MUMBAI: Considering the fact that the urban markets are reaching saturation point and the ARPU (Average revenue per user) is declining, cellular service providers have ultimately moved towards rural India. Or was it  Telecom Minister Maran's call that forced cell operators to start providing connectivity to rural India?

Selling integrated services to enterprises was the new buzzword for cellular operators when cellular markets reached its saturation. Now it's time to tap the lucrative upcountry market. A market that has not been tapped to its full potential, the operators are now making a beeline for it as the urban market has had its share of tariff cuts and varied payment plans. In short, the mass market cannot boost cellular operators' bottom lines any longer. Therefore, there has been a change in focus and now the objective is to expand the telecom market by offering cellular service to the rural market.

The pie's worth?
The rural market is a good business proposition for cellular operators and handset manufacturers as the mobile phone penetration is very low in this area. It stands at a measly four percent when compared to 22 percent of urban India. Cellular operators launched their services in B and C class cities and received an overwhelming response. The growth in these areas is almost triple compared to the stagnant growth in metros.

The recently opened Jammu & Kashmir circle for mobile services has seen around 8 percent growth as compared to the less than 2 percent growth seen in the metros in April this year. Recently, Union Minister for Telecom and IT Dayanidhi Maran asked all cellular operators to extend their services to rural markets. Also, the entry cost of going mobile has dropped from the earlier Rs 1500 to around Rs 300. The penetration level of mobile phones in rural India has reached 5,000-odd villages, which is less than 1 percent. With over 60 percent of the country's one billion population living in the villages, it is a vast market.

If one were to carry this number forward and take the other operators into account, on a rough estimate, the total enterprise segment market for cellular operators would work out to around Rs 18,000 crore.

The move to the rural markets was inevitable. Various initiatives like free incoming calls, massive cuts in long distance rates, declining voice revenues, value-added services, et al, have been tried to boost the flagging average revenues per user (ARPUs) from the mass market. The only other way was to target a segment that was ready to spend, which would in turn ensure better ARPUs. Besides, the rural market holds an added charm as it has the lowest churn rate.

The cellular operators have asked the government to allow sharing of BSNL's infrastructure for rural connectivity, but Maran declined saying that rural connectivity is BSNL's USP and private operators are monetarily sound to have their own infrastructure. Therefore private operators have started building their own networks to tap this lucrative market and hopefully India would soon see further upsurge in teledensity.