Rise of WLL Power

Mobility, limited or not, is a compelling proposition. For almost two years now, the cellular service has been in the forefront of the Indian telecom industry, giving it much to cheer about with growth rates in multiples of that ever seen by the fixed landline service operators. But it has competition now from what was hitherto perceived as a poor cousin–wireless in local loop or
WLL.

For within the mobile industry, it is now the turn of the contentious WLL services to take control of the action. Consider the numbers: the first quarter (April-July) of the current financial year saw cellular operators adding 36 lakh new customers, while net additions for WLL services stood at 31 lakh. Even though the figure is lower than that of the cellular operators, compare it with the total number of WLL subscribers as on March 31, 2003–17.77 lakh. And, if one looks at the figures for the last month of that quarter, that is July, it emerges that WLL is playing the game of catch-up rather well. The total customer addition by WLL services stood at a whopping 12 lakh, while the cellular industry trailed close at 11.5 lakh. WLL, it seems, is finally is edging past cellular to become the fastest growing service in the Indian market.

Where there’s a WLL...

The reasons for the astonishing growth of WLL are pretty much on the wall–never before has the industry witnessed such market aggression as that unleashed by players like Reliance Infocomm, Tata Indicom and even the state-owned incumbent Bharat Sanchar Nigam Limited (BSNL). Offers like “Monsoon Hungama” by Reliance and the “999 scheme” by Tata Indicom have redefined telecom marketing in India, with entry points priced as low as Rs 501 and Rs 999 respectively. In addition, the operators are offering mobile phones along with the service subscription. Naturally, getting new customers is proving to be a not-so-difficult task.

Reliance Infocomm’s “Monsoon Hungama” offer set the record for the lowest entry point for a new subscription. The scheme, launched on July 1, 2003, has gone on to become a roaring success–so much so that handset suppliers to Reliance, like LG and Samsung, have had to hire Boeings to ferry more phones to India. Consider the impact of the “Monsoon Hungama”; the company’s subscriber base stood at 17 lakh subscribers as of June-end and finished July by adding 11 lakh new subscribers. The company is eyeing a figure of 4.8 million subscribers by September-end, which would effectively place it at the top of all mobile service providers. 

Hopping onto the bandwagon

The marketing action unleashed by private operators seems to have rubbed on to the incumbents as well. BSNL and MTNL have resorted to luring customers by offering lower tariffs and free talktime, offers that their landline customers have never been given. Both the incumbents seemed to have figured that the wind is certainly blowing in the direction of wireless.

Ironically, their landline customers now have to grapple with increased rentals and lower pulse rates, while WLL subscribers are being offered miniscule rentals and lots of bundled airtime.

For example, one of the offers of BSNL’s “Tarang” WLL service is a new phone to the customer at a rental of just Rs 20 a month. According to BSNL chairman and managing director Prithipal Singh, the company has set a target of 15 lakh WLL subscribers (including fixed WLL terminals) by the end of this year and 30 lakh subscribers by next year.

Unlevelled playing ground

It is interesting to note that the phenomenal growth being shown by the WLL industry is purely on the back of excellent marketing efforts. In terms of service features, the WLL service lacks a characteristic that is almost fundamental to a mobile phone, which is roaming within networks. Since WLL is part of the basic service license and since the license bars an operator from offering the roaming service to customers, WLL operators can at best offer what is called “limited mobility”.

While operators like Reliance are offering a way around this limitation by an innovative use of the call-forwarding feature along with multiple registrations, the latest judgment by the Telecom Disputes Settlement Appellate Tribunal (TDSAT) has sought an end to such usage. As of now, roaming continues to be the domain of cellular operators alone.

Notwithstanding the fact that WLL phones do not offer full mobility, the service’ popularity is growing simply because WLL operators can afford to offer ridiculously low entry points, which they can do purely because of the unique characteristics of the underlying technology platform–CDMA. A CDMA phone does not have a SIM card–rather the operators program it for use at the time of subscription by a customer. Once programmed, the phone is locked with that particular operator, making inter-operator migration almost impossible. All WLL service providers have been using this inherent feature of the technology to their advantage–bundling new phones with their services, pulling in users who cannot move away.

A CDMA phone does not have a SIM card–rather the operators program it for use at the time of subscription by a customer

Finally…

Much as the cellular operators might protest and despair, WLL is a service that is here to stay. As KPMG’s executive director (telecom) Rothin Bhattacharya says: “In the case of basic service providers, 70% to 80% of growth will come from
WLL.”

Moreover, the latest TDSAT verdict stands in favor of the service. Although, taking care to address the demands of the cellular industry, TDSAT has directed the Telecom Regulatory Authority of India to come up with suggestions for creating a level-playing field between the two services.

Cellular operators need to realize the fact, and realize it fast, that the consumer choice is wireless–if it is not a GSM-based cellular phone, then it a CDMA-based WLL/limited mobility phone. And, hopefully, all anomalies in the regulatory environment will go away once the unified license becomes a reality, but then that’s a different story altogether.

RISHI SETH  in New Delhi

Fixed in a Mess

Wireless services are causing customers to hang up on fixed landline operators. And not in small numbers–both cellular and WLL-M services added approximately 67 lakh customers in the first quarter of this year (April-July)–a figure that exceeds the total additions by them in the whole of the previous year (approximately 65 lakh), according to a statement by the Telecom Regulatory Authority of India. 

And all this while, growth in the landline segment has lagged far behind. For instance, in fiscal 2002-03, around 77.5 lakh mobile connections were added, while additions in fixed line connections were only 27.2 lakh (Voice&Data estimates). In other terms, the fiscal saw the mobile segment adding almost three times more subscribers than the fixed landline segment. 

Very clearly, wireless or mobility is the first preference for the average telecom consumer while opting for a new connection.

The ever-plunging tariffs–sometimes matching or even lower than landline tariffs–coupled with the inherent advantage and convenience of a mobile phone seem to have done the trick. But the results do not bode well for landline service providers–an incumbent like Bharat Sanchar Nigam Limited is grappling with a large number of surrenders; close to 1.6 million customers gave up their landline connections in fiscal year 2002-03 alone.