In the furthest reaches of India's rural heartland, the cellphone is bringing something that television, radio and even newspapers couldn't deliver: Instant access to music, information, entertainment, news and even worship.
Despite its rapid modernization, many of India's 750,000 villages remain isolated except for the cellphone reception that now blankets almost the entire country after a decade of rapid expansion by operators. So in villages that don't receive any FM radio stations, people have begun calling a number that has a recording of Bollywood tunes and listening to it on their headsets.
This primitive cellular "radio" service was used by close to 20 million Indians last year, phone company executives estimate.
"I call it the poor man's iTunes," says Mahesh Prasad, president of Reliance Communications Ltd., one of India's largest cellular companies. "A villager waiting for a bus has nothing to do. When he wants to kill some time, this is the only entertainment media available."
The cricket fan without a television or radio can dial up and listen to the latest match live on his phone. Bharti Airtel Ltd., India's largest cell company by subscribers, has a special service that calls hundreds of thousands of farmers every day with recorded messages of weather reports and advice about crops.
Tata Teleservices has a service which lets farmers use their cellphones to control the pumps that water their crops. For the religiously devout, Bharti Airtel is starting a service where users can hear live prayers and chants from popular temples, mosques and shrines.
"Our religious offerings work the best," says Raghunath Mandava, chief marketing officer at Bharti Airtel. "There is nothing like getting the original prayer from the place of worship."
Charges for the services vary: Some are free for now, others cost more than the price of a regular call. Dial-up radio, for example, costs about one rupee, or 2 U.S. cents, a minute. Reliance customers can get cricket reports via text messages three times a day on the day of the match for 5 rupees per day, or take a service for 49 rupees a month to listen to live commentary during matches.
So far these types of services make up only about 10% of cellular companies' revenues, analysts say. But in the next five years the portion of revenue generated by these services could rise to as much as 25%, they estimate.
They are another example of how Indian companies are innovating to reach a new market: consumers in rural India who may have little to spend but have been relatively insulated from the global recession and are keen to gain access to some of the services enjoyed by India's urbanites.
The mobile value-added service business, which also includes standard nonvoice services like texting, will rise close to 70% in the next year to 165 billion rupees ($3.6 billion), according estimates by the Internet and Mobile Association of India.
Some of the services are helping to offset the impact of a fierce price war that has erupted in the Indian cellphone industry for regular voice calls as new entrants have come into the crowded market.
Because of the lower prices, millions of new customers are being added per month, but there is a crumbling of the average revenue per user, a key measure of revenue.
Average monthly spending by Indian cellphone users has plunged 20% in the past year to less than $5.
The biggest phone companies have also started charging per second rather than per minute, further crimping the number of rupees they get from calls.
Monthly spending will continue to slide for the next two years, analysts estimate, unless phone companies can find ways other than call rates to get Indians to spend more on their phones.
Cellphone companies' shares, once the darlings of the stock market, have been tumbling, many, including Bharti Airtel and Reliance, losing around 30% over the past three months.
New revenues won't come anytime soon from so-called 3G services, which offer advanced cellular networks and high-speed Internet surfing. India has yet to even decide which private companies will be allowed to offer 3G services, though an auction of spectrum is expected early next year.
Instead, to get the cost-conscious Indian cellphone user to spend a few extra rupees requires tailored services that are delivered simply and can work even on a $20 phone.
In the town of Behror in the state of Rajasthan, there is no regular radio music broadcast, so 60-year-old farmer and music lover Balwant Singh Yadav says dialing up his favorite music has been a "lifeline."
"I used to walk 10 to 15 kilometers just to listen to Hindi songs being played at marriage parties and other local functions," he said. "With the cellphone, the latest hits come handy. I can tune in any time I'm free." He said he spends about $1.50 a month on the music service.
The latest Bollywood tunes "station" is the best seller, says Mr. Prasad at Reliance. Devotional songs as well as classic film songs are also popular, he says, showing that users are not just tech-savvy teenagers.
With the more than $200 million in revenues phone company executives expect this year, the radio via phone business already makes almost as much as consultants at KPMG estimate all the regular FM stations in India will make.
"The nonvoice business is becoming very, very important for any operator today to concentrate upon," says Madhusudan Gupta, a Singapore-based senior research analyst at Gartner, a consultancy. "That is the reason that a lot of experiments are now happening."
—Vibhuti Agarwal and Sonya Misquitta contributed to this article. Advertisement
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