Given the mobile base of 100 million, the natural question to ask is: what are these users doing? From anecdotal evidence speaking to people, the answer comes down to search, consuming media (songs, videos), and social network use (primarily Facebook). The top sites in India are similar to those elsewhere in the world, if one looks at the data from Opera.
The challenge in this emerging world is that of monetisation. The only option for content creators is that of advertising. The other option – subscriber pays – has been a non-starter in India for two reasons: the operator revenue shares and closed platforms make it hard for content creators to make money by billing through the operator, and the mobile payments options through the banking network are so regulated and cumbersome to make them almost unusable for small payments.
What is clear, though, is that users are moving from one world of value-added services to another. Ringtones, wallpapers, CRBT and the ilk are being pushed to the background as a new set of services and needs comes to the fore. A next-generation of mobile value-added services awaits us.
A new world of mobile data is emerging. It is being driven by the rise of better phones, faster networks and an increasing variety of content applications and mobile internet portals. While India is not the first country to experience this new world, it is unique because it is one of the few countries where the mobile is becoming the primary (and in many cases only) device in people’s lives.
In India today, there are an estimated 100 million people who already use the mobile Internet. This is an extrapolation from the datapoint provided by Vodafone that it has 32 million people using the mobile Internet. Airtel would probably have a similar number, and other operators put together would add an equal number.
The PC internet in India has about 80-100 million users, according to recent surveys and estimates. While there is some overlap between the PC and mobile Internet users, it would be fair to say that the Internet in India now has about 120+ million unique users – about 10% of the population. Going ahead, this user base should rise even faster.
From a series I wrote a year ago:
Being part of this movement to help transform India is what I propose to do going ahead. We cannot sit by silently and watch the extraction and exploitation continue. It is only when some among us start getting outraged at what we see happening that the wheels will be set in motion. But this has to be done in a planned way. One has to bring the inventiveness and energy of a startup to this process. There is one path to success, and that needs to be figured out.
When we look back at India since the 1930s, it is a tale of missed opportunities. There are many occasions when we could have taken a turn for the better, but poor decisions by our leaders failed us repeatedly. Some were plain stupid, others were motivated. We cannot afford the luxury of time any more. There are too many futures at stake now – our futures.
The good news is that India can be transformed. And we can make this happen during our lifetimes to bequeath to the next generation a country they can genuinely be proud of. As citizens of India, some of us need to step forward to lead this effort.
Government and Politics: Interference and Opportunity
2011 will be remembered as the year that the government started cracking down and limiting the freedom of speech on the Internet. Perhaps shaken by the success of the India Against Corruption mobilisation via mobile and social media, the government fought back by cracking down on social media, TV channels and SMS. 2012 will see various court battles to determine whether India sees censorship in the China model, as one of the judged hinted.
India’s mobilisation and politics can also be changed via the coming rise in digital users. IAC was a good showcase of what can be possible. Given the large base of urban Middle India and the tools that they have to now organise, there is no reason for this segment to continue to stay apathetic to social and civic issues relevant to the future of the country.
So, even as India’s Internet comes of age finally, our government, digital infrastructure and regulation hold our usage back. I hope that 2012 sees these obstacles go. But given past experience, I am not optimistic. And yet, we as consumers will find our own paths to make the digital world an even greater part of our life.
Marketing: Multiple options
Digital media options are proliferating. Marketers now talk of paid, owned and earned media. Paid media is the search and display ads that companies run. Owned media is the properties that are created – for example, Facebook pages and mobile apps. Earned media is the multiplier effect from users spreading the word on their own through social media and other mechanisms.
There is mobile marketing with all the various options – SMS, voice, mobile Internet and apps. There is also social media. Email marketing is also growing rapidly in India. What is perhaps lacking is more innovation in how all of these options can be better integrated together. For example, TV advertising could include opt-in options to drive permission marketing to the mobile.
As digital marketing options proliferate and ever greater percentages of the budgets shift, companies will demand even greater accountability of their spends. So, analytics will emerge as a by-product of the process with even sharper targeting of users. There is so much information that we are leaving in trails on the Internet and sharing that the world of microtargeting is now becoming a reality.
Entrepreneurs: Optimism Abounds
The past year has seen at least a few private companies like Flipkart and InMobi with valuations rising to the magical billion-dollar mark. eCommerce companies of all shapes and sizes have been at the receiving end of dollops of dollars. That is good. While there will be many failures, there will be a large array of entrepreneurs who will learn a lot from this process. Multiple models will be tried and morphed, and good always comes out of such experimentation.
A decade ago, there was a similar optimism but that window was too short and the user base was simply not there on the Internet. This time around, it is for real. There is a much better pipeline of funding available for entrepreneurs now – from individuals, angel networks to VCs. All we need to keep this pipeline running is a continuous flow of exists through M&As and IPOs.
