India's fixed-line telecom network is estimated to expand to about 47 million by March 2005 from 41.5 million in March 2003, though the rate of growth in services revenues is likely to be lower in comparison with the pace of increase in the number of fixed lines, an ICRA report said.

"The existing record of competition in fixed telecom services in India demonstrates that competition in the provision of local services to residential customers has proceeded more slowly and tentatively than competition to serve business customers," the report, released recently, said.

Observing that effective competition seemed likely in long distance, national and international services, ICRA said, "Cellular operators are estimated to have provided 66 per cent of additional telephone connections during 2002-03, up from 33 per cent during 2001-02 and 22 per cent during 2000-01.

"Cellular services have the maximum potential in diluting the incumbent's (BSNL and MTNL) traditional monopoly control over telecom services. However, while cellular services are certainly on a high growth path, the rate of growth will hinge on regulatory solutions that advance competition in the cellular services sector and promote competition between fixed and cellular mobile networks," it said.

"The current low level of telephone penetration in the country, the large unmet demand for telephone connections, and the emerging demand for data services are expected to result in expansion of Indian fixed-line network from an estimated 41.5 million lines by end-March 2003 to about 47 million by end March 2005," it said.

Even then, 95 per cent of the fixed lines are expected to be controlled by the incumbent operators, it said.

"The rate of growth in service revenues is likely to be lower than the pace of increase in the number of fixed lines. This expectation is based on likely increase in competition from cellular networks and the expected sharp decline in the prices of long distance, national and international telephony services," it said.

However, in a competitive environment, slower revenue growth for incumbent operators from voice services could be offset by increased revenues from increasingly higher speed data related services and network access services, it added.