Why India's Internet connections are falling

Posted by: Bruce Einhorn on October 8, 2007

Here’s some weird news from India: At a time when Internet usage is supposed to be on the rise, the number of Net connections in the country actually dropped in the second quarter, falling from 9.27 million to 9.22 million. As a somewhat incredulous Economic Times reporter comments, “India is possibly the only country in the world where internet connections are falling.”

How can this be? I asked my colleague Nandini Lakshman in Mumbai to explain what’s happening. Her take: More and more Indians are indeed online. They’re just not using landline connections. Instead, she says, Indians are getting onto the Net via mobile. According to the Economic Times, over a fifth of India’s 200 million-plus mobile subscribers go online via their handsets.

“Yes, mobile Internet is big,” Nandini says in an email. “Even college-going kids carry phones with GPRS costing upwards of $400. Mobile operators are constantly introducing VAS schemes as their entire focus is to increase the average revenue per user. India’s ARPU is the lowest in the world.”

Morever, the popularity of mobile Internet connections is also a reflection of the sorry state of India’s big telcos. “The largest service providers are two state-owned companies — BSNL and MTNL,” she adds. “But they are so overwhelmed by the load, that their servers crash often. Accessing the Net on the mobile becomes more convenient.”

It’s great that Indians are among the world’s leaders in terms of using their cell phones to access the Net. But India doesn’t have 3G yet and speeds for mobile access of course can’t compare to broadband over fixed lines. For the country’s Internet companies to take off, India’s telcos need to get their act together.

What’s happening in India is also worth noting given the interest among people in the IT industry in coming up with inexpensive ways to help people in the developing world go online. MIT Prof. Nicholas Negroponte’s One Laptop Per Child non-profit this month is coming out with its first machines, designed with kids in poor countries in mind. (See this story by my colleague, Steve Hamm, about OLPC’s attempts to jump-start its program.) Intel has a project of its own, the Classmate PC, that’s also meant to meet the demand for a low-cost way to provide Internet access in poor countries in Africa, Asia and Latin America. (I wrote about how the two projects compare here.)

OLPC, Intel and others are betting that the PC is the best way to do that. But PCs, even specially designed ones for emerging markets, are more expensive than cell phones. Negroponte’s project isn’t off to a roaring start: See, for instance, this BW story by my colleague Steve Hamm about OLPC’s efforts to jump-start its program.

Some people, such as Qualcomm chairman Irwin Jacobs, argue that focusing on the cell phone is a better way to boost Internet usage in the developing world. You would expect Jacobs to say that. He’s in the business of selling chips for cell phones, of cours. But the drop in landline connections in India - and the surge in mobile access to the Net - seems to support his case.

Reader Comments

pqrsam

October 8, 2007 11:01 AM

Airtel and over a dozen other companies offer land line internet connectivity. Its only because of MTNL's huge reach that it has the largest market share. But this share is falling

Robin

October 8, 2007 11:22 AM

Mobile internet as a percentage share might be big, but this merely a sign of desperation. Government policies have indulged the incumbents, the people losing out are the consumers and organisations whose business models rely on the internet to reach their customers.

Just as an example, I have a 256kbps DSL connection. The price and speed of which hasn't budged since Nov 2005 when I took it on.

tiddle

October 8, 2007 12:04 PM

While mobile net over phone might be great tool for consumers, you don't go about using that for work purpose over a prolong period. Wireless internet connection is still the most alternative to landline broadband, on top of the fact that it's cheaper than being charged per minute to connect.

kp

October 8, 2007 12:45 PM

This news does not surprise me.GPRS and EGPRS connections are painfully slow to use and therefore the online experience is severely limited and very basic.Implementation of 3g seems to take forever.Broadband is a reality for few in India.

Pranav

October 8, 2007 3:35 PM

"According to the Economic Times, over a fifth of India's 200 million-plus mobile subscribers go online via their handsets"

There are absolutely no reports or official figures available on how many users access Internet via their mobiles. I therefore tend to take any such news stories with the due skepticism.

"Accessing the Net on the mobile becomes more convenient."

You've got to be kidding me -- with EDGE and GPRS speeds ?

Ritam

October 8, 2007 4:07 PM

It depends on how we are measuring the 'no. of net connections'. Is this a report generated by each ISP? or it is a count from the landline providers (for Dial-up). Almost every city now have cable/ broadband and the providers use modems to split lines up. Hence, a single live IP results in number of leased IPs which no one counts.

Prabhath

October 8, 2007 4:34 PM

Well the authors blog is based on a news article alone and he hasn't done proper research on the topic.... I have recently given up my landline broadband connection from BSNL because my university campus was made Wi-Fi enabled and i use it to acces internet and plus there are a lot of cable operators who provide internet and it is virtually impossible to count their subscribers.....

Andy

October 8, 2007 11:14 PM

A proof that state owned companies combined with non competitive market is a formula for failure.

