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In India mobile devices account for 72% of all website traffic.

In one of our earlier posts we saw how mobile internet has bolstered the progress of our economy. And while it is true that internet penetration has opened up enormous possibilities never before imagined, our broadband consortium isn’t that great. In particular when we compare ourselves with our South East Asian neighborhood, India has one of the slowest broadband speeds.

At a meager 2.3Mbps average download speed, We ranked ourselves to the 123rd position in the global broadband speed index during 2013. This is one of the slowest in Asia.

poor-internet-india-meme

And that pretty much sums up the state of internet in India.

The State of Internet in Asia

To get an idea of where we stand when compared alongside our neighbors, let’s take a look at how fast broadband connections are in some of the other asian countries. You might be surprised to find out that Thailand has a higher average download speed than India.

The year on year growth of the broadband segment hasn’t been encouraging either. It is only the corporate solutions provided by companies like Airtel , ACT and Hathway that lend a bit of heavy numbers to the internet speed.

While it is true we have come a long way from the dial up days of yore, it is of little solace when the general pace is sprinting away while we take baby steps.

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Do We Need Faster Broadband?

Well, probably no. Here’s the thing, 72% of all website traffic are generated by mobile phones meaning household computers pretty much are like the dormant volcanoes. What we need are faster and more robust mobile networks.

The rural population of India accounts for 70% of the total population however the internet penetration is below 10% in these areas. Now it’s clear that this deficit in connectivity cannot be met by wired broadband connections; as they would be ridiculously expensive and an infrastructural feat if ever it were plausible.

The solution then is to improve on the mobile network in rural India. Although ‘internet’ penetration of rural areas is below 10% that is not to say that mobile phones have not penetrated the rural locations. There are adequate handsets with the capability for internet access in rural areas. The task here is to establish a robust telecommunications network across the rural landscape and ensure undisrupted connectivity across providers.

Rural population accounts for 70% but has an internet penetration of just 10% Click To Tweet

Do we need faster broadband connectivity. Yes, to be at par with out asian neighborhood we would need to scale up our existing network 10x times. But the need of the hour is to realize a greater than 80% internet penetration in rural India.

Telecom in India

For the sake of understanding this environment better, let us analyze telephone connectivity and internet connectivity separately. While this post is about the state of the internet in India, it is also about the manner in which internet reaches the population.

Only those in Urban towns / cities have the luxury of having a high speed wired internet connection such as ACT, Hathway, You Broadband and so on. Infact wired broadband and fibernet account for just 12% of the total internet users in India. The rest of India access the world wide web through their mobile devices. This is why mobile connectivity is crucial for the growth of the nation.

A broadband internet connection would require that the subscriber also have adequate means of utilizing the connection such as a desktop or a laptop- this also translates into additional expenses. With the growth of India’s 3G and 4G spectrums, more and more mobile users are able to maximize the use of their mobile devices for surfing the internet. The goal now is to have this pan India, even in remote and rural areas.

The other more sophisticated internet we are talking of is the broadband connections that offer higher speed and more bandwidth for unlimited high speed browsing, uploads and downloads. The thing about high speed broadband and fibernet connections is that they require extensive infrastructure to laid out initially thus contributing to their high cost and limited coverage. Ultimately it is mobile internet that will connect India in the true sense. To understand the dynamics of mobile connectivity better let’s look into the telecom sector.

General Environment in The Telecom Sector

ParticularsWirelessWirelineTotal
No. of Broadband Subscribers (Million)83.6815.5299.20
Total Subscribers (Million)969.8926.59996.49
Urban Subscribers (Million)555.7121.47577.18
Rural Subscribers (Million)414.185.12419.31
Urban Teledensity143.085.53148.61
Rural Teledensity47.780.5948.37
Share of Urban Subscribers (%)57.3080.7357.92
Share of Rural Subscribers (%)42.7019.2742.08

Telephone density or teledensity is the number of telephone connections for every hundred individuals living within an area. It varies widely across the nations and also between urban and rural areas within a country.

