Chapter-3.

Internet and its Growth in India

3.1 Internet Era

3.2 The Emergence of World Wide Web

3.3 Internet- A Growing Basic Need

3.4 Advent of E-Commerce

3.5 E-Business -The Future of Business

3.6 Internet-The Present Scenario in India

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Internet and its Growth in India

Long back, Alvin Toffler in his proactive book-“The Third Wave” categorizes the
development of a society into three waves.

The First wave, Agricultural Age (8000 B.C to 1700 A.D)-The first wave of transformation
began when some prescient person about 10,000 years ago, probably a woman, planted and
nurtured a seed, the age of agriculture began. Its significance was that people moved from
nomadic wandering and hunting and began to cluster into villages and develop culture.

The Second wave, Industrial Age- was an expression of machine muscle. The industrial
revolution began in the 1700s and gathered steam after America’s civil war. People began to
leave the peasant culture of farming to come to work in city factories.

The Third wave, Information Age-The third wave was based not on muscle but on mind. It is
what we variously call the information or knowledge age and while it is powerfully driven by
information technology, it has co-drivers as well among them social demands worldwide for
greater freedom. The third wave had started with the advent of internet, after which
commercial organization began to recognize the use of such network which converted the
whole world into a “global village”, and allowed almost instant access to business or
commerce data and a host of other services such as e-mail and e-commerce.

The advent of computer in 1946 is responsible for the emergence of internet in 1969, as an
experimental four –computer network by the US Defence Department. Today Internet has
spread its root globally and its presence can be seen in all walks of life.

In INDIA THE INTERNET was first launched in August 1995 by VSNL. A new revolution
was kicked off after VSNL started offering TCP/IP access to public in1997.This opened
www with its graphic interface to the internet users in India.

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3.1 Internet Era

The internet began in 1969, as an experimental four-computer network called ARPAnet,

which was designed by the U.S Defence Department so that research scientists could
communicate with each other. By late 1980s the concept of Internet had taken firm roots in
USA and parts of Europe through the educational institutions which were part of the initial
Internet project. In 1990 ARPAnet was officially disbanded and the same network then came
to be known as “INTERNET”.1

After that, commercial organizations recognized the use of such a network which converted
the whole world in to a “global village” and allowed instant access to business and host of
other service such as E-Mail and E-Commerce. Networking giants like British Telecom,
Hyundai, AT&T and others are responsible for the rapid growth of Internet. These
networking giants expanded the existing network and gave access to Internet via ISP
Gateways which made possible to route data from one point of the globe to another. ISP’s
offers client’ access to the Internet via their gateways as paid for service.

The Internet consists of two types of computers Servers and Clients. The computers which
offer information to be read are called Servers and computer that read information offered are
called ‘Clients’. Every computer has a unique identification called the IP address. An
international body called InterNIC, located in USA, is responsible for registering and
assigning unique IP addresses to Internet servers. InterNIC also authorizes organizations in
other countries to issue IP addresses. In India, NCST (National Center of Software
Technology) a quasi government body is authorized to issue permanent IP addresses.

TCP/IP is the only protocol used to sends and receives data packets from one computer to
other computer around the internet. Another technology called HTML (Hyper text markup
language) has enabled data to be presented as pages with hyperlinks. These hyperlinks can be
assigned to specific text in such a manner that if a link is clicked, a search and retrieve
routine is triggered for the linked file wherever it is situated on the network. The computers
equipped with software called browser reads the document created in HTML.

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To the public in India however, Internet was first launched in August 1995 by the then
public sector Videsh Sanchar Nigam Limited (VSNL).

Initially, Internet was accessible as a “Shell Account” which could be handled only by
regular computer users who were familiar with the Command/DOS interface as distinguished
from the “See and Click” interface (Graphic User Interface or GUI) with which we are
familiar today in the Windows environment. A new revolution came up after VSNL started
offering TCP/IP access to the public some time in 1997. This opened up the World Wide
Web with its graphic interface to the Internet users in India. This also enabled the common
man who could click his way through the Windows menu but was not comfortable with the
DOS screen, to get onto the Internet. As a result, the usage of Internet started to grow at rapid
pace.

