An internet penetration of mere 11 per cent is a huge challenge in India. Lesser developed countries like Russia, Brazil and Indonesia have a much higher penetration. The country should look at doing things to drastically increase penetration as this can drive the fortunes of all tech entrepreneurs.
We are a country of 1.3 billion people of which the average income of the top 32 million is Rs 13,000 per month. Presently, only this segment has access to internet. In India, the target broadband price cannot be more than Rs 100 per month in order to make it affordable for the mass. When we get there, the entrepreneurs will have the opportunity to innovate and create products to cater to everyone.
The problem is that while traditionally India was driven by state-led initiatives, in the mid-80s markets started driving the economy. All our telecos are very market capital driven, a model that makes sense to small VCs and entrepreneurs but not for large infrastructure projects. The ROI on broadband takes 25-30 years.
Though our government has a plan of allocating Rs 70,000 crore to create broadband infrastructure, there are many private players in the market. It is not wise for private sector players to invest in it. In the US, for instance, there were companies like WorldCom which had raised huge rounds of funding which were used to put fibre under the ground but went bankrupt. Unfortunately, telecos in India are market driven and have discredited the role of MTNL.
Here are excerpts from keynote address made by Ajit Balakrishnan, founder and CEO, Rediff.com, at the recently concluded Techcircle Startup 2014 in Bangalore. Watch the video for more.