The Hindu Business Line : Mobile goes rural

The initial bids for the right to set up infrastructure for mobile telephone networks in the rural areas with government funds make a heartening point: Running a mobile service in the countryside is not going to be as expensive and unprofitable as was once feared. A change in the rules of the game has altered the equation. Two or more service providers can now share the passive infrastructure such as transmission towers and power equipment. Given that the number of users per square km in the rural setting is likely to be much lower than in towns, and the average revenue from them is also expected to be considerably less, sharing passive infrastructure makes eminent sense for even competing cellular phone companies. Indeed, it has taken out so much of the business risk that four cellular companies have not sought even a rupee of government subsidy to run the service for 2.5 lakh villages. From all indications the cellular route is about to provide the most cost-effective solution yet to connecting rural India.

If rural communications needed attention at all, it is now. The disparity in the connectivity available to the urban and rural populations is lamentably getting wider and more significant every month. With the explosive growth in the number of mobile phones over the past two-three years, there is now one phone, either cellular or wired, for every two people in Urban India, but only one for every 50 persons in Rural India. Barely 25 per cent of the country's population today can access a cellular signal, and virtually all of them are in the urban areas. This abysmal rural penetration has changed little over the past ten years, the decade of the cellular phone, because all the new infrastructure has been set up in towns and cities that were not unsurprisingly seen as more worthy of investment by the mobile telephone companies.

Yet for many years even the Government did not make the right choice for rural telephony, persisting with the old-fashioned wire or radio technology to connect individuals or public telephones, a strategy that was both expensive for Government and unattractive for users. Only two years ago did it dawn on the Department of Telecommunications that the cellular phone, the device of choice for even the low-income groups in the towns, is what Rural India also deserves; hence the decision to make mobile telephony eligible for government subsidy. Once cellular signals beam over the hinterland in the next several months, some 270 million people will have the chance to get connected. Many may still be too poor to afford the phone, but given that less than one third of the Universal Services Obligation fund has been spent, the Government has the means to bring it within the grasp of a chunk of the rural populace. It would be public money well spent.

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