While the Internet growth story in India seems promising, individual users are yet to play their rightful role. Individual consumption is placed at 29 per cent — much lower than the international figure of 45 per cent, which means the Internet economy in India continues to be driven by large companies. By 2015, the Internet sector is projected to become bigger than the education sector, and equal to the health care sector in terms of GDP contribution. In many sectors, the actual impact of the Internet on the economy remains disguised.
Emphasising that a multistakeholder effort across government, business, citizens and especially youth in semi-urban and rural areas is crucial in order to realise the full potential of the Internet economy, McKinsey urged participants expected to converge on New Delhi on October 4-5 for the multistakeholder conference on Internet Governance to discuss the five key barriers that the study believes will come in the way of rapid Internet penetration. Agreeing, Communications and IT Minister Kapil Sibal said “the conference should peep into the future and settle the present where issues of Internet governance are concerned,” while recognising the Internet as the quintessential representative of democracy in the world.
The conference, which has attracted the participation of roughly 60 experts ranging from government, civil society, academia, media as well as students, from India and overseas, will discuss these challenges and submit a report to the government as an input to inform future policy dialogue.
Agreeing that a multistakeholder effort, aimed at discussing all issues relating to Internet governance, is crucial, Telecom Secretary R. Chandrashekhar suggested that all inter-linked issues be debated in detail.
“While internationally the multidimensionalism of the problem and views is well recognised, perhaps in India we have not had as intense, as frequent and heavily participative discussions. That phase is just beginning,” he said.
According to Anu Madgavkar, India Head and Fellow at McKinsey Global Institute, the first key barrier to Internet growth is the absence of low-cost and high speed connectivity in small cities and villages. Rural Internet penetration which is at an abysmal 2 per cent, will have to quadruple backed by 2G/3G spectrum allocation and the government’s Rs. 20,000 crore Bharat Broadband network program to reach 2.5 lakh village panchayats within the next year. Several announcements related to this project are expected in the next few months.
The second hurdle is the total cost of ownership, including connectivity, devices and applications. In Purchasing Power Parity (PPP) terms, cost of broadband in India today is 4-6 times that of China and Brazil and 20-30 per cent higher than countries like Malaysia and Vietnam. To influence prevailing data tariff schemes is a critical and challenging task for the Telecom Regulatory Authority of India (TRAI) since the next 350 million users will come in a much lower affordability bracket. Tariffs in India are decided exclusively by the regulator, and therefore affordability of Internet or lack of it falls entirely within its jurisdiction.
The third key element, beyond reach and affordability, is digital literacy. In India, digital literacy in many cases is the first exposure to any literacy for young users in semi urban and rural areas. Like mobile phones which have promoted English in numbers, the Internet is expected to promote digital literacy. Local language content, image-based interface and local language operating systems, big investment in computer literacy training and entrepreneurial models which create “para-technicians” can become the intermediaries between the web and those who use it. This is a key area for government-industry PPPs.
Widening and extending in breadth the application services that are offered on the Net is the fifth challenge. Agriculture, education, healthcare and public information are the big areas, where such expansion needs to occur. Along with entertainment, these four sectors will create maximum “pull” for Internet services in the future — providing mission-critical killer applications.
Entrepreneurship is expected to play a key role in expanding the reach of the Internet in India. A favourable business environment for online businesses by easing the ability of these businesses to start up, scale up and operate within predictable regimes is crucial, says the study.