the new customers in future to come mostly from the rural markets.

Fixed Line Posts Negative growth

Cellular, Broadband and ILD grow at Healthy rate

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.

The International Long Distance (ILD) segment posted a 10.1% growth to touch revenue of Rs. 22,607 crore in FY11 compared to Rs 20,530 in FY10. While Tata Communications, the largest ILD player, posted revenue of Rs 8,672 crore showing a growth of just 0.5%, smaller players like Verizon, Idea and Aircel grew at a very healthy rate, at 61.7%, 59.3% and 43.9% respectively.

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.

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. 6,846 crore recording a growth of 22.4% over last year’s earnings of Rs 5,591 crore. While BSNL and MTNL saw 40% and 32.9% growth in FY2010-11 in their broadband revenues respectively, the other state-run telecom operator MTNL grew just 8% over the same period.

Broadband growth still lagging targeted 20 Mn connections by 2010

The industry failed to achieve the Indian Government’s target of 20 million broadband connections by 2010 even by end of March, 2011, ending with just 11.87 million subscribers. Here also, the top 30 cities contributed nearly 60% to all the broadband subscribers.

The popularity of Value added services (VAS), that include the basic SMS, ring-tone downloads, navigation aids and mobile payment features, picked up during 2010-11. 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 services proliferating, this space is likely to get even more competitive and exciting.

The Top 10 Service Providers
Bharti Airtel, retained its position for the second consecutive year, by posting a growth of 42.1%, to end the fiscal with revenues of Rs. 59,467 crore. Vodafone Essar posted revenue of Rs 27,348 crore in FY11 from Rs 23,559 showing a healthy growth of 16.1% and emerged as the third largest player. Reporting a marginal growth of just 4.4% Reliance Communications was at No. 4 with revenues of Rs. 23,108 crore.

The leading public sector giant BSNL saw a drop in its revenues for the third consecutive year to end the year with Rs. 28,877 crore, a drop of 10% from its last year’s earnings of Rs 32,072 crore. Idea Cellular, Tata Communications and Tata Teleservices retained their slots at No. 5, 6 and 7 with revenues of Rs. 15,503 crore, Rs. 11,932 crore and Rs. 8,280 crore, respectively.

Aircel retained its No. 8 slot--by recording the highest growth of 44.1%--among the Top 10 players, to post revenue of Rs. 5,392 crore. MTNL’s revenue dropped nearly 22%—the biggest drop among the top 10 players--to post revenue of Rs. 3,951 crore at No 9.

Telecom Equipment market plunges 2.52%
Voice & Data had in June 2011 reported that the revenues of the Indian telecom equipment industry plunged 2.52% to touch Rs 1,17.039 crore in 2010-11, from Rs 1,20,069 crore in FY2009-10.

This together takes the size of the Telecom (equipment and services) industry size to Rs 283207 crore in 2010-11, up 7% from Rs 264669 crore reported in 2009-10.

The survey 'V&D 100' volume 1 covered over 500 telecom companies in India spanning carrier equipment, enterprise communication equipment, and user device manufacturers.

According to the annual telecom industry survey, the 16th from the specialty publishers CyberMedia, close to half of the telecom equipment revenue came from carrier equipment manufacturers, which saw a dip of 12.12% to touch Rs 58,294 crore during the year. In FY2009-10, the segment registered revenue of Rs 66,332 crore.

The enterprise equipment vertical grew at 0.87% to report revenues of Rs 24,023 crore for the same period from Rs 23,815 crore in FY2009-10. The user device segment that includes mobile handsets, fixed phones, data cards and tablets, contributed more than one-third to the total telecom equipment industry, at Rs 34,722 crore recording a growth of 16.04%.

V&D100 is the most comprehensive annual survey of the Indian equipment industries and telecom services.