Project Report

Dated: December 2009

Subject: Rural Marketing

Topic: Wireless Telecommunication towards Rural

Submitted to: Prof Shrijay Devaraje Urs

Subject: Wireless Telecommunication towards Rural
Department: Institute of Departmental Studies
University: Mysore
State: Karnataka

Submitted by: Pradeep Kumar V

Subject: Rural Marketing
Topic: Wireless Tele Communication towards Rural
Course: MBA - Agribusiness
Department: Institute of Departmental Studies
University: Mysore

1
 CONTENTS

Title Page No

1.Indian Telecommunication Industry 3

2 Telecom Regulatory Authority of India (TRAI) 5

3.Industry Revenue (2002-2010) 16

4. Emerging Rural Mobile Market in India 20

5. What Next? 33

6. The Challenges 34

7. Rural Telecom Market – an emerging market 35

8. The Pay Per Second Billing Model 40

9. Rural Telecom Strategies 43

2
 Indian Telecommunication Industry

In 1880, two Telephone Companies viz. The Oriental Telephone Company Ltd. and
The Anglo-Indian Telephone Company Ltd. approached the Govt. of India for
permission to establish Telephone Exchanges in India. The permission was however
refused on the grounds that the establishment of Telegraphs was a Government
monopoly and that the Government itself would undertake the work in the event of
sufficient demand. By 1881, Govt. of India changed their earlier decision and licences
was granted to the original Oriental Telephone Company Limited of England for
opening Telephone Exchanges at Calcutta, Bombay, Madras, Karachi and
Ahmedabad.

Introduction

The number of telephone subscribers in India increased to 464.82 Million at the

end of June-09 from 429.72 Million in Mar-09, thereby registering a growth rate
of 8.17%. With this, the overall Tele-density in India reached 39.86 as on 30th
June 2009.

Subscription in Urban Areas increased to 328.55 Million and Rural subscription

increased to 136.27 Million. Rural Teledensity reached 16.61 and urban
Teledensity 95.05 at the end of June-09. The share of rural subscribers increased
to 29.3% in total subscription.

Composition of Telephone subscribers

Urban w ireline Rural Wireline
5.9% 2.2%
Rural w ireless
27.1%

Urban Wireless
64.8%

Internet subscribers increased to 14.05 million at the end of June 2009

registering a quarterly growth rate of 3.80%. However, this growth rate is lower
than the growth rate seen in the previous quarter (5.3%).

Average Revenue Per User (ARPU) for GSM-Full Mobility service declined by 10%
from Rs. 205 in QE Mar-09 to Rs. 185 in QE Jun- 09.

ARPU for CDMA – Full mobility service declined by 7.2% from Rs. 99 in QE Mar-
09 to Rs. 92 in QE June-09.

3
ARPU for dialup Internet usage increased by 2.97% from Rs. 236.47 in QE March
2009 to Rs 243.50 for the quarter ending June 2009.

MOU per subscriber for GSM – Full mobility service continued to show a declining
trend. It declined by 6.19% from 484 in QE Mar- 09 to 454 in QE Jun-09.

The outgoing MOUs declined by 5.30% and incoming by 7.04%. MOU per
subscriber for CDMA-full mobility service declined by 4% from 357 (Q.E March
2009) to 342 (Q.E June 2009). The Outgoing MOUs declined by 2.7% and
Incoming MOUs declined by 5.2%.

Gross Revenue (GR) and Adjusted Gross Revenue (AGR) of Telecom Sector for
the QE June-09 has been Rs 39,108.33 Crore and Rs. 29,732.52 Crore
respectively. There has been a reduction of 3.3% in GR as compared to previous
quarter. AGR has shown slight increase of 0.02% vis-à-vis previous quarter.
Average license fee as percentage of AGR is 8.43% in June-09 as against 8.4% in
previous quarter.

The wire line Service Providers met the QoS parameters of Customer Care
Service (Closures) and Response time to the customer for assistance [%age of
calls answered (electronically) within 20 sec]

The performance of Wireline service providers improved as compared to the

previous quarter, in respect of parameters Provision of Telephones, Faults
repaired by next working day, Mean Time to Repair, Call Completion Rate, and
Customer Care Services (Shifts and Additional Facilities) and Time taken for\
refund of deposits.

The performance of the wireless service providers has deteriorated in this quarter
as compared to the previous quarter in respect of the following parameters:-

a. Call Set-Up Success Rate (Within Licensee’s Own network)

b. Call drop rate.
c. Response time to the customer for assistance
(I)%age of calls answered (voice to voice) within 60 sec.
(ii)%age of calls answered (voice to voice) within 90 sec.
d. Complaints per 100 bills issued.
e. %Age of complaints resolved within 4 weeks.

4
 History of Indian Telecommunications
Year Evolution of the industry-Important Milestones
2000 Dot becomes a corporation, BSNL
Cellular Services are launched in India. New National
1999
Telecom Policy is adopted.
1997 Telecom Regulatory Authority of India created.
Conversion of DOT into two wholly government-owned
companies: the Videsh Sanchar Nigam Limited (VSNL)
1986 for international telecommunications and Mahanagar
Telephone Nigam Limited (MTNL) for service in
metropolitan areas.
Department of Telecommunications (DOT) established,
an exclusive provider of domestic and long-distance
1985
service that would be its own regulator (separate from
the postal system)
Nationalization of all foreign telecommunication
companies to form the Posts, Telephone and Telegraph
1947
(PTT), a monopoly run by the government's Ministry of
Communications
Merger of ETC and IRT into the Indian Radio and Cable
1932
Communication company (IRCC)
1923 Formation of Indian Radio Telegraph Company (IRT)
1883 Merger with the postal system
1881 Telephone service introduced in India
First operational land lines were laid by the government
1851
near Calcutta (seat of British power)

2 Telecom Regulatory Authority of India (TRAI)

2.1 Mission

To ensure that the interests of consumers are protected and at the same time to
nurture conditions for growth of telecommunications, broadcasting and cable services
in a manner and at a pace which will enable India to play a leading role in the
emerging global information society.

2.2 Role of TRAI

One of the main objectives of TRAI is to provide a fair and transparent policy
environment, which promotes a level playing field and facilitates fair competition. In
pursuance of above objective TRAI has issued from time to time a large number of
regulations, orders and directives to deal with issues coming before it and provided
the required direction to the evolution of Indian telecom market from a Government
owned monopoly to a multi operator multi service open competitive market. The
directions, orders and regulations issued cover a wide range of subjects including
tariff, interconnection and quality of service as well as governance of the Authority.
The functions of TRAI can be divided as : Recommendatory function and Mandatory
Function.

5
2.3 Recommendatory Functions

 Need and timing for introduction of new service provider

 Terms and conditions of licences to a service provider

 Revocation of license for non-compliance of terms and conditions of license

 Measures to facilitate competition and promote efficiency in the operation to

facilitate growth in industry

 Technological improvement in services by service providers

 Inspection of type of equipment used by service provider

 Measures for Technological development

 Efficient Management of available spectrum

2.4 Mandatory Functions

 Ensure compliance of terms and conditions of license

 Fix the terms and conditions of there inter connectivity between service providers

 Ensure Technical compatibility and effective inter-connection between different

service providers

 Regulate arrangements for sharing of revenues amongst service providers

 Lay-down the standards of QoS to be provided by service provider, ensure this by

periodical survey

 Lay-down and ensure time period for providing local and long-distance circuits of
telecommunication between different service providers

 Maintain inter-connect agreement register

 Ensure compliance of USO(universal service obligation)

6
 2. TELECOM SCENARIO IN INDIA

• Third largest telecom subscribers in the world.

• Second largest wireless network in the world.
• Fastest growing telecom sector with an average addition of over 10-12 million
subscribers per month.
• 480 million telecom subscribers as on July 2009, with a CAGR of 45 per cent
during last five years.

442 million wireless subscribers as on July 2009, with a CAGR (Compound Annual
Growth Rate) of 65 per cent during last 5 years.

Target of 650 million connections by 2012.

Objective

• Provide a platform and interactive session with prime movers of the Telecom
sectors across various spheres like Government, Policy makers, Industrial
leaders, Academic and Potential investors.

• Focus on networking opportunities for exchange of ideas leading to future

business alliances.

• Provide opportunity to learn about practices, global experiences and showcase

state –of-the-art technologies.

• Focus on using Telecom successfully for achieving inclusive growth of the

country.

The bottlenecks for ' Indian Telecom Industry ' are:

• Slow reform process.

• Low penetration.

• Service providers’ bear’s huge initial cost to make inroads and achieving
break-even is difficult.

• Lack of infrastructure in semi-rural and rural areas, which makes it difficult to

make inroads into this market segment as service providers have to incur a
huge initial fixed cost.

• Huge initial investments.

• Limited spectrum availability and interconnection charges between the

private and state operators.

