Rural Strategy: Operators shift their focus from voice to data

The rural telecom landscape has evolved significantly over the past few years. While growth in these areas had been largely voice led, data is now witnessing higher traction with people becoming more aware of high speed technologies and their benefits. Operators, too, are looking at rural areas as the new growth centres and devising innovative strategies to increase data uptake in these areas. However, seve­ral challenges remain and given the sluggish pace of government initiatives like the BharatNet project, the future for mass adoption of data services remains unclear. Industry experts share their views on the rural telecom scenario, the key challenges and the future roadmap…

How has the Indian rural telecom landscape changed in the past few years?

 

Sharat Chandra

Rural India has witnessed several changes, the foremost amongst these being the significant shift towards data-enabled communication. It is not uncommon to come across internet cafes on rural highways that offer download facilities, WhatsApp sessions and Skype chats. While a large part of India uses mobiles for voice calls only, there is a growing population that is using wireless for their data needs. Internet use through wireless devices is increasing due to the rise in demand for smartphones and tablets. Close to 300 million subscribers are estimated to have accessed the internet via wireless devices as of end 2015.

 

 

Hemant M. Joshi

The rural telecom subscriber base in India has increased from 219 million in 2010 to 423 million in 2015, representing a compound annual growth rate of almost 14 per cent. The teledensity has risen from 26.43 per cent to 49 per cent during the same period. However, when compared to the urban teledensity of 153 per cent, there seems to be significant scope and growth potential in the rural market. Rural India has about 68 per cent of the total population and hence represents a vast untapped telecom market. There is significant growth taking place in the rural areas in terms of networks, telecom infrastructure, innovative services like m-banking and m-governance, and new-age technologies like machine-to-machine and internet of things.

 

Brijendra K. Syngal

The rural telecom landscape has changed considerably over the years, especially with the use of wireless technologies such as cellular phones. The change is perceptible from the growth in teledensity, which rose from  5 per cent in 2006 to around 50 per cent now. However, the growth continues to be led by plain vanilla voice services. The pace of change may not be that great because of some infrastructural problems relating to the availability of power to run the very basic base transceiver station (BTS) and backhaul connectivity to the nearest switching centres. There are also apprehensions on the part of operators about inadequate opportunities in rural India, which affects their return on investment. This will change with the government’s intent to execute the Digital India initiative for providing connectivity.

 

 

Dr Mahesh Uppal

Voice connectivity is less of an issue and the focus is now on reliability and bandwidth for data services. While most areas that are inhabited are now covered with 2G signals, 3G is yet to see any traction. Even the government’s BharatNet (erstwhile National Optical Fibre Network) programme is moving very sluggishly.

How has operators’ approach towards rural subscriber acquisition and retention changed over time? What strategies should operators adopt to better leverage the rural potential?

Sharat Chandra

Rural subscribers are price sensitive, easily swayed by multiple exciting options, not brand loyal and will quickly switch operators if they get a better scheme, package offer or freebie. Thus, a carrier has to keep rural subscribers excited about offers that are relevant and affordable by making them visible through various media campaigns. Rural subscribers continue to remain prepaid focused and hence it is necessary to have sufficient and convenient cash-enabled recharge options close at hand to keep them connected to their network.

Hemant M. Joshi

The growth and development of digital infrastructure and communications technology are empowering rural population and forcing operators to change their customer retention and acquisition strategies. They are moving away from low-cost products and focusing more on better quality of service and network infrastructure. Rural consumers have diverse, specialised requirements and operators need to understand the culture, economy and demographics of rural India, and customise their services and products as per rural needs. They need to find a proper balance between cost and quality.

Brijendra K. Syngal

To my mind, the efficacy of connectivity or being in touch is very well understood. There is going to be an increase in the migration of human resources , which will  increase the basic need to stay in touch with the people back home. This, in turn, can increase the need to transfer money quickly. Operators must engage more with these people to educate them about the use of telecom services, which will have a multiplier effect of increased usage.

Dr Mahesh Uppal

For an operator, once connectivity is available at a particular place, the focus immediately moves to usage, including both minutes of usage and data consumption. This is all the more true for rural areas, where spectrum availability is at present not a major issue. Here, operators would want to focus on developing the market by expanding usage. Currently, there are all kinds of promotional packages that allow people to gain familiarity with data services.

What has been the rural market’s response to data service offerings? What are the services/applications that are witnessing significant traction? What are the key issues that need to be addressed to encourage data uptake in rural areas?

Sharat Chandra

The rural youth is shifting to WhatsApp rapidly with the proliferation of attractively priced and 3G-enabled smartphones in these markets. Songs, movies and entertainment clip downloads are also gaining rapid interest. However, the challenge for the operator is to make data available on the network. Wherever paid or free Wi-Fi is available, download seekers throng the place, often enhancing the business of the Wi-Fi hotspot offering vendor such as a chai shop, the local halwai or dhaba. Conn­ectivity, uptime and network data speeds are often limited, sporadic and patchy, and this turns away the enthusiastic customer.

Hemant M. Joshi

Data services are getting increasingly popular in rural India due to the growing penetration of budget smartphones, customised and localised services, and the government’s push for e-/m-governance through basic online services and the Digital India initiative. The rural internet subscriber base has grown by 21 per cent from 98.1 million in in September 2014 to 111.5 million in September 2015. M-governance services like mobile seva, m-kisaan, behtarzindagi, ApnaChoupal and private services like m-paisa are gaining momentum. The availa­bility of network infrastructure, custom­i­sed and relevant services and awareness about the value of the internet and digital literacy will help in data uptake in rural India.

