Internet in India Report - IAMAI2007

(Summary Report of I-Cube 2006)
MAPPING THE INDIAN INTERNET SPACE

IMRB International & IAMAI
Internet And Mobile Association of India
Contents
0.1 Introduction 4
0.2 Glossary of terms used in the report 5
1.0 The Growing Internet Population 7
1.1 Every 10th individual in urban India has accessed the Internet 8
1.2 Internet ever user base has doubled over 2004 9
1.3 Small towns are growing the Internet user base 10
1.4 Internet is reaching out to the less affluent sections of the society 11
1.5 Youth are the biggest segment on the Internet 12
2.0 Paradigm shifts in Internet Access 13
2.1 Gap between PC owners and Internet subscribers is reducing 14
2.2 Broadband is the new face of Internet connectivity 15
2.3 Internet access from home is gaining prominence 16
2.4 Segments have clear preferences for access points 17
3.0 The Booming Internet Applications 18
3.1 Internet competing with other media across specific applications 19
3.2 Newer applications are emerging on the Internet 20
3.3 Demographic segments have specific application focus 21
3.4 Internet: Growing on the stickiness index 22
eTechnology Group@IMRB 02
4.0 The Future and Drivers for Growth 23
4.1 Top addressable barriers amongst non users and non owners of Internet 24
4.2 Internet growth drivers for the future 25
4.3 Enablers: Specific intervention needed 26
4.4 Summarising the growth of Internet in India 27
4.5 Growth forecasts: 50 million users will experience the Internet by March 2007 28
A1.0 Annexure I: Sample & Methodology 29
A1.1 Target segment & city selection 30
A1.2 Household listing interview sampling procedure 31
A2.0 Annexure II: Press releases from I-Cube 32
A2.1 IAMAI-IMRB study pegs urban internet users at 37 million for September 2006 33
A2.2 E-mail and Chat no longer primary internet traffic drivers! 35
A2.2 E-mail and Chat no longer primary internet traffic drivers! 35
A2.3 38% internet users clock of 8.2 hrs per week on the net 37
A2.4 39% Users still prefer to access Internet from Cyber Cafes 38
0.1 Introduction
Internet is the latest addition to the media bouquet that has caught the fancy of the Indian masses. It is making deep inroads
into everyday life, be it creating new means of service delivery, knowledge sharing and at the most basic level just how
individuals communicate with each other. This revolution is benignly changing the lifestyle of Indians through the length and
breadth of the country.
This report aims to map the growing relevance of the Internet in India. It is based on the “Internet in India” study, an annual
syndicated research conducted by IMRB International since 1998 and this year conducted in association with IAMAI.
About Internet in India 2006 Reports
Internet in India (I-Cube) reports are based on a primary survey conducted in early 2006 amongst 16,500 households covering
65,000 individuals across 26 major metros and small towns in India, with additional coverage of 10,000 business and 250
cyber café owners. The coverage of I-Cube is unparalleled in breadth and scope.
0.2 Glossary of terms used in the report
PC Literate: PC Literates have been defined as those who know how to use a PC. While this term does not signify the extent of
PC usage, it essentially means that a computer literate is able to work on a PC without assistance.
Ever User: Ever user of Internet is someone who has used the Internet at any point in time
Active User: Active user of Internet is someone who has used the Internet at least once in the last 1 month.
Internet Non User: Individual who has not accessed the Internet at any point in time
Internet Non Owner: Household which does not own an Internet connection
Top 8 Metros: The top 8 towns in terms of population (Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Pune,
Ahmedabad
Small Metros: Other towns which are not a part of top 8 metros but have more than 1 Million population. The I-Cube 2006
covers 18 such towns including Lucknow, Cochin, Patna, Coimbatore, Indore, Ludhiana, Jaipur, etc.
Non Metros : towns with a population between 0.5 million 1 Million Towns. The I-Cube 2006 covers 6 such towns including
Chandigarh, Guwahati, Bhopal, Bhubaneshwar, Durg and Trichy
Less than 0.5 Million Town: Urban Centers with a population of less than 0.5 million. No primary survey was carried out in
these locations. The findings have been extrapolated to these centers using various statistical techniques.
Socio Economic Classification: Socio-economic classification (SEC) indicates the affluence level of a household to which
an individual belongs. Socio economic classification of an urban household is defined by the education and occupation of the
chief wage earner (CWE) of a household. SEC is divided into 8 categories A1, A2, B1, B2, C, D, E1, and E2. (In decreasing
order of affluence). I-Cube 2006 survey covers all the SECs in top 8 metros and SEC A SEC C in other centers.
School Kids: All those studying in school above 8 years of age. Most students will be in the age group of 8-17 although a small
proportion will be over 18 years
College Going: All those studying in college (graduate, post-graduate and doctoral). Most students will be in the age group of
18-23 although a proportion will be below 18 and over 23 years
Young Men: These are men in the age group of below 35 years who are not school or college student. This segment includes
all those who are employed as well as unemployed.
Older Men: These are men in the age group of 35 to 58 years and include all in this age group whether employed or not.
Working Women: These are women in the age group of 18years to 45 years and employed outside home.
Housewives: These are women below 45 years age and not working. This segment includes housewives as well as non-
working young women who are not school or college students.
Stickiness Index: Stickiness Index is a composite of how often a media is accessed and how much time is spent on it.
1.0 The Growing Internet Population
“As user engagement grows with it, Internet will

grow faster than all other media”
1.1 Every 10th individual in urban India has accessed the Internet
Internet in urban India can be viewed as a funnel. At the top most level
is the universe of urban population; at 243 million it offers tremendous Internet in Urban India
*Source: NRS 2005
#Source: All India Figures, I-Cube 2006; March 2006
room for growth for Internet in India.
Urban Population ~ 243 Million*
However Internet is also a function of many other variables, chief