7
Reasons for growth

The two major reasons that have fuelled this growth are
1. Low tariffs
2. Falling handset prices

Subscriber Base & Teledensity – Rural & Urban

Subscriber
Teledensity
Base (Million)
Quarter ending Rural Urban Rural Urban
June 82.16 243.62 10.12 72.01
September 90.56 263.1 11.13 77.35
December 103.83 280.96 12.72 82.15
March 122.21 307.51 14.93 89.44
June 136.27 328.55 16.61 95.05

Wireless Subscribers

Total Wireless Subscribers 427.29 Million

% Change During Quarter 9.07% 9.07%
Urban Subscribers 301.34 Million (70.5%)
Rural Subscribers 125.95 Million (29.5%)
GSM Subscribers 328.83 Million (77.0%)
CDMA Subscribers 98.46 Million (23.0%)
Teledensity 36.64
Urban Teledensity 87.18
Rural Teledensity 15.35

Rural Surge Quarterly

Subscriber Base (Million) for Quarter ending

Teledensity Rural Teledensity Urban

95.05
100 89.44
90 82.15
77.35
80 72.01
70
60
50
40
30 14.93 16.61
20 10.12 11.13 12.72
10
0
June 2008 September 2008 December 2008 March 2009 June 2009
Month

8
 Subscriber Base for Quarter ending

Subscriber Base (Million) Rural Subscriber Base (Million) Urban

350 328.55
307.51
280.96
300 263.1
243.62
250
200
122.21 136.27
150 103.83
82.16 90.56
100
50
0
June 2008 September 2008 December 2008 March 2009 June 2009
Month

Market Share - Rural & Urban

100%

80%
74.8% 74.4% 73.0% 71.6% 70.7%
60%

40%

20% 25.6% 27.0% 28.4% 29.3%

25.2%

0%
June-09 Sept-08 Dec-08 March09 June-09

Rural Urban

Subscription in Urban Areas increased to 328.55 Million and Rural subscription

increased to 136.27 Million. Rural Teledensity reached 16.61 and urban Teledensity
95.05 at the end of June-09. The share of rural subscribers increased to 29.3% in
total subscription. TRAI’s last quarter report has an interesting statistics that is an
eye opener to many of the telecom players
- Of the 25 million customers added in the Apr-June quarter,
- 8 million are from rural areas!

9
 Trends at a Glance
A. Wireline & Wireless Services

%age %age %age

change change %age change
over over change over
June Sep over Dec Mar
2008 2008 2008 2009
QE QE (12
(9mont (6 (3
June QE Sep QE Dec QE Mar June months
hs) months) months)
2008 2008 2008 2009 2009 )
1) Subscriber's Base (in million)
i) Wireline 38.92 38.35 37.9 37.96 37.53 -3.57% -2.14% -0.97% -1.13%
ii) Wireless 286.86 315.31 346.89 391.76 427.29 48.95% 35.51% 23.18% 9.07%
Gross Total 325.78 353.66 384.79 429.72 464.82 42.68% 31.43% 20.80% 8.17%
Rural 82.16 90.56 103.83 122.21 136.27 65.86% 50.48% 31.24% 11.50%
Urban 243.62 263.1 280.96 307.51 328.55 34.86% 24.88% 16.94% 6.84%

2) Traffic (MOU) (minutes of use/ sub/month)

Wireless (full mobility)
i) GSM 505 499 496 484 454 -10.20% -9.00% -8.50% -6.20%
ii) CDMA 354 332 371 357 342 -3.20% 3.10% -7.70% -4.00%

3) Average Revenue Per User (ARPU) (Rs./sub/ month)

Wireless (full mobility)
i) GSM 239 221 220 205 185 -22.70% -16.40% -15.90% -10.10%
ii) CDMA 139 122 111 99 92 -33.80% -24.90% -17.20% -7.20%

4) Teledensity
Population in million
(Estimated) 1150 1154 1158 1162 1166
i) Wireline teledensity 3.38 3.32 3.27 3.27 3.22 -4.78% -3.06% -1.58% -1.58%
ii) Wireless teledensity 24.95 27.32 29.96 33.71 36.64 46.86% 34.12% 22.30% 8.70%
Total Teledensity 28.33 30.64 33.23 36.98 39.86 40.70% 30.09% 19.95% 7.79%
Rural teledensity 10.12 11.13 12.72 14.93 16.61 64.11% 49.29% 30.55% 11.21%
Urban teledensity 72.01 77.35 82.15 89.44 95.05 32.00% 22.89% 15.70% 6.27%

Wireless Subscriber Base (in Million)

10
 %age %age %age %age
change change change change
over over over over
Service QE Jun QE Sep QE Dec QE Mar QE Jun
Jun Sep Dec Mar
Providers 2008 2008 2008 2009 2009
2008 2008 2008 2009
(12 (9 (6 (3
months) months) months) months)
Bharti 69.38 77.48 85.65 93.92 102.37 47.55% 32.12% 19.52% 8.99%
Reliance 50.79 56.05 61.34 72.67 79.62 56.76% 42.05% 29.80% 9.56%
Vodofone 49.2 54.63 60.93 68.77 76.45 55.39% 39.94% 25.47% 11.17%
BSNL 41.96 43.86 46.23 52.15 54.36 29.56% 23.95% 17.60% 4.25%
Tata Tele 26.33 29.33 31.76 35.12 37.12 40.99% 26.57% 16.88% 5.70%
Idea 31.74 33.98 38.01 43.02 47.09 48.36% 38.58% 23.89% 9.46%
Aircel 11.92 13.88 16.08 18.48 21.8 82.88% 57.05% 35.56% 17.96%
MTNL 3.72 3.96 4.19 4.48 4.61 23.81% 16.31% 9.92% 2.81%
BPL 1.38 1.66 1.95 2.16 2.31 67.08% 38.89% 18.24% 6.74%
HFCL 0.34 0.36 0.38 0.39 0.38 13.00% 6.72% 1.11% -1.49%
Shyam 0.11 0.12 0.37 0.6 1.19 981.00% 890.92% 221.38% 98.18%
Total 286.9 315.3 346.9 391.8 427.29 48.95% 35.51% 23.18% 9.07%

Circle wise Share as on Oct 2009

Circle A Circle C

ANDHRA PRADESH BIHAR

MAHARASHTRA HARYANA

TAMIL NADU ORISSA

KARNATAKA ASSAM

GUJARAT J&K
Circle B NORTH EAST

U.P.(EAST) Circle D

RAJASTHAN DELHI

MADHYA PRADESH MUMBAI

U.P.(WEST) KOLKATA

KERALA CHENNAI

11
WEST BENGAL
PUNJAB
HIMACHAL PRADESH

Wireless Circlewise Share

Circle B Circle A Circle D Circle C

12%
38%
15%

35%

Wireless Circlewise Subscribers Share

Circle B Circle A Circle D Circle C

332,937,141

411,302,820 1,016,483,09
2

939,702,075

12
 Circle wise Companies Share as on Oct 2009

30.00% Citcle A Circle B Circle C Circle D

25.08%
25.00%

22.81%

21.43%
20.42%
20.00%
18.65%

17.21%
16.01%
%ge

15.00% 14.59%

11.71% 12.48%

11.37%
9.52%

10.00% 8.38% 7.56% 8.82% 8.76%

8.92%
6.48%
6.41%
5.73%

4.82%
5.00%

2.17% 2.97%
1.81% 2.56% 0.12%
2.05% 2.18%
1.35% 1.42% 1.53% 0.75%
0.37%
0.54% 0.24%
0.12%0.03%
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13
 Company wise %ge as on Oct 2009

Sistema Shyam
Teleservices
Loop Telecom Pvt. Ltd
Ltd. 0%
1% Spice
0% HFCL Infotel
MTNL 0%
1%
Aircel
Tata Teleservices 5% Bharti Airtel
9% 24%

Idea
11%

BSNL Reliance
13% 18%

Vodafone Essar
18%

Bharti Airtel Reliance

Vodafone Essar BSNL
Idea Tata Teleservices
Aircel MTNL
Loop Telecom Pvt. Ltd. Sistema Shyam Teleservices Ltd
Spice HFCL Infotel

14
 State wise No of Subscribers as on Oct 2009

HIMACHAL PRADESH 0.84%

%ge
NORTH EAST 0.89%

J &K 0.96% State wise No of Subscribers as on Oct 2009

ASSAM 1.49%

CHENNAI 2.26%

ORISSA 2.40%

HARYANA 2.46%

KOLKATA 2.85%

PUNJAB 3.59%

WEST BENGAL 4.07%

KERALA 4.24%
States

MUMBAI 4.76%

U.P.(WEST) 5.00%

MADHYA PRADESH 5.28%

DELHI 5.37%

BIHAR 5.75%

GUJARAT 5.91%

RAJASTHAN 5.92%

KARNATAKA 6.05%

U.P.(EAST) 7.09%

TAMIL NADU 7.26%

MAHARASHTRA 7.78%

ANDHRA PRADESH 7.81%

0.00% 1.00% 2.00% 3.00% Percent

4.00% 5.00% 6.00% 7.00% 8.00% 9.00%

3.Industry Revenue (2002-2010)

15
According to a Frost & Sullivan industry analyst, by 2012, fixed line revenues are
expected to touch US$ 12.2 billion while mobile revenues will reach US$ 39.8 billion
in India. India has become the second country in the world to have more than 100
million CDMA-based (code division multiple access) mobile phone subscribers after
the US, which has 157 million CDMA users. The Indian telecommunications industry
is on a growth trajectory with the GSM operators adding nearly 9 million new
subscribers in April 2009, taking the total user base to 297 million, a growth of 3.11
per cent over the additions made the previous month.

Indian Telecom Industry

The dynamics of the Indian telecom industry are changing. Although the industry
is experiencing the lowest tariffs globally, aggressive price wars have started owing
to new entrants. This is having a dilutive impact on Average Revenue Per User
ARPU). Further, with declining Minutes of Use (MOU) elasticity, top line of all the
operators has been impacted, as reflected in 2Q FY10 results. We believe that the
fierce competition would hasten consolidation, as new players would find it difficult to
sustain such intense price wars. Moreover, as the incumbents have also joined the
price wars, the top line should be impacted in the near term. Although a short-term
impact on revenue/profitability is expected, we believe this is beneficial for the long-
term outlook. We also believe that the advent of 3G would enable the incumbents to
arrest the fall in ARPU and differentiate themselves from the newer players. We cut
our estimates and price target across the board, as we adopt a cautious view on the
sector in light on the current changes. However, we believe that Bharti Airtel is
fundamentally strong and is well positioned to sustain in this competitive
environment. Further, we believe that the company will have a first-mover
advantage in offering 3G services. We maintain our positive outlook on the stock
from a long-term perspective. We maintain our neutral recommendation on the
telecom sector. Our top picks include Bharti Airtel, Idea Cellular, and On Mobile
Global (VAS Provider).

