Home Asia-Pacific III 2008 Internet and growth in India

Internet and growth in India

by david.nunes
Author's PictureIssue:Asia-Pacific III 2008
Article no.:5
Topic:Internet and growth in India
Author:NK Goyal
Organisation:Communications & Manufacturing Association of India, CMAI, and Chairman Emeritus, TEMA
PDF size:290KB

About author

Mr NK Goyal is the President of the Communications and Manufacturing Association of India (CMAI); Chairman Emeritus of the Telecom Equipments Manufacturers Association of India (TEMA); Senior Vice President, Himachal Pradesh (HP) Chamber of Commerce and Industries and is actively involved in policy formulations and development of industrial policies specially related to the telecom and IT sector. Mr Goyal is also a Director on the Board of Directors of National Fertilizers Ltd. (NFL) and a former Director of the National Institute of Entrepreneurship and Small Business Development (NIESBUD). He has served the Government of Himachal Pradesh in various posts for more than 21 years, including as General Manager (Development) of Himachal Pradesh State Electronic Development Corporation Ltd. He has also served as President (Operations) for a telecom solution provider company and as a consultant to a telecom multinational. Mr Goyal, a Post Graduate in Science with 38 years’ experience in telecom/IT, has presented papers internationally on topics of public concern such as waste, radiation, telecom, IT, manufacturing, global peace and well being, excellence in performance, etc.

Article abstract

India’s phenomenal economic growth is due in great part to ICTs, especially the Internet, to open the world’s markets for its companies. Nevertheless, much of the benefit derived from India’s participation in the global service markets has been confined mostly to urban regions. Much of India’s population lives in rural regions that cannot be economically reached by traditional fixed communications. India is counting upon wireless broadband to bring the Internet to rural India and foster economic growth and opportunity.

Full Article

India is the seventh largest and second most populous country in the world. It is also the fourth largest economy in the world in terms of PPP (purchasing power parity). India is already the top country in the world in terms of the monthly growth of telecom subscribers (8-9 million) and second largest country after China in terms of subscribers’ base (270 million). India is poised to reach 512 million subscribers by 2010. A series of ambitious economic reforms aimed at deregulating the economy and stimulating foreign investment has unleashed India’s latent strength and made it a front-runner in the rapidly growing Asia-Pacific region. Today India is one of the most exciting emerging markets in the world. Skilled managerial and technical manpower that matches the best available in the world, and a middle class whose size exceeds the population of the USA or the European Union, provide India with a distinct advantage in global competition. The Internet has been around since the 1970s, crawling deep into people’s lives getting closer than ever before. VSNL launched Internet services in India in 1995. Public domain radio communication that offers voice services is a new addition to the market. The rapid rise of GSM made it a worldwide favourite; it covers almost 80 per cent of the market. Higher speed technologies like UMTS and IMT are available, but adoption demographics and rates have been dismal in comparison to GSM – having a solution does not mean that we will automatically succeed. We urgently need to understand the problem in local terms, so we can tailor a solution to the situation. Business demands on IT are increasing. Companies are facing increased competition for customer attention, market share and revenue. IT service providers are expected to play a more significant role in the overall performance of the enterprise. IT leaders have responded to enterprise growth by reducing costs, but that is no longer sufficient – IT must be a revenue driver. Businesses need to adapt to new technologies, make process improvements, and align their IT and business strategies to meet their goals. IT and IT solutions have helped insert India into the global economy. IT has acted as a window opening wide to the rest of the world, shrinking perspectives, ensuring that businesses and industries like manufacturing, media, etc. all have access to world markets. IT is beginning to penetrate rural India and offer opportunities to those in small towns and villages, broadening their horizons and offering them opportunities to earn their livelihoods that never existed before. Companies are planning to expand their IT infrastructure, investing not only in hardware, but also in enterprise applications and management tools. Indian industry spending on IT is expected to grow at a five-year CAGR (compound annual growth rate) of 14.8 per cent, exceeding US$36 billion by 2009. In a bid to encourage popular use of IT, the growth of high-speed Internet is essential. TRAI – the Indian telecom regulator came up with a consultation paper called Accelerating Growth of Internet and Broadband Penetration. Broadband access benchmark targets were established for the years 2007 and 2010. It is estimated that by 2010 around 20 million of India’s 40 million Internet subscribers will have signed up to broadband. There is a huge potential market to be tapped, but it will be complicated by the fact that 75 per cent of India’s population lives in rural regions. Current broadband speeds and percentage of subscribers Connection Speed Per cent of Broadband Subscribers 256 Kbps 96% 512 Kbps <3% >1 Mbps <1% To reach broadband subscriber targets and make broadband available for all, typically requires a high-quality copper and optical fixed infrastructure. A fixed broadband infrastructure that covered India’s vast rural regions would be prohibitively costly and time consuming to roll out. Hence, the government and operators are keen on using 3G and 4G wireless technologies such as UMTS, WIMAX etc, to bring broadband to these regions. Key telecom players like BSNL, MTNL, Vodafone, TATA, Airtel, Idea etc. are ready to roll out these services once the regulations are in place and the spectrum auction process is completed. At present, the main internet players are: Market Share Operators Subscribers Percentage B S N L 564,0191 50.82 M T N L 1,899,747 17.12 Bharti Airtel 815,360 7.35 Reliance 696,440 6.28 Sify 576,047 5.19 In India, as in many of the world’s growing economies, excitement about technology is higher than in the western economies where people are more accustomed to the new technologies. This enthusiasm for new technologies is very encouraging to operators, investors, Internet providers and governments alike, but these high expectations need cautious handling. For this reason, the Government of India is handling the auctions for 3G spectrum and WiMAX very carefully. The Government, though, has already announced its plans for 2.5 GHz broadband wireless and 2.1 GHz for 3G services. The auction is likely to be held shortly, and foreign operators are likely to be permitted to take part directly. All these technologies have a common goal: they all provide high data speed and mobility. All the access technologies are Internet friendly, and should eventually do away with traditional POTS (plain old telephone systems) which dealt with only voice on analogue systems. The guidelines issued by the Government of India’s Department of Telecom do not limit the number of licenses issued to ISPs (Internet service providers). These are available for the entire country, entire states or entire districts. The holders of United Access Service Licenses/ISPs are not required to obtain separate Internet Telephony Service Providers Licences. The broad term used will be: Internet Service Providers for all the Internet Service including Internet Telephony. Internet telephony used a total of 115.04 Million minutes during the first quarter of 2008. This gives a good idea of the potential of VoIP (Voice over IP) based services in the Indian market, especially since regular voice call charges in India are already the lowest in the world. With even lower-cost VoIP calling, the competition amongst cellular and ISPs will be a boon for India’s people. Demand for broadband Internet access in India is driven by a wide variety of services including: always-on Internet access; social networking; YouTube; mobile video conferencing; high definition video; IPTV tele-medicine and tele-education. The potential for exponential Internet growth is very high. The Internet is the most comprehensive communication tool in history, and it is binding the whole world into a small community. Today, the focus is moving towards increasing the efficiency of our networks. The NGN (next generation network) consultation body has started working on it. With Europe taking the lead in NGNs in the form of BT’s 21st Century project, it is time for governments and bodies around the world to act on it fast. The goal should be to make the Internet and it’s usage a general purpose technology (GPT) – a common tool to help the world interact.

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