NEW DELHI, India-Wireless seems to be the latest buzzword in the corridors of the Sanchar Bhawan, the building that houses India’s telecom establishment, as well as in telecom industry circles.
GSM subscriber numbers are booming. Fixed service providers (FSPs) will soon be allowed to offer “limited mobility services,” allowing users to have a portable phone within a limited range. Multinational vendors of different wireless systems are competing among each other to prove they are the best. At stake is the vast, untapped Indian rural telephony market with one of the lowest teledensities-0.4 percent-in the world.
India has 607,000 villages, where more than 70 percent of the 1 billion Indians live. More than 50 percent of these villages (375,000) each have a village public telephone (VPT). The 1999 National Telecom Policy envisions connectivity in all villages by 2002 and a teledensity of 4 percent by 2010. VPTs are to be provided by the government service provider, as well as FSPs. Because FSPs have failed to install the requisite number of VPTs, the matter has been referred to the Telecom Regulatory Authority of India (TRAI), which will soon suggest a funding mechanism to implement the service obligation.
Although the number of villages without VPTs is about 232,000, the actual number where new lines have to be installed will be much larger. Many VPTs based on older analog radio technology must be replaced over time for technological and economic reasons.
While FSPs have defaulted in providing VPTs, some GSM operators have launched rural services, although there is no obligation to do so in the service licenses. The reason is simple: GSM networks by default encompass a large number of villages, particularly along the highways covered by their networks. So with little incremental effort, they can reach out to rural areas. In this way, 50,000 villages across the country are “covered” by GSM signals. However, the estimated number of GSM connections in villages is about 3,000.
The two mobile operators in Uttar Pradesh (UP)-India’s largest state-are promoting rural connectivity in a big way. Escotel has installed some 500 rural phones in UP West and the adjoining Haryana circle in the last six months.
“We were encouraged by the success of the Grameen Phone in Bangladesh. Since we are not backed by a microcredit network as in the case of Grameen Bank there, we had to evolve our own model,” said Rajiv Burman, chief officer, customer acquisition and retention, Escotel.
Escotel subsidizes the cost of the handset and the connection by 40 percent, and airtime charges are subsidized by 50 percent. Only one phone is given in a village to a person recommended by the village headman. It is used as a public call office (PCO), where a private person shares a cell phone and charges a small service fee, in addition to the actual airtime used, and receives a commission from the government. Because normal call rates apply even for long-distance calls made within the circle, the use of the GSM phone works out to be cheaper than a Department of Telecommunications (DoT) landline connection, for which one has to travel 5 kilometers or more.
Escotel’s competitor, Koshika Telecom, is also inspired by the Bangladesh experience. Its rural PCO service is called “YES-T-D,” differentiating it from domestic long-distance PCOs using DoT landlines. In places farther from a base station, antenna and boosters are being used.
“We find that PCOs using our phones are earning 15 percent more than those using landlines. There are inherent advantages, like the phone can be taken inside a house where women can talk in privacy. Villagers have a number to give to their relatives where they can call back,” noted Sundeep Saksena, Koshika vice president marketing.
“Rural markets can be covered profitably through innovation and understanding of the market needs,” said Sean Dexter, managing director, Spice Communications, which operates in the relatively prosperous state of Punjab. Spice’s rural strategy involves providing coverage to towns and villages, which make business sense as a block, and optimizing spillover coverage through four sectored sites and directional antennae. Other innovations include zonal tariffs allowing reduced outgoing and incoming tariffs within zones, a shared-phone concept, a voice mailbox in the local language, and e-mailing facilities for relatives abroad because a large number of Punjabis live in the United Kingdom, Canada and the United States.
Tender conflict
Wireless will certainly be a predominant technology to ensure faster rural connectivity. More than half the new VPTs to be installed by DoT from 2000 to 2002 will be wireless. Earlier this year, DoT had floated a huge tender for procuring 600,000 wireless lines based on CDMA. The final bidders included HFCL-Hyundai, ITI-Lucent, HTL-Motorola and LG-Escorts.
But now DoT is reassessing the tender, in view of demands the rural connectivity should be open to other technologies as well. All GSM operators, having rolled out extensive networks, are eying the rural markets but want the government to give them incentives or subsidies.
Yet another technological option is CorDect, a system developed by the Indian Institute of Technology (IIT) and Chennai and being marketed globally by Indian company Midas and U.S.-based Analog Devices. It is based on the DECT standard (1880-1930 MHz) and provides a 32 kilobits per second (kbps) voice channel, along with 70 kbps Internet connectivity or 35 kbps Internet access with a simultaneous voice call.
“At rupees 13,000 (US$281) per line cost, this is the most affordable technology for rural connectivity in India,” said Dr. Ashok Jhunjhunwala of IIT.
India has been slow in deploying CorDect, but at least a dozen countries have adopted it, and it is undergoing validation trials in China.
The race to connect rural India has virtually turned into a GSM versus CDMA turf war. But several industry observers said DoT should adopt a technology-neutral approach.
“Let there be no entry barriers, no license fees and no quality restrictions for some time. There is no need to subsidize; just provide incentives to the players,” observed Dr. Rakesh Mehrotra, vice president, Mumbai-based ASC Enterprises, a global mobile personal communications by satellite (GMPCS) company.
For the time being, the ball is in the court of DoT.
