PROJECT REPORT ON Revolution of M-Commerce in Rural Area

Post Graduate Diploma in Management (INTERNATIONAL BUSINESS) PGDM (IB)

Submitted To:
PANKAJ UPADHAYA (Faculty of JIMS)

Submitted By:
SUJEET KUMAR GUPTA (37) PAWAN KUMAR VERMA (23) SHIVAM CHAWALA ( )

Jagannath International Management School

Kalkaji, New Delhi

ACKNOWLEDGEMENT

The thesis what I have presented is not the made outcome of my labor alone. There are dozens of hands buttressed me all through the programmed it doesnt go without thanking all of those who constantly keep me on the move. I would like to give heartily thanks to JIMS KALKAJI, NEW DELHI who has given us an opportunity to learn something project report in our PGDM (IB) Program me. I express my gratitude to Faculty Guide Mr. PANKAJ UPADHAYA who has supported me to complete this thesis. I give my sincere token of thanks to all my faculties, relatives and friends who have gathered me the wisdom of knowledge.

SUJEET KUMAR GUPTA PAWAN KUMAR VERMA SHIVAM CHAWALA PGDM (IB) JIMS, KALKAJI

EXECUTIVE SUMMARY

This project titled is REVOLUTION OF M- COMMERCE IN RURAL AREA. Mobile technology and m-Commerce are transforming our digital economy to a mobile one, with new markets and mobile services worldwide. Today, the importance of communication and information access in a timely and efficient manner is critical for many industries: particularly those in rural and regional areas, due to their often limited Internet access and mobile coverage. This paper presents the findings of the project, which investigated the use of mobile technology to improve communication and information access within one of these rural industries using a Rapid Appraisal approach.. The extremely positive acceptance of the solution by organic primary producers illustrated the significant potential mobile technology has to improve rural farm life in Australia. Keywords: m-Commerce, mobile technology, information access, rural and regional, organic primary producers and so on. This report presents a snapshot description of the current financial activities as being undertaken by various entities in India by considering some examples. At the same time, it defines an ecosystem for discussing the m-commerce model. The ecosystem elaborates the roles of each and every significant stakeholder involved in the mcommerce process. Thereafter, the report proposes two models to be used in an mcommerce related system, namely, debit model and credit model. Each of these models is suitably explained and a comparison is done across the models. The debit model, essentially a model approved by the regulatory bodies in India is more or less similar to what has been proposed in various forums in India. However, the credit model is suitably explored and is subject to the prevalent regulatory norms. Thereafter, the report analyzes the role and responsibility of each and every stakeholder previously identified. Using the analysis done so far, the report suggests a probable, non-traditional route for the growth of m-commerce, wherein various regulatory supports are assumed to sketch the future. The mobile subscription penetration is expected to increase in India at the rate of 75% with a total of 1.159 billion mobile phone users across the nation by 2013 (1). Currently, the estimated number of mobile phone (GSM) users (termed as Wireless Users by TRAI) has already reached nearly 556millions (2) or more than 730millions (2) over all mobile phone users, by the end of January 2011 with a growth rate of nearly 43.23% over December 2009 (3). If nothing at all, these statistics at least showcase one very important thing, i.e., the accessibility of mobile phones, or if it can be suitably reworded reach-ability of mobile phones. This is one of the main reasons that RBI (Reserve
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Bank of India see footnote1) has decided to push all the nationalized (Private and Public Sector Units) banking units in India towards adoption of mobile phone based and other similar wireless technologies in their banking services as a means to achieve financial inclusion across India. Even though theres a significant heterogeneity in ter ms of reach-ability levels of mobile phones in urban areas versus rural areas, it is a fair start to what may turn out be a revolutionary process of bringing banks and people together across India. However, we must also remember that banking need not pick up unless theres a need to bank, i.e., a person enabled to access banking services through mobile services may not necessarily access banking services unless theres a need to do the same. It is absolutely essential for that person to have some sizeable cash to put to use for banking services (or suitable guarantees to avail loans), especially in rural areas. Thus, the whole setup of bringing about financial inclusion is also dependent on mobile technology being able to aggregate and service very small monetary amounts at profitable returns (for the major players who are affected directly per transaction like banks and their customer). This brings into the picture the role of m-commerce, or usage of mobile technology not just for banking, but any and all kind of financial transactions as permitted by the legal authority.

INTRODUCTION OF M- COMMERCE IN RURAL AREA AS WELL AS URBAN AREA INTRODUCTION:How do you like the idea of paying bus fare by just flashing your mobile phone before the Conductor? The mobile phone, using a technology called Near field communication (NFC), communicates with a device in the bus and the amount is debited from your NFC is gaining popularity across the world and is set to revolutionize mobile commerce. Though NFC is in nascent stages in India, Early this year Bharti Airtel launched prepaid cash cards in India, the Airtel Money service. The service, which allows customers to use their mobile phones to make payments, is now available in Gurgaon and Airtel Mobile commerce is quite popular in the West and research shows that 91 per cent of UK consumers use it. But in India it is yet to take off. Debit cards, which the mobile money can potentially replace, are easier to carry and help you draw cash. Mobile money providers typically charge transaction and subscription fee and face the challenging task of ensuring universal acceptability of their money. . A recent Forrester report expects global m-commerce to reach $31 billion by 2016. For that to happen rural areas may have to step in, in a big way. Approximately 72 per cent of the worlds population is estimated to be unbanked. The mobile phone, which is becoming ubiquitous even in the developing countries, offers an excellent platform to take banking to them. Studies suggest that an increase in the banked population has a direct correlation to increased GDP and reduced poverty. Kenya has emerged as a leader in mobile banking system with M-PESA, which was launched in 2007 by Safaricom, a mobile Operator. M-PESA is an SMS based, branchless system that allows individuals to deposit, send and withdraw money using their mobile phone. M-PESA has over 14 Million customers, representing 60 per cent of the adult. In India, regulators like RBI and TRAI, several banks, mobile service providers and phone makers are joining hands to take m-commerce to the unbanked population. Echo, a mobile banking technology provider, has tied up with SBI and ICICI banks. It helps people create a bank account and perform basic transactions at local Kirana shops. Idea Cellular has a similar partnership with Axis Bank. Subscribers would be able to open No-frills savings bank accounts at Ideas retail outlets and avail basic banking services such as cash deposit, withdrawal and transfer. Idea is currently offering the
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Fifty-two per cent of Indias adult population does not have access to any form o f formal financial services. With the rising tele-density there is good potential for business. According to the latest BCG report, the projected fee-based revenue from mobile commerce could exceed $4.5 billion by 2015 in India. This revenue would be shared by banks, A major bottle-neck in mobile commerce in rural areas lies in meeting the Knowyour-customer (KYC) norms. Kenyas National ID system eliminated the need for KYC norms and played a key role in M-PESAs success. That is precisely the role Indias Aadhar project is planning to play. If it succeeds, mobile commerce would get a big boost. But to really make it happen banks and Telcos have to build awareness among people by promoting it aggressively.

M-Commerce has not taken off to its full potential in India as against in West where it has almost reach its zenith. G Krishna Kumar of Teleca Software Solutions India has an interesting in the Deccan Herald highlighting the present state of m-commerce in the country, especially in rural areas.

The article talks of a technology called Near Field Communication (NFC) that will allow for making cash transactions via mobile phones. For instance, it would facilitate you to pay your bus fare by flashing your mobile phone before the conductor. Your NFC enabled phone will communicate with a device in the bus and the amount will be deducted from your bank account.

NFC has become the backbone of m-commerce around the world though it is still at infancy stage in India. In UK 91 % of consumers use mobile commerce and there is a large scale adoption of the same in the west as a whole. This is quite contrary to the scenario out here. People here still prefer debit cards to mobile money as the latter has extra charges and acceptability issues associated to it. Bharti Airtel had already launched Airtel Money, the pre-paid cash cards, which will allow its customers to make payments. The service is just available in Gurgaon and is yet to take off in the rest of the country. In a forecast by Forrester, global m-commerce is set to reach $31 billion figure by 2016. However, for that to happen, rural areas also have to become a part of it without much delay. Till this date, about 72% of the worlds population does have bank accounts or access to banks. And mobile phones are the main media that can take banking to them. Coming to the major players in m-commerce, Kenya has emerged as a leader in mobile banking system with its M-PESA. With more than 14 million customers, M-PESA allows individuals to deposit, send and withdraw money using their mobile phones. Following this path are Pakistans Easy Paisa and Bangladeshs Grameen Banks Mobile money. In India, RBI and TRAI, several banks, mobile service providers and phone makers have joined hands to take m-commerce to rural India. For instance, Echo, a mobile banking technology provider, has partnered with SBI and ICICI banks for mobile banking solutions. Likewise Idea Cellular too has partnered with Axis Bank for the same. And other banks too are following suit. In another report by Boston Consulting Group, it has been predicted that Mobile commerce and banking are set to take off in India. At present, there are over 500 million mobile subscribers in the country, compared with the 240 million people holding bank accounts,20 million credit cards, 88000 bank branches and 70,000 cash points. It further points to the fact that though half of Indian households do not possess bank accounts, 42% of these have least one mobile handset, and 90% of these can be used for basic financial transactions. In Urban India, most of the people have
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bank accounts but they still go for cash for 90-95% of their petty needs. Altogether, there is an ample scope for mobile commerce. The major road block to m-commerce in India, especially in rural areas is meeting the Know Your Customers (KYC) norms. Kenya has a successful National ID system that catapulted itsm-commerce to a big success. And Indias Unique Identity Development Authority of India (UIDAI) or Aadhar projectis still at a nascent stage. Once it becomes successful, this road block can be easily eliminated and mobile commerce can see an all time high in the country. But that certainly will need time and also telecom companies and bank have to drive this initiative beyond frontiers. Only then will mobile commerce be successful in India.

