India needs government tailwinds to drive internet connectivity: KPMG report

Despite the increasing use of mobile data in the country, internet penetration in India continues to be low, according to a report released by KPMG titled ‘New Digital Horizons’ at the India Mobile Congress on Thursday.

India has over 1.1 billion telecom subscribers and 512 million internet subscribers as on June 2018.

According to the report, internet penetration in rural India was 19.48% while rural teledensity was at 57.99% as on June 2018, significantly lower than the national average of 89.72%. Teledensity or telephone density refers to the number of telephone connections per 100 people in a given area.

The report adds that government-backed telecom infrastructure provider BharatNet and public-private partnership models such as the one formed by Google with RailTel to create public wi-fi hotspots have helped reduce the gap, with sustained efforts required over time.

The targets set by the National Digital Communications Policy 2018, which aims to provide fixed-line broadband services to 50% of households by 2020, will require government intervention to make resources available such as spectrum, right-of-way permissions and an implementation and monitoring system.

On the bright side, the low price of entry-level 4G devices has led to 22% penetration of these gadgets in India as on 2017, as compared to a mere 12% in 2016. This makes mobile devices popular for content consumption.

However, India’s 4G coverage at 68% lags far behind global counterparts led by the US at 91% and download speeds in India is at 9.1 Mbps compared to 46.5 Mbps in Singapore, which leads the segment.

The report indicates that video-streaming has the largest share in media consumption on mobile at 65-75%, followed by online browsing and social media. Due to data-driven revenue, service providers are looking to monetise the opportunity by providing bundled services including tie-ups with free access to over-the-top apps to drive average revenue per user (ARPU).

“Telcos are evolving from pure voice providers to players integrating voice, data and content offerings,” says the report.