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Reasons For The Declining Growth of Cyber cafes In India

There are only 600 cybercafes in Mumbai, as per this report in BusinessWeek, down from 2000 in 2006. As per a CII-IMRB report, the growth of cybercafes has declined as well – down to 20 percent growth, from 60 percent growth in 2004-05, but that was obviously on a smaller base. They’ve estimated that there are 180,000 cybercafes in the country. And I wouldn’t be surprised if even this figure is bloated:

Classification as a Cybercafe: I wonder how they’ve classified cybercafes – how many computers, on an average, make a cybercafe? How many of these are single PC outlets?
Efficacy of data: Secondly, how is this data collected? Sify might claim 3000 cybercafes, but eight months ago, one of the iWays listed near my home wasn’t even set up (I just checked, and it is operational now). Note how shoddy Sify’s iWay list is, with fake contact numbers (0, 1231321, 111111) , and cybercafes not even operational yet.*
Adding Cybercafes, or mostly conversations: while Sify is focusing on smaller iWays – e-Ports – many of their cybercafes are actually conversions of unbranded cybercafes, and not new additions (source).

I’ve written previously about how the decline in wireline subscribers isn’t a healthy trend for India. WiMax appears to be everyone’s bet for broadband growth, people forget that WiMax will have a gestation period, isn’t going to come cheap, and is more likely to convert people from wired broadband first. Spectrum hasn’t yet been sold, and mass infrastructure hasn’t yet been laid out yet. So don’t take the decline of wireline connections lightly.

Reason for the decline
— Half a dozen licenses needed for a cybercafe
— KYC (Know Your Customer) norms put into place by the government – students staying in hostels may not have a mobile phone, or a contact number. Too many details required before access is allowed at a cybercafe: Name, temporary address, permanent address, identification number, phone number and signature.
— Legit Proprietary Software adds to cost – not a bad thing, but the cost of setting up and running a cybercafe with M$ software adds to the cost for the end consumer. Perhaps Open Source zealots need to get involved here.
— Health Certification? In Pune, since a cybercafe is a “Cafe”, one needs permission from a municipal health department
— Increasing rentals and real estate costs – impacts the return on investment for those running the cybercafe
— Police Harassment: Last year, I found cybercafes weren’t operational because users would refuse to give complete data, and the police were fining cybercafe owners Rs. 5000 per incomplete entry. The local police also needs to give a no-objection-certificate to cybercafes

* – Yes, it’s no big secret that I’m not a Sify fan – having been a broadband customer, experienced their dependancy on unscrupulous franchisees, I don’t really buy such hype. For Sify’s sake, I hope I’m proven wrong and the cybercafe and broaband model works for them, but…

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