Feb 3, 2009

Business - Mobile phone makers moot free handsets for 50 million poor families

Esha Madhavan

Taking rural telecom penetration to the next level, the Indian Cellular Association (ICA) in a proposal to the Telecom Regulatory Authority of India (TRAI) has suggested free of cost mobile handsets and connections for the 50 million families living below the poverty line (BPL) in India. The ICA has suggested that “an investment of approximately Rs 4,000-5,000 crore from the Universal Services Obligations Fund (USO) for the free phones has the potential of transforming the life of many families/ individuals in this category. The mobile handset provided can be a basic phone with an AM radio. The AM radio can be very useful for listening to relevant local language content. These radio stations should be made interactive and calls to these radio stations should be made free of cost”. The Indian Cellular Association represents handset makers including Nokia and Sony Ericsson.
According to Pankaj Mahendroo, President, ICA, “A free calling package of up to 100 calls per month free of cost for a period of two years should be provided along with the skills mapping of these families, which needs to be done at the time of providing these connections/ handsets. These families have unutilised/under utilised skills and competencies, which can be used, provided these are mapped out and then aggregated in a particular geographical area, for example, say 20 sq km. These skills/competencies can be made available based on requests received through voice calls and SMS. The IT backbone along with local language call centres need to be created.”
The industry body has estimated that free calls would enable these families to save Rs 15-20 a month by cutting down on the transportation cost as they would have better access to information in local languages on their mobile phone. “As the cost saving starts accruing, these families, after the initial period of two years, would be willing to start paying for the mobile services at the rate of at least Rs 25 per month” as suggested by the ICA.
In addition to the USO subsidy, the handset makers have sought the abolition of the VAT of 4 per cent, which would help in bringing down costs of handsets to below Rs 1,500. Mahindroo has stressed on the importance of getting the rural population educated on the usage of handsets and has made suggestions on repairs, after sales service, and setting up of service stations. He further pointed out, “The resultant action by taking our points on board can revolutionise the rural economy of the country and also create major transformations in the below the poverty level population’s economic status.”
At a time when the potential of the rural economy of India is on the verge of getting harnessed, the rural telecom penetration is considered highly relevant in the context of rural health, I.T. infrastructure, VAS and rural economy.

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