Building Rural Telecoms, One Rupee at a Time

Mohammad Chowdhury
Updated: Aug 14, 2013 08:48:08 AM UTC

Mohammad Chowdhury is PwC's Telecom, Media and Technology consulting leader across Australia, SE Asia and New Zealand. Until recently he built the practice in India where he became one of the most quoted industry experts in the country. Mohammad has served as an adviser to telecom sector reform in Saudi Arabia, Zimbabwe, Ethiopia, Slovakia, Poland and Slovenia and during 2015 as national telecommunications adviser to the Government of Myanmar. Previously in his career he has conducted significant strategic roles at Vodafone and IBM. He is quoted regularly by the Financial Times, Wall Street Journal, BBC, CNBC, TV-18 and NDTV. Mohammad has worked in 83 countries, lived in 7 and speaks 6 languages. He has a BA in Politics, Philosophy and Economics from Oxford University, an MPhil in Economics from Cambridge University, and strategy training from Harvard Business School. He was born in London, has family origins in Bangladesh, and is married with two sons.

In India, variety is the name of the game. We have states with the population of Hong Kong but the per capita GDP of Honduras (Himachal Pradesh), or with an economy the size of Singapore but the population of Germany (Maharashtra). In spite of having such a cornucopia of segments to serve, India’s mobile industry has done a heroic job to deliver 40% penetration in rural areas through operations designed to primarily service metros (which now boast over 150 percent teledensity). But the one-size-fits-all business model for India has run its course, and for rural areas the next phase of growth demands more granular and cost-efficient ways to acquire, retain and serve customers.

Heralded by Freddie Laker and his Skytrain, in the late 1970s the airline industry spawned a successful “no frills” segment to cater specifically for lower income groups. For the first time in civil aviation history, air travel was delivered to the masses.  British working classes could now holiday in the Mediterranean or Dubai and this saw the rapid demise of freezing cold English seaside holidays. Between 1996 and 2005, while European full service air traffic grew from 42m to 47m passengers, the “no frills” segment grew from 3m to 51m!

In India, perhaps it is time for a similar disruptive play in mobile to give birth to an economically-justifiable tiered service model. In rural areas the “VillageCo” business model should be designed to:

  • Deploy networks more cheaply, for example using off-grid network solutions
  • Differentiate service levels into modules suited to pre- and post-paid users depending on preferences and spend, similarly to frequent flyer categories, thereby reducing service redundancies and cutting cost to serve
  • Spend less on customer service and care, offering more “experience” through retail outlets and orienting staff to both solve problems and up-sell all at once
  • Brand more in local languages and themes and experiment with sub-brands
  • Offer handsets customised for rural preferences, such as more phones with torch lights and loudspeakers for playing music
  • Offer a concentrated set of micro-localised services, collaborating across operators to offer common platforms, toolkits and programmes so as to offer developers a larger market opportunity
  • When regulation allows, implement virtual models (MVNOs) where partners wholesale network capacity and offer services to segments they understand better (eg the student community in Pune, or UP-ite taxi drivers in Mumbai).

CEOs should demand a high growth, no-frills business which once established delivers 35+ percent margins and breathes new air into the growing the mass base in rural areas, where penetration is still hovering at 40 percent and data is yet to take off. The operator’s own resources and systems will only go so far. What is needed is more partnership at the local level to enable better services, and farther reaching distribution. New collaboration models are needed to achieve this, and the possibilities are significant given what we’re seeing already:

  • In Bangladesh, BRAC, the world’s largest NGO by beneficiaries covered, is embracing mobile in providing healthcare through its community healthcare workers. Indirectly this is creating mobile diffusion in places hitherto not economically reached by operator retail channels.
  • Hindustan Unilever employed a team of women to sell its products, including soaps and detergents. The initiative was successful in terms of making sales in remote areas without high capital expenditure.
  • Egypt has seen direct rural selling as part of an initiative by one of the leading mobile service providers who set up a branded hub-and-spoke model for distributing cards and recharges.
  • To overcome electricity shortages, Uninor collaborated with The Energy and Resources Institute (TERI) to provide training to women to run solar lanterns and charging stations, an off-grid solution to encourage mobile usage in areas with no or interrupted power supply.

Over the next few years, expect to see disruptive models at the rural level dispel current notions by pursuing telecoms growth profitably!

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