Thursday, November 26, 2015

Internet Adoption is Not Simply a Case of Network Investment

Increasing use of the Internet in India will be driven by smartphone adoption, higher use of 3G and 4G networks, lower devices costs, more-affordable subscription prices and greater understanding of the value of Internet apps.

In other words, higher rates of Internet use will require investments and innovations both in the policy, business and technology realms. Networks reaching all potential users are necessary, but not sufficient.

Supplier business models arguably need to become more sustainable, consumers need to better understand the value of Internet apps and retail prices will need to be more affordable. And growth itself will cause new problems.

As has been the case recently, higher usage means more stress on networks, dropped calls being one clear example. That will be the case for Internet access quality of experience as well as usage climbs.

That will require more investment in spectrum and networks, which also means government policies that encourage investment will matter. And only government can release the additional required spectrum.

At the same time, consumers need to be convinced they need the Internet, and that is not universally the case, today.

By 2020, more than half of India’s people still will not regularly use the Internet, according to The Mobile Economy: India 2015 report. Most of the excluded population will live in rural areas.

The gender gap will remain, as well. Women in India are 36 percent less likely to own a mobile phone than men, which equates to 114 million Indian women.

Also, nearly 70 percent of the Indian population lives in villages, where network costs are higher than in urban areas, and sustainable business models are more much more difficult.

According to the Ministry of Communication and Information Technology, nearly 10 percent of Indian villages had no mobile coverage from any of India’s mobile operators as of March 2015.

A combination of a difficult terrain, characterised by mountains and sparsely populated farmlands, high energy costs and low income levels often makes it uneconomical for mobile operators to expand coverage to rural communities using conventional network deployment strategies.

A recent report by the GSMA analysed three broad strategies to address the coverage gap, namely network sharing, government support and alternative technologies (such as drones, balloons or satellites). The first two are particularly relevant to the Indian market, GSMA argues.

A study organized by a major mobile trade association might be expected to say that.

The cost of ownership of a mobile phone (which covers all the costs associated with both owning a phone and accessing mobile services) is a key factor in mobile internet adoption, particularly in India where nearly one-third of the population (360 million people) lives below the poverty line.

Data tariffs in India, at 0.5 to 0.7 cents per MB, are among the lowest in the world, but a significant proportion of the population is unable to afford this for regular internet use due to low disposable incomes.

A recent report by GSMA Intelligence found that many non-users lack awareness of Internet uses and available content. They do not feel the Internet is relevant or useful to them.

Creating awareness around the benefits of the internet and the availability of useful services covering a wide range of subjects, such as agriculture, education and healthcare, is crucial to bringing more people online.

Not coincidentally, that is why Facebook’s “Free Basics” program is viewed as so significant by Facebook and many others.

Most agree that mobile will be the primary Internet access platform in India. But that does not mean mobile will be the only platform. Fixed networks will have a role to play, both for access and backhaul, while new backhaul platforms might be more significant than some assume.

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