Telecom for all, and telecom within the reach of all. With these socialistic objectives, India kicked off its telecom reforms in 1994. To some extent, availability and quality of telecom services have improved since then. However, most of the positive developments have been restricted to metros and other cities.

The real challenge has been, however, to ensure that benefits of deregulation reach the rural India where 70 percent of our population lives. Two problems have been most significant when it comes to providing services in rural areas. One, lack of a substantial subscriber base, which does not justify the high investment for companies to be profitable. Two, lack of other infrastructural facilities like power, which makes the provision of services in these areas difficult.

While the issue has been seriously debated by many in recent years, the debate has been restricted to primarily two issues:

• a regulatory driven model where the service provider in some way forced to go to the rural areas

• a technology approach where the objective has been to minimize the cost by using low-cost technology

While these may be essential steps, they alone have not sufficed to take telecom services in a major way to villages. The need for a wider approach has therefore always been felt. A model that has worked in neighboring Bangladesh shows that a social approach could just serve the purpose.

Innovative Initiative
The state-owned Bangladesh Telegraph and Telecom Board (BTTB) was the only provider of telecom services in the country. Given the scale and magnitude of telecom requirements there, the investments required for the same and the economic condition of the country, the task was stupendous.

The telephone density was 0.26 lines per 100 people, waiting time for a connection was more than 10 years, and the installation charge was as high as $450. In addition, customers had to bear with poor services and faulty connections, coupled with a skewed urban rural phone ratio of 200:1, similar to the scenario in India.

Indigenous business model: It was mainly because of the efforts of Iqbal Qadir, working for Gonafone, US, that a movement was propelled towards this model. A consortium was formed between Grameen Bank, Telenor Marubeni Corporation, and Gonafone to actualize the venture.

The initiative, Village Phone, combined a village bank—the Grameen Bank with expertise in village-based micro-enterprise and micro-credit—with the wireless technology provided by Grameen Telecom. The necessary condition, of course, was that the village selected fell under a cellular operator.

Grameen Bank provides lease financing to a member who applies (mostly female) and is found eligible. As per the eligibility criteria, the applicant must be literate, must have a good loan repayment record and have a small side business. The responsibility for extending services to customers for both incoming and outgoing calls, collecting call charges, remitting payments to Grameen Telecom, and ensuring proper maintenance of the telephone set vests with her.

The operator’s income consists of the difference between charges paid by customers and the airtime charges billed to the operator by Grameen Telecom. Grameen Telecom buys bulk air time from the Grameen Phone and this enables cost savings which can be passed on to the operator. At the end of every month, Grameen Bank officials collect their charges from the operator while the loan repayment is by means of nominal weekly installments.

Low-cost technology: Grameen Phone mainly uses GSM cellular technology. The phone is connected to a high-gain antenna secured to a four- to five-meter bamboo pole affixed to a dwelling, with a coaxial cable running between the antenna and the phone.

Low-capital commitment: The model is well-suited to Bangladesh which faces a constant threat of floods and other natural calamities. Using an inexpensive infrastructural setup helps reorganization of the infrastructure in case of natural or man-made disasters.

Has the endeavour succeeded? Yes. Grameen Telecom expects that when Grameen Phone completes its network in December 2002, almost 50,000 operators will be operating with a net income of $24 million per annum.

Socioeconomic Approach Works
The Grameen model—wittingly or unwittingly—addressed some unique socioeconomic issues. As a corollary, the success of the model shows how service providers can penetrate the hugely untapped rural pockets by taking a social approach in general, and a community building approach in particular. Some salient features of the model are:

Empowerment of women: It is an excellent social instrument for bringing women into economic and political mainstream. Women can use their free time in the role of Grameen telephone operator and supplement their family income.

Effective interaction with rural masses: One of the main reasons for the poor telecom performance of the Bangladeshi government was the magnitude of operations, be in terms of manpower requirements or fast servicing of customer needs. Since the operations are now localized, there can be better controlled. Also, since the operator personally knows her customers, she can service their requests for connections or to correct any discrepancies in the operation.

Minimal training for operator: Little time is spent in giving operators the basic training in operating the setup, understanding Roman numerals, etc. For instance, in Bangladesh, a training of one day is found to be sufficient.

Low setup cost: As already mentioned, the model uses low-cost, locally available material. Like Bangladesh, which faces a constant threat of floods and other natural calamities, Indian states like Orissa and Andhra Pradesh also face the same problem, and such calamities cause untold damage not only to the human and animal life but also to the telecommunication infrastructure.

Communication means for weather-related information: Any timely communication to farmers about natural events like cyclones, etc, which might save their crops or minimize the damage, will be highly valued. Also, communication with the village doctor, in case of health problems, especially in the light of transportation problems will lead to better healthcare. Farmers can also use the phone to directly communicate with the trader for selling foodgrains, thus obviating the role of middlemen.

Service in remote areas: These services are vital in regions where rough terrain prevents the laying of cables, for providing basic services. For example, in certain areas of Madhya Pradesh and some southern states—characterized by hilly and uneven terrain—such wireless services can be very valuable.

Implementation Issues
With bidding for cellular services complete and a major portion of the country coming under the purview of cellular majors like Bharti Telecom and Hutchison, application of the model is further facilitated. The model is not without issues, which have to be addressed, if the model is to be successfully replicated in India.

Cost of call: The cost of making a call has to be comparable with that of a local public telephone call. Given that the average per capita income of an Indian villager is approximately Rs 8,300 per annum and that Indians do not spend more than 7% of their family income on telecom services, the cost of making a call has to be in the range of Rs 2–3 per call.

Also, a differential pricing scheme may be adopted. For instance, states of Orissa and Bihar with per annual capita incomes of Rs 4,001–7,000 can be charged lesser, states like Punjab and Goa with annual per capita incomes of greater than Rs 20,000 can be charged slightly more.

Selection of villages: The model makes economic sense only if regions are covered by a cellular operator. The villages chosen should satisfy this basic criteria. Also, villages with unsuitable geographical terrain, those facing frequent floods and cyclones, and those with no telecom infrastructure should be accorded priority.

Parallel development of power systems: Access to electricity is required for operators to recharge batteries or power the phone. The technology for power, if cost-effective, will play a major role in the costing of the call. Solar power may be a viable option.

Backward integration with current systems and options for further value-added services: In villages, basic services will demand highest priority in the beginning. However, in future, some value-added services like low-quality videoconferencing may be needed. The technological infrastructure should allow this.

Outlook
The success of the model in Bangladesh has resulted in growing cellular usage in rural areas and cellular operators in India should look at it as an opportunity to penetrate rural India. The similarity of social and economic conditions in India and Bangladesh presents a very strong case for the application of the Grameen Phone model in India.

True, the Grameen Phone model can’t be a substitute for the fixed service, and will be used only when found to be economically viable. Nevertheless, the working model can be taken as a good starting point and further customization can be done to suit the varying demographic and geographical needs of Indian villages.

Prof V Sridhar is associate professor Arun J, Chetan R, Jayesh E Vipul D, and Vishwadeep S are students at IIM Lucknow