Four of five Indians could afford internet if data costs fell by 66%, according to a Facebook-commissioned report on internet access. But Indian telecom operators already run data services at a 11% loss, making cost-cutting difficult.
The statistics mean that a data plan, currently priced at Rs 100 should not cost more than Rs 34, if India has to make the internet affordable for 80% of its population.But the adverse economics imply that this cannot happen without intervention from the government —- whose Rs 20,000-crore ($2.9 billion) plan to connect each of India’s 250,000 panchayats (a village administrative unit) with broadband by 2018 — is three years behind schedule.
The internet reached 29% of Indians —- 354 million users in September 2015, IndiaSpend reported. It could rise to 39%, or 462 million users, by June 2016.
But if it were to reach 100%, India’s GDP could be increased by an extra $1 trillion by 2020, according to the Facebook-commissioned report published this month. To put this in perspective, India’s GDP crossed the $2-trillion mark for the first time in 2014, according to World Bank data.
To optimise data costs, the report considered 500 MB data plans, classifying them “affordable” if each cost less than 5% of a person’s monthly income.
The report, titled “Connecting the world: Ten mechanisms for global inclusion”, is based on a study done by PricewaterhouseCoopers for Facebook.
Internet access drives up GDP
The Facebook report said that global GDP could grow by an additional $6.7 trillion by 2020, if internet reaches every human being. If that happens, the GDP of China and India could reach $2.089 trillion, nearly a third of the hypothetical world output.
Universal internet access can also bring half a billion people worldwide out of poverty, according to the report.
High data costs in developing countries:
Data costs in India, as in several other developing countries, are a major barrier.
While 92% people in South Asia live in range of a 2G network, no more than 17% can afford a 500 MB monthly data plan. Two other regions–sub-Saharan Africa (11%) and Middle East and North Africa (17%) — are comparable to South Asia. In contrast, 94% of North Americans can afford such a data plan.
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