Indian Economy: Shift to rural telephoney intensifies

By Nitya Chakraborty

NEW DELHI: The telecom industry has projected the need for 3.5 lakh towers by 2010 to cater to about 500 million mobile subscribers by the end of the first decade of the new century. Currently, out of 1.2 lakh towers in India, private mobile operators share about 24 per cent of their passive infrastructure on a twin-sharing basis with operators in their respective service areas.

According to industry sources, in the Indian context, sharing of passive infrastructure comprising primarily towers, which are essential building blocks for any mobile network, is becoming a necessity. With seven operators in each market, increasing rural rollout and declining tariffs, operators are constantly on the look out to cut costs to maintain and improve their margins.

For the smaller players, shared tower infrastructure is also a way to catch up faster with their more established peers in terms of coverage. Once 2/3 operators start sharing and lower their costs, the rest of the industry can not stay away for too long thus making it a virtuous cycle. In a marked departure from its earlier stance, it has been reported recently that now BSNL wants to follow the industry trend of sharing infrastructure. It wants to utilise passive telecom structures like towers, space and associated power from infrastructure companies and telecom service providers on shared basis along with all related operations and maintenance activities in various locations of its different telecom circles.

As of now, 70 per cent of the total fixed lines in India cater to the urban areas while 30 per cent take care of the rural areas. In mobile services, an even higher share of 80 per cent of the total mobile lines is servicing urban areas and only 20 per cent cater to rural subscribers. In terms of coverage, it is estimated that mobile signals have reached an estimated 40 per cent of the geographical area and 65 per cent of the overall population of India.

Industry studies point out that the rural population coverage is largely due to signal overflow from urban areas to adjoining rural areas. Attempts are being made by operators to achieve presence in rural markets so as to sustain their growth momentum and overcome the increasing saturation in the maturing urban markets like metros and towns. Over the last few years, the major thrust area for telecom service providers has been urban areas as it offered higher population density with higher spending power, relatively easier roll out and comparatively better support infrastructure. In contrast, rural rollout is slowed down by issues pertaining to higher per subscriber entry and operational costs.

A significant finding of a recent study made by the FICCI in collaboration with PricewaterhouseCoopers is that the Indian mobile sector continues to be predominantly prepaid, with more than 80 per cent of the subscribers on the prepaid platform and almost 90 per cent of incremental additions on this platform. This is also an indicator of the increasing addition of marginal subscribers on the network as the network expands.

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