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Rural Road Map - Operator strategies to woo customers

June 15, 2010
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With telecom penetration in the rural areas at just a little over 20 per cent, the growth potential of these relatively untapped regions is immense.

Once neglected by operators, the rural regions have now emerged as their key area of focus. Realising the immense growth opportunities offered by the sector, operators have, over the past few years, pulled out all the stops to augment their rural subscriber base. They have been coming up with packages that are custom-made for the rural populace, and have developed rural-specific value-added content, tied up with vendors and cooperatives that have large distribution channels, and expedited network rollout by sharing passive infrastructure. Their efforts have clearly paid off, with the smaller towns and urban areas now accounting for the bulk of their total subscriber additions.

This trend is likely to intensify over the next few years. Industry analysts predict that rural teledensity is expected to rise to about 40 per cent from the current 21 per cent by 2012.

The key demand enabler for mobile phones in rural areas will be service offerings such as micro banking, information services, commodity trading, health and education services, regional entertainment and location-based services.

tele.net takes a look at some of the recent initiatives of the major telecom operators in the country to propel rural penetration...

State incumbent Bharat Sanchar Nigam Limited (BSNL), which accounts for 99.5 per cent of the rural wireline market, has undertaken a number of initiatives to increase rural telephony and provide broadband connectivity over the past few years. It has set itself a target of providing broadband services to 250,000 gram panchayats by 2014. The operator has already provided village public telephones (VPTs) in 61,186 of the 62,302 uncovered villages, as of December 2009, and expects to cover the remaining villages by February 2011. It has also set a goal of serving 250,000 rural WiMax subscribers across 80,000 villages under Phase I of its rural project which involves the setting up of common service centres. Another 1.1 million rural subscribers will be covered across 675,000 villages under the second phase of this Rs 10 billion-Rs 15 billion project. The project is likely to be completed by end-2010. BSNL has already launched its Wi-Max services via a franchise model in Gujarat, Maharashtra and Madhya Pradesh.

The operator has also entered into a tie-up with the Department of Telecommunications, whereby it will provide 888,832 fixed line broadband connections from its 27,789 digital subscriber line access multiplexers at the existing rural exchanges by 2014. This project is being subsidised by the Universal Service Obligation Fund. So far, 95,011 connections and four kiosks have been set up for the purpose.

BSNL has recently also partnered with National Fertilizers Limited to launch a pilot project offering crop information services, weather forecasts, soil testing as well as health information in local languages. The project has initially been undertaken in the Madhya Pradesh and Chhattisgarh circle. Earlier, in 2009, BSNL had launched another pilot project with mobile valueadded service (VAS) provider OnMobile Global, whereby it offered the "Mandi on Mobile" service in Uttar Pradesh in association with the state government. Another VAS initiative of the state operator has been its "Learn English" mobile programme, which was launched in November 2009 with EnableM and OnMobile Global.

Bharti Airtel
Bharti Airtel, the country's largest operator by subscriber numbers, leads in the rural segment as well, with a 43.24 million subscriber base that accounts for about 35 per cent of its overall market. In February 2009, the company set up 4,000 Airtel service centres (ASCs) in the remotest villages of the Maharashtra and Goa circle. The centres are empowered to sell and exchange SIM cards, activate, reactivate, recharge and provide other suitable VAS to rural users. Of its total presence in 24,000 villages covering over 65 per cent of Maharashtra's population, 4,000 large villages have so far been identified for ASCs.

Earlier, the company had formed a joint venture (JV), Kisan Sanchar Limited, with Indian Farmers Fertiliser Co-operative Limited (IFFCO), to provide voice updates on mandi prices, farming techniques and weather forecasts besides marketing IFFCO's fertilisers to farmers across the country. Currently, Kisan Sanchar reaches 18 states and about 1.5 million users.

As of December 2009, Reliance Communications (RCOM) had a rural subscriber base of about 19 million, which accounted for 20 per cent of the company's total subscriber base. With the rural segment presenting such a major market for the company, it has, over the years, undertaken several initiatives to drive its revenues from the segment.

