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Rural India is just a call away

The economy may have slipped, but more than 100 million new mobile connections have been witnesssed by the communication sector in 2008. The industry must further tap rural India to drive the growth of mobile telephony and buffer India’s economic slowdown. Manoj Gairola reports.
By Manoj Gairola | Hindustan Times
UPDATED ON JAN 05, 2009 01:58 AM IST

For fishermen of Tamil Nadu’s Veerampattinam and Machchilipattinam districts, it’s no longer a hit-and-trial sail in the sea for their routine catch. Satellite images received through mobile phone guide them to catching fish, while price tips help them avoid exploitation by middlemen – courtesy a joint initiative of Tata Teleservices and MS Swaminathan Research Foundation, introduced in 2006.

Examples like these are plenty, and they demonstrate how increased penetration of wireless phones are changing, or can change, lives in villages across the country, where nearly two-thirds of our one-billion plus people live.

The communication sector has been in the forefront of the India growth story of the past one-and-a-half decades. Even as the economy slipped in 2008, the telecom sector continued to grow briskly, adding more than 100 million new connections and making India the world’s second largest mobile phone market after China.

That growth, experts say, will continue through 2009, but with a difference. A majority of the new connections will come from rural areas, where teledensity is only about 12 per cent compared to 72 per cent, or more, in urban areas.

Telecom operators are getting ready to exploit this opportunity.

“We are bullish on rural areas. More than half of our growth will come from rural India in the next two to three years,” said Kuldeep Goyal, chairman and managing director of government-owned Bharat Sanchar Nigam Ltd. (BSNL).
The government had earlier set an ambitious target of 500 million subscribers by 2010 that — it appears now — can be achieved easily.

“Fortunately, the demand in rural markets for FMCG products (consumer goods of daily use such as soaps and toothpastes) as well as telecom services is doing well and will sustain despite lower GDP growth,” said Manoj Kohli, joint managing director and CEO of Bharti Airtel.

At the end of 2008, we had close to 350 million wireless phone subscribers. That leaves us with a target to add another 150 million by next year. Of this, “about 90-100 million should come from rural areas,” said Nripendra Misra, chairman of Telecom Regulatory Authority of India, which soon plans to recommend measures that will help bridge the rural-urban divide in the telecom sector.

The biggest challenge in rural areas is marketing.

“Unlike urban areas, customers will not come to us. We have to approach them,” said BSNL’s Goyal.

Another big challenge would be to develop relevant applications. From mobile banking to e-governance, the potential is huge. The challenge is how to translate it into cost-effective solutions for a large mass of people who would now be connected with wireless phones.

Some initiatives have come from telecom companies in the past two years. More should follow in 2009, as the multiplier impact of increased rural telephony can be a buffer for the broader economy that’s likely to get worse at least in the first half of the year.

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