India to surpass US in Internet users soon

The growth in the number of Internet users in India is largely coming from mobiles.

India's Internet subscriber base was 198.30 million at the end of the June quarter, growing 20 per cent over the previous quarter, according to a report by the Telecom Regulatory Authority of India (TRAI). At the same growth rate, India's Internet population will be bigger than that of the US in the next few quarters, which has about 260 million users.

A recent research report by the Internet and Mobile Association of India (IAMAI) estimates the number of Internet users at 205 million in October, and estimates it to swell to 213 million by the end of 2013. The number of Internet users in rural India too is growing. In October, according to IAMAI, India had 68 million rural users and the number is expected to grow to 72 million by the year-end.

"With mobile technology, even in rural areas Internet penetration has picked up," says Hemant Joshi, Partner, Deloitte Haskins & Sells. "The young generation is using the mobile device more and more, but there is still a long way to go."

Even though India is tipped to outgrow the US in total subscriber base, penetration is still low at only 12.6, according to The World Bank's World Development Indicator. The US has a penetration level of 81 per cent and the number is 43.2 per cent for China whose Internet user base is almost thrice than that of India.

The growth in the number of Internet users in India is largely coming from mobiles. With data becoming the driver for telecom operators, penetration is only expected to increase. On his India visit, Vodafone Plc's Chief Executive Officer Vittorio Colao said that data will be one of the leading factors for the company's growth in India. He even announced that Vodafone Plc will spend $3 billion on its Indian subsidiary in the next two years.

It is not Vodafone alone. Bharti Airtel, Idea Cellular and Reliance Communication too are pegging their growth on data. Bharti Airtel's data users rose to 50.6 million in the September quarter from 46.5 million in the previous quarter while Idea Cellular's 3G subscriber base increased to 6.2 million from 5.5 million.

Unlike the US, where a large amount of mobile data is used for office related work, in India 80 to 90 per cent of the data is consumed on video and social networks. "The entire B2B business has a huge potential and people will build businesses around mobile Internet," says Subho Ray, President, IAMAI. He also mentions that there is a huge growth potential for Internet companies like Google in India. They can tap the new set of users who are getting hooked to the Internet, he points out.