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Koshika to help DoT set up 'village public telephones'

In an idea that is strikingly similar to the grameen phone service in Bangladesh, the Department of Telecommunications proposes to offer 'village public telephone' connections in a few northern states through the GSM cellular infrastructure of Koshika Telecom Limited.

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Under the agreement being discussed, DoT will begin trials in two 'short-distance charging areas' in each of the states where Koshika is operating, Uttar Pradesh (East and West circles), Bihar and Orissa.

DoT is in the process of identifying villages in the four circles that can offer GSM-based VPTs.

Koshika has proposed that DoT purchase bulk airtime on a monthly basis, which it will then resell through its agents in the rural areas.

The DoT will retain all revenues from re-sold minutes and it can choose to offer current rural tariffs (average of Re 1 for three minutes) for GSM connections as well.

Koshika has proposed that DoT pay a tariff in the range of Rs 2,000 per month per connection. The company is looking to sell around 10,000 connections at least.

Apart from a fixed cost of Rs 2,000 per month per connection, DoT will have to invest in handsets. The fixed amount is inclusive of all connection and activation charges. Maintenance and billing expenses are absorbed by the company.

Issues relating to mobility will have to be sorted out now. It is learnt that the DoT has said that some restrictions would have to be placed on mobility since VPTs have primarily to service particular areas.

The restriction on use can, however, be implemented using software tools, it is learnt. Koshika is looking to optimise utilisation of its 2,017-km long backbone infrastructure spread over the four circles.

Since the backbone follows the highways, the infrastructure can be used to provide connections to villages along the route.

Though Koshika already offers such rural connections, it is now looking to optimise network utilisation without having to roll out front-end (sales, marketing and customer service) infrastructure throughout the states.

DoT, on the other hand, already has a presence across the country. For Koshika, a bulk deal with the DoT will bring in assured cash flows that are critical to the industry.

Cellular operators are facing a scenario of negative cash flows that are far higher than estimated coupled with high incidence of bad debt.

Assuming that the DoT agrees to pay Rs 2,000 (though this is likely to be negotiated) per month for 10,000 connections, Koshika is assured annual revenue of Rs 240 million per annum from one customer alone.

About cost-effectiveness of GSM connections for rural telephony, Koshika is pointing to its own experiment, where 1,100 villages were offered such connections.

Average tariffs vary between Rs 4 and Rs 14 per minute for long-distance calls within circles for mobile-to-fixed calls.

The average revenue per connection is around Rs 2,300 per month, though the spectrum swings from Rs 3,000-Rs 55,000 per month.

This is inclusive of the DoT charges for long-distance carriage, which, according to Koshika, constitutes the bulk of the bill amount.

Most of Koshika's volumes are generated from STD/ISD traffic, which is one area where GSM connections could have an edge.

Most DoT VPTs do not have direct STD/ISD connectivity and long- distance calls have to be booked through the nearest exchange.

Offering rural public telephone connections through GSM will enable the DoT to meet rural telephone obligations in areas where infrastructure exists without incurring heavy capital expenditure.

The four circles where Koshika operates have over 200,000 villages, over a third of all villages in the country.

- Compiled from the Indian media

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