Contributors to Internet Revolution

Internet is a project for which contributions have been made by many. In future also, it will
grow with the contributions of many ordinary persons working behind scenes. Yet, it is
necessary to remember at least the three most important visionaries who made Internet
possible. They are Vincent Cerf, Tim Berners Lee and Jon Postel. Dr Vincent G. Cerf of the
University of California, Los Angeles (UCLA) is credited popularly as the “Father of
Internet”. He was one of the four members of the “Net Working Group” involved in the early
days of the ARPANET project and co-designer of TCP/IP protocols.

Dr Tim Berners Lee, an Englishman working as a software consultant at CERN (the famous
European Particle Physics Laboratory in Geneva) is credited popularly as the “Father of the
World Wide Web”. In 1990 he created the Hyper Text mark Up Language (html) and Hyper
Text Transfer Protocol based on which documents could be shared by different computers.
He also developed the first browser software to read documents written in html and called it
the World Wide Web. He also set up the first web server known as "info.cern.ch." at CERN.
Dr Jonathan B. Postel, who also worked in the ARPANET project, can be considered the
“Father of Internet Address System”. He was the person responsible for maintaining the IP

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addresses of the Computers in the ARPANET and his system evolved into the Domain Name
Registry system in due course.

3.2 The Emergence of World Wide Web

The World Wide Web (known as "WWW', "Web" or "W3") is the universe of network-
accessible information, the embodiment of human knowledge. The World Wide Web began
as a networked information project at CERN, where Tim Berners-Lee, now Director of the
World Wide Web Consortium [W3C], developed a vision of the project.

The Web has a body of software, and a set of protocols and conventions. Through the use
hypertext and multimedia techniques, the web is easy for anyone to roam, browse, and
contribute to. The World Wide Web (WWW) is a collection of host computers that deliver
documents, graphics and multi-media to users via the Internet.

The common protocol used on the WWW is HTTP. It stands for Hyper-text transport
protocol. Each host computer on the World Wide Web provides files and information in any
format, such as a graphics file, text document, PowerPoint presentation or audio file in the
form of website. Prior to the World Wide Web, the display, searching, and viewing of files
was difficult and took a long time. A Website is a collection of web pages interconnected for
navigation. Such sites can be accessed from any computer connected to the internet by
simply typing the URL (Uniform Resource Locater) in the Browser window. The WWW lets
users link documents together using hyperlinks (a connection to another document on the
WWW).

A web browser is a computer program used to view documents on the WWW. The web
browser displays the documents formatted along with the graphic images or additional
multimedia components.

Some of the advantages of World Wide Web (WWW) are:

 Easy linking of documents to other documents

 Documents are simple to create and make available for other people to use

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 Support for multiple multimedia components in a single document (such as text,

images, sound and video)
 Access to anyone connected to the Internet with a web browser
 Easy to publish and share information to other people all around the world
 Today there are more than 1 billion (100 crore ) web pages and about 40 million (4.0
crore) active URL s on the network containing information of various natures such as
education, entertainment , business, philosophy ,etc.

3.3 Internet- A Growing Basic Need

As things progress, the adoption of Internet has increased so much that every individual wake

up to see the morning news on the Internet, correspond through e-mails, retrieve information

from web sites, chat with our friends online and listen to music or follow a Cricket match on

the Net. Internet provides chat rooms where the user can exchange real time notes with each

other as if he/she is chatting with people in the real world room. Voice messages can be sent

across e-mail. Today internet is an all purpose multimedia communication tool capable of

exchanging text, audio and video messages across people sitting at different corners of the

world.

The advent of E-Commerce would mean that one may order Cigarettes or Grocery or do

Banking or Share trading on the Internet. While some have already adapted to this style of

living, others are moving in this direction and the “Digital Divide” is narrowing at least in

terms of access to Internet. That’s why the need is to recognize that the immediate future

ahead us is the Internet Era.

Falling Cost and Growing Popularity

With the advent of Web TVs and the increasing Cyber Café’s in all cities, even those who do
not own a Computer can now access Internet. Soon there will be Internet Kiosks in all public

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places enabling the public to have quick sessions to view e-mails or browse the latest news.
Access of E-Mails on Mobile phones has also enabled the services of Internet to be available
outside the traditional Computer based environment. Several State governments have
embarked on projects to take Internet browsing centers to smaller towns.2

Internet access has already become very economical in India with the average access cost
coming to about Rs 6 per hour. Recently the telephone cost has been revised downwards so
that Internet access cost through dial up connections in India has been brought to around Rs
10/- per hour on an average. For heavy users, there are access providers who provide leased,
DSL (Digital Subscriber Line), Broadband and Cable access on a monthly rental basis.

