CHAPTER 1 INTRODUCTION

1.1 Telecommunication in India

The Indian telecommunication industryis the world's fastest growing industrywith 826.93 million mobile phone subscribers as of April 2011.It is also the second largest telecommunication network in the world in terms of number of wireless connections after China. See List of countries by number of mobile phones in use . As the fastest growing telecommunications industry in the world, it is projected that India will have 1.159 billion mobile subscribers by 2013.Furthermore, projections by several leading global consultancies indicate that the total number of subscribers in India will exceed the total subscriber count in the China by 2013. The industry is expected to reach a size of 344,921crore (US$76.57 billion) by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10 million people during the same period.According to analysts, the sector would create direct employment for 2.8 milli n people and for 7 million o indirectly. In 2008-09 the overall telecom equipments revenue in India stood at 136,833crore (US$30.38 billion) during the fiscal, as against 115,382crore (US$25.61 billion) a year before.

1.2 Modern Growth

A large population, low telephony penetration levels, and a rise in consumer spending power has helped make India the fastest-growing telecom market in the world. The market's first operator was the state-owned Bharat Sanchar Nigam Limited (BSNL), created by corporatization of the Indian Telecommunication Service, a government unit formerly responsible for provision of telephony services. Subsequently, after the telecommunication policies were revised to allow private operators, companies such as Bharti Airtel, Reliance Communications, Tata Indicom, Idea Cellular, Aircel and Loop Mobile have entered the market (Bharti Airtel currently being the largest telecom company in India). In the fiscal year 2008-09, rural India outpaced urban India in mobile growth rate. The total number of telephones in the country stands at 861.48 million, while the overall tele-density has increased to 72.08% as of April 30th, 2011.Mobile telephony experiences growths at rates such as 15.34 million subscribers a month, which were added in April 2011.

1.3 His

Telecom i t e eal ense means t e t ansfer of information et een t o istant oints in space. The popular meaning of telecom al ays involves electrical signals and as a result people often exclude postal or any other raw telecommunication methods from its meaning. Therefore, the history of ndian telecom can of telegraph. e started with the introduction

1.4 I
n The

l p

, two telephone companies namely The Oriental Telephone Company td. and td. approached the Government of India to

nglo-Indian Telephone Company

establish telephone exchanges in India. The permission was refused on the grounds that the establishment of telephones was a Government monopoly and that the Government itself would undertake the work. In , the Government later reversed its earlier decision and a

licence was granted to the Oriental Telephone Company imited of England for opening telephone exchanges at Calcutta, Bombay, Madras and telephone service was established in the country. On the hmedabad and the first formal th January , Major E. Baring,

Member of the Governor General of India's Council declared open the Telephone Exchanges in Calcutta, Bombay and Madras. The exchange in Calcutta named the "Central Exchange", was opened at third floor of the building at , Council House treet, with a total of

subscribers. ater that year, Bombay also witnessed the opening of a telephone exchange. urther milestones and developments T bl 1.1 Y 1902 D v l p s

irst wireless telegraph station established between agar Islands and andheads.

1907 1913-1914 1927

irst Central Battery of telephones introduced in Kanpur irst utomatic Exchange installed in himla Radio-telegraph system between the K and India, with Imperial Wireless Chain beam stations at Khadki and Daund. Inaugurated by ord Irwin on July by exchanging greetings with King George V.

1933

Radiotelephone system inaugurated between the K and India

1953 1960

12 channel carrier system introduced irst subscriber trunk dialing route commissioned between ucknow and Kanpur

1975

irst PCM system commissioned between Mumbai City and ndheri telephone exchanges

1976 1979 1980

irst digital microwave junction introduced irst optical fibre system for local junction commissioned at Pune irst satellite earth station for domestic communications established at ecunderabad, .P.

1983

irst analog tored Program Control exchange for trunk lines commissioned at Mumbai

1984

C-DOT established for indigenous development and production of digital exchanges

1995

irst mobile telephone service started on non-commercial basis on 15 ugust 1995 in Delhi

While all the major cities and towns in the country were linked with telephones during the British period, the total number of telephones in 1948 numbered only around 80,000. Post independence, growth remained slow because the telephone was seen more as a status symbol rather than being an instrument of utility. The number of telephones grew leisurely to 980,000 in 1971, 2.15 million in 1981 and 5.07 million in 1991, the year economic reforms were initiated in the country. While certain measures were taken to boost the telecom industry from time to time, for example introduction of the telex service in Mumbai in 1953 and commissioning of the first ubscriber trunk dialling route between Delhi and Kanpur and between ucknow and

Kanpur in 1960), the first waves of change were set going by am Pitroda in the eighties. The real transformation in scenario came with the announcement of the in 1994. ational Telecom Policy

1.5 I

p li i s

 All villages shall receive telecom facilities by the end of 2002.

 A Communication Convergence Bill introduced in the Parliament on August 31, 2001 is presently before the tanding Committee of Parliament on Telecom and IT.  National ong Distance ervice NLD) is opened for unrestricted entry.  The International Long Distance ervices ILD ) have been opened to competition.  The basic services are open to competition.  In addition to the existing three, a fourth cellular operator, one each in four metros and thirteen circles, has been permitted. Cellular operators have been permitted to provide all types of mobile services including voice and non-voice messages, data services and PCOs utili ing any type of network equipment, including circuit and/or package switches that meet certain required standards.  Policies allowing private participation have been announced as per the New Telecom Policy NTP), 1999 in several new services, which include Global Mobile Personal Communication by atellite GMPC ) ervice, digital Public Mobile Radio Trunked ervice PMRTS) and Voice Mail/ Audiotex/ nified Messaging Services.  Wireless Local Loop WLL) has been introduced to provide telephone connections in urban, semi-urban and rural areas promptly.  Two telecom PSUs, VSNL and HTL have been disinvested.  Steps are being taken to fulfill Universal Service Obligation USO), funding, and administration.  A decision to permit Community Phone Service has been announced.  Multiple ixed Service Providers SPs) licensing guidelines were announced.  Internet Service Providers ISPs) have been allowed to set up International Internet Gateways, both Satellite and Landing stations for submarine optical fiber cables.  Two categories of infrastructure providers have been allowed to provide end-to-end bandwidth and dark fibre, right of way, towers, duct space etc.  Guidelines have been issued by the Government to open up Internet telephony IP).

1.6 E

pl y

In 1975, the Department of Telecom DoT) was separated from Indian Post & Telecommunication Accounts and services in entire country inance Service. DoT was responsible for telecom until 1985 when Mahanagar Telephone Nigam

Limited MTNL) was carved out of DoT to run the telecom services of Delhi and Mumbai. In 1990s the telecom sector was opened up by the Government for private investment as a part of Liberalisation-Privati ation-Globali ation policy. Therefore, it became necessary to
5

separate as Bharat

the

Government's

policy

wing

from

its

operations private

wing.

The such

Government corporati ed the operations wing of DoT on 1 October 2000 and named it Sanchar Nigam Limited BSNL). Many operators,

as Communications, Tata, Vodafone, Loop Mobile, Airtel, Idea etc., successfully entered the high potential Indian telecom market.

1.7 P iv iz i

si I

The Indian government was composed of many factions parties) which had different ideologies. Some of them were willing to throw open the market to foreign players the centrists) and others wanted the government to regulate infrastructure and restrict the involvement of foreign players. Due to this political background it was very difficult to bring about liberali ation in telecommunications. When a bill was in parliament a majority vote had to be passed, and such a majority was difficult to obtain, given to the number of parties having different ideologies. Liberali ation started in 1981 when Prime Minister Indira Gandhi signed contracts with Alcatel CIT of rance to merge with the state owned Telecom Company ITI), in an effort to set up 5,000,000 lines per year. But soon the policy was let down because of political opposition. She invited Sam Pitroda a US based Non-resident Indian NRI to set up a Center for Development of Telematics(C-DOT), however the plan failed due to political reasons. During this period, after the assassination of Indira Gandhi, under the leadership of Rajiv Gandhi, many public sector organi ations were set up like the Department of Telecommunications (DoT) , VSNL and MTNL. Many technological developments took place in this regime but still foreign players were not allowed to participate in the telecommunications business. The demand for telephones was ever increasing. It was during this period that the Narsimha Rao-led government introduced the national telecommunications policy [NTP] in 1994 which brought changes in the following areas: ownership, service and regulation of telecommunications infrastructure. They were also successful in establishing joint ventures between state owned telecom companies and international players. But still complete ownership of facilities was restricted only to the government owned organi ations. oreign firms were eligible to 49% of the total stake. The multi-nationals were just involved in technology transfer, and not policy making.

