FORMER TELECOM secretary Pradip Baijal calls it the silent revolution. From December 2007 to December 2008, the number of rural mobile phone subscribers in India increased from 6.4 crore to 9.3 crore. An Ernst and Young and Confederation of Indian Industry report says that out of the next 25 crore mobile phone users in India, 10 crore, or 40 percent, will be from rural India. The current rural tele-density is 14 percent, which translates to 14 mobile phones per 100 people.
Rural India is witnessing a hunger of a different kind, the urge to possess a mobile phone. This has changed the dynamics of communication across a majority of India’s 6 lakh villages.
Sanjay, 32, is a Bihari migrant labourer in Dariyapur village, 30 km from the capital. Every day, when he goes out to work, he carries with him a mobile phone; an instrument which no one in his family had before. “I use my phone to stay in touch with the owner of these fields, as well as my relatives. Sometimes, I even listen to FM radio,” says Sanjay. What he means is simple: words such as recharge, mobile phone and call rates are now part of the rural vocabulary.
India has the world’s second largest telecom user base after China, ahead of the US
At the same time, there has been a visible reduction in landline connections in rural India, with the subscriber base falling from 1.16 crore to 1.06 crore in the year 2008.
Sanjay narrates an interesting story that many say is a new face of rural India. Earlier, only a few houses in a village had fixed landlines. Those houses acted as contact numbers for the entire village. This meant trudging to a neighbour’s house to receive a call. Now, this has changed. A simple 10 digit number means that anyone, including relatives, officials, and others, can stay in touch at all times.
The change is happening. At a time when almost all sectors are bearing the brunt of the global financial meltdown, India’s telecom market is continuing its high growth saga, thanks to the expanding rural subscriber base. In April 2009, India saw the highest increase in the number of subscribers, 1.58 crore, more than three times the population of countries such as Finland, Denmark and Singapore.
TV Ramachandran, Director General of the Cellular Operators Association of India (COAI), is over the moon. “I am happy to see this change happening in the countryside where this overwhelming number of connections that are added every month,” he said, adding, “This, I think, is due to the spread of the network to those sections of society it had never touched before.” COAI statistics say that India, which already boasts of the second largest telecom user base in the world after China and ahead of the US, now has 42.97 crore telecom subscribers, in both wireless and mobile segments, with a record growth of 59.48 percent last fiscal. The industry watchdog, the Telecom Regulatory Authority of India (TRAI) says that overall tele-density in the country reached 36.98 percent at the end of March 2009. “If this pace continues, we should cross 80 crore subscribers by 2012,” Ramachandran told TEHELKA.
Sunil Dutt, country head of Samsung’s telecom division agrees. “The mobile market will grow by 10-15 percent, mostly driven by first time users in the tier II, III and IV cities. The market is big because almost 12-13 million new connections are added every month.”
However, some telecom experts believe that this is just a temporary phenomenon and the high growth rate will continue for a maximum of 8 — 10 quarters.
Another telecom major, Bharti Airtel has drawn up elaborate plans of setting up rural service centres in villages across India. The first centre was established in March 2009, in Ausarikurd, about 60 kms from Pune. Here, customers can purchase SIMcards, get answers to queries related to mobile phones and even subscribe to specific Value Added Services (VAS). For rural customers, VAS include updates on crop prices and fertilizers, a service which is provided in collaboration with Indian Farmers Fertilizer Cooperative Limited (IFFCO).
Urban and rural markets differ in many ways. For instance, the simple requirement of electricity to charge cell phone batteries cannot be guaranteed in rural India. This creates a dependency on petrol or diesel generators. In addition, setting up mobile phone towers is no easy task. As rural population density is low, not many people in a specific area use telecom services, thereby lowering profit. Despite this, more than 2.4 lakh towers have been constructed in rural India.
ALSO HIGH on the rural telecom growth story is Rohit Dadwal, managing director (Asia-Pacific) of Mobile Marketing Association (MMA), a global non-profit trade body established to lead the growth of mobile marketing and allied technologies. Companies such as Microsoft, Vodafone, Yahoo! India, TELiBrahma, Hungama, Nokia, Tata Teleservices, India Games, among others, are its members.
“The rural markets in India are witnessing their best growth,” says Dadwal, adding there is immense scope for revenue generation in the mobile marketing and advertising segment. “The domestic market is growing at a staggering rate. If India accounts for just 2-3 per cent of the global expenditure on advertising of $500 billion, it can translate into business worth $10-20 billion.”
But there are some who are feeling the heat. There is a direct impact on the PCO business, with TRAI statistics indicating that the total number of PCO booths dropped by 2.6 lakhs, merely from September to December 2008.
PCOs were a source of revenue for many in villages. Now, even those who owned PCO booths have switched to mobile phones. On the flip side, those who have opened recharge shops are registering huge profits. Says Bablu, owner of a profitable recharge shop in a small town near Delhi, “My PCO booth has no customers.”
Landlines are being phased out in rural India, and the heavy subsidies they once attracted are decreasing. Says Baijal, also former TRAI Chairman: “What is needed is the reduction of subsidies for fixed landlines and the evolution of separate schemes and sensible regulations”.
If that happens, the sky is the limit for the great Indian telecom bazaar.