Government of India has announced year 2007 as the year of broadband. Indian households
are adopting broadband services which are cheaper and more widely available at a rapid
pace. Thus the easy availability of the services, their utility to a wide section of the society
and the falling cost of Internet access has made it a universal communication tool as common
as the Telephone. With Internet telephony having become legal in India, from April 2002,
Internet has already become a “Long Distance Phone” with call rates which are around
1/20th of the current costs for International calls.

Regulatory Perspective

The unprecedented popularity of the Internet and its deep penetration into the common man’s
life brings a new social responsibility for administrators as well as those who are driving this
Internet Revolution. To bring order to the lives of Netizens who live in a border-less virtual
society, the governments all over the world led by the United Nations and the government of
USA are evolving a regime of uniform "Cyber Regulations”.

India has taken the first step in this regard by passing the IT Act-2000 to define the Cyber
Laws for India. This has redefined the business and legal process in the country by bringing
in electronic documentation as a legally accepted replacement of written documents. This
law will not only apply to Internet transactions but also to transactions over other Computer
networks of Companies, Banks, Educational Institutions, and Government Departments, etc.

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3.4 Advent of E-Commerce

The technology of creating web pages where netizens surf information can interact with the
web servers on real time basis, has given rise to commercial transactions. The development
of e-commerce has converted to World Wide Web into global marketing place. E- Shopping,
e-banking, e-stock, e- movies, e-medicine, e-gaming, etc had made possible for netizens to
use cyberspace for most of the social interactions.

An e-commerce site consists of a product catalogue and an online payment mechanism and
the information. If the site is having a large number of products on sale, the customer will be
provided an option to go round the e-shop, select products he wants to purchase and put them
in a shopping cart/basket. On confirmation of the intention to purchase, the customer gets an
online invoice. At this point of time the customer will be prompted for payment. If the site has
made arrangements for accepting credit cards the customer will complete the necessary form
where the card number, expiry date, name of the holder etc will be filled up and submitted for
payment. The site will then refer the card details to the “Payment Gateway” manager who
verifies the card on line with the master data base of cards and provides authentication. Once
the authentication process is over, the shopping session gets concluded and the shopper may
leave the site.

The E-Commerce site owner, on receiving the authentication of the payment makes
arrangement for the shipment of the goods. Based on the authentication, the Bank participating
in the payment gateway, will pay to the merchant and claim reimbursement with its commission
from the card issuing Bank. Some of the paying Banks insist that the payment would be released
to the merchant only after the order fulfillment confirmation is received in the form of a
shipping note signed by a reputed shipping agent. With such an arrangement, a website can
effectively display products and collect money on line. If the product to be delivered is a “Digital
Product” such as software or a “Music file”, the product can also be delivered online.

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Types of E-Commerce sites

B2C- If a web merchant is selling products to a consumer on the net, the transaction is often
referred to as B2C E-Commerce, meaning Business to Consumer.

C2C- An auction site where a person can become a member and then offer his products for
auction enables a “Consumer to Consumer” sale and is referred to as C2C E-Commerce.

B2B- A site where transactions between Business to Business are envisaged is similarly
referred to as B2B E-Commerce. Inter Bank transactions or Inter Company transactions fall
into this category.

With the facilities of information delivery and payment combined together, Internet has
today become a place for Communication, Entertainment, Education and Business. As days
pass, the versatility and utility of Internet is increasing at such a pace that the Virtual world is
converging onto the Real world.

3.5 E-Business -The Future of Business

Today the use of internet is so prevalent that the statement holds true-“there is no business
without e-business”. The initial use of computers in Business was as a “Digital Aid to the
Secretary” in replacement of the electronic typewriters. It made the work of drafting of letters
easy. Next it was the finance and personnel departments in companies which adopted
computerized ways of account keeping and salary records maintenance.

With the evolution of “Networking” the “Communicating Computers” emerged in the office
environment and people started transacting in the Cyber Space created by the networked
computers. While the development of LANs and expansion of their functionality is a
continuous development, a paradigm shift in the use of computers came when the corporate
network got connected to the outside world through Internet. Simultaneously, development
of large Intranets and Extranets expanded the use of computers in to a “Knowledge
Management Tool” and “Productivity Enhancement Tool”.

