Internet user base is on a roll: Survey

NEW DELHI: According a survey conducted by AccessMedia on ‘Internet markets

and usage trends in India’ despite a relatively low consumer and SOHO

subscriber base, the overall market registered a 116.5 per cent growth in the

year ended March 2001 over previous year.

AccessMedia’s recent update of the annual study on Internet Markets and

Usage Trends highlights the dynamics and issues that concerns the entire

cross-section of users, besides insights into market sizing and projections for

the next five years.

Click here https://www.ciol.com/images/trendsanalysis_internet_growth.gif

for the graph

Besides ‘bandwidth traps’ the supply side will continue to face serious

challenges in terms of being able to sustain basic service quality. As this

years study shows users (including a significant cross-section of consumers) are

beginning to relate cost to quality of connections.

Delays in rollout plans and implementations of technologies like DSL, ADSL

and Cable-based Internet services will continue to effect growth as markets are

still supply driven to a large extent.

Going by realistic estimates the Internet subscriber market is poised for

rapid growth in the fiscal ending March 2003. Growth rate for the current year

is expected to drop to 78.5 per cent. The number of subscribers (connections) is

expected to exceed ten million by early 2004-05, the critical mass required for

most B2C business models. Going by optimistic growth projections India will have

more than 10 million subscribers before the end of FY 2003-04.

The CAGRs for the five-year period ending FY 2005-06 however are 60.067 per

cent and 63.081 percent respectively for realistic and optimistic scenarios. In

terms of people using the Net (as opposed to connections) India currently has

4.2 million Internet users by realistic estimates. AccessMedia predicts the

number of Internet users to be over 28 million by FY 2005-06.

In terms of the overall market sizing, the country is divided into four

zones. Further to that 14 key cities constitute what is termed as Priority 1

cities, followed by 12 Priority 2 cities. While the Priority 1 cities are

expected to grow at a combined CAGR of 50.645 per cent for the next five years,

Priority 2 and ‘Others’ will likely grow at 100.883 percent and 154.208 per

cent respectively in terms of Internet connections. This comprises Corporate,

SOHO and Consumer segments across the country.

The corporate Internet base comprising different access technologies is still

showing strong growth, and this trend is expected to continue through FY ending

2003. The corporate market is expected to grow at over 65 per cent and 75 per

cent for the next two years before the growth rate declines to below 40 per

cent.

Click here https://www.ciol.com/images/trendsanalysis_annual_growth.gif

to view graph

At this rate the corporate share of Internet connections (of any access

technology) will equal that of Consumers and SOHO combined by FY 2003-04. The

corporate segment is expected to grow just below 40 per cent over the next

five-year period. As is the case with the other segments the corporate growth

too will peak in FY 2002-03. The share of corporate segment will be about 35 per

cent by FY 2005-06.

Among vertical segments Media organizations continue to record maximum usage

in terms of daily dial-up hours, followed by IT companies and Telcos.

The supply side woes include extremely low Brand loyalty among the dial-up

subscribers (especially PSTN-based) and users are equivocal when it comes to

rating ISPs on service and connection related parameters, as ‘inconsistent’.

Other technologies like DSL, Cable and Satellite-based connectivity would

certainly make a difference, but vendor rollout plans seem to be hitting a rough

patch. ISPs are in various stages of network rollouts and investments, in a

marketplace that is yet to reach critical mass as far as value-add services are

concerned. The existing numbers and the indicative price points are not being

able to provide vendors adequate confidence levels. It is quite clear that PSTN-based

connectivity is here to stay and will continue to grow at a significant rate

through the next few years.

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to view table