reversal of digital divide in india - itu: committed to ... · •the term digital divide refers to...
TRANSCRIPT
1
Reversal of Digital Divide in India
S D Saxena Director (Finance)
BSNL India
2
Digital Divide & India
• The term digital divide refers to the gap between those with regular, effective access to Digital and information technology, and those without this access.
• The potential benefit from the ICT revolution is well documented.
• While in-home Internet access is still a rarity in many villages, mobile phones are much more common.
3
• IT today contributes around 2 percent of India’s GDP, but PC penetration is just about 6 per 1,000 people. Internet penetration, which was expected to give a fillip to PC penetration, has been able to reach just 1 percent of the population, with 10 million users. IT spending as a percentage of GDP is just 0.8 percent.
4
Pre-Reforms status of Telecommunication
Status in 1994 • 0.8% teledensity – far below world average of 10%
and other neighbouring countries.• Total phones: 8 mn with a waiting list of 2.5 mn.• Below 25% villages (1.7 lakhs) covered.
5
1991-96 : Pre-Reform scenario
0
2
4
6
8
10
12
14
16
1991 1992 1993 1994 1995 1996
SupplyDemand
Mill
ion
tele
phon
es
6
Current Status: Hot Competition
• As of now, Supply exceeds demand
• There are more than 20 companies providing Telecommunication services in one of the most competitive markets.
• These companies are now spending huge amount on Marketing & Branding.
7
2001: Mobile revolution triggered
3.58
0.056.430.1
12.687637
0.309726.15
7.16
41.03
10.547
69.19
20.348
121.43
36.158
0
20
40
60
80
100
120
140
160
Mar
'01
Mar
'02
Mar
'03
Mar
'04
Mar
' 05
Mar
'06
Mar
'07
GSM Mobile WLL(M)
Mill
ions
•CDMA WLL(M) launched in limited manner in few circles.
•Tariff for GSM cellular mobiles reduced.
•Total Additions in FY 05-06 was 38 Million and in FY06-07 68 Million.
•Year to Year growth in FY 2006-07 was 76%.
8
Reason: Low Affordability
• The Real Increase in Mobile is in Pre paid segment, which is pre-dominantly driven by people of lower income group. Affordability of mobile has increased as ARPU of prepaid has decreased from 375 to 335 in sept-06 in case of Pvt. Operators and 319 (mar-07)in case of BSNL
• Though the ARPU in case of post paid connection is higher at Rs.566(BSNL,Mar-07) more than 50% customers are below Rs.250 per month mark.
9
Continuously Improving Affordability
Effective Tariffs – 400 Minute Basket
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Dec-00
Mar-01
Jun-0
1Sep
-01Dec
-01Mar-
02Ju
n-02
Sep-02
Dec-02
Mar-03
Jun-0
3Sep
-03Dec
-03Mar-
04Ju
n-04
Dec-04 2006
US
D p
er m
inut
e
In last 3 years alone, effective local call cellular tariffs have plummeted by 80% from USD 0.6 / minute in December 2000 to USD 0.1 / minute in December 2004.During 2005, tariffs have declined further by ~ 37% And Now under one India Plan STD calls @Re.1 per minute
Source:TRAI Quarterly Performance Indicators, March 2005
10
Average Revenue per user (in Rs.)
0100200300400500600700
2005 2006 2007
Post Paid
Prepaid
Bfone
Decreasing ARPU shows more penetration among poorer class
11
Post-paid Billing Distribution
0102030405060
0 1-250 250-500 500-1000
1000-2000
2000+
Per
cent
age
Usage in Rs. Per Month
12
0102030405060708090
Pre 1999 1999-00 Oct-00 Jul-02 Mar-03 Current
NLD ILD
Long Distance Peak rate tariffs (Rs / min)
02468
10121416
Pre 1999 1999-00 Oct-00 May-01 Jul-02 May-03 Current
Fixed Line GSM Mobile
Local Call Tariffs (Rs / min)
Increased competition leads to tariff reduction and affordable services
13
Convergence of Tariffs and Growth of mobile services
Mobile growth and effective charge per minuteSteps taken for increasing growth
1.26 1.261.18 0.8613.033.6
89.5
157.6
6.53.61.91.20.9
52.2
0.002.004.006.008.00
10.0012.0014.0016.0018.00
Mar-98
Mar-99
Mar-00
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Effe
ctiv
e ch
arge
(in
Rs.
per
min
.)
0.0020.0040.0060.0080.00100.00120.00140.00160.00180.00
Mob
ile s
ubsc
riber
bas
e (in
Mill
ion)
Fixed (Rs./min.) GSM Mobile (Rs./min)CDMA Mobile (Rs./Min) Mobile Subscriber base (Millions)
NTP '99Telecom Tariff
Order
3rd & 4th cellular operator
CDMA introduced
CPP introduced
Lowering of ADC from 30% to 10% of sector
revenue
14
Growth drivers of mobile
• Declining entry costs and falling tariffs have lowered the bar in terms of affordability coupled with branding and advertising.
• High percentage of population owning two-wheelers are prospective mobile telephone users.
• Middle class spends 6% of its income on telecom services.• Lower middle group has developed vision for use of mobile
for its economic benefit and ease.• India lags behind other Asian economies (approx. 10 years) -
therefore India is poised for growth.
