India Inc India Inc: Monday, 13 October 2014 13:37

Tech Speak with Nitin Dahad - Connectivity for all in India: Much work to be done

by Nitin Dahad

With the visit of Facebook CEO Mark Zuckerberg to India last week there’s been much media frenzy about the grand vision of connectivity for all in India. On the surface, his agenda would appear to have tied in very nicely with Prime Minister Narendra Modi’s Digital India vision, for a connected India using technology to enhance and deliver public services, healthcare, education and banking.

But there is a long way to go in achieving this, since there are about 1.1 billion individuals that are offline, and they face barriers to going online due largely to literacy and infrastructure, according to a report published by McKinsey entitled: ‘Offline and falling behind: Barriers to Internet adoption’.

It reports that Internet adoption has grown steadily in India over the last 10 years, with the pace accelerating in recent years. From 2008 to 2013, India’s online population increased at a CAGR of 30 per cent; by 2013, approximately 189 million Indian consumers were online, placing the country third in the world (behind China and the United States) by number of Internet users.

However, India’s current Internet penetration rate is only 15 per cent. With a population of approximately 1.3 billion people, this signifies almost 1.1 billion offline individuals, the largest non-Internet user population in the world.

The report highlights that India would need to address crucial gaps in the Internet ecosystem to accelerate the growth of the online population. The ‘Internet Barriers Index’ indicates that, relative to other indicators, India performs well on affordability – in terms of the price of the absolute price of data plans compared to other countries; however, India’s consumer economic profile uncovers tremendous challenges due to low incomes.

Factors affecting Internet connectivity

There are several factors the report highlights as potential drivers and obstacles for getting Indian people online: social connectivity, the ability to carry out online spending (e-commerce capability), affordability, digital literacy and infrastructure.

Social connectivity is considered important. In urban India, 89 per cent of the online population uses the Internet for online communication, 75 per cent for social networking, 69 per cent for entertainment, and 50 per cent for online shopping. Rural Internet users cite entertainment as their number one use (87 per cent), reflecting the appeal of Bollywood and cricket. Online services and social networking came in second and third, with 62 and 52 per cent, respectively.

On e-commerce, the report suggests that while urban Indians show a willingness to spend online, overall e-commerce transactions, even through SMS, have trailed demand. Only 0.25 per cent of Indian retail sales occur online, compared with six per cent in China and nine per cent in the United States. One reason for this lack of take-up in India is a poor e-payment system in India, which hampers e-commerce and the commercialization of online activities; cash on delivery is still the preferred method of payment.

A significant obstacle to adopting Internet is affordability. Many Indians struggle to meet their basic needs and are unable to afford Internet services. Even with the low absolute prices of devices and data plans compared with the rest of the world, Internet access in India remains beyond the grasp of close to 950 million people – even the cheapest data plans are just too expensive.

Low digital literacy, national literacy drive

At 62 per cent, India’s literacy rate is among the lowest in the countries researched in the McKinsey report – the illiterate adult population accounts for 37 per cent of the global total. Of India’s 1.1 billion offline population the report estimates that 43 per cent are illiterate. Since some level of literacy is necessary to participate in ‘Digital India’, the low literacy rate is a major impediment to increasing Internet penetration. For example, illiterate farmers are unable to benefit from a variety of existing services that provide weather forecasts and market prices through text messages or other digital means.

Surprisingly, in this digital age, the reports says that in a recent survey, 69 per cent of respondents weren’t aware of the Internet, while 33 per cent lacked the digital literacy (defined as the ability to operate a computer) to get online. Even if India’s rural and illiterate population were to gain access to sufficient coverage, they would still need to obtain basic literacy and digital skills before they could navigate the Internet.

To address the literacy issue, an agreement was announced last week between the Nasscom Foundation and CSC-SPV, a company promoted by Department of Electronics and Information Technology (DeitY), to make a million people in India digitally literate within 18 months. An MoU was signed to deliver the first phase goal for the National Digital Literacy Mission (NDLM). This public-private-partnership (PPP) will provide the foundation towards the higher goal of ensuring at least one person from every household in India is digitally literate by 2020.

Under the agreement, industry will train a minimum of 100,000 people. In addition, the Nasscom Foundation will promote and market NDLM to around 2,000 member companies to align the training content of industry partners with that of the NDLM curriculum framework, as well as mobilise financial resources and volunteers from industry partners. Companies like Amdocs, Cognizant, Cyient, Google, Intel, Microsoft and Zensar Technologies are already on board to create NDLM centres across India.

Infrastructure issues

In a survey of India’s rural population, around one-third of respondents said the lack of a connection, device, or electricity was an obstacle to Internet adoption. While India is the big growth story in mobile adoption, a lack of sufficient network coverage and adjacent infrastructure still exists for Internet connectivity.

Access to electricity is also an issue – we’ve heard this many times before from the electronics manufacturing industry: that lack of stable electricity and water supplies has meant that the semiconductor industry is unable to invest in fabrication plants in India.

This same factor (access to electricity) also needs to be improved for Internet adoption; according to the 2011 Census of India, only 55 per cent of rural Indian households had access to electricity. A 2009–10 survey reveals the percentage of rural households depending on firewood remained at 76 per cent in 2009–2010.

While 2G coverage is around 90 per cent, most of it is not Internet enabled. 3G coverage is expanding, but currently the quality of mobile connections is low—dropped signals and an inability to meet demand during peak hours are common problems.

To a certain extent, enabling better connectivity is being addressed through the National Broadband Plan, introduced in 2010 by the Telecom Regulatory Authority of India (TRAI), which has allocated around Rs 600 billion ($9.8 billion) to build the optical fibre network throughout the country. The plan aims to provide affordable and reliable broadband to 600 million subscribers by 2020.

Re-enforcing this vision, the minister for communications and information technology, Ravi Shankar Prasad only in the last week re-iterated that the government would help bridge the digital divide in India by enabling 50,000 villages with broadband connectivity by the end of this fiscal year. He also said that another 100,000 hamlets would be connected by 2015-16, and another 100,000 rural habitations will be connected by 2016-17.

Overall, despite the challenges in India as outlined in this article, there is indeed great potential to get offline population literate and connected. This is supported by a prime minister and government that have a vision to deliver services and do it transparently through digital technology. The visit of Facebook’s CEO was not the great story the media has made out to be. After all, the company is a corporate entity that is keen on growing its India revenue – India is the second largest user of Facebook globally, but generates a very tiny fraction of its revenue. So the company needs to look at ways of bolstering its revenue from this large user base.

What India needs to do is get over the excitement of celebrity CEO visits. It needs to get on with the mission of improving literacy, improving infrastructure, and creating the right type of environment for public services, education, and healthcare to be delivered effectively through its digital vision.

The rest is already happening – we are seeing a huge growth in the whole tech innovation ecosystem – with budding tech entrepreneurs, digital media and social media innovation, and the investor community globally coming to India to invest and take advantage in the potential upside of India’s connected economy.

Nitin Dahad is a consultant and advisor to the technology, industrial and media sector, and to government agencies and trade organisations, to develop global market strategies and programs based on nearly 30 years’ experience across Europe, US, Asia and Latin America

Login to post comment
Get in Touch
This email address is being protected from spambots. You need JavaScript enabled to view it.

Array ( [format] => html [Itemid] => 117 [option] => com_k2 [view] => item [task] => 3917:tech-speak-with-nitin-dahad-connectivity-for-all-in-india-much-work-to-be-done [id] => 3917:tech-speak-with-nitin-dahad-connectivity-for-all-in-india-much-work-to-be-done )