18 April, 2017, Economic Times
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Long at the margins of the telecom and internet revolutions, India is today moving towards pole position on data consumption. The recently released Boston Consulting Group-The Indus Entrepreneurs (BCG-TiE) report on India’s internet economy suggests the country is the ‘second highest’ in terms of mobile internet adoption, clocking at 391 million users.
India’s digital economy is expected to double its value to $250 billion, and contribute to 7.5% of the GDP in three years. The projected data consumption per average user: 7-10 GB a month by 2020. Contrast this to the findings of the 2016 Ericsson Mobility Report that suggested data usage in India is slated to increase five-fold by 2021, rising to 1.4 GB per active smartphone. The five to seven times difference in projected data consumption between the 2016 Ericsson and the 2017 BCG-TiE one can be attributed to a disruptive intervention and a data-hungry consumer.
Jio, Reliance Industries Ltd’s technology startup, provided that disruptive intervention. It is perhaps the most influential driver behind the new numbers, which are, however, only the tip of the iceberg. There are deeper transformations that await the digital sector.
Three such transformations will prompt traditional telecom companies to compete and create new revenue streams that can’t rely on connectivity alone:
* The Death of Voice: Telecom companies should acknowledge the reality that traditional voice-based communication is now a market utility, not a luxury. ‘Voice-based’ communication companies will be pressed to invest in new infrastructure and ecosystems that meet the demand for videos and data-driven apps.
In practice, this means investing in infrastructure, and a new cadre of experts who can not only build platforms but respond agilely to disruptive innovation. Unless they can create this new technology ecosystem, they will perish.
* An Internet of People: Unprecedented data connectivity in the hands of half-a-billion (and growing) Indians will create an ‘Internet of People’, with each user signifying multiple opportunities to generate value for the platform economy. GoI’s flagship Digital India programme is, perhaps, the biggest public sector effort in the world to create such an ecosystem.
The ‘Internet of People’, in turn, gives rise to a major challenge: will the innovations for Indians be created and hosted in India? Or will the biggest platforms all be based abroad, leaving little room for the Indian platform economy to grow? As custodians of data, Indian businesses should build capacities for Big Data analytics, create tailored services and products for local consumers in local languages and, in the process, generate employment, unleash entrepreneurial spirits, and catalyse technology-driven social transformation. So, the individual is the biggest driver of India’s platform economy.
Policies for the Platform Economy: As India moves to a $10 trillion GDP by the early 2030s, the fuel of choice will be ‘bits and bytes’. If data is indeed the new oil, how is India prepared to secure this valued commodity? Regulatory questions around cyber security and data protection, as these relate to civilian networks in India, remain woefully unaddressed.
Policy debates in this space have been ‘principle-heavy’, seeking a golden median for regulation — say, for encryption or net neutrality — that can be emulated nationally. Instead, digital economy regulation should be ‘function-heavy’, prescribing rules of conduct for businesses and governments based on the end uses that data is deployed for.
The three-way contract between the user, service provider and app provider will determine questions like: who shares access to data? Can service providers innovate as nimbly as small startups providing applications on their platforms? How should applications be priced? And should this be reflected in data tariffs?
Jio is only one example of the disruption that is set to reverberate across the digital sector in India. That a company like Reliance can bring its considerable resources to bear on a digital enterprise definitely sets Jio apart from others. But the reality is that its digital infrastructure will generate little to no value for Jio, its nearest competitor or the next entrant into this sector. Innovation at the top, at the level of the platform, will expand the digital economy pie in India.
Already, Jio has emerged as a big contributor to Facebook’s latest quarterly revenues from Asia. How can Indian platforms avail the same benefits? It is crucial that India’s businesses, entrepreneurs and regulators train their sights on the application of data, rather than the tubes that deliver them to consumers.
The writer is vice-president, Observer Research Foundation. He has worked with Reliance Industries Ltd since 1994