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Data Stream: Mobile internet services find many takers

December 31, 2013
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Driven by the increased availability of affordable smartphones and relevant regional content, mobile data uptake grew significantly in 2012. According to the I-Cube 2013 report, released by the Internet and Mobile Association of India, and IMRB International, the overall penetration of mobile internet services has reached 2.4 per cent in 2013, as compared to 0.4 per cent in 2012.

The country’s mobile internet user base stood at 110 million in October 2013 and is expected to reach 130 million by end-December 2013. In June 2013, over 91 million users accessed the internet through mobile devices. Of these, 70.2 million were urban users. The urban subscriber base increased to 85 million in October 2013 and is estimated to grow by 47 per cent to reach 103 million by December 2013.

Rural India also registered growth in the number of mobile internet customers from 21 million in June 2013 to 25 million in October 2013. This is expected to increase to 27 million by December 2013.

tele.net takes a look at the mobile internet space in India and customer usage patterns…

 India’s online landscape

According to comScore’s India Digital Future in Focus 2013 report, internet usage through mobile handsets and tablets grew by 14.2 per cent between March 2012 and March 2013.

In particular, Indian customers were accessing information related to weather, car rentals, blogs and entertainment services (notably music) through their tablets and/or mobile devices. As per comScore’s Device Essentials July 2013 data, 66 per cent customers accessed weather-related information, 60 per cent accessed car rental-related information, 26 per cent accessed online blogs and 24 per cent accessed music services through their tablets or mobile devices.

Further, market research firm Juxt’s India Mobile Landscape report divides Indian customers into two categories – those who access the internet from their desktop, laptop, smart TV or mobile data connections such as GPRS/EDGE and 3G; and customers who access the internet through operator portals such as Airtel Live and Reliance R World. The latter, called on-deck users, have limited access to data services such as ringtone game downloads and video downloads, but do not use the regular internet through a browser or an application.

According to Juxt, India has 23.8 million customers who access the internet through mobile handsets using a data connection such as GPRS or 3G. Interestingly, 1 million of these users access the internet exclusively using a data connection on mobile handsets, which implies that they do not access the internet through any other means such as a desktop or a laptop.

Also, about 7.1 million (or 77 per cent) of these users who access the internet exclusively through mobile data connections are from rural areas.

As many as 110.4 million individuals use operator portals. Of these, about 48.5 million do not access the internet through any other means.

 Popular applications and content

As per Juxt’s report, on-deck users mostly download games, videos and music, while those accessing the internet through a data connection largely use it for communication. Social networking, instant messaging and email are three of the top four applications used by regular data customers.

According to Avendus Capital’s study, India’s Mobile Internet, applications driving the growth of mobile internet in India are search engines, cricket, music, news, games, social networking, utility-based applications, videos, online retail, chat and instant messaging platforms.

For example, in India, Google receives over 40 per cent of its total search queries from the mobile platform. Over 30 per cent of the total number of queries in India has been generated from mobile devices in 2013, doubling during the course of the year. Google also has a significant presence in the mobile applications space, with India being the second largest market for Admob. Similarly, of Facebook’s 82 million active monthly customers in India, 75 per cent access the social networking platform via their mobile handsets. As of June 30, 2013, 62 million customers accessed the site via their mobile handsets and going forward, the company expects the next billion users to originate from the mobile platform.

Another upcoming segment is mobile video content. For instance, 30 per cent of videos on YouTube are being accessed through the mobile handset by Indian customers. According to Vdopia, over 85 per cent of online video views is contributed by Bollywood, cricket and news, followed by tutorials, humour and personalised clips.

Avendus Capital expects significant uptake of internet-based games and applications. This market is expected to be valued at Rs 27 billion by 2016, driven by rapid uptake of smartphones and a growing 3G user base. Over 50 per cent of the mobile internet traffic and paid content revenue (largely provided by Google and the Apple App Store) is contributed by smartphones. The combined revenues of Google Play and the Apple App Store are expected to cross Rs 8 billion by 2016.

Mobile advertising is also gaining momentum and is expected to account for a large part of the mobile internet traffic. As per Avendus Capital, this market would be valued at Rs 28 billion by 2016, as compared to Rs 1.8 billion currently. Over the past year, major players such as Bookmyshow and Cleartrip have adopted the mobile platform and have registered a 25 per cent and 12 per cent revenue growth through mobile advertising.

 Challenges in mobile internet service uptake

Several factors are impacting mobile internet services in India. According to KPMG India, the uptake of mobile internet will depend on factors such as coverage, quality of service (QoS) and service affordability. As per the research firm, 96,000 of the 736,000 telecom towers in India are 3G enabled and are largely restricted to urban areas. This limits the reach of mobile internet services.

Though 4G services have been launched in India, the QoS is below expectations. Also, though the incumbent players have reduced 3G tariffs to the levels of 2G prices, the per MB revenue realisation for each data plan is less than one-sixth of the global average. This does not translate into a viable business case for telecom operators.

 Conclusion

Going forward, non-PC data traffic is expected to continue to witness growth. According to Cisco’s Visual Networking Index (VNI), non-PC data accounted for 10 per cent of the IP traffic in 2012.  By 2017, this will grow to 53 per cent.

Moreover, portable devices like smartphones and tablets will contribute 40 per cent to IP traffic in 2017, as compared to 3 per cent in 2012. Also, Cisco expects mobile internet traffic to witness strong growth by 2017. Mobile data traffic is expected to grow four times faster than fixed IP traffic during 2012-17. The mobile platform accounted for 3 per cent of the total IP traffic in 2012. This share is expected to increase to 32 per cent in 2017.

By 2017, mobile data traffic in India will reach 900 petabytes per month, as compared to 15 petabytes per month in 2012. Factors such as the increasing market penetration of affordable smartphones, access to regional content, use of online video from mobile devices and innovation in the services provided by mobile operators will contribute to mobile internet service growth in India.

With regard to content, the mobile data explosion will be primarily driven by video, as per Cisco. New and affordable devices have strengthened the business case for mobile internet services. Cisco’s VNI predicts that by 2017, video will account for 60 per cent of all mobile data.

 
 
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