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Indian Internet Penetration: Should we be happy with these number?

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Considering that India is a global hub for software outsourcing, it is surprising that Indian Internet penetration still remains quite dismal.

IMAI (Internet and Mobile Association of India) and IMRB international recently published their I Cube (Internet in India) report 2007 that showed number of internet users in India touching 46 million in September 2007 from 32.2 million in September 2006. During the same period, the number of active internet users reached 32 million.

Prima facie, the growth may look good, but honestly speaking even these ‘active’ 32 million Indian internet users comprise of 90% dial-up users (non-broadband users). This essentially means that there are only 3 million users who actually use internet regularly for activities other than email and instant messaging.

If you look at Internet penetration at all India level, it is next to negligible. In a country where we have population of 105 billion only 0.3% have used internet and only 0.03% have broadband connections. That is probably the lowest Internet penetration in the world. Even countries like Algeria (7.3), Zambia (4.4) and Azerbaijan (9.8%) have much higher penetration than India.

Another question is, with the total user base of 3 million broadband users how can hordes of India centric online startups be successful?

I am actually surprised that many Indian startups, especially social networking sites claim to have millions of registered users. How can that be possible?

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The chances of a dial-up users spending time on Web2.0 startups / social networking sites while blocking their telephone line are quite remote.

Here are some of the bottlenecks that stall the growth of Internet broadband penetration in India:

  1. Total number of Internet broadband providers is very few.
  2. Broadband connections are not easily accessible. In some cases, you cannot even get a broadband connection due to lack of infrastructure.
  3. Relatively expensive.
  4. Even though a connection should provide ‘broadband’, it is not better than a dial-up connection. The speeds provided on broadband are pathetic
  5. Frequent issues with downtime and lack of support
  6. Indian internet users still do not have concrete reasons as to why they should upgrade to a broadband connection
  7. And lastly lack of knowledge

I am getting a first hand experience of this. For last 3 days I have called up 3 different broadband providers here in Pune without any success. Either they do not provide the connection where I live or the tariffs are too high or they are going to take more than 7 days to provide the connection.

Nasscom, in its 2007 report that estimated number of broadband subscribers will hit 20 million users in the next three years and the number of internet users in India which is currently 40 million will rise to 100 million users by 2010 .

If this has to become a reality, Indian Government and TRAI really need to take strong initiatives to ensure broadband growth in India, otherwise they are going to put the fate of online startups in Jeopardy!

  1. […] Indian Telecommunication Industry is currently growing at an unimaginable pace. Normally, growth of Internet subscribers is directly relative to growth of telecom subscribers. However in India, Internet penetration has […]

  2. Sandeep says

    guess there is a very easy way to solve this problem. i am thinking its not the ability to browse that is the constraint here. Ooha from chennai is providing free internet through a kiosk infrastructure. they are basically trying to solve the facility to browse problem. check about them below…

    http://www.thehindubusinessline.com/ew/2008/02/18/stories/2008021850150400.htm

  3. bala says

    //I am actually surprised that many Indian startups, especially social networking sites claim to have millions of registered users. How can that be possible?

    er.. you missed internet cafes. the social networking traffic is mainly driven by college going crowd and most do it so from internet cafes. ten years back same thing happened to chat rooms now it is social networking

    //If this has to become a reality, Indian Government and TRAI really need to take strong initiatives to ensure broadband growth in India, otherwise they are going to put the fate of online startups in Jeopardy!

    it can be done by just cutting the cost. minumum broadband plans go for 250 rs a month, . unless the cost of getting a broad band connection becomes negligible like getting a post paid mobile, broadband wont get much numbers

  4. Jim says

    Interesting article!

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