Literate Population
amongst them is a basic level of familiarity with English, to make 203 Million*
meaningful use of the Internet and also familiarity with the most English Knowing
77 M*
common access device, the PC.
PC Literate
59 Million#
In India almost three fourth of all English speaking language population
is now PC literate but of these only 55% have experienced the Internet. Ever User
$
32 Million
Thus there exists an immediate potential for Internet converts amongst
Actives Use
existing PC users. 21 Million#
After reaching the outer limit of growth amongst the English speakers, the next challenge would be to reach out to the non
English speaking population.
$ IMRB International estimates that as of September 2006 there are 38 million “Ever” Internet users in India. These include
1million “Ever” users from the rural India.
1.2 Internet ever user base has doubled over 2004
#Source: All India Figures, I-Cube 2006; Figures in millions
80
PC Literates Ever User Active User
70
59
60 53
50 42
40 31 32
30 21
20 16 16
9 12 11
5 4 7
10 2
0
2000 2001 2003 2004 2006 2000 2001 2003 2004 2006 2000 2001 2003 2004 2006
*Study not conducted in 2002 and 2005
The number of PC literates is growing steadily over the years and has grown by 270 % over 2000! The growth of Ever Users
and Active users has been even more impressive with 540% & 950% respective growth over 2000!
Ever users as a proportion of PC literates has been constant over the years at about 30%, except last year when it grew to
become 54%. Thus every second PC user in India has now experienced the Internet at any point in time; this has now created a
critical mass for rapid growth.
The trend of Active users as a proportion of Ever users has grown from 40% in 2000, to the current proportion of 66% This is a
clear demonstration that Internet Internet is not merely trials but several users continue to actively use it.
1.3 Small towns are growing the Internet user base
Internet trials are increasing in the small and

Non-metros as more users log on and feel Town Class Distribution
Source: All India Figures, I-Cube 2006, Ever Users
confident enough to become a part of this global
community. From 27% in 2001, the Non Metros BASE
9m 12 m 16 m 32 m
and Small Towns now account for 39% of all 100%
20% 20% 19%
Internet users. 29%
80% 6%
7% 7%
15% 19% 20% 10%
The growth from smaller towns is driven both by 60%
20%
better access and by increasing awareness as 40%
mass media and word of mouth promote Internet. 58% 55% 55%
20% 41%
The Top 8 Metros which have been the traditional 0%
early adaptors continue to be the biggest 2001 2003 2004 2006
Top 8 metros Small metros Non metros Small towns

contributors to the Internet population in India.
However the proportion has come down significantly over 2001 and should go down even more over the next 3 years as more
users from the smaller cities log on.
1.4 Internet is reaching out to the less affluent sections of the society
It is not just the smaller towns which are contributing

to the Internet revolution in India; it is also being Socio Economic Class Distribution
Source: All India Figures, I-Cube 2006, Ever Users
driven by the less affluent sections of the society, the
lower socio economic classes. It has taken a BASE
9m 12 m 16 m 32 m
combined effort of Internet stakeholders to reduce 100% 3%
9% 12% 11%
21%
the initial inertia and promote this interaction. 80% 17% 18% 18%
60% 32% 35%

Firstly mass media has helped in creating more 31% 29%
awareness for the Internet, especially as a tool for 40%
empowerment. 20% 41% 40% 41% 42%
0%
Secondly PC's and internet connections have
2001 2003 2004 2006
become more affordable making it easier for many
SEC A SEC B SEC C SEC D & E
more people to own a PC and use the internet. On the
applications side several one time applications like examination results and ticketing, which are non communication oriented
encourage the less affluent to be on the Internet.
As corporate digital divide programs and NEGP initiatives bear fruition; usage amongst lower SECs should increase
phenomenally in the next 2-3 years.
1.5 Youth are the biggest segment on the Internet
Internet universe can be divided into 6 exclusive and exhaustive segments

based on specific demographics
The third key element in the Internet equation in India is the

School Kids Older Men
demographic segment. Age 12-17 Age 35-58
14% 17%
Users between the age of 18-35 are the biggest segment in
India accounting for 50% of all users on the Internet. This has
College Students Working Women
been aided by the traditional focus of Internet content Age 18-23 Age 18-45
providers on youth centric applications. Like their peers in 23% 9%
other countries, Indian youth are also more inclined to adopt
Young Men
technology faster and be the leaders in showing the way to Non Working Women
Age <35,
the other segments. Working or NW Age <45
9%
27%
Overall the proportion of different segments has been stable
over the last couple of years; however as Internet penetration for household increase, we expect the at-home segment like non
working women and school children to grow in proportion over the next 2-3 years.
(Expecting this growth, many content providers have come up with games and stories targeting at school children and are
planning to come up with women specific content in the near future.)
2.0 Paradigm shifts in Internet Access
“ User intimacy with Internet will grow as

interaction through multiple platforms &
access points becomes common”
2.1 Gap between PC owners and Internet subscribers is reducing
Internet universe can be divided into 6 exclusive and exhaustive segments

based on specific demographics
The number of Internet subscribers is

Internet owners- Trend
growing steadily and has increased from Source: All India Figures, I-Cube 2006
25,000 to 2.9 million in the period 1997-