During this period, the World Bank and ITU had advised the Indian Government to liberali e long distance services in order to release the monopoly of the state owned DoT and VSNL; and to enable competition in the long distance carrier business which would help reduce tariff's and better the economy of the country. The Rao run government instead liberali ed the local services, taking the opposite political parties into confidence and assuring foreign involvement in the long distance business after 5 years. The country was divided into 20 telecommunication circles for basic telephony and 18 circles for mobile services. These circles were divided into category A, B and C depending on the value of the revenue in each circle. The government threw open the bids to one private company per circle along with government owned DoT per circle. or cellular service two service providers were allowed per circle and a 15 years license was given to each provider. During all these improvements, the government did face oppositions from ITI, DoT, MTNL, VSNL and other labor unions, but they managed to keep away from all the hurdles. After 1995 the government set up TRAI (Telecom Regulatory Authority of India) which reduced the interference of Government in deciding tariffs and policy making. The DoT opposed this. The political powers changed in 1999 and the new government under the leadership of Atal Bihari Vajpayee was more pro-reforms and introduced better liberali ation policies. They split DoT in two- one policy maker and the other service provider (DTS) which was later renamed as BSNL. The proposal of raising the stake of foreign investors from 49% to 74% was rejected by the opposite political party and leftist thinkers. Domestic business groups wanted the government to privati e VSNL. inally in April 2002, the government decided to cut its stake of 53% to 26% in VSNL and to throw it open for sale to private enterprises. TATA finally took 25% stake in VSNL. This was a gateway to many foreign investors to get entry into the Indian Telecom Markets. After March 2000, the government became more liberal in making policies and issuing licenses to private operators. The government further reduced license fees for cellular service providers and increased the allowable stake to 74% for foreign companies. Because of all these factors, the service fees finally reduced and the call costs were cut greatly enabling every common middle class family in India to afford a cell phone. Nearly 32 million handsets were sold in India. The data reveals the real potential for growth of the Indian mobile market. In March 2008 the total GSM and CDMA mobile subscriber base in the country was 375 million, which represented a nearly 50% growth when compared with previous year. As the unbranded Chinese cell phones which do not have International Mobile Equipment
7

Identity (IMEI) numbers pose a serious security risk to the country, Mobile network operators therefore planned to suspend the usage of around 30 million mobile phones (about 8 % of all mobiles in the country) by 30 April. 56 years the average monthly subscribers additions were around 0.05 to 0.1 million only and the total mobile subscribers base in December 2002 stood at 10.5 millions. However, after a number of proactive initiatives were taken by regulators and licensors, the total number of mobile subscribers has increased greatly to 811.59 million subscribers as of Mar 31st 2011. India has opted for the use of both the GSM (global system for mobile communications) and CDMA (code-division multiple access) technologies in

the mobile sector. In addition to landline and mobile phones, some of the companies also provide the WLL service. The mobile tariffs in India have also become lowest in the world. A new mobile connection can be activated with a monthly commitment of US$0.15 only. In 2005 alone additions increased to around 2 million per month in the year 2003-04 and 20042005. In June 2009, the Government of India banned the import of several mobile phones manufactured in China citing concerns over quality and the lack of IMEI's which make it difficult for authorities in India to track the sale and use of such phones.[20] In April 2010, the Government was also reported to be blocking Indian service providers from purchasing Chinese mobile technology citing concerns that Chinese hackers could compromise the Indian telecommunications network during times of national emergency. A series of attacks on Indian government websites and computer networks by suspected Chinese hackers has also made Indian regulators suspicious with regards to the import of potentially sensitive equipment from China. The companies reported to be affected by this are Huawei Technologies and ZTE.

1.8 T l

sR g l

y E vi

i I

LIRNEasia's Telecommunications Regulatory Environment (TRE) index, which summari es stakeholders perception on certain TRE dimensions, provides insight into how conducive the environment is for further development and progress. The most recent survey was conducted in July 2008 in eight Asian countries, including Bangladesh, India, Indonesia, Sri Lanka, Maldives, Pakistan, Thailand, and the Philippines. The tool measured seven dimensions:  Market entry
8

 Access to scarce resource  Interconnection;  Tariff regulation;  Anti-competitive practices; and  Universal services;  Quality of service, for the fixed, mobile and broadband sectors. The results for India, point out to the fact that the stakeholders perceive the TRE to be most conducive for the mobile sector followed by fixed and then broadband. Other than for Access to Scarce Resources the fixed sector lags behind the mobile sector. The fixed and mobile sectors have the highest scores for Tariff Regulation. Market entry also scores well for the mobile sector as competition is well entrenched with most of the circles with 4 -5 mobile service providers. The broadband sector has the lowest score in the aggregate. The low penetration of broadband of mere 3.87 against the policy objective of 9 million at the end of 2007 clearly indicates that the regulatory environment is not very conducive. Some vi l s is i s on ele- ensi y T ble 1.2 P i l s Wi eless (Fig es in millions) Wi e line (Fig es in millions)

Total s bs ibers Total net addition % of monthly growth Urban s bs ribers R ral s bs ribers Tele density Urban Tele density R ral Tele density

771.78 18.99 2.52

34.94 -0.15 -0.41

512.26 258.93 64.74 143.36 31.05

26.13 8.82 2.93 7.31 1.06

Some vital Statisti s on Cell phones:  Land Lines: 34.87 million eb 2011)
9

 Cell phones: 791.38 million eb 2011)  Annual Cell phone Addition: 227.65 million (Feb 2010 - 2011)  Monthly Cell phone Addition: 20.20 million (Feb 2011)  Tele-denisty: 69.29 % (Feb 2011)  Projected Tele-denisty: 1.159billion, 75% of population by 2013.  Telephone Subscribers (Wireless and Landline): 826.25 million (Feb 2011).
Source: Trai, annual report 2010

10

CHAPTER 2 TOPIC INTRODUCTION

11

2.1 Rural Tele hon

Today with the telecom revolution, channels of communications aretaking different forms. In fact, telecommunications has become such an integral part ofour socio-economic fabric that it has changed the way people think, act, react, talk, work communicate and live. , It is difficult to imagine life without telecommunications any more. There is a strong two way co-relationship between economic development, literacy and general awakening of a region, with its tele-denisty. Access to telecommunications has a strong and direct positive impact on the overall economic growth, development ofthe private sector, delivery of public services and integration of the rural and isolatedareas with the rest of the country. The poor, specially the rural poor, have less access to telecom services than justified by their poverty levels and the emerging digital divide is widening. It is an established fact that the income of the poor grows faster in telecom intensive economies and access to affordable telecom services is essential for any strategy for poverty reduction. Rural communications help people to participate in market economy and also improve productivity by saving time and transportation cost. It is therefore, important to extend availability and access to affordable telecom services in rural and other vulnerable areas.

2.2 Demo ra hic and Geo ra hic factor in India

India is a vast and diverse country, almost of the size and variety of a whole continent. There are about 300 cities and 4600 towns, besides four metropolitan towns. There are many languages, cultures, religions, castes, and creed. It is the second most p opulous country in the world, the largest democracy and has a great variety in demographic and geographic terms. The terrain is varied, with hot deserts, high mountains, long coast lines, plateaus, arid and marshy lands, valleys, forests and fertile lands. It has a population of more than a billion people and geographical area of about 3.3 million sq kms. The average population density is 319 persons per sq. kms, which varies from as thin as 10 persons per sq. km. in States like
12

J&K to as high as 2000 per q. km. in Delhi, Mumbai and some other areas. Although during the last 5-10 years a rapid urbanization of rural areas has taken place, yet more than 70% of the population lives in 6,07,491 villages. The economy of the country is still predominantly dependent on agriculture although the distribution pattern is gradually changing in favour of industry and service. Due to growth in industrialization, commerce and services the telecommunication demand is growing fast. The difference in tele-denisty between rural and urban areas at present is more than the differential quotient in their poverty levels. A number of measures have been taken in the recent past to accelerate the telecom growth and one of the immediate concerns is to bridge the emerging digital divide.

