Critical Analysis of Growth Strategies for Telecom Stake Holders in Rural India

Critical Analysis of Growth Strategies for Telecom Stake Holders in Rural India

N. P. Singh (Faculty of Information Technology Management, Management Development Institute, Gurgaon, India) and Manisha Kaushik (Research Scholar of Singhania University, Faculty in Rukmini Devi Institute of Advanced Studies, Delhi, India)
DOI: 10.4018/jicthd.2013040105
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Abstract

Telecommunications has provided an excellent mean to connect people, businesses, communities and countries across the globe. Quality of life has improved tremendously with the development of communications and related technologies. In spite of excellent growth of telecommunications services and reduction in tariff the benefits of telecommunication technologies have not reached to the poor segment of the population in the emerging and developing countries. India is no exception to it. There is wide gap between teledensity in urban and rural areas in India. The research paper discusses the efforts of government and service providers to fill this gap. The paper also presents the analysis of growth strategies of telecom stake holders. Based on the analysis, it is suggested that the gaps can be filled in by understanding and addressing technical and financial issues of the service providers in the context of rural areas. There is a need to create better policy instruments to provide incentives for service providers in rural areas and create markets for service providers that are financially viable. In this context paper analyzed existing status of rural telecommunication, role of information & communication technologies (ICTs) in the life of rural population, future needs of rural population, and strategies of making telecommunication services affordable in rural areas.
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1. Introduction

Telecommunications is a mean to connect people, businesses, communities and countries across the globe. Quality of life is enhanced with the development of telecommunications and related technologies (ICTs) since people are connected now in the remotest areas for receiving help in emergencies and general situations for example Telemedicine. Doing business beyond the boundaries of your own country has become a reality with reduced cost. Knowledge and resource sharing among countries has increased tremendously for the better life of the mankind of the earth.

In spite of all these efforts and benefits of the telecommunication/communication technologies/ ICTs, it has not connected the poor segment of the population as is the case of the rich segment of the population across the world. The statistics shows that this gap is less in developed countries and more in emerging / developing economies. The reasons cited in the literature are as under: (i) service providers have been reluctant in the past to expand their services to areas which are uneconomical from business point of view and are often sparsely populated and isolated from the main cities. (ii) income and education level (among female population) of the rural population is low to acquire computers/mobile phones/ internet access or other digital equipments, (iii) large group of population cannot afford to buy the required components of telecom network to have access of the services. (iv) gender bias has also contributed to the situation of low penetration of telecom services in the rural areas. Many social groups or communities do not encourage female to use telecom services, (v) the high cost of 3G spectrum in the recently auction process may further hamper the efforts of government to reduce the urban–rural telecom services divide (Ovum, 2009), (vi) Availability of supporting infrastructure such as power, availability of recharge facilities, information about innovative tariff models etc., in rural areas are big factors for low usage of telecom services (Mukhopadhyay & Aithal, 2008)), (vii) It is reported that for mobile operators, rural Capital Expenditure is up to 4 times that of urban expenditure and Operational Expenditure is 3 times that of urban expenditure. This situation did not encourage mobile network operators (MNOs) to extend their reach to rural areas.

The literature is full of the stories about the benefits of telecom/ICTs. UNDP (2005) cited that telecom/ICTs helps in (i) eradicating poverty and hunger, (ii) achieving universal primary education, (iii) in promoting gender equality and empower women, (iv) reducing child mortality, (v) improving maternal health, (vi) combating HIV/AIDS, malaria and other diseases, (vii) ensuring environmental sustainability, and (viii) developing a global partnership for development.

To pass on these benefits to the large rural population and to fill the huge gap in available infrastructure there is a need to understand the operational, financial, and technical issues as well as need to create better policy instruments to provide incentives for rural service providers. The paper discusses mainly following four aspects of telecom services in rural India: (i) The analysis of existing telecom /ICTs scenario in the context of rural India, (ii) The possible roles and usage of telecom/ICTs in the life of rural folks, (iii) trends in rural telecommunication/ICTs in terms of strategies of growth in rural areas including the steps taken/being taken by the Government and private service providers to remove the disparity of the teledensity between the rural and urban areas in the country, (iv) The possible interventions by all the stakeholders to achieve the stated objectives of the new telecom policy 2011 follwed by concluding remarks.

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