What we need in India now is more investments into localised content and services. This will help drive more usage and advertising. The ad spends on the Indian Internet at Rs 1,500 crore annually are still now large enough to sustain a vibrant content ecosystem. Local languages and content will be critical in the next phase of the Indian Internet.
Mobile Payments: Mired in regulation
One of the big boosters for monetisation on the Internet and eCommerce can come from enabling mobile payments. Here, regulation by RBI and the payout regime from the DoT has ensured that mass-scale mobile payments remain a mirage.
Imagine being able to pay for a book you bought by just having it added it to the phone bill (or being deducted from a prepaid amount). If this process is simplified, then even an SMS sent by a merchant can turn into an actionable transaction with the consumer just smsing a Y to complete the purchase.
To make this happen, while the theory of mobile wallets happens, the process is simply too cumbersome. For sub-thousand rupee payments, we need a simpler process. Operators should have not to pay service tax and revenue share to the government on these charges. They can take a transaction fee (3-10%), and pass on the rest to the merchant.
Unfortunately, 2012 is unlikely to see much change on this front.
Bandwidth: Frozen in time
India’s data pipes scenario doesn’t look that good in the near-term. The wireline networks are almost entirely dependent on a broke BSNL and a meandering MTNL. As a result, we are not seeing the high-speed networks that should have been ubiquitous by now. By not unbundling the local loop (last mile), the government has forced private players to take the wireless route even for the last mile.
Reliance’s impending entry with their 4G networks will change the game. But it will take a couple years for that to happen at a national level. One would have thought that the existing 3G mobile operators would have fast-tracked moves, but that hasn’t happened. So, with BSNL and MTNL not doing much, RIL’s entry still some time away and the 3G networks not living up to their promise, things aren’t changing much.
Bandwidth remains critical because the Indian Internet usage needs to switch from intermittent to always-on, and from low broadband (sub-1 Mpbs) to real broadband (multi-Mbps). Until that happens, the usage will remain somewhat muted. For applications like multi-player gaming to take off, high-speed networks are critical.
Video : Variety and Vroom
If Facebook is synonymous with social networking, YouTube is the same with video. In terms of viewers, it is the 10th largest TV channel in India, if one sees it thus. As bandwidth costs have become flatter, video usage has increased, both on wireline and mobile networks. Hundreds of movies and tens of thousands of snippets are creating a varied video experience.
In 2012, we can expect much more Live Video. Already, one can see many events like – including the ongoing India-Australia series (should one want to, of course). Political rallies, some conferences are now being live streamed over the Internet, thus enabling reach independent of geography.
Video brings things alive in a way text simply cannot. And this opens up huge possibilities in India. We will start seeing made-for-Internet “TV channels” which bypass the investments required for distribution via cable and satellite. This has the potential to change many industries in India, from education to politics.
Continued next week.
Mobile: Missing Data
The mobile revolution in India has seen an amazing decade of growth. With nearly 900 million SIMs distributed to 500+ million Indians, the mobile has done for communications what the landline telephone never did. The voice revolution in India is finally complete. Pretty much everyone who chooses to be connected can do so for a small investment.
The next upgrade will come through the use of Data. This is where the operators’ 3G strategy has been confusing and disappointing. They haven’t really pushed 3G hard enough. The networks too are not delivering the speeds that they should. So, even as have devices capable of doing so much more, the usage of data and the ecosystem of content and applications is not growing fast enough.
Data plans for postpaid users need to become much more rational. To charge Rs 600 as operators want to do on a Blackberry data connection is irrational, even as they offer cheaper plans for BBM and email. Operators should replicate the i-mode model of open platforms and micropayments to drive the ecosystem in India. That is where the Rs 500+ data ARPU is going to happen.
Social media, led by Facebook’s virtual monopoly, is driving the daily use of the Internet in India. One never wants to be away from friends and the extended family for too long! Old classmates are being found, photos are being shared and tagged, the day’s trivia make up the personal headlines. Social media is filling in life’s free moments – both on the Internet and on the mobile.
In some ways, Facebook has become what Windows was in the 1990s – the new platform. The magnetic pull that it exercises with everyone else being there becomes hard to resist. Sites like Linkedin are doing the same for professional connections. So, no one is more than a few hops away.
The implications for other portals is that they have to start putting people at the centre. A new book, “Grouped” by Paul Adams, explores this theme in much more depth. The result is the news we read, the searches we do, the eCommerce portals we browse, the videos we watch – all of these will start having the filter of the social graph that we have so meticulously built. The web will become personal, through the lens of our friends.
