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Teledata

Tele Data

Mobile Subscribers Yearwise comparision

Rural Drive: Industry gears up to harness untapped potential

June 03, 2013

India’s rural population has remained largely untouched by the telecom success story of the urban areas. Factors such as high roll-out costs, low ARPUs and literacy rates, and infrastructure challenges have deterred operators from exploring this segment fully. As a result, the share of rural telecom subscribers in the total subscriber base continues to be low. As of March 2013, rural users comprised 349.22 million of the country’s total subscriber base of 898.02 million. However, the rural markets have started drawing the attention of telecom companies as urban markets reach saturation and the business case for providing rural services improves. These areas are expected to drive the next wave of telecom growth. Policy and regulatory support, efficient energy management practices and a developed value-added service (VAS) ecosystem will play a key role in tapping this market. Industry experts comment on the key trends in the rural segment, policy and regulatory growth drivers, the issues and challenges in increasing service penetration, energy management practices and the emerging VAS landscape…

Rural market overview

 Kunal Bajaj, Telecom Analyst and Entrepreneur

Several key trends have been observed in the rural market over the past few years. One such trend is the sharing of tower infrastructure for providing telecom services. Further, affordability of handsets and entry-level services has increased. In the past few months, some operators have increased tariffs and withdrawn promotional offers to drive revenues, but new entrants continue to offer price-competitive packages to rural subscribers.

Issues and challenges

One of the major hurdles facing telecom service providers in the rural market is the high cost of operations.  This is primarily due to the lack of electricity and the high expenditure on diesel usage. On the other hand, revenues from the rural market continue to remain subdued due to low ARPUs. As a result, the challenge for operators is to make rural operations more viable.

Industry initiatives

In order to drive telecom services, especially data services in the rural market, the government is implementing the NOFN project, which will facilitate the provision of backhaul networks to the last mile. The project will also help in reducing the cost of rural operations and enable operators to provide affordable services to rural users. In the future, the government should provide subsidies from the USO Fund to operators in order to make network roll-out a viable proposition.

Meanwhile, operators have also been taking several measures to drive service uptake. These include strengthening their distribution channels and adopting strong local marketing strategies.

Benoy C.S., Director, Information and Communication Technologies Practice, Frost & Sullivan

With a population of 720 million based in 630,000 villages across 3.2 million square km, and an economy accounting for over 50 per cent of the GDP, rural India clearly represents a huge growth opportunity for the entire telecom ecosystem including operators, VAS providers, handset manufacturers and equipment vendors.

According to the Telecom Regulatory Authority of India (TRAI), the country had 553 million urban and 348 million rural mobile subscribers at the end of February 2013. Rural subscribers account for nearly 40 per cent of the overall subscriber base. Under the initiatives of the Universal Service Obligation (USO) Fund, 579,421 village public telephones had been provided as of June 2011 to cover 97.61 per cent of the country’s villages.

On the infrastructure front, around 7,000 towers have been set up under the shared mobile infrastructure scheme. This infrastructure is being shared by three service providers for the provision of mobile services. In the broadband segment, the National Broadband Penetration Program aims to provide the next 1 million connections in untapped markets. The Department of Telecommunications has granted a subsidy to Bharat Sanchar Nigam Limited (BSNL) for providing wireline broadband connectivity in rural and remote areas through the USO Fund. The fund will provide the subsidy for every broadband connection provided by BSNL through its 27,789 rural and remote telephone exchanges. Currently, rural consumers account for only 5 per cent of broadband connections. Broadband usage is expected to be driven by the National Optical Fibre Network (NOFN) project, which was approved by the government in October 2011 to provide broadband connectivity to all gram panchayats in the country.

Strategies adopted by operators

Operators are taking the rural route due to stagnating urban revenues and margins. They are focusing on developing affordable services, devices and applications to address the needs of rural subscribers. Some of the key initiatives taken in this regard are:

•   To strengthen its foothold in the rural market, Vodafone India has rolled out the Associated Distributor Vodafone Mini Stores, which are touchpoints managed by a local resident.

•   M-health and m-education services are being provided by several service providers to capitalise on the rural opportunity.

•   Mobile-based agriculture solutions are being provided to the rural population through the interactive voice response and SMS platforms. Further, personalised agricultural information is being provided to the farming community through mobile handsets.

•   HDFC Bank has launched a mobile bank account, M-Paisa, in association with Vodafone India, thereby providing m-banking services to a large population base. The mobile wallet service is based on M-Pesa, which has been a successful mobile-based money transfer service in Kenya. Using this service, the customer can deposit and withdraw money from a network of agents including airtime resellers and retail outlets acting as banking agents.