15
Trends : Fixed & Mobile
0
20
40
60
80
100
120
140
2003 2004 2005 2006 2007
Fixed GSM CDMA
MillionsIn
Mill
ion
16
Teledensity in India
19.2
12.9
9.17.0
5.14.33.62.92.31.9
0
5
10
15
20
25
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
…………..still a long way to go.
17
Mobile & Poor
• There is fortune at the lower end of economic pyramid• Lower income People generally use prepaid connection
which is dearer in making calls. Per minute blended cost of a call is Rs.1.10 in Post paid connection while 1.33 in prepaid. It is like Reverse subsidization by poor.
• Telecom has demonstrated that exceptionally lower tariff can still create margins and a viable business model provided volume is large
18
Mobile in Lower income People• Mobile connection is growing
at very high rate i.e. 156%, 55%,73% & 76% in last four year on year to year basis.
• This growth is driven by poorer consumers
• Economically lower-rung and small entrepreneurs have discovered new way to use information/communication to improve their business potential & RoI
19
Mobile>>>Prosperity, Comfort• Mobile gives them a lot of freedom in
various ways• A vegetable vendor uses it to know latest &
lowest rate in different market• A fisherman gets best bet for his daily catch
on his mobile and Weather Alerts as well• A poor villager in remote area saves himself
the journey time and expenses, as he keeps in touch with his son working in a city.
• Petty contractors, worker use it keep in touch with potential customers and enhance their earning
• Students with small pocket allowances SMS each other to communicate in economically.
• Mobile is also very effective tool in Disaster Management.
20
• Have the monetary gains of IT businesses been shared across the society? The answer is 'no'.
• But in case of Telecommunication, the answer is :Yes• Fishermen in Kerala began about 2 years ago to carry mobile
phones on board their small boats. Useful in emergencies, for fishing intelligence and to check which village along the beach bids the best for their catch. The idea is spreading. Similarly, farmers in several states use mobile phones and intranets to find the best prices for grains, milk and whatever else that went earlier through middlemen.
• According to the London Business School study, which looked at 92 countries, rich and poor, between 1980 and 2003, in a typical developing country, a rise of 10 mobile phones per 100 people boosts the rate of growth of GDP by 0.6 percentage points a year
• Already, these mobile phones seem to be generating big economic benefits
21
Impact on Economy and Future
• Indian Telecom provided the backbone for thriving BPO and KPO sector as well as software export
• With R&D outsourcing coming to India, Telecom sector is again in focus to provide world class connectivity in cost effective way.
• Introduction of 3G is expected anytime, and growth in mobile segment may see a new height.
22
Mobile in Disaster Management• Mobile phones were used to spread the news about Gujarat
Earthquake as all other channels were broken down.• Use of SMS by Swedish government to citizens to pare down the list
of who's missing and who's not in tsunami.• After tsunami an small group of programmer developed “ARC”: the
Alert Retrieval Cache. The idea is simple: a person sends a textmessage to a particular phone number and includes key words on aparticular subject he or she wishes to address. The system then sends the SMS text, based on each subscriber's interests, to every phone number that subscribes to the system.
• Right now, a practical application would be a relief worker sending out an SMS because she needs access to more antibiotics. Using the names of those antibiotics as key words would then route thetext message to people and organizations that might be a source for those antibiotics.
23
Digital Divide & ICT• The success story of Mobile Telephony is going to be repeated in
Internet.• Younger Population : More demand for Broadband for Education,
Research, Chatting, Entertainment etc.• Very low Broadband Tariff and aggressive policy by PSU Telcos.• Discovery of Potential of ICT by Educated young Generation • Advent of CIDA Project by BSNL (in M.P.),E-Choupal by ITC (in
6 states),N-Logue (in Tamil Nadu ), humi Project (in Karnataka) Akshaya (Kerala) ,Drishti (M.P. & Delhi) Gyandoot (M.P,)
• Gyandoot is an intranet in Dhar district connecting rural cybercafescatering to the everyday needs of the masses.
• Initiation of e-governance in AP, Karnataka, Maharashtra
24
ICT in India• N-Logue has wirelessly connected more than 50 villages in
Tamil Nadu's from a server in Melur. The network was implemented by Sustainable Access in Rural India [SARI].
• Amul of Anand, Gujarat has setup- Dairy Information System Kiosk [DISK]. When done, the net will cover 70,000 village milk societies. Right now more than 2500 village level kiosks have been connected. Apart from milk accounts, the kiosks offer telephony, market intelligence, fund management, information on best practices, and innovations and downloadable forms a dairyman needs.
• Media Lab Asia [MLA] a joint venture between the Indian Government and MIT has established a 75 km WiFi corridor between Kanpur and Lucknow.
25
Internet• Internet
Access : 8.6 Million as on Dec06, Quarterly Growth 6%
Growth Trends
39.10 39.13
48.0551.90
54.70
27.9230.21 29.04 29.06
31.12
67.0369.35
77.0980.96
85.82
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
Q4,05 Q1,06 Q2,06 Q3,06 Q4,06
Quarter Ending
No.
ofSu
bscr
iber
s
PSU ISP
Privat e ISP
All ISPs
Source: TRAI Report
