The scramble to bring internet to more Indians

SANJAY VIJAYAKUMARSRIRAM SRINIVASAN

February 15, 2015

Silicon Valley has many of the world’s most innovative and influential Internet companies. India has millions of people untouched by the Internet but nonetheless potentially accessible. Put the two together, and it is inevitable that Internet giants can’t help but think about India’s untapped population.

That’s precisely what was on show last week – Facebook launching its solution to spread Net access in the land of a billion-plus people and Google joining the race with an outline of its own plan.

The Mark Zuckerberg-led Facebook got together with Anil Ambani’s Reliance Communications to launch in India internet.org, a service that offers subscribers free access to a pre-selected bouquet of Websites. Google’s plan, as outlined during the Nasscom India Leadership Forum toward the fag end of the week, is to use helium balloons to connect people to the Net.

Last year, their rival Microsoft announced a ‘white spaces’ project — a plan to use unused TV spectrum to provide connectivity.

That’s quite a high-profile list of companies trying to get Indians connected to the Internet. And it should gladden those who bemoan India’s relatively poor Internet record. The country’s Internet penetration is less than 20 per cent, whereas the likes of China, Russia and Brazil have got close to half their populations connected to the Net. The comparative percentage for developed countries such as the US, the UK and Japan is over 80 per cent.Why India?

Never mind if these efforts are philanthropic or commercial. What’s true is more Internet is good for people; largely, if you disregard privacy issues. More Internet is also good for a country’s GDP, as a 2012 research paper from Tuck School of Business at Dartmouth College pointed out. It indicated up to a 0.46 percentage point increase in the GDP of low- and middle-income countries when a 1 per cent increase in broadband penetration is achieved.

But more significantly, more Internet is good for the Internet companies. As industry analyst Horace Dediu pointed out in his blog last year, Google’s revenues are positively correlated with the world’s Internet population. So, it makes sense for Internet companies to do everything to increases the size of the pool as also improve it. And if that involves, playing a part in providing infrastructure, so be it.

The Internet companies have launched or are planning to launch numerous initiatives toward this. Google Fiber, which seeks to provide “fiber-to-the-premises” at 100 times the broadband speeds of today, is one such. Facebook is said to be considering the use of drones and satellites to connect people.

Geographically, it makes sense to look for virgin territory. China has more people than India but its user base is already nearing 650 million, twice the US population. Also, internet is more restrictive in China to outside players than many other parts of the world, and there are lots of technical and social filters. In this context, India fits the bill perfectly. A recent Morgan Stanley report predicted India’s user base to exceed 600 million in 2020, which means 46 per cent of the population would have been covered. What’s more important is that, by that time, the total Internet market would have risen by a compounded annual growth rate of 43 per cent to $137 billion. That would represent about 7 per cent of current GDP (from 0.6 per cent now). To be part of India’s internet story is lucrative.

It’s, however, going to be far from easy. The initiatives of the Internet giants may need a lot of regulatory clearances.

Facebook’s internet.org, for instance, has already been criticised for violating Net neutrality, a principle that all bits of data must be treated equally. The way internet.org presents just a small selection of websites, with the choice not in the hands of the user, is called zero-rating, a practice that has been banned in countries such as Chile.

In India, the regulator Telecom Regulatory Authority’s stance on this is awaited. Internet players, including Facebook and Twitter, have in the past done individual deals with telecom players in the past to offer subscribers such free deals. It isn’t clear how Internet players and telecom companies are sharing the burden of the freebie, and if this will be sustainable in the long run.

But like Facebook, others would like to figure out a way to work with telecom companies. They are going to be key partners, as 92 per cent of internet consumption in India happens through mobile wireless (mobile plus dongle).

Google’s plan, more technologically audacious, according to its Web site description, is to use “a network of balloons travelling on the edge of space, designed to connect people in rural and remote areas, help fill coverage gaps, and bring people back online after disasters.”

The Microsoft project involves working with unused spectrum of Doordarshan and the government. All three tech players have touched base with the government with respect to their Internet initiatives.

Interestingly, the government itself is working on a mega plan to make internet ubiquitous in India. Called Digital India, the project involves 7.5 lakh km of cable over the next three-and-half years to provide broadband in every village of the country.