Mbillionth Award for Mobile Innovations in South Asia, DEF

The telecom industry has been witnessing increasing focus on rural subscribers by the service providers. As rural subscribers comprise approximately 45% of total net additions, carriers are being forced to consider how to appropriately address this rural growth opportunity. Apart from increasing their rural network footprint, carriers are now focusing on expanding their VAS offerings targeted at these subscribers.

This increased focus on rural VAS is primarily driven by the opportunity to capture additional revenues from this incremental subscriber base. As the current ARPU of rural subscribers is low, carriers are thinking about innovative and relevant rural VAS offerings to encourage these subscribers to spend more. For instance, the ARPU of incremental rural subscribers is in the range of INR 60 to INR 80, causing very low or even negative margins for operators. Carriers are trying to sell a variety of customized rural VAS offerings such as agri-information services, health alerts and educational information updates to gain whatever additional revenues they can from this low ARPU subscriber base and thus contribute to increasing overall margin.

However, the challenges in rural markets are unique and require solutions that are different from those in urban areas. The three key challenges in increasing adoption of rural VAS are literacy, utility and affordability.

Carriers are tackling the literacy issue by introducing voice based rural VAS offerings. These offerings are likely to see a higher adoption than the other channels, as voice overcomes the low literacy rates in rural India and regional language issues related to text based services.

The utility issue is being addressed by developing customized VAS for the rural subscribers. Earlier, only agri-advisory services were the key focus area, but now carriers are launching rural VAS for healthcare, banking, education and governance related information updates. Even in the established agri-advisory segment, there is increasing innovation. Instead of providing only text based market updates, initiatives are being rolled out to create products and services that extend beyond the basic updates and provide greater utility to the farmers. New services and applications are looking to generate better “returns” for users on the “investment” they make in purchasing or subscribing to VAS services through the utility that is delivered.

Finally, to resolve the affordability challenge, carriers are experimenting with billing innovation. They are offering targeted rural VAS offerings using daily and weekly pay per use models, with some offerings priced as low as INR 1 per day.

All of these examples of innovation are represented in the submissions for the mBillionth Awards. The applications and services are trying various unique ways to accelerate growth for their target base of rural communities, G2C services consumers or inclusive growth efforts. The mBillionth platform should be able to highlight and raise the awareness around such innovations, and facilitate their acceptance into the mainstream so that their ability to scale is accelerated.

While challenges will remain for the foreseeable future in this segment, this is an important step in the journey.