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It was the ability to do transactions on the internet (ECommerce) that really changed the
perspective of the computers in corporate business. It all started with the Electronic Data
Interchange system (EDI) which enabled the exchange of documents from one computer
network to another often through proprietary gateways. The emergence of TCP/IP as a
universal protocol and HTML as a universal document language opened up an EDI process
without proprietary tools.

In this open network environment, “Security” was a critical issue. The security in the initial
stages was to ensure that there was no “Eaves Dropping” or “Data modification” during
transit. But as the dependency on E-Commerce grew, there was need to integrate E-
Commerce into the legal framework by making “Authentication”, an integral part of data
interchange and “Legal non-repudiability”, and an essential part of such communication. It
was in this context that one of the main objectives of the Information Technology Act-2000
was set to promote E- Commerce by providing a safe environment for exchange of electronic
communication over open networks.

Today, the IT enabling of business has taken such deep roots that we often refer to an
environment of “E-Business” rather than “ECommerce”. In the E-Business paradigm, every
aspect of business from Finance, Marketing, Purchase, HRD etc are conducted using
electronic documents. From receiving an application for recruitment to getting the firing
order or submitting a resignation, an employee of the Company deals with E-Documents.
Hence the role of Cyber Laws has grown multifold and Cyber Law Compliancy has become
an integral aspect of “Quality Process” in a business entity.

In the initial days of E-Commerce, the business strategy development in Companies was to
use the Web as a means to extend their real world business. In between, some aggressive
players came up with the concept of Dot-Com business where the entire business was
created, established and maintained in the virtual world.

The example of Network Associates Inc in the domain name business, Amazon in the Book
Business, Napster in the Music Business and a couple of Virtual Banks made Dot-Com

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business model, a dream for small entrepreneurs. With a global reach through a small web
site, the dot-com model enabled “Knowledge Capital owners” to take on “Finance Capital
Owners” in the area of “Service” or “Customized Products”. The rapid growth of the dot-
com concept and the support of the venture capitalists created a thriving Internet Economy
that shook the real world giants.

3.6 Internet-The Present Scenario in India

The year 2007 had been declared as the ‘Broadband year’ by Indian government. Various
initiatives are been undertaken to increase PC and Internet penetration. People have started to
realize the importance of Internet in their lives where it is not just a communication mode to
email, chat and get information but has become an enabling tool to perform various tasks
over Internet like learning, networking, shopping, gaming and expressing themselves in the
form of blogs to the extent of establishing a virtual world for themselves. 3

According to the “I Cube Report 2007” published

Facts about Internet Users in India
by the Internet and Mobile Association of India 250 Million Urban Population
and IMRB International, the number of internet 205 Million Literate Population
77 Million English Knowing
users in India has touched 46 million in September
65 Million PC Literate
2007.During the same period, the number of active 46 Million Claimed User
internet users has reached 32 million. 32 Million Active User
Source: Internet and Mobile Association of India

On the rapid growth of internet users Dr Subho Ray, president, IAMAI commented and
concluded, "although a growth of 40 percent year on year makes us happy, especially since
for the last couple of years the rate of growth was between 30-35 per cent, relative to what
can be achieved and what needs to be achieved, the growth rate is not very satisfactory". He
added, "Broadband which would drive more applications, functions and businesses and
therefore more users, now really needs to take off in India in order to make the growth
sustainable". If the broadband targets are not met in the Year of the Broadband there is a
possibility of missing out on creating a virtuous cycle of better connectivity, better content
and more users.

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Mr Mohan Krishnan, Senior Vice President, IMRB, was of the view that the demand for
internet still continued to be primarily from the urban areas. Therefore, while the government
was justifiably drawing up plans to reach internet to the rural areas, it was also necessary that
the urban digital divide should also be bridged with appropriate policy measures.

People from non metro and small towns are increasingly experiencing their tryst with this
new medium. This is evident from the fact that their contribution to Internet user base is
increasing. As more users from, the non metros show their interest in becoming a part of the
Internet Community the digital divide is poised to reduce in the years to come. The growth
by smaller towns is driven both by better access, increasing computer literacy and by
increasing awareness as mass media and word of mouth promote internet. Not only smaller
towns are contributing to the internet revolution in India, it also being driven by less affluent
sections of the society. This has been possible due to certain factors such as awareness done
by mass media and price affordability of pc’s and internet connection.

