Indias Mobile Revolution Posted by B V Krishnamurthy on May 22, 2008 8:21 AM The last decade has seen a dramatic

growth in the communication sector in India. Until the 1980s, a telephone was considered a luxury. There was a waiting list of 20 million. Thanks to the liberalization in government policy and the entry of private players, the situation has changed beyond recognition. Few wish to have a landline today. India represents one of the fastest growing economies in terms of mobile communication penetration with millions of new users being added every month. What makes the transformation remarkable is the diffusion of the technology to the grassroots level. It is quite common to see construction workers, cab drivers, fruit and vegetable vendors, maintenance crew and farmers using the mobile phone as if they were born with the gadget. Consider the following: Fishermen in the Southern Indian state of Kerala routinely use mobile phones to ascertain the price of their catch before heading back to the shore. Stock Brokers use the device to exchange information about price movements in real time and make buy / sell decisions in seconds. Farmers know when to expect rain and can even be warned about any impending natural disaster such as a cyclone. Vegetable, fruit and flower growers are directly accessing market information bringing in the process an unprecedented level of disintermediation. The young generation finds it an absolute necessity to keep in touch with friends and of course with parents. In all of this, the most notable feature is that the government has merely been a facilitator. Looking at similar success stories in IT and BT, one is tempted to infer that whenever the government decides to play only a facilitating role, the sector does very well. There is no dearth of either the entrepreneurial spirit or the willingness to take risks and take on the world on its terms. What is needed is a supportive environment. When the mobile communication technology was introduced in the 1990s, the price of a handset was beyond the reach of an ordinary person. Call rates were as high as 75 cents per minute. Today, with both CDMA and GSM technologies complementing each other, one can get a handset with a pre-paid connectivity and a few hundred free calls for as little as $25. Call rates, including long-distance calls, are just about 2.5 cents per minute. As scale economies are exploited and a critical mass is reached, call rates may go down further. This is not to say that there are no problems at all. At one extreme, mobile phones have been used from across the border to detonate bombs. It is worth noting that 49.5% of all terror attacks occurring in the world are in India. The reluctance of organizations like Blackberry to provide access to sensitive information may force the government to bring in regulation that the industry can do without. There is also the growing fear, as suggested in a recent paper, of the possible harm that excessive use of mobile phones could cause, including addiction, loss of hearing, and damage to the brain. These are untested waters and one has to tread with caution. Safety is a major concern one is petrified to see people on

motorcycles and scooters using a mobile phone while driving. Students using the device to send SMS even from classrooms is another area that needs to be addressed. Service providers would do well to bring in some form of self-regulation one provider promises 40,000 ringtones and downloads: is this necessary? Cooperation among competitors is also critical some resources such as relay towers need to be shared; there is just no space for every service provider to have a tower in every location and moreover such an approach may lead to unnecessary investments and increased costs. Communication, like any technology, is a double-edged sword. Used with due diligence, it can improve the quality of life through enhanced productivity and efficiency. In the wrong hands, it can also cause destruction. The choice is ours. The number of mobile phones is expected to touch the 500 million mark in two years. That is good news for manufacturers, service providers, and customers. Even as the country prepares to embrace the next wave of technology, let us learn from the experience of other countries, and avoid the pitfalls that might confront us in the relentless pursuit of progress. *** Sign up for the Harvard Business Publishing Weekly Hotlist, a new weekly email roundup featuring the top highlights from HarvardBusiness.org.