The telecom industry has been growing steadily in rural areas over the past few years, with the share of rural subscribers registering a significant increase. This segment has huge potential as its teledensity remains much below that of urban Inida. However, issues like the high infrastructure installation costs involved in providing services in these areas, along with the lack of local content, has not let the segment come into its own in terms of telecom growth. Going forward, government initiatives like the National Optical Fibre Network (NOFN) project and e-governance will play an important role in reaching the untapped rural population and improving service uptake. Industry experts share their views on the evolving rural telecom landscape, the strategies adopted to resolve energy management issues, and the key challenges and outlook for the segment...

How has the rural telecom space evolved over the past few years?

Sharat Chandra

A few years ago, telecom in rural India was synonymous with the “missed call syndrome”, despite the very low call rates prevalent during that period. Over the years, the availability of smartphones, improved coverage and better grid conditions have yielded better network availability. Meanwhile, the proliferation of messaging, with the greater acceptance of WhatsApp and similar applications is spreading to the rural segments. All these are favourable indicators that have led to a positive environment.

Inderpreet Kaur

Operators have been recording a strong growth in subscriptions from rural areas, which has led to an increase in the share of rural subscribers in the country’s overall subscriber base. While educating rural consumers and introducing relevant services for the segment have been instrumental in encouraging adoption, lower access charges and device costs have helped as well. Operators that have been successful with their rural strategies have focused on offering services in four key segments: agriculture, education, health care, and banking. Idea Cellular, for instance, which reports over 50 per cent of its subscribers in rural pockets, began offering educational services for the segment in 2008, later launching a service called Behtar Zindagi for rural subscribers. Bharti Airtel, meanwhile, launched Airtel Mediphone, English Guru, Apna Chaupal, mobile education, and mobile money early on to tap the rural segment.

Sabyasachi Majumdar

The Indian telecom industry has reported healthy growth over the past 15 years. This has mainly been centered on urban areas, and it is only in the past few years that rural areas have registered a surge. In March 2001, rural teledensity stood at 1 per cent, and increased to 15 per cent by March 2009. After that, it more than trebled to 48 per cent as of March 31, 2015. Nevertheless, it still remains much below the pan-Indian teledensity of 79 per cent and the urban teledensity of 149 per cent.

Dr Mahesh Uppal

The number of people who are living in rural areas and using mobile services is increasing rapidly. However, there is still a significant lot who do not have access to such services or infrastructure. This is because these are relatively high-cost areas that do not present a serious business case for mobile operators or others and are therefore a challenge for public policy. The broadband uptake in these regions is also very poor, with access to it being far lower and limited than regular narrow-band access.

What is the nature of broadband uptake in these regions? What are the key growth drivers for these services?

Sharat Chandra

Wireless broadband is yet to gain acceptance in rural areas. Broadband is mostly an urban phenomenon and limited to users making use of high throughput fibre and 3G applications. More needs to be done for its rural growth since the availability of network bandwidth alone is not the solution; better phones and greater availability of the grid to keep devices active are equally important factors. E-governance services for land records and agriculture will drive its wider acceptance as well.

Inderpreet Kaur

On the fixed line side, the penetration of broadband services has remained low. The newly established targets under the NOFN project are expected to improve the state of rural broadband infrastructure, but this does not put forth a foolproof solution for last mile connectivity. The plan, which focuses on a middle mile fibre layout, will enable the delivery of high speed broadband only to village councils. The large-scale adoption of data services in the rural market will require an awareness of their availability and the provision of last mile connectivity. The solution could be innovative business models built through stronger collaborations between the government and private sector entities, and greater reliance on wireless infrastructure.

Sabyasachi Majumdar

The broadband uptake in rural regions has been slow. The progress in terms of bringing more people in rural areas on the internet has been subdued despite the government’s focus on connecting villages through the optical fibre network. As of December 31, 2014, the number of India’s total internet subscribers stood at 267.39 million (of which 175.21 million were urban and 92.18 million rural). Only 85.74 million of these were broadband subscribers. Rural internet subscriber density stood at 10.7 per cent. Although broadband subscriber numbers are not available, they are expected to be low. This highlights the segment’s strong growth potential.

What are the main challenges impeding service uptake?

Sharat Chandra

The main challenges faced by this segment are poor infrastructure, accessibility, grid conditions, network coverage and lack of contiguity. A paying subscriber in these regions will be unwilling to settle for less, particularly when he faces additional challenges in terms of recharging and online payments. In contrast, these facilities are readily available to urban subscribers.

