Fixed Line Telephony in need of a fix!

While cut-throat competition among Pakistani cellular companies led to enhanced user choice and increased cellular teledensity, the fixed local loop telephony - FLL or simply land line - has been the obvious casualty.
According to PTA, the FLL teledensity stood at 2.16 percent in December 2010, declining by a hefty 35 percent from an already abysmal 3.37 percent in 2006.
The general perception remains that landline telephony is declining universally, but it is hard to substantiate this without conducting a thorough analysis. In such a scenario, it becomes imperative to contrast Pakistans shrinking landline subscriber base to those in the South Asian region.
The graph shows annual rates of growth or decline in the number of land line subscribers in India, Pakistan, Bangladesh and Sri Lanka for five years ended 2009-10.
The trends in the graph are marked by decreasing growth rates as well as chronic, persistent shrinking of landline segments among the four countries.
With an 80 percent surge in landline subscription during the last five years, Sri Lanka comes on top in the SA region with FLL tele density at 17 percent in 2010. In a nation of over 20 million people, the fact that Colombo, Sri Lankas largest city, alone has over 40 percent fixed line subscriptions is an anomaly.
This, however, does not limit growth prospects for Sri Lankan FLL operators, who now have the opportunity to diversify their networks in the previously troubled Tamil-dominated northern and eastern provinces.
However, they would have to face tough time from the cellular companies, who would also scramble for new subscribers in the war-torn areas.
Although landline subscriber growth in Bangladesh depicts a sinusoidal curve, it is apparent that the shift towards mobile telephony and heightened competition among some 12 FLL operators have finally caught up with the land line segment.
The government owned BTCL is a significant market player, although new licenses were issued in 2004 and 2007 to local and foreign operators.
Despite net additions in some periods, the landline subscriber base is back in 2010 to what it was in 2006. Even before the double-digit growth in mobile telephony, the FLL teledensity never crossed 1 percent, and has rather declined by 10 percent between 2006 and 2010. Mobile phone subscription, on the other hand, has grown by over 150 percent in the same period.
As far as India is concerned, in its latest report, the Telecom Regulatory Authority of India (TRAI) estimated that Indias wireless segment added a whopping 227 million new subscribers in the twelve months ended December 2010. Growth in the rural wireless segments was 1.4 times that of the urban segment.
According to the report, landline teledensity in urban areas is seven times that of the rural areas, making a strong case for more investment and penetration in Indias rural areas. On the contrary, it is Indias rural population which has seemingly more appetite towards wireless telecommunication than their urban counterparts.
According to TRAI, the rural landline segment shrunk by 10.75 percent in twelve months ended December 2010, compared to an urban contraction of only 3.32 percent. The rural wireless segment grew by 52.5 percent, compared to urban wireless growth of 39.05 percent. Indias overall FLL tele density stood at 2.95 percent in 2010, dropping by over 20 percent in last five years.
While Pakistans overall telecommunication landscape is hanging on, consolidating earlier periods of double-digit growth, the landline segment has been descending since 2005. Apart from mobile telephony, wireless local loop (WLL) is also a formidable factor in FLL segments deteriorating value proposition in the last five years.
Pakistan is regarded as a 100 million landline user market. Actual subscriber base, however, had been reduced to only 3.4 million in 2010. FLL operators have lost almost two million subscribers since 2005. In the wake of stiff price competition, their top lines eventually take the hit every year. Investment in the sector has waned sharply.
It turns out that land line telephony is, indeed, tapering off in these countries, not least because of the obvious benefits of wireless (e.g. mobile) modes of telecommunication. Sri Lanka is an outlier in the region, however; recent numbers suggest its landline telephony is also converging towards the regional trend.
Experts are of the view that the sooner the FLL operators diversify into broadband services, entertainment, and international VoIP technology; the better. There are many limitations associated with the fixed nature of landlines, however, the few advantages it does offer should not be left unexploited.