Mobile Commerce is the subset of e-commerce, which includes all e-commerce transactions, carried out using a mobile (hand held) device. This paper attempts at figuring out the relevance and potential role that m-commerce can play in the development of Indian business environment, in particular rural India. M- Commerce in India is at its infancy, with significant uncertainties and complexities due to evolving business and regulatory models, which are further complicated by the involvement of large number of interrelated players in it. Timely and correct public policy interventions are needed to allow it to unravel its potential and help the country to reap the benefits. The traditional tools and techniques of analysis and forecasting (for e.g., econometric models and regression analysis approaches) seem to be inadequate to study the dynamic nature of interrelatedness among the entities in the m-commerce domain to draft a policy framework. System Dynamics based modeling approach will help in dealing with the complex interrelatedness and to develop a policy model. In this paper, the authors developed a causal loop diagram based on the analysis of various players and their interests who are the stakeholders in the M-commerce space to facilitate the policy makers to infer the impact of various policy options to decide on policies that can foster both technology and business in India for public good. After the internet revolution the mobile revolution is all set to sweep the Indian soil. When e-commerce emerged as an improvement in traditional business it was said, Businesses will be e-commerce, or no business at all. These phrases have lost meaning with the emergence of m-commerce. In Indian context too the way of conducting business is due to witness an upturn not only due to technological developments that have revolutionized business to a plastic money enabled 24x7 concept but also due to the shifted business focus on the bottom of the pyramid . This concept has guided the Indian business world to shift their focus towards the ignored rural markets. There is tremendous opportunity for mobile technologies based business models to explore the market around the rural poor, and translate it into a business opportunity to serve around 75 million rural populations in the country. Unlike the ecommerce based business models, mobile technology based businesses can overcome barriers of literacy, availability and cost. The new mobile devices are feature rich and
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user friendly so as to enable an illiterate to operate. The mobile service charges are at an all time low in India compared to the world, enabling even the low-income groups to own and operate mobile phone. Pro-active rather than reactive public policy and regulatory initiatives are needed in India to fully utilize the opportunities offered by mobile technologies. M-commerce: An overview:Any use of a handheld device a mobile phone, a communicator or a PDA to do business whether it is sharing information, transferring data, voice, video, making payments, granting credits, playing quiz or conducting contests falls within the purview of m-commerce. M-commerce has been defined as any transaction with a monetary value that is conducted via a mobile telecommunication network. The scope of mcommerce can be extended to include all business related communications among individuals and companies, which do not necessarily involve financial transactions. In a very broad sense m-commerce includes all services that can be initiated over mobile devices such as voice telephony, communication-based services (messaging, bulletin boards etc.,), internet access on mobile, payments for goods and services through mobile, services over local radio systems like Bluetooth. The newer arguments for including business done while on the move, irrespective of whether a wired or a handheld device is used, in m-commerce or mobile commerce is the fact that business is being conducted while in a state of motion. This can also include a transporter who starts with goods and delivers them based on information received on the way. This broadened gamut is interesting to study but in this paper the authors considered only the transactions done using a hand held wireless device.

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Business Model of M-commerce:The 3G 1 mobile services include video calls, transfer of video images, m-portals, retail goods sale, micro payments, m-banking, location based services etc. The business model of m-commerce places the mobile operator at the hub and other service providers reach mobile users through this hub. The service provider gamut includes banks, mobile operators, retailers, content providers, small and large business enterprises, application developers, hotels, travel etc. The application developers or aggregators develop m-portals, m-games, translate content suitable to mobile downloads etc., and are a major link between content industry and mobile operators. Presently in India the content services are the application developers or aggregators develop m-portals, m-games, translate content suitable to mobile downloads etc., and are a major link between content industry and mobile operators. Presently in India the content services are being offered through m-portals of aggregators or of mobile operators. However the GPRS2 and MMS3 are being offered directly through operators. For all transactions through mobile,

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Payments are primarily made by the mobile operator who later recovers the amount with some additional service charges from the user in his monthly bill. Subscribing to the interest group theory fair share of revenues between different parties is a major enabler in success of m-commerce for which policy interventions, regulations and sound legal framework are necessary. Mobile Usages in India:In India mobiles are currently used primarily for passing and sharing information using SMS4 and voice. However, the inclination to use value added services is evident from the increase in share of revenues generated from value added services as a proportion of total revenues of mobile industry increased from 7.26% in June 05 to 9.58% in September 05; which amounts to more than 2% rise within a quarter. The corresponding figures for revenues for SMS show a rise from 5.25% to 5.4% [9]. This rise has resulted from introduction of voting based participative TV Programs, voting on some socio-economic-political issues in Newspapers; SMS based quiz/contests on mobile, MMS etc. Student clientele of mobile companies are major consumers of wallpaper, ring tone, mobile games, music and video clip download services available on e- portals as well as mobile portals. Other services like micro payment facility are also being offered though only by one or two operators. GPRS based services are being offered by mobile operators on a limited scale. However one or two operators GPRS based services are being offered by mobile operators on a limited scale. However, wide ranges of new wide ranges of new services are on the anvil as more and more operators upgrade to 3G networks.

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Relevance and potential of m-commerce in rural India:The mobile subscription base stood at 76 million in Jan06, surpassing that of China, and is increasing at a rate of 5 million per month. It is expected to reach 210 million by 2009-10 representing a CAGR5 of 32.1% over a period of five years. The telecom industry revenues are expected to grow at a CAGR of 11% driven mainly by revenue growths in mobile revenues at a CAGR of 20% in next five years. This growth is expected to infuse investments worth Rs. 600-650 billion in mobile networks [10]. The overall profitability of mobile operators and ROCE6 is expected to increase due to reduction in regulatory expenses, lower capital expenditure per subscriber due to economies of scale. Bridging the digital divide and promoting trade and commerce in rural areas to accelerate development & growth are the main m-commerce growth drivers in India. The Indian rural population is much devoid of information and mobile technology can bridge this gap. Thousands of geographically scattered village have never attracted telephone companies as they failed to make a good business case for them. But a right mix of wireless technology, newer business models and directed policy initiatives can overcome these hurdles. The concept of localized services has always been restrictively thought of in terms of provisioning information related to travel, hotel, shopping, weather and other facilities. However for rural India the meaning of localized services could include information and consultation related to agriculture, such as advice on suitable crop for the area, timing of various agricultural activities, quality, information on cost of seed and prices of agricultural produces, future trading option in agricultural commodities, obtaining comparative rates in various mandis (local place of auction), disaster warning for coastal areas etc. Paucity of information which led to exploitation of the rural farmers at the hands of the middlemen could be easily overcome by wireless technology based new business model like that of e-choupal. Other relevant usages of m-commerce would include giving short-term credits to rural farmers and small entrepreneurs. Micro credit is a large market in India. It is estimated that the trade sector needs around Rs
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2.1 lakh crores of credit out of which around Rs. 61,000 crores is met by banking sector and rest by non banking informal sector. Charmed by the figures many banks are interested in entering the sector but are often constrained by their limited reach. However collaboration between mobile operators and banks, postal department, or financial institutions interested in extending their operations to micro credits in far-flung areas can work wonders. For example in the boat markets of Bangkok one can make payments through charged cards provided by mobile operators. Other example could be Bangladeshs Gramin Phone working on a similar principal. Taking conservative estimates even if only Rs 50,000 crore of non formal credit market is tapped by mobile operators in the next five years at an interest rate of 20 percent (though the retail credit in the `open' market is at around 60 per cent today) the sum that is expected to be earned is Rs. 10,000 crore which is around six months revenue of all operators combined. Central and state governments can use the networks to provide public information to masses, leading to better governance. Once the small farmers get perceived benefits from m-commerce services the propensity to go mobile will increase. This would trigger an increase in subscriber base, which will pull down the fixed costs of services. This would further snowball into rise in subscriber base making rural markets a good business case for mobile operators. Thus the mobile technologies can prove to be a win-win situation for all stakeholders, particularly the rural population, mobile- operators, and the go Once the small farmers get perceived benefits from m-commerce services the propensity to go mobile will increase. This would trigger an increase in subscriber base, which will pull down the fixed costs of services. This would further snowball into rise in subscriber base making rural markets a good business case for mobile operators. Thus the mobile technologies can prove to be a win-win situation for all stakeholders, particularly the rural population, mobile- operators, and the government.

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Policies and Regulations in Mobile Industry in India:All the arguments above converge on the existence of large potential for the mobile markets and hence mobile commerce in India. But the success of market depends on faith all the players have in the functioning of the market. The telecom sector in India has witnessed successful implementation of an independent regulatory body and dissociation of government from regulations. However there have been no initiatives either from the government or the telecom regulator in defining the codes of conduct or setting standards for mobile commerce. The question that arises obviously is whether the self-regulatory system that has evolved with time is adequate to deal with the increasing mobile-based business or needs improvement. It is the right time to discuss the issues related to the regulatory system and appropriate policy support from government that should be adapted to play a catalytic role in building faith of all stakeholders in the system.

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The target sample was 50 mobile phone users in each of the Urban and Rural areas. 100 questionnaires were distributed in Urban and Rural area using the convenience sampling method. 50 questionnaires were collected in Urban and Rural .Sample profile demographic and socio-economic criteria Table provides a detailed comparison of the two samples and demonstrate their similarity. The main areas of difference are a slightly older age profile in Rural and a higher proportion of students in the Rural, resulting in a lower income profile in the Rural.
Table DEMOGRAPHIC AND SOCIO-ECONOMIC PROFILE OF SAMPLE:-

Urban area Respondents Male Female Age (< 30) Age (>30) Mean age Student Employed Unemployed Graduate/diploma Post graduate Under graduate Earn none Earn < 50,000 Earn 50,000-1 lac Earn 1-3 lacs Earn > 3 lacs Total 24 26 44 06 21 37 11 02 14 03 33 35 05 07 03 -50 100 74 22 04 28 06 66 70 10 14 06 Percentage 48 52 88 12

Rural area Respondents 35 15 42 09 24 40 06 04 10 -40 38 04 06 02 -50 100 80 12 08 20 -80 76 08 12 04 Percentage 70 30 84 19

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Advantages of M-Commerce:In connection, the development of Mobile Commerce or M-Commerce gives an opportunity to many businesses to offer flexibility for their customers to have access to their business from devices such as mobile phones M-Commerce is the term for making business transactions using mobile devices. There are already several existing M-Commerce applications and services nowadays that have been very helpful to us. Some are mobile banking, location maps, and variety of news, mobile shopping, ticketing and mobile file sharing. Mobiles are being used more and more on daily basis and its more then just making and receiving a call. Mobile companies are coming up with new features for their smart phones, which offers consumers ease, flexibility and security at the same time. My self I have a Blackberry and an iphone which I use both to run my online business, from sending and receiving emails, online accounts, socialize on Face book and Twitter and also paying for my shopping so I just need to collect it. I believe if I was to loose my phone, I would be lost, as I would have no communication, besides my wife calling me, I wouldnt be able to operate my day to day business. Having these features on my phone, saves me hours in a day, as I dont go home to a full inbox of emails, I dont need to wait in queues to collect my shopping, as I have already paid for it. Convenience It is a true convenience to do much from a handy device via M-Commerce. With wherever you are, in just a few clicks on your mobile device, you can already do shopping,banking,download,media.files. FlexibleAccessibility User can be accessible via mobile phones and at the same time be accessible online too through logging on to various mobile messengers like Yahoo and Gtalk and other networking platforms. On the other hand, user may also choose not to be accessible by shutting down his mobile device, which at times can be a good thing. EasyConnectivity As long as the network signal is available, mobile devices can connect and do commerce transactions, mobile to mobile and even mobile to other devices. Personalization Each mobile device is usually dedicated to a specific user, it is personal. You can do whatever you want to your mobile device, modify the wallpaper, change view settings or modify contact information as you send emails or e-payments.
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TimeEfficient Doing M-Commerce transactions do not require the user to plug anything like personal computer or wait for the laptop to load. Just hit the on button of your mobile device and Despite the small screen, having something in your pocket that can do so much via MCommerce is really an amazing technology and a great help. E-Commerce business are also making applications for mobile phones which allows users to browse their online products and make payments with couple of buttons. Is Mobile Commence appealing to you, is this something you would implement into your business, share your thoughts with us regarding mobile e-commerce in the comments below.

