The Hindu Business Line : Why not mobiles for Rural India?

EXPANSION OF THE telephone network deep into Rural India is a task that must always merit wholehearted support. With the Universal Services Obligation Fund, to which all telecom operators contribute 5 per cent of their revenue, the Government intends to spend up to Rs 8,000 crore to provide some 60 lakh new fixed line telephones to rural households by 2007. With most of the current nine crore telephones concentrated in the urban areas, this initiative should help create a new constituency of users, reducing the disconnect between the two Indias. Yet while the goal is laudable, the method chosen to achieve it does not seem to be the most cost-effective. Last week's tender announcement by the Department of Telecommunications for subsidised rural telephones specified that only conventional landline and fixed wireless telephones would be eligible for the subsidy. Mobile phones would not.

The debarment is perplexing. Over the past few years the mobile phone has become the shining symbol of a resurgent economy. Its number has grown from zero to 4 .4 crore in just nine years, overtaking the fixed telephone despite the latter's 113-year headstart; the first wired phone came to India in 1882. The low usage costs — about the lowest in the world — have made `the cell' attractive to even those who do not pay income-tax. Its versatility and distinctive utility have added to its appeal. For instance, a person working on the farm can carry his mobile phone to the field and stay connected; the fixed wired or wireless phone that the DoT plans to thrust on him, albeit at subsidised rates, can only work at home.

Yet it is the portability that is the problem, in DoT's view. A town dweller can register for a subsidised mobile phone in a village, operate it in the town and unfairly get the subsidy. But the threat of leakage must be solved in a different manner. The biggest advantage of mobile telephony is that the infrastructure of cell sites is widely shared, unlike wired telephones, the substantial part of whose infrastructure is specific to a subscriber. To push costs down, the Government must persuade existing operators, with fiscal concession if necessary, to install cell sites and illuminate rural areas fully with mobile signals so that visitors share the infrastructure costs with the residents. It must mandate unrestricted roaming among subscribers of different networks so that infrastructure is not unnecessarily duplicated. Reduction of levies will also help. The cost of rolling out the mobile network is expected to be less than that of the fixed line. As a consequence, the subsidy the Government would need to bear for each rural phone user would be much lower. The secret behind the near doubling of cell connections each year is the falling cost of using the mobile phone, the increase in the subscriber base bringing its own economies of scale and facilitating a further drop in tariffs. The Government would do well to take the mobile lesson seriously and alter the terms of the rural tender.

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