PC Owners Internet Subscribers % PC Owners with Internet
2006 7000 76% 80%
6000
More PC owners are now opting for the
Number of users (in '000)

58% 60%
Internet experience at home; from a mere 5000
54% 54%
51%
3861
9% in 97-98, the proportion of users who 4000
43%
2,927 40%
own an Internet connection has come up 3000 2,550
27% 1,886
to 76% of the total PC owning base. 2000 1,550
1,304 20%
9% 1,073 1,025
732 837
1000 461 624
This growth in Internet adoption can be 126 318
287
25
attributed to faster and cheaper access 0 0%
97 - 98 98 - 99 99 - 00 00 - 01 01 - 02 02 - 03 03 - 04 05 - 06
options driven by broadband technology.
We estimate that this proportion should grow further with added growth coming in from smaller towns as the PCs and internet
access technologies get cheaper
2.2 Broadband is the new face of Internet connectivity
Indian households are adopting Broadband

Type of connections
services which are cheaper and more widely Base: All India Figures, 2.6 million internet owners, I-Cube 2006
available.
Though Dial-up connections continue to dominate

the market due to sheer historical build up, we
estimate that broadband connections will 27%
overtake dial-ups in 2008-09 and by 2009-10 73%
broadband will lead with 75% share of the market.
This growth for broadband has been driven by

Telcos' pushing into the smaller towns and cable
operators offering last mile solutions.
Only Broadband Only Dialup
As bandwidth constraints are released and last
mile connectivity issues are resolved, broadband
growth will see an upturn.
The recent 40% fall on the prices of bandwidth will also augur well for growth, particularly from small & medium businesses and
cyber café who will now find it more affordable to get broadband connectivity.
2.3 Internet access from home is gaining prominence
Growing broadband adoption in India is Main points of access

reflected in the increasing importance of Source: Active Users, 26 cities, I-Cube 2006
home as an access point. Though the

BASE
1.4 m 3.1 m 4.9 m 7.5 m 13.2 m
upswing is limited because the lower SEC's 100% 3% 2% 2% 2%
5% 3% 5% 6%
4%
still largely access from cyber café. 19% 20%
80% 30% 20% 22%
Increasing Internet access from home is a 60% 30%

23%
27%
22% 31%
healthy sign for the industry as it will lead to
40%
higher user intimacy with this media; Users
52% 46%
20% 43% 44% 39%
will interact in the privacy and comfort of
home without being constrained by external 0%
factors and will experience the Internet in a 2000 2001 2003 2004 2006
more personal manner. Cyber café Home Office School/College Others
Amongst the other points of access Cyber café still continue to be the most popular access points for a majority of Indian
internet users. Cyber café have served an important function, often being the first point of initiation for new users. They
continue to evolve their roles and over a period of time will become places of social interaction and networking. In the Top
metros, café have already taken on an avatar of gaming zones.
Educational institutions will also gain prominence as government initiatives & corporate programs bring the Internet to more
schools and students are imparted the necessary IT skills.
2.4 Segments have clear preferences for access points
In a complex Internet market like India there

Main point of access across segments
are clear differences in how demographic Source: Active Users, 26 cities, I-Cube 2006
segment use different access points. Choice
of primary access point is a function of 4% 2% 2% 2% 1% 5%
100% 1% 2%
12% 2%
disposable income, mobility and technology 15%
80% 35% 41% 38%
28% 33% 47%
saviness. 60%
26%
40% 39% 34%
Thus Cyber café are the dominant point of 20% 53% 53% 45%
36%
18% 25%
access for students, driven by convenient 0%
access and privacy. School College Young Older Men Working Non-
Going Kids Going Men Women working
Office gains prominence and becomes the Student Women
most used point of access amongst the Cyber Café Home Office School/College Others
working segment as it is the only media they
can access easily during the office hours/
their 8-12 hour shift.
Home is the main point of access for most non-working women as it is the most convenient and accessible point of access for
them.
3.0 The Booming Internet Applications
“Usage is linked directly to cost of access and

stickiness of applications”
3.1 Internet competing with other media across specific applications
Internet as a category is also competing

with other media and this interaction can be
clubbed into three broad areas:
Internet exlusive: Internet Other Media

--”e-mail, Chat/IM, VoIP“ Exclusive Common Exclusive
Communication is the “core benefit” which
Applications Applications
initiates users into the Internet category

and continues to be a key application.
Internet competing with other media:

--“Entertainment, Jobs, Matrimony, News”
As users mature they look for other applications which are also offered by other media; thus Internet directly competes with
other media and needs to offer strong differentiation building up on the convenience factor and developing other benefits.
Hooks offered by Internet:

--“Online banking, Ticketing, Products”
These services are the “extended benefits” which increase the stickiness of Internet and create an advantage over other
media, these need to be used as hooks to compete against traditional media.
3.2 Newer applications are emerging on the Internet
The trend in Internet application usage in India

Main applications used
is very interesting and demonstrates the Source: Active Users, 26 cities, I-Cube 2006
evolution of Internet as a media.

