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TECH TALK: India Internet and Mobile: Internet Challenges

February 7th, 2006 · 2 Comments

We would like to explore the salient challenges facing businesses predominantly driven by Internet & Mobile.

The Internet user base in India is said to exceed 35 million with two-thirds of that access coming in from cybercafes. I believe that for the Internet to play a significant role in our lives much of that access has to shift to homes. Only then will people start building their lives around the Internet. Availability of access away from home for a few minutes a day is not how the Internet usage will take-off, even though the user base may keep growing.

There are many bright spots on the Indian Internet. Jobs and matrimonial sites have done exceptionally well. Ticketing (both for railways and airlines) has taken off in a big way, as has online trading. But whats needed for the Indian Internet is a positive feedback loop of an increasing user base and increasing usage way beyond whats there today. For this, there are four key challenges that need to be addressed: PC installed base, broadband availability, content and payments.

The installed base of PCs in India is growing from its base of about 18 million, but not quickly enough. That is primarily because of the ADAM problems that I have discussed earlier: affordability, desirability, accessibility and manageability. PCs are still quite expensive (the Rs 10,000 PCs are barely usable), the importance of the PCs in daily life has still not been driven home, access to PCs is still not ubiquitous to build connected lives around it, and finally, users have to be reasonably competent to manage their PC (especially to prevent viruses and spyware). All of these four problems need to be solved simultaneously.

Broadband is one of the big disasters in India. Not only do we need to redefine the lower speed limits of what what is considered broadband, we need to make it available to people rapidly and for an all-you-can-eat pricing. Currently, we have speeds well under the official limit of 256 Kbps masquerading as broadband. In places like Mumbai, it takes weeks to get a connection from the local telco (MTNL). The low entry price point of Rs 200-250 ($4.50-5.50) per month is only applicable if one limits downloads to less than 100 MB. Beyond that, it is metered. Without unbundling of the last mile, it will still be some time before the private ISPs can provide affordable broadband access.

The content and services available on the Indian Internet still leave a lot to be desired. Part of this is due to a historical accident the funding window for start-ups in the space during 1999-2000 was too short for many businesses to get created. Even though there are signs that this is now changing with venture capital starting to flow in, India needs at least a hundred different start-ups to start building out the relevant content for domestic users.

Finally, we need payment options beyond credit and debit cards. It could be pre-paid cash cards or it could be via mobiles. What is needed is that both customers and merchants feel comfortable paying and accepting payments via the Internet. In the US, the combination of address verification and credit reporting agencies keep fraud in check.The same is not the case in India. Without the ability to complete transactions, the consumer Internet will remain more info-centric rather than a utility for people.

Tomorrow: Mobile Challenges


TECH TALK India Internet and Mobile+T

Tags: Tech Talk

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