Having saturated the urban market in India for mobile phone services, leading players in the sector have started focusing on the rural areas where the potential for growth is tremendous.

Here’s a classic example of tapping fortune at the base of the pyramid. Following their revolutionary conquest of millions in urban areas, major mobile phone vendors including Nokia, Motorola and LG, have turned to Indian villages for future growth. A series of marketing innovations followed with sights on mandis, haats and rural retail chains with unconnected millions, as revealed by the news from Agency Faqs.

The industry estimates a contribution of around 5% by rural markets to the national GSM handset sales. However, a rise to 25-30% is likely by 2009. Despite 70% of the population living in rural areas, the mobile handset penetration is less than 3% in contrast to the urban rate of 40%. So it is quite logical that handset vendors are engaged in serious brand-building efforts in villages using touch and feel promotions

Rural market is seen as growing more rapidly. The growth in subscriber numbers is mainly due to the enlargement of the rural market. The reason behind this is the rural market forming the focus of developing service and products.

The fact that mobile phone sales among Indian villagers have begun to pick up implies tremendous boom in mobile services in countries with the poorest populations. The growth in the Indian telecom market continues without a pause. Increasing demand for mobile services in smaller towns and rural area is already underway. Urban tele-density averages 30% in contrast to around a mere 2 percent in rural areas.

Some industry experts interpret intense competition in the cellular market and saturation of the urban market as the compulsion for companies to seek subscribers in the rural areas. Another indication of the eagerness of private operators to win over rural India with their services is the latest bids to the government for a Universal Services Obligation (USO) fund project for the purpose of setting up infrastructure for cellular services across rural India consisting of 2.5 lakh villages, which still lack any telecommunication services.

The conclusion drawn by a research analyst at RNCOS is that optimism marks the expansion of Indian mobile operators into the largely untouched rural market, with the intention of providing services across the length and breadth of the country. Growth expectation is mainly from pre-paid connections and is fuelled by the rise in affordability of handset and tariffs for the lower middle class in India.