In the past decade, India has seen a veritable telecommunications revolution, which is the result of an effective regulatory and policy environment, coupled with an enterprising telecom industry. The growth in rural teledensity has been remarkable. It has risen to 36 per cent as on August 30, 2011, from a mere 1.7 per cent in 2004. In fact, today, it is growing at a much faster rate than urban teledensity.

At the beginning of 2011 there were 282.29 million rural connections (most of which were wireless) as compared to a mere 4.84 million (only landline) phones in 2000. Practically all the growth has come from mobile telephony and the private sector has played a major role in this expansion.

With an average family size of five, it may be assumed that almost every rural household owns a mobile phone. Also, there are PCOs and Universal Service Obligation (USO) Fund-sponsored village public telephones in almost every inhabited census village in the country.

While rural India is well connected through telephones, internet/broadband services are yet to make an impact. However, a good percentage of Indians, even in small towns, do access the internet regularly in shared spaces (public kiosks, offices, educational institutions, etc). The smartphone is the leading mode of individual internet access, suggesting a good market potential for wireless broadband.

Information and communication technologies (ICTs) are known to be facilitators of socio-economic development. In rural India, with its obvious lack of basic facilities  in the areas of health, education, financial services and employment avenues, ICTs can help to bridge gaps by providing access to internet and mobile-enabled e- and m-services. ICTs can make available knowledge and employment opportunities, education, health, financial and government services, etc., in rural India.

The notable growth in rural telephony, especially mobile telephony, has brought improved connectivity and this, in turn, has contributed significantly to the socio-political and economic mainstreaming of rural India in the past decade. However, more efforts are required to be made if the benefits of telecom connectivity are to translate into overall rural development. This constitutes new prospects for service providers. For instance, improving broadband penetration is a key focus area, which is being addressed actively by the Department of Telecommunications.

The USO Fund launched a wireline broadband scheme in 2009 and is at an advanced stage of planning a rural wireless broadband scheme. It also plans to fund the National Optic Fibre Network (NOFN), which will soon connect 250,000 village panchayats and co-located Bharat Nirman Kendras with optic fibre, thereby providing high speed broadband facilities.

Bandwidth from NOFN will also be available to eligible service providers for offering broadband and broadband-enabled services in rural areas.

There is tremendous potential in rural markets, given the background of robust mobile connectivity and the imminent spread of broadband in these areas. What rural India needs is information, knowledge and urban-quality services. This translates into a huge market opportunity for providers of ICT-enabled access to information, education, health, financial services, commerce and employment opportunities.

Under the USO Fund’s pilot project scheme for mobile value-added services (m-VAS) for rural women’s self-help groups (SHGs) – a part of its Sanchar Shakti scheme – the information needs of SHGs are identified based on their entrepreneurial/income generation activities. The information is delivered in the local language through mobile phones, either through SMS (if the women are literate) or through outbound diallers and integrated voice response systems.

The focus is on skill-building and income-enhancing information (training, market opportunities, input and output prices, weather, crop/livestock care, etc.). Information is also provided on health, education, women’s empowerment and local government schemes. MoUs have been signed for nine pilot projects in different states and the details of the scheme are available on the USO Fund website. The pilot projects received a strong response from rural women. In Uttarakhand, SHGs sought information on procuring licences to sell forest produce rather than depending on intermediaries. They also showed interest in information related to market prices and women’s health.

SHG members from villages in Kanyakumari were very keen on improving profit margins from the sale of their cottage industry products and wanted relevant SMS inputs. Also, women farmers were receptive to and interested in crop-related information (sowing techniques and timings, and disease prevention). Information on government schemes was also valued highly. As of now, rural women constitute a negligible target segment for m-VAS. This project was designed not only to cater to the needs of rural women but also to demonstrate the demand for such women-specific content to mobile services and content providers.

The government is actively considering m-VAS for target groups like anganwadi workers and women sarpanches. This unexplored segment responds positively to information and demonstrates eagerness for relevant content. This goes to show the value of knowledge-based content and hence, the market potential for the sale of relevant m-VAS in local languages.

This is an area that needs to be explored and is a far cry from the current focus on entertainment-based m-VAS. While many government and private agencies such as Reuters Market Light and Indian Farmers Fertiliser Cooperative Limited are already providing m-VAS to farmers, a broader range of the rural population’s information/service needs could be successfully met through creative use of m-VAS on a commercially sustainable basis. Another learning from the Sanchar Shakti project was the very high price elasticity of demand for voice services in rural India. Rural women know the cheapest per minute call rates available locally and demand the same from the Sanchar Shakti service provider. Useful and relevant m-VAS would ensure market differentiation and consumer loyalty. The lack of higher education facilities  also makes rural India the ideal market for distance education services. This calls for e-enabled study centres that can be provided by the Bharat Nirman Kendras. It also points to the need for public access to broadband facilities in every Indian village.

Apart from education, this would make medical facilities, employment opportunities and government services, etc. more accessible. The utility of ICT-enabled services to provide a feedback mechanism to rural Indians is often overlooked. This is critical for successful governance and would be a major pull factor, leading to a demand for ICTs.

Already, there are more internet users in small towns than in the top eight metros put together. Of this, more than 20 per cent users are schoolchildren and 10 per cent users belong to the lowest socio-economic strata.

While only a minority of rural Indians may be able to afford individual access to broadband services, this does not imply a lack of demand for such services. In interactions during the verification of the USO Fund’s wireline broadband scheme, it has clearly emerged that financially better-off rural families across the country do buy computers for the same reasons as urban families do – children’s education, knowledge and entertainment or as an aid to their income.

The fact that the USO Fund scheme offers Rs 99 and Rs 150 monthly subscription plans (with no installation/registration charges) is a plus point, but 60 per cent of rural users actually opt for higher- value plans.

With the availability of low-cost devices like Aakash and affordable smartphones, the demand for broadband will increase further. There is also a healthy demand for public access broadband facilities. This is logical in light of the near absence of local infrastructure and services.

The rural population would like to access research/information online if the necessary provisions are made. Booking journey tickets online is a simple example. If credit cards are a problem, intermediaries (village-level entrepreneurs [VLEs]) with credit cards can step in to facilitate transactions. VLEs also facilitate online money transfers, downloading mobile software, etc. Skype is also popular among rural Indians as a means to reach out to relatives in cities and abroad. This demand will only grow as the rural literacy rate rises beyond the current 68.91 per cent, and knowledge and e-connectivity increasingly become key to empowerment. The demographic profile of the country indicates that more than 50 per cent rural Indians are less than 25 years old. They have the same affinity for the world wide web as the urban youth.

A recent article in Time magazine highlighted the growing potential of e-commerce in India. Going by the current success of e-tailing and anticipating internet users to increase three times to 230 million by 2015, the country is expected to become an attractive e-commerce market. Rural India already accounts for about 50 per cent of the sale of fast-moving consumer goods, consumer durables and services, and it may be assumed that broadband-enabled e-commerce would be a bigger hit in villages where media exposure is at par with towns but shopping options are limited.

It is a fact that rural India accounts for 40-60 per cent of the sales in online retailing portals such as eBay.in, Snapdeal.com and Naptol.com. The latent potential of rural BPOs has been adequately demonstrated by successful examples such as Rural Shores, Desi Crew and Nextwealth. Given the rising salaries and high attrition rates of urban BPOs, and in the context of improving rural connectivity, rural business and knowledge process outsourcing has huge potential as a business and employment opportunity.