2.3 Rural tele hon

The stakeholders

2.4 The growth of telecom sector and changes in the polic framework Initially, these services were mainly used for Government, trade and industry. After independence, the growth of telecommunication in India picked up and the pace 3gradually gained momentum. Manufacturing of telecom equipment began in public sector units ike l ITI, and telecom services were gradually spread in several parts of urban areas, Government

13

offices, trade and industry and some rural areas. With the development of agro-based industries and the need of telecom services in rural areas, there was a sharper focus on the provision of telecom services in rural areas. In early 1980s, a Mini-mission of Rural Development was started and a Special Task Force was set up to open more and more small and medium si ed telephone exchanges in the villages. Further, a time bound programme was undertaken to extend at least one public telephone in rural areas within easy reach of villagers. The growth of telecommunication in India received a major spurt in early 1980s with the launch of objectives of this Mission were:  Improvement in Quality of Services and Customer support.  Improvement of accessibility within the existing network.  Concentrated attention to the indigenous development and manufacture of certain Technologies and products.  Target of Telephone on Demand was also set up, as to be achieved by the year 2000.  Participation of the private sector in production and services of telecom sector was permitted. Besides, under the Mission Better Communications a special R&D Centre called Centre for Development of Telematics(C-DoT) was established in 1984, with an objective of developing the latest world class indigenous switching equipments of Digital Electronic Exchanges and transmission systems suitable for Indian conditions, particularly for rural areas. The manufacturing of customer premises equipments like telephone instruments, dropwire etc. started in the private sector in 1984. Several other initiatives were taken, Posts and Telegraphs were segregated, Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL) was set-up as separate corporate entities. A rapid proliferation of STD/PCOs (Public telephone call centres) took place all over the country, both in urban/semi-urban as well as in rural areas and accessibility and so also the demand for the services rapidly increased with availability of facilities nearby. To facilitate the faster growth of telecom services in the country, the Government of India constituted Telecom Commission in 1989. This is the apex policy making body, with full powers of the Government. Telecommunications, which is a central subject in the federal set up, received a major concentrated thrust by this high-powered Body. The process of telecom reforms
14

Mission Better Communications by the Government. The main

received a further fillip in 1990s, with the introduction of the New Economic Policy 1991. Value added services were opened to the private sector. Licenses were granted to private operators for providing cellular mobile service in four metros and also for paging services. With the National Telecom Policy 1994 (NTP 94), further thrust was given, specific targets were set for achievement including for rural areas. Several other liberali ation measures were effective, including opening up of basic telephony for private sector and establishment of Telecom Regulatory Authority of India (TRAI). However, the most significant landmark in telecom reforms was New Telecom Policy 1999 (NTP 99), which heralded a series of initiatives, completely opening the telecom sector.

2.5 New Telecom Policy 1999 (NTP-99)

The most important landmark in the process of telecom reforms was NTP 99 which was made effective from 1st April 1999. This paved the way for change-over from fixed license fee to revenue sharing, migration of existing operators to the new regime -thus resolving their long-standing difficulties, strengthening of Regulator (TRAI), opening of the National Long Distance, corporatisation of telecom services, and establishment of Bharat Sanchar Nigam Limited (BSNL) etc. The policy had also stipulated several specific and timebound targets in tele-denisty, rural telephony, etc. The following specific objectives, targets and stipulations for rural areas are enshrined in NTP 99:Objectives  Availability of affordable and effective communications for the citi ens.  Strive to provide a balance between the provision of universal service to all uncovered areas, including the rural areas, and the provision of high-level services capable of meeting the needs of the countrys economy.  Encourage development of telecommunication facilities in remote, hilly and tribal areas of the country.  Encourage development of telecom in rural areas making it more affordable by suitable tariff structure and making rural communications mandatory for all fixed service providers. Targets  Increase rural tele-denisty from the current level of 0.4 to 4 by the year 2010.
15

 Achieve telecom coverage of all villages in the country and provide reliable media to all exchanges by the year 2002.  Areas of North East, Jammu & Kashmir and other hilly areas, tribal blocks, etc. to be identified as special thrust areas for accelerated development of telecommunications.

2.6 Uni ersal ser ice o ligation

Universal Service is desirable for social, economic and political reasons and to enable low-income customers, customers living in rural, remote and high cost areas, the physically disadvantaged and elderly customers to participate in the mainstream and rem the feeling ove of isolation. The common approach to Universal Service in the developing countries like India is to provide Universal Access, individually to households at affordable charges and to the others by shared access through a suitable provision o subsidy. It is essential in a public f policy, to provide availability and access to all people for basic telecom services at affordable and reasonable prices. One of the incentives to the operators to invest in rural areas could be to provide funds through USO Fund. Till so far, the entire development in rural areas has been done by the incumbent operator through crosssubsidization. However, with tariff rebalancing, deregulation and corporatisation of the incumbent operator, the situation has perceptibly changed and warrants a careful look on the arrangements, to meet the rural telecom needs. While the deregulation had, no doubt, expected the private sector to playa significant role in providing the telecom services in the country, the experience so far has been that the private operators have concentrated mainly in the urban areas both in the basic and value added services, despite the clear contractual obligation of the private sector to provide certain percentage of total number of telephones in the rural areas. In a deregulated environment, private operators, generally tend to concentrate in the high income and high density areas with high incidence of information intensive industries/activities. The provision of telecom facilities in rural areas can bring about significant changes in socio -economic

16

conditions of these regions as also the integration with the rest of the market economy, bringing in considerable direct and indirect benefits to the economy. Some of the advantages are indicated below: Telecommunication facilities enhance the regions appeal as an attractive location for investment.  Local producers and service sector get enriched through integratio of market and n provision of regional, national and international links, which can improve better price reali ation of goods and services  Diffusion of innovative technologies and information-based services is facilitated.  The quality and efficiency of the government at the grass root level can improve through e-governance.  Research and development in leading edge technologies can be stimulated.  Two major barriers to rural economic growth i.e. the distance from the market place and lack of economies of scale can be broken by telecom facilities, particularly with broadband data communication facility.  There is considerable latent demand in rural areas, which can surface with right conditions and stimulants.  Information and communication technology (ICT) centres in rural areas can be effectively used for providing information and delivery of public services on matters related to production, prices, health, education, animal husbandry, weather conditions and service sector.  Greater employment opportunities and other benefits flowing from essential applications of information technology vi . e-commerce, e-governance, telemedicine, distance learning, software development, e-business operation etc. to the advantage of rural population.

17

Roll Out Obligation USO Funding Policy Universal Service Objectives

Competition

Termination Charges

Tariff Policy

Access Deficit Charge Rural Service Providers Government Funding

Implementation of USO Fund activities DoT has entered into Agreements with M/s BSNL and Private Operators in March 2003 for operation and maintenance of existing Village Public Telephones (VPTs), providing Rural community phone (RCP) and for installation of Rural Household Direct Exchange Lines (RDELs). Substantial progress has already been made in all these areas. USO Fund has also been utili ed to provide subsidy support for setting up and managing infrastructure sites in 500 districts for provision of mobile services in the specified rural and remote areas, where there is no existing fixed wireless or mobile coverage. USO Fund subsidy for wireless broadband had been given to BSNL for installing Wimax BTS in rural India. BSNL till date has rolled out approximately 1000 Wimax BTS and is in process of deploying an additional 7000 BTS in rural area. DoT is also considering support to the winners of Broadband Wireless Access (BWA) spectrum auction to ensure level playing field in rural area.

18

Table 2.1

Year

Collections

Disbursement

Accumulated Balance

(Crore `) 2002-2003 2003-2004 2004-2005 2005-2006 2006-2011* 1653 2143 3457 3500 37541

(Crore `) 300 200 1314 1750 17936

(Crore `) 1353 3296 5439 7189 25044

Source: Information received from office of USOF,DOT

19

CHAPTER 3 COMPANY PROFILE

20

Reliance Communications
Reliance Communications Limited is the flagship Company of Reliance Anil Dhirubhai Ambani Group, India's third largest business house. The company is India's largest private sector information and communications company, with over 100 million subscribers. They have established a pan-India, high-capacity, integrated (wireless and wire line), convergent (voice, data and video) digital network, to offer services spanning the entire infocomm value chain. The company shares are listed on the National Stock Exchange and the Bombay Stock Exchange.

