With a population of about 720 million based in 630,000 villages, rural India presents a significant growth opportunity for telecom operators, value-added service (VAS) providers and handset manufacturers.

To drive the growth of telecom services, particularly data services in the segment, operators have launched a slew of price-competitive voice and data packages for rural subscribers over the past few years. The idea is to provide these customers a one-stop shop of localised and relevant telecom services and applications at affordable prices.

Operators are focusing on developing content based on agricultural activities (such as rainfall forecasting and cropping patterns), education (distance education, virtual schooling, etc.) and health (mobile hospitals, easy availability of medicines, etc.). For instance, mobile-based agricultural solutions are being provided to rural subscribers through the interactive voice response and SMS platforms. Further, personalised agricultural information is being offered to the farming community through mobile handsets.

To ensure access to these services and minimise costs, operators are deploying outsourcing models. For example, most operators are utilising prepaid call centres for the provision of voice-based services and are also ramping up their rural distribution networks. Bharti Airtel, for instance, has a multilayered distribution network in rural areas. The company has employed small retailers in rural pockets to ensure easy availability of recharge coupons.

The government has also launched several initiatives to promote the uptake of telecom services in these areas. A notable example is the National Optical Fibre Network project, which is expected to facilitate the provision of backhaul networks to the last mile. The project will also help reduce the cost of rural operations, enabling operators to provide affordable services to rural users.

So far, operator initiatives in this segment seem to be paying off, with rural customers accounting for a large share of subscriber additions. As per the Telecom Regulatory Authority of India’s (TRAI) performance indicator report for January-March 2013, rural customers accounted for over 39.47 per cent of the overall wireless subscriber base as against 38.35 per cent in October-December 2012. Operator-wise, Idea Cellular had the highest proportion of rural customers in its overall user base at 54.09 per cent, followed by Vodafone India at 54.01 per cent.

tele.net takes a look at recent operator initiatives in this space...

 BSNL

Bharat Sanchar Nigam Limited (BSNL) has the largest rural infrastructure footprint amongst operators in the country. As per TRAI, the company had a wireless rural customer base of 34.84 million as of March 2013 and a market share of 10.17 per cent. The operator is present in 581,968 villages (98.04 per cent of the total inhabited villages as per Census 2001) through village public telephones.

The operator offers CDMA services in over 400,000 villages, 2G/3G GSM services in over 350,000 villages and wireline broadband services in over 170,000 villages. BSNL also has about 650,000 km of optic fibre cable network across the country, which is significantly larger than that of other pan-Indian players. It also has a wide network of copper wires and tower sites that covers almost all populated villages in the country.

To tap the rural segment, the company has developed a wide portfolio of value-added services. It has, for instance, introduced video calling services in partnership with ITI Limited and Click Telecom. Subscribers availing of this service will be charged Rs 2.50 per minute. The operator is also offering users an unlimited calling facility for this service, which is valid for 30 days and is priced at Rs 2,200. The other two plans available are priced at Rs 750 and Rs 350, and offer subscribers free calls worth 900 and 150 minutes respectively. Thereafter, users are charged Rs 2.50 per minute. Both plans are valid for 30 days.

BSNL is also offering various voice plans for rural customers like the Anuraga plan for 2G and 3G prepaid rural customers in Karnataka. Under the plan, customers are charged Rs 20 and Rs 59 for 2G and 3G SIM cards respectively, while the services are priced at Rs 49. Customers can also avail of 30 minutes of free talktime and 100 free SMSs for the first 30 days of usage. The plan has a validity period of 180 days.

 Bharti Airtel

Bharti Airtel has charted healthy growth on the rural front. According to the Cellular Operators Association of India (COAI), it had over 86.69 million rural subscribers in August 2013. This is a result of collaborations with VAS providers to offer applications in local languages.