Key Takeaways from the 2QFY10 results:

Industry witnessing heightened competition The Indian telecom industry is going

through a phase of heightened competition. This has led to aggressive price wars
from new entrants as well as incumbents. Tariff wars brought about a steeper decline
in ARPU’s. With MOU elasticity also declining, revenue growth of most operators was
slower on YOY basis. However subscriber growth continues unabated.

Year Revenue(US$
billion)
2002-03 9
2003-04 10
2004-05 11
2005-06 15
2006-07 20
2008-09 32
2009- 43
10(forecasted)

16
 Revenue(US$ billion) Revenue(US$ billion)

50 43
45
40
35 32
Revenue

30
25 20
20 15
15 9 10 11
10
5
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06

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20

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20
20

20

20

re
fo
0(
-1
09
20
Year

Telecommunication
The economic renaissance affected in the early 1990s brought around a paradigm
shift on the overall business scenario of India. The telecommunication companies in
India went through a huge makeover during the implementation of the open-market
policy of India. The erstwhile closed market policy was replaced by a more liberal
form of economic policy. A whole new form of Indian Telecommunication Policy was
drafted to compliment the change effected in the economic policy of India. The
amendment affected the new telecommunication policy of India made huge changes
with respect to investments and entry of Foreign Direct Investments (FDI) and
Foreign Institution Investors (FII) respectively, into the virgin Indian
telecommunication market. This resulted entry of private, domestic and foreign
telecommunication companies in India.

The robust growth of Indian economy after the economic liberalization in the 1990s
induced massive change in the telecom policy and new draft was framed and
implemented by the 'Telecom Regulatory Authority of India' (TRAI) and 'Department
of Telecommunication' (DOT), under the Ministry of Telecommunication government
of India. The main aim of these telecommunication companies in India is to provide
basic telephony services to each and every Indian.

With the advent of private telecommunication companies in India, the industry

witnessed introduction of mobile telephones into the Indian market and it became
popular amongst the Indian masses in no time. Today two types of mobile phone
service providers operates in the Indian market, like the following -

• Global System for Mobile Communications (GSM)

• Code Division Multiple Access (CDMA)

The main binding objective for all the telecommunication companies operating in
India is as follows –

17
 • To facilitate telecommunication for all
• Ensuring quick availability of telephone connectivity
• Achieve universal service access at affordable price covering all Indian
villages, as early as possible
• Providing world class telecommunication services
• Solving consumer complaints, resolve disputes, and special attention to be
given to public interface
• To provide widest possible range of services at reasonable prices
• To emerges as a major manufacturing base and major exporter of
telecommunication equipment
• To protect the defense and security interests of the country

Industry Sectors

Network Infrastructure Companies: Alcatel-Lucent, Cisco, Ericsson

Telecom Service Providers: Bharati-Airtel, Vodafone, Idea, Reliance.
Telecom Equipment Manufacturers: Nokia, Motorola, Samsung
Telecom Solutions Providers: Tech-Mahindra, Aricent, IBM India Wipro, Sicken.

The number of telephone subscribers in India increased from 427.29 Million in Mar-
09 to 464.82 Million at the end of June-09, registering a growth rate of 8.17%. The
overall Teledensity in India has reached 39.86 as on 30th June 2009.

Subscriber Growth

India added 130 million new customers in 2008-09, the largest globally. The
country’s cellular base witnessed close to 50 per cent growth in 2008, with an
average 9.5 million customers added every month. By April 2009, the total number
of telephone connections reached 441.47 million. With this growth, the overall tele-
density reached 37.94 at the end of April 2009. According to Business Monitor
International, India is currently adding 8-10 million mobile subscribers every month.
It is estimated that by mid 2012, around half the country's population will own a
mobile phone. This would translate into 612 million mobile subscribers, accounting
for a tele-density of around 51 per cent by 2012.

3G Spectrum allocation policy in India in 2009

In the conducive business environment, India Inc. awaits the rollout of 3G services.
The Indian government plans to auction the spectrum for 3G services by inviting bids
from domestic, as well as foreign players and creating a competitive environment
that offers better services to consumers. Therefore, the 3G spectrum is among the
major investment opportunities and growth drivers of the telecom industry.

 The immense potential for 3G is reflected by the 30-40 per cent annual growth in
value added services

 The global revenue for 3G is 60 per cent higher than that of other services

 Cellphone manufacturers are striving to develop US$ 100-priced 3G handsets for

the Indian market

18
 India expects to replicate its 2G growth in 3G services. The Indian market is well
poised to leverage the 3G service offerings in content categories such as sports,
games and music. In the present context, 3G technology is extremely relevant for
India.

 It offers voice capacity that is four to five times higher than that of 2G services.
Therefore, it is an ideal platform for low-cost cellular services

 It can fulfill the need of fast developing mobile penetration in rural areas

 It can meet the demand for high-speed data and content rich services in the urban
landscape

 It can play a vital role in augmenting the competitiveness of the country’s large
BPO segment

 It can be a way forward to achieve the Government’s broadband objectives.

In addition, it will be a good solution for education, telemedicine, etc. Even if 2 per
cent of the 180 million cellular subscribers adopt 3G technology as soon as it is
launched, it is likely to create an initial subscriber base of 3.6 million. The market is
slated to capture more than 11.3 per cent of all mobile subscribers by 2010, i.e.,
21.3 million people. Therefore, it would not be incorrect to assume that 3G are
poised to create the next mobile revolution in India. In the race towards lowering the
entry barrier for 3G services, companies plan to offer bundled service packages with
subsidized handsets. With regard to its business potential, many national players
have already completed 3G trials. BSNL has charted out a plan for launching 3G
services in 250 cities. Private players, such as Bharti, Reliance and Idea, are also
ready to offer this service in 10-20 major Indian cities. However, Airtel and MTNL are
very keen on leveraging their first mover advantage in this field.

In June 2009 the DoT (Department of Telecom) in India has announced the radio
spectrum that will be made available when 3G licenses are eventually auctioned off.
It could be the case that just 4 Operators are given radio spectrum around Delhi -
given that two incumbents (BSNL and MTNL) already have some licenses in each
zone, then that would be just the possibility of two new Operators coming to play. In
other areas, there is apparently going to be more provision for private players -
meaning up to 11 ‘Operators’ could enter business. The greater availability of
spectrum in these other zones is due to the Defense Ministry giving up some of its
Spectrum.

Currently there are disputes over how many operators can exist per zone, and
whether the relevant spectrum is sold in trenches, or in one go. Hopefully something
will be resolved soon, as India is beginning to really lag behind in 3G technologies,
particularly as many other countries are already at HSPA (3.5G) level, and going to
HSPA+ (3.75G) soon

19
Executive Summary & Trends at a Glance

List of Cellular Mobile (GSM & CDMA) Service Providers

Currently providing service [As on 30th June 2009]

Service
Sino. Area of Operation
Provider
AP, TN, Karnataka, Assam, Bihar, Chennai, Delhi, HP, J&K,
1 Aircel Group Kerala, Kolkata, MH,
Mumbai, NE, Orissa, UP(E), UP(W) & WB
2 Bharti All India
3 BSNL All India (except Delhi & Mumbai)
4 HFCL Punjab
IDEA (Including Delhi, Mumbai, AP, MP, Rajasthan, Punjab, Haryana, Gujarat,
5
Spice) TN, Karnataka, Bihar, HP, Kerala, MH, Orissa, UP(E) & UP(W)
Loop Telecom
6 Mumbai
Private Ltd
7 MTNL Delhi & Mumbai
Reliance
8 Kolkata, MP, WB, HP, Bihar, OR, Assam & NE
Telecom
Reliance
9 All India (except Assam & NE)
Communications
Sistema Shyam
10 Kolkata, TN, Kerala, Rajasthan & WB
Telelink
Tata Tele
11 All India
services
12 Vodafone All India

20
Quarterly

According to data available with the Telecom Regulatory Authority of India, 48 million
rural consumers took a new mobile connection in the first six months of calendar
2009 compared with just 32 million in the cities. In contrast, only 39 million new
mobile users were added from the rural areas for whole of 2008.

Due to the surge in usage, there are now a total of 136 million mobile users residing
in villages. While this is not much compared to the 329 million mobile consumers in
the urban areas, market watchers predict that the next 500 million mobile
subscribers will come mostly from the hinterland.

“The cities and towns are saturated, with the tale-density as high as 95 per cent.
However, the density-density in the rural areas is just 17 per cent, which means
there is a huge unmet demand in these regions. The rural mobile user base is likely
to overtake the urban subscriber base in the next 3-4 years,” said an official from the
Department of Telecom.

Big gainers

The biggest gainers from the shift in mobile usage trend are Bharti Airtel, BSNL and
Vodafone Essay. While Airtel’s rural subscriber base grew from 15.76 million
subscribers in March 2008 to 33.78 million by June 2009, BSNL’s rural base improved
from 13.74 million to 29.64 million in the same period. Vodafone almost doubled its
rural user base from 13.14 million to 24.83 million.

Reliance Communications and Tata Teleservices, the two operators with both GSM
and CDMA networks, have not been able to penetrate the rural market yet despite
having a strong focus in this segment.

According to the TRAI data, Reliance’s rural user base has increased from 8.95
million to 16.36 million and Tata Tele has only 2.96 million rural users.

But the impact of this urban to rural shift is weighing on the operator’s revenue. Low
tariffs combined with low minutes of usage have driven telecom operator’s revenue
to a negative growth for the first time in Q2 2009. Compared to a combined revenue
of Rs 32,211 crore in the first quarter of calendar 2009, the revenues for the second
quarter were Rs 29,507 crore, which is 9 per cent decline.

