India’s Internet user base to double to 600 mn users, smartphone subscription to reach 520 mn by 2020: ASSOCHAM- Deloitte joint study

The Internet user base in India is rapidly expanding, and is expected to double to 600 million users by 2020 from 343 million users currently, driven by 3G and 4G penetration, according to an ASSOCHAM- Deloitte joint study.

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The study said that the Internet user base has reached a penetration of over 27% as comapred to 50.3% penetration in China. It added that rural adoption of data-enabled devices is also likely to go up with the BharatNet initiative under Digital India.

India is the second largest mobile phone market globally with over 1 billion mobile subscriptions. Of this, smartphone users account for around 240 million subscriptions which is expected to grow to 520 million by 2020, the study said.

Spectrum availability in Indian metros is about a tenth of the same in cities in developed countries. This has put a major roadblock in providing high speed data services. Public Wi-Fi penetration remains low. Globally, there is one Wi-Fi hotspot for every 150 citizens.

“For India to reach that level of penetration, over 8 million hotspots are required of which only about 31,000 hotspots are currently available, reveals the study,” the study said.

Currently, over 55,000 villages remain deprived of mobile connectivity, largely due to the fact that providing mobile connectivity in such locations is not commercially viable for service providers, the ASSOCHAM- Deloitte joint study said.

“Challenges in policy, such as taxation, right of way, restrictive regulations etc. are major roadblocks in realizing the vision of Digital India. Some of the common policy hurdles include the following lack of clarity in FDI policies, for instance, have impacted the growth of e-commerce,” it said.

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The study said that the implementation of the Digital India program has been hampered by contracting challenges such as the projects assigned to PSUs are delayed given challenges related to skills, experience and technical capabilities.

“Several RFPs issued by the government are not picked up by competent private sector organizations since they are not commercially feasible” it noted.

With the proliferation of cloud-based services like DigiLocker, data security has emerged as a major challenge. The recent data breach in August 2016, in which debit card data for more than 3.2 million subscribers was stolen highlights the importance of implementing foolproof security systems.

A uniform RoW policy across all states with a reasonable cost structure is required along with a single window mechanism for granting RoW permissions. PPP models need to be explored for sustainable development of digital infrastructure, as has been the case for civic infrastructure projects like roads and metro project. In addition, the government should make efforts to make additional spectrum available to telecom service providers for deployment of high speed data networks, noted the study.

Effective collaboration with the private sector is critical to the development of the digital infrastructure. Innovative engagement models that ensure commercial viability needs to developed jointly through consultation with industry bodies. This will encourage private sector participation and ensure a better response to infrastructure RFPs. In addition, startups need to be incentivized for the development of the last mile infrastructure and localized services and applications.

In rural and remote areas, private sector players should be incentivized to provide last mile connectivity, the study opined.

USOF can be effectively used to incentivise and create a viable business model. The deployment of funds so far has been erratic and not been used to effectively to fund the cost of infrastructure creation in rural areas, it added.

Satellite communication solutions could be used to speed up broadband access in rural and remote areas. For instance, banks can use VSAT technology to connect remote ATMs, remote branches that need instant access to customer data. It could be used as a last mile connectivity solution in rural areas which lack telecom networks, highlighted the study.

For the success of the Digital India program, capacity building is crucial. In addition to infrastructure development, Digital Literacy, skill building and higher adoption of digital solutions is key to program success, said the study.