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A few years after the telephone was invented, India got its first 50-line manual telephone exchange in Kolkata (then Calcutta). At the time of Independence, there were approximately 82,000 telephone connections in India. Telecommunication has seen a stoic rise since then. In fact, in the last three to four years, there has been a voice revolution of sorts. Wireless has taken the place of wired telephone and every other person is now connected through a mobile. The revolution, which started from the elite urban class, has gradually paved its way to the common man of the country.

Active Government
Projected statistics of growth in the telecom sector tell a story of rural importance. In the year 2006, the telecom industry contributed over Rs 105,287 crore to the Indian economy. According to a Frost & Sullivan's report, the industry is expected to grow at a CAGR of 26.8% and will supposedly reach Rs 3 44,921 crore by 2012-surely, a major chunk of it will come from the rural market. If the projected growth happens, the telecom industry will employ 2.8 mn people directly and around 7 mn people indirectly. With e-Governance growing in prominence, the economy will further gain Rs 6,100 crore with the reduction in farmers' procurement cost by 2.5% through e-agriculture. Realizing the potential, the government is placing more emphasis on this market. The villages will be developed as knowledge centers with a firm base of telecommunication.

Nobody Can Miss the Opportunity Number of villages in India is more than 6 lakh Number of VPTs in India is less than 6 lakh More than 50% of the telecom investments will be in the rural market in the next two years The telecom industry contributed over Rs 105,287 crore to the Indian economy in 2006 The industry is expected to grow at a CAGR of 26.8% to reach Rs 344,921 crore by 2012 Direct employment to 2.8 mn people and indirect employment of 7 mn people to be generated Benefits through e-agriculture is expected to amount to Rs 6,100 crore

“Majority of the next 500 mn customers in telecom will be in the rural areas, through rural connectivity. The approach to enable this will require the government to review the strategy pursued so far, and bring substantial change in the policy framework followed to enable the growth of the telecom industry, during the next plan period,” says RR Shah, member secretary, Planning Commission. “There is a set of needs at the rural level which has to be converted into an opportunity, where information and communication technologies will have a major role. Local content has to be encouraged to implement e-Governance applications and connect rural India for the overall inclusive growth,” Shah adds.

Education and health figure to be the prime focus in the next plan period. Shah further adds, “Rural connectivity, e-Governance applications, e-commerce, telemedicine, and e-education are going to contribute to substantial growth of the telecom industry in the next phase of inclusive development in the Eleventh Five-Year Plan period, up to 2012.”

This may be the glorious part of the story, but the fact on the ground is somewhat different. Rural India is still deprived of telecom connectivity. India has achieved a teledensity of 22%, out of which rural teledensity is merely 8%. People in some parts of the country are still not aware of this euphoria, and if they are, the quality of service raises a debate on the commitment of service providers.

Reality Bites
Rita Sinha is a government employee residing in the rural part of Bihar. She owns a Reliance prepaid (RIM) mobile connection for the last one-year. The mobile phone works like a fixed phone for her. She hangs the phone at a particular place in her room. Whenever she gets a call, she takes the mobile and rushes to the rooftop of her house simply because there is no network coverage inside the house. Her story is similar to all the mobile owners in the rural part of the state. Bihar is the third most populated state in the country. Take another example, Prakash Babu lives in a small town in Kerala. He has a Vodafone mobile connection which works fine for him. Everyday he travels by bus to the adjoining city to work. But, once he gets inside the bus, his family has no clue of his whereabouts until he reaches the city-no network coverage in villages when he travels being the problem. A plenty of other real life examples can be quoted here which loudly talk about the mobile penetration and service level in rural India.

Questionable Change
This year saw service providers taking a U-turn as all of a sudden they have started talking rural and are gung-ho about rural prospects. Is this a need-based move or are they really excited about the opportunities in the rural market? Are they considering it a part of their corporate social responsibility? How promising is the rural market for all the telecom service providers? Considering the past, the intention of service providers is suspicious.

India lives in its villages. This famous quote is not convincing enough for service providers to take the rural market seriously. There are 607,491 villages in India. The total number of village public telephones (VPTs) till June 30, 2007 was 572,997. BSNL is one service provider that has increased the number of VPTs in the last quarter. Other operators, after the initial hiccups, backed out of the project. The irony is that many villagers are not even aware of a VPT in their area. Similar is the story with the rural community phone project. The project was started in September 2004 and was slated to be completed by 2007. At that time, Reliance Communication was very excited about the project and promised to set up 7,500 rural phones out of 21,499 planned under the project. The company has set up around 1,000 phones till date and the deadline of the project ended in September this year.

Despite the extensive wire line and wireless services offered in India, they hardly cover rural India. No doubt, some of the service providers already have a good number of customers in rural areas, but they do not really care about the quality of service. Service providers are not eager to improve the quality of services and customers have no choice but to bear with the poor service. Despite all the hype and talks about the rural market, it is true that the service providers have turned blind to the customer's plea. If you talk about wire line services, out of the total 122,71,602 subscribers, BSNL has got a share of almost 100% (122,58,190). Other operators are Shyam Telelink (13,095), Reliance Communications (287) and Tata Teleservices Maharashtra (30). Coming to wireless, out of 184.92 mn subscribers in June 2007, rural subscribers amount to 37.4 mn, which includes both GSM and CDMA.

“With telecom tariff coming down to the lowest level, there is ample scope for expansion of telecom networks in rural areas” Kuldeep Goyal, CMD, BSNL	“As the expected ARPU in rural regions will be less than Rs 200, pricing will be a key thing for all operators” Jagbir Singh, group CTO, Bharti Airtel	“Rural market predominantly is a prepaid market” SP Shukla, president, Personal Business, Reliance Communications.

Who Will Bell the Cat?
Despite the fact that the rural market has a vast scope for growth and expansion, why have the service providers not been active during all these years? There are many reasons for the low penetration in the rural market, the biggest being the geographical barrier. Cities have dense population in any specific area, so with a little more investment, service providers can serve a chunk of the population effectively. On the other hand, the population in rural areas is scattered and to serve a less number of people, service providers need to make huge investments in infrastructure set up. The low per capita income in the villages as compared to the urban areas also make it difficult for service providers to get the desired RoI. A better ARPU and short period for RoI in urban areas proves to be more beneficial.