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Mobile service providers and handset makers are reeling under the same old understanding that rural customers have very limited understanding on the handsets, applications, and services, and hence the services can not be delivered as profitably as in urban areas. In fact, considerable size of rural customers have same level of understanding compared to normal urban mobile users on some applications like games, entertainment, services, service plans, etc, as they have more time to toy with the handsets and applications and interact with other customers. It is a timely research report by Accenture to sound a wake up call to the operators. The survey findings report that telecom operators planning to further expand in a big way into rural areas need to have better understanding on their customers' needs.

The report titled “Wanted: Business Models for Profitable Rural Expansion,” which was released at Accenture's Global Convergence Forum, calls for telecom operators to think beyond the typical business model to achieve success in India's rural geographic markets. The study based on 2,4000 rural mobile users and in-depth interviews with 15 senior-level executives brings out that telecom operators underestimate the complexity and maturity of the rural consumer base and the rationale that rural consumers use to make buying decisions. Actually considerable size of mobile users in rural areas, particularly the youth segment with basic education, have good understanding on services, service plans, applications like gaming, entertainment, multimedia, etc which certainly should be tapped for further mobile expansion. Only old generation segment has limited understanding.

In the survey, rural consumers ranked the mobile phones as the cheapest medium to communicate as first for their mobile phone adoption. Followed by this, dependable communications and privacy formed the most important factors for their mobile phone adoption. Whereas senior executives interviewed ranked that mobile phone as a status symbol as the second most important value proposition for rural customers, and the mobile phone as an entertainment platform as the third most important value proposition, which was inconsistent with consumers' views. True, the phase of mobile phone as status symbol largely changed to mobile as easy way to communicate with privacy.

So based on these new findings, service providers need to orient their business strategies and new service rollout plans. Kumar Ranjan, India lead, Communications & High Tech group, Accenture, said, “Telecom providers are yet to create and implement business models capable of driving sustained profitable growth through a rural expansion strategy. Obviously, an important prerequisite in the creation of successful business models is the implicit understanding of the needs and buyer values.”

According to the findings, more than half (52%) of those surveyed cited ease of use and mobile phone's usefulness during emergencies to contact people quickly. The executives said that the lack of information available to rural consumers about various mobile offerings was a barrier to the consumers' decision-making on mobile phone purchases. However, in the survey on consumers, 90 % of consumers indicated that while a detailed comparison of mobile operators may not be readily available, they had a general understanding of mobile offerings and had the information they needed to make a buying decision.

Martin Cole, group chief executive, Global Communications and High Tech operating group, Accenture, said, “Telecom operators need to move to a truly customer-centric strategy if they want to be profitable. For India's rural markets, simplicity – good, solid handsets and reliable voice services – is the name of the game.”

Cost, a key barrier

Thirty six percent of respondents said that the cost of mobile phones prevented them from buying a handset, and 18% of respondents said cost of services as another reason for not becoming a mobile customer. Both the executives and consumers ranked handset cost as the primary obstacle for mobile adoption.

The report also revealed that rural consumers want a handset with attractive basic features such as a camera (23% respondents), dust resistant (19%), torchlight (11%), and long battery life (11%) for an affordable price. Less important were functions and capabilities including the ability to play games (2%), a speaker-phone (2%) or to be video-enabled (1%).

Kannan K

kannan@cybermedia.co.in