The advantage of m-commerce is: 1- Providing wider reach. 2- Reducing transaction cost 3- Streamline business processes. 4- Competitive pricing. 5- Reducing time to order. The Disadvantages of M-commerce:-. 1- Small screens of most devices still limit types of file and data transfer (i.e. streaming videos, etc.) 2- Standards guiding applications and technology development and connection(s) 3- WAP and SMS limited to small number of characters and text. 4- Use of graphics limited 5- Less functionality for mobile Internet over mobile phones and existing generation of handhelds than for mobile computers (laptops and next generation handhelds) 6- User interface is often difficult to learn how to use 7- Limited bandwidth 8- Limited roll out of higher bandwidth mobile networks and devices (i.e. 3g networks and wireless broadband networks are predominantly located in cities) 9- Cost of establishing mobile and wireless broadband infrastructure 10- Technology constraints of mobile devices (memory, processing power, display capabilities, input methods) 11- Security of data moved across some mobile and wireless networks 12- Businesses investment in hardware and infrastructure is seen as riskier as rapid evolution of mobile and wireless technologies continues.

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AREAS / USES OF M-COMMERCE In the current commerce industry, mobile commerce or M-Commerce has been entered in finance, services, retails, tele-communication and information technology services. In these sectors, M-Commerce is not only being widely accepted but also it is being more used as a popular way of business/ commerce.

Finance Sectors Telecommunication Sectors Service / Retail sectors Information Sector

M-COMMERCE APPLICATIONS The general m-commerce applications are:

1. Mobile ticketing
Tickets can be sent to mobile phones using a variety of technologies. Users are then able to use their tickets immediately by presenting their phones at the venue. Tickets can be booked and cancelled on the mobile with the help of simple application downloads or by accessing WAP portals of various Travel agents or direct service providers. Mobile ticketing for airports, ballparks, and train stations, for example, will not only streamline unexpected metropolitan traffic surges, but also help users remotely secure parking spots (even while in their vehicles) and greatly facilitate mass surveillance at transport hubs.

2. Mobile vouchers, coupons and loyalty cards

Mobile ticketing technology can also be used for the distribution of vouchers, coupons and loyalty cards. The voucher, coupon, or loyalty card is represented by a virtual token that is sent to the mobile phone. Presenting a mobile phone with one of these tokens at the point of sale allows the customer to receive the same benefits as another customer who has a loyalty card or other paper coupon/voucher. Mobile delivery enables:

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economy of scale quicker and easier delivery effective target marketing privacy-friendly data mining on consumer behavior environment-friendly and resources-saving efficacy

3. Content purchase and delivery

Currently, mobile content purchase and delivery mainly consists of the sale of ring-tones, wallpapers, and games for mobile phones. The convergence of mobile phones, mp3 players and video players into a single device will result in an increase in the purchase and delivery of full-length music tracks and video. Download speeds, if increased to 4G levels, will make it possible to buy a movie on a mobile device in a couple of seconds, while on the go.

4. Location-based services
Unlike a home PC, the location of the mobile phone user is an important piece of information used during mobile commerce transactions. Knowing the location of the user allows for location based services such as:

local maps local offers local weather people tracking and monitoring

5. Information services
A wide variety of information services can be delivered to mobile phone users in much the same way as it is delivered to PCs. These services include:

news services stock data sports results financial records traffic data and information

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Particularly, more customized traffic information, based on users' travel patterns, will be multicast on a differentiated basis, instead of broadcasting the same news and data to all Users. This type of multicasting will be suited for more bandwidth-intensive mobile equipment.

6. Mobile Banking
Banks and other financial institutions are exploring the use of mobile commerce to allow their customers to not only access account information, but also make transactions, e.g. purchasing stocks, remitting money, via mobile phones and other mobile equipment. This service is often referred to as Mobile Banking or M-Banking. More negative issues like ID theft, phishing and pharming are lurking when it comes to mobile banking, particularly done on the mobile web. Net security technology free from redundancy and paradigm shifts away from mobile web-based banking will be an optimal solution to mobile banking in the near future.

7. Mobile brokerage

Stock market services offered via mobile devices have also become more popular and are known as Mobile Brokerage. They allow the subscriber to react to market developments in a timely fashion and irrespective of their physical location.

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8. Auctions
Over the past three years Mobile reverse action solutions have grown in popularity. Unlike traditional auctions, the reverse auction (or low-bid auction) bills the consumer's phone each time they place a bid. Many mobile PSMS commerce solutions rely on a one-time purchase or one-time subscription; however, reverse auctions are high return applications as they allow the consumer to transact over a long period of time.

9. Mobile purchase
Mobile purchase allows customers to shop online at any time in any location. Customers can browse and order products while using a cheap, secure payment method. Instead of using paper catalogues, retailers can send customers a list of products that the customer would be interested in, directly to their mobile device or consumers can visit a mobile version of a retailers ecommerce site. Additionally, retailers will also be able to track customers at all times and notify them of discounts at local stores that the customer would be interested in.

10. Mobile marketing and advertising

Mobile marketing is an emerging concept, but the speed with which it's growing its roots is remarkable. Mobile marketing is highly responsive sort of marketing campaign, especially from brands experience point of view. And almost all brands are getting higher campaign response rates. Corporations are now using m-commerce to expand everything from services to marketing and advertisement. Although there are currently very few regulations on the use and abuses of mobile commerce, this will change in the next few years. With the increased use of m-commerce comes increased security. Cell phone companies are now spending more money to protect their customers and their information from online intrusions and hackers.

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KEY ISSUES OF M-COMMERCE The success of M-Commerce depends on:

Evolution: Technology and Business models are constantly evolving which will demand flexibility and patience on part of all players.

Customer loyalty: Who will own the customer? Partnerships among players from various industries will be necessary for most, if not all, m-commerce initiatives, and, in turn, will alter the nature of any one company to own their own customers.

Cross-sector knowledge gulf, where the different parties will need to learn about the functions and limitations of the services provided by the other players, for example, operators will need to know about content and applications.

Moving up the value chain: To respond to market opportunities some companies have develop subsidiaries in order to react more rapidly to market challenges. For example, Sonera has developed Sonera Zed, to provide portal and application management services such as location based mobile yellow pages as well Smart Trust, to develop secure solution for m-commerce transactions. And Citicorp has established e-Citi to develop a wireless access gateway strategy for financial service providers.

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Growth of M-Commerce:-

The Growth of m-Commerce:M-Commerce, also known as Mobile Commerce, has been a buzzword ringing bells to everyone linked to tech world. To put it in simple words, Mobile Commerce is a transaction of goods or services traded through mobile devices or smart phones. M-Commerce has already made its presence acknowledged by changing the mobile into a channel facilitating reliable & secured transactions like, banking, payment and ticketing. Despite the concept being widely known & acknowledged as an equivalent of e-commerce, many of its facets are still unexplored & unknown to masses. A concept which started with its simplest form i.e. transactions through SMS in 1997, has evolved like a wildfire over the last 5 years. In the widespread growth of MCommerce, advancement in mobile technologies along with Financial Policies of New world countries has acted as a catalyst. To the m-Commerce users delight, along with well developed economies, now developing countries are also embracing the concept with surprising speed. With most of the common services accepted well by the English speaking markets, African countries like Cameroon, Congo, Ghana, Ethiopia, Kenya, etc. are taking a more liberal approach while drawing financial guidelines to promote the use of Mobile Commerce. This will surely add more vigor in the rapid growth of m-Commerce, expanding the market reach & accessibility for more commodities & services. With the global outlook 2012 predicting an increase in m-Commerce utilization up to 54% (from 38% in 2011) in smart phone users, it is becoming the honey pot for all businesses. Apart from the regular Mobile Commerce Products & Services, a new (/ refined) service Mobile Wallet is on the rise amongst new service areas. Example for this is the Google Wallet or Square. These services available as mobile apps on your smart phones, are here to eliminate the use of physical credit cards or cash for purchases made in stores or online. A few other areas apart from mobile commerce that you would want to keep an eye on for drastic changes are:

M-Banking Mobile Wallet Location based Services

Going by the statistics, the number of mobile subscribers is expected to surpass the number of retail banking accounts in a couple of years all across the globe. This will surely lead to Mobile Commerce becoming the Channel of Choice, not only limited to basic shopping & selling experience but to more complex activities. So keep a watch on it!

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Increasing direct E-commerce sales via mobile devices has been a huge focus in recent years within the world of big retail and the mobile phone industry. With the ubiquitous distribution of smart phones and devices providing constant connectivity to end users coupled with the ability to potentially track, target and incentivize end users, the possibilities for m-commerce are endless and the Info graphic below shows some interesting data about the rise of this mobile commerce. The barriers to date have been around user interface problems, security issues and lack of comfort and trust by the end user to actually make purchases through there devices.
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Many of these problems are being overcome by the development of better device technologies, added security features, the creation of user friendly mobile retail apps and in general a growth in comfort and attachment of the end user to their device. It is therefore no surprise, as some of the stats below show, that many consumers are open to and actually gearing up to m-commerce, downloading mobile retail apps etc. Location based tracking and targeting is very much the missing piece that all big players want to add to their arsenal. The technology is available the issue is more about user permissions and trust. Large amounts of time, money and effort are being thrown into ways to incentivize users to accept location tracking on their devices and as the stats below suggest these incentives seem to be working. Smarter Apps which do product price checks, instant gratification of QR codes and the wonder of Augmented Reality are all ways in which the end consumer is being tempted into the world of m-commerce, sharing more data and ultimately allowing themselves to be highly targeted for marketing purposes. It looks like there is no stopping the rise of m-commerce.

