Aditya Mishra of TCS has written an event summary of MoMo Mumbai’s December event in the Mint newspaper.

First, rural does not indicate poor. Service providers found mobile users in rural areas willing to pay good money, if offered the right services. However, local content would be key to growing the rural VAS market, said Krishna Durbha, head VAS, business and marketing at Reliance Communications. For example, a farmer would be interested to know the mandi price in his area, rather than quotes from remote cities. The challenge for an operator is to aggregate content that is as locally relevant as possible.

A feature unique to rural customers is the seasonal nature of their finances. A farmer wants to sell his crop before he pays for mobile application services, said Arun Pande, head of the Innovation Lab at Tata Consultancy Services Ltd in Mumbai. He emphasized the need for local information by adding that a farmer doesn’t want to know the weather forecast for “northern Maharashtra but for his field.


Some of the oldest forms of fuel, cow dung, jatropha and cottonseed, may help power rural mobile telephony in India. The country’s first base station powered by biofuel is set to become operational at a rural area near Pune in the next couple of weeks.

The rural areas are plagued by erratic power supply and mobile companies depend heavily on diesel gensets.

P Balaji, VP, marketing & strategy, Ericsson India:

“Driving telecom penetration in rural areas is a major challenge. Uninterrupted power supply is a major issue as power cuts are frequent. A key reason why some regions lack GSM coverage is the limited reach of the electricity grid. Availability of diesel is another problem where gensets need to be up and running to ensure continuity in coverage,


BSNL is in talks with Taiwanese and Chinese handset manufacturers to launch a sub-Rs 1000 handset for the rural market.

According to ET, BSNL has begun preliminary talks with Taiwan’s Compal and China’s TCL Communication Technology (TCT) for a single chip GSM handset.

“The mobiles will be based on single-chip technology. The SIM card will be non-removable and the mobile will remain on the BSNL network only,


In a bid to lay a cellular network covering the entire population in the country, the state-owned company is leaving no stone unturned.

It is using even helicopters to fly down mobile equipment in areas where the road network is yet to reach. And if that’s not enough, BSNL has hired a fleet of trucks that ferry diesel every day to power the huge generators that run the mobile base stations, in areas where there is no electricity.

The company had recently floated a tender to acquire cellular equipment for rolling out 63 million lines, of which more than 50% is being deployed in rural India. BSNL is laying a full network in the North East too where the tough hilly terrain makes it hard for installing the equipment required to offer mobile services.

“By the end of this project, 100 per cent of habitable India will be covered. It is a challenging task but full of opportunity considering that India’s mobile penetration is only 8.5 per cent. There is a huge pent up demand,” said Mr Sinha.

The Business Line article says that BSNL has the highest ARPU, more than that of any private operator despite concentrating more on the semi-urban and rural areas.

BSNL has 16.1 million cellular users and is hoping to get 20 million users a year, most of which is expected to come from non-urban areas.


Sony Ericsson will focus more on the smaller towns across the country for its expansion plans. Its distribution partners Ingram and Salona will focus retailing in the small cities and town.

“Our 60 per cent of the business comes from B and C category towns. In bigger cities, the market is more for replacement customers,” he added.

A significant change in buying pattern was the preference of colour mobile handsets in small cities. In the beginning of the last year, 60-70% of the handsets were black and white but by the end of the year, the trend had reversed.

The company is planning to double it’s existing 23 advantage stores in the state, which is highest in the country, by the end of the fiscal year.

“The national growth rate for mobile handsets was 40 per cent last year while in Gujarat it was 60 per cent. Apart from economic factors, Gujarat has a large number of young consumers who are always eager to try new products. Therefore, we chose Ahmedabad for the launch as it is a potential market,” he added.

The company has introduced good quality feature-rich handsets and is present in all price segments. It seems to be doing well in India. It is already among the top 3 and wouldn’t be surprising if its market share has risen.


The government has reached a landmark deal with telecom companies under which it will fund operators to create telecom infrastructure in rural India from the Universal Service Obligation Fund.

As per the agreement, the government will extend financial support for both passive (land, tower and power back-up) and active (BTS, antennae and a portion of the backhaul) infrastructure, which will then have to be shared between operators. However, bids for the two will have to be separate.

This can lead to a rapid rollout of telecom services in rural India as only Rs 1,800 crore of the USO Fund has been utilised so far against the total collected non-lapseable sum of over Rs 8,000 crore.

In yet another first in the sector, the government has allowed standalone infrastructure providers to bid, but only for setting up the passive part. On the other hand, access providers bidding for setting up this sort of infrastructure must also compulsorily bid for the active component. Tenders for the bids would be announced by February end.

The towers and the land will be jointly owned by the government and the successful bidder, which cannot sell, alienate and lease the infrastrucure without prior permission from the USOF administrator.

The government also said that companies that share the infrastructure will have to arrive at a mutually agreed amount for its maintenance.

Source: Business Standard


In yet another move to increase the rural tele-density, the Telecom Regulatory Authority of India (Trai) has recommended that the government create a national rural telecom licence, that allows companies to operate all kinds of telecom services, exclusively in rural areas.

The regulator has proposed that companies which offer services under the new licence be charged only a nominal entry fee and be exempted from all other charges, including licence fee, spectrum fee and revenue share.

For existing telecom operators, the regulator has reiterated that the government abolish spectrum charges for rural operations. But it has added that that semi-urban and semi-rural areas in the periphery of large towns be excluded from the definition of


Sunil Jain has a good article in Business Standard discussing TRAI’s latest recommendations on rural telephony.

Since 2002, the government has levied a cess of 5% on telephone bills to fund rural phones through the Universal Service Obligation fund. The USO Fund collected a whopping Rs 7,254 crore till April but had disbursed only Rs 1,815 crore of this. TRAI says a total of Rs 30,457 crore will be needed by 2010 to have around 28 million rural phones (as compared to 13.6 million currently), resulting in a rural teledensity of around 4%.

TRAI has suggested an innovative approach for utilising USO funds.

So, Trai’s paper recommends the USO be given for mobiles as well, but the real innovation lies in the approach


Rural and semi-urban India are not the mobile markets of the future. They are the present; already taking a lead. Cellular growth over the last 12 months has been largely driven by subscriber additions in smaller towns and rural markets. The Indian cellular market has witnessed an average growth of 3.5% per month during the last year. A geographical break-up reveals that this rate has been propped up by category B and C circles.

According to data compiled by industry bodies and the Department of Telecommunications, C and B category circles have shown an average monthly growth of 6.5% and 4.23%, against 2.49% and 3.14% for the Metros and A-class circles, during the last 12 months.

DoT data puts the number of middle-to-high-income households at 21.16 million in rural India and 23.22 million in urban India. Telecom regulator TRAI says rural markets have sufficient purchasing power to drive up subscriber growth. Indicated by the fact that both rural and urban areas had same number of middle to high income households, while the penetration was 25 times lower in former.

Source: Business Standard


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.