VSNL lost 8.31% of its subscribers for the quarter ended December 2005.

From being the dominant internet service provider (ISP) in the country until recently, Videsh Sanchar Nigam Ltd (VSNL) has witnessed a steady erosion of its subscriber base.

According to latest figures, the company’s market share has dropped to a single digit figure of 6.97 per cent.

According to the Telecom Regulatory Authority of India’s (TRAI) performance indicator report released on Monday, VSNL has lost 8.31 per cent of its subscribers for the quarter ended December 2005.

Its subscriber base has fallen by 20.56 per cent for the quarter ended September 2005 and 9 per cent for June 2005. In the quarter ended March 2005 there has been a 24 per cent decline.

This comes even as all the other top ISPs including BSNL, MTNL, Sify, Reliance and Bharti maintained impressive growth rates over the last four quarters.

These service providers have registered 14.80 per cent, 8.80 per cent, 2.51 per cent, 9.8 per cent and 62.34 per cent growth respectively, for the quarter ended December 2005. Growth figures for the previous quarter ending September 2005 were 12.14 per cent for BSNL, 8.72 per cent for MTNL, 1.73 per cent for Sify and 24.24 per cent for Bharti.

Interestingly, VSNL’s decline in this segment comes at a time when India’s internet subscriber base (both broadband and dial-up) has been registering close to 25 per cent growth annually, industry analysts said. VSNL’s declining subscriber base is a result of customers moving from dial-ups to broadband connections.

“The company has also failed to attract new users as it has not matched the slew of schemes that are currently being offered by new players in the sector,” an analyst said.

However, according to a VSNL spokesperson, “The Internet market trend is shifting towards broadband. VSNL’s broadband subscribers have grown considerably in the last few months.”

Then, unlike the other top ISPs, VSNL has suffered because of it lacking last mile connectivity. State-owned BSNL and MTNL, which provide the last mile for VSNL, are themselves major players in the ISP space following launch of their broadband services last year.

The two PSUs – BSNL and MTNL — with a subscriber base of 2.6 million and 1.3 million respectively, continue to be the dominant ISPs and account for over 58 per cent of the country’s Internet subscribers.

Sify is the third largest ISP, with a subscriber base of 0.87 million and a market share of 13.09 per cent, followed by VSNL at 6.97 per cent and Reliance at 5.08 per cent, Trai said.

While there are 163 ISPs operating in the country at present, these five ISPs together, account for 83.48 per cent of the country’s 6.7 million Internet users.

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