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ADOPTION OF M-COMMERCE SERVICES:-

Table summarizes the adoption rates of the various m-commerce services, grouped into the four categories of communication, transaction, information and entertainment. The adoption rates of communication services are the highest of the four categories in both Rural and urban area. Adoption rates are generally higher in the Urban area.
% Adoption among sample Urban area Rural area

Communication Services Voice SMS MMS Video E-mail

100 92 08 36 08

100 74 06 30 06

Transaction Services Ticket purchase Payment Banking services Stock Trading

06 04 12 10

02 04 08 02

Information Services Entertainment news Sports news Headline news Stock /commodity info Future/weather forecast

18 24 08 10 10

12 14 08 0 0

Entertainment Services Download Game

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16

28

Download Ring tones Download Wallpaper/Screen saver Browse Internet

46 16 16

20 16 08

BEHAVIORAL PROFILE OF SAMPLE Urban area Respondents Number of mobile phones held currently 1 2 3 or More 30 15 05 60 30 10 Percentage

Rural area Respondents Percentage

38 09 03

76 18 06

Number of service Providers used currently 1 2 3 or More 30 15 05 60 30 10 38 09 03 76 18 06

Length of usage of mobile phone Less than 1 year 1-2 years 2-3 years More than 3 years 08 12 08 22 16 24 16 44 19 12 10 09 38 24 20 18

Total

50

100

50

100

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BEHAVIORAL CRITERIA:Table shows that multiple phone and subscriber use is more prevalent in urban area. This demonstrates the structural difference of mobile markets in Urban and Rural area Mobile Industry:The Indian telecom industry saw a rapid development phase after involvement of the private sector in 1993-94. Mobile services were launched in India in 1998 with two private operators. An independent telecom regulatory authority Telecom Regulatory Authority of India was formed in 1997 to regulate the sector erstwhile regulated by Department of Telecommunications. The sector has witnessed various policy interventions in the past decade, which have influenced its growth in many ways. Based on past affects future influences can be analyzed as represented in the causal loop diagram in Fig.. Government policies and regulations will influence the mobile operators to Improve service versatility and technology diffusion for example introduction of 3G Technology is expected to lead to a rise in the number of mobile users. Similar trend was observed in year 2001 with the introduction of WLL, which resulted in a rise in mobile subscriber base. (Figure 2) Reduce the price of service, which will lead to a rise in the subscriber base. As the prices of mobile services started falling after TRAI intervention in March 99, there was a rise in number of mobile users as the potential user base increased. Improve the quality of service, by defining standards on acceptable call dropping rates, congestion, signal strength etc. It can be inferred intuitively that such an effort would attract an increasing number of subscribers.

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Government policies aimed at Universal access will positively influence (increase) the number of potential mobile. Government policies related to the Mobile Terminal Industry (MTI) will play an important role in the mobile diffusion. A reduction in the cost of handset will increase the number of potential as well as actual mobile users. MTI industry can be influenced either by bringing down import duties or promoting domestic industries. In India the domestic manufacturing/assembling capacity is very low whereas it is perceived to be a very good market to MTIs.

M-Banking as a means of M-commerce:There are broadly three categories of m-banking systems, 1. Bank driven Here, bank hires a vendor and provides the service to only its customers at negligible or no costs. Leaders ICICI, Citibank, HDFC, SBI. The mode of payment is through account transfers from the customers account to the sellers accounts (usually through a third party secured transaction channel like VeriSign, etc) 2. Telecom service provider driven Here, the telecom service providers use their network and user connections to enable the users pay through partners banks, either through an inbuilt portal on the phone or in the network applications. Leaders Airtel, Vodafone, etc 3. Third party driven In this model usually a third party vendor collaborates with multiple banks and provides services like account transfers across various services, to the customers, usually independent of the cellular service provider. Leaders ngpays, empays, etc. recently, Nokia has decided to provide such a service through its vast operations in India.

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Miscellaneous Services as a part of M-commerce:1. Entertainment a. Games b. Wall papers c. Ring tones d. Chat servers e. Caller tunes f. TV clips g. Voting for entertainment channel programs, etc

2. Business a. Stock market updates b. News updates c. Travel updates, etc d. Promotional i. Advertisements ii. Mobile coupons iii. earn by viewing ad promotions iv. Information about promotional events, etc 3. Education - Updates about admission procedure 4. Miscellaneous SMS based social networking (interactive, and not static like other entertainment modes) The above services are examples of service provider using the mobile phone usage charge (prepaid deposit or post-paid billing) for providing commercial services. Here, the content may be through a third party, but billing is essentially taken care of by the telecommunications service provider.

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The Process for m-commerce:The process of m-commerce involves several entities such as mobile device, banks, mobile network operators, IMPS, etc. This report explores two different models which are sufficiently but not comprehensively analyzed in the forth coming sections. The models assume the various entities as a set of roles/responsibilities and distinguish between them on the basis of the functions they perform. There may be several other classifications via various combinations of the functions other than what have been proposed below.

Debit Model
Following is a preliminary flow of transactions between a remitter and a beneficiary using M-commerce, highlighting the flow of data and the various independent entities having partial or complete access to the data:

Credit Model
The same process can also be viewed in a different manner wherein, the payments are instantaneously done with or without the presence of a communication technology to connect to the respective banks. This model is specifically useful for areas with a low or intermittently available network/cellular infrastructure (such as rural areas in India which cant boast of a communication infrastructure as comparable to the urban areas).

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The mobile Device User:For the purpose of this report, the role of mobile device user will be analyzed from the point of view of a remitter/beneficiary in a payment transaction with a recognized (recognized by RBI as a legal recipient/sender) third party and the associated scope of activities. The various m-banking practices that are more of an information transfer between the bank and the user will not be emphasized upon, unless directly involved in the process of the transaction. Also, activities in which the user is making a payment/receiving a payment to/from the home bank (the bank in which the user has an account) or the foreign bank (any other nationalized bank that holds a banking license) will not be considered.

Needs and Usage

1. Payments a. Remittance of amount for a real time purchase. E.g. shopping an article from a retail outlet, buying vegetables from the grocery store, tea from a road side tea vendor, purchase from a tourist spot seller, etc i. Ideal real time transaction would relate to an instantaneous, zero delay in the transfer of relevant amounts ii. Ideal universality of payments would relate to being able to make payments to each and every legal entity with an MMID as far as the scope of this report is concerned b. Transfer of amounts from the user to another individual person, whether in person or remotely i. Ideal situation would be a transfer to any person associated with an MMID c. Payments towards bills, insurance amounts, etc (especially for concepts like micro insurances, toll charge bills, local transport tickets and other such services) i. Ideal situation would be to automatically, periodically complete these payments on a single click of a button ii. Ideal payment process would be consolidation of all such bills in a single list with minimum views required to get into the details d. Payment towards digital purchases like ticket (travelling, movies) booking, music download, e-book downloads, OTA (over the air) installations, etc

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Costs
a. Minimum fee for availing m-commerce services b. Uniform fee structure across any bank, any MNO or any device as far as mcommerce activities are concerned c. Minimum/negligible fee per transaction

Quality of Service requirements:a. Instantaneous, 24x7 operation b. Ability to transact seamlessly whether in roaming or home network c. To reiterate again and again just to emphasize, complete confidentiality, privacy and security for every transaction attempted, and guarantee that every such transaction completes in an expected fashion

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The Telecom Infrastructure:For the purpose of this report, it will be assumed that 1. The Mobile Network Operators (MNOs) are solely responsible for providing the connectivity from a mobile device to a bank 2. The MNOs are only those entities which have been given the licens e by TRAI for using spectrum to provide GSM, CDMA, 3G, 4G, LTE or BWA based services and are recognized by TRAI as the legal users of this spectrum license 3. The MNOs are providing a complete path for the data to flow from a mobile device to the bank, and may or may not be responsible for aggregating this data internally or through out-sourcing to a third party IT service provider. 4. The MNOs infrastructure services will be available for such a commercial use only if it is allowed by (in the descending order of authority) a. TRAI b. RBI

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The Road Ahead:So far, the models used for m-commerce across various nations (models like Airtel Semi wallet, Bank of Ethans Wizzit services in South Africa, m-Pesa in Kenya, etc) are essentially debit systems which transfer money from one account to another in real time. Such systems have flourished due to supports by regulatory bodies across various nations who were very skeptical about using credit model in the m-commerce system. However, with the advent of highly secured SIM tool kits, Near Field Communication (NFC) (16) systems and real time network transmissions; theres a possibility that a mobile device may assume the role of a banks branch and perform the credit/debit services independently of the bank itself. Another possibility would be the presence of a complete debit model wherein, the MNOs serve the role of an MPSP, bank and IMPS if the regulations allow such a scenario. Nonetheless, the RBIs push to promote m-banking for financial inclusion, and thus inherently m-commerce; MNOs push to mobile services in financial tran sactions to leverage their data services and the users desire to simplify all the operations into a single click on a mobile device will be the key drivers that will decide the future of how fast m-commerce can spread across the masses. There will always be an inherent need to ensure a secured and fraud-proof environment and it will be possible only when all the stakeholders come together with this common purpose.

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Literacy rate of Rural Area and Urban Area:Literacy in India:Literacy in India is key for socio-economic progress,[1] and the Indian literacy rate grew to 74.04% in 2011 from 12% at the end of British rule in 1947.[2][3] Although this was a greater than six fold improvement, the level is well below the world average literacy rate of 84%, and India currently has the largest illiterate population of any nation on earth. Despite government programs, India's literacy rate increased only "sluggishly, and a 1990 study estimated that it would take until 2060 for India to achieve universal literacy at then-current rate of progress. The 2011 census, however, indicated a 2001-2011 decadal literacy growth of 9.2%, which is the slower than the growth seen during the previous decade.

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There is a wide gender disparity in the literacy rate in India: effective literacy rates (age 7 and above) in 2011 were 82.14% for men and 65.46% for women. The low female literacy rate has had a dramatically negative impact on family planning and population stabilization efforts in India. Studies have indicated that female literacy is a strong predictor of the use of contraception among married Indian couples, even when women do not otherwise have economic independence. The census provided a positive indication that growth in female literacy rates (11.8%) was substantially faster than in male literacy rates (6.9%) in the 2001-2011 decadal period, which means the gender gap appears to be narrowing.

