Telecom Companies and the gold-rush to rural markets – Part 1: its a whole new ballgame
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This has been coming for a long time now, but it seems like all major telecos have set their sights firmly on the untapped rural market for growth.
I want to briefly (not comprehensively) discuss the number of challenges for a teleco moving to a rural market, and then discuss some telecos’ approaches.
Game Changers
The rural market is still an open field – anyone can claim market dominance in that area, irrespective of their existing position.
Network Expansion
Network expansion is perhaps the first big challenge for telecos – Outside of citites, the population density decreases rapidly to the point where it is not economically feasible in some parts to put up towers, or set up switching centers.
This is particular important since network infrastructure is costed on the basis of slots – whether they be ports on a switch or frequencies off of a tower – the equipment becomes feasible when you can expect the threshold number of people to be served from the equipment over its lifecycle.
Brand Perception
In rural markets, there usually wont be any preconceived understanding of how one brand is better than another. In fact, most rural consumers will not have a sense of an abstract relationship of trust that a brand creates – trust in these markets starts from within family and the people they know.
In other words, trust from an arbitrary third-party is harder to gain in the rural markets than urban “capitalistic” markets.
Package Awareness Differential
Most rural consumers may not spend the time to understand the subtle differences or advantages one operator gives them over another.
Product Perception
Here is an important point – even though we would like to think just a “connection” to their relatives in urban areas may be enough, rural consumers would generally demand that any technology make a direct impact on improving their quality of life, whether through productivity, information services or more.
In other words, value-addition over your connection plays an important role
Experience Differential
Somewhat obvious – for rural consumers, the technology curve is too steep to adopt. Even operating an ATM by rural customers have proven to be a challenge for rural customers in India. Banks now purchase and install “special” ATMs in India that use biometric fingerprint ID techniques to make the technology curve easier.
A cellphone, on the other hand, befuddles the most hi-tech of us with poorly designed UI, let alone a rural consumer.
Marketing
Marketing is also economical over channels that aggregate consumers. Aggregation platforms – whether they are TV Channels, Radio, Green & White, Newspapers, bring people from a target market together based on specific content, thereby increasing their spatial density over a virtual space, thereby increasing the economies or marketing.
In other words, you benefit from giving out a message once and reaching a lot of people – its straightforward.
So how does a company implement a mass-marketing campaign in areas of much lower population density and limited a set of platforms to aggregate audience virtually?
Distribution
Another model that becomes feasible with population density is direct-to-retail. Your focus then becomes how to make an optimal network of retail stores, service centers and franchises to cover niche areas within the larger population.
Take away population density dramatically and retail becomes infeasible. How do you then take your products to your consumers? More importantly, how do you do that faster than your competitors.
The interesting change is that whichever operator exists in an area more than another automatically gains marketing value.
Administration
Some additional considerations here: How do you provide security to any of your assets installed for the service? How do you collect to manage defaulting on payment? How do you plan technical support on remote sites?
There are plenty more, but that is about enough to cover the tip of the iceberg here.
In future parts I will talk about the different approaches of a number of telecos.
Until then, why dont you all try it yourself? What could a “Best Practice Framework” for telecos look like?
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