In a significant achievement, India crossed the 400-million mark in telephone connections at the end of January. This is a great achievement for a nation that used to have just more than 10 million telephone connections just a decade ago. Things have changed fast, and for the better.
India is today adding around 10 million phone connections every month, and despite the slowdown in the economy, the telecom industry continues on a dynamic growth path.
The role of telephony in our lives has undergone a complete transformation over the years. The perceived return on investment on a mobile connection continues to be higher vis-à-vis other forms of investment or expenditure by a customer. The qualitative impact on life and quantitative impact on one’s vocation explains the unusually rapid expansion in demand in the sector.
I am optimistic about future growth, even when other sectors are facing a slowdown in recent months, because of the wide spectrum of socio-economic categories from which demand for telecom services is emerging. From industrial workers to farmers, from entrepreneurs to government employees, housewives to students, subscribers are coming from every segment.
What is particularly heartening is the demand coming out of rural India, where the industry has just about scratched the surface as far as potential demand is concerned.
Incomes in rural India have gone up, more and more schools are being set up, villages are becoming connected by roads and railways, retail companies are procuring directly from farmers.
Telecom connectivity has probably been the single most revolutionary infrastructure development in rural India after the railways network was set up more that a century ago. Mobile services have brought technology to the doorstep of farmers, providing them information on market prices, transport and marketing opportunities.
Connectivity has helped improve governance and, thereby, begun to empower rural households to access education, health care, civic and other facilities that, ultimately, help improve income levels. Mobile phones have emerged as the most effective tool for inclusion of rural India into the mainstream.
The growth of broadband services will be the next challenge for the industry. If India has to realize the dream of a fully connected country, a revolution similar to that in mobile telephony must be realized in this segment too.
The next wave
There are two obvious ways for the service providers to expand. The first is, quite simply, to connect more people. teledensity, measured as a percentage of phone customers to a given population, is rising steadily but has reached only about 36%, leaving significant potential for market expansion.
The majority of growth will now come from outside the metros and in the smaller cities, towns and villages as teledensity in the major urban centres has reached 82%. It’s worth noting that while 70% of the Indian population lives in rural areas, and, equally importantly, 64% of the nation’s expenditure and 56% of its income comes from these villages, yet India’s rural teledensity currently stands at less than 13%.
The second growth driver will be third generation, or 3G, services. I strongly believe 3G wireless broadband is going to be the next big thing in Indian telephony as it is going to mark a quantum jump in wireless communication in the country. Services such as high-speed Internet access and video calls on the mobile phone will be a reality. These networks are going to play a critical role across the rural-urban divide. Rural development initiatives such as e-governance, e-health and e-education will receive a significant impetus once operators roll out 3G networks.
New products and services such as mobile money transfer and mobile commerce are likely to gain ground as the year progresses. As for demand emerging out of the business enterprises, there could be activity arising out of increased demand for services such as videoconferencing. I do believe, as companies start rationalizing different cost heads, they will realize the importance of substituting a lot of executive travel costs with investments in video conferencing facilities.
Overall, value-added services will take new shape and grow. And the industry will have to make these services relevant to the emerging set of users.
The Indian mobile scenario seems to be all set for the next stage—expansion and consolidation—but there are a few complications as well. Not all users can afford costlier services beyond messaging and talk time.
What is expected is increase in the already growing user base so such services can become affordable to one and all in the long run. The revolution in the Indian telecom sector has only just begun.
Technology and connectivity will take a quantum leap as the next 400 million customers come into the fold. These new customers will be different. They will have access to a phone plus many innovative services for the first time. Not only will they be talking among themselves, they will be paying their bills, making money transfers both in the country and outside, using their phones as entertainment devices, finding employment and entrepreneurship opportunities and also educating themselves.
And, with that, also open up to a window of new opportunities for themselves and for their roles in nation-building.
Manoj Kohli is chief executive and joint managing director of Bharti Airtel Ltd. Comment at email@example.com