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The Next Billion Geeks
By: Steve on September 9, 2010
Buying a mobile phone was the wisest $20 Ranvir Singh ever spent. Mr Singh, a farmer in the north Indian state of Uttar Pradesh, used to make appointments in person, in advance, to deliver fresh buffalo milk to his 40-odd neighbours. Now his customers just call when they want some. Mr Singh’s income has risen by 25%, to 7,000 rupees ($149) a month. And he hears rumours of an even more bountiful technology. He has heard that “something on mobile phones” can tell him the current market price of his wheat. Mr Singh does not know that that “something” is the internet, because, like most Indians, he has never seen or used it. But the phone in his calloused hand hints at how hundreds of millions of people in emerging markets—perhaps even billions—will one day log on.
Only 81m Indians (7% of the population) regularly use the internet. But brutal price wars mean that 507m own mobile phones. Calls cost as little as $0.006 per minute. Indian operators such as Bharti Airtel and Reliance Communications sign up 20m new subscribers a month.
In other developing countries, too, there are many more mobile phones than internet connections. In Brazil, Russia, India, China and Indonesia (the so-called BRICI countries), there are 610m regular internet users but a staggering 1.8 billion mobile-phone connections, according to the Boston Consulting Group (BCG). In a report called “The Internet’s New Billion”, BCG predicts that by 2015 there will be 1.2 billion internet users in these countries—dwarfing the total in America and Japan.
These new internet users will mostly log on via their mobile phones. This tends to be cheaper and easier than any other option. In Brazil, fixed-line broadband is often prohibitively expensive; in Russia, where it can be much cheaper, it is often unavailable. In India, where infrastructure is always a headache, it is hard to get a good basic landline, let alone broadband.
Poor people seldom have personal computers. In the BRICI countries, whose combined population is more than 3 billion, there are only 440m PCs. Many people use internet cafés, but these are inaccessible to rural folk. A connection in your pocket is far more convenient.
Hordes of Indians will start using their mobiles to access the internet early next year when third-generation (3G) services, which allow subscribers to access the web, arrive. Kunal Bajaj, India director of Analysys Mason, a British consultancy, expects the take-up to be as fast—and as revolutionary—as it has been for mobile phones. “The telecoms companies have seen what happens when they drop prices. They’ve already tasted blood. The price wars will be just as aggressive,” he says.
The stakes are high. In developing countries, every 10 percentage-point increase in mobile-phone penetration yields an extra 0.81 percentage points of annual economic growth, according to a 2009 World Bank study. The mobile internet could be even more powerful. The unemployed will search for jobs online. Farmers in remote areas will find customised advice on crop planting.
The drawback of the internet is that you have to be literate to use it. That is a huge problem in India, where the literacy rate is only 60% (in China and Russia, it is over 90%). Mr Singh, the farmer, cannot read, so he cannot send text messages. He says he often needs help dialling numbers correctly, too.
Source: The Economist