Village telephony has been a bugbear for
telecom policy makers in India. Quarter after quarter, telecom
service companies – Bharat Sanchar Nigam Ltd. (BSNL) and the
private telecom providers – have missed their mandated village
phone targets.
Telecom managers shrug their shoulders and tell you that
the investment-return equation just does not work out in the
case of hinterland phone networks. Each rural phone is
expensive to wire up while the revenues – forget earnings for
a long time – have very little upside for years.
For those telecom executives and analysts looking for a
toehold into rural and, perhaps small-town India, the
conventional thinking that ‘rural is not profitable’ has been
turned on its head in an experiment in Andhra Pradesh.
Last October, I wrote about Rural Telecom Foundation (RTF),
a non-profit foundation committed to rural telephony in India.
The foundation has wired up 260 homes in Kalleda village in
Warangal district in north central Andhra Pradesh through what
is, in telecom parlance, called the ‘party line’ scheme.
Dubbed ‘Gramphone’, the RTF’s ‘party-line’ model splits or
multiplexes a direct line from a telephone exchange into, say,
four phones. At its simplest, it is akin to having a phone and
three extensions; add more incoming lines and the Gramphone
will resemble the PABX (private automatic branch exchange) in
your office.
The pricing of the scheme was simple arithmetic: a rural
phone in Kalleda (under the Parvatagiri exchange of BSNL)
comes at Rs 100 for a two-month billing cycle and offers users
125 free calls. Spread across four households, this worked out
to Rs 12.50 a month for some 30 outgoing calls and unlimited
incoming calls.
Based on its learning from the Kalleda experiment, the RTF
is now suggesting a new model that promises to be a
money-spinner for the implementing company; in this case,
BSNL.
The foundation has worked on increasing the multiplexed
households that a single Gramphone line can wire up. After
tests, it has come up with a solution to wire up to 10
extensions or households on a single line from the telephone
exchange.
This line, it has suggested, should be priced at Rs 450 a
month with unlimited calling within the ‘short-distance
calling area’ or SDCA which is the local calling geographical
unit mandated by Indian telecom rules that typically has a
20-30 km radius.
Traffic patterns in India show that a majority of calls
(70-80 per cent) are within an SDCA and Parvatagiri is no
different. The Rs 450-a-month package also takes care of
billing issues among members of each ‘party-line’ unit and
does away with monitoring the costs of outgoing calls.
At Rs 450 a month and 10 ‘party-line’ extensions, the cost
a household pays is less than Rs 50 a month, which is
approximately a land labourer’s daily wage in an area like
Kalleda.
RTF thinks, legitimately so, this is affordable in rural
India. The revenue implications of this new model are
stunning: in Parvatagiri, RTF has projected with the new Rs
450-a-month package, total revenues will triple from Rs
1,20,000 a month to Rs 3,60,000. It assumes the number of
phones in the area will increase from the current 800 to 1,200
and half of these (600 phones) will be on the new Rs
450-a-month package.
The investment for this Gramphone conversion is not very
high. RTF estimates a cost of under Rs 800 for each Gramphone
extension if the direct exchange line to the village exists.
The investment-return equation then works out to be much
more appetizing for a company like BSNL which already has
25,000 rural exchanges and phone lines laid on the ground or
wireless connections.
RTF estimates that BSNL can bring in 20 million new rural
users into the network through the Gramphone model for a
one-time investment of Rs 2,000 crore and expect revenues of
Rs 4,000 crore each year from them!
These are astonishing numbers and need validation. For a
start, all that the RTF is asking for is permission to
implement the new Rs 450-a-month package in Parvatagiri
village as a pilot project of BSNL and then to scale it up to
the Warangal SDCA and ‘secondary switching area’ (SSA, again a
telecom geographical definition which comprises several SDCAs
and is equivalent in most cases to a district).
The Gramphone is a very interesting model to wire up Indian
villages. It makes phone services affordable for the rural
millions, who are looking for low-cost solutions for their
communication needs.
As a survey of the Kalleda experiment by students of the
National Law School of India University has shown, users are
willing to live with issues like lack of privacy on the
Gramphone model.
Leaders at the Department of Telecommunications and BSNL –
and, in time, private fixed line service companies – owe it to
themselves and India to give it a shot. It has wonderful
potential to work with de-centralised governance and self-help
groups.
(Josey Puliyenthuruthel works at content company
perZuade. His views are personal and may not be endorsed by
his employer, the company’s investors, customers or vendors.
Comments may be sent to josey@perzuade.com)
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