report on vas feasibility in rural india

61
PROJECT TITLE VALUE ADDED SERVICES PENETRATION AND FEASIBILITY STUDY IN RURAL MARKET For VODAFONE ESSAR DIGILINK LTD. A PROJECT SUBMITTED AS A PART OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION SUBMITTED BY Gaurav Saxena MARKETING/SYSTEMS BATCH: 2009-11 UNDER THE GUIDANCE OF Mr. Aniruddha Ghosh Sr. Manager VAS (Vodafone UP-East) Prof. Kinshuk Bhadury Faculty, SIMS

Upload: gaurav-saxena

Post on 07-Apr-2015

473 views

Category:

Documents


7 download

TRANSCRIPT

Page 1: Report on VAS Feasibility in Rural India

PROJECT TITLE

VALUE ADDED SERVICES PENETRATION AND FEASIBILITY STUDY

IN RURAL MARKET

For VODAFONE ESSAR DIGILINK LTD

A PROJECT SUBMITTED AS A PART OF THE REQUIREMENTS

FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

Gaurav Saxena

MARKETINGSYSTEMS

BATCH 2009-11

UNDER THE GUIDANCE OF

Mr Aniruddha Ghosh

Sr Manager VAS (Vodafone UP-East) Prof Kinshuk Bhadury

Faculty SIMS

Symbiosis Institute of Management Studies

To whom it may concern This is to certify that Mr Ms Gaurav Saxena_ PRN No 09020441245_ has

completed his her project report on the topic Value Added Services penetration

and feasibility study in rural market _ under my guidance Kinshug Bhadury

Sign

Place

CPS Report ndash Vodafone Essar Digilink Ltd

Page | i

Project

The prime question associated is ldquoWHY VASrdquo and ldquoWHY Rural marketrdquo

Why Rural Market

The proportion of new mobile subscribers

from rural areas indicates the importance of

this market segment to sustained mobile

growth in India

Telecom Regulatory Authority of India

(TRAI) predicted in its 2009-2010 report

that of the next 250 million mobile

subscribers in the country approximately

100 million will be from rural areas and this

will drive the growth of rural VAS By 2012

60 per cent or close to 400 million of Indiarsquos

projected 650 million total mobile subscriber

base will be rural subscribers

Why VAS

Present day operators are facing the biggest

hick of declining ARPU (Average Revenue

Per user) and increasing churn

A sharp decline in average revenue per user

is being witnessed due to tumbling tariff

rates Entry of new operators has aggravated

this and tariff rates have hit rock bottom

levels Thus telecom operators are seeking

ways to increase their per-user revenue and

VAS has become one of the key focal point

To make this more attractive vendors and

operators have started focusing on innovative

solutions and local content to increase

consumer stickiness along with improving

the adoption rate of these services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | ii

Acknowledgement

It gives me immense pleasure to acknowledge all the people who have guided and helped

me to complete this assignment

The Vodafone UPE rural market survey offered a great learning experience During the

tenure of this project I was fortunate to have interacted with people who in their own

capacities have encouraged and guided me

I would like to express my sincere gratitude to HR Department of Vodafone (UPE) for

providing me an opportunity to undergo training in VAS-Marketing Department of such a

reputed organization Working with the market leaders was a great learning experience

I am extremely fortunate that I got an opportunity to work with the VAS Marketing

Team of Vodafone (UPE) My sincere thanks to Mr Aniruddha Ghosh who have

shared his corporate experiences and shown me the direction during my project I am

deeply indebted to him for his extensive illuminating guidance creative suggestions

persistent encouragement constant supervision and constructive criticism which enabled

me to give this project its final shape

I offer humble thanks and shall always be obliged to him for giving me such a valuable

project and for trusting my potential

Thank you Vodafone (UPE) for this opportunity

Gaurav Saxena

MarketingSystems

EMAILGauravsaxena2011simsedu

CPS Report ndash Vodafone Essar Digilink Ltd

Page | iii

Executive Summary

Rural markets in India constitute a wide and untapped market for many products and

services which are being marketed for the urban masses There is a demand for

telecommunication services to be provided to in these areas Till now it was government

which was trying to reach the villages through various initiates but the rural tele-density

is very poor and can be improved only through the introduction of modern and suitable

technology along with participation from the private operators The report here would

like to make a strong insight for the use of VAS for rural areas The various marketing

issues related to marketing of VAS services in rural areas area seen through the 4 Arsquos

framework

The structure of report is as follows the First section outlines how the telecom sector has

grown in last 5-10 years what all aspects have grown and what all have fallen what all

new services are being introduced and currently in which direction is this sector heading

to

Second section talks about Vodafone global and Vodafone India growth of hutch to

Vodafone current wireless subscriber base and market share in UPE and then lastly about

Vodafone (UPE) and VAS in Vodafone (UPE)

Third section talks about the VAS in urban market A survey and research result

(obtained from online resources) is presented giving the big picture of how and what

urban subscribers want to see in VAS The section ends highlighting the dividing

elements between urban and rural market

Last but not the least Fourth section introduces the rural market and all aspects with the

promotion of VAS in this type of market giving the subscriber behavior and pattern

followed by graphical analysis of survey and authors recommendations

The project report highlights the understanding of rural market the consumer behavior

and pattern why VAS is not so much accepted or used in these areas as compared to

urban market and how a company should promote VAS

The research suggests out that company need to better understand the customers

(subscribers) need wrt cost of products and services buyer values of rural customers as

well as the post-sales support expectations that rural customers have in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | iv

Table of Content

Section I

Telecom Overviewhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip1

Prepaid connections popular among mobile usershelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2

Tele-densityhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3

Tariff reductionshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4

Revenue growth in industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5

ARPUhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip7

Minutes of usage (MoU) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8

Growth of MVAShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip9

Section II

About Vodafone and Vodafone Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip11

Growth of hutch to Vodafonehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip12

About Vodafone Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip13

About Uttar Pradeshhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip13

Wireless subscriber base in UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip14

About Vodafone UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15

UPE Vodafone regional structure (hierarchy) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip16

VAS VAS entities and VAS in Vodafone UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip18

Promotion of VAShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip20

Section III

Statistical snapshot of Indian mobile usershelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21

Top mobile siteshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21

Urban behavior studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip22

The gap between urban and rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25

Section IV

Indian rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27

Marketing issues in rural telecomhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip28

Mobile awareness levelhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip30

Rural surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Targeted information sourceshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Questionnairehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Survey analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip36

Graphical analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39

Recommendationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip47

Concluding Remarkshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip51

CPS Report ndash Vodafone Essar Digilink Ltd

Page | v

Referenceshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip52

Appendix A

Major VAS products in Indian rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Successful Global Experiences in Rural Telecomhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Abbreviations VAS Value Added Service

ARPU Average Revenue per User

IVR Interactive Voice Response

SMS Short Messaging Service

MCI Missed Call Information

CT Caller Tune

P2A Person to Application

P2P Person to Person

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 1

1 Telecom Overview

The Indian telecommunication industry with 62128 million telephone (landline and

mobile) subscribers and 584 million mobile phone connections as of March 2010 is the

second largest telecommunication network in the world and the second largest in terms

of number of wireless connections in the world Telecommunication activities saw rapid

growth in India starting at the dawn of the 21st century and since then efforts have been

made from both governmental and non-governmental organizations to further improve

the telecommunication infrastructure The eventual goal is to foster the development

and widespread use of modern telecommunication technologies that will serve all

segments of Indialsquos culturally diverse society and to transform it into a country of

technologically aware people The Indian Mobile subscriber base has increased in size

by a factor of more than one-hundred since 2001 when the number of subscribers in the

country was approximately 5 million to 584 million in March 2010 In the first quarter

of 2010 there have been a record breaking 5918 million mobile subscriber additions -

More than twice as many added in China during the same period (295 million) which

is currently leading with 780 million mobile subscribers as of March 2010

As the fastest growing telecommunications industry in the world it is projected that

India will have a more than 1-billion mobile subscribers by 2015 Furthermore

projections by several leading global consultancies indicate that Indialsquos the total number

of subscribers will exceed China by 2019 The industry is expected to reach a size of

Rs 344921 Crore (US$ 7692 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 28 million people

and for 7 million indirectly

Figure 1 Service Providerslsquo share in net additions during the month of March-2010

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 2

Figure 2 Service Provider wise Market Share as on 31-3-2010

11 Prepaid Connections Popular Amongst Mobile Users

Prepaid customers account for a significantly higher share in the total subscriber base in

both the GSM as well as CDMA segments Prepaid subscribers form around 9310

and 9430 of the total subscriber base of the CDMA and GSM segments respectively

Figure 3 Area wise composition of wireless subscribers (FY-09)

Ease of changing the tariff plans anytime coupled with the notion that prepaid

connections help in limiting expenses within a fixed budget are likely to have made

prepaid connections an attractive proposition for the customers especially in the middle

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 3

and lower income segments Interestingly in the metros the proportion of postpaid

subscribers is relatively higher as compared with other service areas The BampC circle

has comparatively higher proportion of the prepaid customers

12 Teledensity

With sustained increase in subscriber base since the beginning of the current decade the

teledensity has witnessed a significant increase from just above 2 in FY99 to 3698

by end of FY09 Even though the teledensity has improved substantially during the last

decade it is still low as compared with other developing countries Thus there is a huge

untapped potential existing for the telecom operators in India While the teledensity in

India has improved substantially there is a stark difference between the teledensity of

the urban and rural areas While the urban teledensity at 89 indicates a rapidly

saturating urban market teledensity of just around 15 in rural areas points to a huge

potential market for the growth in the telecom industry

Figure 4 Trend in Urban and Rural Teledensity

The urban teledensity has improved from under 7 in FY99 to as much as 89 in

FY09 In fact in Delhi the teledensity is as high as 125 While the teledensity in the

metros is rapidly reaching saturation point the future growth in urban areas is expected

to come from non-metros The teledensity of the rural areas has also improved

substantially during the last decade The number of rural telephones increased from

around 1230 mn in March 2004 to 12029 mn in March 2009 In fact the significant

improvement in the rural teledensity has been primarily backed by the surge in wireless

services in the rural areas The wireless subscriber market in the rural areas has surged

to 10971 mn by end of FY09 taking the share of rural wireless subscriber to 28 of

the total wireless subscriber in the country

Although the teledensity in the rural India has grown from as low as 05 in FY99 to

around 15 in FY09 the rural areas still remain under-penetrated to a large extent Large agricultural workforce low per capita income low literacy rates and around 60

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 4

of rural households not having access to electricity is likely to have limited the growth

of the mobile services in rural areas Further underdeveloped telecom infrastructure in

the rural areas has also been an inhibiting factor to necessitate rapid penetration of

telecom services in rural areas High network maintenance cost in rural areas compared

with the urban areas on account of poor transportation lack of skilled labour have also

restrained the rapid growth of telecom services in these areas

Overall Teledensity in India reaches 4789 with 56221 million subscriber base (Jan-

2010)

13 Tariff Reductions

Across the board reduction in telecom tariff has been one of the primary factors behind

the exponential growth experienced by the Indian telecom industry The competition

within the various segments of the telecom sector has intensified in the past few years

and has led to a price war between the operators The race between the telecom service

providers to capture the market which led to substantial tariff reduction has proved

beneficial for the consumer The array of tariff schemes is being made available by

various service providers to suit the usage profile of a wide range of customers in India

to stay ahead of competitors Also most operators offer schemes with assured lifetime

connectivity without having to pay any recurring fixed charges Moreover intense

competition and the resultant reduction in tariff levels induced the TRAI to gradually

move towards a regime of tariff deregulation While tariffs for some crucial segments

like rural telephony roaming services and leased lines are still regulated all the other

tariffs are under forbearance The tariff regulation of TRAI has even granted the unique

option for customers to avail a particular tariff for the entire licensing period of their

service providers without having to fear any tariff hike

Currently the charges for outgoing local telephone calls have dropped to below Re

1min and there is no charge for incoming calls The charges for national long distance

calls and international long distance calls have also experienced significant reduction

since 1999 A 1 minute call between Delhi and Mumbai that cost more than Rs 37- in

pre-TTO 1999 period can be currently made for almost at the price of a local call

Similarly the tariff for a call to American continent from India has come down from Rs

75 to less than Rs 7 per minute within the same span of time

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 5

Figure 5 decline in Tariff of NLD and ILD service during period May-99 to Mar-08

The average outgo per outgoing minute (Rental revenue + Airtime revenue per outgoing

minute) which is considered as a realistic indicator of tariff levels has also witnessed

significant decline in the last few years The average outgo per outgoing minute for

GSM subscribers has declined by almost 34 from Rs 115 in March 2007 to Rs 076 in

March 2009 and that for CDMA subscribers has declined from 081 in March 2007 to

Rs 057 in March 2009

GSM Segment CDMA Segment

Figure 6 Average Subscriber Outgo per minute

14 Revenue Growth in the Industry

Despite the Indian economy witnessing a significant slowdown in growth on account of

severe global economic crisis the Indian telecom industry has shown resilient

performance with a revenue growth of almost 18 (y-o-y) during FY09 A confluence

of factors such as under-penetrated rural areas growing demand for telecom services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 6

(especially by the young population) have supported the industry growth The revenue

growth in the telecom industry during FY09 was primarily driven by the robust

performance of the private sector The revenue of the private sector grew by as much as

29 during FY09 On the other hand the revenue of public sector witnessed a decline

of around 480 during FY09 as a result the share of private sector in total revenue

increased to 73 during FY09 as compared with 6650 in FY08 and that of public

sector declined to 27 from 3350 in the same period

Figure 7 Growth in gross revenue

Within the GSM as well as the CDMA segment revenue from call charges account for

around 60 of the revenue While the share of rental revenue for the GSM players is

around 18 for CDMA players it is comparatively higher at around 24 However for

both these segments the share of rental revenue in total revenue has witnessed

significant decline in the last few years The decline can be partly attributed to the

intensified competition within the players that has led to intensive price-war between

service providers

Figure 8 Trend in outgoing SMS

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 7

Further the share of revenue from SMS has also witnessed substantial decline in the

recent past Decline in SMS charges lucrative offers designed by service providers

(such as SMS package) coupled with falling call price leading to substitution effect is

likely to have reduced the revenue share from SMS services In fact the number of

outgoing SMS per subscriber per month has witnessed a gradual reduction the last few

years The revenue forms the value-added services and installation charges have

witnessed a gradual increase in the past few years

15 ARPU is Continuously Declining

The average revenue per unit (ARPU) of both GSM and CDMA subscribers has been

on a downtrend in the last few years The industry-wide ARPU of GSM service

providers have witnessed a decline of around Rs 189 between FY05-FY04 from Rs 394

during the quarter-ended March 2005 to Rs 205 during the quarter-ended March 2009

The ARPU of CDMA service providers have also declined from Rs 256 in the quarter-

ended March 2006 to Rs 99 during the quarter-ended March 2009 The decline in the

ARPU over the years could be largely attributed to the reduction in tariffs of local NLD

and ILD calls The customer-oriented policy taking by the regulatory body and intense

competition among the players have to a greater extent resulted in declining ARPU in

the telecom industry The ARPUs have also been affected by the increasing proportion

of prepaid subscribers and increasing subscription from lower income population

Postpaid ARPU has been five times that of prepaid ARPU which could be attributed to

the declining importance of processing fee on recharge coupon voucher purchased by

prepaid subscribers the gap is lowest in Circle C (368 times) and highest in Circle A

(559 times)

Source TRAI various issues of performance report

Figure 9 Segment wise trend in ARPU

The ARPU in the B amp C circles is relatively lower as compared with the other areas

This could largely be attributed to concentration of low income and low usage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 2: Report on VAS Feasibility in Rural India

Symbiosis Institute of Management Studies

To whom it may concern This is to certify that Mr Ms Gaurav Saxena_ PRN No 09020441245_ has

completed his her project report on the topic Value Added Services penetration

and feasibility study in rural market _ under my guidance Kinshug Bhadury

Sign

Place

CPS Report ndash Vodafone Essar Digilink Ltd

Page | i

Project

The prime question associated is ldquoWHY VASrdquo and ldquoWHY Rural marketrdquo

Why Rural Market

The proportion of new mobile subscribers

from rural areas indicates the importance of

this market segment to sustained mobile

growth in India

Telecom Regulatory Authority of India

(TRAI) predicted in its 2009-2010 report

that of the next 250 million mobile

subscribers in the country approximately

100 million will be from rural areas and this

will drive the growth of rural VAS By 2012

60 per cent or close to 400 million of Indiarsquos

projected 650 million total mobile subscriber

base will be rural subscribers

Why VAS

Present day operators are facing the biggest

hick of declining ARPU (Average Revenue

Per user) and increasing churn

A sharp decline in average revenue per user

is being witnessed due to tumbling tariff

rates Entry of new operators has aggravated

this and tariff rates have hit rock bottom

levels Thus telecom operators are seeking

ways to increase their per-user revenue and

VAS has become one of the key focal point

To make this more attractive vendors and

operators have started focusing on innovative

solutions and local content to increase

consumer stickiness along with improving

the adoption rate of these services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | ii

Acknowledgement

It gives me immense pleasure to acknowledge all the people who have guided and helped

me to complete this assignment

The Vodafone UPE rural market survey offered a great learning experience During the

tenure of this project I was fortunate to have interacted with people who in their own

capacities have encouraged and guided me

I would like to express my sincere gratitude to HR Department of Vodafone (UPE) for

providing me an opportunity to undergo training in VAS-Marketing Department of such a

reputed organization Working with the market leaders was a great learning experience

I am extremely fortunate that I got an opportunity to work with the VAS Marketing

Team of Vodafone (UPE) My sincere thanks to Mr Aniruddha Ghosh who have

shared his corporate experiences and shown me the direction during my project I am

deeply indebted to him for his extensive illuminating guidance creative suggestions

persistent encouragement constant supervision and constructive criticism which enabled

me to give this project its final shape

I offer humble thanks and shall always be obliged to him for giving me such a valuable

project and for trusting my potential

Thank you Vodafone (UPE) for this opportunity

Gaurav Saxena

MarketingSystems

EMAILGauravsaxena2011simsedu

CPS Report ndash Vodafone Essar Digilink Ltd

Page | iii

Executive Summary

Rural markets in India constitute a wide and untapped market for many products and

services which are being marketed for the urban masses There is a demand for

telecommunication services to be provided to in these areas Till now it was government

which was trying to reach the villages through various initiates but the rural tele-density

is very poor and can be improved only through the introduction of modern and suitable

technology along with participation from the private operators The report here would

like to make a strong insight for the use of VAS for rural areas The various marketing

issues related to marketing of VAS services in rural areas area seen through the 4 Arsquos

framework

The structure of report is as follows the First section outlines how the telecom sector has

grown in last 5-10 years what all aspects have grown and what all have fallen what all

new services are being introduced and currently in which direction is this sector heading

to

Second section talks about Vodafone global and Vodafone India growth of hutch to

Vodafone current wireless subscriber base and market share in UPE and then lastly about

Vodafone (UPE) and VAS in Vodafone (UPE)

Third section talks about the VAS in urban market A survey and research result

(obtained from online resources) is presented giving the big picture of how and what

urban subscribers want to see in VAS The section ends highlighting the dividing

elements between urban and rural market

Last but not the least Fourth section introduces the rural market and all aspects with the

promotion of VAS in this type of market giving the subscriber behavior and pattern

followed by graphical analysis of survey and authors recommendations

The project report highlights the understanding of rural market the consumer behavior

and pattern why VAS is not so much accepted or used in these areas as compared to

urban market and how a company should promote VAS

The research suggests out that company need to better understand the customers

(subscribers) need wrt cost of products and services buyer values of rural customers as

well as the post-sales support expectations that rural customers have in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | iv

Table of Content

Section I

Telecom Overviewhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip1

Prepaid connections popular among mobile usershelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2

Tele-densityhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3

Tariff reductionshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4

Revenue growth in industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5

ARPUhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip7

Minutes of usage (MoU) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8

Growth of MVAShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip9

Section II

About Vodafone and Vodafone Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip11

Growth of hutch to Vodafonehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip12

About Vodafone Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip13

About Uttar Pradeshhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip13

Wireless subscriber base in UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip14

About Vodafone UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15

UPE Vodafone regional structure (hierarchy) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip16

VAS VAS entities and VAS in Vodafone UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip18

Promotion of VAShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip20

Section III

Statistical snapshot of Indian mobile usershelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21

Top mobile siteshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21

Urban behavior studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip22

The gap between urban and rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25

Section IV

Indian rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27

Marketing issues in rural telecomhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip28

Mobile awareness levelhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip30

Rural surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Targeted information sourceshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Questionnairehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Survey analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip36

Graphical analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39

Recommendationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip47

Concluding Remarkshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip51

CPS Report ndash Vodafone Essar Digilink Ltd

Page | v

Referenceshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip52

Appendix A

Major VAS products in Indian rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Successful Global Experiences in Rural Telecomhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Abbreviations VAS Value Added Service

ARPU Average Revenue per User

IVR Interactive Voice Response

SMS Short Messaging Service

MCI Missed Call Information

CT Caller Tune

P2A Person to Application

P2P Person to Person

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 1

1 Telecom Overview

The Indian telecommunication industry with 62128 million telephone (landline and

mobile) subscribers and 584 million mobile phone connections as of March 2010 is the

second largest telecommunication network in the world and the second largest in terms

of number of wireless connections in the world Telecommunication activities saw rapid

growth in India starting at the dawn of the 21st century and since then efforts have been

made from both governmental and non-governmental organizations to further improve

the telecommunication infrastructure The eventual goal is to foster the development

and widespread use of modern telecommunication technologies that will serve all

segments of Indialsquos culturally diverse society and to transform it into a country of

technologically aware people The Indian Mobile subscriber base has increased in size

by a factor of more than one-hundred since 2001 when the number of subscribers in the

country was approximately 5 million to 584 million in March 2010 In the first quarter

of 2010 there have been a record breaking 5918 million mobile subscriber additions -

More than twice as many added in China during the same period (295 million) which

is currently leading with 780 million mobile subscribers as of March 2010

As the fastest growing telecommunications industry in the world it is projected that

India will have a more than 1-billion mobile subscribers by 2015 Furthermore

projections by several leading global consultancies indicate that Indialsquos the total number

of subscribers will exceed China by 2019 The industry is expected to reach a size of