Base 3.1 m 4.9 m 7.5 m 13.2 m
Traditional favourites e-mail & chat continue to 100% 1% 1% 1% 4%
5% 6% 9% 7%
be dominant but slowly & surely are giving way 20%
80% 24% 24%
to other emerging applications, especially to 10% 33%
60% 13%
information search. 12%
10%
40%
As users mature on the application curve they 64%
52% 50%
20% 45%
look for other applications beyond basic
communication to continue their relationship 0%
with Internet. Demographic preferences also 2001 2003 2004 2006
start coming into the picture and users develop E-mail Text Chat
Information/ Education Entertainment/ Relaxation
clear favourites. Buy/Sell/Transact
Yet innovations in e-mail will continue to play an important role, both as an incentive for trialists and for retaining existing users.
Other applications will continue to evolve to cater to different segments of users as they mature.
3.3 Demographic segments have specific application focus
All the nuances in the differences between

Main applications across segments
the demographic segments are also Source: Active Users, 26 cities, I-Cube 2006
reflected in their application preference.

Base 3.1 m 4.9 m 7.5 m 13.2 m
Communication based applications gain 1%
100% 3% 1% 1% 1%
7% 4% 5% 5%
increasing importance amongst the older 18%
9%
1% 5% 5%
4% 4% 2% 8%
4% 1%
80%
segments, a function of their comfort level 21% 25% 22% 22%
37%
with only basic applications. 60%
47% 11% 8%
9% 8%
40% 14%
Infotainment is a clear focus for youth
11% 53% 56% 56%
50%
and the use of Internet for education is 20%
35%
23%
strong. 0%
School Going College Going Young Men Older Men Working Non-working
Over a period of time India will go the way Kids Student Women Women
of Japan & South Korea and online E-mail Text Chat/Internet Telephony
Informations / Education Search E-Commerce
gaming should also become a key driver Entertainment/Relaxation Matrimonials /Job Sites
Others
for children, starting with the metros.
E-commerce is also slowly emerging as a focus area; ticketing has been the killer application, driven by a strong convenience
driven benefit for the user (especially railway tickets) Over the next 2-3 years increasing credit card penetration and positive
word of mouth about secure online payments will encourages more Internet users to try e-commerce offerings. Increasing
comfort levels with e-commerce will also ensure that higher value transactions on the Internet become more common.
3.4 Internet: Growing on the stickiness index
Internet is moving on the way of becoming mass

Frequency of Internet access
media as users are logging on more often & Source: Active Users, 26 cities, I-Cube 2006
Mean
spending more time on the Internet. Hours Week
Per Week
However, compared to the growth in the number 100% 3% 4% 3% 4%

of Internet users, the growth in the number of 11% 10% 13%
16%
80%
frequent internet users has been limited. 21% 23% 15%
21%
60% 22%
25% 21%
This can be attributed to multiple reasons, like 24%
40% 18%
on the applications side, limited innovations 14% 18%
15%
20%
catering to the specific needs of Internet users in 25% 23% 28%
17%
India. Beyond a basic level, users will only 0%
spend more time on the Internet if there are 2001 2003 2004 2006
enough applications to engage their attention. Almost daily including holidays 4-6 times/week
2-3 times/week Once a week
Time spent on the Internet is also a function of
2-3 times a month Less than once a month
the high cost of Internet access, with low speeds
of still popular dial-up connections, basic Internet surfing was so far an expensive proposition for a majority of Internet owners.
There are initiatives by key stakeholders to tackle issues related to cost of access and availability of user specific content
issues but there would need to be significant interventions to resolve the issues on the application side. As these issues are
resolved mean hours per week should grow even more for the typical Indian user.
4.0 The Future and Drivers for Growth
“Growth beyond natural limit will come from of a

combined strenuous effort of all stakeholders”
4.1 Top addressable barriers amongst non users and non owners
of Internet
Barriers amongst non users of Internet Barriers amongst PC owners not

owning Internet at home
Do not understand Cost of access from

71% 69%
its usefulness home is high
Cost of access is high Need for limited time so

45% 31%
access from café
Not confident about using 24% Do not find it very useful 30%
The biggest barriers to the growth of number of users and connections are driven by perceived high cost & low awareness.
However, with cost of enablers & home access reducing, there would be a shift in this perception in the near future. To tackle
awareness issues, It is important is to create user “pull” by large scale interventions on educating non users about the
usefulness of this medium. This would then have to be supported by customisation of content to suit the tastes & needs of
those who would be drawn to use.
4.2 Internet growth drivers for the future
Growth from non users will be stimulated due to the intervention of certain
ENABLERS
Each enabler will address a different barrier which

Technology Access holds back non users & non owners from getting on to
Enablers Enablers
the internet.
These interventions will be a larger community initiative

involving different stakeholders like Government,
ISP's, web sites, search engines, mobile service
Content Awareness
providers & content providers.
Enablers Enablers
˜ These enablers together will create a positive

environment for a “pull”, drawing in non internet users & more importantly, non internet owners who would not otherwise
become internet users and owners respectively in the due course of time.
4.3 Enablers: Specific intervention needed
Technology Access
Enablers Enablers
˜ Broadband making in home internet access ˜ Cost of PC coming down

attractive.
˜ Internet on mobile becoming a realistic solution.
˜ Government & Corporate Digital divide programs
˜ Cyber café's penetrating to villages &
increasing access amongst rural areas & urban
proliferating in small towns.
lower SEC's.
Content Awareness
Enablers Enablers
˜ Regional language online content

