subject: Telecom penetration in Rural India [print this page] Telecom penetration in Rural India Telecom penetration in Rural India
Telecom Penetration in Rural India
The mobile subscriber base in India is 680 million out of which 68% of the subscribers are from urban areas and the balance 32% is from rural areas. The urban teledensity has reached 134% whereas rural teledensity is only 28%. As a result, the telecom subscriber growth in urban areas is now saturated and further growth can come only from rural India.
According to TRAI, 91% of the villages in India are covered by at least one operator. Overall, 51% of the villages in India are covered by three operators and 31% of the villages are covered by four operators. The population density across India is very low in villages making it less viable for the telecom companies. This is due to lower number of subscribers per BTS and lower ARPU of a rural customer when compared to the urban customers. Difficult topography and climatic conditions are the other reasons for this low tele-density in rural areas.
Population density
Number of villages
Between 1000 - 2000
129,000
Between 500-1000
144,000
Less than 500
219,000
If we look at the spread of population, 70% of the population lives in rural India spanning 492,000 villages. Majority of this population depends on agriculture for survival. Contribution of the rural India is very significant as 45% of the GDP comes from this segment. As telecom and network connectivity is seen as enablers of nation's socio-economic growth, the Government is aggressively looking at plans to improve the tele-density in rural areas. The industry has made several suggestions for improving the tele-density in rural areas.
1. Fast approval mechanism for site acquisition
Telecom companies spend considerable time for the acquisition of land and for obtaining permission from the quasi-government authorities like Panchayats for the erection of BTS. There is always a threat of site demolition and considerable delay is experienced in getting approvals till now. There is also difficulty in laying down optical fibre cable due to right of way issues.
Telecom is a public utility and a critical infrastructure for rural development. Government should instruct the Village Panchayats / Forest departments / Highway authorities to issue the permission for the erection of BTS site on a fast track. Similarly the land for the site acquisition should be made available quickly and there should not be any restriction or charges or penalty on conversion of agricultural land to commercial activity.
2. Immediate SEB (grid) power connection at industrial rate
Another major deterrent for erecting sites at rural areas is the non-availability of SEB power. The telecom companies depend on diesel power which is very expensive and does not justify the site at many rural areas.
The Government should treat the telecom as essential services and mandated to the state electricity board that the power connections should be made available within one month of application and at industrial tariff. The BTS sites should be exempted from power cuts and uninterrupted power supply should be made available.
USO subsidy should be considered for non-conventional energy sources like Wind power, solar energy and bio fuels.
3. VSAT connectivity for rural areas
The telecom companies face considerable delay in providing optical fibre, leased lines and MW backbones at rural areas. Besides it takes time and huge effort to build up this network. The Government should provide VSAT connectivity at these rural areas, faster approval and lesser charges.
4. Ensuring availability of low cost Handset
Even though the mobile handsets are available now at Rs 1000 and below, the rural households may still consider this as expensive and it will be a major entry barrier in rural India.
The telecom companies should consider bundling of handsets along with connection and subsidise the handset cost. In turn, the Government needs to provide financial support / subsidy to the telecom companies to compensate this cost.
5. Develop applications to make the mobile handset more useful
The literacy rate in rural areas is very low. It is therefore, important to develop content in vernacular language and design the application software such that it is user-friendly and menu driven, with innovative graphics to overcome the limitations of illiteracy. Operators should take initiatives to offer regional and national news, weather forecasts and market prices for crops in regional languages to help improve mobile uptake in rural areas.
6. USO subsidy for OFC connectivity
As the OFC connectivity at rural areas require huge investments, USO Fund should be made available to the telecom operators who invest capital expenditure for rural connectivity. In order to reduce the capital expenditure Government should mandate that the OFC infrastructure available in rural India should be shared among all operators at a pre-fixed nominal cost.
7. Mobile Banking
TRAI is of the view that mobile banking is a catalyst to promote mobile services in untapped rural India. Even today the banking services have not reached the rural India fully. It will be very expensive to provide the banking services through branch expansion or through ATM. Mobile phone is the ideal and unique vehicle to extend the banking services to rural India. Many African countries have successfully employed mobile phones for fund transfer among the rural population. RBI and the banking sector should make the necessary policy changes and join hands with the telecom sector to reach the banking services to the uncovered areas.
The advent of wireless technologies, Government support and policy changes have made it possible to overcome many of these difficulties. While launching wireless technologies in rural India, operators are required to focus on service availability, affordability, acceptability and awareness. Operators need to create and implement business models capable of driving profitable growth through a rural expansion strategy.