21
“While it is good that the rural tele-density is improving, operators should also
simultaneously address the issue of declining revenues by bringing in applications
and services beyond voice and SMS. Innovation through third generation
technologies should help the operators improve their finances even as they continue
to add more subscribers,” said a market analyst.

4. Emerging Rural Mobile Market in India

The Indian mobile market has been continued to witness rapid increase in its
subscriber base over the past few years, largely due to the declining mobile tariffs
and availability of low cost handsets in the country.

The country saw addition of an average of around 10 Million subscribers per month in
its mobile subscriber base during 2008 with penetration approaching saturation in
urban India. With this, mobile operators in the country are now vying rural India as
their next area for growth in the near future.

Meanwhile, a number of mobile handset manufacturers have been working to cover

the untapped rural mobile market, which will be the major driver for Indian mobile
market in coming years.

According to our latest study on sector called, 'Emerging Rural Mobile Market in
India', the mobile market in rural India has significant potential with number of
subscribers anticipated to grow at a CAGR of around 32% during 2009 to 2012.

The report thoroughly discusses about the factor, which will drive the growth of rural
mobile market over the forecasted period.

The rural mobile market in India lies in the operators’ service pricing models coupled
with the availability of low cost handsets that support affordable access for rural
areas.

It is forecasted that sales of mobile handsets in rural India will grow at CAGR of
around 17% from 2009 to 2012.

Availability of low-cost battery efficient handsets will drive the future sales in this
segment.

This report covers various aspects of the Indian rural mobile market. It gives detailed
analysis of the rural mobile market in terms of total subscribers, subscribers by
technology and service providers.

Each section sufficiently explains the current and future market trends, and
developments in the Indian rural mobile market.

22
Our research foresees immense opportunities for various industry players including
mobile operators and handset manufacturers.

Besides this, we have also comprehensively analyzed the mobile market in metros
and in various circles, rural mobile penetration in different states helping the clients
to understand the mobile market trends and developments across the country.

The study also evaluates various strategies that will boost the rural mobile market in
India.

b) Rural does not mean poor!

While the term ‘rural’ conjures up an image of tiny, remote villages engaged only in
agriculture, the reality is quite different.

In 2008, the rural areas grew at a robust rate of 25 per cent as compared to 10 per
cent growth in urban retail market.

On account of negligible tax liability and little or no burden of loan repayments, the
Indian rural population has a higher propensity to save. The rural areas account for
33 per cent India's total savings.

In terms of economic output, rural India accounts for almost half (48%) of the
country’s economy.

So as a target market, it is attractive not only because of the size, but also because
of impressive growth potential. Also, Rural GDP has been witnessing strong growth in
the last four years (average of 4 per cent).

Thus, there is no reason for one to any longer go by the belief that rural means poor.
The rural Indians have been found to be very sensitive towards value for money.

They are constantly calculating and evaluating investment options with its returns.
Though they have been found to be more comfortable with the sachet-pricing model,
wherein they pay a small amount at a time for a product or service.

They certainly did not show inclination towards pricing models wherein they tend to
get locked in for a longer period of time. Pay per use and smaller units are more
acceptable and have proven successful in the rural context.

Rural Indians are in fact willing to pay a price for products such as music and movies
that their urban counterparts may not, simply because they have lack of options to
get it from.

There is also a better sense of value for something that they have not had. Our
research on willingness to pay for an unmet need showed that more rural Indians
were willing to pay than have it for free.

This clearly demonstrates that they value information and would trust information
that came at a cost.

23
The bleak, endless landscapes of 600,000 villages in India—where 70 per cent of the
population lives off the land and conducts meetings under ancient village trees—is
becoming the next frontier for mobile handset makers to conquer.

Although 11,000 subscribers are being added every hour in India, this is happening
only in the metros and tier-one and tier-two cities. The vast rural market, where
tele-density is 4 per cent and mobile density is not even mapped because it is so
negligible, lies untouched.

With 80 lakh (8 million) subscribers coming into the mobile fold taking the current
total to 26 crore today, India has become the fastest-growing telecom market in the
world. But for this growth to be sustained, new markets have to be explored.

Even as the rural market is growing attractive for India's telecom industry, the
operators face several challenges in rural penetration like illiteracy and low revenue
per user.

The challenges include difficulty in the acquisition of rural consumers due to the low
affordability of telecom services, the low average revenue per user (ARPU), lack of
locally relevant content and the prevalent literacy levels, said the report.

Though the cost of owning and using telecom equipment and services has come
down considerably in the last few years, the rural consumer still finds it hard to put
aside money for 'discretionary spend'.

'Tie-ups with state-owned banks could enable the rural consumers to purchase
telecom equipment and services at affordable rates.

The rural ARPU is not expected to be driven solely through voice services. The
availability of data services is expected to have a positive impact on the rural ARPUs,
FICCI said.

To increase adoption, the report stated that it was essential to develop services like
news in local language, weather alerts for fishermen, and comparative 'mandi' rates,
among other services.

'To derive maximum benefits from these services, it is essential for the consumers to
have basic reading and writing skills in place.'

c) Rural India registering new wireless subscribers at almost 80 % growth

rate
Rural India has always received inferior treatment from marketers especially in
services driven economy with marketers mainly targeting the urban segment to
notch up quick revenue generation. But it is no secret that majority of India is still
based in the rural parts and if one has to truly taste success in India then one has to
market services, which find relevance in the rural ecosystem. It appears mobile
service providers in the country have precisely identified this aspect and are now
diverting their resources to tap this huge segment comprising of more than 700
million people. And the new focus is paying off big time as the uptake for mobile
services in the rural areas is seen growing at 80% on a yoy comparison.

24
India’s mobile subscriber base in the rural segment stands at 125.95 million at the
end of June’09 as compared to 70.83 million on June ’08, a growth rate of 77.8%.
Mobile tele-density in rural India is 15.35 at end of June’09 while it was 8.73 at
June’08. Further while the market share of rural subscribers in the country’s total
subscriber base for mobile services were 24.7 % in June’08, the figures has now
increased to 29.5 %.

Overall, the rural segment grew by 65.86 % for all telecom services i.e. including
mobile as well as Wireline services. Compare this to urban segment, which grew by
only 34.86%.

With urban areas reporting drop in revenues there is no doubt that only those service
providers will be able to sustain growth, which have strong presence in the rural
areas. And it is here where market leader Bharti Airtel is seen leading with a 26.82%
market shares in the rural segment. Disappointingly PSU BSNL, which has the best
coverage in the rural areas among all the service providers, could manage a market
share of only 15.36% as on June’09.

Idea Cellular registered the highest contribution from rural segment in its total
subscriber base with as many as 42.05% of the company’s subscribers coming from
rural India. Another aspiring Telco, which is on expansion mode, Aircel followed Idea
with 40.47 % of the company’s subscribers from rural areas.

d) MOBILE HELPS FIND RIGHT PRICE FOR FARMER PRODUCE

Two major problems plague the agriculture sector the first, lowering input costs and
the other, proper marketing. If these two are economic status will improve.

“Though marketing fruits and vegetables at the right time becomes imperative to get
a good price, the fact is many of our farmers are unaware of the daily market prices
and often depend on middlemen, who easily exploit them. Many of these brokers
often work on an established network and quote the same (low) price.

e). Wireless Service Providers (Market share)

Rural markets in India constitute a wide and untapped market for many products and
services, which are being marketed for the urban masses. There is a demand for
telecommunication services to be provided to in these areas. Till now it was
government, which was trying to reach the villages through various initiates, but the
rural tele-density is very poor and can be improved only through the introduction of
modern and suitable technology along with participation from the private operators.

India lives in villages, close to 72 percent of Indian population lives in rural areas. In
the country we have 6.36 lakh villages out of which only 13 percent have population
above 2000. The rural economy contributes nearly half of the country’s GDP, which is
mainly agriculture driven and monsoon dependant. More than 50 percent of the sales
FMCG and Durable companies come from the rural areas. The McKinsey report
(2007) on the rise on consumer market in India predicts that in twenty years the
rural Indian market will be larger than the total consumer markets in countries such
as South Korea or Canada today, and almost four times the size of today’s urban
Indian market and estimated the size of the rural market at $577 Billion.

25
f). Why go the rural way?

70 per cent of India's and 12 per cent of global population lives in rural India and
contributes 50 per cent of the country's GDP. Their population of 75 crore (750
million) is more than that of US, UK, France, Japan, Italy and Germany put together.
Government of India statistics reveals that even with the increasing urbanization and
migration, 63% of India’s population would still be living in rural areas in 2025.

Thus rural market has been, is, and will continue to be vitally important to the Indian
economy. While overall communications market growth will be led by urban areas,
rural appending growth of 9.5% over next 20 years is still noticeable.

Also, it is estimated that communications will be the fastest growing subcategory of

rural consumption as millions of households rise out of poverty and enter the ranks
of ‘rural aspirers’. Although, we need to understand that Rural India is not
homogenous and in fact there is no one rural India.

An old saying captures the variations in rural India perfectly - “Kos-kos par badle
paani, chaar kos pe baani”; which translates to – at every mile taste of water
changes and every four miles dialect (baani). Even within one state, the rural areas
have demonstrated stark differences by virtue of their economy and exposure. Such
diversity poses a great challenge to those who intend to serve this “Rural Market”.
Surely, here one size would not fit all.

g) Mobile phones in rural India

Most of Rural India skipped the landline telecommunication and Internet age and
leapt straight to adopt mobile telephony.

With mobile phones becoming cheaper, easier to procure and affordable network
charges, an increasing number of rural audience adopted the technology.

The last two years have seen an accelerated adoption to mobile technology. Now
majority of village families own at least one mobile phone. It is their first exposure to
western technology, and step ahead from their experience and usage of simpler
interactions and single button interfaces of television, calculator and radio.
The most popular brand in rural areas was found to be the Nokia 1100 model as it is
strong, easy to use, people recommend it and provide value for money.

