New Delhi, Nov 25, : .India’s mobile internet and digital service ecosystem has seen rapid growth over the past five years due to the pioneering efforts made by large private sector players. Although this industry-led growth may seem unusual, it could be a model that could help other developing countries, wrote Michael Spence in Project Syndicate.Spence is a Nobel laureate for economics.
Spence is Professor Emeritus of Economics and a former Dean of the Graduate School of Business at Stanford University.
“Reliance is large and profitable energy company, which used its resources for long-term investments into the mobile internet ecosystem.
This set the stage for Jio Platforms rapid expansion.Spence stated that this model, which did require no significant public sector investment, will probably not work everywhere.
In the years ahead, more chapters will be added to the Digital India story.He wrote that the country has already provided important lessons in understanding and adapting development models to an age in which traditional sources (especially manufacturing) of employment will be replaced by automation and Artificial Intelligence.
India has seen an extraordinary increase in digital connectivity and access of services.Spence said that this has had a positive effect on inclusive economic growth, on efficiency and productivity in finance, retail, and supply chains, as well as on entrepreneurial activity.
Reliance Jio made significant investments in the construction of the fiber-optic infrastructure that would support broadband access and a national internet system.Reliance Jio was granted permission to use the same spectrum as data for voice services.
This allowed it to launch highly affordable smartphones with very low-cost data plans.Spence wrote that Reliance Jio’s mobile phones and voice and data service were launched in 2016.
The result was a rapid growth in Jio subscribers (which reached 400million in 2020) as well as smartphone users throughout the country.India’s data costs dropped from being among the most expensive in the world to being among the lowest.They were roughly $3.50 per gigabyte prior to Jio, and then fell to $0.30 per GB after Jio’s expansion.
Combining higher speeds with low costs has led to rapid growth of internet use in multiple industries, including ecommerce and streaming video, and other forms digital content.
Spence stated that the major players, including Amazon, Netflix, and Facebook, have entered or expanded their presence in India.
It seems unlikely that the data prices Reliance Jio established upon entry would have been sustainable over time.
The company did however benefit from some excess capacity in its network infrastructure.And, most importantly, it used its early growth to incorporate into a wider range profitable service offerings on its network, increasing the returns on its investment in low-cost mobile internet offerings.
Jio Platforms, which was founded in 2009, has created a number of digital-services apps as well as majority stakes in growing numbers of companies offering similar services.These strategies have contributed to India’s rapid growth in mobile internet, opening up new opportunities for entrepreneurs and startups, he said.
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