BG Mahesh | Mahesh | mahesh.com

Will internet penetration growth be dampened by new tax in India?

The Internet user base in India has grown but it is still not big enough as most of us want it to be. It hasn’t grown fast enough. Akamai releases a report every quarter “The State of the Internet“. It may sound cynical but we tend to see how bad India looks in that report. Instead we should have been looking forward to see how is India improving in terms of internet speed, internet penetration.

The infographics from Akamai are self explanatory. Akamai defines 4 Mbps as broadband. India saw a massive 265% increase in broadband adoption in 2012. This is good news but we can do better.

I have always felt we need to first work on penetration. There are many areas of Bangalore which still don’t have wired broadband – due to high costs of last mile access and government red tape.

 

Death Tax For Wireline Broadband Services in India

I was a little shocked to read yesterday about DoT is planning on introducing 8% license fee [by Ajay Shah] on broadband services in India even if you are not using the spectrum. Important points from the article are,

Prefer Wireline Broadband Over Slow 3G in India

I strongly prefer using wireline broadband services. I must be one of the first subscribers of Airtel broadband service in Bangalore.

I have been a 2G user on my mobile for a long time. Just 6 months ago I got a 3G pre-paid connection for my battery-power hungry Samsung Tab2. I hate both – 3G and Samsung Tab2. Even while using wifi at work every time I blink the balance on my prepaid connection keeps reducing. I still haven’t found a solution for this prepaid puzzle. And the 3G connection is slow as a donkey.

The following graph from Akamai clearly shows India was not on the list of countries which they felt had to be tracked for mobile internet speeds.


The government of India must work towards internet penetration with decent internet speeds. It will create jobs in pockets all over urban and Tier-2 India. When jobs are created we indirectly pay taxes to the government in various ways – income tax of employees, service tax, you buy goods for your company. So why tax the enabler in India? Leave broadband alone please.