Rs 344921 Crore (US$ 7692 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 28 million people

and for 7 million indirectly

Figure 1 Service Providerslsquo share in net additions during the month of March-2010

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 2

Figure 2 Service Provider wise Market Share as on 31-3-2010

11 Prepaid Connections Popular Amongst Mobile Users

Prepaid customers account for a significantly higher share in the total subscriber base in

both the GSM as well as CDMA segments Prepaid subscribers form around 9310

and 9430 of the total subscriber base of the CDMA and GSM segments respectively

Figure 3 Area wise composition of wireless subscribers (FY-09)

Ease of changing the tariff plans anytime coupled with the notion that prepaid

connections help in limiting expenses within a fixed budget are likely to have made

prepaid connections an attractive proposition for the customers especially in the middle

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 3

and lower income segments Interestingly in the metros the proportion of postpaid

subscribers is relatively higher as compared with other service areas The BampC circle

has comparatively higher proportion of the prepaid customers

12 Teledensity

With sustained increase in subscriber base since the beginning of the current decade the

teledensity has witnessed a significant increase from just above 2 in FY99 to 3698

by end of FY09 Even though the teledensity has improved substantially during the last

decade it is still low as compared with other developing countries Thus there is a huge

untapped potential existing for the telecom operators in India While the teledensity in

India has improved substantially there is a stark difference between the teledensity of

the urban and rural areas While the urban teledensity at 89 indicates a rapidly

saturating urban market teledensity of just around 15 in rural areas points to a huge

potential market for the growth in the telecom industry

Figure 4 Trend in Urban and Rural Teledensity

The urban teledensity has improved from under 7 in FY99 to as much as 89 in

FY09 In fact in Delhi the teledensity is as high as 125 While the teledensity in the

metros is rapidly reaching saturation point the future growth in urban areas is expected

to come from non-metros The teledensity of the rural areas has also improved

substantially during the last decade The number of rural telephones increased from

around 1230 mn in March 2004 to 12029 mn in March 2009 In fact the significant

improvement in the rural teledensity has been primarily backed by the surge in wireless

services in the rural areas The wireless subscriber market in the rural areas has surged

to 10971 mn by end of FY09 taking the share of rural wireless subscriber to 28 of

the total wireless subscriber in the country

Although the teledensity in the rural India has grown from as low as 05 in FY99 to

around 15 in FY09 the rural areas still remain under-penetrated to a large extent Large agricultural workforce low per capita income low literacy rates and around 60

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 4

of rural households not having access to electricity is likely to have limited the growth

of the mobile services in rural areas Further underdeveloped telecom infrastructure in

the rural areas has also been an inhibiting factor to necessitate rapid penetration of

telecom services in rural areas High network maintenance cost in rural areas compared

with the urban areas on account of poor transportation lack of skilled labour have also

restrained the rapid growth of telecom services in these areas

Overall Teledensity in India reaches 4789 with 56221 million subscriber base (Jan-

2010)

13 Tariff Reductions

Across the board reduction in telecom tariff has been one of the primary factors behind

the exponential growth experienced by the Indian telecom industry The competition

within the various segments of the telecom sector has intensified in the past few years

and has led to a price war between the operators The race between the telecom service

providers to capture the market which led to substantial tariff reduction has proved

beneficial for the consumer The array of tariff schemes is being made available by

various service providers to suit the usage profile of a wide range of customers in India

to stay ahead of competitors Also most operators offer schemes with assured lifetime

connectivity without having to pay any recurring fixed charges Moreover intense

competition and the resultant reduction in tariff levels induced the TRAI to gradually

move towards a regime of tariff deregulation While tariffs for some crucial segments

like rural telephony roaming services and leased lines are still regulated all the other

tariffs are under forbearance The tariff regulation of TRAI has even granted the unique

option for customers to avail a particular tariff for the entire licensing period of their

service providers without having to fear any tariff hike

Currently the charges for outgoing local telephone calls have dropped to below Re

1min and there is no charge for incoming calls The charges for national long distance

calls and international long distance calls have also experienced significant reduction

since 1999 A 1 minute call between Delhi and Mumbai that cost more than Rs 37- in

pre-TTO 1999 period can be currently made for almost at the price of a local call

Similarly the tariff for a call to American continent from India has come down from Rs

75 to less than Rs 7 per minute within the same span of time

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 5

Figure 5 decline in Tariff of NLD and ILD service during period May-99 to Mar-08

The average outgo per outgoing minute (Rental revenue + Airtime revenue per outgoing

minute) which is considered as a realistic indicator of tariff levels has also witnessed

significant decline in the last few years The average outgo per outgoing minute for

GSM subscribers has declined by almost 34 from Rs 115 in March 2007 to Rs 076 in

March 2009 and that for CDMA subscribers has declined from 081 in March 2007 to

Rs 057 in March 2009

GSM Segment CDMA Segment

Figure 6 Average Subscriber Outgo per minute

14 Revenue Growth in the Industry

Despite the Indian economy witnessing a significant slowdown in growth on account of

severe global economic crisis the Indian telecom industry has shown resilient

performance with a revenue growth of almost 18 (y-o-y) during FY09 A confluence

of factors such as under-penetrated rural areas growing demand for telecom services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 6

(especially by the young population) have supported the industry growth The revenue

growth in the telecom industry during FY09 was primarily driven by the robust

performance of the private sector The revenue of the private sector grew by as much as

29 during FY09 On the other hand the revenue of public sector witnessed a decline

of around 480 during FY09 as a result the share of private sector in total revenue

increased to 73 during FY09 as compared with 6650 in FY08 and that of public

sector declined to 27 from 3350 in the same period

Figure 7 Growth in gross revenue

Within the GSM as well as the CDMA segment revenue from call charges account for

around 60 of the revenue While the share of rental revenue for the GSM players is

around 18 for CDMA players it is comparatively higher at around 24 However for

both these segments the share of rental revenue in total revenue has witnessed

significant decline in the last few years The decline can be partly attributed to the

intensified competition within the players that has led to intensive price-war between

service providers

Figure 8 Trend in outgoing SMS

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 7

Further the share of revenue from SMS has also witnessed substantial decline in the

recent past Decline in SMS charges lucrative offers designed by service providers

(such as SMS package) coupled with falling call price leading to substitution effect is

likely to have reduced the revenue share from SMS services In fact the number of

outgoing SMS per subscriber per month has witnessed a gradual reduction the last few

years The revenue forms the value-added services and installation charges have

witnessed a gradual increase in the past few years

15 ARPU is Continuously Declining

The average revenue per unit (ARPU) of both GSM and CDMA subscribers has been

on a downtrend in the last few years The industry-wide ARPU of GSM service

providers have witnessed a decline of around Rs 189 between FY05-FY04 from Rs 394

during the quarter-ended March 2005 to Rs 205 during the quarter-ended March 2009

The ARPU of CDMA service providers have also declined from Rs 256 in the quarter-

ended March 2006 to Rs 99 during the quarter-ended March 2009 The decline in the

ARPU over the years could be largely attributed to the reduction in tariffs of local NLD

and ILD calls The customer-oriented policy taking by the regulatory body and intense

competition among the players have to a greater extent resulted in declining ARPU in

the telecom industry The ARPUs have also been affected by the increasing proportion

of prepaid subscribers and increasing subscription from lower income population

Postpaid ARPU has been five times that of prepaid ARPU which could be attributed to

the declining importance of processing fee on recharge coupon voucher purchased by

prepaid subscribers the gap is lowest in Circle C (368 times) and highest in Circle A

(559 times)

Source TRAI various issues of performance report

Figure 9 Segment wise trend in ARPU

The ARPU in the B amp C circles is relatively lower as compared with the other areas

This could largely be attributed to concentration of low income and low usage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 3: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | i

Project

The prime question associated is ldquoWHY VASrdquo and ldquoWHY Rural marketrdquo

Why Rural Market

The proportion of new mobile subscribers

from rural areas indicates the importance of

this market segment to sustained mobile

growth in India

Telecom Regulatory Authority of India

(TRAI) predicted in its 2009-2010 report

that of the next 250 million mobile

subscribers in the country approximately

100 million will be from rural areas and this

will drive the growth of rural VAS By 2012

60 per cent or close to 400 million of Indiarsquos

projected 650 million total mobile subscriber

base will be rural subscribers

Why VAS

Present day operators are facing the biggest

hick of declining ARPU (Average Revenue

Per user) and increasing churn

A sharp decline in average revenue per user

is being witnessed due to tumbling tariff

rates Entry of new operators has aggravated

this and tariff rates have hit rock bottom

levels Thus telecom operators are seeking

ways to increase their per-user revenue and

VAS has become one of the key focal point

To make this more attractive vendors and

operators have started focusing on innovative

solutions and local content to increase

consumer stickiness along with improving

the adoption rate of these services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | ii

Acknowledgement

It gives me immense pleasure to acknowledge all the people who have guided and helped

me to complete this assignment

The Vodafone UPE rural market survey offered a great learning experience During the

tenure of this project I was fortunate to have interacted with people who in their own

capacities have encouraged and guided me

I would like to express my sincere gratitude to HR Department of Vodafone (UPE) for

providing me an opportunity to undergo training in VAS-Marketing Department of such a

reputed organization Working with the market leaders was a great learning experience

I am extremely fortunate that I got an opportunity to work with the VAS Marketing

Team of Vodafone (UPE) My sincere thanks to Mr Aniruddha Ghosh who have

shared his corporate experiences and shown me the direction during my project I am

deeply indebted to him for his extensive illuminating guidance creative suggestions

persistent encouragement constant supervision and constructive criticism which enabled

me to give this project its final shape

I offer humble thanks and shall always be obliged to him for giving me such a valuable

project and for trusting my potential

Thank you Vodafone (UPE) for this opportunity

Gaurav Saxena

MarketingSystems

EMAILGauravsaxena2011simsedu

CPS Report ndash Vodafone Essar Digilink Ltd

Page | iii

Executive Summary

Rural markets in India constitute a wide and untapped market for many products and

services which are being marketed for the urban masses There is a demand for

telecommunication services to be provided to in these areas Till now it was government

which was trying to reach the villages through various initiates but the rural tele-density

is very poor and can be improved only through the introduction of modern and suitable

technology along with participation from the private operators The report here would

like to make a strong insight for the use of VAS for rural areas The various marketing

issues related to marketing of VAS services in rural areas area seen through the 4 Arsquos

framework

The structure of report is as follows the First section outlines how the telecom sector has

grown in last 5-10 years what all aspects have grown and what all have fallen what all

new services are being introduced and currently in which direction is this sector heading

to

Second section talks about Vodafone global and Vodafone India growth of hutch to

Vodafone current wireless subscriber base and market share in UPE and then lastly about

Vodafone (UPE) and VAS in Vodafone (UPE)

Third section talks about the VAS in urban market A survey and research result

(obtained from online resources) is presented giving the big picture of how and what

urban subscribers want to see in VAS The section ends highlighting the dividing

elements between urban and rural market

Last but not the least Fourth section introduces the rural market and all aspects with the

promotion of VAS in this type of market giving the subscriber behavior and pattern

followed by graphical analysis of survey and authors recommendations

The project report highlights the understanding of rural market the consumer behavior

and pattern why VAS is not so much accepted or used in these areas as compared to

urban market and how a company should promote VAS

The research suggests out that company need to better understand the customers

(subscribers) need wrt cost of products and services buyer values of rural customers as

well as the post-sales support expectations that rural customers have in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | iv

Table of Content

Section I

Telecom Overviewhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip1

Prepaid connections popular among mobile usershelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2

Tele-densityhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3

Tariff reductionshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4

Revenue growth in industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5

ARPUhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip7

Minutes of usage (MoU) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8

Growth of MVAShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip9

Section II

About Vodafone and Vodafone Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip11

Growth of hutch to Vodafonehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip12

About Vodafone Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip13

About Uttar Pradeshhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip13

Wireless subscriber base in UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip14

About Vodafone UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15

UPE Vodafone regional structure (hierarchy) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip16

VAS VAS entities and VAS in Vodafone UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip18

Promotion of VAShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip20

Section III

Statistical snapshot of Indian mobile usershelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21

Top mobile siteshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21

Urban behavior studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip22

The gap between urban and rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25

Section IV

Indian rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27

Marketing issues in rural telecomhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip28

Mobile awareness levelhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip30

Rural surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Targeted information sourceshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Questionnairehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Survey analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip36

Graphical analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39

Recommendationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip47

Concluding Remarkshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip51

CPS Report ndash Vodafone Essar Digilink Ltd

Page | v

Referenceshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip52

Appendix A

Major VAS products in Indian rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Successful Global Experiences in Rural Telecomhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Abbreviations VAS Value Added Service

ARPU Average Revenue per User

IVR Interactive Voice Response

SMS Short Messaging Service

MCI Missed Call Information

CT Caller Tune

P2A Person to Application

P2P Person to Person

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 1

1 Telecom Overview

The Indian telecommunication industry with 62128 million telephone (landline and

mobile) subscribers and 584 million mobile phone connections as of March 2010 is the

second largest telecommunication network in the world and the second largest in terms

of number of wireless connections in the world Telecommunication activities saw rapid

growth in India starting at the dawn of the 21st century and since then efforts have been

made from both governmental and non-governmental organizations to further improve

the telecommunication infrastructure The eventual goal is to foster the development

and widespread use of modern telecommunication technologies that will serve all

segments of Indialsquos culturally diverse society and to transform it into a country of

technologically aware people The Indian Mobile subscriber base has increased in size

by a factor of more than one-hundred since 2001 when the number of subscribers in the

country was approximately 5 million to 584 million in March 2010 In the first quarter

of 2010 there have been a record breaking 5918 million mobile subscriber additions -

More than twice as many added in China during the same period (295 million) which

is currently leading with 780 million mobile subscribers as of March 2010

As the fastest growing telecommunications industry in the world it is projected that

India will have a more than 1-billion mobile subscribers by 2015 Furthermore

projections by several leading global consultancies indicate that Indialsquos the total number

of subscribers will exceed China by 2019 The industry is expected to reach a size of

Rs 344921 Crore (US$ 7692 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 28 million people

and for 7 million indirectly

Figure 1 Service Providerslsquo share in net additions during the month of March-2010

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 2

Figure 2 Service Provider wise Market Share as on 31-3-2010

11 Prepaid Connections Popular Amongst Mobile Users

Prepaid customers account for a significantly higher share in the total subscriber base in

both the GSM as well as CDMA segments Prepaid subscribers form around 9310

and 9430 of the total subscriber base of the CDMA and GSM segments respectively

Figure 3 Area wise composition of wireless subscribers (FY-09)

Ease of changing the tariff plans anytime coupled with the notion that prepaid

connections help in limiting expenses within a fixed budget are likely to have made

prepaid connections an attractive proposition for the customers especially in the middle

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 3

and lower income segments Interestingly in the metros the proportion of postpaid

subscribers is relatively higher as compared with other service areas The BampC circle

has comparatively higher proportion of the prepaid customers

12 Teledensity

With sustained increase in subscriber base since the beginning of the current decade the

teledensity has witnessed a significant increase from just above 2 in FY99 to 3698

by end of FY09 Even though the teledensity has improved substantially during the last

decade it is still low as compared with other developing countries Thus there is a huge

untapped potential existing for the telecom operators in India While the teledensity in

India has improved substantially there is a stark difference between the teledensity of

the urban and rural areas While the urban teledensity at 89 indicates a rapidly

saturating urban market teledensity of just around 15 in rural areas points to a huge

potential market for the growth in the telecom industry

Figure 4 Trend in Urban and Rural Teledensity

The urban teledensity has improved from under 7 in FY99 to as much as 89 in

FY09 In fact in Delhi the teledensity is as high as 125 While the teledensity in the

metros is rapidly reaching saturation point the future growth in urban areas is expected

to come from non-metros The teledensity of the rural areas has also improved

substantially during the last decade The number of rural telephones increased from

around 1230 mn in March 2004 to 12029 mn in March 2009 In fact the significant

improvement in the rural teledensity has been primarily backed by the surge in wireless

services in the rural areas The wireless subscriber market in the rural areas has surged

to 10971 mn by end of FY09 taking the share of rural wireless subscriber to 28 of

the total wireless subscriber in the country

Although the teledensity in the rural India has grown from as low as 05 in FY99 to

around 15 in FY09 the rural areas still remain under-penetrated to a large extent Large agricultural workforce low per capita income low literacy rates and around 60

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 4

of rural households not having access to electricity is likely to have limited the growth

of the mobile services in rural areas Further underdeveloped telecom infrastructure in

the rural areas has also been an inhibiting factor to necessitate rapid penetration of

telecom services in rural areas High network maintenance cost in rural areas compared

with the urban areas on account of poor transportation lack of skilled labour have also

restrained the rapid growth of telecom services in these areas

Overall Teledensity in India reaches 4789 with 56221 million subscriber base (Jan-

2010)

13 Tariff Reductions

Across the board reduction in telecom tariff has been one of the primary factors behind

the exponential growth experienced by the Indian telecom industry The competition

within the various segments of the telecom sector has intensified in the past few years

and has led to a price war between the operators The race between the telecom service

providers to capture the market which led to substantial tariff reduction has proved

beneficial for the consumer The array of tariff schemes is being made available by

various service providers to suit the usage profile of a wide range of customers in India

to stay ahead of competitors Also most operators offer schemes with assured lifetime

connectivity without having to pay any recurring fixed charges Moreover intense

competition and the resultant reduction in tariff levels induced the TRAI to gradually

move towards a regime of tariff deregulation While tariffs for some crucial segments

like rural telephony roaming services and leased lines are still regulated all the other

tariffs are under forbearance The tariff regulation of TRAI has even granted the unique

option for customers to avail a particular tariff for the entire licensing period of their

service providers without having to fear any tariff hike

Currently the charges for outgoing local telephone calls have dropped to below Re

1min and there is no charge for incoming calls The charges for national long distance

calls and international long distance calls have also experienced significant reduction

since 1999 A 1 minute call between Delhi and Mumbai that cost more than Rs 37- in

pre-TTO 1999 period can be currently made for almost at the price of a local call

Similarly the tariff for a call to American continent from India has come down from Rs

75 to less than Rs 7 per minute within the same span of time

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 5

Figure 5 decline in Tariff of NLD and ILD service during period May-99 to Mar-08

The average outgo per outgoing minute (Rental revenue + Airtime revenue per outgoing

minute) which is considered as a realistic indicator of tariff levels has also witnessed

significant decline in the last few years The average outgo per outgoing minute for

GSM subscribers has declined by almost 34 from Rs 115 in March 2007 to Rs 076 in

March 2009 and that for CDMA subscribers has declined from 081 in March 2007 to

Rs 057 in March 2009

GSM Segment CDMA Segment

Figure 6 Average Subscriber Outgo per minute

14 Revenue Growth in the Industry

Despite the Indian economy witnessing a significant slowdown in growth on account of

severe global economic crisis the Indian telecom industry has shown resilient

performance with a revenue growth of almost 18 (y-o-y) during FY09 A confluence

of factors such as under-penetrated rural areas growing demand for telecom services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 6

(especially by the young population) have supported the industry growth The revenue

growth in the telecom industry during FY09 was primarily driven by the robust

performance of the private sector The revenue of the private sector grew by as much as

29 during FY09 On the other hand the revenue of public sector witnessed a decline

of around 480 during FY09 as a result the share of private sector in total revenue

increased to 73 during FY09 as compared with 6650 in FY08 and that of public

sector declined to 27 from 3350 in the same period

Figure 7 Growth in gross revenue

Within the GSM as well as the CDMA segment revenue from call charges account for

around 60 of the revenue While the share of rental revenue for the GSM players is

around 18 for CDMA players it is comparatively higher at around 24 However for

both these segments the share of rental revenue in total revenue has witnessed

significant decline in the last few years The decline can be partly attributed to the

intensified competition within the players that has led to intensive price-war between

service providers

Figure 8 Trend in outgoing SMS

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 7

Further the share of revenue from SMS has also witnessed substantial decline in the

recent past Decline in SMS charges lucrative offers designed by service providers

(such as SMS package) coupled with falling call price leading to substitution effect is

likely to have reduced the revenue share from SMS services In fact the number of

outgoing SMS per subscriber per month has witnessed a gradual reduction the last few

years The revenue forms the value-added services and installation charges have

witnessed a gradual increase in the past few years

15 ARPU is Continuously Declining

The average revenue per unit (ARPU) of both GSM and CDMA subscribers has been

on a downtrend in the last few years The industry-wide ARPU of GSM service

providers have witnessed a decline of around Rs 189 between FY05-FY04 from Rs 394

during the quarter-ended March 2005 to Rs 205 during the quarter-ended March 2009

The ARPU of CDMA service providers have also declined from Rs 256 in the quarter-

ended March 2006 to Rs 99 during the quarter-ended March 2009 The decline in the

ARPU over the years could be largely attributed to the reduction in tariffs of local NLD

and ILD calls The customer-oriented policy taking by the regulatory body and intense

competition among the players have to a greater extent resulted in declining ARPU in

the telecom industry The ARPUs have also been affected by the increasing proportion

of prepaid subscribers and increasing subscription from lower income population

Postpaid ARPU has been five times that of prepaid ARPU which could be attributed to

the declining importance of processing fee on recharge coupon voucher purchased by

prepaid subscribers the gap is lowest in Circle C (368 times) and highest in Circle A

(559 times)

Source TRAI various issues of performance report

Figure 9 Segment wise trend in ARPU

The ARPU in the B amp C circles is relatively lower as compared with the other areas

This could largely be attributed to concentration of low income and low usage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 4: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | ii

Acknowledgement

It gives me immense pleasure to acknowledge all the people who have guided and helped

me to complete this assignment

The Vodafone UPE rural market survey offered a great learning experience During the

tenure of this project I was fortunate to have interacted with people who in their own

capacities have encouraged and guided me

I would like to express my sincere gratitude to HR Department of Vodafone (UPE) for

providing me an opportunity to undergo training in VAS-Marketing Department of such a

reputed organization Working with the market leaders was a great learning experience

I am extremely fortunate that I got an opportunity to work with the VAS Marketing