Today mobile phones have moved beyond their primary role of voice communications
and have graduated to become an essential entertaining device for mobile users. We
are in an era where users buy mobile phones not just to be in touch, today’s youth
use it to express their thoughts, for social networking, to show their interests, play
games, read news, surf on the internet, listen to music, chat instantly with friends &
families and even check their bank balances. There are various phone manufacturers
providing handsets.

However, Nokia is the dominant player on the GSM space, accounting for 63% of the
installed base (phone’s currently in use) while LG rules CDMA with 48% of installed
base market share. On looking at urban India GSM/CDMA combined installed base,
Nokia is at the top with 54% of installed base market followed by LG (14%). LG is
second most used handset manufacturer India primarily due to its dominant position
in the CDMA.

26
h). Phone manufacturer usage

April 2009 ending quarterly Average - India Urban Mobile Phone Users (N=5,775)

Brands Installed base*

Total (GSM +
GSM CDMA
CDMA)
LG 4.4% 47.6% 14.4%
Motorola 7.8% 5.4% 7.2%
Nokia 62.6% 24.3% 53.7%
Samsung 9.0% 11.2% 9.5%
Sony-
Ericsson 8.9% 6.8%
* – Users currently using the phone model

On looking at the ability of manufacturers to gain market share via word of mouth,
Nokia and Sony-Ericsson fare a lot better compared to the other three big
manufacturers, with 2 out of 3 users for each of the two manufacturers mentioning
they are likely to recommend their handset to their friends.

Phone manufacturer usage

April 2009 ending quarterly Average – India Urban Mobile Phone Users (N=5,775)

Model Installed base*

Likely to Recommend**
LG 57.6%
Motorola 41.0%
Nokia 68.6%
Samsung 55.7%
Sony-Ericsson 65.3%

27
Rural vs. Urban phone subscribers in India

On an average rural Indians use their phones around 8.5 hours a month, up 10%
over the past year. Of the next 250 million Indian wireless users, approximately 100
million (40 per cent) are likely to be from rural areas, and by 2012, rural users will
account for over 60 per cent of the total telecom subscriber base, according to a
report jointly released by Confederation of Indian Industries (CII) and Ernst & Young.
As per The Telecommunications Regulatory Authority of India figures, subscriber
additions in rural areas exceeded additions in the metros.

i). Owning a mobile phone

Mobile Phone ownership is largely limited to the earning male or head of the
household. The primary reason is that women are unable to produce the proof of
identity required to get a connection. Mobile Phone is a device, which gives its owner
a status, power and freedom to communicate and that too, very easily. The
undercurrents strongly suggest that the rural society may not be ready to impart
similar rights to the women of rural India yet and this could be impacting the gender
skew in ownership of mobile phones.

With an average household income of Rs. 4000/- per month, a rural Indian perceives
mobile phone as an investment, and not an indulgence. This is an interesting insight,
which debunks the common perception wherein a mobile phone implies additional
expense and thus becomes avoidable. Mobile Phone is fast catching on with a bicycle,
radio, and alarm clock to be the first durable that a rural Indian is purchasing.

28
The mobile phone seems to have greatly improved quality of living, simply because
almost everyone now is contactable and there is no longer an information delay of
any sort, be it critical in nature or simply that of enquiring about well-being of loved
ones. Knowing the whereabouts of family members and getting in touch with distant
relatives is the primary use of mobile phones in rural India.

The mobile phone is also seen as something with a lot of possibilities, much more
than what is present; which is largely that of making calls.

A person with a mobile phone is perceived to be ‘efficient’ and one who values time.
A person who gets a mobile phone is also eager to be perceived as one, and hence is
eager to disseminate his new number.

For most rural Indians, mobile phone makes economic sense. A villager is able to
save time and money to travel to another village to meet his grandchildren, and is
able to catch up with them for less than Rs. 1 per minute. Mobile phone is also
making business sense to farmers who can now find the best price for their produce
by calling the wholesalers and checking with other farmers.

j). The sociology of mobile communication

During a research project in rural Gujarat, a group of young men were asked, “So,
how has mobile phone changed life in today’s world?” A young man promptly
smilingly replied –“Jab se mobile phone aaya hai, tabse sab log jhooth zyaada bolne
lage hain.” (“Ever since mobile phones have come, people have started lying much
more.”). This simple yet profound statement has stirred the whole aspect of
sociology of communication. During the landline days, we used start by asking,
“How are you?” to the other person; today, with mobile phones we start with
“Where are you?”

Mobile Phones have made our lives easier and facilitated communication but also
have impacted the nature of our relationships and the dynamics of communication.
Rural audience is relatively more sensitive to the sociological impact of the mobile
phones.

k). The all mighty retailer

Rural audience has their trust grounded in the wise known person. For generations,
they have relied on the village elder or opinion leader to seek advice and opinion on
their day-to-day life and issues related to it. For mobile phone users, this expert is
the local mobile phone retailer.

Mobile phone retailers are major influencers in rural India. Users in rural India
require a lot of handholding and the retailers not only are the purchase point for
various products and services but also act as a guide to using them. The most
common need of the users is to know as to how to save contacts on the mobile
phone.

The local rural retail store serves as a one-stop shop for all their mobile phone
related needs. The retailer recommends the mobile handset, the service plan and
even guides the novice users into turning on the handset and using its features.

29
There have been instances where information hoarding was observed around the
usage of mobile phones. In rural India, information is important and renders power
to the one who has it.

The retailer is such an expert who has knowledge about mobile phones and is
regarded with respect because of this. The rural users turn to the retailer in need and
are much gratified for his services.

The retailer was observed to not share the breadth and depth of his knowledge on
mobile phones. His main drive is to maintain this edge.

A typical retail shop sells recharge coupons, mobile phone handsets and even pirated
CDs. Some even have items like batteries and confectionary. New users at times lock
themselves out of the phone, and it is the retailer they turn to for help. The retailer is
thus an effective channel to educate, influence and capture the rural audience.

l). Rural India realities

During the fieldwork across research studies in rural India, the experience has been
enriching and educative simply because the ground reality has almost always been
surprising. Rural India never ceases to amaze the stereotypical urban. Hence, the
sociology of the rural Indian emerges as an important aspect to understand.

When asked how would they want a mobile phone designed for them to be like, a
frowning farmer replied, “Why should it be different than yours? Perhaps, they do not
wish to be excluded but included.

Such paradoxical yet powerful thought wave challenges the philosophy of designing
for the rural Indians. The key is to be subtly powerful, in serving the need in an
inclusive fashion. It is imperative to gather the ground level realities of the user
group, which one intends to serve through a unique and new technology

m). Information is power

In rural India, information is scarce, valuable and held with the privileged. The
information source could be a sarpanch, who knows about the government schemes
on kisan loans; an anganwadi worker who knows about the free meal scheme or the
village teacher who has information on scholarships for higher education.

Caste, gender, money have been long known as the factors influencing the power
dynamics in rural India. Information has emerged as one potent power symbol.
Information bestows immense powers to the ones who have it.

The information dissemination channels in rural India are not always fair and equal.
Mobile devices have a great potential to eliminate these inequalities that come from
“those who know” deciding whom they will tell, say, about government health
programs. Information is out there, the need is to provide it to the ones who need it.

A mobile phone can act as a neutral distribution channel, which empowers its owner
with the option to seek information especially around livelihood, employment, and
education. They need information that can help them achieve a better standard of
living.

30
Our research identified the key information areas, as unmet needs were agriculture,
health and NEWS.

n). Rural does not mean farming!

For long, a rural Indian has been envisaged as one who is all about farming. Such a
stereotype has led to a lack of entertainment services for the rural audience.
Entertainment is a human need.

A leading TV channel recorded 25% of interactive TV responses from rural areas in

Andhra Pradesh. Interactive media programs receive excellent response from non-
urban locations.

In a study to understand the entertainment needs of rural Indians, we found that

Cricket is the largest source of entertainment for them. Another source of that has
besotted the rural audience is bollywood content.

So really how different the rural audience is from the urban one when it comes to
their entertainment needs. While today, the largest provider of entertainment is the
television in rural India; there is a huge opportunity to provide this on the mobile
platform. With long power cuts, mobile phones should emerge as the new
entertainment source for the rural Indian.

o). The literacy barrier?

According to census of India 2001, the overall rural literacy rate is 58.7%. [6] This
rate however does not reflect on an individual’s effectiveness and efficiency in using
a mobile phone. We now have mobile handsets which have been designed keeping in
mind the rural user – sturdy, affordable, with features like torchlight and a single,
dust free, bilingual keypad. Even with these adaptations, the rural mobile phone user
still goes through a learning curve to perform tasks such as unlocking the handset,
saving contacts in address book and deciphering the iconography of the various
functions. Some of the iconography used in a mobile phone seems quite foreign; for
instance; wrench for settings does not convey its function.

During a study we found that most users were not aware of the # (hash) key on
their mobile phones. They simply did not know where it was and what it did. Some
were confident that in fact there is no such key.
One clear literacy issue relates to SMS. Though the rural audience has been found
comfortable forwarding existing messages; most promotional messages, in English,
are never read.

The interesting aspect is that this supposed barrier has not deterred the rural Indians
from adopting the mobile phones. They have in fact innovated some of their own
ways to use the mobile phone effectively. For instance, we observed rural users
saving a contact with an image from the default set provided is Nokia 1100. Nokia
1100 is a simple, affordable and durable handset with a monochrome screen and is
targeted at users who do not need advanced features beyond making calls and SMS
text messages, alarm clock, reminders. It has torchlight and a single dust proof
keypad. They look for the image and press the green button to make a call. So
clearly the rural mobile phone users have adapted well to use the technology to their
benefit.