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Indian states ranking by literacy rate:Although schooling is free and compulsory from 614 years of age, facilities are inadequate and often totally lacking. Approximately 40% of students, mostly girls, drop out by secondary school ... it is estimated that by the year 2020 over 50% of the illiterate population will live in India. The table below shows the adult and youth literacy rates for India and some neighboring countries in 2002.Adult literacy rate is based on the 15+ years age group; while Youth literacy rate is for the 1524 years age group (i.e. youth is a subset of adults).
Country Adult Literacy Rate Youth Literacy Rate

China

95.9% (2009)

99.4% (2009)

Sri Lanka

90.8 (2007)

98.0

Burma

89.9% (2007)

94.4% (2004)

Iran

82.4% (2007)

95% (2002)

World Average 84% (1998)

88% (2001)

India

74.04% (2011)

82% (2001)

Nepal

56.5% (2007)

62.7%

Pakistan

62.2% (2007)

73.9% (2010)

Bangladesh

53.5% (2007)

74%

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Reasons for Low Literacy Rate:The absence of adequate school infrastructure like improper facilities and inefficient teaching staff is one of the main factors affecting literacy in India. There is a shortage of 6lakh classrooms to accommodate all the students in 2006-2007 In addition, there is no proper sanitation in most schools. The study of 188 government-run primary schools in central and northern India revealed that 59% of the schools had no drinking water facility and 89% no toilets. A Public Report On Basic Education (PROBE) team did surveys and reported that India had very poor infrastructure in 1999 and a 25% rate of teachers being absent from school on any particular day in 2005. In 600,000 villages and multiplying urban slum habitats, free and compulsory education is the basic literacy instruction dispensed by barely qualified Para teachers. The average Pupil Teacher Ratio for All India is 1:42, implying teacher shortage. Such inadequacies resulted in a non-standardized school system where literacy rates may differ. Furthermore, the expenditure allocated to education was never above 4.3% of the GDP from 1951-2002 despite the target of 6% by the Kothari Commission.This further complicates the literacy problem in India. Severe caste disparities also exist. Discrimination of lower castes has resulted in high dropout rates and low enrolment rates. The National Sample Survey Organization and the National Family Health Survey collected data in India on the percentage of children completing primary school which are reported to be only 36.8% and 37.7% respectively. On 21 February 2005, the Prime Minister of India said that he was pained to note that only 47 out of 100 children enrolled in class I reach class VIII, putting the dropout rate at 52.78 per cent. It is estimated that at least 35 million, and possibly as many as 60 million, children aged 614 years are not in school. Absolute poverty in India has also deterred the pursuit of formal education as education is not deemed of as the highest priority among the poor as compared to other basic necessities. The MRP-based (mixed recall period) poverty estimates of about 22% of poverty in 2004-05 which translated to 22 out of per 100 people are not meeting their basic needs, much less than meeting the need for education. The large proportion of illiterate females is another reason for low literacy in India. Inequality based on gender differences resulted in female literacy rates being lower at 65.46% than that of their male counterparts at 82.14%.Due to strong stereotyping of female and male roles, Sons are thought of to be more useful and hence are educated. Females are pulled to help out on agricultural farms at home as they are increasingly
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replacing the males on such activities which require no formal education. Fewer than 2% of girls who engaged in agriculture work attended school.

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Growth of literacy
The British Period

43

Literacy in India grew very slowly until independence in 1947. An acceleration in the rate of literacy growth occurred in the 1991-2001 period. Prior to the British era, education in Indian commenced under the supervision of a guru in traditional schools called gurukuls.The Gurukuls were supported by public donation and were one of the earliest forms of public school offices. In the colonial era, the gurukul system began to decine as the system promoted by the British began to gradually take over. Between 1881-82 and 194647, the number of English primary schools grew from 82,916 to 134,866 and the number of students in English Schools grew from 2,061,541 to 10,525,943. Literacy rates in accordance to British in India rose from 3.2 per cent in 1881 to 7.2 per cent in 1931 and 12.2 per cent in 1947. In 2000-01, there were 60,840 pre-primary and pre-basic schools, and 664,041 primary and junior basic schools. Total enrollment at the primary level has increased from 19,200,000 in 1950-51 to 109,800,000 in 2001-02. The number of high schools in 200001 was higher than the number of primary schools at the time of independence. In 1944, the Government of British India presented a plan, called the Sergeant Scheme for the educational reconstruction of India, with a goal of producing 100% literacy in the country within 40 years, i.e. by 1984. Although the 40 year time-frame was derided at the time by leaders of the Indian independence movement as being too long a period to achieve universal literacy, India had only just crossed the 74% level by the 2011 census.

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Post Independence
The provision of universal and compulsory education for all children in the age group of 6-14 was a cherished national ideal and had been given overriding priority by incorporation as a Directive Policy in Article 45 of the Constitution, but it is still to be achieved more than half a century since the Constitution was adopted in 1949. Parliament has passed the Constitution 86th Amendment Act, 2002, to make elementary education a Fundamental Right for children in the age group of 614 years. In order to provide more funds for education, an education cess of 2 per cent has been imposed on all direct and indirect central taxes through the Finance (No. 2) Act, 2004. The literacy rate grew from 18.33 per cent in 1951, to 28.30 per cent in 1961, 34.45 per cent in 1971, 43.57 per cent in 1981, 52.21 per cent in 1991, 64.84 per cent in 2001 and 74.04 per cent in 2011.During the same period, the population grew from 361 million to 1,210 million.

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Literacy rate variations between states

46

The literacy rates of different Indian states in 2001 and 2011.

Main article: Indian states ranking by literacy rate

Kerala is the most literate state in India, with almost 100% literacy, followed closely by Lakshadweep at 92.28%. Bihar is the least literate state in India with 63.82% literacy. Several other social indicators of the two states are correlated with these rates, such as life expectancy at birth (71.61 for males and 75 for females in Kerala, 65.66 for males and 64.79 for females in Bihar), infant mortality per 1,000 live births (10 in Kerala, 61 in Bihar), birth rate per 1,000 people (16.9 in Kerala, 30.9 in Bihar) and death rate per 1,000 people (6.4 in Kerala, 7.9 in Bihar). Every census since 1881 had indicated rising literacy in the country, but the population growth rate had been high enough that the absolute number of illiterates rose with every decade. The 2001-2011 decade is the second census period (after the 1991-2001 census period) when the absolute number of Indian illiterates declined (by 31,196,847 people), indicating that the literacy growth rate is now outstripping the population growth rate. Bihar is the only remaining Indian state in the 2011 census where less than 65% of the population was literate. It is also only one of two states where less than 75% of the male population (the other being Arunachal Pradesh) was literate and only one of two states where less than 55% of the female population (the other being Rajasthan) was literate.[39] Six Indian states account for about 70% of all illiterates in India: Uttar Pradesh, Bihar, Madhya,Pradesh, Rajasthan, AndhraPradesh and WestBengal. Slightly less than half of all Indian illiterates (48.12%) are in the six Hindi-speaking states of Uttar Pradesh, Bihar, Rajasthan, Madhya Pradesh, Jharkhand and Chhattisgarh. Large variations in literacy exist even between contiguous states. While there are a few states at the top and bottom, most states are just above or below the national average.

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Learnings from state literacy efforts in India

Several states in India have executed successful programs to boost literacy rates. Over time, a set of factors have emerged as being key to success: official will to succeed, deliberate steps to engage the community in administering the program, adequate funding for infrastructure and teachers, and provisioning additional services which are considered valuable by the community (such as free school lunches).

Bihar literacy challenges

Bihar has significantly raised the literacy rate as per the 2011 census. The literacy rate has risen from 39% in 1991 to 47% in 2001 to 63.8% in 2011 .The Government of Bihar has launched several programs to boost literacy, and its Department of Adult Education even won a UNESCO award in 1981. Extensive impoverishment, entrenched hierarchical social divisions and the lack of correlation between educational attainment and job opportunities are often cited in studies of the hurdles literacy programs face in Bihar. Children from "lower castes" are frequently denied school attendance and harassed when they do attend. In areas where there is no discrimination, poor funding and impoverished families means that children often cannot afford textbooks and stationery. When children do get educated, the general lack of economic progress in the state means that government jobs are the only alternative to farm labor, yet these jobs, in practice, require bribes to secure - which poorer families cannot afford. This leads to educated youths working on the farms, much as uneducated ones do, and leads parents to question the investment of sending children to school in the first place. Bihar's government schools have also faced teacher absenteeism, leading the state government to threaten withholding of salaries of teachers who failed to conduct classes on a regular basis. To incentivize students to attend, the government announced a Rupee 1 per school-day grant to poor children who show up at school.

Kerala literacy successes

Kerala has the highest literacy rate among the states of India, followed by the state of Mizoram. Kerala topped the Education Development Index (EDI) among 21 major states in India in year 2006-2007.[143] More than 94% of the rural population has access to primary school within 1 km, while 98% of population benefits one school within a distance of 2 km. An upper primary school within a distance of 3 km is available for more than 96% of the people, whose 98% benefit the facility for secondary education
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within 8 km. The access for rural students to higher educational institutions in cities is facilitated by widely subsidized transport fares. Kerala's educational system has been developed by institutions owned or aided by the government. In the educational system prevailed in the state, schooling is for 10 years which is subdivided into lower primary, upper primary and high school. After 10 years of secondary schooling, students typically enroll in Higher Secondary Schooling in one of the three major streamsliberal arts, commerce or science. Upon completing the required coursework, students can enroll in general or professional undergraduate programmed. Kerala undertook a "campaign for total literacy" in Ernakulum district in the late 1980s, with a "fusion between the district administration headed by its Collector on one side and, on the other side, voluntary groups, social activists and others". On February 4, 1990, . The Government of Kerala then replicated the initiative on a statewide level, launching the Kerala State Literacy Campaign. First, households were surveyed with door-to-door, multistage survey visits to form an accurate picture of the literacy landscape and areas that needed special focus. Then, Kala Jthas (cultural troupes) and Sksharata Pada Ytras (Literacy Foot Marches) were organized to generate awareness of the campaign and create a receptive social atmosphere for the program. An integrated management system was created involving state officials, prominent social figures, local -officials and senior voluntary workers to oversee the execution of the campaign .

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Himachal Pradesh literacy successes

Strong government action and community support made Himachal Pradesh one of India's most literate states by 2001 Himachal Pradesh underwent a "Schooling Revolution" in the 1961-2001 period that has been called "even more impressive than Kerala's." Keralahas led the nation in literacy rates since the 19th century and seen sustained initiatives for over 150 years, whereas Himachal Pradesh literacy rates in 1961 were below the national average in every age group. In the three decadal 1961-1991 period, female literacy in the 1519 years age group went from 11% to 86%. School attendance for both boys and girls in the 6-14 year age group stood at over 97% each when measured in the 1998-99 school year. A key factor that has been credited for these advances is Himachal's cultural background. Himachal Pradesh is a Himalayan state with lower social stratification than many other states, which enables social programs to be carried out more smoothly. Once the Government of Himachal Pradesh was able to establish a social norm that "schooling is an essential part of every child's upbringing ," literacy as a normal attribute of life was adopted very rapidly. Government efforts in expanding schools and providing teachers were sustained after the 1960s and communities often responded very
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collaboratively, including with constructing school rooms and providing firewood essential during the Himalayan winters.

Mizoram literacy successes

Mizoram is the second most literate state in all of India, second only to Kerala, with Serchhip and Aizawl districts being the two most literate districts in India (literacy rate is 98.76% and 98.50%),both in Mizoram Mizoram's literacy rate rose rapidly after independence: from 31.14% in 1951 to 88.80% in 2001. As in Himachal Pradesh, Mizoram has a social structure that is relatively free of hierarchy and strong official intent to produce total literacy. The government identified illiterates and organized an administrative structure that engaged officials and community leaders, and manned by "animators" who were responsible for teaching five illiterates each. Mizoram established 360 continuing education centers to handle continued education beyond the initial literacy teaching and to provide an educational safety net for school dropouts.

