Home India 2009 Value added services in rural India

Value added services in rural India

by david.nunes
Author's PictureIssue:India 2009
Article no.:7
Topic:Value added services in rural India
Author:Manoranjan Mohapatra
Organisation:Bharti Telesoft
PDF size:268KB

About author

Manoranjan Mohapatra is the CEO of Bharti Telesoft. Prior to joining Bharti Telesoft, Mr Mohapatra was President and COO of Aricent. At Aricent, Mr Mohapatra led teams in the areas of R&D, product management, operations, and sales and marketing, building his hands-on experience and in-depth knowledge of the software and communications industries. Mr Mohapatra began his career at Aricent at the Center for Development of Telematics (CDOT), where he made significant contributions to research and development in telecom switching. Manoranjan Mohapatra holds a Bachelors degree in Electronics and Electrical Engineering from the Birla Institute of Technology and Science, Pilani.

Article abstract

Mobile networks are growing, and ultra low cost handsets and electronic micro-recharge services to pay for minutes makes it increasingly easy for those at the bottom of the socio-economic pyramid to afford mobile service. Soon, 60 per cent of India’s expected 650 million subscribers will be rural. Value added services using Interactive voice response (IVR) technology lets largely illiterate populations access vital economic, money transfer, educational, health, government and entertainment services using the languages and dialects prevalent in different rural regions.

Full Article

As urban markets become increasingly saturated and as mobile telecommunications transcend technologies, standards, operators and operational zones, the largely untapped rural markets for Value Added Services (VAS) can no longer be ignored. Indeed, the proportion of new mobile subscribers from rural areas indicates the importance of this market segment to sustained mobile growth in India. In the first nine months of 2008, the four largest metropolitan areas together added 10.3 million subscribers, while the rural areas added more than 11.3 million. Of the next 250 million mobile subscribers in the country, approximately 100 million will be from rural areas, and this will drive the growth of rural VAS. By 2012, 60 per cent or close to 400 million of India’s projected 650 million total mobile subscriber base, will be rural subscribers. What is more, access to mobile communications has a major impact on economic well-being and growth. For every one per cent increase in teledensity, GDP grows by 0.6 per cent (ITU). The challenge is to adapt VAS to provide services that positively impact the lives of rural and ‘base of the pyramid’ (BOP) segments by enhancing their livelihoods and enriching their lives. The first hurdle that needs to be addressed in extending VAS to rural segments is access to mobile communications. As mobile networks are rolled out to an increasing number of villages and small towns, the infrastructure issue is being addressed. The development and distribution of ultra low cost handsets is also a prerequisite for greater penetration of BOP segments – again, such phones are now widely available, though still beyond the means of many individuals. One way in which ownership of a mobile identity can be hastened is via a virtual phone – where a few people, each having their own mobile number, but not requiring their own SIM, can share the use of one physical phone. Once individuals have access to a mobile phone service, the issue of payment for such services arises. Critical in supporting uptake of mobile usage is provision of micro-recharge services, such as electronic recharge- a pre-paid top-up service that enables low-income mobile users to recharge their accounts using very small denominations. Experience from rapidly expanding markets indicates that an electronic pre-paid recharge service can enhance the uptake of mobile phone subscription- generating increased revenues for operators. Equally important is the fact that operators are able to expand services profitably. Without the costs of printing vouchers, storage, transportation, potential loss, expiry or fraud, operators significantly reduce their overheads in the delivery of pre-paid top-up. Electronic recharge also opens the way for individuals to become entrepreneurs, or to supplement income from their existing profession. As an example, with mobile recharge, all that a person requires to be able to act as a top-up agent is a mobile phone. An agent, who could be a cobbler or a kiosk owner, receives a commission for every top-up performed, providing a valuable service to the community and generating additional income for themselves. Given the literacy levels in many rural communities, access to VAS using a voice interface is critical. Interactive voice response (IVR) technology enables services to be accessed using languages and dialects prevalent in different rural regions. With IVR based interfaces in place, rural communities can access a whole range of information and entertainment services, as well as carry out fundamental micro-recharge operations. Information services can range from the provision of farming and irrigation related information for an agriculturally dominant region to train freight charges to wholesale market prices for grain. One of the most commonly cited reasons for farmers not getting a fair price for their crops is their ignorance of the prices at which their produce is eventually sold at Mandis (agricultural produce markets) and wholesale markets. Information provided real-time as a VAS helps farmers optimize their returns. Given the challenges of providing health care in rural areas, health information via the mobile phone delivers practical advice to people without immediate access to a doctor or hospital. Economic development and well-being, and the provision of financial services in rural areas are issues that require greater focus. Currently, rural communities tend to rely on informal channels to carry out transactions, such as allowing a trusted third party to make payments of monies or carrying funds from one village to another location. Traditional banking models, which rely on a physical presence, cannot be profitable in a rural model, where population density is low. A mobile banking offering enables operators and banks to work together to deliver secure regulatory-compliant financial services to the unbanked; mobile banking offers a model that is profitable for the service providers and affordable for the rural segments. Whilst the rural segment will benefit from practical information and financial services, the need for entertainment also exists. The mobile can be used to listen to songs downloaded to the phone by following voice prompts, whether popular Bollywood movie songs, regional language songs, or folk music. The popularity of ring back tones among this segment shows that where a value is perceived, rural and low-income segments will pay for that service. Some of the major VAS products already in the rural market are: • Reuters Market Light (RML) – Reuters has dispenseds comprehensive agriculture-related information on a pilot basis in Maharashtra since April 2007; • IFFCO Kisan Sanchar Limited – a joint venture between Bharti Airtel and IFFCO to provide rural-specific telecom services to rural households; is set to expand rural coverage from 3.2 lakh to 5 lakh villages by 2010; • Soochna Se Samadhan – by One World Network in collaboration with Reliance Mobile since 2006; • Mandi on Mobile service – by the state-run BSNL in Uttar Pradesh; • Fisher Friend project – a pilot project launched in Tamil Nadu and Pondicherry aimed at the fishing community; and • LifeTools – by Nokia, a package providing agricultural information and educational services, slated to be commercially launched in 2009.

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