31
p). Value added services

There is a need to offer quality value added service to the rural users, which enhance
their quality of life. With coverage expansion by operators reaching rural areas,
mobile networks are penetrating geographies where there are few entertainment and
information outlets other than television. In such areas mobile can be positioned to
function as an all-purpose device that provides entertainment, information and
communications.

For instance, Qualcomm India, TATA Indicom, Astute and MSSRF have started a joint
initiative called Fisher Friend, a mobile application which provides vital real-time
information to fishing communities when and where they need it the most, at mid-
sea. This includes when and where selling the fish through access to market prices,
weather (e.g. sea wave heights, satellite scan data about fish shoals), government
schemes, etc. Access to this data could drastically improve market transparency and
thus earning capabilities for smaller fishermen.

Rural applications initiatives are likely to grow quickly in less developed geographies
because of the willingness to spend on services, which enhance livelihood.

q). Voice Recognition Technology

The next question is the medium of offering these services, the technology that
would be best suited to offer the required service. Voice based interfaces have been
identified for their potential to increase access to information services in a developing
country like India where
480 million illiterate people reside. Interactive Voice Response (IVR) is an automated
telephony system that interacts with callers, gathers information & routes calls as per
option selected by user, who has to follow IVR directions to get to the requisite
information or content.

IVR will be a quick solution to providing regional content in local languages all across
India. In rural areas where the literacy rate is low, IVR will be in great demand
because of ease of use and local language support.

Voice as a technology has the ability to account for variations in the local language
and this is a huge advantage. Users are comfortable with spoken word compared to
written text. Voice services are key in the rural context.

Voice has been proven as an effective technology in rural banking transactions as

well. Dena Bank has come up with Kisan ATMs at Balwa village near Gandhinagar
that enables its rural consumers who cannot read or write to conduct their banking
activities using voice guided animated screens without any hassles. Its key features
include; Finger print verification; a feature close to their mental model of
thumbprints as identification instead of a personal identification number.

Mobile voice based technology cuts through the issue of literacy and connectivity in
rural India. These interfaces follow the most natural interaction of the user with the
mobile phone – hear and speak. The services provided through a voice user interface
also are not handset dependent, which is especially crucial in the rural context
wherein ultra low cost handsets are more prevalent.

32
Voice interfaces do not present users with complex interactions. These are more
natural, dialogue-based conversation styled interactions. These interactions come
closest to the basic use of mobile phone – to talk to another person. They have an
easy learning curve and capability to offer regional language content. They are also
capable of replicating virtually any information service offered on SMS or WAP, e.g.
news, market rate information, etc. Voice based user interfaces make content
discovery faster and easier. In scenarios where there is a lot of information for a user
to go through and make a choice, voice search and browsing could be an effective
solution.

r). Mobile phone ownership in India is growing rapidly

Six million new mobile subscriptions are added each month and one in five Indians
will own a phone by the end of 2007. Many of these new “mobile citizens” live in
poorer and more rural areas with scarce infrastructure and facilities, high illiteracy
levels, and low PC and Internet penetration. The study looks at how their new
mobility could be used to bridge the growing economic and social digital divide
between rural and urban areas.

The report identifies seven service areas that could be transformed for rural
communities by mobile communications:

Transport

Finding cost-effective, reliable, and safe ways to transport goods and services to
market is a major problem for small businesses in rural communities. Public
transport is not available in 45% of villages in India, and only 1% of Indian
households own a vehicle. Mobile communication could be used to create and co-
ordinate car sharing schemes amongst villages, and provide real-time information
about public transport services and the ability to make request stops.

Micro-commerce

Small businesses in rural areas often have to travel significant distances to markets
or other places they can distribute their goods, and cannot make arrangements in
advance with buyers or other sellers. Mobile phones could significantly change the
logistical issues faced by rural traders and home entrepreneurs, by affording mobile-
based ordering systems, delivery requests, and the ability to make more reliable and
advance arrangements with business partners or clients.

Finance

Mobile phones are already being used in rural areas as a tool for financial
transactions by swapping airtime for goods and services. The study encourages
mobile networks and financial services institutions to work together to test and
develop new financial services in this area and address how people can transfer these
credits into cash.

Healthcare

New mobile services in this area could better connect rural communities, creating
networks to share and discuss health information and advice.
Governance

33
Accessing information about public services remains a major challenge for many rural
communities. Mobile phones provide a new platform through which rural
communities will be able to access government information and services, using text,
data, and audio browsing techniques;

Education

The study looks at a range of educational services that could be provided via mobiles
to children in remote villages and communities, particularly where PCs or connections
to the Internet are not available. Mobile phones could serve as an essential means
for children to become connected to one another for educational and peer-learning
activities. These phones are particularly important for communities that are either
nomadic or transitional on account of displacements due to a natural disaster or for
other reasons; and

s). Mobile helps find right price for farmer produce

Two major problems plague the agriculture sector: the first, lowering input cost, and
the other, proper marketing. If these two are addressed then the farmer’s economic
status will improve.

t) Mobile Value Added Services [VAS] in rural market

The next wave of Telecom growth will come from the bottom of the pyramid. For
majority of the population in the rural segment, the mobile phone is the first
communication device.

Rural should not always be interpreted as poor and therefore some categories of
MVAS might apply directly to them. But whether the statement can be extended to
MVAS depends on some key factors.

One is to clearly identify the need of the rural segment, second is to communicate
the services to them i.e. generate awareness and thirdly, to provide an easy and
cheap access mode to the rural consumers.

All these 3 are quite big challenges and therefore needs to be addressed adequately
for MVAS to take off in Rural India.

Apart from the identification of rural consumer needs and development of relevant
content, communication of these services to the rural population would be a bigger
challenge.

One way to do this is to communicate through regional SMS for which a separate
SMS gateway needs to be installed.

Literacy level of the geographical area will be another limitation. Therefore the better
communication option is Voice in regional languages.

The challenge with regional voice is not only investment but also blockage of the
already scarce spectrum. Marketing the content in rural market is going to be all the
more challenging.

34
This would require right packaging and pricing of MVAS. Providing cheap access
mode to end consumer would be another key booster to rural MVAS. Current voice
MVAS charges are expensive from a rural consumer perspective therefore that also
would need to be addressed for e.g. the ‘sachet model’ could prove to be successful
here. MVAS is going to address two main needs of rural consumers- connectivity and
entertainment mode. Connectivity will provide Information VAS on Agriculture
necessary for the farmer’s livelihood e.g. mandi rates, weather, etc. Health, finance,
job opportunities etc are potential areas. Mobile also has the potential to evolve as a
key entertainment mode considering lack of other entertainment options in rural
areas. The industry has witnessed some type of content being downloaded more in
small towns of UP and Bihar rather than in metros like Delhi and Mumbai. Therefore
by leveraging on these two aspects MVAS can be a success in rural area.

5. What Next?

The mobile phone and its applications should be able to improve the quality of life of
the rural mobile phone user, keeping in mind their context. With the knowledge of
the scenarios, the way forward is providing relevant value added services using voice
recognition technology. Of course the solution is not as simple. There are challenges
of many kinds, which need to be addressed to be able to meet the larger goal of
design for all.

One of the challenges for a voice-based interface is to serve the wide range of
languages with variations in dialects and pronunciations. India is home to several
hundred languages and over a thousand dialects. The 1991 census recognizes 24
languages and 1642 dialects. Design for all implies that technology should be able to
serve this varied range.

The second big challenge in creating voice-based interface for mobile phones is the
voice recognition technology. A robust recognition system with an extensive
vocabulary, which recognizes utterances with utmost accuracy, is crucial. Indian rural
environments may not be the most conducive to using a voice recognition system. A
rural environment is resplendent with background sounds, loud noises and multiple
interactions going on the mobile phone. A voice recognition system will have to be
stable enough to not be thrown off by such inputs.

The other big challenge is the varied and diverse needs of the rural audience. Their
information needs are also linked to geographies. For instance, information on crops
is very region specific.

It would be a constant endeavor to meet the challenge. The task ahead is to work
with the profile of the rural mobile phone user to create true value add easy to use
and affordable service solutions.

35
 6. The Challenges

The challenges include difficulty in the acquisition of rural consumers due to the low
affordability of telecom services, the low average revenue per user (ARPU), lack of
locally relevant content and the prevalent literacy levels, said the report.

Though the cost of owning and using telecom equipment and services has come
down considerably in the last few years, the rural consumer still finds it hard to put
aside money for 'discretionary spend'.

'Tie-ups with state-owned banks could enable the rural consumers to purchase
telecom equipment and services at affordable rates,'

The rural ARPU is not expected to be driven solely through voice services. The
availability of data services is expected to have a positive impact on the rural ARPUs,
FICCI said.

The report also cited lack of locally relevant content for restricting rural telecom.

To increase adoption, the report stated that it was essential to develop services like
news in local language, weather alerts for fishermen, and comparative 'mandi' rates,
among other services.

'To derive maximum benefits from these services, it is essential for the consumers to
have basic reading and writing skills in place.'

Half of new mobile subscribers are coming from rural areas.

A few months earlier, Airtel entered into a joint venture with the Indian Farmers
Fertilizer Cooperative Ltd (Iffco) to offer specifically designed products and services.
The target consumers are the 55 million farmers under Iffco’s fold. Airtel has already
enrolled over 60,000 farmers under this scheme.

Mobile phone manufacturer Nokia, which had earlier launched a basic handset with a
torch and an alarm clock, has now gone a step further with Nokia Life Tools – a
range of agriculture, education and entertainment services designed especially for
consumers in small towns and rural areas. The Life Tools provide basic information
on weather, mandi prices and crops.

The Indian telecom market woke up to the potential about three years ago and the
moves are paying off now.

Apart from the tie-up with Iffco, the company has set up Airtel Service Centres in
rural areas to provide services and handle customer queries and complaints,
eliminating the need for call centres.

