40% of next 250 mln wireless users to be from rural areas

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New Delhi, Jul 6 (UNI) With India witnessing the second highest telecom subscriber growth globally, the next spurt in numbers will be contributed by the rural sector which a Ficci-Ernst and Young study pegs at about 100 million over the next 5-10 years.

A Ficci and Ernst&Young paper on 'Telecom: The Last Frontier: Connecting India's Rural Telecom Community' brought out today states that telecom operators have shown profits despite low Average Revenue Per User (ARPU) of less than six dollar per month.

The operators have achieved this through reduced fixed costs, controlling variable costs and tailoring services to the requirements of the customers and the same model could be extended to the rural areas with minor customisation.

The Paper states that the likely phasing out of the Access Deficit Charge (ADC), new incentives for rolling out mobile networks in rural India would come to the forefront.

Passive infrastructure sharing and ''spectrum hoarding cess'' on defaulter operators who fail to meet their roll out obligations are illustrations of proactive government initiative, it adds.

Enhancing rural telephony also presents challenges as erecting towers in the tough rural terrain is still an expensive and logistically challenging proposition, but this can be overcome through infrastructure sharing.

As operators have developed cost-effective business models to maintain profitability in the low ARPU, the same can be leveraged to the rural market.

Outsourcing core services, introduction of managed services model, sharing of passive infrastructure and innovative tariff packages like micro-prepaid and lifetime validity, can be some of the strategies for driving growth in the rural market.

The Paper notes that low cost handsets have driven the demand to a large extent. With plummeting handset costs bundled with low call rates and other costs, the rural market has received a fillip for increased access.

UNI PDT MP RN1411

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