Tamil Nadu literacy successes

Tamil Nadu is the most literate state of India according to the HRD ministry of India's 2003 statistics. One of the pioneers of the scheme is the Madras that started providing cooked meals to children in corporation schools in the Madras city in 1923.The programmed was introduced in a large scale in 1960s under the Chief Minister ship of K. Kama raj. The first major thrust came in 1982 when Chief Minister of Tamil Nadu, Dr. M. G. Ramachandran, decided to universalize the scheme for all children up to class 10.Tamil Naidus midday meal programmed is among the best known in the country. Starting in 1982, Tamil Nadu took an approach to promoting literacy based on free lunches for schoolchildren, "ignoring cynics who said it was an electoral gimmick and economists who said it made little fiscal sense." The then chief minister of Tamil Nadu, MGR launched the program, which resembled a similar initiative in 19th century Japan, because "he had experienced as a child what it was like to go hungry to school with the family having no money to buy food". Eventually, the program covered all children under the age of 15, as well as pregnant women for the first four months of their pregnancy. Tamil Nadu's literacy rate rose from 54.4% in 1981 to 80.3% in 2011. In 2001, the Supreme Court of India instructed all state governments to implement free school lunches in all government-funded schools, but implementation has been patchy due to corruption and social issues. Despite these hurdles, 120 million receive free lunches in Indian schools every day, making it the largest school meal program in the world.
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Rajasthan literacy successes

Although the decadal rise from 2001-11 was only 7% (60.4% in 2001 to 67.1% in 2011)Rajasthan had the biggest percentage decadal (19912001) increase in literacy of all Indian states, from about 38% to about 61%, a leapfrog that has been termed "spectacular" by some observers. Aggressive state government action, in the form of the District Primary Education Programmed, theShiksha Karmi initiative and the Lok Jumbish programme, are credited with the rapid improvement. Virtually every village in Rajasthan now has primary school coverage. When statehood was granted to Rajasthan in 1956, it was the least literate state in India with a literacy rate of 18%.

Social commentary
In his essay on Social Infrastructure As Important As Physical Infrastructure published in India Development Report 2002, Kirit S. Parikh had pointed out, With a literacy rate of 65, we have 296 million illiterates, age seven years and above, as per the 2001 census. The number of illiterates today exceeds the population of the country of around 270 million at Independence, age seven and above. In his book The Argumentative Indian, Amartya Sen notes, on the basis of investigations by Pratichi Trust, set up with the proceeds of his Nobel award, carried out in West Bengal and Jharkhand, that absenteeism of comparatively well-paid teachers, particularly where bulk of the students come from scheduled castes and tribes, poses a major problem. Students are circumstantially forced to go in for private tuitions. He concludes, Sometimes the very institutions that were created to overcome disparities and barriers have tended to act as reactionary influences in reinforcing inequality... The teachers unions, which have a very positive role to play in protecting the interests of teachers and have played that part well in the past, are often are turning into an influence that reinforces the neglect of the interests of children from desperately underprivileged families. There is evidence of hardening of class barriers that separate the newly affluent teachers from the impoverished rural poor.

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Literacy efforts
The right to education is a fundamental right, and UNESCO aims at education for all by 2015. India, along with the Arab states and sub-Saharan Africa, has a literacy level below the threshold level of 75%, but efforts are on to achieve that level. The campaign to achieve at least the threshold literacy level represents the largest ever civil and military mobilization in the country. International Literacy Day is celebrated each year on 8 September with the aim to highlight the importance of literacy to individuals, communities and societies.

Government schemes
National Literacy Mission
The National Literacy Mission, launched in 1988, aimed at attaining a literacy rate of 75 per cent by 2007. It imparts functional literacy to non-literates in the age group of 1535 years. The Total Literacy Campaign is the principal strategy of the NLM for eradication of illiteracy. The Continuing Education Scheme provides a learning continuum to the efforts of the Total Literacy and Post literacy programmes.

Sarva Siksha Abhiyan

The Sarva Siksha Abhiyan (Hindi for Total Literacy Campaign) was launched in 2001 to ensure that all children in the 614 year age-group attend school and complete eight years of schooling by 2010. An important component of the scheme is the Education Guarantee Scheme and Alternative and Innovative Education, meant primarily for children in areas with no formal school within a one kilometre radius. The centrally sponsored District Primary Education Programme, launched in 1994, had opened more than 160,000 new schools by 2005, including almost 84,000 alternative schools.

Non-governmental efforts
The bulk of Indian illiterates live in the country's rural areas, where social and economic barriers play an important role in keeping the lowest strata of society illiterate. Government programmes alone, however well intentioned, may not be able to dismantle barriers built over centuries. Major social reformation efforts are sometimes required to

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bring about a change in the rural scenario. Several non-governmental organizations such as ITC, Rotary Club, Lions Club have worked to improve the literacy rate in India.

Mamidipudi Venkatarangaiya Foundation

Shantha Sinha won a Magsaysay Award in 2003 in recognition of "her guiding the people of Andhra Pradesh to end the scourge of child labour and send all of their children to school." As head of an extension program at the University of Hyderabad in 1987, she organized a three-month-long camp to prepare children rescued from bonded labour to attend school. Later, in 1991, she guided her familys Mamidipudi Venkatarangaiya Foundation to take up this idea as part of its overriding mission in Andhra Pradesh. Her original transition camps grew into full-fledged residential "bridge schools." The foundation's aim is to create a social climate hostile to child labour, child marriage and other practices that deny children the right to a normal childhood. Today the MV Foundations bridge schools and programs extend to 4,300 villages.

Definition of literacy
The United Nations Educational, Scientific and Cultural Organization (UNESCO) has drafted a definition of literacy as the "ability to identify, understand, interpret, create, communicate, compute and use printed and written materials associated with varying contexts. Literacy involves a continuum of learning in enabling individuals to achieve their goals, to develop their knowledge and potential, and to participate fully in their community and wider society." The National Literacy Mission defines literacy as acquiring the skills of reading, writing and arithmetic and the ability to apply them to one's day-to-day life. The achievement of functional literacy implies (i) (ii) self-reliance in 3 R's, (ii) awareness of the causes of deprivation and the ability to move towards amelioration of their condition by participating in the process of development, acquiring skills to improve economic status and general well being, and Imbibing values such as national integration, conservation of environment, women's equality, observance of small family norms.
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(iii) (iv)

The working definition of literacy in the Indian census since 1991 is as follows:

Literacy rate: The total percentage of the population of an area at a particular time aged seven years or above who can read and write with understanding. Here the denominator is the population aged seven years or more.

Crude literacy rate: The total percentage of the people of an area at a particular time aged seven years or above who can read and write with understanding, taking the total population of the area (including below seven years of age) as the denominator.

55

Comparison of IT infrastructure of rural and urban area:-

Mobile commerce catching up in non-urban areas

NEW DELHI : Online purchasing through mobile phones is catching up fast in non-urban and rural area

According to e-Commerce firm eBay India, the ratio between rural and urban buyers would be 1:10 right now but it may go up to 6:10 over next two years.

56

NEW DELHI :

Online purchasing through mobile phones is catching up fast in non-urban and rural areas. According to e-Commerce firm eBay India, the ratio between rural and urban buyers would be 1:10 right now but it may go up to 6:10 over next two years.
NET PENETRATION

Internet penetration along with the growth in smart phones and tablets has led mobile commerce (m-Commerce) to take off in India, it said. It is also becoming important for consumers who are using their mobile phone as a window to transact anytime and anywhere. The company conducted a survey in May with over 4,500 eBay India users and found out that 94 per cent of them access the Internet on their mobile phones. Over 87 per cent of the users compare product prices online and 68 per cent of them have made online purchase using their smart phones, Kashyap Vadapalli, Chief Marketing Officer, eBay India, told Business Line. He said this behavior will increase in India with the power of shopping on a palm in pocket leading to growth from smaller towns and cities as well. Many of these smart phone users (80 per cent) are also connected to social networking sites such as Face book or Twitter, who end up purchasing products through advertisements on those sites, he said. There are 120 million Internet users in India today, out of which, 20 million users are through smart phones and tablet computers. We expect 100 per cent growth over the next one year with the number of such devices growing everyday, he said.
ECOMMERCE REVENUE

According to independent research firm Forrester, e-Commerce revenue in India will increase from $1.6 billion in 2012 to $8.8 billion by 2016. Venture capitalists are also bullish on e-Commerce growth, which invested $177 million in India last year. Social media and mobile are helping accelerate e-Commerce adoption, it added.

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Mobile subscribers worldwide At the end of 2011, there were 6 billion mobile subscriptions , estimates The International Telecommunication Union (2011). That is equivalent to 87 percent of the world population. And is a huge increase from 5.4 billion in 2010 and 4.7 billion mobile Mobile subscribers in the developed world has reached saturation point with at least one cell phone subscription per person. This means market growth is being driven by demand developing world, led by rapid mobile adoption in China and India, the world's At the end of 2011 there were 4.5 billion mobile subscriptions in the developing world (76 percent of global subscriptions). Mobile penetration in the developing world now is 79 percent, with Africa being the lowest region worldwide at 53 percent. Portio Research in the excellent free Mobile Factbook 2012 predicts that mobile subscribers worldwide will reach 6.5 billion by the end of 2012, 6.9 billion by the end of 2013 and 8 billion by the end of 2016. Portio research estimates that Asia Pacifics share of the mobile subscribers will rise from 50.7 percent in 2011 to 54.9 percent in 2016. By 2016 Africa and Middle East will overtake Europe as the second largest region for mobile subscribers Africa. Ericsson (June 2012) believes global mobile penetration reached 87 percent in Q1 2012 and mobile subscriptions now total around 6.2 billion. However, the actual number of subscribers is around 4.2 billion, since many people have several subscriptions. There is a large difference between the number of subscriptions and subscribers. This is due to the fact that many subscribers have several subscriptions. Reasons for this could include users lowering their traffic cost by using optimized subscriptions for different types of calls, maximizing coverage, having different subscriptions for mobile PCs/tablets and for mobile phones. In addition, it takes time before inactive subscriptions are removed from operator databases. Consequently, subscription penetration can easily reach above 100 percent, which is the case in many countries today. It should however be noted that in some developing regions, it is common for several people to share one subscription, having for example a family or village phone. Ericsson forecasts that mobile subscriptions will reach 9 billion in 2017, of which 5 billion will be mobile broadband connections.

