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Mobile penetration in hinterland goes up

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M. Dinesh Varma

Expansion in most cities and major towns reaching saturation

CHENNAI: Tamil Nadu’s mobile phone industry, which has its nose ahead of India’s average in tele-density, is witnessing a scale-up of network penetration in hinterland.

Industry observers say that with the mobile expansion in most cities and major towns reaching saturation, the focus is shifting to smaller towns and villages. With service providers targeting Tier II and Tier III towns, the State stands to further its distance from the national average of 30.8 (wireline, wireless and Wireless in Local Loop connections combined), once the expansion plans are completed.

Overall, the State’s tele-density averages out at 50 phone connections per 100 of the population.

In terms of average wireless connections per 100, Tamil Nadu is above the national average and accounts for 9 per cent of India’s net user base, but is marginally behind Punjab and fractionally ahead of West Bengal and Haryana.

Home-grown provider Aircel has recently crossed the 1-crore subscriber mark. K.V.P. Baskar, Operations Director-South, Aircel, says the company plans to add 1,200 towns by the end of the year to the 1,800 places it is present now.

As for fixed phone, the State has 5.7 connections per 100 of population, ranking above the national average, but well behind Kerala, Punjab, Himachal Pradesh and Maharashtra.

It is evident from the experiences of BSNL, Airtel, Aircel, Vodaphone, Reliance and Tata Indicom that wireless connections have filled up the important chapters of the growth story in the State as has been the phenomena nationwide.

However, while in India, the ratio of fixed lines per 100 of the population decreased from the peak of 4.28 in 2005 to 3.34 by 2008, largely owing to a rash of landline surrenders, BSNL Chennai Telephones has proved an exception to a nation-wide trend.

In Chennai with a cumulative tele-density of 138, BSNL has staved off landline surrenders, mainly with the help of the dual strategy of value-added services and pairing its DataOne broadband offers through the fixed phone, a spokesman says.

In most cases, the surrender of a landline translated into the addition of at least three-four mobile connections in a typical family unit. Obviously the surrender has not been accompanied by the user switching to another operator.

“Despite the fixed phone sector contracting, India looks good on the wireline side, behind only the Maldives and Sri Lanka,” says Rohan Samarajiva, CEO of LIRNEasia, a not-for-profit agency that provides telecom departments in south Asia with policy inputs.

But he cautions that the official methodology of calculating tele-density of a State could be skewed. For instance, Delhi’s tele-density of 120 wireless connections per 100 of population is largely overstated, as large numbers of people who live in nearby Haryana and Uttar Pradesh may be buying their SIM cards in Delhi.

This could be true for Tamil Nadu that has a substantial proportion of the population coming in from suburbs and neighbouring districts every day.

He suggests that data be surveyed from the demand side instead of the supply side to evolve a truly representative national telecom scenario.

Airtel experience

Industry observers say the inflection points in the telecom growth story were in March 2003, when the telecom industry switched to the Calling Party Pays (CPP) ecosystem and two years later, when operators unleashed a slew of attractive packages such as lifetime pre-paid schemes and other sops. The Airtel experience, for instance, illustrates this aspect. The service provider’s subscriber base grew six-fold in just three years.

The number of Airtel users doubled from 25,13,036 as on December 31, 2006 to 51,34,274 as on December 31, 2007.

As of December 31, 2008, its subscriber base aggregated 76,68,927.

An Airtel spokesman says affordability—telecom tariffs in India are the lowest in the world—and productivity enhancement through mobile connectivity are the prime growth drivers.

Another factor is network expansion, especially in rural areas.

Airtel has 8,700 towers with a cumulative connectivity of 94 per cent of the State’s geographical area.

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