Internet For All May Add $1 Tn To India's GDP By 2020: FB

by CXOtoday News Desk    May 31, 2016

Internet users in India Image Courtesy A new Facebook study claims that India’s GDP could grow by $1 trillion if every single citizen gets access to the Internet. According to Facebook-commissioned study, the global GDP could grow by an additional $6.7 trillion by 2020, if the Internet reaches every human being. If that happens, the GDP of China and India could reach $2.089 trillion - nearly a third of the hypothetical world output.

The study also states that four out of five Indians could afford data access if prices fell by 66 percent, But Indian telecom operators already run data services at a 11 percent loss, making cost-cutting difficult. The report, titled “Connecting the world: Ten mechanisms for global inclusion”, is based on a study done by PricewaterhouseCoopers explains this by stating that a data plan which costs Rs 100 right now should be sold at Rs 34 in order to make surfing online a viable option for 80 percent of India’s population.

According to IndiaSpend report, the Internet reached 29 percent of Indians 354 million users in September 2015. It is expected to rise to 39 percent, or 462 million users, by June 2016. To optimize data costs, the report considered 500MB data plans, classifying them “affordable” if each cost less than five percent of a person’s monthly income. As it stands currently, only two percent Indians can afford to watch a five-minute standard definition video daily. If you add a two-minute HD video as well, less than one percent can afford it, the report states. 

The report said that in India, “Internet usage is growing but many are disengaged and many more remain unconnected”. According to a February survey by the Pew Research Centre, 22 percent respondents in India said they use the Internet “at least occasionally” or have a smartphone.

The report cited a JP Morgan analysis to show that Indian data operators make a negative margin of 11 percent from data sales. Giving examples of other developing countries with negative margins, the report said: “Operators in most of these markets already charge very low prices and have negative margins on data, which makes it difficult for them to cut prices further.”

In India, nearly 70 percent of connections are on 2G networks, but these data services are no longer profitable for telecom operators. Bharti Airtel, for instance, needs more than 1,000 rural users per site per month to ensure its 2G data services break even. Providing voice services over 2G is more profitable - the company would need no more than 480 subscribers per site per month to break even.

The study done for Facebook advocates Internet access in developing countries, which may be seen as connected to the social media giant’s controversial project. The Guardian observed: “The focus on cost reductions (in the report) marries with Facebook’s own project, which is aimed at partnering carriers in developing nations to give low-cost Internet access.” had come under criticism from net neutrality advocates around the world. In India, its platform Free Basics was blocked by the Telecom Regulatory Authority of India (Trai) in February this year. Founder Mark Zuckerberg had then written: “Connecting India is an important goal we won’t give up on, because more than a billion people in India don’t have access to the Internet.”

According to the study, which echoed Zuckerberg’s thoughts, 56 percent of the world is still not online. Bringing them online would “create millions of new jobs, develop vast new markets, and lift millions out of poverty.