Telecom Transformation: The Future is Calling
Ten years ago, only three in hundred Indians had a phone. That number's up to 45 now. The next step is going from plain communications to applications.
The spread of mobile telephones across the breadth and length of the nation is without doubt the biggest success story of the Indian economic reforms. No single event since Independence has transformed the lives of Indians as mobile phones have. Remarkably, the transformation has come about almost entirely within the last decade.
Just 10 years ago, the total number of mobile and fixed-line phones was less than three per 100 individuals. Mobile phones had been introduced in the mid-1990s and accounted for barely 6 per cent of all telephones.
Today, the number of phones per 100 individuals has risen to an impressive 45. Much of this growth has been in mobile phones, which now account for a staggering 92 per cent of all phones. Fixed-line phones are now an endangered species. While the growth in phones has been concentrated in cities, rural areas have been fast catching up. There are now an astonishing 95 and 17 phones per 100 individuals in urban and rural India, respectively.
Taking the 2001 Census figures of 5.2 and 5.4 members per household in urban and rural India, respectively, these figures translate into almost five phones per household in urban India and one phone each in nine out of ten households in rural India.
To be able to fully appreciate the revolution in mobile phones, we must look at the history of telecommunications in India. The telephone arrived early and doors to the first telephone exchanges located in Calcutta, Bombay and Madras, opened as early as January 1882-just six years after Alexander Graham Bell patented the first telephone. With 93 subscriber lines, the Calcutta Exchange served as the "Central Exchange".
Despite this early start, the telephone network in India did not expand rapidly. A desire to gain better control of the country led the British to connect major towns and cities by phone. But they had no interest in bringing this revolutionary means of communication to the common man. No surprise that as late as 1948, more than six decades after the phone arrived in India, there were only 80,000 phones countrywide.
The Government of India made a more serious effort to expand the telephone network in the country following Independence, but the pace of expansion was slow. The telephone remained a "luxury" and therefore out of reach of the common man for almost another half a century. When I left India in the mid-1970s, waitlists for phones in most cities were several years long.
To make matters worse, the service was hopelessly poor: the running joke was that half the time you could not get the dial tone and the other half of the time you would get a wrong number. The advent of Subscriber Trunk Dialling and International Subscriber Dialling public call booths in the second half of the 1980s gave some respite to the common man seeking access to phone service. But the number of phones per 100 people remained embarrassingly low at 0.6 as the decade came to a close.
Former prime minister P.V. Narasimha Rao chipped away the government monopoly over telecommunications by letting private mobile phone operators enter the market in select cities in the mid 1990s. The change led to some acceleration in the growth of phones but the telecommunications revolution came about only after another former prime minister A.B. Vajpayee introduced and implemented the New Telecom Policy (NTP) in 1999.
Under the NTP, private sector players gained entry in all markets and were rapidly placed on an equal footing with public sector suppliers. Healthy competition ensued and growth in mobile telephony exploded. India went from a total sum of five million telephones installed in the first 110 years to adding 15 million phones per month in August 2009. In less than a decade, private sector firms captured 80 per cent of the market in all phones and 85 per cent in mobile phones.
Today, mobile phones have become a necessity for all. Fishermen use it to check the market that would offer them the highest price for the day's catch even before they arrive on the shores. If their motorboats break down, they can instantly call for help rather than wait until another boat happens to pass by them. Farmers use the mobile phone to find the prices of their produce in nearby markets.
In case of pests attacking their crop, farmers can transmit the pictures or video clips of the infestation to extension service centres to get instant customized advice on remedies.
In many cities, customers can use their mobiles to request radio taxis at any time and place and receive confirmation by text messages within minutes. Mobile phones also help car and taxi drivers better manage their time while providing good service to their clients.
When clients need to go from one place to another for meetings, they do not have to run around in search of the spot at which their car or taxi driver waits on them. Instead, a "missed call" to the driver quickly brings the car to them.
With relatively low Internet penetration in India-there are only 14.05 million Internet subscribers-mobile banking is fast spreading. Already, there now exist 20 to 25 million registered users of mobile banking. This opens the possibility of short-term borrowing and lending among friends and relatives located in far off places.
Mobile phones have also become useful for the practice of tele-medicine. Pictures or short video clips of a patient, shot and transmitted using mobile phones, can allow a doctor in a distant location to offer preliminary diagnosis. Dr Ashok Panagariya, head of the department of neurology at the SMS Medical College, Jaipur, tells me that video recordings of seizure episodes by family members using mobile phones can provide information useful for distinguishing attacks affecting the brain from non-epileptic attacks.
With processing power, storage capacity and bandwidth rapidly expanding, the uses of mobile phones is going to continue multiplying in areas such as finance, commerce, medicine, entertainment, event management and agriculture. It is altogether possible that in the future, phones will entirely replace conventional computers.
-Arvind Panagariya is a professor at Columbia University and author of India: The Emerging Giant.