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For all stats and analysis on Mobile Web and mobile broadband:Key Global Telecom Indicators for the World Telecommunication Service Sector in 2011 (all figures are estimates) Ara Develop Developi Glob b ed ng Africa al Sta nations nations tes Mobile cellular subscriptio 5,981 1,461 ns (millions) Per 100 people Fixed telephone lines (millions) Per 100 people 86.7 % Asia & CIS Pacif ic

Europ The e Americas

4,520

433

349 2,897 399

741

969

117.8%

78.8%

53.0%

96.7 73.9 % %

143.0 119.5 % %

103.3%

1,159 494

665

12

35

511

74

242

268

16.6 %

39.8%

11.6%

1.4%

9.7 13.0 % %

26.3 %

39.1% 28.5%

Active mobile broadband 1,186 701 subscriptio ns (millions)

484

31

48

421

42

336

286

59

Per 100 people

17.0 %

56.5%

8.5%

3.8%

13.3 10.7 % %

14.9 %

54.1% 30.5%

Fixed broadband subscriptio 591 ns (millions) per 100 people

319

272

243

27

160

145

8.5% 25.7%

4.8%

0.2%

2.2 6.2% 9.6% 25.8% 15.5% %

Source: International Telecommunication Union (November 2011)

via: mobiThinking

Mobi Thinking note: Mobile subscriptions outnumber fixed lines 5:1 (more so in developing nations); Mobile broadband outnumbers fixed broadband 2:1. With stats like this, it is easy to see why the experts predict that mobile Web usage will overtake PC-based Web usage. This will happen more quickly in developing nations (if it isnt happening already) where fixed Web penetration remains low. In developed nations, this will happen more slowly. IDC believes that mobile Web usage will not overtake PC Web usage in the US until 2015. Regardless of the timescale, this inevitability makes your mobile Web strategy more important than your PC Web strategy.

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Top mobile markets 30 percent of the worlds mobile users live in India and China. As of March 2012, there are now more than a billion subscribers in China, with India not far behind. Both dwarf the number of subscribers in third place USA. China: 1,023.7 million subscribers 76 percent of population in April 2012 (see table below for operator breakdown), 159.3 million of these are 3G users. India: 919.2 million subscribers in March 2012 (TRAI, May 2012) 75 percent of population. 65 percent of mobile subscribers are urban dwellers. USA: 331.6 million subscribers (105.8 percent of population) in November 2011 (CTIA).

Mobile subscribers in China by operator April 2012 Operator China Mobile China Unicom China Telecom Total Subscribers 672.4 million 212.7 million 138.5 million 1,023.7 million 3G users 61.9 million 51.8 million 45.6 million 159.3 million

Sources: China Mobile; China Unicom; China Telecom via: mobiThinking

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China: 1 billion mobile subscribers, 400 million mobile Web users and No1 smart phone market

We had more than 425 million mobile monthly active users in December 2011. In 2011, mobile usage of Face book increased in markets around the world, including major developed markets such as the United States where smart phone penetration grew rapidly Improving our mobile products and increasing mobile usage of Face book are key company priorities that we believe are critical to help us maintain and grow our user base and engagement over the long term. We expect consumers around the world will continue to increase the amount of time they spend and the information they share and consume through mobile devices. Face book IPO statement (February, 2012).

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Widely used application of M-commerce via particular sector:Mobile device shipments a) There were 11.1 percent more mobile devices sold in 2011 compared to 2010. IDC (February 2012): 1,546 million handsets were sold in 2011, up 11.1 percent compared with 2010. Gartner (February 2012): 1,775 million handsets were sold in 2011, up 11.1 percent compared with 2010. Gartner (February 2012): predicts mobile device sales will grow by 7 percent in 2012, while smart phone growth is expected to slow to 39 percent. Strategy Analytics (February 2012): 1,551.4 million handsets were sold in 2011, up 14 percent compared with 2010. These figures include feature phones (68-69 percent of handsets sold in 2011) and smart phones (31-32 percent of handsets sold in 2011). Smartphone sales are broken out below. Top ten mobile phone manufacturers, by 2011 global sales according to Gartner Mar ket shar e 201 1 Mar ket shar e 201 0

Top five mobile phone manufacturers, by 2011 global sales according to IDC

Shipme nts Vendo 2011 r (millio ns)

Shipme nts 2010 (millio ns)

Shipme nts Vendo 2011 r (millio ns)

Mar ket shar e 201 1

Shipme nts 2010 (millio ns)

Mark et share 2010

Annu al grow th

Nokia

422.4

23.8 461.3

28.9

Nokia

417.1

27.0 453.0 % 21.3 280.2 %

32.6% -7.9%

Samsu 313.9 ng

17.7 281.0 %

17.6 %

Samsu 329.4 ng

20.1%

17.6 % 96.2 %

Apple

89.2

5.0% 46.5

2.9%

Apple

93.2

6.0% 47.5

3.4%

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LG Electro 86.4 nics

4.9% 114.1

7.1%

LG Electro 88.1 nics

5.7% 116.7

8.4%

24.5 % 30.9 % 24.5 %

ZTE

56.9

3.2% 29.6

1.9%

ZTE

66.1

4.3% 50.5

3.6%

RIM

51.5

2.9% 49.6

3.1%

Others 552.1

35.7 443.6 %

31.9%

HTC

43.2

2.4% 24.6 2.3% 23.8

1.5% 1.5%

Huawei 40.6 Motorol 40.2 a Sony Ericsso 32.5 n

2.3% 38.5

2.4%

1.8% 41.8

2.6%

Others 597.3

33.7 485.4 % 100 %

30.4 % 100 % 100 % 11.1 %

Total

1,775

1,597

Total

1,546

1,391.5 100%

Source: Gartner (Feb 2012)

Source: IDC (Feb 2012)

via:mobiThi nking

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 MobiThinking note:

Mobile phone sales stats are often confused with handset market penetration. The breakdown of handsets sold in a given period is not a very accurate indication of what handsets people are actually using, as most people retain the same handset for 18 months, 24 months (depending on their contract) or longer. Thats why you wont find quarterly sales stats here they can be very misleading. Yearly sales give a better indication of market penetration, but looking at sales over a two or even three years provides a more accurate picture.

Mobile device market penetration In the absence of research based on sales of handsets, the best indication of mobile device market penetration is research based on surveys of consumers. There are no global figures surveys are only conducted in a few of the most developed mobile markets. While survey data is useful, it should be noted that these figures are based on the responses of a few thousand people in markets of 30-330 million mobile subscribers, and thus should only be considered as estimates of market penetration. Com Score (Q4 2011): The top device manufacturer by market penetration in Western Europe is Nokia, in the US is Samsung and in Japan is Sharp. Com Score (Q4 2011) estimates that in UK and Spain smart phones now outnumber feature phones (which is remarkable considering that smart phones were 31-32 percent of handsets sold in 2011). Smartphone market penetration are broken out by manufacturer and operating system below. The estimates below are based surveys conducted Com Score in Q4 2011.

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Top mobile manufacturers, by market penetration, Q4 2011, according to ComScore USA Canada Japan Germany UK Nokia 29.1% Nokia 24.4% France Spain Italy Nokia 43.8%

Samsung Samsung Sharp 25.3% 24.3% 24.4% LG 20.0% LG 18.8%

Samsung Nokia 37.9% 40.7%

Panasonic Samsung 13.6% 24.3% Fujitsu 11.5% Sony Eric 13.5%

Samsung Nokia 19.9% 18.5% Apple 13.6% Apple 10.1%

Samsung Samsung 20.4% 24.2% Sony Eric LG 7.2% 8.4%

Motorola RIM 13.3% 14.8%

Proportion of subscribers with a smartphone, Q4 2011, according to ComScore 41.8% N/A 17% 37.0% 51.3% 40.0% 51.0% 43.9%

Source: ComScore (February 2012)

Survey group: 24,000

via: mobiThinking

"Mobile handsets are in an excellent position to become the primary digital channel for providers of banking and related financial services in emerging markets

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Smartphone shipments by operating system market share Android is the top operating system for new smartphones sold in 2011. Canalys (February 2012): 48.8 percent of smartphones shipped in 2011, shipped with Googles free Android OS. Canalys points out that smartphones now outsell PCs. Previously Nokia was the leader in smartphones, until its surprise decision to drop its Symbian OS in 2011 Worldwide smart phone market, by operating system, by 2011 global sales according to Canalys Shipments 2011 Market share 2011 Annual growth (millions) 237.7 93.1 80.1 51.4 13.2 6.8 5.4 487.7 48.8% 19.1% 16.4% 10.5% 2.7% 1.4% 1.1% 100% 244% 96% -29.1% 5.0% 183.1% -43.3% 14.4% 62.7% via: mobiThinking

Operating System

Android iOS Symbian BlackBerry Bada Windows Phone Others Total

Source: Canalys (Feb 2011)

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China Mobile is the largest mobile operator in the world by subscribers and revenues: For this research Portio looked at the mobile operator groups and calculated the proportional number of subscribers across the whole group, taking into account that some operators only had part shares in some of their subsidiaries. Notably, while groups such as Vodafone, America Movil and Telefonica span many operators in many countries, China Mobiles subscribers are only in China. And since these stats were taken in 2010, it has added 78 million subscribers to its base Top ten operator groups by subscribers and revenues worldwide Revenue from Mobile Operations (In US$ millions, 2010) $71,571.6m $63,407.0m

Operator group Rank (HQ location)

Proportionate subscribers (millions, 2010)

Operator group

1 2

China Mobile (China) 594.2m Vodafone Group (UK) 338.9m America Movil (Mexico) Telefonica (Spain) Bharti Airtel (India)

China Mobile Verizon (US) Vodafone Group AT&T Telefonica

224.4m

$60,779.7m

4 5

216.9m 199.2m

$58,500.0m $52,729.1m

China Unicom (China) 169.3m

NTT DOCOMO $48,462.5m (Japan) Deutsche Telekom

AT&T (US)

148.8m

$45,694.5m

68

SingTel (Singapore) France Telecom (France) Reliance Communications (India)

133.9m

America Movil $29,940.4m France Telecom

129.5m

$29,718.0m

10

125.7m

Sprint Nextel

$28,597.0m

Source: Portio Research (2011)

via: mobiThinking

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Mobile operators in developed countries could run out of profit:- In the next two to four years if they do not change their business models,
according to research by Tellabs/Analysys Mason (February 2011). This assumes current trends in demand for data, revenues and costs associated with investing in high speed data networks. When mobile operators in developed economies are expected to run out of profit (if expenditure, demand and revenue trends remain the same) Worst case scenario Q1, 2013 Q3, 2013 Q1, 2014

Region

Median

Best case scenario

North America Developed Asia Pacific Western Europe

Q4, 2013 Q3, 2014 Q1, 2015

Q2, 2014 Q1, 2015 Q2, 2015 via:mobiThinking

Source: Tellabs/ Analysys Mason (February 2011)

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Five companies in rural Area:-

Competitor Analysis of Mobile Phone Manufacturers

Nokia

Nokia, a Finnish cell phone giant, has become the world's No.1 maker of cell phones, ahead of rivals such as Motorola, Samsung and others. The company's

products are divided primarily between four divisions: mobile phones (wireless voice and data devices for personal and business uses), multimedia (home satellite systems, and mobile gaming devices), networks (wireless switching and transmission equipment used in carrier networks), and enterprise solutions (wireless systems for businesses). Nokia wants to be the leader in third-generation (3G) wireless network equipment. The company has slowly becoming the supplier to half of the world's commercial 3G networks. By doing so, Nokia swims to the top of the wireless network infrastructure market led by Ericsson. To capture the international market, Nokia rolled out new business and consumer models with color screens worldwide. The company also gained a piece of the Chinese market by delivering a unit of models capable of English and Chinese text recognition to be sold by vendors in China.