Undoubtedly, the biggest story on the Internet in India is that of the dramatic rise of eCommerce. People are becoming comfortable buying all sorts of things over the Internet. Companies have also set up better logistics for distribution and collecting money on delivery. Consumers are willing to trust sites since they can choose to only pay on receipt of the goods.
For an India that is urbanisng and hasn’t had as much choice, especially in smaller towns, the Internet eCommerce sites are a godsend. More than FDI in retail, it is these sites which are the real disruptors for kirana stores. Daily deal sites and discount portals which offer branded goods at lower prices means that eCommerce also becomes a fun activity in the search for the best price.
The challenge for Indian eCommerce sites like Flipkart and Snapdeal will be the investments that they will have to do to fill in the missing elements of the Indian logistics value chain. Amazon can rely on UPS for delivery and the credit card companies for cash collection. Indian companies have to do all of this themselves for the most part to ensure tighter control on delivery, as also set up warehouses closer to the customers. Much of this should improve as third-parties start offering all of these specialised services.
For now, discounts and free shipping supreme, giving Indian consumers a veritable treat if they choose to buy online.
I used to do a Trends list every year until a few years ago. Then, inexplicably, I stopped. Perhaps, it was more out of disappointment at the slow pace of change in the Indian Internet and Mobile Data space. Things are finally changing, as users, money and tech are helping bring about an acceleration in the use of the Internet in India.
The last few years have seen an acceleration in the use of the Internet in India. Starting with the convenience of ticketing (train, air, movies, bus) to the use of social networking and video, the Internet is becoming part of our daily lives – but with services that didn’t exist a decade ago. So, the Internet in India is following a different trajectory from what happened in the US, where it was the content sites that first rose to prominence.
In the next couple years, the Internet in India will reach over 200 million users with the majority of them accessing it via their smartphones and tablets on 3G and 4G networks. Social networks will current more than 100 million of us together. Video use on the Internet will rival the reach of TV’s most popular channels.
In this changing world, let us take a look at key trends for 2012.
From a series I wrote a year ago:
India is a democracy. In the words of Abraham Lincoln, the country has a “government of the people, for the people, and by the people.” But Indians have to understand that most of India’s maladies are a consequence of their abdication of the responsibility that necessarily accompanies the rights Indians have in a democratic system. Democracy is not just about voting but rather informed voting. Citizens have to act collectively against those who have brought ignominy and shame to the country. They have the responsibility to clean up the corruption. This they can do most effectively by refusing to vote for criminals.
The news is not all bad. Citizen groups are springing up that seek to address the problem of corruption. It is a collective problem that can only be solved through the mobilization of informed voters. Among many others, one such nascent group, called “United Voters of India,” is an association of people who agree to vote only for candidates who are capable and clean.
Our problems have to be solved within the system through the democratic process. The good news is that advances in information and telecommunications technologies have shifted the balance of power from the government to the people. People now have the means to inform themselves and collectively organize to force reform on the system. The telecom scam should serve as a wake-up call to all Indians that it is time to take action. If it does that, perhaps the scam will have served a positive purpose after all.
One India I have been thinking about is taking a few days to actually travel through Uttar Pradesh to get a better sense of what is happening. Maybe, even attend some of the rallies of the leaders. It is an India that is very different from what we in Mumbai are used to. Even though we have the municipal corporation elections in mid-Feb here, they are no match for the excitement of what is happening in UP!
Another aspect I am curious to understand is the impact of Urban Middle India. Is there really an aspirational middle class that is willing to look beyond caste and vote for a positive agenda (in case one exists)? Is this class large enough to really make a difference in the electoral outcome? Or has this class, like we have been told, switched off and seceded?
All in all, we are in for an exciting couple months ahead, culminating in the budget. And once that is over, we need to get ready for the next set of elections. We (as in our elected representatives) need to elect a President and Vice-President. And once that is over, we are on to Gujarat and the next set of states. Election excitement aplenty! Hopefully, in all this, we will also get some reforms and decisions to move India forward.
What is going to be interesting is what happens once the elections results come out on March 4. First will be the spin each party gives to claim victory. Football-like results will be trotted out – 3-2, 4-1, or whatever. Once we get past that, we will need to get down to the harsh realities of what comes next.
Will there be a re-alignment of forces at the Centre as perhaps an SP replaces the TMC? If the Congress does really well, will it go for a mid-term poll? If it does badly, will it replace the Prime Minister? Will the Budget give a push for big-bang reforms as many from the world of business have been asking for?
Hopefully, the elections will provide some clarity on the way forward. What hits the economy hard is stasis. India cannot afford another 2-3 years of policy paralysis and governance deficit. We are digging ourselves into a hole that is getting deeper by the day.