It is no secret that the next phase of growth in Indian mobile services sector is to be witnessed from the rural segment. While there is vast difference in the socio-economic aspects between urban and rural areas, Indian operators are seen merely replicating the urban offerings to rural people which may not work in the long run.

Accenture’s Global Convergence Forum precisely points out this mistake in approach by Indian operators as it says “service operators underestimate the complexity and maturity of the rural consumer base and the rationale that rural consumers use to make buying decisions.”

‘Wanted: Business Models for Profitable Rural Expansion’, new report from Accenture calls for new business models to be formulated for the rural segment which will be profitable in nature.

Cheap mode of communication, dependable and enhanced privacy are the top three reasons for a rural consumer to opt for mobile services. The survey points out that senior executives however felt that perception of mobile phone as a status symbol and as a entertainment tool were the reasons rural folks opt for mobile connections. This shows contrasting views and difference in thinking between senior executives and actual rural consumers.

“Telecom providers are yet to create and implement business models capable of driving sustained profitable growth through a rural expansion strategy,” says Kumar Ranjan, India lead for Accenture’s Communications & High Tech group, “Obviously, an important prerequisite in the creation of successful business models is the implicit understanding of the needs and buyer values of one’s consumers.

“Our research shows that mobile operators need to develop a more accurate understanding of the mobile value proposition in rural communities, as well as the potential barriers to winning over potential customers if they are to achieve profitable growth through rural expansion.”

On the decision-making process, while executives felt that lack of information to rural consumers about various mobile offerings was a barrier, rural consumers (92%) said that they had a general idea of the offerings and options available. This again reflects difference in thinking.

“In order to develop an effective business model that will enable telecom operators to create a differentiated experience for rural consumers, telecom operators must better understand the real needs of diverse populations like those in emerging economies such as India,” laments Martin Cole, group chief executive of Accenture’s Global Communications & High Tech operating group. “This requires that they move to a truly customer-centric strategy if they want to be profitable. For India’s rural markets, simplicity – good, solid handsets and reliable voice services – is the name of the game.”

Handset, services costs are key impediments to becoming a mobile customer 

Cost of handset is seen as a primary obstacle for adoption of mobile services. Among the features of interest to rural population include camera, dust resistant, torchlight and long battery life. Gaming, speakerphone and video features are of lesser interest.

Lack of connectivity due to inadequate cell towers is also a barrier.

Among other recommendations, Accenture calls for the service providers to focus on measures which will keep down costs including opex while catering to the rural segment. Innovative VAS can be used to drive adoption.

Accenture conducted interviews of 15 senior-level executives from the industry and survey of over 2,400 rural consumers including 802 active mobile users and 1,634 non-users.