2014: The tipping point for mobile internet in India

By : P Balaji
Last Updated: Mon, Jun 02, 2014 07:54 hrs
Nokia XL phablet

The much awaited mobile internet movement in India is gaining scale. By June this year we will have 185* million mobile internet users. Separately there are already 431** million internet capable devices in the hands of consumers today. We believe 2014 will be the tipping point for mobile internet on the back of improved regulation, increasing investments by operators in data, increasing consumer adoption and businesses embracing 'mobile' as a central piece of their strategy to engage customers. The first mobile revolution led by 'voice' transformed how people connected and communicated. The second led by 'data' is transforming how people consume infotainment and services, share their lives and gain knowledge. It is disrupting traditional business models and creating new business opportunities that are location agnostic. This shift is monumental and one that is good for the country.

So what makes 2014 an important year for mobile internet in India?

Both adoption and consumption is on the rise. Last year, we had around 25 million 3G users. That is expected to grow almost four fold to reach 96*** million by March 2015. The latest quarter results by the big private operators also show a consistent growth in 3G subscriber base. If we consider consumption, a study by NSN showed an 87 per cent rise in data traffic generated by 2G and 3G services in 2013. If we only consider 3G, data traffic grew by 146 per cent, surpassing the world average that is roughly doubling every year. Interestingly, 3G use is also spreading beyond the bigger cities with 3G data payload in category B circles surpassing that of the metros.

We are also seeing mobile internet consumption habits evolve with users doing more and more from their devices. A good example is video. With increase in screen sizes and quality of display - a lot of consumers today are watching movies on their smartphones on the go; and an equal number are streaming videos online. Entertainment and online videos are growing in India at a very fast rate. In fact, large screen smartphone (more than five inch screen size) users spend a bulk of their time on online apps. Mobile photography is another good example. More and more consumers are using their smartphones for photography and sharing it across social media. In fact, how people search, access social networks like Facebook and LinkedIn, and book tickets for movies and travel among other things is also happening from the mobile devices itself. An Avendus research shows that 30 per cent of Facebook users in India are mobile-only Internet users and 30 per cent of new registrations are coming through mobile. India also ranks among top four growth markets for mobile usage for LinkedIn.

The recent regulatory changes will provide the necessary impetus to mobile internet growth and drive investments in the sector. Guidelines around M&A, permission to sell and trade spectrum and allowing 100 per cent foreign direct investment (FDI) will ensure much needed consolidation and long-term viability in the sector. This will be good for consumers too. An important signal of the sentiment improving is the recently concluded auctions, which showed the operators were back in the market and investing again. Further, the acquisition of 1,800 Mhz spectrum by all of the top players points towards increased focus on data. Globally, 1,800 Mhz is emerging as the preferred band for 4G/LTE services. 3G network expansions are also already underway.

Businesses are also increasingly embracing mobility for service delivery and consumer engagement. A lot of the big consumer brands either have their own mobile app or are in the process of building one. Sectors like airline, media, hospitality, banking, FMCG, insurance, sports, entertainment and e-commerce are among the early adopters. Take entertainment for example - from trailers, to simultaneous apps and/or games to even simultaneous launches it is all happening. Zee Anmol was the first general entertainment channel in the television space to be simultaneously launched on mobile and television platforms. HUL launched a free radio-on-demand service on mobile phones to reach out to villagers in Bihar which has been a big success. The company has stopped advertising on radio in Bihar because its own channel reaches more people than any radio station. Striker, a recent movie was launched simultaneously on the screens and YouTube. Some examples of movie specific gaming apps have been Dhoom 3 and Krishh 3. Simultaneous music release launches are common place now. We are also seeing more spends moving to digital marketing.

Clearly, all pieces of the mobile internet juggernaut are moving and we expect them to accelerate further this year.

From an economic standpoint, this augurs well for the country. The impact of the internet on GDP has not been felt as it contributes a modest 1.6 per cent currently with just about 10 per cent penetration. This can grow to 2.8 to 3.3 per cent by 2015 contributing $100 billion to India's GDP according to McKinsey. More importantly, the internet and mobile collectively will create greater opportunities for people as it creates uniform access to markets, consumers, knowledge and tools and takes away the location advantage. Consider the mobile app ecosystem. A developer could be based anywhere in the country, can get access to tools online and develop apps and place them in app stores that give him access to consumers globally.

In sum, the mobile internet revolution is in motion and has gained critical scale in terms of users to make it attractive for ecosystem. The stage is set, the ecosystem is mature, it is time to accelerate and 2014 will be the year.

More from Sify: