India aims to have 500 million phone users by 2010

If the subscriber’s growth rates continue in India nearly half of Indians will have a phone by 2010, India's Communication Minister Dayanidhi Maran said Wednesday.

Maran said total phone users in the country would cross 250 million in three or four months as deregulation, greater competition, lower costs and technological advances have spurred growth in the telecommunications industry. Until 1994, the sector was a monopoly of state-run companies.

The number of phone users has jumped five times over the past five years, and already, India has the world's third-largest number of phone users, putting it behind only China and the U.S.

Data released earlier this week showed that India added a record 67 million wireless phone users in the fiscal year ended March 31, taking the total number of phone users in the country to 207 million despite a marginal decline in land line phones.

The additions last year, which averaged more than 5 million a month, make India one of the world's fastest-growing telecom markets and a favorite among global companies that either provide telephone services or make equipment for the industry.

Leading handset manufacturers like Nokia Corp., Motorola Inc. and Samsung Electronics Co. have set up factories here in recent years, while companies such as Vodafone PLC are expanding by acquiring local service providers.

"We have proved to the world that you don't have to have high tariffs to be profitable," Maran said, referring to the surge in profits of mobile phone companies that came alongside a sharp decline in tariffs.

India currently has one of the lowest telecom tariffs in the world.

Much of the expansion has been limited to urban areas, though, and Maran said the government's focus would now shift to boosting phone connections in villages, where two-thirds of India's 1.1 billion people live.

"We have achieved very rapid growth in the cities. But we are unhappy with the growth in rural areas," he told reporters.

Currently, only one out every eight phone users is in rural India. Maran said the government would like that ratio to at least double by 2010.

He said the government has asked state-run Bharat Sanchar Nigam Ltd. to set up 10,000 transmission towers across rural India by 2010. That would be on top of 8,000 towers that the company is adding this year.

Maran said his ministry has also set an ambitious target to increase broadband connections from 2.7 million now to 9 million by end of this year. He said the demand for Internet in villages is "enormous," but there is no infrastructure to meet that demand.

He said the government expects private companies, which mostly cater to cities and towns, to follow BSNL and expand operations in rural areas.