Company Type Fiscal Year-End 2005 Sales (mil.) 1-Year Sales Growth 2005 Net Income (mil.) 1-Year Net Income Growth 2005 Employees 1-Year Employee Growth

Public (NYSE: NOK; Helsinki: NOK1V) December $40,465.0 2.1% $4,280.0 (1.5%) 58,874 6.1%

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Motorola
Motorola is the No. 2 manufacturer of wireless handsets after global leader Nokia. After a previous reorganization, its remaining operations have been focused in four business segments: connected home solutions; government and enterprise mobility solutions; mobile devices; and networks. The company generates nearly 60% of sales through the manufacture and sales of wireless handsets and related products.

Company Type Fiscal Year-End 2005 Sales (mil.) 1-Year Sales Growth 2005 Net Income (mil.) 1-Year Net Income Growth 2004 Employees 1-Year Employee Growth

Public (NYSE: MOT) December $36,843.0 17.6% $4,578.0 198.8% 68,000 (22.7%)

Ericsson
Ericsson, a company base in Stockholm, Sweden, is the worlds leading maker of wireless telecom infrastructure equipment. Ericsson is also a top cell phone maker and seller through its joint venture with Sony, Sony Ericsson. The company's other products include corporate networking gear, cable, defense electronics, and software for mobile messaging and commerce.

Company Type Fiscal Year-End 2005 Sales (mil.) 1-Year Sales Growth

Public (NASDAQ: ERICY [ADR]; Stockholm: ERIC) December $19,099.0 (4.3%)

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2005 Net Income (mil.) 1-Year Net Income Growth 2004 Employees 1-Year Employee Growth

$3,059.0 6.4% 50,534 (2.0%)

Other Manufacturers: LG
Founded in 1947 as Lucky Goldstar, LG Group consists of more than 30 affiliated companies that operate through more than 300 offices around t he globe. LG Group's companies operate in more than 120 countries. LGs annual sales in 2004 have

reached $798.8 million (Hoovers). The Group and its former partner, GS Holdings, are headed towards a competitive showdown in the fuel cell and rechargeable battery markets.

Samsung
Samsung Electronics Co., Ltd. is the world's top maker of dynamic randomaccess memory (DRAM) and other memory chips, as well as all sorts of electronic gear including LCD panels, DVD players, and cellular phones. The Korean companys sales in 2004 have reached $ 78,250.1 million (Hoovers), a number that worth a big celebration.

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Competitive Position of Major Wireless Service Providers

Net Income

6B Verizon

4B

AT&T 2B

Sprint Nextel -700 M

Qwest

20 B

50 B Market Capital

80 B

110 B

The vertical axis represents the total amount of Net Income earned by each wireless service provider. The horizontal axis represents the market capital each company has. The circles represent the total assets each wireless service provider has. The figure represents financial position of each company.

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Verizon
Market Capital Employees Qtrly Rev Growth (yoy) Revenue (ttm) Gross Margin (ttm) Oper Margins (ttm) Net Income (ttm) EPS (ttm) P/E (ttm) PEG (5 yr expected) P/S (ttm)

AT&T 101.30B 189,000 54.50% 49.45B 56.05% 16.19% 5.35B 1.519 17.19 1.57 2.05

Qwest 12.17B 39,000 0.80% 13.93B 58.23% 8.08% -726.00M -0.404 N/A 48.15 0.89

Sprint Nextel 72.97B 79,900 66.50% 39.29B 59.34% 10.05% 1.74B 0.710 34.63 1.03 1.89

Industry 350.37M 800 2.90% 237.24M 55.19% 10.82% -318.91K N/A 15.02 4.07 1.70

93.05B 217,000 25.10% 79.68B 64.74% 18.85% 7.31B 2.571 12.41 4.74 1.18

Among the four competitors in wireless service market, Verizon take the lead, which it has the most net income and second most market capital. Whereas AT&T has the most market capital. Sprint Nextel has the best Price/Earning ratio, which means Sprint Nextels stock has the relative high earning per share. Verizon has the highest gross margin. Gross margin (gross profit / sales revenue) is a measure of a company's efficiency in turning raw materials into income. In other words, Verizon is most efficiency in providing its service.

75

Competitor Analysis of Wireless Service Providers

Verizon Verizon Communications was founded in 2000 when Bell Atlantic bought GTE. The name is a combination of veritas, the Latin word for truth, and horizon. Verizon is a top US telecom services provider base in New York, New York. The company operates nearly 49 million access lines in 28 states and Washington, DC. Verizon operates in four business segments: Domestic Telecom, Domestic Wireless, Information Services, and International. The Domestic Wireless unit offers wireless voice and data services and equipment sales through the US. Its International segment has operations and holdings mostly in the Americas and Europe .
Key Numbers
Company Type Fiscal Year-End 2005 Sales (mil.) 1-Year Sales Growth 2005 Net Income (mil.) 1-Year Net Income Growth 2005 Employees 1-Year Employee Growth Public (NYSE: VZ) December $75,112.0 5.4% $7,397.0 (5.5%) 250,000 19.0%

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AT&T
The company was founded in 1878 when a dozen customers signed up for the first telephone exchange in St. Louis. SBC acquired AT&T Corp. in 2005 and took that company's more well-known name as AT&T Inc. AT&T holds a 60% stake in Cingular Wireless, which has acquired AT&T Wireless in a cash deal valued at $41 billion. The deal has created the leading US wireless operator with 46 million customers in 49 states.

Some of the companys selected subsidiaries and affiliates include:

AT&T Corp. AT&T Communications of California, Inc. AT&T Communications of Illinois, Inc. AT&T Communications of NJ, LP AT&T Communications of the Mountain States, Inc. AT&T Communications of the Southern States, LLC Teleport Communications New York Cingular Wireless (60%, joint venture with BellSouth) Illinois Bell Telephone Company (AT&T Illinois)
Public (NYSE: T) December $43,862.0 7.5% $4,786.0 (18.7%) 162,000 (3.6%)

Company Type Fiscal Year-End 2005 Sales (mil.) 1-Year Sales Growth 2005 Net Income (mil.) 1-Year Net Income Growth 2004 Employees 1-Year Employee Growth

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Sprint Nextel
Sprint Nextel combines the best of two powerhouse wireless companies. The combination of No.3 US wireless carrier Sprint with No.5 Nextel Communications has created a wireless giant that aspires to take on the wireless units of bounding former Baby Bells Verizon and AT&T Inc. Sprint Nextel has about 50 million subscribers to its nationwide digital wireless network, puts the wireless carrier behind only Cingular and Verizon Wireless in number of subscribers. The company's wireline business provides local-exchange phone services through more than 7 million access lines in 18 states.
Company Type Fiscal Year-End 2005 Sales (mil.) 1-Year Sales Growth 2005 Net Income (mil.) 2004 Employees 1-Year Employee Growth Public (NYSE: S) December $34,680.0 26.4% $1,785.0 59,900 (10.5%)

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Porters Five Forces Framework (PFFF)

More than two decades ago, Professor Michael Porter suggested some driving forces which could help to analyze the attractiveness of any industry/sector as well as its competitive positioning. This framework is widely used and known as Porters Five Forces. Professor Porter invented this model in 197 9 and this was published in his book in 1980. Whether the business is service oriented or physical goods, there are always competitive forces in any perfect competitive business environment, like that of the mobile sector in Tanzania. Rationale of the Porters Five Forces Model in the mobile Industry:The model attempts to address key strategic issues in a wider scope. Many of the issues mentioned in the model, including the forces and the management of those forces, are relevant to the banking sector as well as any other service-oriented business. The results, which will be obtained by the application of this model, should be given the value of the time of the analysis and that a continuous review is necessary in order to avoid to be myopic or obsolete with the results. Michael Porter provided a framework that models an industry as being influenced by five forces (Porter, 1980). provides details of the framework.

79

Porters Five Forces Framework:DEGREE OF RIVALRY

-Exit barriers -Products -Switching costs -Brand identity

THREAT OF NEW ENTRANTS

-Absolute cost advantages -Learning curve

BUYERS POWER

-Bargaining leverage. Buyers information.

THREAT OF SUBSTITUTES

-Switching costs -Buyer inclination to substitute

SUPPLIERS POWER

-Supplier concentration - Inputs Differentiation

It is a model of pure competition, which implies that risk-adjusted rates of return should be constant across firms and industries. However, numerous economic studies have affirmed that different industries can sustain different levels of profitability; part of this difference is explained by industry structure. Any strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates. The manager can then use the analysis as a basic tool for strategic decision making for the current situation or future. The banking sector of Tanzania can also consider the application of this model for some strategic decision processes.

80

Threat of Substitutes:In Porter's model, substitute products refer to products in other industry. To the economist, a threat of substitutes exists when a product's demand is affected by the price change of a substitute product. A product's price elasticity is affected by substitute products - as more substitutes become available, the demand becomes more elastic since customers have more alternatives. A close substitute product constrains the ability of firms (banks) in an industry to raise prices. The competition engendered by a Threat of Substitute comes from products outside the industry. In the banking sector, there are so many products and at the same time there are so many substitute products. For example if someone is looking for a travelers cheque and that could not be provided, one might decide to opt for Telegraphic Transfer. Buyers bargaining power:The power of buyers is the impact that customers have on a buying process of the products from a certain industry. In general, when buyers power is strong, the relationship to the industry is near to what an economist terms a monophony - a market in which there are many suppliers and one buyer. Under such market conditions, the buyer 12 sets the price. In reality few pure monopolies exist, but frequently there is some asymmetry between a producing industry and buyers. The same case can as well be applied to the service industry, as nowadays there is no pure-manufacturing or pure service industry. Suppliers bargaining power:A producing industry requires raw materials - labor, components, and other supplies. This requirement leads to buyer-supplier relationships between the industry and the firms that provide the raw materials used to create products. Suppliers, if powerful, can exert an influence on the producing industry, such as selling raw materials at a high price to capture some of the industry's profits. In a service sector there is no direct supplier of raw material. However the supply of supporting facilities like cheque books, furniture, stationeries, etc can give the same analogy.

81

Conclusion
In recent years, cell phones have turned out to be a necessity rather than a status symbol. Nowadays, cell phone manufacturers are producing different phones that fit different needs; and also, service providers have different plans for customers to choose from. With the advance in technology, consumers are able to experience the ease in communication. From 1994 onwards, the cell phone industry has seen great success through the years, and analysts predict that this growth is only going to increase with the advancement of technology.

82

Bibliography
1) 2) 3) 4) Google.com Infomediayellowpages.com Justdial.com Wikipedia.com

83