Pit Crew

October 9, 2007 1:57 AM

I can't imagine reading Business Week Online on a mobile screen, let alone waiting for a page to load using GPRS. While I can understand Indian consumers are taking up more data-focussed VAS, its difficult to believe that ~50,000 people have decided to replace their computers with their phones to check email. I think the numbers indicate that more people are accessing the Internet from their offices or from Internet cafes.

Mat

October 9, 2007 1:57 AM

No Andy.If state owned cos are failing, there are already privte players who should pick up the customers who are dissatisfied with state owned cos.
The problem is, these private cos give worse service and costlier access and are confined to urban areas. THAT is the problem .This shows that private cos are not the solution to everything

Sarang

October 9, 2007 7:43 AM

You got to be kidding. I was so frustrated with GRPS connection from Airtel, I discontinued the service in 3 days!!

Steven

October 9, 2007 9:13 AM

The main reasons could be that the PC ownership in India is still low if the PCs owned by coperations are excluded. PCs are still very expensive for Indians.

I also heard that the connections faster than 256Kb/s are considered as high-speed or broadband. if this is true, that means Indian ISPs sucks.

Rahul

October 10, 2007 2:37 PM

Opera mini 4 beta on CDMA performs quite well. You can also use tools like flurry to access email easily on the mobile. So I guess GSM GPRS sucks and CDMA is somewhat better. Waiting for EV-DO to arrive in india, hopefully soon.

Sanjay Khandkar

October 11, 2007 12:51 AM

One point no one seems to have touched upon is the reason for reduction. I read a newspaper article which mentioned that the connections were not being used by subscribers and hence were dropped by BSNL. Which explains the drop in the number of connections. It is true that broadband in India [some may even consider this to be as FAST as 256kbps as compared to pathetic speed of a dial-up connection] is available to very persons at home. However, most people access faster internet in their offices. Once you use a faster net connection [or even otherwise] one does not really want to use dial-up. Which may explain why the dial-up connections are not being used.

Sankara

October 11, 2007 3:54 AM

There are many people who doubt the figure that most Indians are going wireless. As a user of GPRS/EDGE I would say it is very true. Of course, this is not because I have the luxury of going wireless or because it is great to work using your mobile. The only reason I have gone mobile is that I'm not able to convince BSNL/Airtel to give me a broadband connection though I live in an apartment of 120 flats with most people using a dial-up/cable internet.

Vivek Chauhan

October 16, 2007 1:03 PM

I would definitely doubt the credibility of the numbers presented in the story. There's gotta be more to it. Day-in and day-out I hear people getting frustrated of accessing Internet on the mobile. And surfing on cellphones is a big big pain. Contrast this with almost universal acceptance amongst my circle of friends of the credibility of broadband connections. I am yet to come across someone who got exasperated of his/her broadband connection.

Nagesh

October 19, 2007 8:55 PM

India has pathetic Internet service. In India all customers are treated as thieves by all companies and their own government. In India the State and Private telcos are monopolies without any regulation and oversight by the customers. This also adversely impacts manufacturing as companies have to rely on quasi govt networks which are totally unrelaible, and you end having to add additional servers to buffer and store production data due to network outages. The govt & Private collusion will eventaully impact India's competitive position. It is all about ripping the consumer legally.

I dont see any hope for better connectivity in Inida for the next decade given the govt & private sector in apetness. All those goverment babus & Trai can be shut down and the money better spent on purchasing a few mor Sukhoi Jet fighter for the Airforce. Meanwhile the world moves on with WEB 2.0!

Praveen

October 21, 2007 12:56 PM

I always take with a pinch of salt what Economic Times of India publishes. There is no proof to suggest that 1 in 5 mobile users are online. I have hardly heard of any of my friends using mobile internet, a couple of them who tried just gave up and closed the service. And I am talking about friends in Bangalore - supposedly the most tech savvy city. Almost half of my friends use BSNL broadband though, every survey i know of has shown that they are better than the private operators who give pathetic service and just know how to suck blood.

Star

October 22, 2007 2:39 AM

I agree with Praveen who commented on Oct 21, 2007.

BSNL broadband is quite a success.
They ( BSNL ) reduce the targets due non availability or short supply of DSL modems

Private operators has limited internet bandwidth with which they some how manage the show ( keeping satisfied some customers ) they do so to create brand image once image is established they suck the bandwidth

Regarding mobile internet how many of us know proper usage of mobile then comes the question of browsing internet on mobile ( certainly bandwidth in mobile will always be restricted as compare to PC/Laptop )

Tanmay

January 5, 2009 10:43 AM

Each time I go to India, I find that the internet speeds to be slower and slower - and this is through a landline connection. I once tried opening google and it did not open. When I asked the owner for a refund, he told me that the google was probably down and it was not their fault! What are the chances that google will be down? It was more like their crappy internet was down! Honestly, I have never seen speeds of above 30 kb/s down. India has a lot of improving to do before it can become a "superpower." Another thing: the companies should stop charging per mb of data downloaded; that is not going to help and will be too expensive. Due ot this, they won't earn money and will not be able to improve their infrastructure.

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