Team of Vodafone (UPE) My sincere thanks to Mr Aniruddha Ghosh who have

shared his corporate experiences and shown me the direction during my project I am

deeply indebted to him for his extensive illuminating guidance creative suggestions

persistent encouragement constant supervision and constructive criticism which enabled

me to give this project its final shape

I offer humble thanks and shall always be obliged to him for giving me such a valuable

project and for trusting my potential

Thank you Vodafone (UPE) for this opportunity

Gaurav Saxena

MarketingSystems

EMAILGauravsaxena2011simsedu

CPS Report ndash Vodafone Essar Digilink Ltd

Page | iii

Executive Summary

Rural markets in India constitute a wide and untapped market for many products and

services which are being marketed for the urban masses There is a demand for

telecommunication services to be provided to in these areas Till now it was government

which was trying to reach the villages through various initiates but the rural tele-density

is very poor and can be improved only through the introduction of modern and suitable

technology along with participation from the private operators The report here would

like to make a strong insight for the use of VAS for rural areas The various marketing

issues related to marketing of VAS services in rural areas area seen through the 4 Arsquos

framework

The structure of report is as follows the First section outlines how the telecom sector has

grown in last 5-10 years what all aspects have grown and what all have fallen what all

new services are being introduced and currently in which direction is this sector heading

to

Second section talks about Vodafone global and Vodafone India growth of hutch to

Vodafone current wireless subscriber base and market share in UPE and then lastly about

Vodafone (UPE) and VAS in Vodafone (UPE)

Third section talks about the VAS in urban market A survey and research result

(obtained from online resources) is presented giving the big picture of how and what

urban subscribers want to see in VAS The section ends highlighting the dividing

elements between urban and rural market

Last but not the least Fourth section introduces the rural market and all aspects with the

promotion of VAS in this type of market giving the subscriber behavior and pattern

followed by graphical analysis of survey and authors recommendations

The project report highlights the understanding of rural market the consumer behavior

and pattern why VAS is not so much accepted or used in these areas as compared to

urban market and how a company should promote VAS

The research suggests out that company need to better understand the customers

(subscribers) need wrt cost of products and services buyer values of rural customers as

well as the post-sales support expectations that rural customers have in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | iv

Table of Content

Section I

Telecom Overviewhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip1

Prepaid connections popular among mobile usershelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2

Tele-densityhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3

Tariff reductionshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4

Revenue growth in industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5

ARPUhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip7

Minutes of usage (MoU) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8

Growth of MVAShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip9

Section II

About Vodafone and Vodafone Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip11

Growth of hutch to Vodafonehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip12

About Vodafone Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip13

About Uttar Pradeshhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip13

Wireless subscriber base in UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip14

About Vodafone UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15

UPE Vodafone regional structure (hierarchy) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip16

VAS VAS entities and VAS in Vodafone UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip18

Promotion of VAShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip20

Section III

Statistical snapshot of Indian mobile usershelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21

Top mobile siteshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21

Urban behavior studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip22

The gap between urban and rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25

Section IV

Indian rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27

Marketing issues in rural telecomhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip28

Mobile awareness levelhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip30

Rural surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Targeted information sourceshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Questionnairehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Survey analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip36

Graphical analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39

Recommendationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip47

Concluding Remarkshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip51

CPS Report ndash Vodafone Essar Digilink Ltd

Page | v

Referenceshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip52

Appendix A

Major VAS products in Indian rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Successful Global Experiences in Rural Telecomhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Abbreviations VAS Value Added Service

ARPU Average Revenue per User

IVR Interactive Voice Response

SMS Short Messaging Service

MCI Missed Call Information

CT Caller Tune

P2A Person to Application

P2P Person to Person

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 1

1 Telecom Overview

The Indian telecommunication industry with 62128 million telephone (landline and

mobile) subscribers and 584 million mobile phone connections as of March 2010 is the

second largest telecommunication network in the world and the second largest in terms

of number of wireless connections in the world Telecommunication activities saw rapid

growth in India starting at the dawn of the 21st century and since then efforts have been

made from both governmental and non-governmental organizations to further improve

the telecommunication infrastructure The eventual goal is to foster the development

and widespread use of modern telecommunication technologies that will serve all

segments of Indialsquos culturally diverse society and to transform it into a country of

technologically aware people The Indian Mobile subscriber base has increased in size

by a factor of more than one-hundred since 2001 when the number of subscribers in the

country was approximately 5 million to 584 million in March 2010 In the first quarter

of 2010 there have been a record breaking 5918 million mobile subscriber additions -

More than twice as many added in China during the same period (295 million) which

is currently leading with 780 million mobile subscribers as of March 2010

As the fastest growing telecommunications industry in the world it is projected that

India will have a more than 1-billion mobile subscribers by 2015 Furthermore

projections by several leading global consultancies indicate that Indialsquos the total number

of subscribers will exceed China by 2019 The industry is expected to reach a size of

Rs 344921 Crore (US$ 7692 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 28 million people

and for 7 million indirectly

Figure 1 Service Providerslsquo share in net additions during the month of March-2010

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 2

Figure 2 Service Provider wise Market Share as on 31-3-2010

11 Prepaid Connections Popular Amongst Mobile Users

Prepaid customers account for a significantly higher share in the total subscriber base in

both the GSM as well as CDMA segments Prepaid subscribers form around 9310

and 9430 of the total subscriber base of the CDMA and GSM segments respectively

Figure 3 Area wise composition of wireless subscribers (FY-09)

Ease of changing the tariff plans anytime coupled with the notion that prepaid

connections help in limiting expenses within a fixed budget are likely to have made

prepaid connections an attractive proposition for the customers especially in the middle

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 3

and lower income segments Interestingly in the metros the proportion of postpaid

subscribers is relatively higher as compared with other service areas The BampC circle

has comparatively higher proportion of the prepaid customers

12 Teledensity

With sustained increase in subscriber base since the beginning of the current decade the

teledensity has witnessed a significant increase from just above 2 in FY99 to 3698

by end of FY09 Even though the teledensity has improved substantially during the last

decade it is still low as compared with other developing countries Thus there is a huge

untapped potential existing for the telecom operators in India While the teledensity in

India has improved substantially there is a stark difference between the teledensity of

the urban and rural areas While the urban teledensity at 89 indicates a rapidly

saturating urban market teledensity of just around 15 in rural areas points to a huge

potential market for the growth in the telecom industry

Figure 4 Trend in Urban and Rural Teledensity

The urban teledensity has improved from under 7 in FY99 to as much as 89 in

FY09 In fact in Delhi the teledensity is as high as 125 While the teledensity in the

metros is rapidly reaching saturation point the future growth in urban areas is expected

to come from non-metros The teledensity of the rural areas has also improved

substantially during the last decade The number of rural telephones increased from

around 1230 mn in March 2004 to 12029 mn in March 2009 In fact the significant

improvement in the rural teledensity has been primarily backed by the surge in wireless

services in the rural areas The wireless subscriber market in the rural areas has surged

to 10971 mn by end of FY09 taking the share of rural wireless subscriber to 28 of

the total wireless subscriber in the country

Although the teledensity in the rural India has grown from as low as 05 in FY99 to

around 15 in FY09 the rural areas still remain under-penetrated to a large extent Large agricultural workforce low per capita income low literacy rates and around 60

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 4

of rural households not having access to electricity is likely to have limited the growth

of the mobile services in rural areas Further underdeveloped telecom infrastructure in

the rural areas has also been an inhibiting factor to necessitate rapid penetration of

telecom services in rural areas High network maintenance cost in rural areas compared

with the urban areas on account of poor transportation lack of skilled labour have also

restrained the rapid growth of telecom services in these areas

Overall Teledensity in India reaches 4789 with 56221 million subscriber base (Jan-

2010)

13 Tariff Reductions

Across the board reduction in telecom tariff has been one of the primary factors behind

the exponential growth experienced by the Indian telecom industry The competition

within the various segments of the telecom sector has intensified in the past few years

and has led to a price war between the operators The race between the telecom service

providers to capture the market which led to substantial tariff reduction has proved

beneficial for the consumer The array of tariff schemes is being made available by

various service providers to suit the usage profile of a wide range of customers in India

to stay ahead of competitors Also most operators offer schemes with assured lifetime

connectivity without having to pay any recurring fixed charges Moreover intense

competition and the resultant reduction in tariff levels induced the TRAI to gradually

move towards a regime of tariff deregulation While tariffs for some crucial segments

like rural telephony roaming services and leased lines are still regulated all the other

tariffs are under forbearance The tariff regulation of TRAI has even granted the unique

option for customers to avail a particular tariff for the entire licensing period of their

service providers without having to fear any tariff hike

Currently the charges for outgoing local telephone calls have dropped to below Re

1min and there is no charge for incoming calls The charges for national long distance

calls and international long distance calls have also experienced significant reduction

since 1999 A 1 minute call between Delhi and Mumbai that cost more than Rs 37- in

pre-TTO 1999 period can be currently made for almost at the price of a local call

Similarly the tariff for a call to American continent from India has come down from Rs

75 to less than Rs 7 per minute within the same span of time

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 5

Figure 5 decline in Tariff of NLD and ILD service during period May-99 to Mar-08

The average outgo per outgoing minute (Rental revenue + Airtime revenue per outgoing

minute) which is considered as a realistic indicator of tariff levels has also witnessed

significant decline in the last few years The average outgo per outgoing minute for

GSM subscribers has declined by almost 34 from Rs 115 in March 2007 to Rs 076 in

March 2009 and that for CDMA subscribers has declined from 081 in March 2007 to

Rs 057 in March 2009

GSM Segment CDMA Segment

Figure 6 Average Subscriber Outgo per minute

14 Revenue Growth in the Industry

Despite the Indian economy witnessing a significant slowdown in growth on account of

severe global economic crisis the Indian telecom industry has shown resilient

performance with a revenue growth of almost 18 (y-o-y) during FY09 A confluence

of factors such as under-penetrated rural areas growing demand for telecom services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 6

(especially by the young population) have supported the industry growth The revenue

growth in the telecom industry during FY09 was primarily driven by the robust

performance of the private sector The revenue of the private sector grew by as much as

29 during FY09 On the other hand the revenue of public sector witnessed a decline

of around 480 during FY09 as a result the share of private sector in total revenue

increased to 73 during FY09 as compared with 6650 in FY08 and that of public

sector declined to 27 from 3350 in the same period

Figure 7 Growth in gross revenue

Within the GSM as well as the CDMA segment revenue from call charges account for

around 60 of the revenue While the share of rental revenue for the GSM players is

around 18 for CDMA players it is comparatively higher at around 24 However for

both these segments the share of rental revenue in total revenue has witnessed

significant decline in the last few years The decline can be partly attributed to the

intensified competition within the players that has led to intensive price-war between

service providers

Figure 8 Trend in outgoing SMS

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 7

Further the share of revenue from SMS has also witnessed substantial decline in the

recent past Decline in SMS charges lucrative offers designed by service providers

(such as SMS package) coupled with falling call price leading to substitution effect is

likely to have reduced the revenue share from SMS services In fact the number of

outgoing SMS per subscriber per month has witnessed a gradual reduction the last few

years The revenue forms the value-added services and installation charges have

witnessed a gradual increase in the past few years

15 ARPU is Continuously Declining

The average revenue per unit (ARPU) of both GSM and CDMA subscribers has been

on a downtrend in the last few years The industry-wide ARPU of GSM service

providers have witnessed a decline of around Rs 189 between FY05-FY04 from Rs 394

during the quarter-ended March 2005 to Rs 205 during the quarter-ended March 2009

The ARPU of CDMA service providers have also declined from Rs 256 in the quarter-

ended March 2006 to Rs 99 during the quarter-ended March 2009 The decline in the

ARPU over the years could be largely attributed to the reduction in tariffs of local NLD

and ILD calls The customer-oriented policy taking by the regulatory body and intense

competition among the players have to a greater extent resulted in declining ARPU in

the telecom industry The ARPUs have also been affected by the increasing proportion

of prepaid subscribers and increasing subscription from lower income population

Postpaid ARPU has been five times that of prepaid ARPU which could be attributed to

the declining importance of processing fee on recharge coupon voucher purchased by

prepaid subscribers the gap is lowest in Circle C (368 times) and highest in Circle A

(559 times)

Source TRAI various issues of performance report

Figure 9 Segment wise trend in ARPU

The ARPU in the B amp C circles is relatively lower as compared with the other areas

This could largely be attributed to concentration of low income and low usage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 5: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | iii

Executive Summary

Rural markets in India constitute a wide and untapped market for many products and

services which are being marketed for the urban masses There is a demand for

telecommunication services to be provided to in these areas Till now it was government

which was trying to reach the villages through various initiates but the rural tele-density

is very poor and can be improved only through the introduction of modern and suitable

technology along with participation from the private operators The report here would

like to make a strong insight for the use of VAS for rural areas The various marketing

issues related to marketing of VAS services in rural areas area seen through the 4 Arsquos

framework

The structure of report is as follows the First section outlines how the telecom sector has

grown in last 5-10 years what all aspects have grown and what all have fallen what all

new services are being introduced and currently in which direction is this sector heading

to

Second section talks about Vodafone global and Vodafone India growth of hutch to

Vodafone current wireless subscriber base and market share in UPE and then lastly about

Vodafone (UPE) and VAS in Vodafone (UPE)

Third section talks about the VAS in urban market A survey and research result

(obtained from online resources) is presented giving the big picture of how and what

urban subscribers want to see in VAS The section ends highlighting the dividing

elements between urban and rural market

Last but not the least Fourth section introduces the rural market and all aspects with the

promotion of VAS in this type of market giving the subscriber behavior and pattern

followed by graphical analysis of survey and authors recommendations

The project report highlights the understanding of rural market the consumer behavior

and pattern why VAS is not so much accepted or used in these areas as compared to

urban market and how a company should promote VAS

The research suggests out that company need to better understand the customers

(subscribers) need wrt cost of products and services buyer values of rural customers as

well as the post-sales support expectations that rural customers have in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | iv

Table of Content

Section I

Telecom Overviewhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip1

Prepaid connections popular among mobile usershelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2

Tele-densityhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3

Tariff reductionshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4

Revenue growth in industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5

ARPUhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip7

Minutes of usage (MoU) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8

Growth of MVAShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip9

Section II

About Vodafone and Vodafone Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip11

Growth of hutch to Vodafonehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip12

About Vodafone Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip13

About Uttar Pradeshhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip13

Wireless subscriber base in UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip14

About Vodafone UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15

UPE Vodafone regional structure (hierarchy) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip16

VAS VAS entities and VAS in Vodafone UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip18

Promotion of VAShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip20

Section III

Statistical snapshot of Indian mobile usershelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21

Top mobile siteshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21

Urban behavior studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip22

The gap between urban and rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25

Section IV

Indian rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27

Marketing issues in rural telecomhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip28

Mobile awareness levelhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip30

Rural surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Targeted information sourceshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Questionnairehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Survey analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip36

Graphical analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39

Recommendationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip47

Concluding Remarkshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip51

CPS Report ndash Vodafone Essar Digilink Ltd

Page | v

Referenceshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip52

Appendix A

Major VAS products in Indian rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Successful Global Experiences in Rural Telecomhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Abbreviations VAS Value Added Service

ARPU Average Revenue per User

IVR Interactive Voice Response

SMS Short Messaging Service

MCI Missed Call Information

CT Caller Tune

P2A Person to Application

P2P Person to Person

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 1

1 Telecom Overview

The Indian telecommunication industry with 62128 million telephone (landline and

mobile) subscribers and 584 million mobile phone connections as of March 2010 is the

second largest telecommunication network in the world and the second largest in terms

of number of wireless connections in the world Telecommunication activities saw rapid

growth in India starting at the dawn of the 21st century and since then efforts have been

made from both governmental and non-governmental organizations to further improve

the telecommunication infrastructure The eventual goal is to foster the development

and widespread use of modern telecommunication technologies that will serve all

segments of Indialsquos culturally diverse society and to transform it into a country of

technologically aware people The Indian Mobile subscriber base has increased in size

by a factor of more than one-hundred since 2001 when the number of subscribers in the

country was approximately 5 million to 584 million in March 2010 In the first quarter

of 2010 there have been a record breaking 5918 million mobile subscriber additions -

More than twice as many added in China during the same period (295 million) which

is currently leading with 780 million mobile subscribers as of March 2010

As the fastest growing telecommunications industry in the world it is projected that

India will have a more than 1-billion mobile subscribers by 2015 Furthermore

projections by several leading global consultancies indicate that Indialsquos the total number

of subscribers will exceed China by 2019 The industry is expected to reach a size of

Rs 344921 Crore (US$ 7692 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 28 million people

and for 7 million indirectly

Figure 1 Service Providerslsquo share in net additions during the month of March-2010

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 2

Figure 2 Service Provider wise Market Share as on 31-3-2010

11 Prepaid Connections Popular Amongst Mobile Users

Prepaid customers account for a significantly higher share in the total subscriber base in

both the GSM as well as CDMA segments Prepaid subscribers form around 9310

and 9430 of the total subscriber base of the CDMA and GSM segments respectively

Figure 3 Area wise composition of wireless subscribers (FY-09)

Ease of changing the tariff plans anytime coupled with the notion that prepaid

connections help in limiting expenses within a fixed budget are likely to have made

prepaid connections an attractive proposition for the customers especially in the middle

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 3

and lower income segments Interestingly in the metros the proportion of postpaid

subscribers is relatively higher as compared with other service areas The BampC circle

has comparatively higher proportion of the prepaid customers

12 Teledensity

With sustained increase in subscriber base since the beginning of the current decade the

teledensity has witnessed a significant increase from just above 2 in FY99 to 3698

by end of FY09 Even though the teledensity has improved substantially during the last

decade it is still low as compared with other developing countries Thus there is a huge

untapped potential existing for the telecom operators in India While the teledensity in

India has improved substantially there is a stark difference between the teledensity of

the urban and rural areas While the urban teledensity at 89 indicates a rapidly

saturating urban market teledensity of just around 15 in rural areas points to a huge

potential market for the growth in the telecom industry

Figure 4 Trend in Urban and Rural Teledensity

The urban teledensity has improved from under 7 in FY99 to as much as 89 in

FY09 In fact in Delhi the teledensity is as high as 125 While the teledensity in the

metros is rapidly reaching saturation point the future growth in urban areas is expected

to come from non-metros The teledensity of the rural areas has also improved

substantially during the last decade The number of rural telephones increased from

around 1230 mn in March 2004 to 12029 mn in March 2009 In fact the significant

improvement in the rural teledensity has been primarily backed by the surge in wireless

services in the rural areas The wireless subscriber market in the rural areas has surged

to 10971 mn by end of FY09 taking the share of rural wireless subscriber to 28 of

the total wireless subscriber in the country

Although the teledensity in the rural India has grown from as low as 05 in FY99 to

around 15 in FY09 the rural areas still remain under-penetrated to a large extent Large agricultural workforce low per capita income low literacy rates and around 60

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 4

of rural households not having access to electricity is likely to have limited the growth

of the mobile services in rural areas Further underdeveloped telecom infrastructure in

the rural areas has also been an inhibiting factor to necessitate rapid penetration of

telecom services in rural areas High network maintenance cost in rural areas compared

with the urban areas on account of poor transportation lack of skilled labour have also

restrained the rapid growth of telecom services in these areas

Overall Teledensity in India reaches 4789 with 56221 million subscriber base (Jan-

2010)

13 Tariff Reductions

Across the board reduction in telecom tariff has been one of the primary factors behind

the exponential growth experienced by the Indian telecom industry The competition

within the various segments of the telecom sector has intensified in the past few years

and has led to a price war between the operators The race between the telecom service

providers to capture the market which led to substantial tariff reduction has proved

beneficial for the consumer The array of tariff schemes is being made available by

various service providers to suit the usage profile of a wide range of customers in India

to stay ahead of competitors Also most operators offer schemes with assured lifetime

connectivity without having to pay any recurring fixed charges Moreover intense

competition and the resultant reduction in tariff levels induced the TRAI to gradually

move towards a regime of tariff deregulation While tariffs for some crucial segments

like rural telephony roaming services and leased lines are still regulated all the other

tariffs are under forbearance The tariff regulation of TRAI has even granted the unique

option for customers to avail a particular tariff for the entire licensing period of their

service providers without having to fear any tariff hike

Currently the charges for outgoing local telephone calls have dropped to below Re

1min and there is no charge for incoming calls The charges for national long distance

calls and international long distance calls have also experienced significant reduction

since 1999 A 1 minute call between Delhi and Mumbai that cost more than Rs 37- in

pre-TTO 1999 period can be currently made for almost at the price of a local call

Similarly the tariff for a call to American continent from India has come down from Rs

75 to less than Rs 7 per minute within the same span of time

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 5

Figure 5 decline in Tariff of NLD and ILD service during period May-99 to Mar-08

The average outgo per outgoing minute (Rental revenue + Airtime revenue per outgoing

minute) which is considered as a realistic indicator of tariff levels has also witnessed

significant decline in the last few years The average outgo per outgoing minute for

GSM subscribers has declined by almost 34 from Rs 115 in March 2007 to Rs 076 in

March 2009 and that for CDMA subscribers has declined from 081 in March 2007 to

Rs 057 in March 2009

GSM Segment CDMA Segment

Figure 6 Average Subscriber Outgo per minute

14 Revenue Growth in the Industry

Despite the Indian economy witnessing a significant slowdown in growth on account of

severe global economic crisis the Indian telecom industry has shown resilient

performance with a revenue growth of almost 18 (y-o-y) during FY09 A confluence

of factors such as under-penetrated rural areas growing demand for telecom services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 6

(especially by the young population) have supported the industry growth The revenue

growth in the telecom industry during FY09 was primarily driven by the robust

performance of the private sector The revenue of the private sector grew by as much as

29 during FY09 On the other hand the revenue of public sector witnessed a decline

of around 480 during FY09 as a result the share of private sector in total revenue

increased to 73 during FY09 as compared with 6650 in FY08 and that of public

sector declined to 27 from 3350 in the same period

Figure 7 Growth in gross revenue

Within the GSM as well as the CDMA segment revenue from call charges account for

around 60 of the revenue While the share of rental revenue for the GSM players is

around 18 for CDMA players it is comparatively higher at around 24 However for

both these segments the share of rental revenue in total revenue has witnessed

significant decline in the last few years The decline can be partly attributed to the

intensified competition within the players that has led to intensive price-war between

service providers

Figure 8 Trend in outgoing SMS

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 7

Further the share of revenue from SMS has also witnessed substantial decline in the

recent past Decline in SMS charges lucrative offers designed by service providers

