In India, variety is the name of the game. We have states with the population of Hong Kong but the per capita GDP of Honduras (Himachal Pradesh), or with an economy the size of Singapore but the population of Germany (Maharashtra). In spite of having such a cornucopia of segments to serve, India’s mobile industry has done a heroic job to deliver 40% penetration in rural areas through operations designed to primarily service metros (which now boast over 150 percent teledensity). But the one-size-fits-all business model for India has run its course, and for rural areas the next phase of growth demands more granular and cost-efficient ways to acquire, retain and serve customers.
Heralded by Freddie Laker and his Skytrain, in the late 1970s the airline industry spawned a successful “no frills” segment to cater specifically for lower income groups. For the first time in civil aviation history, air travel was delivered to the masses. British working classes could now holiday in the Mediterranean or Dubai and this saw the rapid demise of freezing cold English seaside holidays. Between 1996 and 2005, while European full service air traffic grew from 42m to 47m passengers, the “no frills” segment grew from 3m to 51m!
In India, perhaps it is time for a similar disruptive play in mobile to give birth to an economically-justifiable tiered service model. In rural areas the “VillageCo” business model should be designed to:
CEOs should demand a high growth, no-frills business which once established delivers 35+ percent margins and breathes new air into the growing the mass base in rural areas, where penetration is still hovering at 40 percent and data is yet to take off. The operator’s own resources and systems will only go so far. What is needed is more partnership at the local level to enable better services, and farther reaching distribution. New collaboration models are needed to achieve this, and the possibilities are significant given what we’re seeing already:
Over the next few years, expect to see disruptive models at the rural level dispel current notions by pursuing telecoms growth profitably!
The thoughts and opinions shared here are of the author.
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