It is no secret now that the future growth in Indian telecom services is to come from the Rural parts of the country. And only those mobile service providers will be able to sustain growth who have devised the right strategies to tap this market. Capgemini, the global consultancy firm is precisely focusing on this concern of service providers to offer its expertise in the telecom field.
Mr. Reji Cherian, Vice President, Capgemini shares more thought on the company’s vision for the Indian market in an interaction with TelecomTiger.
Q1) What is your take on the potential of rural telephony in India?
Ans: Rural India accounts for over 70% of the population, 56% income, 64% of expenditure and 33% of savings. We are already seeing the segment growing based on data from March 2009 Urban teledensity stood at 88.6% and Rural teledensity at 14.8 and the subscriber base itself crossing the 136 million mark. With low Rural penetration levels, there is huge scope for operators in this segment. Estimates peg the segment to have a market share of 32% by 2015 in the overall mobile subscriber base.
Q2) A section of the industry feels that it will be VAS more than wire which will bring rural folks on board for mobile services. Do you agree with this theory?
Ans: There are reasons to believe on account of the early indicators that mobile voice usage is inelastic beyond a point, prices have declined rapidly, VAS will become the key driver of ensuring growth and expanding reach of mobile services. The need of the hour is to help reach information to the Rural Indian consumer, there are instances to showcase that VAS can also help to bring the rural flocks onto the mobile services fold. Reuters Market Light and Nokia Tools serve up as examples for this. Operators will have to build services that help rural consumers overcome challenges of getting to essential information eg: soil and water related, information on Government schemes, plants to crop according to season.
Q3) Talks of mobile broadband in the rural space are doing the rounds. But from a service provider perspective the fix is whether to go for 3G or WiMAX to push mobile broadband. What will be your suggestion to such service provider?
Ans: Asia and Africa have shown promising trends on WiMAX implementations. We feel that for new entrants and Greenfield players WiMAX offers a more compelling proposition For incumbent GSM operators, the 3G/HSDPA/HSPA and moving onto LTE route offers a natural upgrade path, moreover mobile operators would also like to safeguard existing investments and hope to drive increased data usage given saturation in voice.
Q4) How can Capgemini assist service provider in the value chain for delivery of services in the rural areas?
Ans: We could certainly assist in the strategy formulation for expanding to rural areas. Analyzing best practices from emerging markets and successful operators elsewhere, helping operators understand key differences between Urban and Rural markets. We have experienced professionals who bring their global expertise on board. Operators can leverage from our strategy formulation competency which spans over various business areas such as Content Delivery Device.
Q5) Is there a radical change in approach required to streamline the processes for rural areas ? (as compared to urban areas)
Ans: Rural areas typically spend a higher percentage of their household income on communication services, indicating the importance of mobile services in their day to day life. Consumer services, which constitute telecom services, had a CAGR of 10.3% over FY 03-07 in rural India compared to 9.4% in urban India
The difference lies in answering questions like how to encourage the rural population to adopt mobile services by giving them a sound value proposition. Mobile services in rural areas are still considered as a household service while in urban areas it is considered to be a personalized and individual service.
Q6) How well positioned is Capgemini to cater to the Indian telecom space with respect to upcoming developments such as entry of 3G and BWA services as well as introduction of MNP?
Ans: Capgemini has extensive experience in helping telecom players manage developments such as introduction of MNP, participating in spectrum auctions and helping launch new services
Capgemini’s TME consulting has worked with most leading operators in Europe, Africa and Asia across projects involving Strategy Formulation, Business Creation, and Operations Excellence. We can help service providers with Strategy Formulation, Business Creation, Operational Excellence.
Our Telco in a Box approach is built around the five integrated elements of Program management, Launch Profile, System Design and Implementation, Process Design and Business Simulation.
Capgemini’s C4 advisory board comprises of top executives from the telecom and media space, which acts as a strong base for generating insights on future trends for telecom and media players.
We have a strong consulting and technology services team in India with professionals who are experienced in the local telecom markets.
Capgemini’s TME Strategy Lab generates insights on the telecom and media markets globally and has also developed whitepapers around the Indian markets(India Telecom report – ‘Connecting Rural India”, MVNO’s in India, 3G in India amongst others).
Q7) For consultancy services like yours, do you see business coming from new entrants or are incumbents also on your radar?
Ans: New operators entering the Indian market. For instance, global majors who are yet to set up shop in India, but those who want to be a part of the Indian growth story; Operators looking to primarily target B and C circles
Incumbent operators: Incumbent operators who are expanding network coverage into rural areas and want to understand the best approach towards targeting rural subscribers (services/segments/rollout strategy, etc)
While new entrants can simplify their rollout strategies by using our expertise, we also see business coming from incumbents.
Capgemini has helped a leading pan-African telecom group expand into four new African markets. The project objectives included defining corporate strategy at group level and country-specific strategies for launch of mobile operations in four African countries
Capgemini has also helped a leading African mobile operator develop a five year strategy and vision.
Other indicative projects include setting up a program management office for a mobile operator and helping a North African incumbent operator to compete in a liberalized environment.