Inderpreet Kaur

To be successful in their rural strategies, operators must take into account factors that define rural consumers and their behaviour. Ensuring simplicity in terms of service design and pricing is critical for encouraging adoption. Operators have been trying sachet pricing (for example, Airtel’s rupee store) to keep pricing strategies low and simple for Tier II and Tier III subscribers. Along with this, operator business models should ensure that service prices are appealing so that long-term relationships can be maintained with subscribers.

Sabyasachi Majumdar

The primary challenges impeding service uptake in these regions include the lack of telecom infrastructure deployment due to high costs, low power availability and the low pricing power of customers in rural areas. The telecom industry’s stretched finances, marked by competitive pressures on profitability and stressed balance sheets, have also prevented companies from aggressively targeting rural areas.

Dr Mahesh Uppal

There are supply-side and demand-side issues. On the supply side, the cost of providing services, the cost of right of way, the terrain, etc. make it difficult to serve these areas. On the demand side, there is still no clarity on the relevance of broadband services for rural areas. There is also a problem with justifying broadband access. For a rural subscriber, it is not clear whether broadband services offer value for money as of now. That they offer value is certainly not to be debated. But why would a rural person or someone with a relatively low income invest in a high-cost handset (clearly, a smartphone is needed to access broadband) or fixed-line internet connection? Neither of them are cheap options for the low-income segment. While there is a demand for data, there is little else available to the rural community. There are language issues, literacy issues, and issues with the relevance of content. They do not have access to government services either. Thus, the ecosystem for broadband in rural areas is very weak.

What strategies are being adopted for resolving energy management issues at tower sites?

Sharat Chandra

Reducing the energy footprint itself entails the removal of air conditioners and using other means of cooling equipment, eventually opting for their outdoor installation in cabinets that are more adaptive to higher ambient temperatures. The use of next-generation technology base transceiver station equipment is also being pursued for those sites where the life span of legacy equipment has come to an end.

Since grid availability is scanty and sporadic in rural areas, the use of diesel generators (DG) for extended periods of time adds to pollution and costs. The reduction of DG use has made a huge difference. It is important to highlight the immense contribution made by the introduction of Lithium-ion batteries. They have reduced DG use from 12-16 hours to 4-6 hours at locations where the grid is available for only 8 hours. The wider and quicker adoption of Lithium-ion batteries across circles will be instrumental in reducing the use of DG sets.

Since sites are far-flung and often inaccessible, the use of equipment to remotely monitor, measure and manage telecom infrastructure holds the key to preventive maintenance and significant reductions in downtime. Energy analytics linked to remote monitoring systems enable the identification of spots in trouble, root cause analysis and technical/managerial intervention to resolve or mitigate issues.

Sabyasachi Majumdar

Industry players are looking at different means of resolving energy management issues at tower sites. They are considering alternative ways of generating power, such as solar-powered batteries and long-haul inverters, and are also working towards energy optimisation in order to reduce power requirements.

Dr Mahesh Uppal

Power itself is an expensive input, and when it is not available from the grid, arranging alternative power is a costly affair. If operators deploy cleaner power, then it is even costlier. Energy costs are high and there is an understandable reluctance among tower companies to deploy solutions that increase the cost of services and thereby affect their margins.

Energy is a net cost for operators and they have absolutely no reason to avoid energy management solutions (EMS). There is a lot of effort on the part of tower companies to make their processes energy-efficient, but EMS is tough and expensive the world over, requiring the participation of the government, the industry and local stakeholders.

What is your outlook for telecom growth in the rural segment over the next two years?

Sharat Chandra

The telecom industry is poised for a major upswing in rural areas. Bharat Broadband Network and Reliance Jio Infocomm Limited will change the landscape. Subscribers have already started demanding more in terms of coverage, service quality, capacity and features. The digital divide will shrink further and the use of renewable energy to power and support telecom infrastructure in rural areas will mean less pollution in India’s hinterland.

Inderpreet Kaur

Around 70 per cent of India’s population resides in non-urban areas, which explains the vast potential of the rural market. However, the segment is not that appealing in terms of pricing and usage when compared to the urban market. It also entails higher subscriber acquisition costs. The proposed introduction of virtual operators can help lift these constraints and aid growth.

Sabyasachi Majumdar

The outlook for the rural segment is bullish, with the government working towards completing the ambitious NOFN project to enhance connectivity. In addition, private telecom operators have been expanding their footprint in rural areas as urban pockets are now lacking in growth opportunities, particularly for voice services. It is believed that data has strong growth potential in rural areas as it is a source of entertainment and information. Telecom operators can tap this, although it is likely to be a long drawn-out process due to the challenges mentioned above.

Dr Mahesh Uppal

The outlook is certainly positive, but we must be realistic about our expectations as we tend to overestimate both supply as well as demand. There is a huge need for market development in rural areas, and those who are willing and able to do so will reap the benefits.