International BusinessRural India still finds telecom expensive: Report
Despite the inherent attractiveness of the rural market for telecom operators various challenges still mar their entry.
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A report by the Federation of Indian Chambers of Commerce and Industry (Ficci) and KPMG reveal that although the cost of owning and using telecom equipment and services has come down considerably in the past few years, the typical rural consumer finds it hard to put aside money for what is still believed to be a discretionary spend.Difficulty in acquisition of rural consumers due to affordability of telecom services, low average revenue per user (ARPU) among rural consumers, lack of locally relevant content, infrastructure and low literacy levels are major hurdles.
The report suggests microfinance and collaboration between state-owned banks and operators as a solution. More, to combat low subscriber base and a low-volume rural market, the report suggests rural ARPU not be driven solely through voice services but with other data services. Development of services like news in the local language, weather alerts for fishermen and comparative ‘mandi’ rates will enhance the customer base.
Moreover, the telecom setup requires large amounts of land for setting up infrastructure elements like Base Transceiver Stations (BTS). In many cases, the land is owned by government bodies or gram panchayats, and the process of leasing or purchasing of land is arduous and expensive. Laying of cable or fibre in rural areas often goes across multiple jurisdictions. This involves obtaining the requisite approvals and permissions from multiple authorities, which become time-consuming and difficult. Other inhibiting factors are limited availability of skilled workforce, poor road connectivity and irregular power supply. The Ficci-KPMG report suggests the high costs associated with the setting up of rural infrastructure could be addressed through sharing between telecom players. This model, it says, has been fairly successful in urban areas, but is yet to pick up traction in rural areas.