What’s ailing Internet penetration in rural India?

by CXOtoday News Desk    Oct 23, 2013

rural internet

Internet is slowly catching up in the Indian hinterlands, according to a recent report by Internet and Mobile Association of India (IAMAI) and IMRB that claims rural India will have 68 million internet users and 46 million active users by the end of October 2013. However, the report also notes that even though the number of active internet users has grown to over 58% since June last year, the growth and penetration in the rural areas is still quite low and it will take a while for the rural users to reap the actual benefits of Internet.

Low access, high cost

“The key challenges in achieving a high broadband penetration in these areas include limited access, low relevance and high cost,” says eminent researcher Ashok Jhunjhunwala. He believes that the Internet is primarily being used as a medium for social networking and entertainment in the country, while its immense potential in enabling widespread access to education, healthcare, banking, jobs and access to government services remain largely untapped.

A recent McKinsey report has also noted that if leveraged in a strategic way, the Internet has the potential to contribute $100 billion to India’s Gross Domestic Product (GDP) by 2015. “Unless the Internet is equally transmitted to smaller cities and rural areas, India’s GDP from the Internet economy will not see a significant growth,” says Anu Madgavkar, India head of McKinsey’s economics research.

Madgavkar recommends telecom operators to introduce high speed internet network at a highly affordable price and also states that government must extend the national broadband network.

Mobile shows optimism

However, the IAMAI and IMRB report also show some signs of optimism. According to the researchers, by December this year, there will be 72 million claimed Internet users and 49 million active Internet users in rural India. By June 2014, claimed internet users in rural India will rise to 85 million and active internet users to 56 million.

Like the trend across regions in India, rural India too has witnessed a surge in mobile internet usage. The report states that there are 21 million active mobile internet users in rural India in June 2013 a five times growth in 2013 over 2012 and nearly 47 times over 2010. It is estimated that by October 2013, there will be 25 million active mobile internet users and 27 million by December 2013.

“Mobile usage and hence, mobile internet usage has seen huge jump from the 2012 penetration levels. Compared to the 0.4% mobile internet users in 2012, the penetration has grown to 2.4%, indicating a substantial growth in the mobile internet user penetration levels,” according to the report.

Local is the way to go

The study also finds that nearly 42% of the internet users prefer to access Internet only in Local languages. “With more content becoming available in the local languages, more users will start using the internet,” says Ralph Simon, CEO and Founder, Mobilium Global who emphasizes that majority of the rural internet population is not comfortable in accessing Internet in English and this is holding them back from using internet fully for other purposes than online entertainment.

According to the recent report, only 9% of the active internet users transact online. Online transaction is still in its infancy owing and there is a pressing need to educate and inform the user of the benefits of the internet services to drive the growth of internet usage.