The Telecom Paradox ; Mobile Phone Population Is Clipping, but Revenue Isn't Growing at the Same Pace. Until Value-Added Services Become More Popular, Operators Will Have to Bank On Cost Cuts to Grow Profitably.

Summary

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Five years after Rakesh kumar left a small town in up for the bright lights of Delhi, he's a mini-entrepreneur with two employees on his payrolls. He doesn't make a whole lot of money, but by his own admission, is doing better than he expected. He doesn't thank his stars, his smarts, or even the big bad city for his good fortune. Instead, he thanks the Nokia 1110 handset and the Airtel connection. Kumar, you see, runs a three-man whitewashing business out of his small shack in Gurgaon near Delhi, and until he bought a mobile connection about two years ago, the only way to find daily employment was to go stand near a roundabout on the main intersection that doubled up as a spot market for daily labour. It's been a long while since Kumar, a late 20-something, did that. These days, his marketplace is his mobile phone; customers call him, and he, in turn, dispatches workers, who, of course, have mobile phones, too.

In a country where inclusive growth is the new rallying cry, the telecommunications industry has played the role of a great equaliser. It has transformed lives of millions of poor in ways not yet fully measured. Indeed, telecoms is the most powerful emblem of the transformation that India has undergone since it opened up its economy in 1991. And 12 years after the then Chief Minister of West Bengal, Jyoti Basu, rung in the first wireless service provider in Kolkata, telecoms is a story to be heard to be believed. It took three-and-a-half years for the wireless population in India to touch a million, but barely seven-and-a-half years to hit 10 million, and just under 11 years to touch 100 million. Today, the number of mobile subscribers stands at over 177-odd million, with six million users getting added every month--that makes India the fastest growing telecoms market in the world.

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The Telecom Paradox ; Mobile Phone Population Is Clipping, but Revenue Isn't Growing at the Same Pace. Until Value-Added Services Become More Popular, Operators Will Have to Bank On Cost Cuts to Grow Profitably.

Yet, the beauty is that even at 177 million, the mobile phone penetration in the country is a modest 15 per cent. That means there's potential to add millions more as consumers over the years ahead. In fact, the government of India has set an ambitious target of hitting 500 million by 2010. To put it in perspective, it's talking of trebling the wireless population in just over three years. Operators seem equally gung-ho. In May this year, operators launched aggressive new schemes to get millions more o...

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