Internet opportunities

Ms Meeker's report also underlines many policy challenges

The Indian internet user-base reached 317 million by October 2015, overtaking the United States, courtesy year-on-year growth of 40 per cent. India's rapid growth was largely responsible for pushing the global internet base to three billion by end-2015, according to a widely circulated report prepared by Mary Meeker on internet trends for 2016. The report by Ms Meeker, a general partner at Kleiner Perkins Caufield & Byers LLC, classifies India as a market with "mixed demographics" and medium-to-high infrastructure barriers. Although smartphones are cheap in absolute terms at an average price of $158 a piece, the price is about 10 per cent of India's per capita income. The report highlights areas where paradigms are changing rapidly. Growth should zoom in voice-operated computer interfaces, image-based e-commerce platforms, mobile video advertising, messenger-based marketing and communication and in on-demand transportation.

One out of every five mobile searches is now voice-initiated. As voice recognition gets better, other voice-operations will become more popular. Amazon Echo, a "smart speaker" which enables voice operations across desktops (it also plays music) was the best-selling "speaker" of 2015 in the US. Voice operations are also very popular in cars, since drivers and passengers prefer being hands-free. Video is also growing fast. The live streaming of sports events with value-addition like real-time statistical updates and interactions on social media, is creating a new experience for sports fans. Monetising this effectively could generate new revenue streams.

Mobile advertising is already all-pervasive and fast-growing. But many advertisers are getting it wrong if the 94 per cent jump in the use of ad-blockers is any indication. Hyper-targeted advertising is possible, and hyper-targeting is probably necessary for user engagement. Image-sharing grew by 60 per cent in 2015 and image-based e-commerce is rapidly scaling up with different monetisation models developing. Most intriguingly, the report alludes to on-demand transportation and sharing rides. The autonomous vehicle may still be some distance away. But Uber and copycats have grabbed serious market share and car-pooling is popular. India has "key ingredients like rapid urbanisation, limited public infrastructure, large millennial population, internet inflection point" for shared mobility. Speculatively, this could lead to lower rates of car ownership but many more cab-rides.

India suffers from poor infrastructure and a low per capita income. But it has scale and a very young population, which is tech-savvy, video-obsessed, and comfortable with e-commerce. In terms of the potential, entirely new indigenous businesses could develop, and go global. But for all this, good policy is necessary. That would mean a review of the telecom policy to enable the building of better physical infrastructure. It would also mean a removal of barriers that hinder investments into multi-brand retail and above all, legislation to ensure data security and privacy of users. Data privacy was the last point stressed in Ms Meeker's report as being of high concern to global users and India has, as yet, no data privacy law.