Rural India Captures Attention of AT&T, TCS

With the U.S. economy sagging and those in communications increasingly looking for opportunities abroad, India continues to be a key area of focus. Given it is the second largest country in terms of people and is the world’s most populous democracy, India has long been both a hot spot of investment and an important source of human resources for our industry. But, interestingly, we’re hearing a lot more lately about rural applications in India, among other developing countries.

For example, as reported previously, AT&T Chairman, President and CEO Randall L. Stephenson during his NXTcomm keynote speech this summer in Las Vegas mentioned how some fisherman in India recently began using mobile phones to call different ports to get the best price for their catch and, as result, increased their revenue by 8 percent. That, in turn, is allowing those fisherman to improve their quality of life and stimulate the economy by buying more goods and services both for the person and professional use, he said, adding that for every 10 percent penetration increase in cell phone service there’s a 0.6 percent increase in GDP.

“The telecom industry is sitting on a world of potential,” he said, noting that 80 percent of the world’s population lives within the coverage area of a cell site.

According to a study commissioned by the Center for Knowledge Societies, a research company specializing in emerging technologies for emerging economies, by the end of this year, three quarters of India's population will be covered by a mobile network. Many of these citizens live in poorer and more rural areas with scarce infrastructure and facilities, high illiteracy levels, and low PC and Internet penetration. That’s why the cell phone is a good option for reaching many of these people, and offering specialized applications can appeal to their needs.

Another application that not only relies on a communications network, but was actually designed in a targeted way to address a specific need of rural citizens in India, is called mKRISHI. Developed by Tata Consultancy Services TCS and running on Tata Indicom’s CDMA 2000 network (which covers about 60 percent of India’s population), mKRISHI provides personalized information and expert advice to rural farmers.

mKRISHI answers unique queries that farmers face and also provides up to date weather and pricing information through text-messaging on cell phones. The application can be prompted by text in farmers’ local languages or via voice functions, which is particularly helpful for those who are not literate in the agricultural community that is the most important sector of India’s economy.

Through mKRISHI, TCS is using various applications including sensors, camera phones, India’s cellular network, and GPS technologies serves up environmental information to agriculture experts, who in turn provide tailored advice to farmers.

Dr. Arun Pande of TCS told xchange via e-mail that mKRISHI has been deployed in several Indian villages including Borgaon, Waifad, Ganori and Bichaula for grape, cotton, soybean and potato farmers, respectively. In Borgaon village, service is operational. The grape farmers in Borgaon and nearby villages can seek advice and information on fertilizer, pesticide and growth hormone application. They also can get local weather forecast on their cell phones. Other services such as spot price, future price, crop insurance, loan services, rural yellow pages, government policy information will be introduced in a phased manner.

Currently the pilot, including weather and soil sensors at four villages mentioned above, would support about 20,000 farmers, each holding an average of three to four hectors of land. However, the total number of farmers who would be reached in a short time through M S Swaminathan Research Foundation (MSSRF), Grape Grower Association, Agro Business Model of Tata Chemicals (Tata Kisan Kendra) would be about 200,000. This number can be scaled up to millions through a local franchisee model when it is in place, Pande said.

For now, the service is offered on a pilot basis, and it is free, but Pande told xchange Tata plans to evolve a business model involving operator, local franchisees and subject matter experts. The services would be categorized into free, vanilla and premium and charges would be assessed accordingly. “We believe there is a scope of subsidizing the service to poor farmers to a great extent through targeted ads on a cell phone,” he said.

“It is too early to comment on the margins for the service provider,” added Pande, “but it is clear that service providers will play an important role in scaling up the operation and touching millions of farmers by distributing the application through cell phones. We found during our discussion with farmers that they may not have a need for casual voice communication in the village. However, the demand for voice and data goes up significantly if they are related to farming operation and related services.

Hence, [the] service provider would make margins not only on services but also on a cell phone if it can be branded for farmers by bundling mKRISHI-like applications into a cell phone.”

And that’s a significant opportunity, he said, given there are about 110 million farmers in India. “If one expects on an average $1 fee per month, the potential would be $110 million per month of revenue from this market segment,” he said. “Handset sale potential is about $11 billion for GPS-enabled 2 megapixel handsets with a price tag of $100 per handset. If upfront subsidy is provided for sale of handset[s], an appropriate EMI component would be charged from customers of recovered through enhanced monthly payment. Additionally, payment charge back would have to be dovetailed with seasonal income patterns of farmers so that there is no hardship of payments on monthly basis.”

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