BusWeek. Taking the Isolation Out of Poverty (int'l edition). India, Bangladesh, and Sri Lanka go cellular
BUSINESSWEEK ONLINE : MAY 3, 1999 ISSUE
SPECIAL REPORT
In the poorest regions of India, Koshika Telecom Ltd. has found golden
opportunities. The New Delhi startup provides cell-phone service in Uttar
Pradesh, Bihar, and Orissa, the country's most populous states--with some 300
million inhabitants all told. Despite severe poverty, this eastern part of India holds
tremendous promise for Koshika: Almost half of the area's 200,000 villages do
not have even one telephone. What's more, since many people move elsewhere
to find work, almost all local families have relatives and friends far away, perhaps
in Punjab to the north or Bombay to the west. ''Imagine,'' says Suresh Sachdev,
who heads business development for Koshika. ''Nearly half of the 75,000
chauffeurs in Bombay alone come from Uttar Pradesh!''
That provides the perfect opening for wireless technology. Countries such as
India, Bangladesh, and Sri Lanka are finding that it's simpler and often cheaper to
use wireless phones in remote areas than to install traditional service. With
wireless technology, you can put up one radio tower for a region--instead of
laying wire to each home and business. There's certainly plenty of opportunity.
India, for example, has only 21.5 million telephone lines for its 960 million
people. Many of those people, to be sure, will get wire-line service soon: In the
next three years, the country's Telecom Dept. plans to invest $10 billion to lay 13
million more phone wires. But from the distant villages in Uttar Pradesh to the tea
estates in northeastern Assam, wireless phones are the only phones.
In some cases, they're even better than traditional telephones. In the tiny village
of Pulala in Uttar Pradesh, Bunty Garg, the owner of a grocery store, bought a
cellular phone from Koshika to sell minutes to local residents. Earlier this year,
Khursheed Khan, a migrant laborer in Saudi Arabia, heard that his brother
Tayyub, a farmer in the village of Dalalabad, had fallen ill. Tayyub didn't have a
phone, but Khursheed was able to phone Bunty's store to ask about his brother's
health. Bunty asked Khursheed to phone back in half an hour. In the meantime,
his errand boy sped on a scooter, cell phone in hand, to the neighboring village in
time for the sick but delighted Tayyub to receive his brother's call.
Enterprising subscribers such as Bunty do well: Koshika gives them a 30% to
50% discount on airtime. Villagers are able to communicate, subscribers make
money, and Koshika earns what it says is a modest profit. Bunty says he will
soon subscribe to Koshika's E-mail through the cell-phone offer--and he's sure
he'll get plenty of business. ''Who wants to pay $2.28 for a phone call to Arabia
when they can get a message for 23 cents?'' says Bunty.
Cell phones are being promoted in rural Bangladesh as well. Grameen Telecom,
a venture of Grameen Bank, offers cellular phones to Bangladeshi village women
as part of its microcredit program, which makes small loans to entrepreneurs.
The women sell minutes to locals who speak to their relatives in other villages or
towns, and the women get much-needed financial independence.
TOOL FOR CROOKS. Not all cellular phones, of course, are used for good
causes. Gangsters in Bombay often carry them along with their guns. To
circumvent attempts to trace their activities, they use multiple phones and phone
cards. That's good for phone companies but not so good for the Bombay police,
who are trying to ban the use of prepaid phone cards for mobile phones. Gang
bosses based in Pakistan or Dubai sometimes go even further: They use satellite
phones. Ditto for terrorists in Sri Lanka, where cellular service doesn't extend to
war zones.
Despite those problems, cellular phones are enjoying booming popularity. In
March, when Indian Prime Minister Atal Behari Vajpayee made a bus journey
from New Delhi to Lahore, in Pakistan, he made history twice: He mended
fences with a traditional enemy and used the first cellular phone installed in a
passenger bus in India. As a result, the Indian government has agreed to permit
luxury buses and trains to install cell phones. Try that with a traditional telephone.
By Manjeet Kripalani in Bombay
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Copyright 1999, by The McGraw-Hill Companies Inc. All rights reserved.
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