TECH TALK: India Internet and Mobile: Issues and Numbers

The US-based VC firm, Kleiner Perkins, along with Ram Shriram, had organised a panel discussion recently amongst 15-odd entrepreneurs in the Indian Internet and mobile space to discuss three issues:

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

  • What is required to service 300 million mainstream connected Indian consumers with diverse usability requisites & language barriers?

  • What is the role venture capital can play in addressing these challenges?

    Because of the limited time, each person got an average of five minutes or so to get their points across. I figured that the questions were interesting enough to merit a longer and deeper discussion. This Tech Talk series will provide my views to the three issues. More broadly, it will focus on the challenges and opportunities in the Indian Internet and mobile space.

    Let us begin by putting together some numbers. I have put these together from a variety of sources and some extrapolation. (I have also put the financial figures in dollars that seems to have become the lingua franca for money-related discussion in India! For easy conversion: $1 = Rs 45; $1 million = Rs 4.5 crore)

    India Per Capita Income: $600 [Population: 1 billion]

    PCs: 18 million; growing at 5 million/year
    Internet users: 35 million; growth 50%/year
    Cybercafes: 100,000; accounts for two-thirds of Internet access
    Landlines: 45 million (declining slightly)
    Broadband users: 1 million (most additions in 2005)
    Broadband: $5 per month for 256 Kbps with 100 MB download
    eCommerce: $250 million; growing at 100%
    Online Advertising: $35 million; growing at 30%; 1.2% of total advertising spend

    Mobiles: 75 million; growing at 4.5 million/month; 77% pre-paid; 75% GSM; 25% CDMA
    Mobile Voice calls: 3c/min (avg); SMS: 2c/message
    In India, calling party pays for calls. There is no charge for receiving SMSes.
    GPRS-enabled phone: $80+
    GPRS Tariff: $8+/month for 100 MB download (plans vary across operators)
    Mobile VAS: $90 million; growing at 40%
    Mobile ARPU: $8.50 [Split: Voice: 70%; Rentals: 20%; VAS: 10%]
    Mobile VAS Split: Person-to-Person SMS, Caller Line Identification, Roaming: 70%; Content: 30%
    Content: Ringtones, Ringback Tones, Games, Wallpapers, Interactive Voice Response, Person-to-App SMS
    Content Providers get about 10-30% of revenue for their content

    This lays out the background for our discussion on the three issues.

    Tomorrow: Internet Challenges

  • Published by

    Rajesh Jain

    An Entrepreneur based in Mumbai, India.