Yeishan Goel spent New Year's in Shanghai. A frequent traveller, Goel has had to cope with language issues in non-English speaking countries and Mandarin is definitely not part of his lingua franca.
Instead of asking random people for directions using sign language, this time around his iPhone 5 came in handy. Goel used the Google translator tool to get around the city, find places to see and eat in, when hailing cabs, for museum visits and tips on using chopsticks. Like most smartphone users, for Goel, 31, the phone is a constant companion. However, unlike for most users, for Goel the iPhone 5 has replaced the laptop and desktop almost completely.
"From the morning alarm to booking travel tickets, hailing cabs, eating out, shopping, games, reading, I do it all via the 20-odd apps on my iPhone," says Goel, CEO of Travel and Hospitality Representation Services (THRS), a Gurgaon-based consultancy. "As long as I have data [read mobile internet], I don't need to communicate via voice."
By March this year people like Goel would have swelled to about 155 million and later in the year to 185 million. That's the expected base of mobile internet users in the country out of the 875 million mobile phone users, according to Internet and Mobile Association of India (IAMAI).
Says Viral Oza, director, marketing, Nokia India: "Even after 17 years of internet we just have 15 million fixed line broadband users. Mobile internet is the way to go." Citing an Avendus Capital report Oza says out of the 150 million internet users, 86 million surfed on their mobile devices in 2013.
Consulting firm AT Kearney says by 2020 there will be about 400 million mobile internet users and 900 million monthly app downloads. By then 75 million children will use apps for education, from almost zilch at present. Already, about a third of Google searches land on mobile, a third of Facebook users log only from their smartphones and a similar number watches YouTube videos on handhelds. Adds Sashi Shankar, chief marketing officer, Idea Cellular: "The country is poised for a mobile broadband revolution."
Low-cost devices and data push
Such growth is expected not only because devices are better and cheaper, but also because cost of data access has fallen almost 90% in the last one year. And services like downloads are as low as Re 1 per video. Says Subho Ray, president, IAMAI: "Social networking, e-mails communication and easy and cheap music downloads are pushing up the data traffic on mobile and use of mobile internet services (see Services used...)."
The gamut of devices in the market coupled with falling cost of internet usage on mobile is attracting new users. For instance, Nokia has launched 16 Lumia devices, 10 last year and two just last week. And don't forget 19 of the more affordable Asha phones launched in the past two years. Says Oza: "These cost between Rs 4,000 and Rs 7,000 with models like Nokia Asha 301 at Rs 5,500 being our lowest cost 3G phone." Local handset maker Karbonn has launched 50 smartphones in the past two years from as low as Rs 3,500 to Rs 20,000.
Says Shashin Devsare, executive director, Karbonn: "3G services that started in 2012 led to the surge in demand as quality was far better than the earlier generation of services."
On 3G the download speeds are about 8 mbps compared to the earlier generation of GPRS and EDGE services of a mere 14-144 kbps. "And now with 4G, users will have five times faster downloads than they experienced on 3G, pushing them to surf internet on mobile phones," adds Devsare. While download speeds have multiplied, the cost to download has dropped dramatically — from two paise per kb to two paise for every 10 kb for both 2G and 3G services. That's a drop of 90% in 2G rates and a 33% reduction for 3G services.
This is having a cascading impact on mobile internet use. Says Bipin P Singh, CEO, Mobikwik, a mobile wallet services provider: "With such low costs, the desktop is not relevant now. Besides, in 2013, apps started taking off and that's made a difference. People are getting to know the difference between an app and a browser and experiencing the ease of use of the former; and that's increasing mobile internet use." Mobikwik, whose services help pay utility bills or shop online, has seen its app downloads double to two million in less than a year.
Airtel, the country's largest mobile service provider with 283 million subscribers (till November 2013), has seen data traffic revenues increase from 7.4% in the first quarter of 2013-14 to 9.2% in the second quarter. At Idea Cellular data revenue increased to 8.7% of total revenue in the second quarter of this fiscal year from 5.4% a year ago.
Hiccups on the way
After the glacial pace of growth of the internet user base in India, mobiles will ensure that India becomes the second largest internet user country, behind China, overtaking the US, which has about 170 million internet users. However, the quality of that connectivity means not everyone can do everything on their mobile, much like what users like Goel (who have high-end phones) are able to do. That's because of the combination of the type of device and the use of services.
Most mobile phone users (about 90%) have a device that costs below Rs 5,000 and these are either feature phones (with no browsers) or good only for 2G services. Says Devsare: "Entry-level smartphones are 2G based. You won't get a 3G smartphone below Rs 4,000 as the chipset cost is higher for 3G and royalty has to be paid to the service provider for a 3G phone."
Besides, the entry-level phones have a limited screen size, below 3 inches, too small to easily read text larger than a tweet, watch a cricket match or browse a shopping site.
Another problem is the lack of local language content. Says Ray of IAMAI: "Downloading songs in any language is not an issue as it's a data download. But filling up a form in say Tamil or writing a local language email is a challenge." Adds Devsare: "Half a billion mobile internet users won't happen without localization of both content and devices [or user interface]."
Even now, the number of users subscribing to a 3G plan is limited. "While we have come a long way in a short span, there are only 22 million people using the better 3G services, and this is a challenge to growth of mobile internet. For greater adoption data plans have to be more accessible," says Oza. To overcome some of the challenges service providers like Idea Cellular offer their own range of 3G smartphone starting at Rs 5,000.
A global comparison shows that mobile internet penetration in India is still low. Idea Cellular's Shankar cites an ITU report which points to higher mobile internet penetration than India — China (17.2%), Singapore (123%), Japan (113%) and US (75%). "We need innovation in affordability of devices and availability of content and applications," Shankar adds.
In the BRICI countries (Brazil, Russia, India, China, Indonesia), with a combined population of more than three billion people, there are only 440 million personal computers. An internet connection in the pocket is far more convenient and cheaper. According to a World Bank study, every 10% increase in mobile phone penetration yields an extra 0.81% of annual economic growth. Mobile internet will only accelerate growth.
Shalini Verma, principal research analyst at Gartner, an advisory firm, believes India has a very small share of the 3G subscriber base. "In India one in five mobile internet connections is a 3G connection while in South Korea 4G connections make up more than half the mobile connections and the rest are 3G. The availability of more affordable smartphones has certainly led to growth in mobile internet use. By 2017, we expect 40% of the total mobile connections to be either 3G or 4G in India."
While challenges persist, Verma believes "once users get hooked to mobile internet they are unlikely to ever give it up, much like in emerging markets like Thailand and Malaysia. There will come a time when mobile internet will become an essential service like water and electricity."
While such a necessity will be great for people in the business of making devices and selling services, today even diehard iPhone users like Goel have to fall back on the good old laptop or desktop for a few tasks. Says Goel: "I do everything on a mobile, but opening attachments and editing documents is better done on a large screen. I believe future phones will have projection technologies built in to enlarge a smartphone screen. And when that happens, I'll definitely not need the laptop."
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