Brijendra K. Syngal

The prime role is to make rural users aware of the power in their hands in the form of information availability. In order to use that information, education in the vernacular language is important. Once this is established, the operator must look for commonalities to provide them services that interest them. The approach has to be in sync with the requirement.

Dr Mahesh Uppal

In most cases, the service preference is similar to that of people in urban areas, which is mostly messaging and social media. Since income levels are in general lower than that in urban areas, the consumption of entertainment on mobile phones is lower in rural areas as of now.

The key issues that need to be addressed are:

• Familiarity with data services – There is less awareness of the possibilities that data services and internet usage offer.
• Affordability of services and plans.
• Device ecosystem – It is important to make it easier and cheaper for people to move from traditional feature phones to smartphones.
• Relevant content in local languages – There is very little internet content in languages besides English and less than half-a-dozen Indian languages.

What are your views on the progress of initiatives like the BharatNet project and Digital India, and their likely impact on the rural telecom ecosystem?

Sharat Chandra

The government and Bharat Broadband Nigam Limited have spent a lot of time, effort and money on these initiatives, but it has neither yielded the desired outcome nor the spread promised within the timeframe committed. As with most government schemes, these, too, suffer from too much hype and too little delivery.

“The rural youth is shifting to WhatsApp rapidly with the proliferation of attractively priced and 3G-enabled smartphones in these markets. However, the challenge for the operator is to make data available on the network.”

Hemant M. Joshi

BharatNet is an important project to improve India’s digital infrastructure and connect the rural population to the internet, while Digital India seeks to empower citizens digitally. The success of the Digital India initiative depends on the BharatNet project and multiple delays are hurting the project as well as the budget. There is an urgent need for private participation to ensure timely completion of these projects.

“The availability of network infrastructure, customised and relevant services and awareness about the value of the internet and digital literacy will help in data uptake in rural India.”

Brijendra K. Syngal

The BharatNet project was meant to im­pa­ct rural India. However, the entire project has been mishandled. The project’s focus on just one technology, fibre and GPON has impacted it. The situation continues to be the same, driven by an industry-vested interest and not a reach-out approach.

“Rural consumers hold immense potential. The challenge lies in harnessing that potential through education, awareness and cost effectiveness.”

Dr Mahesh Uppal

The BharatNet project is moving very sluggishly and it has missed a key requirement of such projects, namely, the alignment of government incentives and private players. Currently, the agenda of the government and private players does not seem to overlap or connect in a constructive way. As a result, the project has been unable to evoke significant interest from the private sector. Unfortunately, this project cannot move unless the private sector is on board.

The same is true in the case of Digital India as well. We need to understand that the government’s role should be limited to areas where there is market failure. How­ever, in areas where markets exist or can be easily developed, the role of the government has to be limited. The government, unfortunately, seems to have missed this point with BharatNet and Digital India.

“Telecom infrastructure has slowly expanded to rural areas. The challenge now is to upgrade these networks for providing data services.”

What is the future roadmap for rural telecom growth in India? How is this market likely to evolve in terms of growth drivers and challenges? What is the business case for 3G and 4G adoption in these areas?

Sharat Chandra

Before speaking about rural areas, let us first understand the urban scenario to get the picture straight. While the telecom industry has done an incredible job in connecting the country by providing mobile connectivity at the cheapest rates globally, the demands of consumers have risen significantly compared to what operators can actually offer for the price. Despite urban subscribers being ready to pay a higher price, operators are not in a position to promise consistency in services and, therefore, subscribers are not eager to join the 4G bandwagon, at least initially.

The rural subscriber, on the other hand, lags behind the urban subscriber in paying capacity.  Given the additional cha­llenge of poorer power infrastructure (resulting in degraded uptime), inadequate data speeds and sporadic coverage of 3G,  the business case for the adoption of 3G/4G in rural markets is just not there. The rural subscriber will have to wait till infrastructure issues are resolved, network upgradation is carried out on a larger scale and costs are recovered from the urban subscriber.

Hemant M. Joshi

There is huge potential in the rural market in terms of data and voice services as well as other services like m-banking, m-health and m-education. Further, the absence of hospitals, banks and educational institutions provides new business opportunities for telecom service providers. The lack of investment in infrastructure, lack of knowledge about the benefits of the internet and lack of localised relevant content are some of the challenges in the uptake of data services. Although many subscribers use 2G services because of their affordability, they are expected to switch to 3G with the availability of good networks and relevant services under affordable data plans. However, 4G is expected to take more time for rural adoption. But subsidised handsets and subscription-based business models may help in its faster uptake.

Brijendra K. Syngal

Rural consumers hold immense potential. The challenge lies in harnessing that potential through education, awareness and cost effectiveness.

Dr Mahesh Uppal

The future roadmap for rural telecom growth is promising. While the government could have expedited connectivity in rural areas, there is no doubt that the private sector will continue to develop the rural market, albeit slowly. Telecom infrastructure has slowly expanded to rural areas. The challenge now is to upgrade these networks for providing data services, to accommodate higher levels of data usage and to provide relevant content in local languages. These goals are not impossible and in the medium term, rural customers will become high data consumers, as services that consume data, such as entertainment, health and education, are bigger priority areas in rural areas as compared to urban areas.