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Internet penetration expected to rise with 3G services roll-out

Internet penetration expected to rise with 3G services roll-out
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First Published: Wed, Feb 23 2011. 10 39 PM IST
Updated: Wed, Feb 23 2011. 10 39 PM IST
New Delhi: India has a dismal record in Internet penetration—just short of 7% of its vast population has access to the Web—but that may change soon with some help from its fast-growing telecom industry.
The country has the second largest telecom sector globally and more people are opting to surf the Internet over their mobile phones, even if that’s often a strain.
But the third-generation (3G) services being rolled out by telecom operators are expected to usher in an era of high-speed Internet browsing on mobile phones, including video streaming and conferencing.
Internet access is becoming key in a country that’s preparing to rely more on e-governance to push its development agenda, including for financial inclusion and plugging leaks in government doles.
Private firms are also pushing their services on the net, such as for bank transactions or booking movie, rail and air tickets, as they try to keep a hold on operational costs.
But while there were 752.19 million cellphone subscribers as at the end of 2010, there were only 80 million Internet users and 11 million broadband users in the country.
Mobile phone penetration stood at 63.22% in December, according to the Telecom Regulatory Authority of India.
Every 10% increase in mobile penetration contributes as much as 0.6% to the country’s gross domestic product; an increase in Internet penetration makes a bigger contribution.
Yet, India has missed its target for broadband penetration. In 2007, then president A.P.J. Abdul Kalam said that by 2010 India would have 40 million Internet users and 20 million broadband subscribers.
R. Chandrashekhar, secretary, department of telecommunications (DoT), said India missed the target because of difficulties in setting up nationwide connectivity, but that could be resolved with the roll-out of wireless technologies such as 3G services.
Another huge barrier to Internet access in India is the low penetration of personal computers (PCs).
“This is mainly due to the issue of affordability,” Citi Investment Research and Analysis said in a September report. PC penetration in India was at 4% of its population in 2009, compared with 20% in China, 89% in the US and 98% in Japan.
A basic computer costs at least Rs 10,000-15,000, whereas mobile phones, even 3G-enabled devices capable of fast Internet browsing, can be bought for about Rs 5,000.
The country’s largest telecom operators, Bharti Airtel Ltd, Vodafone Essar Ltd and Reliance Communications Ltd, which spent thousands of crores of rupees for 3G licences, are expected to start rolling out the services soon.
“The longer the spectrum remains unused, the more the notional loss on the spectrum,” a senior analyst with a Mumbai-based brokerage said.
About 15% of Internet users in India access the Web through their mobile handsets—“a trend likely to pick up with the increased take-off in smartphones and the advent of 3G,” Citi said in its report referring to 2009 data.
In a recent report on 3G-based mobile broadband in the country, PricewaterhouseCoopers (PwC) said this would be driven by the “introduction of new innovative applications, enhanced user experience, (and) decreasing prices of 3G-enabled handsets”.
It added that 3G subscriber numbers are projected to cross 107 million by 2015, growing at a compounded annual growth rate (CAGR) of 190% between 2011 and 2015. It expects 3G penetration to reach 13% by 2015.
The PwC report also said while initial subscription to mobile broadband services will almost exclusively be from the cities, by 2015 rural subscribers would comprise 24% of the overall 3G subscriber base. “Total revenue from 3G subscribers is expected to reach Rs 264 billion by 2015, growing at a CAGR of 150%, of which Rs 102 billion would be from data services.”
Increased access to Internet would have a significant impact on the lives of the large number of people in India’s villages.
The impact of high-speed broadband access can already be gauged. In early August, when the Himalayan region of Leh woke up to a devastating flash flood, cyber-cafe operator Mohammed Yusuf became an indispensable part of relief operations.
His cyber-cafe, connected by VSaT (very small aperture terminal), enabled local emergency services in the distant region request help from the army and Central government agencies. Stranded foreign tourists used his cafe to communicate with their families abroad.
Several crucial Internet-based applications are also being rolled out. India’s largest hospital chain, Apollo Hospitals Ltd, has joined hands with organizations such as the Indian Space Research Organisation, the Centre for Development of Advanced Computing and the Japanese government to increase the reach of its telemedicine programme.
About “80% of (the) specialists are in the cities and people in rural areas do not have access to them at all,” Apollo said in a statement at the time of announcing the deal.
While 3G services on mobile phones may not be equipped yet to handle complex applications such as telemedicine, the greater access to the Internet is expected to give a fillip to the country’s economy.
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First Published: Wed, Feb 23 2011. 10 39 PM IST
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