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Report: Mobile Internet Yet to Take Off in India

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News Analysis
Light Reading
1/6/2010
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Despite the large number of mobile phone users in India -- there are now more than 500 million -- only a fraction are using their mobile devices to access Internet services on a regular basis, according to a new study published by the Internet & Mobile Association of India (IAMAI) . (See India Passes 500M Mobile Mark.)

Although 127 million Indian mobile users have devices that are Internet-ready, only 12 million have accessed the Internet using their handsets during the past year, and only 2 million use mobile Internet services at least once a month, according to research conducted for the IAMAI by market research firm IMRB International.

Not surprisingly, the main users of mobile Internet services in India are young people. College students and young men aged between 18 and 35 account for 35 percent and 33 percent of those active users respectively, while schoolchildren account for a further 11 percent.

During the past few months, Indian operators have launched many services targeting the youth market.

Bharti Airtel Ltd. (Mumbai: BHARTIARTL), the largest operator in India with a subscriber base of 116 million at the end of November 2009, launched a Twitter Inc. service for its subscribers last October. The operator recently published the results of its own mobile usage survey. (See Airtel Surveys Mobile Usage.)

Aircel Ltd. , which has a subscriber base of around 30 million, launched its Pocket Internet service early in 2009 with the youth segment as its main target. The company also plans to launch India’s first mobile applications store in association with Infosys Technologies Ltd. (Nasdaq: INFY). (See Aircel Plans Mobile App Store, Tower Sale.)

Of the mobile Internet services being consumed by the 2 million regular users, communications applications, such as social networking, blogging, and packet voice services, are the most popular, with about 60 percent using such services. E-commerce services such as paying bills and buying travel tickets are used by only 2 percent of regular mobile Internet users, while mobile banking is unpopular because of fraud concerns. The biggest impediment to mobile Internet usage growth in India is the high cost of data usage. However, the operators now realize there is pent-up demand, and are starting to offer more affordable tariffs. Sistema Shyam TeleServices Ltd. , which markets its services under the MTS India brand, in November launched its prepaid mobile data service Mblaze, which offers downstream speeds of up to 3.1 Mbit/s, free access to Websites such as Yahoo and Wikipedia, and a tariff of just 10 paise (less than 1 U.S. cent) per megabyte of data downloaded. (See MTS India Continues Rollout.)

— Gagandeep Kaur, India Editor, Light Reading

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