Increasing rural teledensity

Posted on | October 16, 2005 |

Telecom Regulatory Authority of India plans to raise the teledensity in rural areas from the current 1.9% to 15% by 2007 and has proposed a Rs 8,000 crore subsidy for creating necessary infrastructure. With this kind of subsidy support, it will be possible to install 20,000 base stations in rural areas to cover about 80-90% of the villages, according to TRAI.

The subsidy is essentially a Universal Services Obligation (USO) fund support. Trai had set up a USO fund for the development of rural areas. A 5% universal access levy on the gross revenues earned by all the operators goes into the fund. The telecom body has also announced a discount in annual license fee and spectrum charges linked with rural coverage.

Teledensity is measured as the availability of phones per 100 persons. One of the main reasons for the low teledensity is the cost involved in setting up infrastructure in the rural areas is high, and recoveries could be lower as there are not many users.

Current urban teledensity is about 31.1% and is expected to reach 43% by 2007. Rural teledensity, at present, is about one-third of the urban teledensity figure seven years back. The government has proposed to cover 3,50,000 out of 6,07,000 villages by ‘07. The population covered in the rural areas would be 450 million.

One of the key variables for supplying mobile phones to rural areas is by adopting appropriate marketing techniques.

Sanjeev Govil, head of rural marketing, Reliance Infocomm, says, “Bundling of mobiles with rural-specific products like mobikes, tractors, and tying up with other distribution channels like LPG and cable network distributors would be interesting ways of marketing wireless mobile phones in rural India.

Category: Rural

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