Now, it is true that there are more mobile users in urban areas and only 43% of the mobile users are from rural areas. But lets look at it from a different angle, more than 80% of the urban population have a wireline telephone connection and only 19% of the rural section have a wired phone. However, over 80%of the rural population use wireless telecom services (mobile connection).

Even in terms of growth there’s an interesting insight- the urban sectors have registered a negative growth in the number of wireless (mobile) new users. However in rural areas the number of mobile phone users have continued to grow,

 WirelessWirelineTotal
Monthly Growth Rate %1.47-1.391.43
Urban Telephone Subscribers (Millions)577.8421.08598.92
Net Additions (Urban) (Million)-0.26-0.06-0.33
Monthly Growth Rate %-0.05-0.30-0.05
Rural Telephone Subscribers (Millions)431.614.64436.26
Net Additions (Rural) (Million)6.23-0.076.17

As you can see, the number of subscribers for wired telephones have declined in both urban and rural areas. But surprisingly, the number of mobile (wireless) users continue to grow in rural india even though they have seen a decline in urban areas. This gives us an idea of the scale of the rural telecom market. Even then, only less than 10% of the rural population have access to telecom services. Large parts of the country still remain ‘unconnected’ in the digital sense.

Why The Future Lies in Mobiles?

Simply because the cost of bringing the wired telephone and internet to rural and remote india is not worth the time and money invested in the short term. Over the long run this would prove a blessing, but as a nation we are also looking at progress and growth on a massive scale. The problem of connectivity can more readily and effectively be addressed by wireless technology.

The affordability of smartphones means that more and more people now have access to the internet on their phones. Precious time and resources spent in creating the infrastructure for broadband/ fibernet can be utilized to set up wireless infrastructure which would cost considerably less and have a greater impact. To see how this plays out, let’s take a look at the internet dynamics in India.

As you can see, almost 90% of the internet usage comes from the mobile device users.

As on 30th November, 2015, the top 5 wired broadband service providers were BSNL (9.93 million), Bharti Airtel (1.64 million), MTNL (1.13 million), ACT (0.84 million) and YOU Broadband (0.50 million)

The total number of mobile internet users stood at 282.81 million at the end of March 2015; translating into a combined growth of over 21% over the previous year.

Based on the TRAI annual report for 2014-15, the mobile internet segment witnessed a growth of over 82% while the wired broadband saw of growth of just 4% for the year.

The total number of mobile service subscribers was 969.89 Million at the end of March 2015 with the rural subscribers making up for 414.18 million of this. Wireless internet subscribers stood at 283.29 million at the end of March 2015.

Opportunity

There is opportunity to be capitalised on here- the need for connectivity. There are many internet providers in India but most of them are small scale and operate only regionally. As per the TRAI website there are around 172 Internet service providers pan India.

Did you know 172 Internet service providers pan India? Click To Tweet

Another report by dot.gov.in lists 300 companies who are licensed to provide internet as of March 31, 2015. Most of them are licensed to operate only in regional pockets. But despite this, our broadband infrastructure is far from ideal and wanting in several aspects. New players who can provide quality connectivity are always welcome; there is also ample room for existing providers to improve on the quality of their services.

Since the gap in the quality of service between the best provider out there today and the more mediocre one is not big, the concept of a market leader in the absolute sense is yet to be defined. Inversely this leaves room for someone to come up and become the leader in broadband connectivity.

On the mobile segment of things, we are far from having achieved ‘telecom inclusion’ for everyone. One way to look at the progress we’ve made in this sector is to analyze the teledensity in both urban and rural areas. Now, teledensity is the number of telephones available for every 100 people in a place. In urban areas this is 143, however in the rural areas this is only 48. Or only 48 people among every 100 in a rural location would have a mobile phone.

If you remember in one of our previous posts we looked into financial inclusion; as it turns out in just 5 months after the government took on the responsibility of Jan Dhan, around 115 million new bank account were opened. If something of a similar scale were implemented to digitally connect everyone in India, the percentage of unconnected would drop drastically. With a population of over 1.2 billion people, there are just 462,124,989 who are using the internet as of March 2016; we need to work towards a greater percentage internet penetration.

Or in other words we need to connect 65% of the population to the internet.

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