˜ Positive word of mouth creating a strong pull.
˜ PC's with regional language interface
˜ Lure of convenience pulling in first time users
˜ Search in regional language
4.4 Summarising the growth of Internet in India
Parameters Introduction Phase Early Growth Phase Growth Phase

Limited Average Adequate
Low Average High
SEC A; SEC B and C; SEC C and D;

Top 8 Metros; Small Metros; Non Metros, smaller
town with less than 0.5
million population;
Young men Working population (Young Men, School and college
Older Men, Working Women) going students, working
population
Cyber café; Cyber café (in small metros); Mainly Home Access
(Due To Broadband
Penetration);
Dial up (trial) connections Home access (driven by Cyber Café (Branded Chains);
for home access Broadband connectivity); Schools And Colleges;
access from Office Mobile Phones;
Offices
E-mail and Chatting E-mail; Chatting (text and video) Information search;
and Information search E-commerce; Gaming;
E-mails and Chatting
English Mainly English; Hindi; some Multi lingual

Regional languages,Tamil, Telegu, Voice interface for illiterate
Bengali etcz
4.5 Growth forecasts: 50 million users will experience the Internet

by March 2007
Internet user base in India will grow beyond

Forecast for the growth of Ever user
50 million users by March 2008. and active user base
(In millions by March each year)
Growth in the number of users will come in
70.0 64.6
from improved access as PC penetration into 60.0 53.5
Indian households increases and as more 50.0 42.5 43.5
40.0 35.7
32.2
existing PC owners opt for Internet 28.7
30.0 21.1
ownership. 20.0
10.0
Push by Telco's into smaller towns is also
2005-06 2006-07 2007-08 2008-09
expected to add as a major fillip to household
penetration of Internet. Ever Used Active Users
Internet should go the mobile way in the next few years and we will see more users from the less affluent sections, who would
want to experience the Internet. This would be driven both by utilitarian application driven reasons as also for the glamour
quotient and the feeling of being “in” with metro cousins.
Within the evolved markets, demographic segments will focus even more on specific applications and the challenge for
stakeholders would be to offer relevant applications to cater to their needs. Subsequently the challenge would be to monetize
these preferences.
A1.0 Annexure I: Sample & Methodology
A1.1 Target segment & city selection
 To determine the sample size, the previous rounds of the Internet in India reports, that have laid down the universe of
the Claimed and Active Internet Users in the country were extensively used.
 In this round of survey, for city selection, population of towns as per Census of India 2001 were referred.
 Based on above, we arrived at using 26 cities this time as against 22 cities covered in the last round of survey
conducted in 2004.
 The cities covered included:
Cities by Strata
Top 2 Metros Delhi & Mumbai
Next 2 Metros Chennai & Kolkata
The above two are sometimes collectively called as Top 4 Metros
Other 4 Metros Bangalore, Hyderabad, Ahmedabad & Pune
The above three are collectively referred to as Top 8 Metros
Small Metros Patna, Cochin, Baroda, Lucknow, Ludhiana,
Coimbatore, Jaipur, Indore, Surat,
Vishakhapatnam, Allahabad, Nagpur
Non Metros Chandigarh, Guwahati, Bhopal, Bhubaneshwar, Durg, Trichy,
A1.2 Household listing interview sampling procedure
 Based on the Quota Sampling, we identified the number of households belonging to SEC A, B, C, D and E to be
covered.
 Selection of households was made based on random starting addresses identified from electoral rolls.
 Care was taken to ensure even geographical spread in identifying the starting addresses across the cities selected.
 The household listing questionnaire was administered to the Chief Wage Earner or the person who is aware of the
usage of IT products / Durables in the household.
 In order to map the population of the internet users, we conducted a detailed interview with the most computer literate
person in the household (but at least 18 years & above) with the aim of understanding ownership and usage of IT and
Internet related products at home currently and in future.
˜ Based on this household survey, we managed to profile (age, sex, occupation, education, computer knowledge &
Internet use) the individuals using Internet in 16,500 households across 26 cities in India.
A2.0 Annexure II: Press releases from I-Cube
A2.1 IAMAI-IMRB study pegs urban internet users at 37 million for

