Bangalore: India's fixed telecom services market is forecast to reach $ 14 billion in 2006, a compound annual growth rate of 14 per cent from 2001, a leading research and advisory firm said on May 16.

According to Gartner Dataquest, a unit of New York stock exchange-listed Gartner Inc., India's fixed telecom services market is facing strong competitive pressure, especially on the pricing front, with the privatisation of long distance services.

"Nevertheless, India is forecast to show double-digit growth, with the telecom services market reaching $ 14 billion in 2006, a CAGR of 14 per cent from 2001 through 2006," the study said.

Growth would be driven by increased deployment of phone lines supported to an extent by the rollout of wireless local loop said, a Gartner statement.

Going forward, contribution from local calls and rentals would shore up the revenue base, it said. Data and internet services would grow faster and their contribution to total revenues would increase, in line with other markets in Asia.

Senior analyst Kobita Desai of Gartner India (Telecom and Mobile) said the huge price drop is not likely to result in corresponding increase in usage.

She said private carriers would need to be more discerning. "Typically, incumbent is more resilient and can sustain a business at discounted rates with lesser impact on its bottom line while for new entrants it could make their businesses unsustainable," she said.

According to the Gartner study, the Asia/Pacific (including Japan) fixed telecom services market would continue to show modest growth over the next five years, despite the problems facing the overall telecom industry.

After suffering a decline of 4.5 per cent in 2001, Asia/Pacific fixed telecom services revenue would increase to $ 111.6 billion in 2002, up 1.8 per cent from 2001, it said.

The industry would continue to experience single-digit growth rates through 2006, when the market is projected to total $ 136.8 billion.

Telephony still contributes about 75 per cent of the Asia/Pacific fixed telecom services revenue. While usage volumes have gone up, revenue dropped 9.3 per cent because of severe price competition, tariff rebalancing and increasing deployment of Voice-Over Internet Protocol (VOIP).

Gartner Dataquest analysts said future growth would be flat. In contrast, data services, including internet and public IP services, is growing strong. It already accounts for 24 per cent of the total market, and this is expected to increase to 35.6 per cent by 2006.

Total data revenue is expected to hit $ 49 billion in 2006.

Meanwhile, China's telecom market is forecast to hit $ 27 billion in 2006, a CAGR of 7.9 per cent from 2001 through 2006, accounting for almost 20 per cent of the total Asia/Pacific market by 2006.

PTI