The company offers the full value chain of wireless (CDMA and GSM), wire line, national long distance, international, voice, data, video, Direct-To-Home (DTH) and internet based communications services under various business units organi ed into three strategic customer-facing business segments; Wireless, Global and Broadband. These strategic business units are supported by passive infrastructure connected to nationwide backbone of Optic Fibre Network fully integrated network operation system and by the largest retail distribution and customer services facilities. The Company also owns through its subsidiaries, a global submarine cable network infrastructure and offers managed services, managed Ethernet and application delivery services. The company is India's first telecom service provider offering nationwide CDMA and GSM mobile services with digital voice clarity. Their mobile portal, R World, offers the widest range of mobile content spanning e-commerce, m-commerce entertainment, music, news, astrology, cricket, bollywood, maps, search, one-click set-up, access to email and social networking. The company offers the most comprehensive portfolio of enterprise voice, data, video, internet and IT infrastructure services catering to large, medium and small enterprises for their communications, networking and IT infrastructure needs. Their product portfolio includes national and international private leased circuits, broadband internet access,
21

audio solutions including Centrex, toll free services, voice VPN, video conferencing , MPLSVPN, remote access VPN, Global MPLS VPN managed internet data centre (IDC) services to name a few. The company operates nationwide Direct-to-Home satellite TV services under its wholly owned subsidiary, Reliance Big TV Limited (Big TV). They formed an alliance with Polycom Inc., the global leader in tele-presence, video and voice solutions, to introduce world's first wireless, high-resolution video and CD-quality audio, conferencing service along with simple-to-use content sharing capabilities - at a bandwidth speed of 256 kbps at any place. They own and operate the world's largest next generation IP enabled connectivity infrastructure, comprising over 2, 77,000 kilometres of fibre optic cable systems in India, USA, Europe, Middle East and the Asia Pacific region. Reliance Communications Ltd was incorporated on July 15, 2004 as a private limited company with the name of Reliance Infrastructure Developers Pvt Ltd. In July 25, 2005, the company was converted into public limited company and the name was changed to Reliance Infrastructure Developers Ltd. During the year, the company altered the objects clause of the memorandum of association to carry on the business of telecommunication, infrastructure, telecommunication system, telecommunication network and telecommunication services. In August 3, 2005, they further changed their name to Reliance Communication Ventures Ltd. In August 11, 2005, the equity shares of the company were acquired by Reliance Industries Ltd and thus the company became the wholly owned subsidiary of Reliance Industries Ltd. As per the scheme of arrangement, all the properties, investments, assets and liabilities related to Telecommunication Undertaking of Reliance Industries Ltd was transferred and vested in the company on a going concern basis with effect from December 21, 2005. In March 6, 2006, the equity shares of the company were listed on the Bombay Stock Exchange Ltd and the National Stock Exchange of India Ltd. In June 7, 2006, the name of the company was changed from Reliance Communication Ventures Ltd to Reliance Communications Ltd. As a result of a Scheme of arrangement with Reliance Industries Limited, the company became the holding company of minority interests in the telecommunications companies formerly controlled by Reliance Industries Ltd. The company restructured the telecom businesses by realigning the economic ownership of various businesses into the company. Under a Scheme of Amalgamation and Arrangement which became effective from September 12, 2006, inter alia, Reliance Infocomm Ltd, Ambani Enterprises Pvt Ltd, Reliance Business Management Pvt Ltd, Formax Commercial Pvt Ltd, Reliance Communications Technologies Ltd, Reliance Software Solutions Pvt Ltd, Reliance Communications Solutions Pvt Ltd and
22

Panther Consultants Pvt Ltd were amalgamated with the company and the and Network division of Reliance Communications Infrastructure Ltd was de-merged to the company. Upon the Scheme of Amalgamation and Arrangement all the subsidiaries of erstwhile Reliance Infocomm Ltd, Reliance Infocomm Infrastructure Pvt Ltd, Reliable Internet Services Ltd and Campion Properties Pvt Ltd including the subsidiaries of Reliance Communications Infrastructure Ltd, Reliance Telecom Ltd and Flag Telecom Group Ltd became the subsidiaries of the company. During the period 2006-07, Paradox Studios Ltd, Reliance Digital World Ltd and NIS Sparta Ltd ceased to be subsidiaries of the company and Gateway Net Trading Pte Ltd, Reliance Communications (Singapore) Pte Ltd, Reliance Communications (Hong Kong) Ltd, Reliance Communications (New Zealand) Pte Ltd, Reliance Communication (Australia) Pty Ltd. RCOM Malaysia SDN BHD, Synergy Entrepreneur Solutions Pvt Ltd and Reliance Next Generation Technology Pvt Ltd became subsidiaries of the company. During the year 2007-08, Reliance Tech Services Pvt Ltd, Reliance Big TV Ltd, Yipes Holdings Inc, Reliance Globalcom Services Inc, Yipes Systems Inc, YTV Inc, Anupam Globalsoft (U) Ltd, Lagerwood Investments Ltd and Reliance Telecom Infrastructure (Cyprus) Holdings Ltd became the subsidiaries of the company. While, Flag Projects Pte Ltd, Alsign Holdings Pte Ltd, Actaram Capital Pte Ltd, Reliance Telephones Ltd and Gateway Net Trading Pte Ltd ceased to be subsidiaries of the company. As per the scheme of arrangement amongst the company, Reliance Telecom Limited (RTL) and Reliance Infratel Limited (RITL), the passive infrastructure of the Company and RTL was de-merged and vested into RITL, with effect from April 10, 2007. The group structure involving various subsidiaries of the company was reorgani ed during the year. Consequently, Reliance Infoinvestments Ltd and Synergy Entrepreneur Solutions Pvt Ltd amalgamated with Reliance Communications Infrastructure Ltd with effect from July 23, 2007 and September 1, 2007 respectively and Reliable Internet Services Ltd amalgamated with Reliance Telecom Ltd with effect from September 29, 2007. FLAG Telecom USA Ltd was merged with Yipes Holdings Inc. with effect from December 17, 2007. During the year, the company acquired Uganda-based company Anupam Globalsoft (U) Ltd, holding Public Infrastructure Provider License and Public Service Provider License to offer Mobile, Fixed Line, Internet, National and International Long Distance services, in addition to WiMax and Wifi services, marking their entry in Uganda In April 2008, they also acquired controlling stake in Reliance WiMax World Limited (formerly eWave World Limited), a UK headquartered company focused on the rapidly developing market for wireless telephony
23

services using the WiMAX technology standard. During the year 2008-09, the company launched GSM services in 14 service areas and commenced commercial operations. They received start-up spectrum to launch GSM services from Department of Telecommunications (DoT) under their existing Unified Access Service License (UASL) in 14 service areas. Reliance Big TV Ltd, a wholly owned subsidiary of the company launched fully Digital Home Entertainment Direct To Home (DTH) Service on the most advanced MPEG 4 DTH Platform. During the year, Reliance Vanco Group Ltd and their subsidiaries, Reliance WiMax World Ltd and Gateway Net Trading Pte Ltd became the subsidiaries of the company. While, FLAG Telecom France Network SAS, FLAG Telecom France Services EURL, FLAG Telecom Korea Ltd and FLAG Telecom Espana SA ceased to be subsidiaries of the company. The company rolled out their fastest Wireless Internet service, 'Reliance Netconnect Broadband Plus', with a downlink speed of up to 3.1 Mbps. This makes Netconnect Broadband Plus best suited for video streaming, video surveillance, rich media content and superior Internet browsing. The company through their wholly owned subsidiary, Reliance Communications Infrastructure Ltd, formed a joint venture with Krishak Bharati Cooperative Ltd (Kribhco), a premier co-operative society with an unparalleled marketing network in rural India. The company made a tie up with Flytxt, a leading technology provider, for the implementation of an integrated carrier-class mobile marketing software platform called Neon on the RCOM Network. Also, they made a tie up with SAS for better business intelligence and analytics and AMDOCS for Customer Self Service systems. During the year 2009-10, Global Innovative Solutions Pvt Ltd, Reliance WiMax D.R.C. B.V, Reliance WiMax Gambia B.V. Reliance WiMax Mauritius B.V., Reliance WiMax Mozambique B.V, Reliance WiMax Niger B.V., Reliance WiMax Zambia B.V., Access Bissau LDA became the subsidiaries of the company. While, Reliance Mobile Ltd and Vanco (India) Pvt Ltd ceased to be subsidiaries of the company. As per scheme of arrangement between the company and Reliance Infratel Ltd, the Optic Fiber Undertaking of the company was de-merged and transferred to Reliance Infratel Ltd with effect from April 1, 2008.Also, Reliance Gateway Net Ltd, a wholly owned subsidiary of the company amalgamated with the company with effect from July 13, 2009. During the year, the company won the prestigious Global World Communication Awards 09, held in London. They also won this award in the Best Device Category where they participated with a new network device, developed with CISCO. The company was the only Indian company to win an award at WCA 09. The company received the Frost and
24

Sullivan Market Share Leadership award for 'Data Center and Managed Services' category (FY 2009). They also received INFOCOMM - CMAI National Telecom Award for the 'Largest Telecom Network' category, presented by Secretary, DoT and Chairman, Telecom Commission. The company has joined the consortium of USD 400 million, 8,300 km, 17 Tbps design capacity Singapore - Hong Kong - Japan (SJC) cable system. The SJC cable system is expected to be completed by third quarter of 2011.

