Even as the rural market is growing attractive for India's telecom industry, the operators face several challenges in rural penetration like illiteracy and low revenue per user, according to a report.

"Despite the inherent attractiveness of the rural market for telecom operators, several challenges in going rural stare the operators in their face," said the report jointly prepared by the Federation of Indian Chambers of Commerce and Industry (FICCI) and global consultancy KPMG.

The challenges include difficulty in the acquisition of rural consumers due to the low affordability of telecom services, the low average revenue per user (ARPU), lack of locally relevant content and the prevalent literacy levels, said the report.

Though the cost of owning and using telecom equipment and services has come down considerably in the last few years, the rural consumer still finds it hard to put aside money for "discretionary spend".

To overcome this challenge, the report suggested that micro-financing could provide a possible solution.

"Tie-ups with state-owned banks could enable the rural consumers to purchase telecom equipment and services at affordable rates," it said.

The rural ARPU is not expected to be driven solely through voice services. The availability of data services is expected to have a positive impact on the rural ARPUs, FICCI said.

The report also cited lack of locally relevant content for restricting rural telecom.

To increase adoption, the report stated that it was essential to develop services like news in local language, weather alerts for fishermen, and comparative 'mandi' rates, among other services.

It added: "To derive maximum benefits from these services, it is essential for the consumers to have basic reading and writing skills in place."

In addition to above challenges, infrastructure-related roadblocks lead to a steep escalation in costs, reducing the attractiveness of the rural market, said the report.

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