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.
The term that has most occupied the minds of telecom marketing teams in India up till now is "U&R", or "Usage and Retention". But the term they'll need to understand and crack going forward is "Adoption" - the most important metric in rural areas.
Consider data services. While the vast majority of smartphone users in urban areas access a data service at least once a month from their handsets, for sub-$3 spenders using basic phones the figure is closer to only 20%. According to a survey done in 2010, only 36% of low ARPU users are both aware of non-voice and non-SMS services being available as well as knowing how to use them. So while the first problem to tackle is to build awareness, most campaigns try to address driving usage through better prices or bundles.
A few operators understand this. Yet none has successfully scaled a solution for driving awareness of data services in rural areas. The first challenge is the problem of the 'free rider': “If I spend millions of rupees educating the base, what if half the customers leave and use the services offered by another operator?” Marketing officers in mobile operators understandably see this as a risk. Distribution partners could hold the answer since they generally cut across operators at the rural level: they could start offering data services education to people who pop into their shops for a fee which they charge the operators, administered by a third party and charged back in a fair way. Millions could benefit, as of course would the operators. If such a multi-operator mechanism is too difficult to set up, the Department of Telecommunications could draw upon the well-filled coffers of the Universal Service Obligation Fund to fill in for this “market failure”.
While rural telecoms presents one of India’s biggest growth opportunities for voice and data communications (urban penetration: 200%; rural: 40%), the market is too often referred to as one segment - low income and too unsophisticated for mass services uptake beyond basic voice. In reality, the rural “segment” is as varied as urban ones are. Rural is not just a poorer base; it is more multilingual, spatially dispersed, and with highly variable social and professional needs and communications patterns. According to the National Census of 2001, literacy is 90% in Kerala, but only 44% in Bihar; and the below poverty line population of Orissa is 48%, yet only 6% in Punjab.
There are other misconceptions about rural too. One is that rural consumers will never be active content buyers. However, recently a leading TV channel recorded that in the state of Andhra Pradesh as much as 25% of interactive TV responses came from rural areas – indicating non-urban consumers can form a sizable segment of engaged, interactive audiences. If I am a rural daily wage worker who earns around INR 300 a day, why wouldn’t I pay 50 rupees for a job alert once a week? And if I don't have a TV or a DTH subscription, why wouldn't I pay 100 rupees one-time to watch a movie on my phone if it can be made available? Rural users, partly because of their remoteness, have a greater dependence on mobile communications services for being connected, informed and entertained than their urban-dwelling counterparts. Weirdly, this means rural dwellers on lower incomes may be more willing to spend more money on services which drive value than their urban counterparts who can rely on other solutions to fulfill the same life needs.
To capture the rural opportunity better the industry will need novel models to reach customers more effectively and cheaply. One option would be to use the Postal Service more, a move tried by mobile operators seeking to go rural in countries as diverse as Ireland and Egypt. In India, though the postal service does provide access to mobile services, a focused partnership with an operator could result in a paradigm shift for data uptake, for example if post offices and delivery workers are deployed as a mobile sales force to encourage the uptake of new types of services.
Lasting success will also require better analytics. Communications demographics in rural areas are not well understood by the industry, despite having terabytes of customer usage data that could help untangle the rural mass into usefully understood and targeted segments. Operators remain unable to use this information flexibly enough to generate useful distinctions between different customers with similar spend profiles. This is not simply a failure to know one’s customer, but a result of the complexity of harnessing data from legacy IT systems across different circles which cannot uniformly generate analysable, insightful output which can be used to drive intelligent and targeted campaigns to thousands of micro-segments.
So to attack the rural market better we need
It sounds like we may need a new business model to run rural telecoms altogether then. Indeed so, a model which I sometimes refer to as “VillageCo” and which I’ll talk about more in a future post!
 Planning Commission, 2001, http://agricoop.nic.in/Statatglance2004/EcoIndicator.pdf