BANGALORE, India India has become the fastest-growing cellular market in the world, adding a net 5.9 million cellphone subscribers in August, the Cellular Operators Association of India said this week.

The gain topped China’s increase of 5.2 million subscribers.

Large areas of India remain too poor or remote to have cellphone service, though the middle class is growing in many cities. As poverty slowly eases, the explosive growth of Indian cellphone use is expected to continue. Factors like low calling charges and cheap phones are also behind the subscriber gains.

Charges per minute in India are said to be the lowest in the world, as service providers offer deals that include a lifetime of unlimited incoming calls for a one-time fee of 1,000 rupees, or $21.75.

“Everybody can afford it, the teawallah, the dhobi and the sabsiwallah,” said T.V. Ramachandran, director general of the Cellular Operators Association, conjuring up the traditional tea vendor, launderer and vegetable seller.

Most of the growth has been recent. When mobile phone services were introduced in India in 1994, only the very rich could afford the handsets, which cost hundreds of dollars, along with the service.

But after the introduction of competition in telecommunications that year, private businesses challenged the government-owned telecommunications company, and prices fell.

India has more than 123 million mobile phone subscribers, well behind the 430 million in China, and it is not expected to catch up for many years.

According to data from the Cellular Operators Association, about half a dozen major cellphone service providers and several smaller ones cover less than half of India’s population. Still, that is an increase from about a third of the population in 2005.

With most of this coverage centered in big cities, providers have yet to venture out to many villages to reach the rural population of 660 million, where infrastructure is so spotty that many villages do not even have electricity.

According to specialists, the next growth spurt will come when mobile service becomes widely available in the villages.

To further this trend, the Telecom Authority of India is considering a proposal to allow rival companies to share infrastructure. “Then, a hundred flowers will bloom,” said the authority’s chairman, Nripendra Mishra, borrowing a phrase from Mao Zedong.

Mobile technology is a potential boon for a poor country like India, where conventional fixed-line infrastructure would be prohibitively expensive.

“In smaller places where affordability is a major concern,” said Naveen Mishra, a senior market analyst for the consulting firm IDC, “operators are lowering entry barriers by selling cheap handsets bundled with services.”

The Finnish cellphone maker Nokia recently introduced a phone costing the equivalent of $43.50, its lowest price globally for the model, in partnership with Reliance Communication, one of India’s largest phone service providers.

Subscribers are responding to offerings like the Don’t Stop Mobile plan of Tata Teleservices, which includes a phone and unlimited talk time for two years for just over $30.

“It’s a market that can be very rewarding for the serious investor,” said Asim Ghosh, managing director of Hutchison Essar, a joint venture of the Essar Group of India and Hutchison Telecom International of Hong Kong.

But the decline in tariffs is squeezing service providers.

India has the lowest average revenue per user in the world, leading companies to offer premium features like text messaging, ringtones and video downloads.

And the rapid growth is not without challenges for users.

With nearly six million connections added last month, networks are becoming congested and connectivity between companies is poor.

Callers increasingly face the frustrations of dealing with dropped calls and recorded messages like “The network is busy, please try later.”

Source- http://www.iht.com/articles/2006/09/15/business/cell.php#

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