September 2006
Youth and small towns lead the way in increasing penetration and use.
According to the joint research by the Internet and Mobile Association of India (IAMAI) and IMRB International, Internet users
in India have reached 37 million in the month of September 2006, up from 33 million in March 2006. During the same period the
number of "active users" has risen from 21.1 Million in March 2006 to 25 Million in September 2006. "Active User" is an
internationally accepted and widely used category to define users who have used the internet at least one in the last 30 days.
The numbers are a result of the largest "offline" survey so far carried out in India to estimate the "ever user" and "active user"
categories. The primary survey for the study was conducted in early 2006 amongst 16,500 households covering 65,000
individuals across 26 major metros and small towns in India, with additional coverage of 10,000 business and 250 cyber café
owners. The survey did not include rural areas.
According to the findings, youth are the main drivers of internet usage in India. College students and those below the age of 35
are the biggest segment on the Internet. Both these segments have the highest proportion of conversion of "Ever" Users to
"Active" users of Internet.
Fast Facts
˜ Estimated 'ever user' base
Sept 2006 - 37 mn
March 2007 - 42 mn
March 2008 - 54 mn
˜ Youth, especially those below the age of 35 are leading the growth
˜ Smaller cities and towns recorded a whopping 142% YoY growth
˜ 25% users from smaller towns
Besides the youth the internet hungry small towns are further fuelling the growth. As per the survey, smaller metros and towns
are increasingly embracing the Internet evolution and are pushing growth from below. Smaller cities and towns have shown a
whopping 142% YoY growth and now account for 25% of all internet users.
Commenting on the survey Dr. Subho Ray, President, IAMAI says, "Although there is a marginal revision of the earlier IAMAI
number for the year, given the rapid growth of internet business and government's massive e-Governance programme, it was
time to look into the numbers more stringently. This will help better business decisions on part of the industry as well as better
resource planning by the government."
Predicting on the future development, Mohan Krishnan, Vice President and Country Manager, eTechnology
Group@IMRB, says, "The next round of growth will be driven by new and innovative applications such as blogs, P2P, video on
demand and online gaming. While the old favourites such as email, Chat and IM will drive first time users to the medium".
The study estimates that the Internet User base is likely to cross the 40 million mark by March 2007, when the "Ever" User base
is likely to hit 42 Million and the Active User base is likely to hit 28 Million. By March 2008, the Ever User base should cross the
50 Million mark. The active user base would reach a staggering figure of 43 million users by the same time.
A2.2 E-mail and Chat no longer primary internet traffic drivers!
32 per cent active internet users rely on the internet as the primary source of information and for research
Mumbai, Oct 10, 2006: 32 per cent active users of the internet in India use the internet as the primary source for information
and research in 2006, a considerable jump from just 20 per cent in 2001, when the primary drivers of internet traffic were e-mail
and chat.
With new innovations coming in the content space in the recent years, especially in the form of online ticketing, weblogs,
product information and preview sites etc., the year 2006 has seen an impressive 32 per cent of the Active Internet Users
having Information as their primary application.
Fast facts
The growth in the number of users accessing Internet primarily for entertainment
˜ 11.6 million e-mail users out of the
has also been impressive though its share continues to hover around 8-10 per cent
13.2 Million Active Internet Users in
the 26 surveyed cities level.
˜ 2.4 million E-Commerce users and
around 7.5 Million Chat users in the These findings are part of the Internet in India (I-Cube) report released by the
26 cities as of March 2006
Internet And Mobile Association of India (IAMAI) in association with IMRB, based on
˜ 32% of the active internet users use
search as their primary application a primary survey conducted in early 2006 amongst 16,500 households covering
˜ The glamour of chat seems to be 65,000 individuals across 26 major metros and small towns in India, with additional
fading away even amongst the
coverage of 10,000 business and 250 cyber café owners. The survey also declared
College Going segment, with
Information search emerging as the that in September 2006 there were 37 million internet users in India with 23 million
2nd most prominent reason for
surfing Internet
active users. Ever user category is defined as someone who has used the internet
at least once and the active users are the ones who access the internet at least once
a month.
The report showed significant variations by demographic segments. The demographic segments used in the report were
School Going Kids, College Going, Young Men, Older, Working Women and Non Working Women. While Email continues to be
the most popular application used across almost all segments (except for School Going Kids and College Going), the other
applications are catching up fast. The glamour of chat seems to be fading away even amongst the College Going segment, with
Information search emerging as the second most prominent reason for surfing Internet.
The report also observes that Entertainment as an Internet application is followed quite keenly by the School Going Kids and
College Going Students. The availability of Online Gaming applications, Gaming Zones in the cyber cafes, movie trailers
online, etc. has fuelled demand for entertainment applications especially in the younger Internet Users.
The report further states that the online transactional applications (E-Commerce) are steadily gathering steam. The Young
Men, Older Men and Working Women segments are the ones that are using it the most. These segments along with the Non
Working Women segment, are also using the emerging applications like jobs and matrimonial in significant numbers.
Commenting on the report Dr. Subho Ray, President, IAMAI says, “the growth of information, transaction and entertainment is
a sure indicator of the fact that active users are spending quality time on the internet this is a positive message to content
based platforms. It is also a clear indication that while communication tools such as email and chat will bring new users to this
medium, mature users will look for more and more content and transactions”
Mohan Krishnan, Vice President & General Manager, IMRB International says, “The growing popularity of applications like
P2P, preview sites, streaming video and radio as well with the emergence of localized content will further change the Internet
dynamics upstaging traditional applications like email and chat. Hence, in order to sustain the growth of the number of Internet
users, the content providers also need to innovate in bringing out applications that make a user's experience simpler and
fulfilling.”
A2.3 38% internet users clock of 8.2 hrs per week on the net
Mumbai, Oct 17: Around 38% of all internet users in India are 'heavy users' and on an average spend about 8.2 hrs per week
on the internet, according to the, I-Cube 2006 report by the Internet And Mobile Association of India (IAMAI) and IMRB
International.
The report also revealed that the percentage of heavy internet users in India is rapidly increasing: from 16% in 2001, 20% in
2004 to 38% in 2006 of the overall internet users. Similarly, the percentage of light internet users has steadily declined from
63% in 2001 to 28% in 2006.
The study further states that school going kids spend an average of 322.3 minutes a week on the internet while college going
students spend an average of 433.2 minutes a week. While older men spend an average of 580.5 minutes a week. Among
women, working women spend an average 535.3 minutes and the non-working women spend 334.5 minutes a week.
Explaining this interesting trend, Dr. Subho Ray, President, IAMAI states “The study has confirmed what we have guessed for
sometime: among some sections of media consumers time spent on internet is longer than any other media. This is food for
thought for advertisers and media buyers!
The study also established that the average time spent on the internet in terms of minutes per week increased with the
increasing age of the user. The active internet users exhibit a marked increase in internet usage as they graduate from school
to college, and then onto their professional lives. The internet has surely stamped its presence in the urban Indian landscape.
Mohan Krishnan, Vice President & General Manager, IMRB International says, “This trend is of great relevance. It leads us to
the assumption that the internet has now penetrated beyond the communication needs of the active user population and is no
longer an avenue for exploring their curiosity. The active user population has found greater and diverse uses beyond
communication and this is where the opportunity lies for far greater growth and adoption..”
I-Cube 2006 covers around 65,000 individuals from 16,500 Households surveyed in 26 cities with additional coverage of
10,000 businesses and 250 cyber café owners and is one the largest offline survey of the Internet Users in India.
A2.3 39% Users still prefer to access Internet from Cyber Cafes
Home Access on the Rise- from 23% in 2003 to 31% in 2006
Mumbai, Oct 26, 2006: Cyber Cafes or Public Access points with a 39 per cent share of users continue to be the most
important internet access points in India. This was revealed by the “Internet in India” study jointly carried out by the Internet And
Mobile Association of India (IAMAI) and IMRB International. It is, however, doubtful as to how long this dominance will
continue, since the share of cyber cafes has been steadily declining from a peak of 52% in 2003. Access from home showed a
marginal increase to 22% from 20% in 2003.
Access from home, on the other hand has steadily risen from 23% in 2003 to 31% in 2006 and prima facie seem to be gaining
on the loss of “market share” by cyber cafes. One of the most significant finds of the study was that access from schools and
colleges remained insignificant at 6%. This remains a major cause of concern since internet access through schools and
colleges not only creates the next generation of users but also goes a long way in reducing digital and hence socio-economic
divide.
1.4 3.1 4.9 7.5 13.2 m
100% 8% 3% 2% 2% 2%
4% 3% 5% 6%
6%
19% 20% 20% Others
80% 22%
30%
School/College
23%
60% 30% 27%
31%
22% Office
40%
Home
52%
44% 46%
20% 43% 39%
Cyber café
0%
2000 2001 2003 2004 2006