The company has also tied up with Nokia to launch an educational initiative in order
to give rural users a live experience on mobility services, that include hands-on
training on making the first phone call and sending SMS with localized content.

36
 7. Rural Telecom Market – an emerging market

According to numbers compiled by the Telecom Regulatory Authority of India,

nearly 21 per cent of the mobile user base now resides in the villages of India, where
a few years ago none of the operators wanted to venture. As on September 2007,
out of the 209 million mobile users in the entire country, 43 million were in rural
areas.

As the government targets to increase rural teledensity from the current 2 percent to
25 percent by 2012, rural telephony will require major investments. This segment
will boost the demand for telecom services, equipment, Internet services and other
value-added services; thereby, offering great market opportunities for telecom
players.

Bharti Airtel, Karnataka’s No. 1 mobile network and the first telecom circle in
India to go past the 1 crore-customer milestone, today announced a unique
initiative to penetrate deeper into the remotest villages of Karnataka.

Airtel to focus on rural expansion

 Bharti Airtel, which had 65 million mobile users in September 2009, had 9.80
million subscribers coming from rural areas.

 People in the rural markets are ready to go mobile and the growth depends
on the strength and the quality of the network.

 To strengthen the distribution with the growing pace and make Airtel to get
reached for all segments of customers in the State.

Airtel Service Centre (ASC) is an ideal combination of distribution and service to

reach out to rural customers and an important step in Airtel's objective of expanding
its presence in the state.

Airtel Service Center’s are Multi Brand Outlets (MBOs) located in a good, easy
accessible location, preferably in the main market in a village that attracts high
footfalls.

4A’s in mobile communication,

1.
Availability 2 Affordability 3 Awareness 4 Acceptability.

A one-stop shop for customers’ immediate communication requirements, Service

Center will revolutionize the lives of our rural customers with localized mobile
communication and service at closer locations”.

Primary Objectives of setting up Service Centers in rural Karnataka:

•Helps in removing barriers towards availing mobile communication

•Handling customer’s queries and complaints

37
•Reducing rural calls per customer

This unique rural model of distribution and service has been developed on the basis
of multiple Consumer Studies, which reflect that rural consumers are hesitant to
speak with machines and most rural people are not comfortable speaking with the
call center executives – these customers prefer to be served in the local dialect, by a
local representative.

•One-stop shop for information about the entire gamut of products and services

•
Services available to rural customers in an Service Center are:

•Sale of connections

•Exchange of damaged or lost SIM cards

•Best value recharges and offers of the day

•Educating and subscribing to relevant value added services

•Handling customer queries and complaints

Enabled with a Multi-function printer and a photocopier machine, Service Center is

suitably equipped to ease documentation required for new connections. Service
Center provides rural mobile customers the convenience of availing all Service Center
under a single roof. Service Center are empowered to resolve consumer queries by a
direct routing channel to trained agents on behalf of customers for solving queries
that are specific to customers’ needs.

38
 Nokia – “The whole world is in Mobile“

Nokia Company aims to tap the fast-growing rural market with various new services.
It would also look at lowering the affordability barrier for mobile phones by providing
micro-financing facilities.

“With estimation of 500 million people it will have a benefit of mobility by 2010 and
the telecom sector would be the biggest contributor to GDP.

It also believes that much of the growth is been take place in the non-urban
markets, where penetration is still low at 13 per cent,”

 India is the second biggest market in terms of revenues for Nokia.

The company also announced the national rollout of Nokia Life Tools services, which
would eventually cover 17 States. Targeted at the rural customer, Nokia Life Tools
provides useful information on weather conditions, farm inputs and market prices.

Nokia also announced that it plans to offer a micro-financing facility for its phones
across 12 States, for which it is currently in talks with few institutions.

This facility would be aimed largely at women in rural areas.

With an investment of $250 million, is now Nokia’s biggest factory worldwide.

“We’re exporting more than half of our production from of this plant to over 59
countries,”

In addition the company has around 1.9 lakh 0,000 retail outlets across the country.

Nokia Ovi Stores

Nokia Ovi Store, a one-stop shop for downloading games, videos, images,
applications and ring tones, is increasingly offering localized content to be more
relevant to users across the globe.

The Ovi Store application, which was launched end of May, has users from around
180 countries. In around 17 markets (including Poland, the US, Switzerland, Finland
and the Netherlands), the store offers “fully localized” content – translated, locally
relevant and, in some cases, locally developed too.

While majority of the content on Ovi Store is free of charge, some are paid for using
credit card. In the 17-odd markets where the store offers fully localized content,
some of the services are also paid through operator billing, in the local currency.

39
“Nokia Ovi Store is working all over the world, including India, on getting content
that is local and is talking to operators for billing support,” said Mr Eric John, Director
and Head of Product Marketing, Media, Nokia. Globally, Ovi Store, after around six
months of operations, is nearing 1 million downloads a day.

The growth in user base month-on-month is 100 per cent and around 75 per cent of
visitors are regulars.

Explore a dazzling array of downloads from Ovi. Discover and download mobile
applications, games, videos, music, themes and more from brands you know and
trust.

Find out how Ovi lets you keep up with what’s going on around you with quality news
and information from your favourite publications, download games from some of the
world’s leading game publishers, organize and share your photos and videos with
applications that give you easy access to your favourite social-networking sites, and
discover useful widgets and utilities that help you get through your day.

Connect with your friends by checking out what applications they’ve rated or
recommended. Get involved yourself by sharing your own ratings, recommendations,
streams and collections. And make the most of where you are with content that’s
relevant to your location – as you discover new places, or as you’re re-discovering
your favourite hangouts.

“Double humped camel”

How to sell feature-rich devices with a lot of high-end applications in a price-

sensitive, ‘poor-country’ market such as India, is precisely the question that Nokia is
now faced with.

Forum Nokia, likens India (and China) to a “double humped camel” with big markets
for both premium as well as low-end devices. ‘Forum Nokia’ is the platform on which
Nokia works with some 4 million applications developers.

“Our applications are not restricted to the high end,” at Nokia’s

‘The Way We Live Next’, was communicated at the World meet by the world’s largest
mobile device manufacturer.

Rural market, local needs

And so, while there is a big market in India for premium devices and services
comparable to any developed country, there is also a big rural market, where money
could be made by addressing local needs.

A good example is Nokia Life Tools, which gives information updates to farmers. The
information ranges from prices of commodities to tips on agriculture to teaching
English language.

40
The new mobile device has given a new meaning to the word ‘local’, which no longer
refers to a piece of geography. Applications developed under Forum Nokia are
changing the way people live,

More than calling device

What with radio, recorder and camera having become almost a standard feature on
mobile phone, people have long stopped thinking of the handset as an instrument to
make calls. Today, ‘calling’ is just one feature of the device.

But practically with each passing day, the mobile phone is becoming a lot more than
what it began its life as.

Chinese developer who happened to attend a Forum Nokia meeting in 2003 was
inspired to develop an application, which has become very popular today – an SMS
spam filter. There has been 10 million downloads so far and the demand is still
strong.

Giving an example for the expanded connotation of ‘local’, another developer has
made it possible for the Malayalam daily, Malayala Manorama, to be available on an
English-language phone. This has become popular with Keralites living in West Asia.

More to come

A lot more applications are on the way. One is Nokia ‘point to find’. You point your
mobile to, say, a hotel or a movie advertisement and click. All details about the hotel
or the movie pop up on your screen. The service was beta-tested last year and is
available in the US and the UK, on Nokia N95 devices. Now, Nokia is rolling it out
across other markets. The service is available free to the customer and can be
downloaded from a mobile phone or a desktop computer at pointandfind.nokia.com.

Among the hundreds of other applications being developed or tested is one that
would help elderly people live independently. A voice recognition feature in the
devices helps them give commands. Originally developed for use while driving cars,
the application is being expanded into a utility tool for the elderly.

The future is going to be richer, say Nokia officials. Nokia Research Centre is working
on using biosensors to sense several measurable – be it quality of air and water or
body health parameters. The center is also looking into the possible use of Nan
technology to miniaturize the biosensors.

Pricing strategy

 Currently, the revenue split between the content developer and Nokia is
70:30. Nokia is also experimenting with other pricing strategies.

SMS services in 22 Indian languages soon

41
For, the 3rd Generation Partnership Project (3GPP), the global standards organization
that defines standards for GSM-based mobile services, has approved a move to
include 22 Indian languages in mobile telephony standards in October. This is the
first time that a standardization proposal from India has been accepted by the global
body.

With this, all the non-English-literate subscribers in India will be able to send and
receive text messages just as others do today in English, besides getting a multitude
of SMS-based services such as news alerts, travel updates, banking services and
health information.

The move from 3GPP will prompt handset vendors to also develop uniform keypad
layout and other user interface that are friendly to Indian languages. Though at
present some handsets support some Indian languages, it is not done in an
organised way. For example, the Hindi keypad on a Nokia handset could be different
from what Motorola provides.

A lot of the language capabilities, currently, are also achieved through proprietary
software by individual handset makers, which gives rise to inter-operability issues. As
a result, India lags behind other countries in SMS usage.

A standards-based method will enhance inter-operability across devices and

operators. The India initiative at 3GPP was led by the Centre of Excellence in
Wireless Technology.

Dial your doctor, pay by phone

Patient-doctor link portal Healthcare Magic has said its subscribers now can not only
consult a doctor on phone but also pay their fee by phone. The company has tied up
with mobile payment service provider Atom Telecom to provide IVR-based payment
option for the service.

“Patients can now interact with doctors by dialling a landline number to get medical
assistance for their illness or common query,” a release by the Bangalore-based
Healthcare Magic said. “The charges range from Rs 160 to Rs 999 and can be paid
through mobile or landline using credit card.”

