Unrealistic National Telecom Policy vision to achieve 70% Teledensity by 2017 & 100% by 2020

00:13:00
In June 2012, Indian Telecom ministry came out with National Telecom Policy to steer static to dynamic policy transition. The new policy goal is to achieve seamless availability, reachability, scalability, security and affordability across consumer and prosumer base through adoption of new network, technology and management. According to floated policy document, the ministry vision of achieving 70% and 100% rural teledensity by FY2017 & FY2020 looks too aggressive given multiple macro and micro environment of India.
In the past one year, Indian Mobile Operators are experiencing fall in net subscriber addition and current mobile subscriber base is 890 Mn with 39% rural teledensity which translate 333 Mn rural subscribers against a rural population of 858.37. The said teledensity is achieved through co-ordinated positioning of heavy advertisement, lowest tariff, Low device cost (starts from $15) and took 12 years post further liberalization in Telecom sector.
The ministry vision achievement looks bleak due to contrary policy movement w.r.t 2001 to 2004 era. Now with higher spectrum auction price (Upcoming), license fee, roaming policy, low tariff, ballooned debt situation, one time spectrum fee, low adoption of VAS services, slow growth of 3G subscriber base and competitive environment are impacting negatively to Mobile operator revenue, operational cost, interest outgo. These factors in turn forced Mobile operator to raise tariff to be viable and maintain minimum level of Capex to maintain the agreed quality of service set by the regulators.
Based on eagle eye calculation, the mobile operator needs to add 290 & 585.32 subscribers to achieve rural teledensity vision. The 80% and 176% subscriber growth in rural sector in next 5 & 8 years respectively looks extremely difficult given the World Bank statistics of poverty level in India by 2020 with 268 million lives under $1.25 per day.
In conclusion, given the current telecom sector environment with cost of offered service increasing beyond control would impact further rise in tariff and in turn impact rural subscriber addition. In order to speed up rural subscriber teledensity government may opt for free mobile phone scheme similar to free security bill. Even though, it looks unrealistic due to the low literacy level with below poverty line.

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