(such as SMS package) coupled with falling call price leading to substitution effect is

likely to have reduced the revenue share from SMS services In fact the number of

outgoing SMS per subscriber per month has witnessed a gradual reduction the last few

years The revenue forms the value-added services and installation charges have

witnessed a gradual increase in the past few years

15 ARPU is Continuously Declining

The average revenue per unit (ARPU) of both GSM and CDMA subscribers has been

on a downtrend in the last few years The industry-wide ARPU of GSM service

providers have witnessed a decline of around Rs 189 between FY05-FY04 from Rs 394

during the quarter-ended March 2005 to Rs 205 during the quarter-ended March 2009

The ARPU of CDMA service providers have also declined from Rs 256 in the quarter-

ended March 2006 to Rs 99 during the quarter-ended March 2009 The decline in the

ARPU over the years could be largely attributed to the reduction in tariffs of local NLD

and ILD calls The customer-oriented policy taking by the regulatory body and intense

competition among the players have to a greater extent resulted in declining ARPU in

the telecom industry The ARPUs have also been affected by the increasing proportion

of prepaid subscribers and increasing subscription from lower income population

Postpaid ARPU has been five times that of prepaid ARPU which could be attributed to

the declining importance of processing fee on recharge coupon voucher purchased by

prepaid subscribers the gap is lowest in Circle C (368 times) and highest in Circle A

(559 times)

Source TRAI various issues of performance report

Figure 9 Segment wise trend in ARPU

The ARPU in the B amp C circles is relatively lower as compared with the other areas

This could largely be attributed to concentration of low income and low usage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 6: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | iv

Table of Content

Section I

Telecom Overviewhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip1

Prepaid connections popular among mobile usershelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip2

Tele-densityhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip3

Tariff reductionshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip4

Revenue growth in industryhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip5

ARPUhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip7

Minutes of usage (MoU) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip8

Growth of MVAShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip9

Section II

About Vodafone and Vodafone Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip11

Growth of hutch to Vodafonehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip12

About Vodafone Indiahelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip13

About Uttar Pradeshhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip13

Wireless subscriber base in UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip14

About Vodafone UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip15

UPE Vodafone regional structure (hierarchy) helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip16

VAS VAS entities and VAS in Vodafone UPEhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip18

Promotion of VAShelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip20

Section III

Statistical snapshot of Indian mobile usershelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21

Top mobile siteshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip21

Urban behavior studyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip22

The gap between urban and rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip25

Section IV

Indian rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip27

Marketing issues in rural telecomhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip28

Mobile awareness levelhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip30

Rural surveyhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Targeted information sourceshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Questionnairehelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip31

Survey analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip36

Graphical analysishelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip39

Recommendationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip47

Concluding Remarkshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip51

CPS Report ndash Vodafone Essar Digilink Ltd

Page | v

Referenceshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip52

Appendix A

Major VAS products in Indian rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Successful Global Experiences in Rural Telecomhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Abbreviations VAS Value Added Service

ARPU Average Revenue per User

IVR Interactive Voice Response

SMS Short Messaging Service

MCI Missed Call Information

CT Caller Tune

P2A Person to Application

P2P Person to Person

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 1

1 Telecom Overview

The Indian telecommunication industry with 62128 million telephone (landline and

mobile) subscribers and 584 million mobile phone connections as of March 2010 is the

second largest telecommunication network in the world and the second largest in terms

of number of wireless connections in the world Telecommunication activities saw rapid

growth in India starting at the dawn of the 21st century and since then efforts have been

made from both governmental and non-governmental organizations to further improve

the telecommunication infrastructure The eventual goal is to foster the development

and widespread use of modern telecommunication technologies that will serve all

segments of Indialsquos culturally diverse society and to transform it into a country of

technologically aware people The Indian Mobile subscriber base has increased in size

by a factor of more than one-hundred since 2001 when the number of subscribers in the

country was approximately 5 million to 584 million in March 2010 In the first quarter

of 2010 there have been a record breaking 5918 million mobile subscriber additions -

More than twice as many added in China during the same period (295 million) which

is currently leading with 780 million mobile subscribers as of March 2010

As the fastest growing telecommunications industry in the world it is projected that

India will have a more than 1-billion mobile subscribers by 2015 Furthermore

projections by several leading global consultancies indicate that Indialsquos the total number

of subscribers will exceed China by 2019 The industry is expected to reach a size of

Rs 344921 Crore (US$ 7692 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 28 million people

and for 7 million indirectly

Figure 1 Service Providerslsquo share in net additions during the month of March-2010

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 2

Figure 2 Service Provider wise Market Share as on 31-3-2010

11 Prepaid Connections Popular Amongst Mobile Users

Prepaid customers account for a significantly higher share in the total subscriber base in

both the GSM as well as CDMA segments Prepaid subscribers form around 9310

and 9430 of the total subscriber base of the CDMA and GSM segments respectively

Figure 3 Area wise composition of wireless subscribers (FY-09)

Ease of changing the tariff plans anytime coupled with the notion that prepaid

connections help in limiting expenses within a fixed budget are likely to have made

prepaid connections an attractive proposition for the customers especially in the middle

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 3

and lower income segments Interestingly in the metros the proportion of postpaid

subscribers is relatively higher as compared with other service areas The BampC circle

has comparatively higher proportion of the prepaid customers

12 Teledensity

With sustained increase in subscriber base since the beginning of the current decade the

teledensity has witnessed a significant increase from just above 2 in FY99 to 3698

by end of FY09 Even though the teledensity has improved substantially during the last

decade it is still low as compared with other developing countries Thus there is a huge

untapped potential existing for the telecom operators in India While the teledensity in

India has improved substantially there is a stark difference between the teledensity of

the urban and rural areas While the urban teledensity at 89 indicates a rapidly

saturating urban market teledensity of just around 15 in rural areas points to a huge

potential market for the growth in the telecom industry

Figure 4 Trend in Urban and Rural Teledensity

The urban teledensity has improved from under 7 in FY99 to as much as 89 in

FY09 In fact in Delhi the teledensity is as high as 125 While the teledensity in the

metros is rapidly reaching saturation point the future growth in urban areas is expected

to come from non-metros The teledensity of the rural areas has also improved

substantially during the last decade The number of rural telephones increased from

around 1230 mn in March 2004 to 12029 mn in March 2009 In fact the significant

improvement in the rural teledensity has been primarily backed by the surge in wireless

services in the rural areas The wireless subscriber market in the rural areas has surged

to 10971 mn by end of FY09 taking the share of rural wireless subscriber to 28 of

the total wireless subscriber in the country

Although the teledensity in the rural India has grown from as low as 05 in FY99 to

around 15 in FY09 the rural areas still remain under-penetrated to a large extent Large agricultural workforce low per capita income low literacy rates and around 60

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 4

of rural households not having access to electricity is likely to have limited the growth

of the mobile services in rural areas Further underdeveloped telecom infrastructure in

the rural areas has also been an inhibiting factor to necessitate rapid penetration of

telecom services in rural areas High network maintenance cost in rural areas compared

with the urban areas on account of poor transportation lack of skilled labour have also

restrained the rapid growth of telecom services in these areas

Overall Teledensity in India reaches 4789 with 56221 million subscriber base (Jan-

2010)

13 Tariff Reductions

Across the board reduction in telecom tariff has been one of the primary factors behind

the exponential growth experienced by the Indian telecom industry The competition

within the various segments of the telecom sector has intensified in the past few years

and has led to a price war between the operators The race between the telecom service

providers to capture the market which led to substantial tariff reduction has proved

beneficial for the consumer The array of tariff schemes is being made available by

various service providers to suit the usage profile of a wide range of customers in India

to stay ahead of competitors Also most operators offer schemes with assured lifetime

connectivity without having to pay any recurring fixed charges Moreover intense

competition and the resultant reduction in tariff levels induced the TRAI to gradually

move towards a regime of tariff deregulation While tariffs for some crucial segments

like rural telephony roaming services and leased lines are still regulated all the other

tariffs are under forbearance The tariff regulation of TRAI has even granted the unique

option for customers to avail a particular tariff for the entire licensing period of their

service providers without having to fear any tariff hike

Currently the charges for outgoing local telephone calls have dropped to below Re

1min and there is no charge for incoming calls The charges for national long distance

calls and international long distance calls have also experienced significant reduction

since 1999 A 1 minute call between Delhi and Mumbai that cost more than Rs 37- in

pre-TTO 1999 period can be currently made for almost at the price of a local call

Similarly the tariff for a call to American continent from India has come down from Rs

75 to less than Rs 7 per minute within the same span of time

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 5

Figure 5 decline in Tariff of NLD and ILD service during period May-99 to Mar-08

The average outgo per outgoing minute (Rental revenue + Airtime revenue per outgoing

minute) which is considered as a realistic indicator of tariff levels has also witnessed

significant decline in the last few years The average outgo per outgoing minute for

GSM subscribers has declined by almost 34 from Rs 115 in March 2007 to Rs 076 in

March 2009 and that for CDMA subscribers has declined from 081 in March 2007 to

Rs 057 in March 2009

GSM Segment CDMA Segment

Figure 6 Average Subscriber Outgo per minute

14 Revenue Growth in the Industry

Despite the Indian economy witnessing a significant slowdown in growth on account of

severe global economic crisis the Indian telecom industry has shown resilient

performance with a revenue growth of almost 18 (y-o-y) during FY09 A confluence

of factors such as under-penetrated rural areas growing demand for telecom services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 6

(especially by the young population) have supported the industry growth The revenue

growth in the telecom industry during FY09 was primarily driven by the robust

performance of the private sector The revenue of the private sector grew by as much as

29 during FY09 On the other hand the revenue of public sector witnessed a decline

of around 480 during FY09 as a result the share of private sector in total revenue

increased to 73 during FY09 as compared with 6650 in FY08 and that of public

sector declined to 27 from 3350 in the same period

Figure 7 Growth in gross revenue

Within the GSM as well as the CDMA segment revenue from call charges account for

around 60 of the revenue While the share of rental revenue for the GSM players is

around 18 for CDMA players it is comparatively higher at around 24 However for

both these segments the share of rental revenue in total revenue has witnessed

significant decline in the last few years The decline can be partly attributed to the

intensified competition within the players that has led to intensive price-war between

service providers

Figure 8 Trend in outgoing SMS

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 7

Further the share of revenue from SMS has also witnessed substantial decline in the

recent past Decline in SMS charges lucrative offers designed by service providers

(such as SMS package) coupled with falling call price leading to substitution effect is

likely to have reduced the revenue share from SMS services In fact the number of

outgoing SMS per subscriber per month has witnessed a gradual reduction the last few

years The revenue forms the value-added services and installation charges have

witnessed a gradual increase in the past few years

15 ARPU is Continuously Declining

The average revenue per unit (ARPU) of both GSM and CDMA subscribers has been

on a downtrend in the last few years The industry-wide ARPU of GSM service

providers have witnessed a decline of around Rs 189 between FY05-FY04 from Rs 394

during the quarter-ended March 2005 to Rs 205 during the quarter-ended March 2009

The ARPU of CDMA service providers have also declined from Rs 256 in the quarter-

ended March 2006 to Rs 99 during the quarter-ended March 2009 The decline in the

ARPU over the years could be largely attributed to the reduction in tariffs of local NLD

and ILD calls The customer-oriented policy taking by the regulatory body and intense

competition among the players have to a greater extent resulted in declining ARPU in

the telecom industry The ARPUs have also been affected by the increasing proportion

of prepaid subscribers and increasing subscription from lower income population

Postpaid ARPU has been five times that of prepaid ARPU which could be attributed to

the declining importance of processing fee on recharge coupon voucher purchased by

prepaid subscribers the gap is lowest in Circle C (368 times) and highest in Circle A

(559 times)

Source TRAI various issues of performance report

Figure 9 Segment wise trend in ARPU

The ARPU in the B amp C circles is relatively lower as compared with the other areas

This could largely be attributed to concentration of low income and low usage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 7: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | v

Referenceshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip52

Appendix A

Major VAS products in Indian rural markethelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Successful Global Experiences in Rural Telecomhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip53

Abbreviations VAS Value Added Service

ARPU Average Revenue per User

IVR Interactive Voice Response

SMS Short Messaging Service

MCI Missed Call Information

CT Caller Tune

P2A Person to Application

P2P Person to Person

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 1

1 Telecom Overview

The Indian telecommunication industry with 62128 million telephone (landline and

mobile) subscribers and 584 million mobile phone connections as of March 2010 is the

second largest telecommunication network in the world and the second largest in terms

of number of wireless connections in the world Telecommunication activities saw rapid

growth in India starting at the dawn of the 21st century and since then efforts have been

made from both governmental and non-governmental organizations to further improve

the telecommunication infrastructure The eventual goal is to foster the development

and widespread use of modern telecommunication technologies that will serve all

segments of Indialsquos culturally diverse society and to transform it into a country of

technologically aware people The Indian Mobile subscriber base has increased in size

by a factor of more than one-hundred since 2001 when the number of subscribers in the

country was approximately 5 million to 584 million in March 2010 In the first quarter

of 2010 there have been a record breaking 5918 million mobile subscriber additions -

More than twice as many added in China during the same period (295 million) which

is currently leading with 780 million mobile subscribers as of March 2010

As the fastest growing telecommunications industry in the world it is projected that

India will have a more than 1-billion mobile subscribers by 2015 Furthermore

projections by several leading global consultancies indicate that Indialsquos the total number

of subscribers will exceed China by 2019 The industry is expected to reach a size of

Rs 344921 Crore (US$ 7692 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 28 million people

and for 7 million indirectly

Figure 1 Service Providerslsquo share in net additions during the month of March-2010

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 2

Figure 2 Service Provider wise Market Share as on 31-3-2010

11 Prepaid Connections Popular Amongst Mobile Users

Prepaid customers account for a significantly higher share in the total subscriber base in

both the GSM as well as CDMA segments Prepaid subscribers form around 9310

and 9430 of the total subscriber base of the CDMA and GSM segments respectively

Figure 3 Area wise composition of wireless subscribers (FY-09)

Ease of changing the tariff plans anytime coupled with the notion that prepaid

connections help in limiting expenses within a fixed budget are likely to have made

prepaid connections an attractive proposition for the customers especially in the middle

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 3

and lower income segments Interestingly in the metros the proportion of postpaid

subscribers is relatively higher as compared with other service areas The BampC circle

has comparatively higher proportion of the prepaid customers

12 Teledensity

With sustained increase in subscriber base since the beginning of the current decade the

teledensity has witnessed a significant increase from just above 2 in FY99 to 3698

by end of FY09 Even though the teledensity has improved substantially during the last

decade it is still low as compared with other developing countries Thus there is a huge

untapped potential existing for the telecom operators in India While the teledensity in

India has improved substantially there is a stark difference between the teledensity of

the urban and rural areas While the urban teledensity at 89 indicates a rapidly

saturating urban market teledensity of just around 15 in rural areas points to a huge

potential market for the growth in the telecom industry

Figure 4 Trend in Urban and Rural Teledensity

The urban teledensity has improved from under 7 in FY99 to as much as 89 in

FY09 In fact in Delhi the teledensity is as high as 125 While the teledensity in the

metros is rapidly reaching saturation point the future growth in urban areas is expected

to come from non-metros The teledensity of the rural areas has also improved

substantially during the last decade The number of rural telephones increased from

around 1230 mn in March 2004 to 12029 mn in March 2009 In fact the significant

improvement in the rural teledensity has been primarily backed by the surge in wireless

services in the rural areas The wireless subscriber market in the rural areas has surged

to 10971 mn by end of FY09 taking the share of rural wireless subscriber to 28 of

the total wireless subscriber in the country

Although the teledensity in the rural India has grown from as low as 05 in FY99 to

around 15 in FY09 the rural areas still remain under-penetrated to a large extent Large agricultural workforce low per capita income low literacy rates and around 60

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 4

of rural households not having access to electricity is likely to have limited the growth

of the mobile services in rural areas Further underdeveloped telecom infrastructure in

the rural areas has also been an inhibiting factor to necessitate rapid penetration of

telecom services in rural areas High network maintenance cost in rural areas compared

with the urban areas on account of poor transportation lack of skilled labour have also

restrained the rapid growth of telecom services in these areas

Overall Teledensity in India reaches 4789 with 56221 million subscriber base (Jan-

2010)

13 Tariff Reductions

Across the board reduction in telecom tariff has been one of the primary factors behind

the exponential growth experienced by the Indian telecom industry The competition

within the various segments of the telecom sector has intensified in the past few years

and has led to a price war between the operators The race between the telecom service

providers to capture the market which led to substantial tariff reduction has proved

beneficial for the consumer The array of tariff schemes is being made available by

various service providers to suit the usage profile of a wide range of customers in India

to stay ahead of competitors Also most operators offer schemes with assured lifetime

connectivity without having to pay any recurring fixed charges Moreover intense

competition and the resultant reduction in tariff levels induced the TRAI to gradually

move towards a regime of tariff deregulation While tariffs for some crucial segments

like rural telephony roaming services and leased lines are still regulated all the other

tariffs are under forbearance The tariff regulation of TRAI has even granted the unique

option for customers to avail a particular tariff for the entire licensing period of their

service providers without having to fear any tariff hike

Currently the charges for outgoing local telephone calls have dropped to below Re

1min and there is no charge for incoming calls The charges for national long distance

calls and international long distance calls have also experienced significant reduction

since 1999 A 1 minute call between Delhi and Mumbai that cost more than Rs 37- in

pre-TTO 1999 period can be currently made for almost at the price of a local call

Similarly the tariff for a call to American continent from India has come down from Rs

75 to less than Rs 7 per minute within the same span of time

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 5

Figure 5 decline in Tariff of NLD and ILD service during period May-99 to Mar-08

The average outgo per outgoing minute (Rental revenue + Airtime revenue per outgoing

minute) which is considered as a realistic indicator of tariff levels has also witnessed

significant decline in the last few years The average outgo per outgoing minute for

GSM subscribers has declined by almost 34 from Rs 115 in March 2007 to Rs 076 in

March 2009 and that for CDMA subscribers has declined from 081 in March 2007 to

Rs 057 in March 2009

GSM Segment CDMA Segment

Figure 6 Average Subscriber Outgo per minute

14 Revenue Growth in the Industry

Despite the Indian economy witnessing a significant slowdown in growth on account of

severe global economic crisis the Indian telecom industry has shown resilient

performance with a revenue growth of almost 18 (y-o-y) during FY09 A confluence

of factors such as under-penetrated rural areas growing demand for telecom services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 6

(especially by the young population) have supported the industry growth The revenue

growth in the telecom industry during FY09 was primarily driven by the robust

performance of the private sector The revenue of the private sector grew by as much as

29 during FY09 On the other hand the revenue of public sector witnessed a decline

of around 480 during FY09 as a result the share of private sector in total revenue

increased to 73 during FY09 as compared with 6650 in FY08 and that of public

sector declined to 27 from 3350 in the same period

Figure 7 Growth in gross revenue

Within the GSM as well as the CDMA segment revenue from call charges account for

around 60 of the revenue While the share of rental revenue for the GSM players is

around 18 for CDMA players it is comparatively higher at around 24 However for

both these segments the share of rental revenue in total revenue has witnessed

significant decline in the last few years The decline can be partly attributed to the

intensified competition within the players that has led to intensive price-war between

service providers

Figure 8 Trend in outgoing SMS

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 7

Further the share of revenue from SMS has also witnessed substantial decline in the

recent past Decline in SMS charges lucrative offers designed by service providers

(such as SMS package) coupled with falling call price leading to substitution effect is

likely to have reduced the revenue share from SMS services In fact the number of

outgoing SMS per subscriber per month has witnessed a gradual reduction the last few

years The revenue forms the value-added services and installation charges have

witnessed a gradual increase in the past few years

15 ARPU is Continuously Declining

The average revenue per unit (ARPU) of both GSM and CDMA subscribers has been

on a downtrend in the last few years The industry-wide ARPU of GSM service

providers have witnessed a decline of around Rs 189 between FY05-FY04 from Rs 394

during the quarter-ended March 2005 to Rs 205 during the quarter-ended March 2009

The ARPU of CDMA service providers have also declined from Rs 256 in the quarter-

ended March 2006 to Rs 99 during the quarter-ended March 2009 The decline in the

ARPU over the years could be largely attributed to the reduction in tariffs of local NLD

and ILD calls The customer-oriented policy taking by the regulatory body and intense

competition among the players have to a greater extent resulted in declining ARPU in

the telecom industry The ARPUs have also been affected by the increasing proportion

of prepaid subscribers and increasing subscription from lower income population

Postpaid ARPU has been five times that of prepaid ARPU which could be attributed to

the declining importance of processing fee on recharge coupon voucher purchased by

prepaid subscribers the gap is lowest in Circle C (368 times) and highest in Circle A

(559 times)

Source TRAI various issues of performance report

Figure 9 Segment wise trend in ARPU

The ARPU in the B amp C circles is relatively lower as compared with the other areas

This could largely be attributed to concentration of low income and low usage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 8: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 1

1 Telecom Overview

The Indian telecommunication industry with 62128 million telephone (landline and

mobile) subscribers and 584 million mobile phone connections as of March 2010 is the

second largest telecommunication network in the world and the second largest in terms

of number of wireless connections in the world Telecommunication activities saw rapid

growth in India starting at the dawn of the 21st century and since then efforts have been

made from both governmental and non-governmental organizations to further improve

the telecommunication infrastructure The eventual goal is to foster the development

and widespread use of modern telecommunication technologies that will serve all

segments of Indialsquos culturally diverse society and to transform it into a country of

technologically aware people The Indian Mobile subscriber base has increased in size

by a factor of more than one-hundred since 2001 when the number of subscribers in the

country was approximately 5 million to 584 million in March 2010 In the first quarter

of 2010 there have been a record breaking 5918 million mobile subscriber additions -

More than twice as many added in China during the same period (295 million) which

is currently leading with 780 million mobile subscribers as of March 2010

As the fastest growing telecommunications industry in the world it is projected that

India will have a more than 1-billion mobile subscribers by 2015 Furthermore

projections by several leading global consultancies indicate that Indialsquos the total number

of subscribers will exceed China by 2019 The industry is expected to reach a size of

