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Internet is at an inflection point in India and the market is well-positioned for massive adoption as efforts of various stakeholders start to converge and gather momentum: Government (Spectrum, Policies, Mandates, National Broadband Network, Regulation), Industry (3G and 4G networks, fiber access, Public Private Partnerships, content/application development, new business models); Consumers (fueled by strong uptake of social networking and entertainment services, adoption of Smart Devices), and Enterprises (internet-based business services, collaboration, cloud services). The convergence of technologies and convergence of users is setting up the stage for India’s Internet horizon.
India has massive potential for Internet growth, but in an environment that is challenged by limited infrastructure, affordability issues and accessibility in terms of India-centric content and applications delivered in local languages. The total wireless subscriber base is now close to 900 million in the country.
This hyper-growth in the mobility sector underscores
a) the latent subscriber demand that was previously un-met by wireline access,
b) the importance of wireless technologies for vast coverage across varied terrain profiles that is deployed in dramatically shortened timelines,
c) that India is very sensitive to cost and affordability of telecom services – and that as a market it can support massive uptake in growth – provided service providers have the right services at the right price-points, and
d) that innovation in business models across the value-chain is key to market sustainability and profitability. Clearly, India has developed into a ‘mobile-first economy’. The challenge and opportunity for India is thus: how do we now replicate the unparalleled success of mobility for the Internet?
Internet usage in India
The latest Internet subscriber count now stands at 23 million*1. However, importantly the ‘mobility revolution’ of recent times has had a very positive impact on the growth of ‘wireless data’ subscribers and estimates put the number of wireless data subscribers at about 432 million subscribers.
This wireless data adoption is an important indicator – a precursor -- for the growth of wireless internet and broadband growth in India as 3G and 4G networks are deployed and broadband services over these networks becomes available and get absorbed to the yet un-served bandwidth/application-hungry community of subscribers. Besides the pre-dominant DSL access for Broadband Internet (85%), Cable Modem Technology (5%) and Ethernet LAN (5%) are other competing technologies in the internet access space.
Internet growth opportunities and market potential
India is served by approximately 190 ISP’s, and about 155 Broadband Service Providers*2 – although only 28 of these providers share 99% of the total broadband subscriber base – this skew exemplifies the lack of affordable broadband infrastructure across India on one hand, and also the lack of subscriber uptake (affordability, content) on the other. The total revenue reported by the Internet Service providers (for the quarter ending December 2011) was approximately US$ 600 million. Innovative VAS are an important dimension to Internet growth in India, which include ‘verticalized’ services in the health and education segments amongst others which are strongly funded through multiple Government programs.
It is apparent, and logical, that wireless technologies will continue to play an important role for Internet access in India; supported by the recent regulatory steps for the digitalization of the CATV network that mandates CATV operators to migrate to digital modems in the wireline access network.
The business opportunity in the India Internet space is accessible primarily via the following avenues:
1. Working with SPs, CATV providers, mobility service providers (especially as 3G and 4G networks emerge, and CATV regulatory mandates become effective) and ISPs (they own significant spectrum and infrastructure on the ground and customers in both consumer and enterprise segments)
2. Accessing the largely untapped rural broadband market (95% of broadband subscribers are in Urban areas). The Bharat Broadband Network floated by the Government of India will play a crucial role in delivering affordable bandwidth access to all types of service providers (local- regional- national telcos, ISP’s CATV providers, content service providers etc) over a common fiber network in the core and aggregation network that will be agnostic to the deployment of a range of wireline and wireless technologies in the access network.
3. Working with India-centric content and applications developers that can provide local language support.
1. ‘The Indian Telecom Services Performance Indicators, October-December 2011’. Published by Telecom Regulatory Authority of India., New Delhi (April 13, 2012)
2. ‘Convergence & Broadband in the Digital Era’ by Rajkumar Upadhyay, Advisor, Telecom Regulatory Authority of India (April 2012)