CELLULAR: Boom Goes the Beep

After PCs, it is the turn of cellular phones. From being a luxury item to be
afforded only by a fortunate few, mobile phones have today become a necessity.
This October 2001 is a significant moment for the cellular industry in India,
for somewhere towards the end of the month, the cellular base in India will
cross the five-million mark.

Surging Use

While the PC industry took twenty years to cross the
five-million mark, it has taken the number of cellular users just six years to
breach this figure. And as if hit by a sudden spurt of energy towards H2 of this
calendar year, each month has been a record in itself.

According to the figures available from the Cellular
Organizers Authority of India (COAI), the month of August saw a record of 2.5
lakh users being added. This preceded the other previous record-making months of
July and June that saw 2.06 and 2.11 lakh users being added respectively. The
cellular user base stood at 4.8 million at the end of September. At the current
rate of growth, the five-million mark would be breached sometime in October
2001. This would be a significant milestone. And despite the slowdown and fear
of a recession, there seems to be no speed breaker ahead for the mobile user
industry. Even as COAI insisted on audited subscriber figures from cellular
operators, the five millionth milestone would be breached this month. At current
growth rates, the cellular base is all set to overtake the PC base by April
2002.

This is in conjunction with what was forecast a year ago.
Research groups had predicted last year that by 2001-02, the shipment of
information appliances, which include mobiles, PDAs, laptops, would overtake PC
shipments. This has now, already started taking place. While PC shipments in the
FY 2001, would be around 2.25 million–assuming a 20 percent growth rate–mobile
shipments in the FY 2001 are projected to be around 2.5 million.

PDAs sales have yet to take off, primarily due to their
prices.

Says Sudershan Banerjee, CEO, Essar Cellphone, "The boom
in the cellular base is no surprise to us considering our low tele-density. The
growth rate is rising due to the tremendous potential and due to the innovative
steps being undertaken".

More for Less

Declining prices of handsets and falling access charges are
the two main factors that are responsible for the fantastic growth in the mobile
shipments. Consider this: an entry-level handset is available from the grey
market at just over Rs 2,000–a price now easily affordable by most people. The
price-drops in the past few months, have also helped to boost demand. It seems
the negative sentiment has not affected this segment. While there has been a
talk about PC-shipment growth falling to an estimated 20 percent down from 34
percent of the previous year, there is only one direction that the mobile market
is going–up. In the past year, the mobile market almost doubled from 1.88
million in March 2000 to 3.57 million in March 2002.

More growth spikes are expected within the next few months,
with a drop in access rates and the entry of the fourth operator. Banerjee adds,
"The key is to redefine affordability and bundle in value-added
services".

But there is still a long way to go. China has more than 120
million cellular users and India has its work cut out. The journey of a thousand
miles begins with a single step. The crossing of the five-million mark is just
the beginning.

Amit Sarkar, Dataquest