•   Telemedicine and Tele Triage are among the health care solutions that can be provided using telecom services. Telemedicine helps patients access a doctor without the need to be physically present at the clinic. Tele Triage solutions help in addressing health-related issues through telephone by medical professionals using physician-approved guidelines and protocols.

•   Regulators like the Reserve Bank of India and TRAI; banks; mobile service providers; and handset manufacturers are joining hands to provide m-commerce services to the unbanked population.

Going forward, tackling the issues of addressability and affordability, and providing attractive services in rural areas will be crucial for driving the demand for telecom and broadband services.

 Energy management in rural areas

Sharat Chandra, Managing Director, TelEnergy

From an energy management perspective in the telecom sector, heat management at tower sites is the cheapest and most efficient solution. This can be achieved through free cooling units (FCUs), which have been widely adopted. Setting up hybrid sites, comprising diesel generator (DG)-battery and solar-DG-battery with FCUs, has been an emerging trend in the energy management space in rural markets.

For a hybrid site set-up, where the battery is used as the anchor, Hong Kong-based COSLIGHT has undertaken pioneering work in the rural markets of Africa and Southeast Asia and is poised to replicate the success in India. Moreover, although trials for renewable energy service companies have been carried out selectively, their scalability is yet to be proven.

Issues and solutions

In rural markets, poor grid availability, difficult terrain, access limitations, etc., are key challenges that result in high diesel consumption and operational costs.

While grid availability is not under the control of the telecom sector, there are several solutions that can be adopted to ensure energy security. These solutions are specifically aligned to grid availability. The most effective one is the DG-battery hybrid model, which can be configured through valve-regulated lead-acid (VRLA)-gelled electrolyte lead (GEL) and lithium iron phosphate (LFP) batteries. These solutions are suitable for areas where:

•   Grid power availability is more than 16 hours: High temperature supporting VRLA-GEL batteries can be used for base transceiver stations, base station controllers as well as mobile switching centre sites. These batteries are suitable for standby and cyclic operations, and have a lifespan of over four years at an average ambient temperature of 35 oC with one cycle of charge-discharge on a daily basis.

•   Grid power availability is 12-16 hours: In these areas, the best results can be achieved by using a combination of LFP and VRLA-GEL batteries. Under this model, the lithium battery always charges and discharges first and the VRLA works as a standby battery during long power outages.

•   Grid power availability is less than 12 hours: In these areas, stand-alone LFP batteries with a charging time of less than two hours (for a fully discharged battery) can be used. Field operations have demonstrated that such batteries have a life of over five years at an average ambient temperature of 35 oC with three to four charge-discharge cycles on a daily basis.

•   Grid is not available: Selective deployment of solar and direct current-DG, in combination with lithium ion batteries, is the most effective solution for these areas. These batteries have a life of more than five years at an average ambient temperature of 35 degrees Celsius with one to two cycles of charge-discharge on a daily basis.

The results achieved by any technology solution will depend on its field operations and maintenance. There have been several cases of damaged equipment and short battery life due to poor maintenance strategies. Tower companies will have to build field capabilities that deliver on the promised equipment performance under a stringent service level agreement framework.

Emerging VAS ecosystem in rural areas

 Praveen Rajpal, CEO, handygo Technologies

As the developed mobile markets across the world approach saturation, telecom service providers have started focusing on “the next million” users. These users belong to rural areas which have limited telecom access.

In India, rural consumers have a huge pent-up demand for mobile services, which is also being driven by the increased availability of affordable mobile handsets. handygo Technologies’ major interactive voice response applications for the rural market include Behtar Zindagi – a 24x7 information service; Ehsaas  –  a service on sexual literacy; Mobi Shiksha – a service related to education and employment; Soochna Shakti – a service for rural women empowerment; and Health & You – a service providing health-related information.

The Behtar Zindagi service has created a niche in the rural community and is promoting rural empowerment. To ensure credible and accurate service delivery, the content is developed in association with various government bodies, non-governmental organisations, universities and private organisations.

Challenges and solutions

Large-scale uptake of telecom applications in rural India is fraught with challenges. The market is huge and fragmented, and there is no single language of communication.

Another key challenge is to reach out to rural areas and educate customers. There are several issues involved in reaching out to these users – poor infrastructure, lack of transport facilities and resources, etc.

Currently, traditional approaches such as line communication and word of mouth are driving VAS adoption in these areas. Communication mediums such as wall paintings, kiosks, regional papers, roadshows and communication through village-level panchayats and other influential groups are being used. Further, traditional outbound dialler-based communication in the form of pre-recorded messages is also being used.

However, a stronger approach is required for promoting rural telecom applications. The government, along with the local administration, can step in to support rural VAS penetration. This would also ensure the availability of affordable services.

The government can facilitate rural VAS provision through the introduction of applications such as Behtar Zindagi in its m-governance services.

 
 

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