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Cell Phone Market Booming in India - 2003-12-12

The mobile phone market in India is booming, with mobile phone users doubling in the past year.

More mobile phones are ringing across India as new connections are sold at the pace of nearly one million a month.

It is a dramatic change in a country that coped with shortages and shoddy services in telecommunications for decades.

People often had to wait several months for a new landline connection and getting the phone did not end their woes. It sometimes took days of arguing, cajoling or bribing workers at state-owned companies to get broken lines repaired.

Mobile phones entered the market in 1996 - a year after India opened up its state-owned telecommunication sector to private investment. But high user rates restricted these phones to the rich, or professional and business users, for many years.

That changed this year as more operators entered the market and competition forced companies to lower prices.

Deepak Jolly is a director at Bharti Tele-Ventures - the company with the largest share of the mobile phone market. He says in India, mobile phone prices, or tariffs, are now the lowest in the world.

"Today the tariffs for mobile phones are equal to or cheaper than the fixed lines, and everybody who wants to go in for a new phone thinks twice, and goes in for a mobile phone," he said.

India has 26 million mobile phone connections, more than half of them have been added in the past year. State-owned companies are vying with private ones for customers, even in remote towns.

Market analysts say low prices are only part of the picture. They say a buoyant economy, a growing middle class, and higher consumer spending are helping mobile phones get into more hands than ever.

Vatsala Misra is a consultant with KSA Technopak, a consultancy firm.

Spending on mobile phones has gone up, not only the handsets, but the airtime has gone up by leaps and bounds," she said.

Mobile phones are the latest status symbols for brand-conscious consumers. And the range of customers is wide. With connections available for less than six dollars a month, new mobile phone owners include students, housewives, and residents of urban squatter settlements who found it difficult to get phone lines installed in their small tenements.

The phones are a special boon to an army of freelance workers such as carpenters, plumbers, and painters who make a living doing small jobs, but who often lost work because they could not be reached.

Mohan Lal is a carpenter in New Delhi who earns about $200 a month working for a small group of customers.

Mohan Lal says he had to either visit or call his customers from a public phone once a week to see if they needed him. If he did not do it, he often lost work. Now that he has a mobile phone, his problems are over.

Despite the mobile phone boom, telephone density in India is still a meager seven percent. But it is a huge jump in a country where less than a decade ago, only one in every 100 people had access to a phone.

Mr. Jolly says the telecommunication sector has huge potential.

"We have a 1,000 million people in the country," he said. "And with total [mobile] phone ownership of only 21 million we have a huge market to explore."

Mobile phone ownership is expected to jump to 100 million by 2007. At the moment, China is the world's largest market with 240 million mobile phone users.

For the time being, Indians seem to be guarding their mobile phones more jealously than their democratic rights. Local media reported that during regional elections in the Indian capital earlier this month, thousands of people returned from polling booths without voting when they were asked to leave their mobiles outside.