Sunday, July 19, 2009

More on the Agenda to grow the Indian Internet market

In the last post ( at blog http://marketerskaleidoscope.blogspot.com, this is fyi for those following the Facebook feed) on July 11th, five actions (not exhaustive, it’s my pick) were suggested to grow the Indian Internet market :

1. Internet association IAMAI should join hands with other organizations and individuals
2. Studies that put a socio-economic value to the Net will help immensely
3. Talent needs to be developed
4. Adoption of Indian languages is the key bottleneck
5. It’s possible to identify “compelling applications”

There was some interest in that post, motivating this update.

Let me dig deeper into actions 1,2 and 4 above. Once again, I largely ignore the possible upsides from the mobile Internet (an area of which I know as yet little). This post is thus about Internet via the PC.


1. On IAMAI joining hands with other bodies

Last week the PC manufacturer’s association MAIT has gone ahead and published it’s own numbers on Internet use, numbers which are in variance with those of Internet association IAMAI.

There are, says the MAIT report, 8.6 million Internet “entities” and 60 million Internet users. (No definition is available on what qualifies as a user, appears to be closer to what the Internet industry would call “ever used”, rather than “active user”).

These vary from the IAMAI & TRAI estimates, not to mention those of others. ISP & telecom regulator TRAI’s Internet subscriber numbers are 12.85 million for Mar ’09. And the IAMAI had estimated 42 million active urban Internet users for Sep ’08. (Given the 20% p.a. growth being experienced - I had given 50 million as the current number).

To be fair to MAIT, their study is primarily a PC & IT hardware numbers study and Internet user numbers are only an add-on.

What stops the IAMAI and MAIT from talking to each other and putting out one set of numbers? Multiplicities of numbers dilute the seriousness with which the Internet sector is taken.

MAIT’s press release that put out the above numbers also made the following astonishing claim, and I quote: “MAIT has set for itself an ambitious target, 'Goal 511', 500 million internet user, 100 million broadband connection and 100 million connected devices by 2012.” No specifics of how this miracle is likely to be achieved, though there is a brief allusion to 3G and WiMax network rollouts.

Ironically, both IAMAI and MAIT use the same market agency IMRB but have different numbers, both of which enter the public domain...

2. Studies that put a socio-economic value to the Internet

We have probably all heard of the multiplier effect telecom is supposed to have on a nation’s economy. There is a correlation between telecom density and GDP growth, it is said.

You would have also heard of the stories about the fisherwoman (or is it the vegetable farmers?) who became rich once she got her first cellphone.

As regards the Internet, stories that have appeared with higher frequency are stories of dotcom IPOs (just 2 in India’s 13 year old industry so far, one on the NASDAQ and one on the BSE), of entrepreneurs could got or nearly got funding, robust ad prospects of this sector, etc.

There is one study though. This is by TRAI dated November 2003 and another 2003 study by CII. These were the studies which first made the case for Internet and broadband expansion in India. The CII study said (and I paraphrase) :

Ubiquitous broadband is expected to create - between 2010 and 2020 - 1.8 million direct & 59 million indirect jobs, as well as create an increase in National Output (GDP) of $90 billion, calculated at PV (Present Value) in 2003 prices. Benefits are seen in improvement in productivity of the existing labour force ($47 out of above $90 billion), e-education at vocational and higher secondary level (worth $27 billion) and e-literacy programs in secondary schools (the balance $14 billion).

10 million urban broadband connections should be targeted by 2010 as well as 100,000 villages connected by Internet kiosks.

All broadband connected villages can enable

(i) the benefit of virtual primary, secondary & adult literacy and distance education through the kiosks,

(ii) e-health viz. each village kiosk acts as a telemedicine centre
(iii) every urban and rural connection acts as a single window Government interface for e-governance.
(iv) Entertainment and e-commerce services and employment opportunities will become available as well through broadband connectivity to all cities, towns and villages in India.