Rs 344921 Crore (US$ 7692 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 28 million people

and for 7 million indirectly

Figure 1 Service Providerslsquo share in net additions during the month of March-2010

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 2

Figure 2 Service Provider wise Market Share as on 31-3-2010

11 Prepaid Connections Popular Amongst Mobile Users

Prepaid customers account for a significantly higher share in the total subscriber base in

both the GSM as well as CDMA segments Prepaid subscribers form around 9310

and 9430 of the total subscriber base of the CDMA and GSM segments respectively

Figure 3 Area wise composition of wireless subscribers (FY-09)

Ease of changing the tariff plans anytime coupled with the notion that prepaid

connections help in limiting expenses within a fixed budget are likely to have made

prepaid connections an attractive proposition for the customers especially in the middle

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 3

and lower income segments Interestingly in the metros the proportion of postpaid

subscribers is relatively higher as compared with other service areas The BampC circle

has comparatively higher proportion of the prepaid customers

12 Teledensity

With sustained increase in subscriber base since the beginning of the current decade the

teledensity has witnessed a significant increase from just above 2 in FY99 to 3698

by end of FY09 Even though the teledensity has improved substantially during the last

decade it is still low as compared with other developing countries Thus there is a huge

untapped potential existing for the telecom operators in India While the teledensity in

India has improved substantially there is a stark difference between the teledensity of

the urban and rural areas While the urban teledensity at 89 indicates a rapidly

saturating urban market teledensity of just around 15 in rural areas points to a huge

potential market for the growth in the telecom industry

Figure 4 Trend in Urban and Rural Teledensity

The urban teledensity has improved from under 7 in FY99 to as much as 89 in

FY09 In fact in Delhi the teledensity is as high as 125 While the teledensity in the

metros is rapidly reaching saturation point the future growth in urban areas is expected

to come from non-metros The teledensity of the rural areas has also improved

substantially during the last decade The number of rural telephones increased from

around 1230 mn in March 2004 to 12029 mn in March 2009 In fact the significant

improvement in the rural teledensity has been primarily backed by the surge in wireless

services in the rural areas The wireless subscriber market in the rural areas has surged

to 10971 mn by end of FY09 taking the share of rural wireless subscriber to 28 of

the total wireless subscriber in the country

Although the teledensity in the rural India has grown from as low as 05 in FY99 to

around 15 in FY09 the rural areas still remain under-penetrated to a large extent Large agricultural workforce low per capita income low literacy rates and around 60

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 4

of rural households not having access to electricity is likely to have limited the growth

of the mobile services in rural areas Further underdeveloped telecom infrastructure in

the rural areas has also been an inhibiting factor to necessitate rapid penetration of

telecom services in rural areas High network maintenance cost in rural areas compared

with the urban areas on account of poor transportation lack of skilled labour have also

restrained the rapid growth of telecom services in these areas

Overall Teledensity in India reaches 4789 with 56221 million subscriber base (Jan-

2010)

13 Tariff Reductions

Across the board reduction in telecom tariff has been one of the primary factors behind

the exponential growth experienced by the Indian telecom industry The competition

within the various segments of the telecom sector has intensified in the past few years

and has led to a price war between the operators The race between the telecom service

providers to capture the market which led to substantial tariff reduction has proved

beneficial for the consumer The array of tariff schemes is being made available by

various service providers to suit the usage profile of a wide range of customers in India

to stay ahead of competitors Also most operators offer schemes with assured lifetime

connectivity without having to pay any recurring fixed charges Moreover intense

competition and the resultant reduction in tariff levels induced the TRAI to gradually

move towards a regime of tariff deregulation While tariffs for some crucial segments

like rural telephony roaming services and leased lines are still regulated all the other

tariffs are under forbearance The tariff regulation of TRAI has even granted the unique

option for customers to avail a particular tariff for the entire licensing period of their

service providers without having to fear any tariff hike

Currently the charges for outgoing local telephone calls have dropped to below Re

1min and there is no charge for incoming calls The charges for national long distance

calls and international long distance calls have also experienced significant reduction

since 1999 A 1 minute call between Delhi and Mumbai that cost more than Rs 37- in

pre-TTO 1999 period can be currently made for almost at the price of a local call

Similarly the tariff for a call to American continent from India has come down from Rs

75 to less than Rs 7 per minute within the same span of time

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 5

Figure 5 decline in Tariff of NLD and ILD service during period May-99 to Mar-08

The average outgo per outgoing minute (Rental revenue + Airtime revenue per outgoing

minute) which is considered as a realistic indicator of tariff levels has also witnessed

significant decline in the last few years The average outgo per outgoing minute for

GSM subscribers has declined by almost 34 from Rs 115 in March 2007 to Rs 076 in

March 2009 and that for CDMA subscribers has declined from 081 in March 2007 to

Rs 057 in March 2009

GSM Segment CDMA Segment

Figure 6 Average Subscriber Outgo per minute

14 Revenue Growth in the Industry

Despite the Indian economy witnessing a significant slowdown in growth on account of

severe global economic crisis the Indian telecom industry has shown resilient

performance with a revenue growth of almost 18 (y-o-y) during FY09 A confluence

of factors such as under-penetrated rural areas growing demand for telecom services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 6

(especially by the young population) have supported the industry growth The revenue

growth in the telecom industry during FY09 was primarily driven by the robust

performance of the private sector The revenue of the private sector grew by as much as

29 during FY09 On the other hand the revenue of public sector witnessed a decline

of around 480 during FY09 as a result the share of private sector in total revenue

increased to 73 during FY09 as compared with 6650 in FY08 and that of public

sector declined to 27 from 3350 in the same period

Figure 7 Growth in gross revenue

Within the GSM as well as the CDMA segment revenue from call charges account for

around 60 of the revenue While the share of rental revenue for the GSM players is

around 18 for CDMA players it is comparatively higher at around 24 However for

both these segments the share of rental revenue in total revenue has witnessed

significant decline in the last few years The decline can be partly attributed to the

intensified competition within the players that has led to intensive price-war between

service providers

Figure 8 Trend in outgoing SMS

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 7

Further the share of revenue from SMS has also witnessed substantial decline in the

recent past Decline in SMS charges lucrative offers designed by service providers

(such as SMS package) coupled with falling call price leading to substitution effect is

likely to have reduced the revenue share from SMS services In fact the number of

outgoing SMS per subscriber per month has witnessed a gradual reduction the last few

years The revenue forms the value-added services and installation charges have

witnessed a gradual increase in the past few years

15 ARPU is Continuously Declining

The average revenue per unit (ARPU) of both GSM and CDMA subscribers has been

on a downtrend in the last few years The industry-wide ARPU of GSM service

providers have witnessed a decline of around Rs 189 between FY05-FY04 from Rs 394

during the quarter-ended March 2005 to Rs 205 during the quarter-ended March 2009

The ARPU of CDMA service providers have also declined from Rs 256 in the quarter-

ended March 2006 to Rs 99 during the quarter-ended March 2009 The decline in the

ARPU over the years could be largely attributed to the reduction in tariffs of local NLD

and ILD calls The customer-oriented policy taking by the regulatory body and intense

competition among the players have to a greater extent resulted in declining ARPU in

the telecom industry The ARPUs have also been affected by the increasing proportion

of prepaid subscribers and increasing subscription from lower income population

Postpaid ARPU has been five times that of prepaid ARPU which could be attributed to

the declining importance of processing fee on recharge coupon voucher purchased by

prepaid subscribers the gap is lowest in Circle C (368 times) and highest in Circle A

(559 times)

Source TRAI various issues of performance report

Figure 9 Segment wise trend in ARPU

The ARPU in the B amp C circles is relatively lower as compared with the other areas

This could largely be attributed to concentration of low income and low usage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 9: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 2

Figure 2 Service Provider wise Market Share as on 31-3-2010

11 Prepaid Connections Popular Amongst Mobile Users

Prepaid customers account for a significantly higher share in the total subscriber base in

both the GSM as well as CDMA segments Prepaid subscribers form around 9310

and 9430 of the total subscriber base of the CDMA and GSM segments respectively

Figure 3 Area wise composition of wireless subscribers (FY-09)

Ease of changing the tariff plans anytime coupled with the notion that prepaid

connections help in limiting expenses within a fixed budget are likely to have made

prepaid connections an attractive proposition for the customers especially in the middle

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 3

and lower income segments Interestingly in the metros the proportion of postpaid

subscribers is relatively higher as compared with other service areas The BampC circle

has comparatively higher proportion of the prepaid customers

12 Teledensity

With sustained increase in subscriber base since the beginning of the current decade the

teledensity has witnessed a significant increase from just above 2 in FY99 to 3698

by end of FY09 Even though the teledensity has improved substantially during the last

decade it is still low as compared with other developing countries Thus there is a huge

untapped potential existing for the telecom operators in India While the teledensity in

India has improved substantially there is a stark difference between the teledensity of

the urban and rural areas While the urban teledensity at 89 indicates a rapidly

saturating urban market teledensity of just around 15 in rural areas points to a huge

potential market for the growth in the telecom industry

Figure 4 Trend in Urban and Rural Teledensity

The urban teledensity has improved from under 7 in FY99 to as much as 89 in

FY09 In fact in Delhi the teledensity is as high as 125 While the teledensity in the

metros is rapidly reaching saturation point the future growth in urban areas is expected

to come from non-metros The teledensity of the rural areas has also improved

substantially during the last decade The number of rural telephones increased from

around 1230 mn in March 2004 to 12029 mn in March 2009 In fact the significant

improvement in the rural teledensity has been primarily backed by the surge in wireless

services in the rural areas The wireless subscriber market in the rural areas has surged

to 10971 mn by end of FY09 taking the share of rural wireless subscriber to 28 of

the total wireless subscriber in the country

Although the teledensity in the rural India has grown from as low as 05 in FY99 to

around 15 in FY09 the rural areas still remain under-penetrated to a large extent Large agricultural workforce low per capita income low literacy rates and around 60

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 4

of rural households not having access to electricity is likely to have limited the growth

of the mobile services in rural areas Further underdeveloped telecom infrastructure in

the rural areas has also been an inhibiting factor to necessitate rapid penetration of

telecom services in rural areas High network maintenance cost in rural areas compared

with the urban areas on account of poor transportation lack of skilled labour have also

restrained the rapid growth of telecom services in these areas

Overall Teledensity in India reaches 4789 with 56221 million subscriber base (Jan-

2010)

13 Tariff Reductions

Across the board reduction in telecom tariff has been one of the primary factors behind

the exponential growth experienced by the Indian telecom industry The competition

within the various segments of the telecom sector has intensified in the past few years

and has led to a price war between the operators The race between the telecom service

providers to capture the market which led to substantial tariff reduction has proved

beneficial for the consumer The array of tariff schemes is being made available by

various service providers to suit the usage profile of a wide range of customers in India

to stay ahead of competitors Also most operators offer schemes with assured lifetime

connectivity without having to pay any recurring fixed charges Moreover intense

competition and the resultant reduction in tariff levels induced the TRAI to gradually

move towards a regime of tariff deregulation While tariffs for some crucial segments

like rural telephony roaming services and leased lines are still regulated all the other

tariffs are under forbearance The tariff regulation of TRAI has even granted the unique

option for customers to avail a particular tariff for the entire licensing period of their

service providers without having to fear any tariff hike

Currently the charges for outgoing local telephone calls have dropped to below Re

1min and there is no charge for incoming calls The charges for national long distance

calls and international long distance calls have also experienced significant reduction

since 1999 A 1 minute call between Delhi and Mumbai that cost more than Rs 37- in

pre-TTO 1999 period can be currently made for almost at the price of a local call

Similarly the tariff for a call to American continent from India has come down from Rs

75 to less than Rs 7 per minute within the same span of time

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 5

Figure 5 decline in Tariff of NLD and ILD service during period May-99 to Mar-08

The average outgo per outgoing minute (Rental revenue + Airtime revenue per outgoing

minute) which is considered as a realistic indicator of tariff levels has also witnessed

significant decline in the last few years The average outgo per outgoing minute for

GSM subscribers has declined by almost 34 from Rs 115 in March 2007 to Rs 076 in

March 2009 and that for CDMA subscribers has declined from 081 in March 2007 to

Rs 057 in March 2009

GSM Segment CDMA Segment

Figure 6 Average Subscriber Outgo per minute

14 Revenue Growth in the Industry

Despite the Indian economy witnessing a significant slowdown in growth on account of

severe global economic crisis the Indian telecom industry has shown resilient

performance with a revenue growth of almost 18 (y-o-y) during FY09 A confluence

of factors such as under-penetrated rural areas growing demand for telecom services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 6

(especially by the young population) have supported the industry growth The revenue

growth in the telecom industry during FY09 was primarily driven by the robust

performance of the private sector The revenue of the private sector grew by as much as

29 during FY09 On the other hand the revenue of public sector witnessed a decline

of around 480 during FY09 as a result the share of private sector in total revenue

increased to 73 during FY09 as compared with 6650 in FY08 and that of public

sector declined to 27 from 3350 in the same period

Figure 7 Growth in gross revenue

Within the GSM as well as the CDMA segment revenue from call charges account for

around 60 of the revenue While the share of rental revenue for the GSM players is

around 18 for CDMA players it is comparatively higher at around 24 However for

both these segments the share of rental revenue in total revenue has witnessed

significant decline in the last few years The decline can be partly attributed to the

intensified competition within the players that has led to intensive price-war between

service providers

Figure 8 Trend in outgoing SMS

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 7

Further the share of revenue from SMS has also witnessed substantial decline in the

recent past Decline in SMS charges lucrative offers designed by service providers

(such as SMS package) coupled with falling call price leading to substitution effect is

likely to have reduced the revenue share from SMS services In fact the number of

outgoing SMS per subscriber per month has witnessed a gradual reduction the last few

years The revenue forms the value-added services and installation charges have

witnessed a gradual increase in the past few years

15 ARPU is Continuously Declining

The average revenue per unit (ARPU) of both GSM and CDMA subscribers has been

on a downtrend in the last few years The industry-wide ARPU of GSM service

providers have witnessed a decline of around Rs 189 between FY05-FY04 from Rs 394

during the quarter-ended March 2005 to Rs 205 during the quarter-ended March 2009

The ARPU of CDMA service providers have also declined from Rs 256 in the quarter-

ended March 2006 to Rs 99 during the quarter-ended March 2009 The decline in the

ARPU over the years could be largely attributed to the reduction in tariffs of local NLD

and ILD calls The customer-oriented policy taking by the regulatory body and intense

competition among the players have to a greater extent resulted in declining ARPU in

the telecom industry The ARPUs have also been affected by the increasing proportion

of prepaid subscribers and increasing subscription from lower income population

Postpaid ARPU has been five times that of prepaid ARPU which could be attributed to

the declining importance of processing fee on recharge coupon voucher purchased by

prepaid subscribers the gap is lowest in Circle C (368 times) and highest in Circle A

(559 times)

Source TRAI various issues of performance report

Figure 9 Segment wise trend in ARPU

The ARPU in the B amp C circles is relatively lower as compared with the other areas

This could largely be attributed to concentration of low income and low usage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 10: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 3

and lower income segments Interestingly in the metros the proportion of postpaid

subscribers is relatively higher as compared with other service areas The BampC circle

has comparatively higher proportion of the prepaid customers

12 Teledensity

With sustained increase in subscriber base since the beginning of the current decade the

teledensity has witnessed a significant increase from just above 2 in FY99 to 3698

by end of FY09 Even though the teledensity has improved substantially during the last

decade it is still low as compared with other developing countries Thus there is a huge

untapped potential existing for the telecom operators in India While the teledensity in

India has improved substantially there is a stark difference between the teledensity of

the urban and rural areas While the urban teledensity at 89 indicates a rapidly

saturating urban market teledensity of just around 15 in rural areas points to a huge

potential market for the growth in the telecom industry

Figure 4 Trend in Urban and Rural Teledensity

The urban teledensity has improved from under 7 in FY99 to as much as 89 in

FY09 In fact in Delhi the teledensity is as high as 125 While the teledensity in the

metros is rapidly reaching saturation point the future growth in urban areas is expected

to come from non-metros The teledensity of the rural areas has also improved

substantially during the last decade The number of rural telephones increased from

around 1230 mn in March 2004 to 12029 mn in March 2009 In fact the significant

improvement in the rural teledensity has been primarily backed by the surge in wireless

services in the rural areas The wireless subscriber market in the rural areas has surged

to 10971 mn by end of FY09 taking the share of rural wireless subscriber to 28 of

the total wireless subscriber in the country

Although the teledensity in the rural India has grown from as low as 05 in FY99 to

around 15 in FY09 the rural areas still remain under-penetrated to a large extent Large agricultural workforce low per capita income low literacy rates and around 60

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 4

of rural households not having access to electricity is likely to have limited the growth

of the mobile services in rural areas Further underdeveloped telecom infrastructure in

the rural areas has also been an inhibiting factor to necessitate rapid penetration of

telecom services in rural areas High network maintenance cost in rural areas compared

with the urban areas on account of poor transportation lack of skilled labour have also

restrained the rapid growth of telecom services in these areas

Overall Teledensity in India reaches 4789 with 56221 million subscriber base (Jan-

2010)

13 Tariff Reductions

Across the board reduction in telecom tariff has been one of the primary factors behind

the exponential growth experienced by the Indian telecom industry The competition

within the various segments of the telecom sector has intensified in the past few years

and has led to a price war between the operators The race between the telecom service

providers to capture the market which led to substantial tariff reduction has proved

beneficial for the consumer The array of tariff schemes is being made available by

various service providers to suit the usage profile of a wide range of customers in India

to stay ahead of competitors Also most operators offer schemes with assured lifetime

connectivity without having to pay any recurring fixed charges Moreover intense

competition and the resultant reduction in tariff levels induced the TRAI to gradually

move towards a regime of tariff deregulation While tariffs for some crucial segments

like rural telephony roaming services and leased lines are still regulated all the other

tariffs are under forbearance The tariff regulation of TRAI has even granted the unique

option for customers to avail a particular tariff for the entire licensing period of their

service providers without having to fear any tariff hike

Currently the charges for outgoing local telephone calls have dropped to below Re

1min and there is no charge for incoming calls The charges for national long distance

calls and international long distance calls have also experienced significant reduction

since 1999 A 1 minute call between Delhi and Mumbai that cost more than Rs 37- in

pre-TTO 1999 period can be currently made for almost at the price of a local call

Similarly the tariff for a call to American continent from India has come down from Rs

75 to less than Rs 7 per minute within the same span of time

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 5

Figure 5 decline in Tariff of NLD and ILD service during period May-99 to Mar-08

The average outgo per outgoing minute (Rental revenue + Airtime revenue per outgoing

minute) which is considered as a realistic indicator of tariff levels has also witnessed

significant decline in the last few years The average outgo per outgoing minute for

GSM subscribers has declined by almost 34 from Rs 115 in March 2007 to Rs 076 in

March 2009 and that for CDMA subscribers has declined from 081 in March 2007 to

Rs 057 in March 2009

GSM Segment CDMA Segment

Figure 6 Average Subscriber Outgo per minute

14 Revenue Growth in the Industry

Despite the Indian economy witnessing a significant slowdown in growth on account of

severe global economic crisis the Indian telecom industry has shown resilient

performance with a revenue growth of almost 18 (y-o-y) during FY09 A confluence

of factors such as under-penetrated rural areas growing demand for telecom services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 6

(especially by the young population) have supported the industry growth The revenue

growth in the telecom industry during FY09 was primarily driven by the robust

performance of the private sector The revenue of the private sector grew by as much as

29 during FY09 On the other hand the revenue of public sector witnessed a decline

of around 480 during FY09 as a result the share of private sector in total revenue

increased to 73 during FY09 as compared with 6650 in FY08 and that of public

sector declined to 27 from 3350 in the same period

Figure 7 Growth in gross revenue

Within the GSM as well as the CDMA segment revenue from call charges account for

around 60 of the revenue While the share of rental revenue for the GSM players is

around 18 for CDMA players it is comparatively higher at around 24 However for

both these segments the share of rental revenue in total revenue has witnessed

significant decline in the last few years The decline can be partly attributed to the

intensified competition within the players that has led to intensive price-war between

service providers

Figure 8 Trend in outgoing SMS

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 7

Further the share of revenue from SMS has also witnessed substantial decline in the

recent past Decline in SMS charges lucrative offers designed by service providers

(such as SMS package) coupled with falling call price leading to substitution effect is

likely to have reduced the revenue share from SMS services In fact the number of

outgoing SMS per subscriber per month has witnessed a gradual reduction the last few

years The revenue forms the value-added services and installation charges have

witnessed a gradual increase in the past few years

15 ARPU is Continuously Declining

The average revenue per unit (ARPU) of both GSM and CDMA subscribers has been

on a downtrend in the last few years The industry-wide ARPU of GSM service

providers have witnessed a decline of around Rs 189 between FY05-FY04 from Rs 394

during the quarter-ended March 2005 to Rs 205 during the quarter-ended March 2009

The ARPU of CDMA service providers have also declined from Rs 256 in the quarter-

ended March 2006 to Rs 99 during the quarter-ended March 2009 The decline in the

ARPU over the years could be largely attributed to the reduction in tariffs of local NLD

and ILD calls The customer-oriented policy taking by the regulatory body and intense

competition among the players have to a greater extent resulted in declining ARPU in

the telecom industry The ARPUs have also been affected by the increasing proportion

of prepaid subscribers and increasing subscription from lower income population

Postpaid ARPU has been five times that of prepaid ARPU which could be attributed to

the declining importance of processing fee on recharge coupon voucher purchased by

prepaid subscribers the gap is lowest in Circle C (368 times) and highest in Circle A

(559 times)

Source TRAI various issues of performance report

Figure 9 Segment wise trend in ARPU

The ARPU in the B amp C circles is relatively lower as compared with the other areas

This could largely be attributed to concentration of low income and low usage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 11: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 4

of rural households not having access to electricity is likely to have limited the growth

of the mobile services in rural areas Further underdeveloped telecom infrastructure in

the rural areas has also been an inhibiting factor to necessitate rapid penetration of

telecom services in rural areas High network maintenance cost in rural areas compared

with the urban areas on account of poor transportation lack of skilled labour have also

restrained the rapid growth of telecom services in these areas

Overall Teledensity in India reaches 4789 with 56221 million subscriber base (Jan-

2010)

13 Tariff Reductions

Across the board reduction in telecom tariff has been one of the primary factors behind

the exponential growth experienced by the Indian telecom industry The competition

within the various segments of the telecom sector has intensified in the past few years

and has led to a price war between the operators The race between the telecom service

providers to capture the market which led to substantial tariff reduction has proved

beneficial for the consumer The array of tariff schemes is being made available by

various service providers to suit the usage profile of a wide range of customers in India

to stay ahead of competitors Also most operators offer schemes with assured lifetime

connectivity without having to pay any recurring fixed charges Moreover intense

competition and the resultant reduction in tariff levels induced the TRAI to gradually

move towards a regime of tariff deregulation While tariffs for some crucial segments

like rural telephony roaming services and leased lines are still regulated all the other

tariffs are under forbearance The tariff regulation of TRAI has even granted the unique

option for customers to avail a particular tariff for the entire licensing period of their

service providers without having to fear any tariff hike

Currently the charges for outgoing local telephone calls have dropped to below Re

1min and there is no charge for incoming calls The charges for national long distance

calls and international long distance calls have also experienced significant reduction

since 1999 A 1 minute call between Delhi and Mumbai that cost more than Rs 37- in

pre-TTO 1999 period can be currently made for almost at the price of a local call

Similarly the tariff for a call to American continent from India has come down from Rs

75 to less than Rs 7 per minute within the same span of time

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 5

Figure 5 decline in Tariff of NLD and ILD service during period May-99 to Mar-08

The average outgo per outgoing minute (Rental revenue + Airtime revenue per outgoing

minute) which is considered as a realistic indicator of tariff levels has also witnessed

significant decline in the last few years The average outgo per outgoing minute for

GSM subscribers has declined by almost 34 from Rs 115 in March 2007 to Rs 076 in

March 2009 and that for CDMA subscribers has declined from 081 in March 2007 to

Rs 057 in March 2009

GSM Segment CDMA Segment

Figure 6 Average Subscriber Outgo per minute

14 Revenue Growth in the Industry

Despite the Indian economy witnessing a significant slowdown in growth on account of

severe global economic crisis the Indian telecom industry has shown resilient

performance with a revenue growth of almost 18 (y-o-y) during FY09 A confluence

of factors such as under-penetrated rural areas growing demand for telecom services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 6

(especially by the young population) have supported the industry growth The revenue

growth in the telecom industry during FY09 was primarily driven by the robust

performance of the private sector The revenue of the private sector grew by as much as

29 during FY09 On the other hand the revenue of public sector witnessed a decline

of around 480 during FY09 as a result the share of private sector in total revenue

increased to 73 during FY09 as compared with 6650 in FY08 and that of public

sector declined to 27 from 3350 in the same period

Figure 7 Growth in gross revenue

Within the GSM as well as the CDMA segment revenue from call charges account for

around 60 of the revenue While the share of rental revenue for the GSM players is

around 18 for CDMA players it is comparatively higher at around 24 However for

both these segments the share of rental revenue in total revenue has witnessed

significant decline in the last few years The decline can be partly attributed to the

intensified competition within the players that has led to intensive price-war between

service providers

Figure 8 Trend in outgoing SMS

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 7

Further the share of revenue from SMS has also witnessed substantial decline in the

recent past Decline in SMS charges lucrative offers designed by service providers

(such as SMS package) coupled with falling call price leading to substitution effect is

likely to have reduced the revenue share from SMS services In fact the number of

outgoing SMS per subscriber per month has witnessed a gradual reduction the last few

years The revenue forms the value-added services and installation charges have

witnessed a gradual increase in the past few years

15 ARPU is Continuously Declining

The average revenue per unit (ARPU) of both GSM and CDMA subscribers has been

on a downtrend in the last few years The industry-wide ARPU of GSM service

providers have witnessed a decline of around Rs 189 between FY05-FY04 from Rs 394

during the quarter-ended March 2005 to Rs 205 during the quarter-ended March 2009

The ARPU of CDMA service providers have also declined from Rs 256 in the quarter-

ended March 2006 to Rs 99 during the quarter-ended March 2009 The decline in the

ARPU over the years could be largely attributed to the reduction in tariffs of local NLD

and ILD calls The customer-oriented policy taking by the regulatory body and intense

competition among the players have to a greater extent resulted in declining ARPU in

the telecom industry The ARPUs have also been affected by the increasing proportion

of prepaid subscribers and increasing subscription from lower income population

Postpaid ARPU has been five times that of prepaid ARPU which could be attributed to

the declining importance of processing fee on recharge coupon voucher purchased by

prepaid subscribers the gap is lowest in Circle C (368 times) and highest in Circle A

(559 times)

Source TRAI various issues of performance report

Figure 9 Segment wise trend in ARPU

The ARPU in the B amp C circles is relatively lower as compared with the other areas

This could largely be attributed to concentration of low income and low usage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 12: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 5

Figure 5 decline in Tariff of NLD and ILD service during period May-99 to Mar-08

The average outgo per outgoing minute (Rental revenue + Airtime revenue per outgoing

minute) which is considered as a realistic indicator of tariff levels has also witnessed

significant decline in the last few years The average outgo per outgoing minute for

GSM subscribers has declined by almost 34 from Rs 115 in March 2007 to Rs 076 in

March 2009 and that for CDMA subscribers has declined from 081 in March 2007 to

Rs 057 in March 2009

GSM Segment CDMA Segment

Figure 6 Average Subscriber Outgo per minute

14 Revenue Growth in the Industry

Despite the Indian economy witnessing a significant slowdown in growth on account of

severe global economic crisis the Indian telecom industry has shown resilient

performance with a revenue growth of almost 18 (y-o-y) during FY09 A confluence

of factors such as under-penetrated rural areas growing demand for telecom services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 6

(especially by the young population) have supported the industry growth The revenue

growth in the telecom industry during FY09 was primarily driven by the robust

performance of the private sector The revenue of the private sector grew by as much as

29 during FY09 On the other hand the revenue of public sector witnessed a decline

of around 480 during FY09 as a result the share of private sector in total revenue

increased to 73 during FY09 as compared with 6650 in FY08 and that of public

sector declined to 27 from 3350 in the same period

Figure 7 Growth in gross revenue

Within the GSM as well as the CDMA segment revenue from call charges account for

around 60 of the revenue While the share of rental revenue for the GSM players is

around 18 for CDMA players it is comparatively higher at around 24 However for

both these segments the share of rental revenue in total revenue has witnessed

significant decline in the last few years The decline can be partly attributed to the

intensified competition within the players that has led to intensive price-war between

service providers

Figure 8 Trend in outgoing SMS

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 7

Further the share of revenue from SMS has also witnessed substantial decline in the

recent past Decline in SMS charges lucrative offers designed by service providers

(such as SMS package) coupled with falling call price leading to substitution effect is

likely to have reduced the revenue share from SMS services In fact the number of

outgoing SMS per subscriber per month has witnessed a gradual reduction the last few

years The revenue forms the value-added services and installation charges have

witnessed a gradual increase in the past few years

15 ARPU is Continuously Declining

The average revenue per unit (ARPU) of both GSM and CDMA subscribers has been

on a downtrend in the last few years The industry-wide ARPU of GSM service

providers have witnessed a decline of around Rs 189 between FY05-FY04 from Rs 394

during the quarter-ended March 2005 to Rs 205 during the quarter-ended March 2009

The ARPU of CDMA service providers have also declined from Rs 256 in the quarter-

ended March 2006 to Rs 99 during the quarter-ended March 2009 The decline in the

ARPU over the years could be largely attributed to the reduction in tariffs of local NLD

and ILD calls The customer-oriented policy taking by the regulatory body and intense

competition among the players have to a greater extent resulted in declining ARPU in

the telecom industry The ARPUs have also been affected by the increasing proportion

of prepaid subscribers and increasing subscription from lower income population

Postpaid ARPU has been five times that of prepaid ARPU which could be attributed to

the declining importance of processing fee on recharge coupon voucher purchased by

prepaid subscribers the gap is lowest in Circle C (368 times) and highest in Circle A

(559 times)

Source TRAI various issues of performance report

Figure 9 Segment wise trend in ARPU

The ARPU in the B amp C circles is relatively lower as compared with the other areas

This could largely be attributed to concentration of low income and low usage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 13: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 6

(especially by the young population) have supported the industry growth The revenue

growth in the telecom industry during FY09 was primarily driven by the robust

performance of the private sector The revenue of the private sector grew by as much as

29 during FY09 On the other hand the revenue of public sector witnessed a decline

of around 480 during FY09 as a result the share of private sector in total revenue

increased to 73 during FY09 as compared with 6650 in FY08 and that of public

sector declined to 27 from 3350 in the same period

Figure 7 Growth in gross revenue

Within the GSM as well as the CDMA segment revenue from call charges account for

around 60 of the revenue While the share of rental revenue for the GSM players is

around 18 for CDMA players it is comparatively higher at around 24 However for

both these segments the share of rental revenue in total revenue has witnessed

significant decline in the last few years The decline can be partly attributed to the

intensified competition within the players that has led to intensive price-war between

service providers

Figure 8 Trend in outgoing SMS

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 7

Further the share of revenue from SMS has also witnessed substantial decline in the

recent past Decline in SMS charges lucrative offers designed by service providers

(such as SMS package) coupled with falling call price leading to substitution effect is

likely to have reduced the revenue share from SMS services In fact the number of

outgoing SMS per subscriber per month has witnessed a gradual reduction the last few

years The revenue forms the value-added services and installation charges have

witnessed a gradual increase in the past few years

15 ARPU is Continuously Declining

The average revenue per unit (ARPU) of both GSM and CDMA subscribers has been

on a downtrend in the last few years The industry-wide ARPU of GSM service

providers have witnessed a decline of around Rs 189 between FY05-FY04 from Rs 394

during the quarter-ended March 2005 to Rs 205 during the quarter-ended March 2009

The ARPU of CDMA service providers have also declined from Rs 256 in the quarter-

ended March 2006 to Rs 99 during the quarter-ended March 2009 The decline in the

ARPU over the years could be largely attributed to the reduction in tariffs of local NLD

and ILD calls The customer-oriented policy taking by the regulatory body and intense

competition among the players have to a greater extent resulted in declining ARPU in

the telecom industry The ARPUs have also been affected by the increasing proportion

of prepaid subscribers and increasing subscription from lower income population

Postpaid ARPU has been five times that of prepaid ARPU which could be attributed to

the declining importance of processing fee on recharge coupon voucher purchased by

prepaid subscribers the gap is lowest in Circle C (368 times) and highest in Circle A

(559 times)

Source TRAI various issues of performance report

Figure 9 Segment wise trend in ARPU

The ARPU in the B amp C circles is relatively lower as compared with the other areas

This could largely be attributed to concentration of low income and low usage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 14: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 7

Further the share of revenue from SMS has also witnessed substantial decline in the

recent past Decline in SMS charges lucrative offers designed by service providers

(such as SMS package) coupled with falling call price leading to substitution effect is

likely to have reduced the revenue share from SMS services In fact the number of

outgoing SMS per subscriber per month has witnessed a gradual reduction the last few

years The revenue forms the value-added services and installation charges have

witnessed a gradual increase in the past few years

15 ARPU is Continuously Declining

The average revenue per unit (ARPU) of both GSM and CDMA subscribers has been

on a downtrend in the last few years The industry-wide ARPU of GSM service

providers have witnessed a decline of around Rs 189 between FY05-FY04 from Rs 394

during the quarter-ended March 2005 to Rs 205 during the quarter-ended March 2009

The ARPU of CDMA service providers have also declined from Rs 256 in the quarter-

ended March 2006 to Rs 99 during the quarter-ended March 2009 The decline in the

ARPU over the years could be largely attributed to the reduction in tariffs of local NLD

and ILD calls The customer-oriented policy taking by the regulatory body and intense

competition among the players have to a greater extent resulted in declining ARPU in

the telecom industry The ARPUs have also been affected by the increasing proportion

of prepaid subscribers and increasing subscription from lower income population

Postpaid ARPU has been five times that of prepaid ARPU which could be attributed to

the declining importance of processing fee on recharge coupon voucher purchased by

prepaid subscribers the gap is lowest in Circle C (368 times) and highest in Circle A

(559 times)

Source TRAI various issues of performance report

Figure 9 Segment wise trend in ARPU

The ARPU in the B amp C circles is relatively lower as compared with the other areas

This could largely be attributed to concentration of low income and low usage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 15: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 8

population in these regions Going forward the fall in ARPU is likely to continue given

that the additional subscriber base for the telecom industry will emanate from the B amp C

circles Thus the deeper penetration in rural areas is likely to put downward pressure

on the industryrsquos ARPU

16 Minutes of Usage (MOU)

With gradually declining call charges the minutes of usage for the GSM players

witnessed gradual increase during the last few years The minutes of usage (MOU) for

GSM subscribers increased from 395 per subscriber per month during end-March 2009

to around 505 during the quarter-ended June 2008 before declining to 484 during

March 2009 The marginal decline in MOU in the GSM segment could in part be

attributed to increasing addition of low-income low usage population to the subscriber

base and slowdown in economic activity during the period

The MOU of CDMA players however have witnessed a gradual decline in the last few

years The MOU for CDMA segment has declined form 550 per subscriber per month

during end-March 2006 to 357 per subscriber per month during end- March 2009 The

withdrawal of free minutes offers from the existing CDMA subscribe is likely to have

dragged down the MOU in the CDMA segment to a certain extent

Figure 11 Segment wise trend in MOU

With both the GSM as well as CDMA segment the postpaid customers have a higher

minute of usage per subscriber per month as compared to the prepaid subscribers

Further the MOU per subscriber per month is relatively lower in the metros as

compared with the other circles for both the CDMA and GSM segments

Local calls (inter circle) account for about 8140 and 8664 of the total all India

minutes of use within the CDMA and GSM segments respectively NLD calls account

for around 18 and 1289 of the all-India minutes of usage for the CDMA and GSM

sectors respectively

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 16: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 9

17 Growth of Mobile Value Added Services Market (MVAS)

The value-added services market is growing rapidly in India According to a

consultation paper published by the TRAI the VAS contributes around 10-14 of the

total revenue of mobile telecom service providers A confluence of factors such as the

falling costs of value added services enhanced handsets qualities lowering age profile

of mobile users have helped in stimulating the growth in this segment Also a host of

innovative contents and packaging provided by the service providers is also luring the

customers Moreover the consumers are increasingly looking for entertainment

different means for performing transactions and accessing information at their finger

tips VAS helps the consumers in receiving the same and hence is expected to become a

major revenue segment for the telephone operators

The rapidly-growing valued-added services segment has been one of the instrumental

factors in Indialsquos runaway success in mobile telephony Value-added services are

increasingly being viewed as an instrument for customer retention and service

differentiation by the telecom operators given the rapidly increasing competition The

usage or demand for the VAS is higher among younger population The CDMA

services have handset constraints thereby its level of acceptance among the youth is

low Among the CDMA players the share of VAS revenue in total revenue is lower as

compared with that of GSM service providers For many service providers mobile

value-added services act as a guard against falling ARPU

In India the VAS delivery has largely been based on the SMS IVR GPRS and WAP

portal platforms These VAS platforms are the backbone of the telecom operators for

managing various entertainment services such as games streaming audio video and

ringtone downloads

The MVAS market is currently dominated by SMS in terms of revenue SMS can be

P2P or P2A A host of services such as the information services (news alerts cricket

scores) are provided through the SMS platform by the service providers

Voice-based value-added services such as customer support lines are delivered via the

Interactive Voice Response system (IVR) IVR is an interactive technology that allows

a computer to detect voice and keypad inputs thereby enabling the end user to select the

options available on a particular service through pressing numbers on the key pad or

using the speech recognition system Given that the voice-based services can be

delivered in different languages these become a significant medium of providing value-

added services to the rural and semi-urban areas These are voice-based value added

services such as news live talk to astrologer movie information jokes cricket

commentary which can be accessed by subscribers

The General Packet Radio Service (GPRS) system is used by GSM mobile phones for

transmitting IP packets thereby enabling a user to access the internet on their mobile

Various services including MMS downloading content such as wall paper ringtones

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 17: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 10

games are provided using the GPRS platform The GPRS adoption in India is still at a

very nascent stage given the significantly higher prices of data access Despite being an

effective mode of delivering MVAS the progress of GPRS has been limited due to

comparatively lower customer base

Unstructured Supplementary Service Data (USSD) is a GSM standard that facilitates

high-speed two-way communication between the mobile phone and the applications

USSD is a very useful mechanism that allows users to access applications through their

mobile phone whether they are at home or overseas USSD offers session-based

communication and supports a range of applications It permits users to search for

information within that session-based service The services are delivered through a

continuous interactive session unlike SMS where the interaction needs to be broken to

separate messages It is charged on a per minute basis and works out to be more

economical than SMS The industry holds a positive perspective towards its adoption as

a means of accessing MVAS Services such as content download cricket updates jokes

news alerts etc can be acquired by consumers through process of using USSD

Call Management Services (CMS) ndash Services such as missed call alerts call forwarding

voice mail and incoming call block come under this category

Mobile VAS may be broadly classified into the following three categories

Entertainment VAS ndash These provide entertainment for leisure time usage jokes

ringtones Caller Ring Back Tone (CRBT) and games

Info VAS ndash These services are characterized by the useful information it provides

to the end-user information on real estate education stock updates

M-Commerce VAS (Transactional Services) ndash These services involve some

transaction using the mobile phone mobile banking and mobile payments

The consumption of VAS by the consumers requires feature handsets that facilitate easy

access of content Given the comparatively higher cost of feature-rich mobile handsets

their penetration remains low The lack of feature-rich mobile handsets acts as a barrier to

the surge in VAS However with the increase in competition between the handset

manufacturers the price of feature rich handsets is likely to witness some moderation

which in turn would assist the increase VAS usage Further the introduction of 3G

services Next Generation Network (NGN) converged network the usage of VAS is

likely to gain momentum 3G services and NGN would enable the high bandwidth

multimedia content services mobile TV and online gaming and thereby will push the

demand for VAS as well as innovations in VAS products offering According to a TRAI

consultation paper the mobile revenue through value added services is expected to cross

30 of the mobile telecom service providerlsquos revenue in the next 5-7 years

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 18: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 11

2 Organization and region Information

21 About Vodafone

The name Vodafone comes from voice data fone chosen by the company to reflect the

provision of voice and data services over mobile phones

Vodafone Group Plc is the worlds leading mobile telecommunications company with a

significant presence in Europe the Middle East Africa Asia Pacific and the United

States through the Companys subsidiary undertakings joint ventures associated

undertakings and investments

It currently has operations in 31 countries and partner networks in a further 40 countries

Based on subscribers it is the worlds second largest mobile phone operator behind China

Mobile with over 427 million subscribers in 31 markets across 5 continents as of 2009

The Companys ordinary shares are listed on the London Stock Exchange and the

Companys American Depositary Shares (ADSs) are listed on the NASDAQ Stock

Market The Company had a total market capitalization of approximately pound712 billion at

12 November 2009

Vodafone Group Plc is a public limited company incorporated in England under

registered number 1833679 Its registered office is Vodafone House The Connection

Newbury Berkshire RG14 2FN England

211 Presence

Vodafone Operating Countries

Vodafones partners and affiliates

Figure 1 Worldwide presence of Vodafone

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 19: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 12

Growth of Hutchison Essar

1992 Hutchison Whampoa and Max Group established Hutchison Max

2000 Acquisition of Delhi operations Entered Calcutta and Gujarat markets through

ESSAR acquisition

2001 Won auction for licenses to operate GSM services in Karnataka Andhra Pradesh

and Chennai

2003 Acquired AirCel Digilink (ADIL mdash ESSAR Subsidiary) which operated in

Rajastan Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch

brand

2004 Launched in three additional telecom circles of India namely Punjab Uttar

Pradesh West and West Bengal

2005 Acquired BPL (Except Mumbai) - 3 Circles another mobile service provider in

India

2008 Vodafone acquired the License in remaining 7 circles and has started its pending

operations in Madhya PradeshChhattisgarh with its headquarters at Malviya Nagar

Bhopal as well as in Orissa Assam North East and Bihar

2008 Vodafone launched the Apple iPhone 3G to be used on its 17 circle 275G

network

Hutch was often praised for its award winning advertisements which all follow a clean

minimalist look A recurrent theme is that its message Hello stands out visibly though it

uses only white letters on red background Another recent successful ad campaign in

2003 featured a pug named Cheeka following a boy around in unlikely places with the

tagline wherever you go our network followslsquo The simple yet powerful advertisement

campaigns won it many admirers

2009 Vodafone launched Recharge Online

2009 Vodafone Essar - 1st Indian Telecom operator to receive the Payment Card

Industry Security Standard (PCI DSS) certification for its Mumbai operations and

launches unlimited SMS offer in Mumbai

2010 Vodafone emerged as the most admired marketer in India

2010 Vodafone crossed 100 million subscribers in India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 20: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 13

22 About Vodafone India

Vodafone Essar formally known as Hutchison Essar is a cellular operator in India that

covers 23 telecom circles in India based in Mumbai Vodafone Essar is owned by

Vodafone 67 and Essar Group 33 It is the second largest mobile phone operator in

terms of revenue behind Bharti Airtel and third largest in terms of customers

Vodafone Essar provides 275G services based on 900 MHz and 1800 MHz digital GSM

technology offering voice and data services in 23 of the countrys 23 licence areas It is

among the top three GSM mobile operators of India

3 About Uttar Pradesh

ldquoI had been to other countries - in Europe Asia and the Middle East - but none of them

had provided even half as much variety or so much to see and experience and remember

as this one State in northern India You can travel from one end of Australia to the other

but everywhere on that vast continent you will find that people dress in the same way eat

the same kind of food and listen to the same music This colorless uniformity is apparent

in many other countries of the world both East and West But Uttar Pradesh is a world in

itselfrdquo - Ruskin Bond

Uttar Pradesh accounting for 164 per cent of the countrylsquos population with a population

of over 190 million people it is Indias most populous state as well as the worlds most

populous sub-national entity Were it a nation in its own right Uttar Pradesh would be

the worlds fifth most populous country

It is also the fourth largest state in geographical area covering 90 per cent of the

countrylsquos geographical area encompassing 2 94411 square kilometers and comprising

of 83 districts 901 development blocks and 112804 inhabited villages The density of

population in the state is 473 people per square kilometers as against 274 for the country

