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Rural Strategy: Paradigm shift in thinking needed

January 23, 2018
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By Kaitki Agarwal, Co-Founder and Vice-President, Development, Parallel Wireless

It is befitting that the theme of the recently concluded Department of Telecommunications-led mega event, India Mobile Congress, was “connecting the next billion”. As the urban market matures in the country, the time is now right for telecom service providers to come up with services and products specifically for the rural segment.

The digital divide is a reality in most developing countries, and it is true for India as well. Of the country’s total population of 1.2 billion, 833 million or nearly 69 per cent live in villages as per the 2011 Census. Further, only 40 per cent of the rural population is connected to wireless networks. According to a recent Cellular Operators Association of India (COAI)-Deloitte report, while the overall internet penetration in India is 33 per cent, it is only 16 per cent in rural areas.

It is not surprising that telcos have focused on the urban markets. Given their high population density and the fact that cities have emerged as the key income generators of industrialised economies, operators have come up with products and services primarily for urban areas.

Time to breach the rural frontier

With the growing maturity of the rural market, service providers can no longer afford to ignore this segment. Falling smartphone prices and decreasing tariffs have made telecom services accessible in rural areas. Besides, the increased reach of television means that the new generation is well aware of the impact of wireless connectivity.

The government has come up with several initiatives like Digital India and the National Optical Fibre Network project to bridge the connectivity gap in rural India. The availability of broadband in the countryside will help in improving the economy, thus increasing employment opportunities and income levels.

While the lure of the rural market is growing, service providers are in a dilemma. The high cost of setting up and managing the network along with low returns on investment spread over an extended period of time is the key reason for their reluctance to cater to the rural market. The uneven spread of population and challenging terrain make the task even more challenging.

Besides, they realise that what works in the urban market is unlikely to bear fruit in a rural set-up. The capital-intensive model adopted in the urban setting is not suitable for the rural market, which requires a low-cost network deployment model to ensure that services are affordable.

At the same time, it is important to remember that the requirements of the rural and urban markets are uncannily similar. Basic connectivity services are no longer sufficient to meet the evolving demands of people in rural areas. According to a recent Boston Consulting Group study, “The Rising Connected Consumer in Rural India”, 70 per cent of rural subscribers use the internet mainly for social media. Other usage includes downloading media (45 per cent), searching for information (41 per cent), and chatting and emailing (30 per cent each).

Innovating for the rural market

So how can service providers find a win-win solution for meeting the growing demands of rural subscribers for quality mobile broadband at a cost both they and their customers are comfortable with?

The rural market demands a network that can be deployed fast and requires low maintenance. Cell sites that run on low power or alternative sources of power like solar or wind energy would help bring costs down, as the cost of power is a primary expense for service providers. Community-managed base stations or networks would further drive down the cost of rural broadband. The use of commercial off-the-shelf products should also be encouraged in the rural segment.

Apart from technology, service providers might need to think of different business models that would allow them to generate profits in the short term. Recently, the government allowed mobile virtual network operators (MVNOs) to operate in the country, which may encourage the operators to expand in rural areas. However, these MVNOs need to adopt the right network strategy to make the best of the rural opportunity.

What is required is a paradigm shift in thinking beyond the traditional network deployment approach that is currently being used. Operators need to come up with new cost-effective and out-of-the-box technological solutions to address the unique demands of the rural population.

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