On the rural front, Airtel is also focusing on the m-commerce market. The company’s mobile money initiative – Airtel Money – has generated a positive response in the areas where it has been launched. This prepaid mobile wallet allows users to make bill payments, book e-tickets, undertake online shopping and money transfers, etc. through their handsets. The service is emerging as an important tool for financially empowering rural customers.

Another recent initiative was the launch of the Apna Chaupal portal for VAS. The platform enables customers to browse and subscribe to various VAS offerings by dialling 58080. The voice-based service platform offers information across different categories such as agriculture and cricket in various regional languages. All calls to 58080 are toll-free and customers are charged the applicable rates for the service packs they subscribe to.

 Vodafone India

While urban markets have always been important for the company, of late, Vodafone India has been making rapid inroads into rural areas as well. As per COAI, the company added over 0.12 million rural customers in August 2013, taking its total subscriber base to 83 million. The operator has attributed this growth to its new rural distribution model, under which people, mostly representing local panchayats, are appointed to sell the company’s various products.

A key initiative in the rural space has been the launch of the M-Pesa service, in association with ICICI Bank, which allows Vodafone India’s customers to make cash deposits and withdrawals from the company’s designated outlets as well as cash transfers to any mobile handset or bank account in the country. The operator issues a mobile wallet to its customers, which allows them to open a mobile money account with ICICI Bank. The service also allows customers to shop at select merchant outlets and avail of various facilities such as mobile recharge, DTH recharge and utility bill payments. Further, the operator has tied up with HDFC Bank, under which it acts as a business correspondent for the bank.

Recently, to boost its mobile internet services, the operator launched the Gammat Jammat mobile internet awareness programme for schoolchildren in rural Maharashtra. As part of the initiative, Vodafone India’s Gammat Jammat team will tour 118 villages over three months to provide information pertaining to the relevance of mobile internet. In addition, the operator will host Chala Bhetuya camps at Vodafone Mini Stores across 118 villages to familiarise people with internet applications.

 TATA DOCOMO

According to TRAI, TATA DOCOMO’s rural subscriber base stood at 13.78 million in March 2013, accounting for 4.02 per cent of its overall user base.

To increase its presence in this segment, the operator recently launched the RC 499 prepaid voucher for rural customers in Karnataka. Priced at Rs 499, the voucher entails free talktime worth Rs 500 with unlimited validity and 2 GB of 3G data usage for 60 days.

Another offering from the operator’s stable is the Thalaivaa special tariff voucher priced at Rs 46 for prepaid rural subscribers in Tamil Nadu. Subscribers using the voucher are charged Re 0.01 per two seconds. The voucher is valid for 30 days.

 RCOM

Reliance Communications’ (RCOM) rural footprint spans over 24,000 towns and 600,000 villages. According to TRAI, the company had a rural subscriber base of 29.34 million and a market share of 8.57 per cent as of March 2013.

To enhance uptake of internet services in rural areas, the company has collaborated with the Department of Information Technology to establish a network of over 7,000 common service centres (CSC). These CSCs are aimed at providing high quality and cost-effective video, voice and data content in the areas of e-governance, education, health, telemedicine and entertainment. The programme is also aimed at providing self-employment opportunities to rural customers in Maharashtra, Uttarakhand, Madhya Pradesh and Gujarat.

 Idea Cellular

Unlike its peers, Idea Cellular has primarily focused on non-urban and rural markets. According to COAI, as of August 2013, the company’s rural subscriber base stood at 68.33 million.

These subscribers account for two-thirds of its total revenues. In fact, two out of the company’s three new subscribers belong to rural/semi-urban areas.

To strengthen its presence in this market, the operator has launched innovative VAS solutions and products. For example, it has entered into a partnership with Axis Bank for the Idea MyCash facility. Besides offering basic banking services like cash deposits and withdrawal, and balance enquiry, the mobile-based financial initiative enables money transfers from customers in urban areas to beneficiaries in rural areas.

Overall, the hitherto untapped rural markets are now emerging as lucrative revenue generators for operators.