Religion Mix

Hindus constitute 80 of the population in the state Islam is practiced by about 18 of

the population while the remaining 2 include Atheists Sikhs Jains Buddhists and

Christians and also the tribal population

Economy

Uttar Pradesh is the second largest state-economy in India after Maharashtra contributing

817 to Indias total GDP Between 2004-2009 Uttar Pradesh grew at 629 and is now

quite close to the miracle growth norm (which is 7 by international norm)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 21: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 14

The major economic activity in the state is agriculture in 1991 73 of the population in

the state was engaged in agriculture and 46 of the state income was accounted for by

agriculture

Language

Uttar Pradesh is often referred to as the Hindi heartland of India While the languages of

state administration are Hindi established by the Uttar Pradesh Official Language Act

1951 and Urdu established by the Amendment to the same in 1989 the native languages

of the state are considered as dialects of Hindi both by the common populace as well as

the State and Central Governmental authorities Linguistically the state spreads across

the Central East-Central and Eastern zones of the Indo-Aryan languages the major

native languages of the state being Bhojpuri Awadhi Bundeli Braj Bhasha Kannauji

and the vernacular form of Khari boli which also forms the basis for the standardized

Hindi and Urdu registers Bagheli is spoken on the southwestern fringes of the state

Festivals

Among the most important Hindu festivals are Diwali Holi and Dashehra which are

also observed with equal fervor by Jains and Sikhs Bāra Wafāṭ Eid and Bakreed are

Muslim religious festivals Mahavir Jayanti is celebrated by Jains Buddha Jayanti by

Buddhists Guru Nanak Jayanti by Sikhs and Christmas by the Christians

31 Wireless Subscriber Base in Uttar Pradesh East

The table below gives a picture of as by how much the subscriber base of various telecom

companies has increased in UPE region

Circle Uttar Pradesh (E)

Feb-10 Mar-10

Vodafone 9561217 10002619

Idea 3613016 3688675

Bharati 8643635 9048192

Reliance 8138842 8601534

Tata 2716819 2824923

Aircel 814571 901538

Unitech 608050 765256

BSNL 7852629 8199211

Total 41948779 44031988

Net Addition 2083209

Table 1 Monthly subscriber addition in UPE region

Source TRAI Report

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 22: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 15

The pie chart below illustrates the market share of different Telcolsquos operating in UPE

region

Market Share of UPE Circle as on

March-10

22

8

20

6

22

19

21

Vodafone

Idea

Bharati

Reliance

Tata

Aircel

Unitech

BSNL

Figure 2 Market Share of UPE circle as on March-10

4 Vodafone UPE Vodafone Uttar Pradesh East (UPE) head quartered at Lucknow covers a population of

12 Crore Of this 95 Crore people reside in small towns (sub-rural) and villages (rural)

areas

ARPU coming from UPE circle stands at Rs178 for prepaid and Rs730 in case of

postpaid

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 23: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 16

41 Vodafone-UPE Region Map

Figure 3 Regional map covered by Vodafone-UPE circle

42 Vodafone UPE Structure

Vodafone UPE circle consists of six main towns which are Lucknow Allahabad Jhansi

Varanasi Gorakhpur and Kanpur The way towns and villages are divided for these main

cities is shown in diagram below

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 24: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 17

Figure 4 The hierarchy of division of regions

Example of the above mentioned Hierarchy taking Lucknow District is illustrated in

diagram below

Figure 5 Hierarchy for Lucknow City

Main

Town

DHQ

District Head Quarter

(Town)

THQ

Tehsil Head Quarter (Town)

Towns and Villages

(79 of covered population)

There are 6 main towns Lucknow Allahabad

Jhansi Varanasi

Gorakhpur and Kanpur

Lucknow District

35 Lakhs Subscribers

Lucknow

(Main Town)

22 Lakhs Subscribers

Bakshi Ka Talab

(THQ)

Lucknow Sadar

(THQ) Malihabad

(THQ)

Mohan Lal Ganj

(THQ)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 25: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 18

5 VAS ndash Value Added Services

A value-added service (VAS) is popular as a telecommunications industry term for non-

core services or in short all services beyond standard voice calls and fax transmissions

but it can be used in any service industry for the services providers provide for no cost to

promote their main service business In telecommunication industry on a conceptual

level value-added services add value to the standard service offering spurring the

subscriber to use their phone more and allowing the operator to drive up their ARPU

51 Entities in VAS Value chain

Entity Description Players

ContentApplication

Owner

Companies who develop

copyrighted content

Saregama Mauj Rajshri

Aggregator

Aggregates content like

gameswallpapersringtones

and distribute it to suit

customer needs

Mauj Hungama mobile

Indiatimes mobile etc

Software developer

Develops applications (like

paymentgamesmiddleware

etc) for mobile VAS

Mchek July systems

Webaroo Affle etc

Technology Enabler

Provides the platform that

plugs into telco networks

and acts like a bridge

between aggregator and

telcos

OnMobile Cellnext Mauj

etc

Table Entities in VAS

Figure 6 Flow between different VAS entities

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 26: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 19

Operators still dominate the revenue sharing arrangement in VAS Of the amount paid by

end users 60-70 is kept by operator aggregator gets 20-25 and content appowner

gets 10-15 of the revenue

Figure 7 Revenue sharing arrangement in VAS

52 VAS in Vodafone (UPE)

Vodafone UPE VAS is Rs1730 million business ie 9 contribution towards gross

revenue

Figure 8 VAS structure of Vodafone (UPE)

The ARPU of VAS (prepaid) is Rs16 and for VAS (postpaid) it stands at Rs135

VAS

VOX SMS Subscription

Packs

Alerts GPRS

LIVE IVR P2A P2P -Cricket

-Jokes

-Astrology

-Match-Day

Packs

Vodafone

Music

Junction

-Cricket

-Learn

English

-Astrology

-Stocks

Guinness

Book

TV serial

alert

News

Beauty

Surfing Downloading

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 27: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 20

521 Promotion of VAS

Promotion of VAS is done by the company through following channels

OBD Outbound Dialer (I)

An automated voice dialer application that automates the functionality of outbound call

operations In situations where outbound calls need to be made with relatively lower

levels of interaction except passing the campaign message the OBD can provide

extremely effective and efficient mode of campaigning

IBD Inbound Dialer (V)

The Telephony server handles inbound calls and routes them to agents When the server

first receives a call it gathers information about the call Based upon the incoming phone

number dialed the server determines which campaign the call belongs to plays a

customized message and then attempts to route the call to an available agent If an agent

is available it immediately transfers the call If an agent is not available then the server

will play a customized on-hold message and continue to wait for an agent to become

available

SMS Short Message Service (I)

It is a communication service component of the GSM mobile communication system

using standardized communications protocols that allow the exchange of short text

messages between mobile phone devices SMS text messaging is the most widely used

data application in the world with 24 billion active users or 74 of all mobile phone

subscribers The term SMS is used as a synonym for all types of short text messaging as

well as the user activity itself in many parts of the world

The first SMS message was sent over the Vodafone GSM network in the United

Kingdom on 3 December 1992 from Neil Papworth of Sema Group (now Airwide

Solutions) using a personal computer to Richard Jarvis of Vodafone using an Orbitel 901

handset The text of the message was Happy Christmas

Voice Search (V)

Tool that allows someone to use their phone to make a query After the user calls the

number of Voices search system they would wait for the words Say your Search

Keywords and then say the keywords Next they would either wait to have the page

updated or click on a link to bring up the search page the user requested

PCN Post Call Notification (I)

After every call or SMS telecom service providers can notify subscribers about the

information on last call or SMS

Retail (V)

Promotion through retail chain of telecom operators

(I) ndash By invitation (V) - Voluntary participation

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 28: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 21

India is currently the 2nd largest Mobile Market in the world after China adding nearly

10-12 million subscribers on average monthly

6 Statistical Snapshot for Indian Mobile Users (Jan 2010)

Page-view growth since December 2008 2633

Unique-user growth since December 2008 2448

Page views per user 339

Data transferred per user (MB) 7

Data transferred per page view (KB) 20

Gmail fell off the top 10 list allowing Facebook Wikipedia Yahoo and

YouTube to move up the list Reason being Google introduced push email feature

few months back and that allowed users to check mail without the browser

Cricinfo is a new addition to the top 10 list Mobile Internet Users grown by 245 in India

7 Top 10 Mobile sites in India (unique users)

1 googlecom

2 orkutcom

3 facebookcom

4 wikipediaorg

5 yahoocom

6 youtubecom

7 songspk

8 zedgenet

9 cricinfocom (new)

10 wapin

Most of the Metrolsquos and big cities have nearly come to a saturation point however the

current phase of growth in Indian Mobile Market is in Rural areas that is now accounting

for majority of growth in mobile space

Following in this section is a survey report that highlights the behavior of

urban market and their mobile service usage pattern

Note The data is collected from online survey and online analysis from data collected by

a colleague

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 29: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 22

8 Mobile VAS services report

Results are from different online reportsstudies which are mentioned in reference

Here are some numbers on how Urban India uses the Mobile Value Added Services

offered by Telecom providers

Note With respect to this project this survey will help in understanding the psychology

of urban subscribers and then when compared with the rural survey done (by the author)

we will be able to see that using same strategies in both urban and rural market fails

81 SMS Based Value Added Services

Figure1 SMS based value added service (proportion of different Tecolsquos)

Nearly 56 Million urban Indians used a VAS related SMS subscription service in

MarchApril 2009 out of which Reliance Mobile CDMA accounted for a quarter of all

subscribers to VAS SMS subscription service followed by Bharti Airtel (18) and

Vodafone (14)

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 30: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 23

82 Which is the most popular SMS service used by Urban India

Figure 2 Most popular SMS service

Numbers are actually surprising It was thought that News and probably Jobs would

garner most votes but NO it is Jokes that used by 52 of Urban Indian Mobile users

followed by Astrology

One conclusion can definitely be made from these numbers is that majority of mobile

users in India fall into Age group of 16-25 years

83 Which are the popular VAS options that Urban India likes

No surprises here Unlimited Internet Access amp better offers on SMS bundles are the two

VAS options that Indian urban mobile phone users look at while deciding on a service

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 31: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 24

84 Which is the most popular M-Commerce Activity for Urban Indian Mobile

phone users

Figure 3 Most popular M-Commerce activity

Nearly 98 million of all mobile users have used mobile phones to recharge their card or

pay their phone bill The second most popular M-Commerce activity is buying movie

tickets (3967 million)

85 Which is the most popular VAS service used by Urban Indian Mobile Phone

User

Figure 4 Popular VAS services among urban subscribers

Finding out who called and informing people when busy are the two other most

popular Value added services used by Urban India Missed call alerts is used by almost

110 million urban Indians while TalkVoice SMS is used by almost 80 million

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 32: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 25

The gap between urban and rural market

The market is a place where buyers and Sellers Exchange Things In lay man terms ―It is

a place where buyers and sellers exchange goodsService for some value in return such as

Money So the Market is same everywhere But the difference is in the consumer

behavior There will be different buyers in each market This is because of different

factors which Influence them So the same way there is a difference between Rural and

Urban Market The factors are so many to define There is a difference in all the

marketing Variables That is where most of the companies approach with different

Marketing Mix and Strategies to Rural Market The strategies differ from the urban to

rural market

The Differences can be Infrastructure Economy Lifestyle Socio- Cultural Background

Availability or reach Habits Competition and Consumer Behavior

Infrastructure The facilities like Electricity Internet Roads and Buildings Educational

Institutions Financial Institutions Communication and Organized Market Other

Facilities differs in urban and rural market In urban everything gets implemented soon

and Availability is also there Where as in rural market everything takes a good amount

of time

Economy Here the Economy means the earning Capacity in a rural Market The cost of

Living always depends upon their way of earning So the Income levels are unreliable as

Most of them are depended upon the seasons and Agriculture So the Income levels

cannot be a fixed one

Lifestyle The Lifestyle that is living pattern of both the markets differ a lot This can be

important factor which influences the companies to think of when they approach rural

market

Socio- Cultural Background Due to the illiteracy level and Culture adaptability from

long time the rural market always gets differ than the urban market The superstition and

other belief as well as the way of thinking towards products and goods differ in these two

markets

Availability or Reach Due to the areas which are diverted geographically and

Heterogeneous market the reach is very difficult The logistics for rural market is a tough

task than to reach the Urban Market

Habits The daily routine of the people makes them to cultivate different habits Apart

from due to the awareness is low in Media terms there will be a difference in the habits

Competition The competition in the market for brands and Companies always differ As

in rural markets it is always the channel Partner and Retailer plays a vital role But where

as in Urban Market Brand plays a great role

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 33: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 26

Consumer Behavior Last but not least the consumer behavior is the task for the task

for the companies The mindset of the rural consumer is completely different from Urban

Consumer The Mindset of the consumer is different For Ex In urban market to buy

Electronic Item the customer thinks of Brand and its updated feature whereas in rural

market he thinks of in so many ways such as money Durability Buying Capacity and

so on So this mindset makes a difference in both markets

So these are the differences in the rural market and urban market Any company need to

understand these differences well and should frame different strategies when entering

into rural market

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 34: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 27

9 Indian Rural Market

In India close to 72 percent of Indian population lives in rural areas In the country we

have 636 lakh villages out of which only 13 percent have population above 2000 The

rural economy contributes nearly half of the countrylsquos GDP which is mainly agriculture

driven and monsoon dependant More than 50 percent of the sales FMCG and Durable

companies come from the rural areas The McKinsey report (2007) on the rise on

consumer market in India predicts that in twenty years the rural Indian market will be

larger than the total consumer markets in countries such as South Korea or Canada today

and almost four times the size of todaylsquos urban Indian market and estimated the size of

the rural market at $577 Billion

Census of India defines rural as any habitation with a population density less than 400 per

sq km where at least 75 percent of the male working population is engaged in

agriculture and where there exits no municipality or board and the same definition being

accepted for the paper here A marketer trying to market his product or service in the

rural areas is faced by many challenges the first is posed by the geographic spread and

low population density in the villages in the country The table below gives us the

population and village size details in the country

Population Number of Villages

Percentage of total

villages

Less than 200 114267 179

200-499 155123 243

500-999 159400 25

1000-1999 125758 197

2000-4999 69135 108

5000-9999 11618 18

10000 amp above 3064 05

Total 636365 100

Table 1 Rural Population Statistics (Source Census 2001)

The second challenge is from the low purchasing power and limited disposable incomes

in these parts of the country But this has been changing in the last few decades with

agricultural growth rate faster in the 1990lsquos and 80lsquos than the 1970lsquos (CMIE 1996)

These all lead to a quantum jump in the incomes of farmers in the country Though the

income levels overall are still very low there are many pockets of prosperity which have

come up in the rural areas in the country

According to NCAER 2002 the number of rural middle class house holds at 274 million

is very close to their urban counterpart at 295 million The improvement in the support

prices being offered to farmers also has an impact on the disposable income with the

farmers And between 1981-2001 there has been tremendous improvement in the literacy

levels poverty and rural housing in the villages of the country Rural literacy levels have

improved from 36 percent to 59 percent the number of below poverty houses have

declined from close to half to 46 percent and the number of pucca houses have doubled

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 35: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 28

from 22 percent to 41 percent These figures provide us with a clear picture that rural

India with the increase in agricultural income and improving standards is on the verge of

becoming a large untapped market which marketers have been aspiring for a very long

period of time Thus the current status of rural markets makes it an attractive market for

marketers The next section specifically looks at the current status of rural telecom and

the technology perspective

Mobiles in recent days are not just a symbol of urbanization Itlsquos also a necessity today in

rural India According to the Telecom Regulatory Authority of India (TRAI) there has

been a rise of 18 in use of the mobiles by rural subscribers Rising from 932 million

users at the end of last year India today has a total of a massive 1097 million rural

mobile subscribers The urban users on the other hand are 282 million in total

With the rural market being identified so well by the Indian Mobile Services as well as

the handset vendors they do not miss a single chance to get themselves on the

forefront With rural mobile market increasing there is a huge market for Mobile VAS

The growth in mobile VAS is mainly attributed to the rural market A few of the service

providers have already taken the initiative for rural VAS

91 Marketing Issues in Rural Telecom

To address the issue of the urban and rural gap and reaching to the rural masses can be

addressed by falling back on the Bottom of the Pyramid (BOP) marketing strategies as

advocated by Prahalad(2007) and the 4 Alsquos Availability Affordability Acceptability and

Awareness The BOP marketing strategies basically talk about aggregating the demand of

consumers who have low individual purchasing power and are spread out The basic

commercial infrastructure suggested by Prahalad and Hart (2002) for the bottom of the

pyramid markets constitutes of four things creating buying power improving access

tailoring local solutions and shaping aspirations

The 4 Alsquos model described in Figure below is explained in the context of rural telecom

Each of the Alsquos is detailed out below

Figure 1 4 Alsquos Model

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 36: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 29

Availability the first A is about making the product reach the consumers and in the case

of telecom services studies have shown this to be the biggest barrier to be overcome It

has been acknowledged by many that distribution systems are the most critical

component and a barrier which needs to be overcome for success in marketing in rural

areas The task of distribution in these areas is considered to be more difficult than in

urban areas low density of population and inaccessibility makes the problem of servicing

villages individually difficult and often uneconomical Direct delivery of goods even to

the top one percent of villages cost twice as much as servicing urban markets To

overcome the difficulties posed in distribution a phased spread of the services is

recommended wherein bigger villages can be targeted first then the ones which are near

a small town and connected and last would be the remote villages In the distribution the

importance of small town markets cannot be ignored and need to be given importance as

besides being a point of distribution they can also be used for promoting products as

villagers tend to come to the town frequently for either purchase of agricultural inputs or

sale of their produce

Acceptability issues would include issues needed to be addressed to improve the

willingness to consume distribute or sell a product It would also include how the

product or service could be made more acceptable to the rural consumers by

incorporating features which would make it attractive to them With a telecom service

there are two basic components of the service one being the handset and second being the

recharge coupons Innovation is needed at both the ends to be able to tackle both the

issues

Affordability issues in telecom would include two sets of issues the first being a fixed

cost and an initial barrier for a villager to start with the service needs to be brought down

and many companies including the market leader Nokia are working on low cost handsets

which could be of use in rural areas Within the product there is a need for customization

in terms of language and user friendliness The rural population where illiteracy is very

high needs to be taken into consideration before coming out with the product and the

feature which would be included in the product need to be rethought the needs of rural

consumer need to be taken into consideration In a rural area a radio combined with a

mobile might make more sense to the rural consumer than perhaps a camera And while

designing the phone one needs to keep the problems related to the power shortages in the

villages

The second component of recharge also needs to be tailored according to the needs of

rural masses The availability of disposable income in rural areas is cyclical relate to

agricultural cycles and thus the recharge coupons provided in the urban areas might not

be suited to the needs to farmers and the promotions and schemes to be used in these

markets also need to be in accordance with the agricultural cycles And it has been shown

through the success of single use small packs that the cost per-use is more important than

the cost of the overall product or service

The last A Awareness is linked to the issues of promotion of telecom services in rural

areas The promotion of the services also needs to be adapted to the village environment

the language and means of communication used should be in the local language The best

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 37: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 30

places to promote the services could be the local haats and melas which is frequented by

the villagers the local festivals should also be included in the promotional plan so should

be the agricultural cycles

Lastly issue of proper segmenting and targeting of village consumers should also be

addressed Rural India is not a homogenous mass but there are pockets of prosperous

villages and areas in the country and within villages the purchasing capacity of the

villagers vary and the products to be offered need to be tailored to their needs The next

section looks at experiences of other countries which have been successful in rural

telecom

92 Mobile Awareness Level of Rural

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 38: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 31

10 Survey A survey was done in order to understand the rural base in a better and closer way The

survey included small towns and villages of UP East which come under Lucknow main

town The detail of areas and distributorsretailers covered is mentioned in Table 2 of

this section (on next page) Following in this section is the questionnaire which was used

and the key findings and recommendations

101 Targeted Information Sources

To come up to some analysis every node of chain from distributor to subscriber was to

be taken into consideration as a very useful source of information

The type of people that were met and queried includes

Distributor MDAD forms the first node of distribution chain There is a certain region

under each distributor Usually a district under Main Distributor (MD) and a Zila by an

Additional Distributor (AD)

Retailers the most important and influential link in the chain is retailer Retailers take

the product (SIMVouchers) from distributor and sell it to locals These are the people

who are contacted by locals in case they face any problem

Subscribers These are the people who are at present using service of any of the

available telecom operators These are the people whose demand is to be captured and

supplied with respective beneficial service

Locals People who donlsquot have mobile as of now but are potential customers

Figure 2 Flow of service

102 Questionnaire

The ideology behind designing the questionnaire was that people in rural areas if asked

closed ended questions wonlsquot provide any useful information hence most of the

questions are framed as open ended to get a detailed view of rural understanding of

telecom and how exactly can we help them through our services

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 39: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 32

1021 Retailerrsquos Questionnaire

इऱाक का नाम करमाॊक

दकान का नाम १ यहाॉ क मखय वयवसाय

२ यहाॉ कौन कौन सी VAS सवाएॉ ऱोग उऩयोग करत ह

कऩया अॊक दीजजय- जो सबस जयादा उऩयोग होती ह उस (१) द | [ ] SMS [ ] CT [ ] Songs [ ] GPRS [ ] MCT [ ] Alerts

३ यहाॉ ककस ककस धमम का अनसरण ककया जाता ह

धमम परततशत

-

-

-

४ हर तनमन लऱखित VAS सवा क लऱए ऱोग ककस कॊ ऩनी को ऩसॊद करत ह

सवा कपनी SMS

CT

Songs

GPRS

MCT

Alerts

५ यहाॉ ककस तरह क गान ऩसॊद ककय जात ह

६ ककस मलय का ररचाजम कऩन सबस ज़ायदा बबकता ह

७ ऱोग यहाॉ ककस कॊ ऩनी का हणड सट उऩयोग करत ह

[ ] Nokia [ ] LG [ ] Samsung [ ] Chinese Mobile [ ] अनय ( )

८ आऩक अनसार ऱोगो को VAS सवा क बार म जागरक करन का कोई उऩाय

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 40: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 33