Healthcare Magic launched its ‘Doctor on Call’ and ‘Doctor on Click’ live chat service
over a year back. The charges were collected online; now this extends to phone-
based payment, a spokesperson said.

The option of paying over the phone will cover all 400 million telecom subscribers
and 40 million landline subscribers across the country. It has tied up with insurance
and telecom players including Reliance Telecom, BPL Mobile, Aircel, ICICI Lombard
and Bajaj Allianz.

“Providing m-payment facility for our customers will definitely increase our
subscriber base and smoothen the payment system. As the mobile penetration in
India is more than the Internet, Atom’s technology will definitely help get more
visibility” to the service,

42
Atom is the digital, retail initiative of the Financial Technologies Group and is said to
have handled over 100 crore similar transactions in India and West Asia.

8. The Pay Per Second Billing Model

The past month has seen some hectic activity in the Indian Telecom Sector. It’s
amazing how a little competition always keeps everyone on his or her feet. Each
business enterprise looking at the market as if through the eyes of a hawk for the
next big business opportunity .Each company trying to seduce the prospective
customer with its products. India, the future to be world’s largest mobile telephony
market is now going through a massive upheaval. Market leaders no longer have it
easy and with the introduction of the per second billing model, the competition
has only gotten more cut throat.

Up until now we’ve seen various hashes and rehashes of the tariffs under the prepaid
and post pay systems. Plan after plan requiring you to remember how much you’d
have to pay if you spoke for a minute. How much to a phone using a rival’s network,
how much for STD, how much for ISD, etc.

All that has changed with the entry of Tata Docomo in the Indian market. Docomo
got the ball rolling by offering the per second model charging 1 paisa per second.

The competition and I mean everybody, absolutely everybody; Airtel, Vodafone,

Reliance, BSNL, Idea Cellular, Aircel and the smaller operators too have now
begun offering the pay/second model.

The activity in the TRAI (Telecom Regulatory Authority of India) offices with regard
to this matter has taken place at lightning speed.

The recommendation has been passed approving the model and immediately the
companies have launched the scheme to attract customers. Tata Docomo has barely
had the time to blink at the success of their initial few weeks in the Indian markets!

In the short term this is a model, which is going to hurt telecom operators with their
revenue. As much as a 15-20% loss in revenue is expected as a result of the pay per
second model. This isn’t my personal opinion but a consensus reached among many
other analysts.

Brokerages are not happy with the telecom sector. The Indian market is saturated to
a point and the pay per sec model cuts down revenue making the entire pack
unattractive.

Considering the downturn in telecom in the past few weeks the introduction of the
pay per sec model has led to a decline in telecom stocks.

Brokerages are unlikely to change their opinion on the telecom pack in the short
/medium term. For them it is the success of the 3G services offered by private

43
operators (which has not yet begun as the licenses are still in the auction stage),
which is likely to determine their interest or re-interest in the Indian telecom pack.
So don’t be surprised if your broker tells you that he thinks the telecom stocks are
going to under perform in the short to medium term.

In the long term though this is a plan that should hold good for the
customer. It gives him a lot more options and when enough are attracted by
it the sheer volume will lead to a growth in revenue over the long run for
the telecom companies.

 Pay per second: A man talks on his mobile phone in front of a live clock in a
hoarding installed by a mobile company as a promo of ‘pay per second
scheme' in Kochi, Kerala. The number of telephone subscribers in India
increased to 525.65 million with more than 16 million new mobile users in
October. With this, the overall tele-density reached 44.87 per cent, according
to data released by the Telecom Regulatory Authority of India. In the wireless
segment, the subscriber base increased from 471.73 million in September to
488.40 million in October at a monthly growth rate of 3.53 per cent. The
growth is primarily because of steep reduction in tariffs as operators launched
per second billing across the country.

For formulating the strategy for promoting telecommunications in Rural

India:

”Due to huge population base, low teledensity and strong socio-economic

developments, rural India is becoming an important growth frontier for the mobile
industry”,

However, half of the rural population is too poor to afford even the cheapest handset,
and among those who can afford one, a mobile phone is likely to be a family device
as opposed to an individual one.

To overcome these challenges, operators need to shift their primary focus from
increasing ARPU and penetration to maximizing total revenue and profit from the
servable rural subscribers.

It can be achieved by adopting a comprehensive rural strategy comprising service &

product innovation and operational excellence.

Strategies for the mobile industry to maximize the rural India opportunity Low ARPUs
and higher costs of providing services to rural users warrant innovative thinking and
a different approach

According to a new report from Ovum, the global analyst and consulting company,
rural India presents significant growth opportunities for the mobile industry.
However, due to low ARPU and the higher cost of providing services in rural India,
operators face the challenging task of serving these areas profitably.

44
Due to huge population base, low teledensity and strong socio-economic
developments, rural India is becoming an important growth frontier for the mobile
industry

However, half of the rural population is too poor to afford even the cheapest handset,
and among those who can afford one, a mobile phone is likely to be a family device
as opposed to an individual one.

Despite a huge rural population and low teledensity, the addressable market in the
short to medium term is less than 200 million unique subscribers out of a total
population of more than 800 million.

While low spending power of end customers has adverse impact on adoption and
ARPU, limited electrification, a lack of backhaul and the poor state of road
connectivity make deploying and operating a wireless network in rural areas
expensive.

Therefore, mobile business case in much of rural India is very challenging.

To overcome these challenges, operators need to shift their primary focus from
increasing ARPU and penetration to maximizing total revenue and profit from the
servable rural subscribers.

Adopting a comprehensive rural strategy comprising service & product innovation

and operational excellence; partnering with the government, non-government
organizations and non-telecom players; and employing local entrepreneurs can
achieve it.

The industry’s success in rural India so far can be attributed to efforts in the areas of
service and product innovation, operational excellence, partnering with non-
government organizations, and employing local entrepreneurs.

However, we believe that the industry needs to further explore partnership

opportunities with the government and non-telecom companies.

Operators can circumvent the poverty constraints of rural India to a certain extent by
forming partnerships with the government and non-telecom companies to charge
them, rather than the poor end customers, for providing mobile services”. “The
government and non-telecom companies get a reliable medium to connect with rural
India, and operators get new revenue streams. It’s a win-win solution.”

45
 9. Rural Telecom Strategies

“To reach through where the areas is not having network connection, and
build the bridge between the across”

 Creation of infrastructure for provision of Mobile Services in rural and remote

areas.

 Provision of Broadband connectivity to villages in a phased manner.

 To connect with rural with cheaper mobile handsets (use and throw) at
cheaper rate.

 Public private partnership for the purpose of Rural Development at the same
for increasing the network connectivity at the surrounding places.

 Creation of general infrastructure in rural and remote areas for development

of telecommunication facilities.

 “The government and non-telecom companies get a reliable medium to

connect with rural India, and operators get new revenue streams.

 Operators can circumvent the poverty constraints of rural India to a certain

extent by forming partnerships with the government and non-telecom
companies to charge them, rather than the poor end customers, for providing
mobile services

=================================

 To build Patient-doctor link has to get consulted by doctor on phone but also
pay their fee by phone as well. The company has tied up with mobile payment
service.

 With partnering with the government, non-government organizations and

non-telecom players.

 By employing local entrepreneurs to minimize the marketing cost.


 To increase the brand presence on customers and become far more local.

46
 Similarly the Internet kiosk could be another way to address the wireless
broadband needs of the rural segment.

 The complexity of the telecom offering is likely to be a significant hurdle to

rural telecom adoption. Educating rural users, raising awareness,
demonstrating the benefits of the communication services will be critical to
sustained rural telecom development. Encourage the telecom sector to act as
rural enablers.

o Entrepreneurship based application and services be offered in the

rural segment
o A mix of technologies is adopted for the rural segment.
o Subsidies to the Customer-premises equipment including the
handheld devices and handsets
o Network Infrastructure adopted should make effective use of the
alternate sources of energy and are self sufficient, need to be
subsidized
o Availability of skilled manpower and training in the rural segment.
o Use of the existing infrastructure for imparting the skill based
training.

 Encourage partnering with local schools and it is with more incentives to the
budding partners to develop and train the local manpower.

 The empowerment of the youth, women (women service providers are less of
a credit risk than the men, women also influence purchase decisions since
they are the most exposed to the kinds of product/services available in rural
markets),

 The socio-economic group with a strong potential to spread the benefits of

communication services e.g. Village Phone program, Information availability
at a call with the social network.

 Encourage rural agencies (not just post offices but also electricity supply
divisions, educational institutions, other public agencies) with existing
Infrastructure to tie up with telecom operators (e.g. partnering with schools
and colleges helps telecom companies reach a wider consumer segment and

47
 Swot Analysis
Strengths

More No of rural population use cell phones.

Easy to make them buy.
Strong network is been building.
Young population interested at download mobile applications, games, videos,
music, themes and more of various brands
People are open to new schemes and offers.

Weaknesses

Limited reach of media, TV and print limited to regional.

Long-term profit.
Some Village are too far, So Logistics services may not be able to provide on
time..
Poor Broadband connectivity.
Recharge coupons are available only in Towns, or distant place.
Connectivity problem in most of the region.
Doesn’t Shift to Post paid in the coarse of longer duration.

Opportunities

There is wide scope for outdoors branding ( It is Visible like any other business
shops for the awareness purpose.
On Local ground activities
Rural members are getting educative this indicates there interest towards
entertainment aspects is increasing, where Nokia Life tools is solution for it
through (MBO).
To diversify from the current activity to Multi Brand Outlets activities
Tele
Networking
Surrounding villages with populations.
Women as a potential target group
Mobile Governance

Threats

Lack of outgoing calls/messages

48
 Mobile activity may be idealized (because of lack of constant Income to make
it use)
Rural members are getting educative..
Awareness and knowledge is increasing, this means Competition is
increasing .
Customer is highly price sensitive
Changing attitude towards mobile as and when the income increases.

49