The total investments for achieving these milestones is summarized in the exhibit 4 of the report as $5.35 billion of which $2 billion were to be for content alone, $500 million was earmarked for rural infrastructure with the balance for urban infrastructure.”

If these old studies are updated and others presented it will revitalize interest in investments by government and private sector, interest seems to have taken a beating because the Internet sector is seen as one that has failed.

For example, it was recently reported that the Government is planning to spend Rs. 40,000 crores (INR 400 billion) to deliver services like the Unique ID number, healthcare, municipal services and some services from Indian Post. If this is indeed true, we will need an ubiquitous and robust Internet infrastructure first. Someone – it could be one of the IT biggies or Nasscom - needs to put a number and make a ‘must have’ case for this.

We now also need a Nandan Nilekani-type appointment to champion the creation of this infrastructure.

4. Language adoption is the key bottleneck

Also in the last post, two interesting numbers were ‘thrown into the ring’: 20 and 205. 205 million is the number of urban literates. And 20 million is the number of people who can actually converse in English, out of 86 million odd who claim to ‘know English’.

If we look (IMRB, Mar ’08) at the number of ever used Internet users (50 million), these are fewer than PC users (72 million), which in turn are fewer than the number of English ‘literates’ (86 million). And English speakers are growing much slower than the number of PC literates and Internet users.

This could be the key bottleneck in the growth in PC and Internet usage.

Did a quick (am no expert) check and learnt:

a. What’s needed for language use are keyboards (hardware), fonts and scripts (software) and content.

b. No one is talking much of external keyboards anymore, they don’t seem to be readily available.

c. As regards fonts and scripts - after years of work thereof - Windows now support most Indian languages. However, a friend of mine, who has been an IT infrastructure manager for over a dozen years - admittedly in big metro Mumbai - has himself never seen a PC being sold with it’s OS pre-configured with any Indian language.

d. Microsoft could have shaped the language agenda. They seem to have been at it for a long, long time, without a breakthrough in the market. Their site on language computing does not seem to have been updated since 2006, leading one to believe this is not something actively engaging their attention.

e. Over and above the OS, there are several applications available that claim to ease the convenience of giving a language input on a PC, these are typically transliteration tools aimed to help (say) the English Internet user send an email to his granny in the village. They don’t address the language requirement per se.

f. There also seem to have been some sincere government initiatives. But these have been on for at least ten years ,in fact earlier ever since the 80’s, when PCs came into being.

g. Multiple softwares and the lack of a dominant player mean that there are no standards in existence. We are stuck at the PC bottleneck (software & hardware) end itself, not at the content end.

h. With none of the major PC manufacturers on to the language trail, the marketing thrust to popularize languages is missing.

i. It’s believed by many that we Indians prefer English per se for PC or work related use, and our own languages don’t stand a chance. Why turn the clock back, the world is going English, they say. Fair enough, but in a large country like India, this is going to take generations. It’s taken 2 years for the number of ‘English-knowing’ adults to grow from 77 million (2006) to 86 million (2008).

The company I work for is also into English education, so this is something I know a bit about. There is and will remain a big unfulfilled gap between demand and supply of English, both in schools and in teaching institutes. We can’t bypass language use if we want to progress.

j. The great Google doesn’t have an answer to this one yet, either. When Shailesh Rao, Google India’s head was asked a couple of months ago about the Indian language Internet, he seemed to duck the question and started talking about the mobile.

Shailesh believes there are 35 million people with a functional command of English (I have been touting 20 million, matters not, both are lower than the number of claimed English knowing people of 86 million and under 20% of India’s urban population).

The future does look bleak for the balance 1000 million + Indians, their not knowing English may deprive them of the joys of using a PC and the Internet the way you and I know! "Let's give the poor guys the Internet via a mobile phone" is the refrain.

I don’t quite understand the absence of success in developing languages for PCs and Internet. Other countries have all popularized their own. This is preventing the (bottom-up) generation of mass demand for Internet services. This is the choke point.

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