25

CHAPTER 4 RESEARCH METHODOLOGY

26

4.1 Problem statement

To bring about a socio economic transformation in the livelihood of the rural population of India through mobile telephony.

4.2 Objectives of the study

1. To understand the impact of mobile phones on the socio economic livelihood of the rural population 2. To understand the scope for telecom players to reach out to a substantial segment of non-adopters in the rural Indian markets. 3. To understand the future impact of internet technology to the rural population.

4.3 Scope of the study

The mobile revolution in the last few years has changed the way interaction functions in India. A majority of the rural population users are undergoing transformational changes that could be attributed to the penetration of mobile telephone into the rural markets. Considering that the growth that can reach 1.2 % a year for every 10% of penetration it becomes critical to understand the impact of mobile telephone on the socio-economic elements of the rural population. 80% of the market is looking for highly localized services and indigenous players to provide these services to them. The optimum target market would be the rural youth who are willing to spend Rs. 10 a day on some interesting service. Players make grave mistakes in positioning their services because they assume that the particular service is not fit for the rural market. This in turn makes it difficult for people in the rural areas to discover these services. The rural market needs to be viewed in a more integrated fashion. VAS for the rural areas has to be different from the normal VAS. For instance, according to me you have a phone that serves as a clock and a paper weight, it is not something that you may consider as a normal mobile value added service, but that might well be the kind of service a rural subscriber wants and is willing to pay for. All the above mentioned attempts would allow the researcher to recommend the company the marketing channels that they can opt for and how it can be optimally utilized.

27

4.4 Research Design

1. Survey Method

Interviews with large number of respondents with a predesigned questionnaire are called a survey. Various services regularly conduct surveys. Surveys are the most flexible means of obtaining data from respondents. The researcher can focus only on a certain segment of the population. Surveys are the primary means of obtaining information about consumers motives, attitudes and preferences. A variety of questions can be asked, and visual aids, packages, products or other props can be used during the interview Properly s. analyzed, survey data can be manipulated in many ways so that the researcher can look at intergroup differences, examine the effects of in dependant variables such as age or income, or even predict future behaviour. Surveys can be broadly classified on the basis of their content as psychographic and lifestyles, advertising evaluation or general surveys/ field surveys. For this particular research, field survey is done to collect data. A sample of the questionnaire is attached along with the annexure. 2. Sample size Sampling design starts by specifying the target population. The target population is the collection of elements or objects that process the information sought by the researcher and about which inferences are to be made. The target population has to be defined precisely. Imprecise definition of the target population will result in research that is ineffective at best and misleading at worst. Since the topic of the research is to find the socio economic impacts of mobile phone adoption in rural India & the road ahead for rural India in terms of adopting data technology, the subjects who were selected for the are categorised as under, 1. Labourers 2. Farmers 3. Businessman 4. Students

28

Strata Students Businessman Farmer labor/labor contactors/engineers etc

sample size 60 60 60 60

Stratified sampling was adopted while conducting this research. All the subjects taken were residing in villages with a population size of less than 1500. The investigator has selected rural areas in southern Karnataka as his research area. Rural Karnataka has a population of 4,03,46,268 as on May 2011. The data collection for the research was done between the time period of 8th May to 18 May.
th

4.5 Formula used for sample size estimation

n= (Z^2(p*q)/e^2) (Where n= sample size, z= confidence interval, p=no of people using cell phone, q= (1-p), e= margin or error.)  For 95% confidence interval, assuming 70% adopters & 30% non adopters and 5% margin of error we get n=322.69
70% 30% mobile users in rural areas non mobile users

confidence level confidence interval

95% 5%

sample size

322.6944

 Number of villages surveyed: 23  Average population of the villages surveyed: 900

29

Table 4.1
SL no 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 24 22 23 village mandigere bardi asruvalli budiyal govindappa layout mopparahalli kodimanchanahalli siddnayakanahalli singanayakanhalli venkatagirikote devanahalli vibhutikere ubudgere anjanapura bannikuppe devaradoddi machsatahallidoddi gudnalli geretikanabele channegowdandoddi doddagarudanadoddi somanahalli bommasandra industrial are jigani district nelamangala nelamangala nelamangala nelamangala nelamangala doddaballapura doddaballapura doddaballapura doddaballapura devanahalli devanahalli ramnagar ramnagar ramnagar ramnagar ramnagar ramnagar anekal anekal mandya mandya mandya anekal anekal population 800 700 750 800 1500 350 500 1200 800 800 1500 700 700 800 1200 700 600 1500 800 800 1200 1500 semi rural semi rural crops grown ragi, corn ragi, corn, vegetables ragi, corn, vegetables ragi, corn, vegetables semi rural ragi, mostly contractors ragi,vegetables ragi,vegetables ragi,vegetables ragi,vegetables ragi,vegetables serciluture,ragi,corn serciluture,ragi,corn serciluture,ragi,corn serciluture,ragi,corn serciluture,ragi,corn serciluture,ragi,corn vegetables, ragi, battha vegetables, ragi, battha ragi, sugarcanes, corn, sericulture ragi, sugarcanes, corn, sericulture ragi, sugarcane, industrial area ragi,industries ragi,industries

4.7 Method of collecting data

One of the objectives of the research was to understand the impacts of mobile telephone on the socio economic livelihoods of the rural population. Hence a case study on two rural individuals was done, to understand the changes brought about by the mobile phone in their day to day livelihood. Questionnaires were also administered to individuals based on the strata to which they belong in the research locations.
y

Primary data collection: This was done through administering questionnaires & field interviews.

Secondary data collection: Secondary data is data collected by someone other than the user. Common sources of secondary data for social science include censuses, surveys,

30

organizational records and data collected through qualitative methodologies or qualitative research Limitations 1. The estimated sample size was 322, due to time constraints 240 samples were collected. 2. The research was restricted to rural areas in & around Southern Karnataka. 3. All the villages in southern Karnataka were not taken into account for this research 4. The subjects who answered the questionnaire belong to various age groups and the conclusions derived from the hypothesis testing may have deviations.

31

CHAPTER 5 DATA ANALYSIS & INTERPRETATION

32

5.1 Population figures:

rural India population Year
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

India-population
1028610328 1045469269 1062604528 1080020634 1097722191 1115713876 1134000445 1152586732 1171477648 1190678186 1210193422

urban India population

285000000 289671154.8 294418870 299244400.2 304149021 309134028.7 314200740.6 319350496.1 324584656.1 329904604.2 335311746.2

in millions
742 754.2 766.7 779.3 792.1 805.2 818.5 831.9 845.7 859.6 873.8

1.4E+09

34000000 33000000 32000000

1.2E+09

1E+09 31000000 80000000 30000000 29000000 28000000 40000000 27000000 20000000 26000000 25000000 rural India opulation
urban India population

Population in India has seen a decadal growth of 1.6%. Population in urban India has seen a decadal growth of 1.67%, while population in rural India has seen a decadal growth of 1.64%.

33

60000000

India

ation

5.2 Tele-density figures: Comparison

year
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

India tele-denisty
3.6 4.3 5.1 7.0 9.1 12.7 20.5 33.2 42.3 61.0 69.3

Urban India tele-denisty

10.4 12.2 14.3 20.8 26.2 38.0 49.5 81.3 95.1 119.7 150.7

rural India tele-denisty

0.9 1.2 1.5 1.6 1.7 1.9 5.8 12.6 16.6 24.3 32.1

160.0

35.0

140.0 120.0
100.0

30.0 25.0
20.0

80.0
15.0 60.0

40.0 20.0
0.0

10.0 5.0
0.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Tele-density in India has seen a decadal growth of 28%. Tele-denisty in urban India has seen a decadal growth of 24.9% while tele-density in rural India has seen a significant decadal growth of 34.33%.This signifies the fact that rural India is a market with great potential for telecom companies to penetrate into. With market for telecom companies in urban India reaching a stage of saturation, rural India presents a market which has not been tapped into effectively & a market with huge growth in the next decade.

