Mobile internet is changing fast in India, but don't let vanity metrics mislead you

Overall data penetration will grow more gradually by 2x to 600 million by 2020, reports Tech in Asia

There are 300 million data subscribers in India, but this is just a vanity metric. The ‘real’ data user base is 50-60 million who consume 1GB or more per month – this is the segment that generates over Rs 500 of combined voice and data ARPU (average revenue per user). This user base will rapidly grow 2x to 100-120 million, and will consume 5x data by 2020, driven by low data costs and better data coverage. That’s 10x data consumption.

Overall data penetration, on the other hand, will grow more gradually by 2x to 600 million by 2020, driven by shifts in awareness and affordability. Case in point – over 9 out of 10 Jio users are existing data subscribers.

Not all data users are equal. The first hundred million users include people like you and me. At current tariffs, we believe that the data consumption in the Rs 500-750 voice + data ARPU segment – currently about 39 million users – will grow 3.5x within the next 12-18 months. This is the data-hungry Indian user.
 

However, further reduction in data prices at lower segments is needed to catalyze internet adoption among the second hundred million users. Catchy offers of 1GB data at 50-odd rupees need upfront payments of Rs 1,500 a year, which locks out mass uptake. Even with the best of promotions, 100MB at the lower segments costs Rs 12, which is more than twice the rate at higher ARPU plans. Voice and SMS are extra. The third hundred million users will probably need assisted internet access to become active data users.
 

There are over 50 million 4G handsets in the market, buoyed by the influx of cheap Chinese phones. Handset prices will come down a further 20 percent next year. However, half of the new phone sales are still feature phones – an average feature phone costs Rs 900 vs Rs 3,500 for a smartphone.

This is an excerpt from Tech in Asia. You can read the full article here