We have a tendency to look at proportions or percentages rather than absolutes and India’s strength lies in absolutes. India is home to over a billion people. A billion people means India offers opportunities that a very few countries can match. It is easy to dismiss any opportunity when one looks at percentages, e.g. only 9% people use mobile internet on a regular basis looks like a small opportunity but when one looks at 100 M people using mobile internet in India, the magnitude of opportunity becomes clearer.
India has the second largest base of mobile subscribers in the world and has one of the fastest growing mobile internet base across the world. A quick look at the key statistics of the Indian mobile industry to give a context to article:
739 M Active mobile subscriber base (source: TRAI)
200 M handsets likely to be sold in 2013 (source: Strategy Analytics)
450 M+ users have data enabled handsets
70 M users have smartphones
50%+ internet traffic from mobile devices (source: Statcounter.com)
30%+ new Facebook users from mobile
30 M+monthly active users on Whatsapp as on 31st Oct, 2013
The above numbers are staggering and can rivaled only by China.
Mobile Internet User Base India
There are multiple sources of data for mobile internet user base but unfortunately they all differ. However, it is possible to estimate the mobile internet base by triangulating data from different sources and overlaying the information from industry sources.
Top 4 operators (Airtel, Vodafone, Reliance & Idea) report the data user base in their quarterly financial reports. These operators account for almost 95% of data users. This gives a mobile internet base of 168.8 million in India (refer to table on the left). However, this user base consists of users who have accessed mobile internet at least once in the 3 months (Jul-Sep) as it is a quarterly report. Most of the analysts are interested in a monthly active base. Industry sources estimate that only 50% of the people who use mobile internet in a quarter are actually regular users. This means that the monthly active mobile internet user base is 85 million as on 30th Sep, 2013.
Another phenomena that is of interest to industry players is the mobile only access. There is a long standing hypothesis that in emerging markets, a majority of users have no access to computers and hence mobile would be the only medium of access for many users. India is no different and in my estimates, almost 30% of 85 million active mobile internet users use mobile as the only access terminal. This is collaborated by report from Facebook that claims that 30% of its users in India access Facebook by mobile only. Recent IMAI report also quotes a number very close to 30% as mobile only internet access.
Interesting chart on the left suggests immense potential as there are over 450 million data enabled handsets but only 85 million are actively using it (once a month at least). The first task for carriers is to look at ways to get the active user base as close to 169 million as they are users who have used mobile internet (browsing or applications or download from carrier portal) and should be relatively easier target.
The boundary between off-deck and on-deck usage is blurring in India and most of the estimates peg the on-deck user base at ~15 million per month. This means that out of 85 million active users, 60 million users are off-deck and 15 million on-deck. On-deck usage is browsing within the walled-garden of operators, i.e. on operator sites only.
India has 70% of its population living in villages and hence rural data usage is important. Internet access in the rural areas has grown tremendously in the last few years and is now almost 23% of mobile internet users are from rural areas (source: IMAI report). This means that there are 20 million active mobile internet users in rural areas.
What is driving Mobile Internet in India?
Mobile internet is driven by cheaper devices, inexpensive service and entertainment/content consumption.
Mobile devices are key to driving mobile internet adoption. The smartphones are getting cheaper and bigger with better features. A couple of years back, the cheapest Smartphone was around Rs 10,000 (~$200) but today the cheapest smartphone costs less than $75. As per IDC the number of smartphones that have a screen size between 5 inches and 7 inches grew by a whopping 17 times in the market in the last one year. The phablets (large screen mobile phones) constituted 30% of all smartphones shipped in Q2, 2013. The large screen is not only a smartphone phenomenon but is visible across price points. 4″ screens are becoming common in Rs 4,000-8,000 segment. Large screen aids browsing and entertainment.
Smartphones are growing at a fast pace but it would be a mistake to ignore the contribution of feature phones. As per the latest InMobile report (Oct’13) on advertising impressions, feature phones contribute to 61.9% impressions. This shows the heavy use of feature phones to access internet.
What makes mobile internet so popular in India is simply how much affordable and reliable it is compared to traditional broadband services available at home or in the office. In addition to the obvious benefit of being connected anytime, anywhere, compared to fixed connections, data plans offered by all Indian telecom operators are insanely cheap. Operators have been reducing the prices of mobile internet, esp. 3G to make the service more affordable. Recently, Vodafone reduced the mobile internet price on pay as you go by 80%
Entertainment is third aspect driving the need for mobile internet. Videos, music and games are extremely popular in India. Content consumption is on the rise which is proven by the fact that India is the second largest market for YouTube across the globe and as many as 40% YouTube users in India access through mobile phones, India is 3rd largest applications market and games are the largest genre among applications.
Need to connect at an affordable price is also a reason for adoption of mobile internet. Messaging clients like Whatsapp, WeChat, Line, etc. are getting popular as they help reduce the SMS costs. A number of users are subscribing to mobile internet to reduce their monthly bills by using messaging clients
India has 85 million monthly active users which are driven by need for entertainment and connectivity. The fact that over 169 million use mobile internet actively or infrequently shows the huge potential that India has for the application developers, content owners and the carriers. It is now the time to invest and benefit from changing mobile user behavior in India. Long term bets are being placed, can you afford to miss? If you liked this article, you may consider subscribing to Telecom Circle to get all the articles in your mail box
Mohit is a telecom professional with rich experience over 15 years. His expertise is in the area of strategy and planning and his work experience includes stints with two of Big 5 consulting organizations, a telecom operator and a handset vendor. Mohit can be reached at firstname.lastname@example.org