Mobile phones overtake fixed lines in
India by Siddharth Srivastava
NEW DELHI - For the first time ever, the number
of mobile connections in India have crossed fixed-line
phones. At the end of September, there were 42.5 million
mobile phone subscribers in India and 43.2 million
fixed-line telephones. With almost 60,000 new mobile
connections added daily, and accounting for the increase
in fixed-line phones as well, Indian telecom observers
had fixed October 18 as the D-day for mobiles overtaking
landlines. Even if the initial deadline has not been
met, a spokesperson of the Cellular Operators
Association of India confirmed to Asia Times Online that
it is now safe to assume that the number of cellular
connections in India has exceeded fixed lines. This
augurs well for the economy as economists have linked a
1% growth in telecom penetration to a 3% rise in the
country's gross domestic product.
According to
Manoj Kohli, executive director and chief executive
officer of Escotel, a cellular operator that caters to
several rural areas, "The remarkable thing is that this
phenomenon is not just happening in metropolitan India,
but even small and remote towns most people haven't even
heard of. In addition to its high affordability, the
cellular phone in general scores over land line because
of its anytime-anywhere communication."
There
are several factors that make the spread of mobile
phones easier in developing countries such as India and
Cambodia, where mobile connections overtook fixed lines
last year. In developed countries such as the US, fixed
lines are much more entrenched, making the spread of
mobile connections that much more expensive as they only
add to the existing network. In countries such as India,
where large areas do not have any access to
communication networks, the economies of expanded mobile
service works much better.
It is estimated that
connecting a remote area with fixed-line connections
costs US$1,400 while a mobile connection costs $500. The
lower costs are passed on to consumers in the form of
cheap rentals (compared to fixed lines) in a highly
competitive market. Add to this the convenience of
over-the-counter purchasing of cell phones, friendly
finance schemes and mobility, and cell phones are the
obvious choice over fixed-line phones.
Airtime
rates in India are among the lowest in the world, with
leading players such as Hutch, Airtel, Reliance,
Escotel, Idea and the state-run Bharat Sanchar Nigam
Limited (BSNL)/Mahanagar Telphone Nigam Limited (MTNL)
furiously competing with one another to garner more
users. The price war has pushed down call rates by
70-80% over the last few years, with fixed-line rates
(long-distance as well as local calls) also forced to
climb down.
Just how fast the rural market is
growing can be gauged from the figures for the eastern
part of the state of Uttar Pradesh. Here, the first
100,000 connections took five years to reach, Airtel
sold the same number in less than two months earlier
this year. As mobile usage keeps growing, it is
estimated that India will have over 200 million cell
phone users by 2010.
Despite strident opposition
from key coalition partners, the Congress-led United
Progressive Alliance is keen to move ahead with economic
reforms, including the telecom sector. Citing the need
for massive additional investment for the telecom
sector, information technology and communications
minister Dayanidhi Maran last week said the government
is currently working out the modalities of increasing
the foreign direct investment cap in the sector to 74% -
a move bitterly opposed by the left parties.
In
keeping with increasing connectivity across the country,
the government also announced last week a new broadband
policy. "By the end of 2010, the policy aims to target
20 million broadband subscribers and 40 million Internet
subscribers,'' Maran said. The policy allows state-run
telecom companies BSNL/MTNL - expected to provide over 2
million connections by the end of 2005 - to enter into a
commercial arrangement with all service providers on
mutually accepted terms.
Worldwide, though, the
news has not been all positive as far as cell phones go,
even as global mobile phone sales have been booming as
thousands of new users sign up every day and existing
subscribers replace their old handsets with new ones,
capable of taking pictures or playing music. According
to a study by Sweden's Karolinska Institute, 10 or more
years of mobile phone use increases the risk of
developing acoustic neuroma, a benign tumor on the
auditory nerve. The risk is confined to the side of the
head where the phone is usually held. The institute, one
of Europe's largest medical universities and a clinical
and biomedical research center, awards the Nobel Prize
in medicine.
Such warnings, clearly, are not
working in India.
Siddharth Srivastava
is a New Delhi-based journalist.
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2004 Asia Times Online Ltd. All rights reserved. Please
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