1022 Localsrsquo Questionnaire

इऱाक का नाम करमाॊक

१ यहाॉ कौन कौन सी बोलऱयाॉ बोऱी जाती ह

२ यहाॉ ककस तरहभाषा क गान ऩसॊद ककय जात ह

३ ऐसी कोई जगह जहाॉ ऱोग अकसर इकठा होत ह

अगर हाॉ तो ककस समय

४ मालसक ककतन का रर-चाजम करत ह

५ महीन म एक ही बार रर-चाजम करत ह

[ ] हाॉ [ ] नहीॊ अगर बार बार तो ककतनी कीमत वाऱा

६ आऩ अऩन मोबाइऱ म कौन कौन सी VAS सवा का परयोग करत ह

अगर नहीॊ तो कयो नहीॊ

७ कया आऩ इन VAS सवाओॊ क बार म जानन क इछक ह

८ कोई ऐसी सवा जो आऩ मोबाइऱटलऱकॉम कॊ ऩतनयो स परापत करना चाहग

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 41: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 34

Moreover much of the information was taken as notes with questionnaire where some

really useful data was found

Following is the list of Retailers met

Area Name Area Name

Bhagoli Maurya PCO Gosaiganj Slok Stuti

Promod PCO Anurag Communication

Ankur PCO Shukla

Rastogi Electronics Anand Mobile

Maurya Recharge Center UP General Stores

Bilhara Atul Medical Lucky Mobiles

Subhash Medical Dixit PCO

Salman PCO Verma PCO

Sama PCO OM Electronics

Ajeen Hello Point Ashish

Deep Mobile Amethi Neeraj PCO

Fatehpur Hello Communication Yash Mobile

Famous Communication Raj Priya

Surendra Mobile Shahdaab

Apna General Store Gaurav Communication

Lucky Battery Khurdai Bazar Ma Padma Mobile

Anju Book Depot Prachi PCO

Muna Mobile PS Gupta Electronics

Rai Communication Balaj Electronics

Yes Mobile Business Point

Verma Communication Bahraich Mukut Telecom

Farukh Watches Noor Mobile Shop

Dev Trader Magic Mobile Shop

Malihabad Ajay PCO Shubham PCO

Yadav Electronics Tulsi PCO

Bombay PCO Faisal Mobile

Janta General Store

Varis Mobile Shop and Cafeacute

Nadeem Mobile Ramnagar Guftagu Mobiles

Mall Nisa Haujri Raj Mobiles

Prijanshi General Store Maurya Mobiles

Raju General Store Astha Mobiles

Ekta Electronics Avasthi Mobiles

Smriti Communications MobileCare

Nabi Panah Rohit PCO Gaurav Mobile

Singh PCO Pankaj Mobile

Divedi Electronics Pathak Mobile

Jindaur Chaman PCO Haidargarh Nav Jyoti pratishthan

Famous Mobiles Grahsthi pratishthan

Star mobiles New Hind Mobile

Phalak Mobiles Pal Vaj Mobile

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 42: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 35

Hardoi Bharat Traders Sachin Mobile

RS Enterprise Sahu Aata

Faizan Telecom Khalsa Mobile

Bindaas Mobiles Ayush Business

Markamau Maurya PCO Raja Communications

OM Mobile Sahu Computers

Hari Om Hardware Kasmandi

Khurd Divekar PCO

Summary Report of survey (Sample)

Area Malihabad Study

MD ndash Harsh Enterprise (98xxxxxxxxxx)

Area Study Nisarg Chowraha is the main chowraha where people gather Most crowded on

Sunday (10 AM to 6 PM)

Season is in June-July when maximum people gather at Malihabad

A good number of people are working in gulf

Consumer

Study

There is a Govt Institute to teach farmers about fertilizers crops machines etc

No fixed income for people and occupation varies from Mango Bagh-Owners

Nursery Bagh-Caretaker workers (mazdoor) and other shopkeepers

People use cheap mobile handsets (China Mobile and Karbonn) Most of them

multimedia sets

People donlsquot download songs they rather prefer going to shop and get transferred into

their memory card

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around Moti Neem and Sanjog Bagh villages) like Bhojpuri songs

eg Saiyan ji dilwa mange angoche bichaike

People donlsquot understand messages and alerts they get from company the messages

should be in Hindi text Even Hinglish donlsquot works

Retailer Study Many retailers are unaware of services offered by company eg GPRS package

Retailers face problem in handling customer care They often get confused

Very low (almost no) brand-visibility in retail shop

Max recharge denomination is 15-25

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 43: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 36

103 Survey Analysis

1031 Snapshot

Mostly retail shops are not dedicated mobile retails they take it as side business

Localsrsquo Questionnaire outcomes

Language

Hindi is used as main language in towns

As we move away from main town to village area the use of Bhojpuri increases

In few areas of Hindu-Muslim mix region Urdu is used but in very small proportion

Songs

People in age group of 18-25 like hearing new Hindi romantic songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

Few people (areas around villages) like Bhojpuri songs

Majority of the people like a song because of its tune (disco type) rather then the

wordings

Songs are mostly downloaded from cybercafeacute and then transferred to mobile memory

card This download facility is also available at most of the retailers shop as well

Azan-Quran-Idaytein (verse) is not a craze even in Muslim region and will be liked only

by very little proportion of people (aged) Young people want newromanticdisco songs

irrespective of religion

Occupation

Farming

Bagh Owner Bagh Keeper

Nursery

Gulf-Return

ShopkeepingSelf owned business

Very little proportion is in service profession

Income

3000-5000 INR per month

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 44: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 37

Psychology of people

People want to spend least possible amount on mobile services

They use mobile mainly for calling

People mainly use China Mobile (multimedia handsets) due to its cost effectiveness and

facility that songs can be transferred to memory card

Age

50-55 of people fall in age group of 0-35

15 of people fall in age group of 35-50

30-35 of people fall in age group above 50

Awareness Interest

Young people are interested in knowledge gainingsharing stunts by company

Old people typically in 50lsquos are not as interested as they feel that they are over-aged to

learn these things and wonlsquot require it anymore as they are going to pass on business to

their young ones

Recharge Pattern

People recharge from Rs100month to Rs1000month

Most preferred way to recharge is to recharge as and when required

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 45: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 38

Retailersrsquo Questionnaire outcomes

VAS Services

SMS CT and Songs are most used VAS services

GPRS is catching up

Alerts and MCI services need is not yet realized by people and proper promotion is

required

Songs

People find it cheaper to go to retail shops and get songs transferred to their mobilelsquos

memory card rather than downloading the songs

Preferred NWrsquos

Airtel is preferred in most regions and Vodafone is the second best preferred network in

rural market mainly because of

Better network coverage

Higher margins given by Airtel to retailers

In GPRS services Aircel was dominating but is slowly loosing the market to Vodafone

Preferred Recharge

People usually recharge of values ranging from Rs10 to Rs25

Very few people do full talk-time recharge

Handset Preferred

Maximum people use China made handsets Next to China mobiles are Nokia and LG

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 46: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 39

1032 Graphical Analysis

Note

18 Tehsils 90 villages (5 villages based on max population in each Tehsil) were covered

- On an average 2500 people per village

- Sample size of 1060 respondents is taken for locals and 95 for retailers

Occupation

Major chunk of the population is agriculture based

Agro based people include farmers nursery owners Bagh ownerscaretakers

Graph 1 Occupation variation

People having self owned business are generally shop-owners and traders

Then there are people in service sector basically in and near main town

Surprisingly there are many people who are working in gulf areas which are not taken

into account in the graph shown above The people working in gulf would constitute

around 10-12

Occupation Response Percentage

self-owned business 148 14

Agro based 827 78

service 53 5

gulf based 32 3

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 47: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 40

Age Group

The education level in rural base is increasing at a rapid pace People are becoming aware

about the trend and status symbols followed in urban India and are eager to accept that

trend but at a slower pace

Following graph shows that maximum population lies in age group of 15-35 ie around

35 and this is the population which is most tech savvy

Age distribution in Rural Base

0

10

20

30

40

0-15 15-35 35-50 50+

Age Group

o

f S

am

ple

Graph 2 Age group distribution

People up to age of 35 are most interested in learning about mobile services So they

should be targeted

People above 50 are least interested in learning about mobiles and use mobile mainly for

calling

People between age of 40-50 have a mixed opinion and more inclined towards learning

Age-Group Response Percentage

0-15 212 20

15-35 371 35

35-50 159 15

50+ 318 30

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 48: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 41

Type of VAS service used

Following graph gives a vague picture of approximately how many people who owns a

mobile handset use which service in what proportion

VAS Service Used

0

10

20

30

40

50

SMS GPRS Caller

Tune

Songs Alerts MCI

Service Type

o

f S

am

ple

Graph 3 Type of VAS service used

The main problem for not using

SMS

Illiteracy ndash Low knowledge of handset characters

Ease of calling ndash people finds it more convenient to call rather than type

messages

Confusion of schemes ndash people ought to get confused between interintra service

operator schemes

GPRS

It is mainly used for surfing and not downloading

Alternative download points ndash people find it cheaper to go to cyber cafeacute and ask

the person to download songs to their memory card

Low interest ndash the main purpose of using internet is either songs or wallpapers

Unawareness ndash many people donlsquot know about the schemes Its not well promoted

by retailers At many places retailers themselves are selling songs downloaded to

memory card

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 49: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 42

Alerts

Pushed Service - Alerts is taken as something that is pushed on to the subscribers

and hence mostly they go for deactivation of alerts

Consumes lot of Battery ndash Alerts are something like text messages which keep on

popping on your mobile screen and hence consume a constant power charge of

mobile handsets This leads to subscribers disinterest in Alerts

Unneeded ndash Most of the alerts that most of the people get are not related to them

MCI

Unawareness ndash this is a service which can be in much-much demand but most of

the people donlsquot know about this service

Total Respondents SMS GPRS CT Songs Alerts MCI

95 42 5 29 3 2 3

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 50: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 43

Types of Songs preferred

Following graph gives a picture of type of songs preferred by people in rural and sub

rural base of UPE

Graph 4 Song choice

The songs that are liked in the main town are like

People in age group of 18-30 like hearing new Hindi romantic jazzydisco songs

People in age group of around 30-50 like hearing Hindi songs of 80lsquos

People in age group of 35+ do like to hear devotional songs but the percentage is quite

low basically on account of

- Changing fashion with more youth and

- Lack of knowledge of songs available

Song Type Response Percentage

New Bollywood 148 14

Romantic 201 19

Disco 212 20

80s 180 17

Devotional 127 12

Bhojpuri 191 18

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 51: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 44

Types of SMS Alerts preferred

As the economy of rural areas is agro driven the main interest of people is in

marketmandi rates As of now people follow rates as are told by the transporter If they

are able to know the right rates wo transporter margin then it will be very much

beneficial for them

Graph 5 SMS preference

The second most preferred interest is local news News on what is happening in their

local areas and district the jobs round and the weather of the local area

The interest in Jokes and sher-o-shayari is increasing and these SMSlsquos are liked in

almost all the regions

Service Response Percentage

Jokes 562 53

Local News 721 68

Sher-o-Shayari 562 53

Astrology 509 48

Market Rates 742 70

weather 689 65

Job 456 43

Cricket 445 42

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 52: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 45

Problems faced in VAS usage

There are many challenges in usage of VAS service in these areas The graph for the

same is illustrated below

Problem Faced in VAS

0

1020

3040

5060

70

Can

not U

nder

stan

d

Expen

sive

Problem

with

CC

Una

war

enes

s

Don

rsquot Nee

d

Problem

o

f S

am

ple

Graph 6 Problems faced in VAS usage

The main reason found was unawareness about the services People simply donlsquot know

what VAS is what services they can use on GPRS and they donlsquot know about MCI etc

People feel that they donlsquot need VAS service is basically because they are unaware of

what they can achieve from these services they need to be realized about it

Many people find these services expensive probably because they are put to the same

tariffs as of urban areas

Literacy is main barrier in understanding the keypad of handsets Most of the people use

mobile only for calling although this problem will be overcome in few years as the

literacy rate is increasing at a rapid pace in rural areas

Problem Faced in VAS Response Percentage

Cannot Understand 371 35

Expensive 583 55

Problem with CC 191 18

Unawareness 636 60

Donrsquot Need 392 37

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 53: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 46

Recharge Pattern

Following graph gives the recharge pattern of rural base and it is easy to predict from it

that mostly they go for chota recharge

Recharge Denominations

010

2030

40

10 15 25 50 100 Full

Talktime

Recharge Value

o

f S

am

ple

Graph 7 Recharge preference

People are very conscious with every penny they spend and hence recharge only when

needed that to of small denominations

People find Full recharge very expensive Currently the full recharge is somewhere about

Rs333 or 500 They need something between Rs200-Rs250

Total

Respondents 10 15 25 50 100 Full

Talktime

95 24 24 31 11 9 19

in percentage

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 54: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 47

104 Recommendations

1041 Specific Recommendations

Recommendation - 1

Recommendation Text messages and alerts in Hindi script

Reason The literacy rate is improving in rural areas but its still at a slow

pace and will take time to transform the rural education scenario

The people in these areas donlsquot understand the messages and alerts

sent to them even if the messages are in Hinglish The only script

understood by the mass is HindiDevnagri

Recommendation - 2

Recommendation Banners Stripes and Signagelsquos at shop

Reason Visibility is a one big issue wherever there is competition in market

If the region is like Fatehpur which is Vodafone dominating then

there is no issue but in other regions like Haidergarh and Gosaiganj

the postersbanners were to be seen only on roads but not in retail

shops The impact of brand visibility in the retail shop will be much

more then anywhere else

Picture 1 Low brand visibility

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 55: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 48

Recommendation ndash 3

Recommendation Retailer Awareness

Reason It was found that some retailers donlsquot even know some of the

services offered by the company (wrt GPRS packages) Hence

timely update Retailer about the ongoing offers thru messages (text)

and moreover retailers should have poster of Info regarding offers

and codes to activatedeactivate services

Recommendation ndash 4

Recommendation GovtInstitutional tie-ups

Reason Central and state Govt is implementing many programs for the

development of rural areas as compared to urban development for

this VAS is required Company should try and tie up with the

institute and collaboratively provide related information to rural

base as there are lots of people attending programs in this institute

Eg Govt Farmer Institute at Malihabad

Moreover there are many technology and management institutes

cropping up in sub rural regions which should be targeted

Recommendation ndash 5

Recommendation Local awareness

Reason Canopies or Care points at prominent places during busy hours

Eg Canopy at Nisarg Chowk (Malihabad) on Sunday between 10

AM to 6PM

Recommendation ndash 6

Recommendation Come up with package (bundle) with mobile handset makers Hindi

displayed keypad and Vodafone connection

Reason If text messages could be sent and received in Hindi script then the

of people using SMS will increase dramatically

Recommendation ndash 7

Recommendation Improve relation with retailers

Retailers are the single point of contact for any rural subscriber Any

problem and the person will directly come to retailer The retailer

can guidemisguide a local easily as the local donlsquot have any other

option to go Other companies are incentivising more to push their

services Eg Airtel is paying retailers 4 extra for pushing GPRS

service in Haidergarh

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 56: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 49

Recommendation ndash 8

Recommendation Alerts of Most useful information

Reason Market price weather information Mandi price as alerts Eg In

Malihabad Transporter rates are followed If people can get to know

the real mandi prices it will be very much beneficial for them

Recommendation ndash 9

Recommendation New Games

Reason Although launching a full fledged application in rural area will be

risky But seeing the craze in games and epics Telcolsquos can think of

launching games on Ramayana and Mahabharata

Recommendation ndash 10

Recommendation Sufficient vouchers to retailers

Reason Rural people are most interested in chota recharge And many a

times these chota recharges get over The company needs to

facilitate the timely flow of these recharge coupons to retailers

Recommendation ndash 11

Recommendation Songs Taste

Reason More than any new bollywood song people will prefer song with

rockingdisco tune and songs of 80rsquos

Recommendation ndash 12

Recommendation Jokes amp Sher-o-Shayari

Reason In the muslim mix areas the intrest in AyanQuran verse was not as

much as it was expected People will prefer SMSlsquos of Jokes and

Sher-o-Shayari

Recommendation ndash 13

Recommendation Pricing structure be broken from monthly to weekly or fortnightly

Reason The rural subscriber carries only those much balance that he will

require for a short span and wonlsquot recharge until he is finished with

it The time he will recharge he will go for chota recharge The time

any service is activated his balance goes in negative and considers

this as loot This pampers him to switch telecom operator

To overcome this to some extend the VAS services could be priced

on 15 day basis or something on same line idea being shortening the

pricing duration

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 57: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 50

1042 General Comments

Operators need to build revenue in the short-run on voice and on low-end VAS products

rather than spending money on creating high-end VAS content requiring them to shell out

high fees to content developers

Mobile operators should focus on exploring ways of reducing the costs being borne by

the customer after being connected ndash Rural consumers are cost- and value-conscious and

do look for a tariff plan that reduces their call charges Business models will therefore

have to focus on providing various packages of voiceVAS-services that are appealing to

rural consumers

Post-sales support and services are very important to rural customers ndash While fixed cost

of acquiring a mobile device is important to rural customers they are equally concerned

about after-sales support and service availability Operators will need to find innovative

ways to provide post-sales support for rural customers

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 58: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 51

Concluding Remarks

The paper was inspired by the fact that even though the market attractiveness of rural

markets has been accepted but very few of the private operators have actually made a

success entry into the market An attempt has been made to understand the marketing

issues underlying marketing of telecom services in rural areas and why private operators

have been not entering rural areas in a big scale Various issues which need to be

addressed in terms of pricing product features both the mobile as well as the recharge

which needs to be addressed to make rural telecom services a success in rural areas in the

country have been brought out and so is the importance of use of existing institutional

infrastructure Thus for success in rural telecom operators have to be innovative in both

product which they offer and the ways in which they tackle the challenges posed by rural

markets

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 59: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 52

References

1 TRAI Report (Press Release No 20 2010) New Delhi 26th April 2010

2 Bda Report (2007) by Mohit S Gundecha Prof Tom Kosnik

3 Article on Value added services in rural India by Manoranjan Mohapatra

CEO Bharti Telesoft

4 Opera today released the state of mobile web report 26 Jan 2010

5 How amp What Mobile Phone Services does India use ndash Report Jan 23 2010

httptrakintagsbusiness20090623report-onhow-what-indian-mobile-

phone-services-vas

6 The Fortune at the Bottom of the Pyramid Strategy and Business Issue 26 by

CK Prahalad and Stuart L Hart(2002)

7 Rural Telecom in India Marketing Issues and Experiences from other

countries by Rajesh K Aithal and Arunabha Mukhopadhyay

8 Tapping the rural telecom market by D Murali (January 20 2010)

httpbetathehinducombusinessarticle83259ece

9 Statistical Data Govt of Uttar Pradesh at httpwwwupgovnicin

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 60: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 53

Appendix A

Major VAS products in Indian rural market

Some of the major VAS products already in the Indian rural market are

Reuters Market Light (RML) - Reuters has dispenseds comprehensive agriculture-related

information on a pilot basis in Maharashtra since April 2007

IFFCO Kisan Sanchar Limited - a joint venture between Bharti Airtel and IFFCO to

provide rural-specific telecom services to rural households is set to expand rural

coverage from 32 lakh to 5 lakh villages by 2010

Soochna Se Samadhan - by One World Network in collaboration with Reliance Mobile

since 2006

Mandi on Mobile service - by the state run BSNL in Uttar Pradesh

Fisher Friend project - a pilot project launched in Tamil Nadu and Pondicherry aimed at

the fishing community and

LifeTools - by Nokia a package providing agricultural information and educational

services slated to be commercially launched in 2009

Successful Global Experiences in Rural Telecom

The table below summaries the four experiences of success rural telecom services

provided in rural areas The first one if the Grameen Phone experience in Bangladesh

which is based on a share access model and has been successfully extended to other

countries also Second is the experience of Smart Communication Inc and how it adapted

its services in rural areas if Philippines and improved the penetration of mobile services

in the country Third is the experience of rural communication in Chile and the

constructive role that the government played in the scripting the success story there and

last is the experience in Africa the success story which has been documented by many

researchers

The Grameen Phone experiences show the importance of relying on a existing

institutional infrastructure of the Microfinance helped it in succeeding and the use of a

share access model Similar initiatives on tying up the rural telecom initiative in the

country to some exiting Institutional Infrastructure like cooperatives or Microfinance

institutions and NGOs would ensure more sustainable success of the launch of the

services And the Experience of Smart Communications Inc in Philippines reemphasizes

the importance of making the services affordable by innovations in both service delivery

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf
Page 61: Report on VAS Feasibility in Rural India

CPS Report ndash Vodafone Essar Digilink Ltd

Page | 54

as well as pricing of services Learning form the Chile experience shows us that

government too needs to play a constructive role and the African experience highlights

the importance of low cost handsets in the expansion of services

Example Salient Features Reasons for success

Bangladesh ndash Grameen Phone (

Grameen Foundation 2005 World

Resource Institute 2001)

- Captured 63 of the countrylsquos

Mobile market

- Average of 60 customers use each

phone and average monthly bills

amount upto $14402 in 2000

- Model has been extended to Uganda

- Share access business model

- A cadre of phone entrepreneurs

- Effective use of the Microfinance

network for promoting Grameen

Phone

- Use of GSM Technology

- Significant subsidy being given to

the service

Philippines ndash Smart Communications

Inc (Anderson amp Billou 2007

Anderson etal 2005)

- Mobile penetration at 30 by 2004

and expected to reach 70 by 2008

- Use of Innovative over the air

payment system to overcome the

availability problems

-Developed smaller denominations of

recharge

-Use of used handsets reduced

barriers to ownership

Rural Communications ndash Chile

(Wellenius 2002)

-From 1995-2002 reduced the

population living without access to

basic voice communication from 15

to 1 percent

- Reliance in market forces and

minimum regulations

- Simple and relatively expeditious

processing

- Effective Government leadership

African Experience in Mobile

Telephony (Vodafone 2006 ITU

2006)

- 15 million mobile subscribers added

to subscriber base in 2004 equivalent

to total number of telephone

subscribers in 1996

- Mobile penetration three times the

land line at 91 per 100 inhabitants

- 75 of all African telephone

subscribers are Mobile

- Use of Mobile technology to leap-

frog the older technologies

-Ability of Mobile operators to

provide mobile coverage rapidly

- High degree of liberalization and

competition in the mobile sector

- Reduction in Tariff combined with

―ultra-low-cost Handsets and

availability of prepaid service

Table Rural Telecom Success Stories

  • 1
  • 2
  • 3pdf