34

rural I

ia - tele e sity

urba I

ia - tele e sity

ia-tele e sity

5.3 Factors influencing rise in tele-density in rural India

Literacy in rural India Vs rural tele-density year
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

rural India literacy in %

46.1 47.2 48.4 49.6 50.8 52.0 53.3 54.6 55.9 57.3 56.5

rural India tele-density

0.9 1.2 1.5 1.6 1.7 1.9 5.8 12.6 16.6 24.3 32.1

Using the CAGR model, a growth rate of 1.67% has been observed in literacy rate of rural India in the past decade.

r ral tele e sity

30

y = 2.066x - 6.207 R = 0.722

25 20
15

r ral tele e sity 10 5

0 Li ear (r ral tele e sity)

0
-5

10

12

-10

Literacy rate is highly co-related with the tele-density growth in rural India. The R = 0.7224, signifies the fact that as the literacy rate of rural India has risen, tele-density has also seen a significant growth in the past decade. Thus literacy has been an important factor contributing to the rise in tele-density in rural India.
35

 

 

Per capita Income of rural India Vs rural tele-density year

2004 2005 2006 2007 2008 2009 2010 2011

per capita income

6660 7570.2 8604.8 9780.8 11117.5 12636.9 14363.9 16327

rural India tele-denisty

1.6 1.7 1.9 5.8 12.6 16.6 24.3 32.1

Using the CAGR model, a growth rate of 13.67% has been observed in per capita income of the population of rural India in the past 7 years
y = 0.003x - 24.40 = 0.965

35
30 25

20 rural teledensity 15
Linear (rural teledensity) 10 5

0 0 -5 5000 10000 15000 20000

Growth in per capita income of individuals in rural India is highly co-related with the tele-density growth in rural India. The R = 0.9653, signifies the fact that as the per capita income of rural India has increased, tele-density has also seen a corresponding growth. Thus per capita income has been an important factor contributing to the rise in tele-density in rural India.

36

r ral tele e sity

Electrification of rural households Vs rural tele-density Year

2004 2005 2006 2007 2008 2009 2010

electrified villages
474982 479144.9303 4,83,344 487580.5675 491853.9167 496164.7191 504900

rural India tele-density

1.6 1.7 1.9 5.8 12.6 16.6 24.3

Using the CAGR model, a growth rate of 0.87% has been observed in number of rural households electrified in the past 6 years.

rural teledensity
30
25

y = 0.000x - 397.3 = 0.931

20

15

rural teledensity

10

Linear (rural teledensity)

0
470000 475000 480000 485000 490000 495000 500000 505000 510000 -5

Increase in the number of rural households being electrified in India is highly corelated with the tele-density growth in rural India. The R = 0.9315, signifies the fact that an increase in the number of rural households being electrified, tele-density has also seen a significant growth in the 5 years. Thus electrification of rural households has been an important factor contributing to the rise in tele-density in rural India.

37

Population density of rural India Vs rural tele-density year

2005 2006 2007 2008 2009 2010 2011

population density/sq m
488.8 492.466 496.159495 499.8806912 503.6297964 507.4070199 511.2125725

rural India tele-density

1.7 1.9 5.8 12.6 16.6 24.3 32.1

Using the CAGR model, a growth rate of 0.75% has been observed in population density of rural India in the past 6 years.

rural teledensity
35 30

y = 1.404x - 688.6 R = 0.956

25 20
rural teledensity

15
Linear (rural teledensity)

10 5 0
485 490 495 500 505 510 515

-5

Population density of rural India is highly co-related with the tele-density growth in rural India. The R = 0.9568, signifies the fact that as the rise in population density of rural India has resulted in the corresponding tele-density has also seen a significant growth in the past decade. Thus literacy has been an important factor contributing to the rise in tele-density in rural India.

38

5.4 Correlation analysis

Correlations population per capita tele-denisty tele-denisty Pearson Correlation Sig. (2-tailed) N per capita income Pearson Correlation Sig. (2-tailed) N population density of India Pearson Correlation Sig. (2-tailed) N literacy rate Pearson Correlation Sig. (2-tailed) N .001 6 .000 6 .000 6 6 .001 6 .977** .000 6 .997** 6 1.000** .000 6 1 .000 6 .974** 6 .996** .000 6 1 .000 6 1.000** 6 .987** .000 6 1 .001 6 .996** .001 6 .997** 1 income .987** density of India .974** literacy rate .977**

**. Correlation is significant at the 0.01 level (2-tailed).

From the correlation table above it is evident that, tele-denisty in rural India is highly correlated (statistically significant since p<0.01) with
y y y

Per capita income Population density Literacy rate

5.5 Hypothesis testing

Individuals who have adopted the mobile telephone in the rural areas will: 1. Make profitable choices regarding their business, occupation, family etc than before 2. Make profitable associations with retailers & suppliers
39

3. Feel more secure about their families 4. Family ties are kept intact, relatives and other family members are always in touch. 5. Get more information about their occupation, job opportunities, education etc 6. Keep themselves informed about politics, sports etc(basically the day to day events) 7. Generate more respect from the society 8. Save more money meant for transport, travelling etc 9. Have enhanced their social connectivity A pilot test was conducted with 30 samples. Analysis was done on the 30 samples collected from the pilot survey to check the reliability of the scale used in the questionnaire. Cronbach alpha which signifies the reliability of the scale was calculated, & the value obtained 0.717 was found to be more than the theoretical value of 0.6 required for a scale to be reliable.
Reliability Statistics Cronbach's Alpha .717 N of Items 18

A paired samples t test was conducted in order to determine if statistical significant difference exists between mean scores on socio economic livelihoods of before & after adoption of the mobile telephone in rural areas.

Paired Samples Statistics Mean Pair 1 make profitable choices in business, occupation etc make profitable choices in business, occupation etc Pair 2 make profitable associations with suppliers, customers etc 1.16 170 .372 .029 4.50 230 1.093 .072 1.16 N 230 Std. Deviation Std. Error Mean .364 .024

40

make profitable associations with suppliers, customers etc Pair 3 feel secure about my family feel secure about my family Pair 4 keep in touch with all my relatives, friends etc keep in touch with all my relatives, friends etc Pair 5 get more information about my occupation, job opportunities, education etc get more information about my occupation, job opportunities, education etc Pair 6 keep myself informed about the happenings in the city, country etc keep myself informed about the happenings in the city, country etc Pair 7 generate more respect from the society generate more respect from the society Pair 8 save more money meant for travelling, access to information etc save more money meant for travelling, access to information etc Pair 9 enhanced my social status enhanced my social status

4.52

170

.681

.052

1.09 4.78 1.07

232 232 232

.281 .412 .261

.018 .027 .017

4.76

232

.429

.028

1.30

232

.605

.040

4.61

232

.628

.041

1.32

108

.470

.045

4.84

108

.366

.035

1.39

232

.629

.041

4.75

232

.436

.029

1.29

232

.454

.030

4.77

232

.472

.031

1.21 4.84

212 212

.407 .368

.028 .025

41

Paired Samples Test

Paired Differences

Mean Pair 1 make profitable choices in -3.343 business, occupation etc make profitable choices in business, occupation etc Pair 2 make profitable associations -3.359 with suppliers, customers etc make profitable associations with suppliers, customers etc Pair 3 feel secure about my family - -3.698 feel secure about my family Pair 4 keep in touch with all my -3.685 relatives, friends etc - keep in touch with all my relatives, friends etc Pair 5 get more information about -3.315 my occupation, job opportunities, education etc get more information about my occupation, job opportunities, education etc Pair 6 keep myself informed about -3.519 the happenings in the city, country etc - keep myself informed happenings country etc about in the the city,

Std. Deviation 1.370

Std. Error Mean .090

.758

.058

.469

.031

.510

.033

1.136

.075

.634

.061

42

Pair 7

generate more respect from -3.353 the society - generate more respect from the society

.742

.049

Pair 8

save more money meant for -3.478 travelling, access to information etc - save more money meant for travelling, access to information etc

.816

.054

Pair 9

enhanced my social status - -3.632 enhanced my social status

.700

.048

Paired Samples Test

Paired Differences 95% Confidence Interval of the Difference

Lower Pair 1 make profitable choices in business, occupation etc make profitable choices in business, occupation etc Pair 2 make profitable associations with suppliers, customers etc make profitable associations with suppliers, customers etc Pair 3 feel secure about my family - feel secure about my family -3.759 -3.474 -3.521

Upper -3.165

-3.244

-3.638

43

Pair 4

keep in touch with all my relatives, friends etc - keep in touch with all my relatives, friends etc

-3.751

-3.619

Pair 5

get more information about my occupation, job opportunities, education etc - get more information about my occupation, job opportunities, education etc

-3.462

-3.168

Pair 6

keep myself informed about the happenings in the city, country etc - keep myself informed about the happenings in the city, country etc

-3.639

-3.398

Pair 7

generate more respect from the society - generate more respect from the society

-3.449

-3.258

Pair 8

save more money meant for travelling, access to information etc - save more money meant for travelling, access to information etc

-3.584

-3.373

Pair 9

enhanced my social status - enhanced my social status

-3.727

-3.537

Paired Samples Test

t Pair 1 make profitable choices in business, occupation etc make profitable choices in business, occupation etc -37.010

df 229

Sig. (2-tailed) .000

44

Pair 2

make profitable associations with suppliers, customers etc make profitable associations with suppliers, customers etc

