Rural Telecom Firms Gear Up for Rural Foray

Tuesday, December 6, 2005

Rajesh S Kurup

Global telecommunication giants are gearing up to take a deep plunge into the domestic rural segment, where, they believe, the next battle for telecom supremacy will take place.
Handset majors like Motorola and Nokia and infrastructure provider Alcatel, and Indian companies such as Reliance Infocomm and Tata Indicom have already taken the first step to venture into the unchartered territories.

“Over 70 per cent of India’s 1 billion-plus population lives in villages and considering that telephones have not yet reached most of the villages, this is where the scene of action is going to be. The challenges are many, but the rewards would also be high,” Benhur Mesfin, director (wireless broadband – Asia Pacific, government & enterprise mobility solutions), Motorola, told on his recent visit to India.

The US-based telecom handset and infrastructure major is positioning its ’Canopy’, a wireless broadband access system that offers last mile connectivity, and is banking on its entry-level handsets for the rural foray. Of the villages numbering over 6.34 lakh, Motorala is positioning its Canopy suite for areas where laying cables for fixedlines would be an impossible task.

The telecom major is also looking at “partnering with the government’s initiative of providing telephony and broadband connectivity to the remotest locations in the country”. The company is also looking at joining hands with private players and selling its Canopy suite for the village telephony rollout.

However, connecting rural areas is not going to be a cakewalk for telecom firms, as they will be targeting the sub-$5 subscriber, while appointing distribution channels – being the most difficult of the phases, he said. Close on the heels is handset-maker Nokia. The Finnish telephony major has introduced affordable phones, infrastructure and telecom solutions for the rural telephony venture. The company is betting on its Nokia Connect GSM Solutions, a set of mobile network solutions that can reduce total cost of ownership, apart from its entry-level handsets for the foray.

Indian villagers do not earn as much as their urban counterparts and would be looking at low-cost handsets.

Reflecting the sentiments of Mesfin, Nokia Networks country head (India Ashish Chowdhary said, “With a teledensity of under 2 per cent, the rural segment holds the key to the future growth of India’s mobile industry and the long-term economic development of the country.”

India has more than 6.34 lakh villages, of which Uttar Pradesh with over 1.2 lakh villages and Bihar (77,697), Madhya Pradesh (76,220), Orissa(51,057), Maharashtra (43,025) and West Bengal (40,889) are on the top of the telephony major’s strategy for the rural foray.

Global infrastructure major Alcatel is banking on WiMax, a wireless networking standard, for its rural foray. According to Alcatel president (South Asia) Ravi Sharma, WiMAX is the cheapest option for providing connectivity in the rural areas as fixed lines can be a costly affair and its maintenance is slated to cost more. This could help in tiding over the infrastructure hurdles, as wireless could be cheaper and efficient than fixedline.

The company has signed a memorandum of understanding with C-DOT to manufacture broadband products based on WiMAX technology.

Not to be left behind, the Indian telephony majors are also in the race to gain the first mover’s advantage. Even though state-owned telecom behemoth Bharat Sanchar Nigam was the first mover by creating a nationwide infrastructure, private players are planning to use the network for the foray.

Reliance Infocomm has already laid a network covering over 4,000 towns, mainly in semi-urban areas, extending even to taluka and block levels. At present, it has a presence in over 1.2 lakh villages in India and is aiming to cover all the 6.34 lakh villages stretching from Badrinath to Kanya Kumari and Jaisalmer (bordering Pakistan) to Siliguri.

The company is also looking at offering broadbrand services in the villages, an ambitious decision, as infrastructure is still the single most hurdle. Reliance Infocomm head (rural marketing) Sanjeev Govil said, “A large number of our subscribers are the first-time users of mobile and we, at Reliance Infocomm, are happy to be part of the telecom revolution that is sweeping across rural India.”

The Anil Ambani-owned company is positioning its entry-level handsets coupled with attractive tariffs to penetrate into the remotest Indian villages. As most of its handsets can access the Net, the company with its R Connect, an internet application, is confident of providing broadband services in the rural areas.

Tata Teleservices (TTSL), a CDMA player, is also on an agressive rollout of services in rural India. The company had already rolled out its fixedline phones in certain remote villages in Andhra Pradesh, Karnataka, Tamil Nadu, Gujarat and Maharashtra, while other states were to get the services in a phased manner.

TTSL president Ajay Pandey said, “We are offering telecommunication services in the remote geographies and villages, even at places that have a population of below 5,000. We hope that our ambitious roll out plan will receive huge response from the masses. This initiative is in accordance with the government’s vision to increase penetration in rural areas.”

Source: Business Week , via Zdnet India (link opens in a new window)