Point of Internet Access

The advent of newer technologies and growth in IT industry has given more access points to
Internet users. Yet the cyber cafe continues to rule as the most prominent point of Internet
access. It has shown a significant drop since the year 2003, when half of the Internet users
used it as main point of access. More recently, Internet users growth is seen to be shifting to
office as a main point for Internet access. The reason could be demographic shifts with
greater working population coupled with growth of IT/ITES sectors and increasing
penetration of PC as a productivity tool in various organizations. As a result of increase in
office as a main access point, a drop in the usage of home and cyber café as access points has
been observed. Contrary to this usage from schools/colleges has increased to 7% due to
introduction of computers and Internet in the educational system. Two thirds of Internet users
are using Internet atleast 2-3 times a week. Thus, Internet is expanding not only in reach but
also in terms of the number of interactions.

In India the internet market is complex and there are clear differences in how demographic
segment use different access points Preference for the primary access point is facilitated by

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3 C’s: Convenience, Cost & Content sought. School going kids and college students find it
more convenient to use cyber cafe as it is the cheapest source of access and also gives them
more privacy regarding content. On the other hand, Home and office has gained popularity
amongst young men, older men and working women as they find these access points to be
more convenient & cost effective over others. The content they seek also involves
e-commerce applications which need a secure network. This acts as a limiting factor for them
to the use of cyber cafe as point of access. Non working women like to access from home as
it is more convenient for them.

Evolving Role of Internet

Internet is competing with other media and the interaction with the Internet is increasing. The
trend in internet application usage in India is quite interesting and demonstrates the evolution
of internet as a media. There has been an evolution in the role played by this medium, where
once it used to be a medium for communication but now it has advanced its role to be used as
a source of information, entertainment, and e-commerce.

The role played by Internet can be clubbed into three broad categories:

Internet as a Communicator: Communication remains the key application over the

Internet. It is a great source of communication transmission. The communication applications
of internet are cheaper and fast which has an upper hand over other communication media.
Email and chat are the exclusive applications offered by the Internet which do not face any
competition from other media vehicles.

Internet as a Infotainer: In this role the Internet is squeezing the share of traditional media.
With the sprouting of new applications like gaming, news, blogs etc users find Internet a
substitute to library, TV, newspaper and radio.

Internet as a Sticky Applicator: Online banking, online ticketing, e-tailing are some of the
emerging applications which act as hooks to make the users stick to the Internet. These
services are some of the extended benefits offered by Internet and used by the application
providers to increase the stickiness index.

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Essentials of Internet Expansion

Even though Internet traffic has increased significantly, there exists a larger untapped area
which needs to be targeted. The barriers to the growth of this traffic are driven by high cost
and low awareness. This requires an understanding of various essentials required to increase
the Internet penetration. The four key essentials are: Technology, Access, Content and
Awareness. These four need to be targeted collectively in a balanced way to expand Internet
usage in India.

Awareness: For the promotion of any program the basic thing connected to it is the
knowledge. It is important to educate non users about the usefulness of the medium, ways to
use it, place of access,etc to target the mass.

Access: This acts as a platform through which a person starts using the Internet. The number
of touch points are already on a rise but more needs to be done due to slowdown in
broadband growth.

Content: Understanding the requirements of the people and delivering them over the Internet
is required to increase the usage. Customization of content is necessary to draw the
customers.

Technology: This includes the backbone of Internet hardware. It includes Broadband, Wi-Fi,
Wimax, optical fiber, DSL etc.

These essentials are to be targeted differently for non users and users to have an overall
Internet expansion. In addition to this, the evolution in technology will definitely act as an
enabler to expand the reach and quality of Internet.

References:
1. Ivan Bayross, “Web Enabled Commercial Application Development using HTML, DHTML,
JavaScript, Perl CGI”, BPB Publications, New Delhi, 2000, p.5.
2. Na. Vijayashankar, “Cyber Laws For Every Netizen in India”, Ujvala Consultants P Ltd,
Chennai,2004 ,p.23.
3. IAMAI, “Internet in India”, IMRB International,2007, p.4

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