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The value of cybercafes in India. Is it the beginning of the end for cybercafes or do they still hold value?
2nd May 2011

I was reading about the draconian new rules being instituted to control Cyber Cafes in India. Read Nikhil Pahwa's excellent take on this issue.

It got me thinking about the value cybercafes still have in India. With ever increasing household internet / broadband penetration will they still be relevant in the near future or are they on the way out? There are a number of factors, some not very obvious, which will affect the future of cybercafe's in India. Here are my thoughts on the same.

Will over-regulation, harrasment and red tape from the authorities put off cyber cafe owners?

No one likes to be made a scape goat when things go wrong but thats exactly what the cyber cafe owners in India have become. Although it must be said that many times cyber cafe owners are not blameless, the scrutiny and red tape which threatens to strangle this industry may be unwarranted.

In spite of all this the cybercafe industry in India continues to thrive and adapt. It just goes to show that Indian entreprenuers are tough but there is a limit to how much punishment business owners will take before they decide to shutter the shop.

Cyber Cafe's have morphed and evolved to survive and thrive, not remaining pure internet players. Will that be enough to ensure their survival.

A bulk of today's internet cafe owner's revenues come from non internet services such as gaming, data entry and other ancillary services. No cyber cafe owner can afford to offer only internet access. In fact I know of some cybercafe's whose internet access is virtually nil compared to the time spent gaming by its customers. The gaming industry has come as a boon to cyber cafe owners who would have shut shop long time back.

Inclusion of Wi-fi service in public establishments has muddied the waters further.

Latest regulations now define public establishments who offer Wi-fi connectivity paid/complementary also as Cyber Cafes. I think that is assinine. Distinctions must be made between pure play cyber cafes and establishments like hotels and coffee shops. The type of public that frequents each is quite different. Levels of access are different. Hardware utilized in cybercafe are owned and controlled by owners whereas hardware used in Wi-fi spots are owned by people thus tremendously affecting control and privacy.

With the growing number of internet broadband connections in the home and portable internet connections with laptops is there a case for the existence of cybercafes?

Although figures of personal and household internet penetration in India is encouraging, owning a computer and broadband connection still is a pipe dream for a vast majority. If at all there is a broadband connection at home, it is a single point one and can be utilized by only one person at a time.

Some reasons people will continue using cyber cafe's in the future

  • Better connectivity and hardware - many personal broadband connections in India are terribly slow or unreliable. A cyber cafe will have good speeds enabling a better experience.
  • Accessing personal sites or social media sites with privacy out of the view of family members.
  • Chatting with lovers is easier in the privacy of the cybercafe booth (although booths are now banned).
  • People travelling will always need a cybercafe if a personal internet connection is not available. However this continues to be the most reducing factor with the growth of products like the Tata Photon Plus.
  • Cyber Cafe owners are a great help to elderly people who are not technology savvy and need help communicating with family abroad. The cyber cafe owners help them setup video chats and more.

Mobile phones / Tablet PCs the game changer and the greatest threat to cyber cafes.

The biggest thing that has come in the last few years is the super handsets that support web access. This factor alone can be the most lethal for cyber cafe owners. Routine tasks like checking mails or chatting can be done over the phone without needing to visit a cybercafe. 3G will also enable video chatting very soon. Earlier price used to be a factor with smart phones but now even that is no longer a factor.

In conclusion I would say its a wait and watch time for cyber cafe owners in a rapidly evolving and dynamic market place. All the factors point to thier eventual demise but we can always count on the Indian cyber cafe owner's ability to innovate and survive. Time will tell.

For more visit this article on the Cyber Cafe Association of India (CCAOI) website.

Cheers,
Ron

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