Internet in India: Somehow it's a free resource that is dearly priced

We're a young nation with an agile population. A vast majority of us Indians are still in our youth. We're a nation of millennials. And for millennials, Internet is at the foundation in their hierarchy of needs.

India is an important market. In fact, India is the market to be in. It has immense potential. India's population isn't a well guarded secret. It's now our greatest asset. Besides, planned or unplanned, our population pyramid is textbookish perfect. We're a young nation with an agile population. A vast majority of us Indians are still in our youth. We're a nation of millennials. And for millennials, Internet is at the foundation in their hierarchy of needs.

Modern urban India, which comprises its youth has its share of roti, kapda and makaan. The quality may differ. But the basics are met. What we don't have is – Wi-Fi and Internet – that is crucial to human life. Irrespective of whether you're an MBA grad or not, business 101 says that when there is immense demand, there exists immense opportunity. That's why we hear there's immense opportunity and potential in the Indian market.

If there exists immense demand, there ought to have been surge in supply, right? But is that what you really experience. It still feels like I pay through my nose for data. A good operator provides a relatively decent cap, with a glitch-free Internet experience on certain times. But as soon as the standard plan is over, we're hit with FUP or we need to pay more for data. This is exactly where my dilemma lies.

Why pay more?

I stand the risk of being too selfish or self centred when I ask for unlimited Internet. Didn't everyone think the same way about broadband Internet? Ever remember paying thousands a month for a 1 Mbps connection? That's the predicament of my generation. We've seen mass adaption pulling broadband tariff, south. If prices could fall exponentially for wireline broadband, what's the problem with mobile Internet? The rate at which adoption has been happening is out of the world. And I'm especially surprised that we didn't reach the tipping point yet, where mobile data gets commoditised.

Internet in India: Somehow its a free resource that is dearly priced

A street vendor in Philippines accesses the Internet on his mobile phone. Image Credits: REUTERS

If there's immense demand and Internet service providers are able businesses, why haven't they identified this immense potential? And effectively, why hasn't supply-demand equilibrium been established?

The problem with statistics

India is known to have the lowest telecom tariffs in the world. But as someone who has to pay for data plans here, and avid users would tell you there's a lot that can be done by operators. Let's take a closer look at the numbers. According to numbeo, the average price of a 10Mbps Internet connection in India with unlimited data is approximately Rs 1,200. That's a great deal when you compare it to the average price of a 10Mbps Internet connection in countries across the globe. It's a no brainer. Internet in India is among cheapest in the world.

That's for a wireline connection. The dynamics change a bit when we go mobile. On deeper analysis, we realise all we ever know of telecommunications in India is that it has the lowest voice tariffs in the world. This changes when you consider mobile data. Since operators look at sustaining average revenue, income through voice becomes redundant. Growth comes from data. In order to retain or grow average revenue, the competition gets stiffer with data tariffs.

CostOfMobile

Image: World Bank

In a report, the World Bank compared the cost of using a mobile phone in nations across the globe. The data is compared as a percentage of monthly GNI, the average cost in USD (as per market rates) and USD (PPP). For the sake of analysis, let's just compare the cost as a percentage of gross national income, which is indicative of the purchasing ability of the citizens of the respective countries.

From the data, India, Pakistan, Bangladesh and Bhutan stand at similar levels, which is far lower than the rest of the world. However, as a percentage of Gross National Income, the consistent levels indicate how dear the pricing is on the pockets of consumers. Take Israel, for instance, with an average market rate of $35.34 for a cellphone plan per month. In contrast, India is at $2.80, which is great. But Israelis pay approximately Rs 76 for a 1.5ltr of bottled water. Similarly, the average income after tax in Israel is a little around Rs 1.5 lakh. Hmmm. It hurt me when I read that initially as well. Point being despite having a higher tariff, it's a lesser pain for Israelis overall, as compared to Indians despite the lower tariffs we have.

Data hungry nation

I doubt any nation loves the Internet more than India. Google’s report on its free Wi-Fi offering at railway stations across India is an important case study of how data hungry citizens are. “It’s heartening to note that even though users are in transit catching their trains and moving to their destinations, the average consumption per user on the network is 15 times the data they would consume on a 3G pack in a day, which today is the most dominant means of access to the Internet in the country,” said Google in its findings. And no, not everyone is just watching movies or listening to music.

Google RailWire

When I first discussed this with friends, they found it surprising as well. But think about it, according to a study on the same parameters, there's scope for a 75 percent reduction in tariff in India! I'm sure you'd agree, that monthly data charges on your smartphone feel expensive as you begin using it liberally. YouTube, Facebook seem harmless, but when you're charged on a 10kb slab, they become expensive. Even if you have cheap rentals and voice tariffs, it's data that hits you the most. Briefly, operators tried taking the diluted route that Free Basics pitched, but that soon was axed by the Indian regulator.

Back in 2009, reports suggested there was no scope for reduction in tariffs. Since then, we've come a long way. When companies such as Google offer free public Wi-Fi, we all agree, it's a much needed service. We all love free Wi-Fi. That's when we do our OS updates, app installs, multimedia sync. Because, we all love taking pictures of food, pouts and pups. Then adding them to Instagram, Facebook and the numerous networks out there. All of this consumes data. But once basic use is done, there's an FUP. Beyond that, it's a thorny path, that's expensive to tread. The same resource. Available for free, and at a hefty price. I wish some correction happens.

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