Home India 2006 The mobile phone as an agent of change in India

The mobile phone as an agent of change in India

by david.nunes
TV Ramachandran Issue: India 2006
Article no.: 12
Topic: The mobile phone as an agent of change in India
Author: TV Ramachandran
Title: Director General
Organisation: COAI
PDF size: 396KB

About author

TV Ramachandran, the Director General of the Cellular Operator’s Association of India, has been the Executive Head of this body since September 1997. Prior to this, he had been the first CEO of Essar Cellphone (now known as Hutchison Essar), Delhi and led the establishment and commercial launch of the country’s first 100,000 capacity cellular network. He was also the founder-Chairman of the Indian chapter of the world-wide GSM MoU Association, as the GSM Association was called then. TV Ramachandran is the current Chairman of the ITU’s Regional Working Group dealing with Private Sector Issues (WGPS) for the Asia-Pacific Region and also the Chairman of the ITU’s Program Group on Infrastructure and Network Development under WGPS. TV Ramachandran holds an MSc in Physics, with specialization in Wireless & Electronics and is also a Fellow of The Institution of Electronics and Telecommunication Engineers (IETE).

Article abstract

India’s mobile services have moved quickly from a class service to a mass service. The continuously falling tariffs, increased coverage and customized services have made mobiles affordable and indispensable to the common man. Cellular is also the fastest, most cost-effective, way to connect rural India. 3G mobile will enhance coverage of low-cost voice telephony in rural and remote areas. It will also be a valuable tool for undertaking key social initiatives such as e-education and tele-medicine.

Full Article

India has emerged as one of the fastest growing mobile markets of the world. Within ten years of the introduction of mobile services in the country, the total mobile subscriber base crossed 80 million in January 2006. When GSM mobile services were first introduced in 1995 the total tele-density of the country was 0.8 per hundred persons, and all were mandated fixed lines, there were no mobiles. In ten years since then, tele-density has grown exponentially to nearly 12 per hundred persons. The contribution of mobile, especially GSM, to this performance has been significant. The Mobile-Fixed crossover was achieved in October 2004, when the number of mobiles exceeded that of fixed phones, demonstrating the powerful role being played by the cellular industry in powering telecom growth in the country. The terrific growth of GSM led to another milestone, the GSM / Fixed Crossover in April 2005. India is now among the nations adding 4-5 million subscribers a month and over 80 per cent of all new subscribers continue to choose GSM month after month. Looking at the performance of the Indian cellular industry over the last ten years, it has become clear that the key success factor in driving mobile growth and tele-density has been the increasing affordability of mobile services. A series of initiatives taken by the Government have completely transformed the mobile landscape. The introduction of the New Telecom Policy-99, the migration of existing operators to the new revenue share regime, the introduction of increased competition into mobile services and most importantly the introduction of a Calling Party Pays (CPP) regime have all contributed to improved affordability, increased consumer choice and hence the overall growth of the industry. Each of the above policy and regulatory measures has served as a point of inflexion, giving a boost to subscriber growth. The Indian mobile industry is a major contributor to the social and economic growth of the country. According to a study conducted by the well known international agency Ovum on “The economic benefits of mobile services in India”, the mobile industry contributes significantly to its social and economic growth in terms of employment generation, government revenues, GDP growth, rural development, etc. As noted by Ovum, the mobile industry has generated 3.6 million jobs directly and indirectly, revenues of US$ 3.3 billion per annum for the government through license fees, spectrum fees and other taxes and levies and an annual GDP of US$ 7.1 billion. These benefits were estimated when the subscriber base was around 48 million mobile subscribers and mobile coverage was available to only 30 per cent of the population. With mobile services growing at a blistering pace, the benefits will continue to grow exponentially. In India, each service area is served by 6–8 mobile operators as compared to the international norm of 3–4 operators, leading to intense competition in the sector. This has yielded all-round benefits to consumers, who have seen mobile tariffs drop by over 90 per cent in the last 10 years. At present, mobile tariffs in India are the lowest in the world. For a variety of reasons, from personal to business, Indians cutting across age, profession and status are increasingly going in for the mobile phone with a zeal that heralds the onset of a communication revolution in the country. Mobile services have become the key plank for infrastructure and economic development. The real revolution has come for low-income group markets and small businesses, as for them the mobile has become a powerful tool of trade. Plumbers, electricians, and vegetable vendors, all have seen a steady rise in their business after they have made use of mobile phones to reach and be reached by their clients. It helps the small traders to keep in touch with their business and clients even when they are out on a short trip or a business deal. A mobile benefits fishermen, enabling them to auction their catch while still at sea, and farmers, who can track prices of their produce. Cell phones have facilitated improved incomes and opportunities for small businesses all across the country. New and innovative measures by cellular operators have made mobile services even more affordable for the masses. The introduction of ultra-low-cost handsets in the range of sub US$ 30, micro prepaid cards available in the range of Rs 10 to Rs 200 and the lifetime validity schemes have all proved extremely beneficial for the low-end users. These offers provide them anytime, anywhere connectivity at affordable prices. Such innovative measures by operators have helped in transforming the use of mobiles from an elitist product to a service for the masses and the common man. The change is there for all to see. Now people can be seen talking on mobile phones while walking down the street, or on subways, on trains, in offices, buses, in marketplaces and even in schools and colleges. The cluster of services in the country is also growing enormously; from vanilla voice, consumers are increasingly opting for a wide range of VAS (value added services). Revenues in the VAS segment are growing at 30–40 per cent annually. VAS is increasingly a growth area, which helps the operators to maximise revenue and help to potentially offset the effect of declining tariffs on ARPU (average revenue per user). Propelled by the need to bring in service differentiation, operators are introducing new value added services in order to satisfy the growing demand of Indian consumers. The SMS growth has been phenomenal, in line with global trends and other VAS such as ring tones, gaming, MMS, etc., are also immensely popular amongst Indian consumers. A wide range of useful services like news updates, stock information, railway ticket status, etc. have also found a significant place in the telecom pie. The mobile has proved to be a boon for the burgeoning young population of India (60 per cent of population is below 30 years); it has become their constant companion. SMS has become the lingo of the youth in India as it has become the easiest and the most economical way to communicate. For them there is no missing anyone now; everybody for them is just an SMS away. Value added services, like multi-player interactive online gaming, music downloads, animated screen savers, etc., are very popular among this segment and the exchange of this content is very frequent. For the young population of India, the mobile is no longer a luxury but a basic necessity. Cellular services in the country have moved quickly from a class service to a mass service for the common man – fuelled by continuously falling tariffs, increased coverage and customized service offerings. Going forward, mobile will also be the fastest and the most effective way of connecting rural India where wireline services do not have the reach. The introduction of 3G will also enhance rural coverage and serve as an ideal platform to deliver low-cost voice telephony to consumers in rural and remote areas. It will also prove to be a valuable tool for undertaking key social initiatives such as delivering e-education, tele-medicine, etc. In the past decade, the mobile industry has played a pivotal role in the expansion of the telecom network in India and it can be expected to be equally explosive in the coming years. Going forward, the future looks bright for India, as there are a number of demographic and socio-economic factors in India’s favour that will continue to fuel the aggressive growth rate of the cellular mobile industry. These include factors such as rising income levels, a booming knowledge sector, a burgeoning middle class and growing urbanization of population. All this will also help in achieving the target of 200 million mobile phones by 2007 as set by the Government of India.

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