"Telecom service providers have to stop seeing the rural areas as a non-viable area. The market in rural areas is two and a half times bigger than urban areas," said Baijal.

Urban teledensity is around 25%, but rural teledensity is only 1.7%, Baijal said. Telecom providers must recognise that the rural market is massive, provided the pricing is appropriate. Reductions in telecom tariffs led to rapid growth in the mobile sector, leading to two million new connections every month, Baijal said.

From 2% in 1998, teledensity has risen to 8.5%, mainly due to mobile subscriber base growth. There are around 50 million subscribers, with 20 million being added last year alone. Baijal said that tariffs in India are three-quarters of China’s tariffs, but India still has relatively low rural teledensity.

"We too can have 200 million people covered by mobile telephones by the end of 2006, and our telecom operators would have covered 75% of the population if the pricing was right," said Baijal.

He urged Bharat Sanchar Nigam Ltd (BSNL) to share its infrastructure with other operators as no other service provider has the requisite fibre-optic network in rural areas. BSNL has 30,000 exchanges in villages connected by fibre-optics and is providing telecom services in 515,000 villages in total.

It is estimated that India’s telecommunications sector requires investments of around Rs.1-1.5 trillion (US$ 23-34 billion) to match the growth in China and achieve the announced target of 200 million telephone connections.

Intelecon Research & Consultancy Ltd. 02/02/2005
Source: The Hindustan Times