Adding a Billion New Internet Users Creates New Problems

Sometimes, “success” causes “good problems.” If ISPs are successful in adding scores of millions of new users, ability to supply that demand immediately becomes a problem.

India has mobile bandwidth of 0.2 Hz/sub, presently supporting nearly a billion customer accounts.

But only about 20 percent of those customers use the mobile Internet. If nearly everyone of those customers starts using the mobile Internet, demand would far outstrip capacity, growing at least 500 percent, even if typical consumption remained low--and it will not.

Add another billion users and it is clear capacity would have to grow 1,000 percent, even if bandwidth consumed by each user did not grow.

Other countries already have 3 Hz/sub to 23 Hz/sub mobile network capacity. Without much question, it will be difficult to impossible to connect up to one billion more Indians to the Internet without dramatically expanding network resources.

In other words, “success”--convincing up to a billion more Indians that need, and can afford, and can buy,Internet access--will bring major new problems.

Solving the demand problem actually makes the second major problem--supply--even worse.

The potential number of new users  is but one of the several adoption barriers in India. Village households have monthly household income of US$230, with US$24 a month in per person spending.

So part of the challenge is convincing those consumers they should spend money buying Internet access. By way of comparison, the typical Indian mobile account represents a bit less than US$2 a month in spending.

http://www.financialexpress.com/photos/business-gallery/29630/mobile-internet-users-pre-budget-discussion-gold-etf-and-more/2/

“Where” many of the new users live also is an issue. There are, according to Professor Rekha Jain, of the Indian Institute of Management, 640,000 villages in India, containing 180 million households. And, as you would guess, the cost of backhaul to reach those villages is high.

Typically, revenue per cell site is highly differentiated. In a Western European market, for example, half of revenue is generated by just 10 percent of sites. And a Pareto distribution (80/20) tends to hold: about 30 percent of sites tend to drive about 80 percent of total revenue.

The corollary is that half of sites collectively generate less than 10 percent of revenue. In a country with 640,000 villages and a huge landmass, that problem is likely worse.

source: Techeconomy