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From 7 mn to 100 mn: Rediff’s Ajit Balakrishnan on how the rest of India can catch up to the Internet

08-December-2010
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From 7 mn to 100 mn: Rediff’s Ajit Balakrishnan on how the rest of India can catch up to the Internet

“Why is it that we have more readers than CNN-IBN has viewers, but they’re still earning a lot more from advertising?” asks Ajit Balakrishnan, Chairman of Rediff.com. Replying to his own question, he says, “The problem is that the frequency of visits is low. The problem is that broadband access to the Internet in India is still very limited, and with that being the case, only some 6-8 million of our Internet users will visit our sites with any frequency.”

Speaking at the Internet and Mobile Association of India’s (IAMAI) Digital Summit in Delhi on December 7, 2010, Balakrishnan pointed out that the number of broadband users in India was very low, only a tenth of that of our neighbour China, and explained that broadband changed the frequency with which content was accessed, so that two days brought in the same number of viewers that two weeks would normally get.

He felt that the Government had not done enough to encourage the growth of broadband Internet in India, and added that the reason was that people saw broadband only in terms of frivolous uses, such as downloading music or playing games, when instead it could also reduce spending on healthcare and education.

As an example, he pointed out that a single seat at IIM (or, he said, any residential educational institution) cost the institution Rs 40 lakh in accommodation and various facilities. IIM had, however, also instituted a one-year diploma programme, where course material was delivered over the Internet, and so the cost involved was far less.

However, at the same time, he cautioned that 3G might not be the solution to problems the way people had been hoping. “We are starved for spectrum, so much of the new 3G spectrum will go to voice. Also, the speed of 3G is also not enough. The telecoms are promising a lot of things right now, but anyone who has used 3G can tell you that you are better off switching to Wi-Fi or ethernet whenever possible,” he added. The solution, he felt, was to look beyond the households who fell into the “anywhere in the world category”. These people were making enough money and fell into the “targeted demographics” that people talked about, he said, but they would not drive growth. According to him, “These are just six million people. We need to look at the next demographic, of 75 million households that make up the consuming class. They are the real buyers of India. They probably don’t own a car, and are probably not fluent in English, though they know it. The average income will be around Rs 18,000. These are the people we need to get on board.”

A content focussed on video, to overcome language barriers, along with more services like booking rail tickets through phones are the keys to connecting with this huge consuming class, and while smartphones and tablets are creating buzz around the world, Balakrishnan felt that if we wanted to build the overall user base, the focus needed to be on low cost devices, which could be bundled with Internet plans.

“We need to have three tiers of Internet, not a single solution. At the base level, there should be unlimited usage Internet, at a lower speed, like 256 kbps, which should be priced at Rs 200 a month. The middle tier will be for the other consumers, who can spend more. A cost of Rs 1,500 per month, greater speeds, wireless access. And the top tier is flexible prices related to speed and usage, for corporate buyers who have high demands for speed,” Balakrishnan suggested.

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