Chart 1: Internet Access points - Over the
Source: I Cube 2006, Figure in Million. Data pertains to month of March in
respective years, Study not conducted in 2002 and 2005.
The demographic (for definitions of demographic segmentation please see additional information below) break up of the data,
too, reveals interesting trends. 53% School Going Kids and 53% College Going Students access internet from cyber cafes
followed by 47% of non-working women. Non-working women, significantly, account for the highest percentage of access from
homes (47%) followed by Older Men (39%). Access from offices is dominated by Older Men and Working Women (41% and
38% respectively)
1.6 3.4 4.3 2 1.1 0.8

4% 2% 2% 2% 1% 5%
100% 1% 2% 2%
15%
12% Others
80% 35% 41% 38%
28% 33% 47% School/College
60%
26% Office
40% 34%
39%
53% 53% Home
20%
45%
36%
18% 25%
Cyber café
0%
School College Young Men Older Men Working Non-working
Going Kids Going Women Women
Student
Chart 2: Internet Access points across Demographic

Source: I Cube 2006, Figure in Million. Data pertains to month of March
in respective years, Study not conducted in 2002 and 2005.
I-Cube 2006 also clearly establishes a direct correlation between household affluence level and home connectivity for
Internet.
6.1 3.9 2.9 0.3

100% 2% 2% 4% 2%
3% 5% 12%
11% Others
25% 23%
80%
17% 19%
School/College
4%
60% 14%
27% Office
44%
40% Home
63%
54%
20% 43% Cyber café
27%
0%
SEC A SEC B SEC C SEC D & E
Chart 2: Internet Access points
Source: I Cube 2006, Figure in Million. Data pertains to month of March in respective years, Study not
conducted in 2002 and 2005.
*Note: Socio-economic classification (SEC) indicates affluence level of household to which individual
belongs. SEC A roughly accounts for 15% and B accounts for 20% of overall population in Urban India.
Home access is prominent amongst SEC A users and the proportion goes down dramatically down the socio-economic order.
In fact for SEC D&E access is dominated by usage from cyber café. More significantly, access from schools and colleges goes
up from 3% to 12% between SEC A and SEC D&E. Both these trends drive home the need to strengthen the public access
points as well as access from schools and colleges in order that non-affluent classes too have easy and quality access to
internet.
Internet in India (I-Cube) reports are based on a primary survey conducted in early 2006 amongst 16,500 households covering 65,000 individuals across 26 major
metros and small towns in India, with additional coverage of 10,000 business and 250 cyber café owners. The coverage of I-Cube is unparalleled in breadth and
scope. There are six volumes in the I-Cube 2006 reports:
1. Know Thy User: Market size of the Internet Users, various segments, their usage behaviour, etc.
2. Know within - the Broadband Report: Current Broadband Market, number of connections, type of accounts, pricing strategy for the future
3. Know Thy World and its corners - The Content Report: User behaviour analysis, websites visited in last one month, E-commerce behaviour
4. Know the wealth o thy Earth - Online finance and Banking report: Internet banking related behaviour, types of bank accounts, satisfaction with Internet
Banking, Online investments, profile of online investors
5. Know thy Neighbours - Media Consumption Behaviour Report: Consumption of various media ranging from newspaper to television to radio, type of content,
frequency of access, point of access, hours spent, time of day analysis
6. Know those who serve - Public Access Report: Supply side status of the Cyber Cafe market, profitability of Cyber Cafes, type of content accessed in Cyber
Cafes, Future directions for Branded vs. Unbranded Cyber Cafe, Government and Private initiatives in the public access space
We also have three report s which provide insights on the three profitable vortals Matrimonial, Travel and Jobs. To know further about these reports or to place your
orders please contact:
DELHI MUMBAI
Vivek Khattar Balendu Shrivastava
eTechnology Group@IMRB eTechnology Group@IMRB
IMRB International IMRB International
8, Balaji Estate, Kalkaji,New Delhi - 110019. 'B' Wing, Mhatre Pen Building,
Tel : (91)-11-42697815, Fax: (91)-11-42687801 / 02 Senapati Bapat Marg, Mumbai
Email: vivek.khattar@imrbint.com Tel : (91)-22-24323500 (18 lines), Fax: (91)-22-24323900
Email: balendu.shrivastava@imrbint.com
BANGALORE CHENNAI
Rajesh Kurup Rathina Kumar
eTechnology Group@IMRB eTechnology Group@IMRB
IMRB International IMRB International
D-7, Devatha Plaza,131, Residency Road 63, Pantheon Road
Bangalore - 560025 Chennai - 600008
Tel : (91)-80-2213186, 2274388, 2274236 Tel : (91)-44-4222 0801
Fax: (91)-80-22473486 Fax: (91)-44-4222 0900
Email: rajesh.kurup@imrbint.com Email: rathina.kumar@imrbint.com
“ No part of this report may be reproduced or copied in any form or by any means
graphics, electronics or mechanical, including photocopying, recording, taping
or any other information retrieval systems) or reproduced on any disc, tape,
perforated media or other information storage device etc., without the written
permission of IMRB International. Breach of this condition is liable for legal action.
eTechnology Group@IMRB
IMRB International
8, Balaji Estate, Kalkaji, New Delhi- 110019
Tel: (91) -11-4269-7800, Fax: (91)-11-4268-7801/02

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(Summary Report of I-Cube 2006)

MAPPING THE INDIAN INTERNET SPACE

0.2 Glossary of terms used in the report 5

1.0 The Growing Internet Population 7

1.2 Internet ever user base has doubled over 2004 9

1.3 Small towns are growing the Internet user base 10

1.5 Youth are the biggest segment on the Internet 12

2.0 Paradigm shifts in Internet Access 13

2.1 Gap between PC owners and Internet subscribers is reducing 14

2.2 Broadband is the new face of Internet connectivity 15

2.3 Internet access from home is gaining prominence 16

2.4 Segments have clear preferences for access points 17

3.0 The Booming Internet Applications 18

3.1 Internet competing with other media across specific applications 19

3.2 Newer applications are emerging on the Internet 20

3.3 Demographic segments have specific application focus 21

3.4 Internet: Growing on the stickiness index 22

4.0 The Future and Drivers for Growth 23

4.2 Internet growth drivers for the future 25

4.3 Enablers: Specific intervention needed 26

4.4 Summarising the growth of Internet in India 27

A1.0 Annexure I: Sample & Methodology 29

A1.1 Target segment & city selection 30

A1.2 Household listing interview sampling procedure 31

A2.0 Annexure II: Press releases from I-Cube 32

A2.2 E-mail and Chat no longer primary internet traffic drivers! 35

A2.2 E-mail and Chat no longer primary internet traffic drivers! 35

About Internet in India 2006 Reports

0.2 Glossary of terms used in the report

1.0 The Growing Internet Population

“As user engagement grows with it, Internet will

However Internet is also a function of many other variables, chief

1.2 Internet ever user base has doubled over 2004

#Source: All India Figures, I-Cube 2006; Figures in millions

*Study not conducted in 2002 and 2005

1.3 Small towns are growing the Internet user base

Internet trials are increasing in the small and

The Top 8 Metros which have been the traditional 0%

early adaptors continue to be the biggest 2001 2003 2004 2006

Top 8 metros Small metros Non metros Small towns

It is not just the smaller towns which are contributing

60% 32% 35%

awareness for the Internet, especially as a tool for 40%

empowerment. 20% 41% 40% 41% 42%

1.5 Youth are the biggest segment on the Internet

Internet universe can be divided into 6 exclusive and exhaustive segments

The third key element in the Internet equation in India is the

2.0 Paradigm shifts in Internet Access

“ User intimacy with Internet will grow as

2.1 Gap between PC owners and Internet subscribers is reducing

Internet universe can be divided into 6 exclusive and exhaustive segments

The number of Internet subscribers is

25,000 to 2.9 million in the period 1997-

Number of users (in '000)

2.2 Broadband is the new face of Internet connectivity

Indian households are adopting Broadband

Though Dial-up connections continue to dominate

This growth for broadband has been driven by

2.3 Internet access from home is gaining prominence

Growing broadband adoption in India is Main points of access

home as an access point. Though the

Increasing Internet access from home is a 60% 30%