Basic service providers eye rural market for market expansion

By Venkatachari Jagannathan | 06 Feb 2003


Chennai: With the urban telecom market becoming highly competitive and reaching saturation levels, basic service providers (government, private) are turning to rural markets.

According to B D Khurana, group president, Reliance Infocomm, half of the 300-million population with an annual income of Rs 1.5 lakh is in rural areas. “A market that cannot be avoided.”

Leading the industry in the rural thrust is Bharat Sanchar Nigam (BSNL), with Reliance and Shyam Telelink following. Curiously, all the three have placed their faith on corDECT wireless in the local loop (WLL), the desi telecom technology that offers simultaneous voice and data (Internet) services.

“Our catchment area is semi-urban and rural areas,” says Shubhendu Ghosh, deputy director general (strategic planning), BSNL. According to him, BSNL has installed 110 lakh lines in the rural areas connecting 5 lakh out of 6 lakh Indian villages.

At the corporate level BSNL intends to add 11 lakh WLL lines, 40 lakh mobile and 29.14 lakh basic service lines. The company has planned a whopping Rs 1,50,000 crore capex.

Unlike other telecom service providers that focussed on urban areas first and slowly went outwards towards semi-urban and rural areas, Reliance Infocomm follows a different strategy. The company first set its nationwide infrastructure (urban and rural) and will be rolling out its services simultaneously in both the areas.

Next to BSNL, Reliance has reposed immense faith in corDECT WLL ordering 1.5 million lines. According to Khurana, 2,000 DECT interface units (DIU) have been set up and 4,200 village phones have been installed. “Wherever we have put a village phone, we get a request for three-four individual phone connections in those places.”

A further fillip is expected in the case of rural connectivity as the telecom regulating authority, under the Universal Services Obligation Fund scheme, is thinking of including rural franchisees of telcos as eligible towards getting financial assistance. The fund has floated a tender for replacement of 2 lakh village public telephones. A large number of them are working on MARR systems.

Further, the fund has also proposed to provide data transmission and Internet facilities within 5 kms of every village by the year 2004. As a mere telephone line will not be of much help to the rural populace, Ghosh says useful content has to be created and offered on the net. “That is one weak spot which we are trying to address.”

But content is not a problem for Shyam Telelink. It has tied up with n-Logue Communications that owns Chiraag Internet cafes. Operating as Shyam Telelink’s rural franchisee providing telephone services in rural Rajasthan, n-Logue has tied up with corporates like EID Parry/Tafe for agri-related content. The company has also tied up with a couple of agricultural and veterinary institutes.


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