A mobile phone has become as ubiquitous as a wrist watch these days; one rarely leaves home without it. However, if asked about the economic benefits of having a mobile phone, most of us wouldn’t look beyond that important conference call we were able to attend while in the car or being able to access voicemail anywhere, anytime. Mobile telephony can have very real economic consequences, above and beyond the value proposition that is offered to the average urban citizen. According to UNCTAD, the growth of mobile teledensity has been shown to have a direct correlation with the growth of GDP per capita in developing countries, which tend to have overwhelmingly high percentages of rural populations.

Telecom providers all over the world, with the exception of a few like Grameen phone, have grown by exclusively tapping the high end of the market. However, mobile teledensity in affluent urban pockets have stabilized to a great extent, with most potential users already having been tapped with some even owning two mobile sets.  Recent trends have shown that by 2010, service providers can expect to gain a majority of new subscribers from what are hitherto unexplored rural areas, with churn being the primary reason for changes in the urban subscriber base. According to BCG’s report on The Next Billion Consumers, this next potential base of consumers can largely be found in Brazil, China and India, with some spread across Africa and other parts of Asia as well.

The needs and usages of rural consumers would differ significantly from those of urban consumers. So would the economics of servicing comparatively lower Average Revenue per user (ARPU) rural customers. In urban societies, the general practice of having a mobile phone is for individual use while in rural areas, phones can be used collectively as well, thereby reinforcing community linkages which are as it is stronger in such areas. The value proposition for rural consumers needs to be tailor-made to suit their requirements. The ability of mobile devices to serve as multi-functional, all-in-one gadgets can be best exploited by using the correct product combinations to meet the aspirational needs of rural consumers and such that it makes economic sense to invest a substantial amount of money in a mobile set. The cost of the average mobile device has been steadily decreasing, enabling ease of such an investment. With telecom providers setting up towers even in remote areas, the focus now shifts towards the acquisition of a critical user base to justify this capital investment to increase reach of mobile networks. The acquisition of user-base clearly depends upon the capacity of service providers to create the correct product offering and thus the need to enable low cost e-applications for rural and remote areas through mobile phones.

Innovative products for the rural user need to be examined critically on the following fronts.

1. The cost of providing such products should not be such that it causes mobile services to be economically out of reach for the rural consumer.
2. Products also need to be such that regulatory measures do not act as hindrances towards practical implementation.
3. Products involving cross-industry collaborations must be such that they bring economic benefits to all the participating stakeholders for the offering to be sustainable.

E-governance has gained tremendous impetuous in the last decade with several developing nations including India and Brazil implementing networks of community centres for access of information in remote and rural areas. The National e-Governance Plan(NeGP) in India states it vision as “Make all Government services accessible to the common man in his locality, through common service delivery outlets and ensure efficiency, transparency & reliability of such services at affordable costs to realize the basic needs of the common man.” The primary goal of e-governance is to create an effective communication channel between the government and common citizens. This is being done in many countries by the establishment of Information Centers at strategic locations. The cost of establishing rural Information Centers is high however, given the low number of users per Information center. The greater part of this cost comes from the hardware and software needed to access the web.

Mobile devices can easily serve as much more economically feasible tools to do the very same. A Value added service (VAS- like SMS, ringtones, News alerts etc.) platform to enable dissipation of information regarding e-governance can be implemented by the service provider. Taking this basic one way model forward, the VAS platform can also incorporate means not just of information dissipation but also faccilitate more critical functions such as application to employment services, filing of tax returns, vehicle registration, social security etc. The primary issue in implementing such critical functions is to have a secure method of usage. Special MDNs (Mobile device numbers), similar in nature to the devices used for EVDs (Electronic Recharges which directly debit cash to your mobile), can be set up in remote communities to provide such services to the more unreachable demographics.

Even agri-related initiatives should not be far behind. Mobile phones can be designed to act as battery operated data collection devices to transmit information from remote and rural areas which do not have any other means of information relay. Environmental data regarding soil, water, Greenhouse gasses can be relayed over mobile devices to central units where they can be analysed. The resultant information can be relayed back to the concerned parties who can make use of this. Agricultural practices can be made more environment-friendly by educating farmers though VAS voice messages. Information about the latest market prices of commodities also serves as a guide for agriculturists to sell their produce at fair price.

Innovative rural specific product propositions not only serve the needs of the consumer but can also help service providers get the last mileage out of existing network capacity in far-flung areas. However the greatest hurdle that lies in the way of service providers to increase reach in such remote and rural provinces is often not incorrect product proposition but availability of mobile telephones, RCV/EVDs (Recharge vouchers, both physical as well as electronic) and the necessary service centres. In many developing countries the business model followed by service providers is of pre-paid mobile telephony. In order to create a successful base in an area, availability of products is the first and foremost hygiene factor and for that sales reach has to be established. Innovation in channel partnership needs to be examined as critically as innovation in products for the rural mobile telephone market to develop to its full potential.

Another critical issue in provision of innovative products is that rural subscribers, especially in developing countries need to be educated on how to use these products as well. With significantly lower literacy rates due to poor education facilities in rural areas, using these innovative products to their fullest potential maybe a concern.

The ARPU for rural users is significantly lower than for urban users. In a sense, extending network and sales reach to rural consumers is like scraping the bottom of the bowl in terms of incremental profits. However, this is where innovative products and VAS can serve as more prominent means of revenue generation thus justifying the exploration of incremental subscribers from rural areas.

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