In June 2009, RCOM and Krishak Bharati Co-operative Limited (Kribhco) formed a JV, Kribhco Reliance Kisaan Limited, to retail customised telecom products and farmer-specific VAS as a part of its rural initiative. Under this tie-up, Kribhco provides RCOM with a distribution channel of around 25,000 cooperatives.
The operator has also established an interactive platform, whereby a customer can call up on a toll-free number to receive information on mandi prices, irrigation methods, fertilisers, etc. RCOM has also recently partnered with BBC News to broadcast news and weather reports in regional languages in the rural regions.

To gain a larger foothold in the rural segments and stay ahead of the competition, RCOM has now devised a threepronged strategy: to drive internet penetration across rural and suburban areas (under the Bharat Nirman plan), to focus on high-impact machine-to-machine (M2M) solutions and to provide VAS specific to rural needs.

The Bharat Nirman plan will be available in 20,000 rural locations across India, offering speeds of about 153 kbps. The M2M solution, on the other hand, will offer applications that will aid in automation, surveillance, remote monitoring and data gathering. These services are likely to witness increased demand in automation of agro and irrigation services, water level monitoring and data gathering for milk and agricultural cooperatives, fisheries, poultry and soil analysis.

Idea Cellular
About 40 per cent of Idea Cellular's revenues and close to half of its total subscriber base are accounted for by rural users. The company has adopted a strategy of handset bundling and has tied up with Nokia for its rural activities. It provides handsets bundled with SIM cards. The company has also undertaken another initiative, Nokia Life Tools, a push-based SMS service that provides information related to market rates, education, fertiliser rates, etc.

Moreover, since local languages play a key role in promoting rural telephony, the company has been branding and marketing its products in these languages to identify with customers.

Some of its other recent initiatives include the Idea Fone Frend, a pilot project which has been launched in association with the Self Employed Women's Association (SEWA) in a few districts of Gujarat. The project aims to allow 100 million rural consumers to benefit from local and affordable access to telecom services, while creating a livelihood for rural entrepreneurs identified to deliver these services. Banking on SEWA's membership of more than 650,000 poor self-employed women across 14 districts of Gujarat, the company has achieved significant success in this endeavour. Women from low-income groups have become micro entrepreneurs and have adopted the initiative as a source of livelihood by providing telephony services in their villages.

The company has also introduced a a Kisan Suvidha pack to cater to the needs of e farmers in the Punjab region. This is a - special voice-based utility portal that is designed to provide farmers with critical farming-related information such as coms modity rates at the major mandis, crop t advisories for a range of seasonal crops, weather and agricultural news updates, etc.

Other players
Other major players have also been adoptl ing strategies to cater to the needs of the , rural populace. For instance, Tata - Teleservices Limited (TTSL) has, over the . years, undertaken several initiatives include ing its Fisher Friend application for the Tamil Nadu and Pondicherry circles. TTSL's Kisan Sansar network offers relas tionship building services such as crop e seminars and small farmer meetings at vils lage levels. It also offers facilities such as soil and water testing, and contract farming. The operator has recently partnered with Ossian to undertake a pilot project, Nano Ganesh, in Gujarat's Sojitra village that offers services whereby mobile phones can be used to remotely control the start of irrigation pumps. TTSL is currently working with micro-finance institutions so as to bundle the mobile phone along with the loan, thereby lowering the entry barrier.

Vodafone Essar, the country's second largest operator, has also been active on this front. In May 2009, it launched a package for its prepaid customers in the rural markets of Maharashtra and Goa, which allowed rural subscribers to discuss business and market trends, and stay connected with their families at a nominal tariff of Re 0.30 per minute. Moreover, to push its rural agenda, the operator has recently launched low-cost handsets priced at Rs 700.

Clearly, operators have achieved considerable success in expanding their rural footprint and the trend is likely to gain momentum in the coming years on account of the customised strategies adopted by most of the operators.

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