Free Mobile Phone for Rural Families Below Poverty Line?

A commendable initiative by handset manufacturers – the Indian Cellular Association (ICA, represents handset manufacturers) has sought Rs 5,000 crore from the Universal Services Obligation (USO) fund to give free cellular phone and a connection to families under the below poverty line.

Basically, telecom operators pay 5% of their revenue to USOF fund for DoT to fund telecom infrastructure in rural India – infact, in December 2007, DoT announced $2.5Bn funds to invest in startups (owing to unutilized amount in USO fund).

ICA’s recommendation:

• Invest in the 50 million BPL families by providing free of cost mobile handsets and connections with 100 free calls per month
• The mobile handset provided can be a basic phone with an AM radio, which can be useful for listening to relevant local language content.
• These radio stations should be made interactive and calls to these radio stations should be made free of cost. This investment of approximately Rs 4,000-5,000 crore has the potential of transforming the life of many families and individuals in this category. – source

As per estimates, free calls will enable these families to save around Rs 15-20 a month (in traveling costs etc) – which will enable them consume more services and after 2 years, start paying atleast Rs. 25 per month.

This is a noble idea combined with commercials. Essentially, mobile is just not about talking anymore, and given the right value – rural India is willing to pay for value services (see my earlier presentation on Mobile VAS in India).

What’s your take on this initiative?

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