-57.772

169

.000

Pair 3 feel secure about my family - feel secure about my family Pair 4 keep in touch with all my relatives, friends etc keep in touch with all my relatives, friends etc Pair 5 get more information about my occupation, job opportunities, education etc get more information about my occupation, job opportunities, education etc Pair 6 keep myself informed about the happenings in the city, country etc keep myself informed about the happenings in the city, country etc Pair 7 generate more respect from the society generate more respect from the society

-120.027

231

.000

-110.114

231

.000

-44.449

231

.000

-57.705

107

.000

-68.883

231

.000

45

Pair 8

save more money meant for travelling, access to information etc save more money meant for travelling, access to information etc

-64.912

231

.000

Pair 9

enhanced my social status - enhanced my social status

-75.581

211

.000

From the paired samples t test it is evident that there exists a statistical significant difference in livelihood scenarios before & after mobile telephone adoption. Taking the example of one of the hypothesis which talks about monetary savings before & after mobile telephone adoption, the mean value for before adoption stands at 1.29 & the corresponding mean value for after adoption stands at 4.77. Thus there exists a statistically significant mean difference of -3.478(significant at 0.05) in the before mobile adoption & after mobile adoption. Thus we reject the null hypothesis that there exists no difference in the socio economic situation of a rural individual before & after mobile telephone adoption.

46

CHAPTER 6 CASE STUDY

47

Case 1: Siddaramu
 Name: Siddaramu  Occupation: Farmer  Grows Ragi  Lives in Channegowdan doddi  Town: Maddur  District:Mandya  Annual Income : `45000

Profile of Siddaramu:  Siddaramu is a farmer by profession.  He has done his basic schooling i.e. till 4 th standard.  Hes from a village by the name Channegowdandoddi in the town of Maddur, Mandya district.  The population of the village is in the range of 1000-1200.  People here are mainly involved in farming with ragi, sericulture, corn, sugarcane etc being the crops grown.  Average income of an individual in the village is Rs 40000pa.  Siddaramu is married to Janaki & has one son. His son works as a cab driver in Bangalore.  Siddaramu cultivates ragi and sells them to traders in the town of Maddur to earn his income.  Siddaramu says irrigational facilities are adequate in his village & they do not face water scarcity.
48

Communication network of Siddaramu

Socio economic impacts

Impact areas (before adoption

Impact areas (after adoption

12.4% sa ings

ertili ers, manure etc

` 14000

ertili ers, manure etc

50% sa ings

Communication

` 200

Communication 30% sa ings

Transport

`1500

Transport

From

the

table we can see that Siddaramu has been able to make significant savings owing to the adoption of mobile telephone. Farming & transport expenses for Siddaramu have gone down significantly owing to the mobile phone adoption.

49

!
`16000 `400 `5000

" $ $

After mobile adoption Fertilizer, manure etc Receives them on credit in case void of cash. This scenario was unimaginable before mobile adoption. Owning a mobile telephone has increased the trust fact & also he has been able to make profitable associations with traders in the city Communication Has saved immensely in this area, by reducing travel to visit relatives, communicate with local farmers etc Transport Another high impact area where he has made savings by reducing travels to the town to purchase necessary farming items, visit relatives, friends etc

 Siddaramu believes after he has bought the mobile phone he has been able to save significantly on his travel expenses. According to him, in a month he saves around Rs 150 per month meant for travelling to the city of Mandya, meeting with his friends by travelling to the town etc.

 Through use of the mobile phone, he saves substantially on travel time by reducing the number of city trips to maintain relationships with traders

 Siddaramu leverages different relationships with different traders, moneylenders or wholesale purchasers to optimise sale of his produce after harvesting.

 Gains other kinds of incremental information such as market rates for his crops, any incentives from the government directed towards farmers etc.  The mobile phone has enabled Siddaramu to overcome the vulnerability caused by a lack of timely information or lack of communication to achieve maximum profits for himself
50

Case 2: Umesh
 Name: Umesh  Village: Devaradoddi  District: Ramnagar  Occupation: Student/farmer  Annual Income: Rs 60000  Grows ragi, sericulture

Profile of Umesh:  Umesh is a student/farmer who cultivates ragi.  Umesh lives with his parents and a younger brother in a village called devaradoddi, Ramnagar district.  The village has a population of around 800.  People here mainly employ themselves in farming.  Ragi, corn, sericulture etc are grown in this region.  Average income of people in this village is Rs 60000pa.  Umesh tries to educate himself on improved farming techniques. He does farming in the morning & attends college in the evenings.
51

Communication network of Umesh

Socio Economic Impacts

)
`25000 `4000 `55000

Impact areas(after adoption

Impact areas(Before adoption 12% sa ings

arming expenses

(fertili er, manure, seeds etc

`22000
50% sa ings

(fertili er, manure, seeds etc

Tra elling

`2000
tra elling

Profit from selling his produce

`57000
Profit from selling his produce

From the table we can see that Umesh has been able to make significant savings owing to the adoption of mobile telephone. Farming & transport expenses for Umesh have gone down significantly owing to the mobile phone adoption.

52

3 6% p ofit

0 5 3 4

'

&

arming expenses

After mobile adoption According to Umesh, he has been able to save considerably on his Farming expenses (fertilizer, seeds etc) manure, farming expenses by adopting inexpensive means of farming. Purchasing seeds of high quality at feasible rates by having profitable associations with the traders. He has been able to sell his produce at the best market rate possible owing to the information he receives through his mobile phone Umesh has been able to save significantly on his travelling Transport expenses after mobile phone adoption. He has been able to keep in touch with his family, relatives, friends etc through the mobile phone instead of travelling to the respective locations to meet them. Also he says, traders visit him to buy his produce thus cutting down on his travelling expenses to the town to sell his produce

 According to Umesh, after mobile adoption he has been able to balance his occupation and education in an efficient manner.  He has increased his social connectivity which according to him did not exist before he bought the mobile phone  Also he saves on his travel to the city to buy necessary items for farming & for his household by making a call to his friends who work in the city & thus bring home the items he requires.  He has also developed a certain amount of trust with vendors & traders, thereby even through if he is running short of finance, vendors & traders do offer him credit since they can contact him through his mobile phone.  Also owing a mobile phone has been led him to undergo education in the town.  He keeps his family informed about his whereabouts and thus has developed a feeling of security within his family.
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CHAPTER 7 CONCLUSIONS, SUGGESTIONS & THE ROAD AHEAD...

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7.1 Conclusions
1. Operators must gain a deeper understanding of the distinctive service requirements of rural customers.

2. The rural customer fulfils his communication needs through the mobile phone. Thus by introducing tariff rates which are beneficial to the rural consumer, telecom companies can reach out to more consumers in rural India.

3. Operators must engage in more detailed customer segmentation, and also provide after sales service appropriate to rural populations.  Though rural mobile device retailers stock various models of mobile phones, second hand devices and Chinese handsets, there are serious post-purchase service challenges.  There are no service centres or repair hubs that provide any servicing for the phone. Most are informal in nature and deal in fake parts that often void warranty on the original device.  Rural users inevitably have to travel more than 10 kilometres at the minimum to arrive any kind of a help agency.  Since there is no awareness of such guarantees that are offered from the manufacturers side, rural consumers are often misled with cheap parts that malfunction in a short period of time.  Improvements in post purchase servicing is essential to drive further rural uptake

4. Operators must collaborate with each other to address the infrastructural challenge.  The lack of steady flow of electricity is a prime barrier to adoption of many electronic devices, including mobile phones. This is seen as an additional expense, as people might have to look to alternative sources to charging their phones.  People in rural India are unable to exploit the benefits of a mobile device in a complete manner.  Consequently, there are challenges around secondary infrastructure like poor network signals.

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 With issues around two primary prerequisites, mobile adoption is not seen as a feasible adoption for certain individuals in highly rural remote locations.  Further infrastructure roll out of both mobile telephony as well as of basic electricity, can further enable mobile adoption in remote locations

5. Network providers must develop innovative VAS targeted towards the rural population.

 Perhaps most important, operators must understand their customers deeply enough to develop relevant and innovative value-added services geared toward the rural population.  Companies customizing products for rural masses
Company name Products

Godrej

Chotukool Refrigerators

Nokia

Life tools

Vortex

Low cost ATMs

Reliance Communication

Gramada phone

 Nokia as a handset manufacturer has developed Life tools. Life Tools is a VAS developed keeping in mind the needs of the rural population in India & is aimed at helping farmers to get local information on seeds, crops, markets and weather. 6. Rural markets offer a huge potential in terms of market, but service providers must provide value to the end user i.e. the rural individual in order to generate more profits.

