How to bring India's 1.25 billion people online using smartphones

Is it conceivable to connect India's whole population of 1.25 billion people to the internet? Prime Minister Narendra Modi's Digital India program is centered on this goal. However, if the government is serious about achieving this aim, it must make internet connections more widely available and accessible. And cellphones are the only method to do so.

There are compelling reasons to support Modi's policy. Researchers have discovered evidence of a "multiplier" effect from mobile access for more than a decade. In 2005, it was anticipated that with every 10% rise in mobile penetration, low-income nations' GDP would expand by about 0.6 percent. According to a 2009 World Bank study, every 10% increase in internet access results in a 1.3 percent boost in GDP in developing countries.

India appears to be taking the right steps in the right path. It, like the rest of the world, has seen a massive increase in the use of cellphones as accessibility has increased and costs have decreased. In addition, the country has "leapfrogged" numerous older technology in favor of the most up-to-date gadgets.

It is fairly uncommon to discover Indian households without electricity yet with cell phones. Many people honestly believe that India has reached a tipping point in terms of internet user growth.

In India, smartphones are widely used.
Mobile phones and smartphones account for the vast majority of the market; landlines account for fewer than 3% of all phones in India, and wireless broadband accounts for 89 percent of all connections.

In addition, the government has made headway toward creating an environment where a growing proportion of mobile phones are built domestically through its flagship plan, "Make in India."

You might think that a "smartphone" is a mobile phone that supports 3G or 4G technology. That, however, is not the case. Any phone with a touchscreen, internet connection, and apps is referred to as a smartphone. "Feature phones" are phones that aren't capable of connecting to the internet at high speeds.

As shown in the graph above, by the middle of 2016, the vast majority of smartphones in India were not 3G or 4G capable. Nearly 75% of all mobile devices were feature phones, meaning they couldn't connect to the internet at high speeds.

India requires more affordable 3G or 4G-enabled handsets, as well as more affordable data plans with reasonable speeds, to increase the number of internet users and regular usage.

Low-cost phones, high-cost connections
When it comes to data, India's telecom sector may be set to alter now that Mumbai-based Reliance Jio, which is owned by Mukesh Ambani, the country's richest man, has made its formal entry into the market.

Between Reliance Jio and the regulator on one hand, and established telecom companies on the other, there has been a war of words over this entrance. Initially, incumbent providers refused to give Reliance Jio the requisite "points of connection" — sites where data from one network is exchanged with that from another.

However, both the incumbents and the newcomer agree on one thing: they both oppose the current high tariffs on telecom services, which include both voice and data.

Taxes mean that the whole bill will be too high for price-sensitive Indian customers, regardless of how low the price of a smartphone or the cost of services is. This is a severe problem that could disrupt the government's Digital India goal.

Expectations for the future
Smartphones have become more affordable as a result of market pressures. In the coming years, the bulk of new smartphones made in India will be 3G or 4G capable.

Due to India's linguistic diversity - the country's Constitution recognizes 22 languages – there would be some difficulty accessing content on phones. By providing content in different languages via its "App Bazaar," Indus OS, India's second-most popular mobile operating system, demonstrates how market forces are evolving in the right direction.

The regulator's recent measures to reduce phone and internet charges provide a reason for optimism. A government with a huge budget deficit, on the other hand, is unlikely to willfully forsake tax revenue.

The answer to getting more Indians online isn't in the hefty taxes on telecom services, nor in the policy uncertainty and outright favoritism that have plagued the sector in recent years.

Sickly telecom business is bad for the country and its residents. So far, market forces have been propelling the sector in the correct direction; now it's time for the government to step in and assist.