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7.2 Suggestions 1. Base stations that function on solar power should be installed in rural & remote areas of India. This in turn  Reduces the fuel costs incurred by companies,  Requires less than 50W of power per Base Station.  Reduces the investment costs incurred by companies, hence companies tend to bother less on the revenue aspect from rural India.

2. Increased government subsidies provided for network roll outs in the rural areas.

3. Voice based VAS for the rural population. Since the rural population is low on literacy rate, SMS based VAS are unaccounted for or are not relevant to the rural population.

4. As mentioned in the findings of the research conducted, rural population does exploit all the features that are available on the mobile phone. Thus reading & sending SMSs are out of the picture when it comes to rural India. 5. Service providers can initiate voice based VAS, to better connect with the rural consumers by providing them information which help them in their occupation as well as cater to the general needs of the rural population. E.g. market info, weather forecasts, regional as well as national news etc.

7.3 The road ahead: Broadband in rural India

Broadband facilities enable people to interact with governments, conduct business communication with peers, and access better healthcare and education services. Initiatives for rural broadband penetration:
y

Grameen Gyan Abhiyan In August 2007, the government launched the Grameen Gyan Abhiyan (GGA), which

envisages knowledge and skill empowerment of rural families using information and communication technology (ICT). A nationwide scheme, it will cover every block with a village resource centre, and provide a village knowledge centre for each panchayat. Last mile
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connectivity will be achieved through a combination of the internet and community radio, as well as that of the internet and mobile phones.
y

Common Service Centres The Common Service Centre (CSC) scheme is yet another initiative to enhance rural

broadband penetration. It is part of the National e-Governance Plan (NeGP) of the National Common Minimum Programme. It aims to provide e-governance countrywide through a publicprivate partnership (PPP) model. The scheme proposes to roll out 100,000 CSCs in the rural areas and 10,000 CSCs in the urban areas. The kiosks will be spread equitably across the country.
y

e-Disha Ekal Seva Kendras Other private companies such as Hughes Communications India Limited (HCIL),

Microsoft, Alcatel-Lucent, etc. are also involved in various rural broadband initiatives. For instance, HCIL and Comsat have partnered with the Haryana government to roll out e-Disha Ekal Seva Kendras across the Rohtak telecom division. The e-Disha Kendras will provide rural citizens with access to e-governance applications like certificates, land records, social welfare, etc. They will also offer services such as interactive education, railway and airline ticketing, mobile prepaid topups and international voice calling.
y

Project Saksham Microsoft has partnered with HCIL to introduce 5,000 broadband-enabled ICT kiosks

across 200 small towns and rural regions in India. As part of its rural computing initiative Project Saksham, Microsoft will offer free 12-day IT literacy programmes for kiosk operators. The kiosks will be operated on a franchiseebased model, offering e-governance, ecommerce and e-education facilities.HCIL will offer broadband services, internet access, prepaid top-ups, value-added services, education services and international voice calling.
y

Infothela As part of the Media Labs Asia project (in which Alcatel-Lucent is involved), the IIT

Kanpur-Lucknow Lab is working on a completely new concept. In February 2006, it developed a battery-powered infothela, a mobile platform equipped with internet and telecom
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facilities to spread IT to people in remote areas. The 200 kg, Rs 70,000, all-weather infothela is designed to spread information about education, healthcare, weather, agriculture and employment. It can check land records as well. Its features include a "digital mandi" an electronic platform for the agro commodities business. In order to promote mass participation, IITians are planning to invite educated and unemployed village youth to operate the infothela. The prototype is ready and runs on BSNL's cable network. Pilot trials are being conducted in 50 villages between Kanpur and Lucknow.
y

e-Choupal There are currently over 10,000 ongoing initiatives to expedite the spread of ICT services

in the rural areas. Though many have hit rough patches, some have been undisputedly successful and lucrative. These success stories propel the growth of other new and innovative business models. e-Choupal is only one of the many success stories. It is a nationwide info kiosk-based e-procurement network set up by ITC in 2000. The kiosks enable farmers to sell their produce at ITC collection shops at competitive market rates.This prevents farmers from being exploited by intermediaries. There are currently 6,500 e-Choupal installations covering nine states and 38,500 villages. In its first year, e-Choupals saved approximately $280,000 on just a single crop, soya. The network is estimated to have benefited 3.5 million farmers. The programme also generated employment. Local farmers, called sanchalaks, are selected and trained by ITC to operate the kiosks. In 2004, in a show of support for the venture, AlcatelLucent joined hands with ITC for the cause. In the future, the project will be extended to cover 15 states and 100,000 villages through 20,000 installations.

Broadband: Opportunity
y

The service delivery ecosystem is developing rapidly to address the opportunity from wireless broadband services in rural areas

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Broadband: economic impact (India)

y

According to the World Bank report 10 percent increase in broadband penetration helps in increasing the GDP of a developing country by 1.38 percent.

Increasing broadband penetration by 1 percent will contribute Rs.162 billion to Indias GDP by 2015.

Rural broadband expansion will mean more digital access to the rural population which is sure to throw up opportunities for innovative service delivery and e-commerce business models which are profitable for domestic IT industry.

Services industry contributes a large chunk to the overall GDP of India; hence rural broadband penetration is sure to enhance the economic growth of India in the coming years.

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Particulars

2010

2015

Wireless broadband users (million) Penetration of population Wireless broadband service ARPU (`/ month) Households with wireless broadband connection (million)* Businesses with wireless broadband connection (million)*

10 0.8% 523 6

158 12.5% 343 72

1.4

4.0

Source: industry inputs, analysys mason, *includes households & businesses with multiple connections & users

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CHAPTER 8 BIBLIOGRAPHY

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Reliance Communications company profile http://www.indiainfoline.com/Markets/Company/Background/Company Profile/Reliance-Communications-Ltd/532712

Tele-density figures http://www.trai.gov.in/ http://www.dot.gov.in/

Broadband penetration, data evolution for rural India http://www.iamai.in/ http://www.imrbint.com/

Population figures http://censusindia.gov.in/

Rural development schemes by Govt of India http://rural.nic.in/ http://finmin.nic.in/

Access to communications in emerging markets." Vodafone.com. Vodafone. Web. 4 Jan. 2010. http://www.vodafone.com/content/index/miscellaneous/error.html

International Telecommunications Union http://www.itu.int/home/index.html

Market share for telecom service providers http://www.indiainfoline.com/

Telecom policies, subscriber base http://indiatelecomnews.com/

Telecommunication in India http://en.wikipedia.org/wiki/Telecommunications_Statistics_in_India

Telecom vision 2020 http://planningcommission.nic.in/sitemap/index.php?poli=newdoc.htm

y y

http://www.itu.int/newsroom/press_releases/2004/NP01.html Reliance Communication rural products(Gramada phone) http://www.rcom.co.in/Rcom/personal/home/index.html

Nokia life tools http://www.nokia.co.in/

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Handset evolution in Indian telecom http://www.ericsson.com/thecompany/company_facts/worldwide/as/in

Developments in telecommunication in India http://karnataka.bsnl.co.in/ http://www.bsnl.co.in/

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CHAPTER 9 ANNEXURE

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Questionnaire (Socio Economic Impacts)

Demographic profile: 1. Age : a) less than 25 b) 25 -34 c) 35-44 d) 45-54 e)>=55

2. Annual income : a)<50000 b) 50000-75000 c)75000-125000 d)125000-150000 e) 150000-200000 f) >200000

3. Location :

4. Village:

town:

District:

5. Occupation:

6. Since how long have you owned a mobile telephone? : The statements given below will measure the impact of mobile telephone on your social & economic livelihood before and after adoption. Request you to encircle the appropriate number at the right of each statement. The meaning associated with each number is as given below.

1 Previous status ( before mobile phone) 2 3 4 5

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Strongly Disagree Disagree Cant Say Agree Strongly Agree

1 Current status (after adoption of mobile phone) 4 5 2 3

Strongly Disagree Disagree Cant Say Agree Strongly Agree

Previous status ( before mobile phone) Im able to make profitable choices regarding my business, occupation etc Im able to make profitable associations with retailers and suppliers 1 2 3 4 5 1 1 2 3 4 5 1

Current status (after adoption of mobile phone) 2 3 4 5

I feel more secure about my family

1 Im now able to keep my family ties intact, relatives and other family members can be easily kept in touch with.

I can now get access to more information regarding my occupation

I keep myself informed about events, politics et

Generate more respect from my society

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Im able to save more money meant for transport, other expenses I have enhanced my social connectivity

Thank you!!!....

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