A Study of Telecom

A Study Of Telecom - Presentation Transcript
1. A Study of Telecom Industry Presented by: Swati Tiwari Priyanka Singh
2. Agenda
o Introduction
o Overview of telecom industry
o History of telecom industry
o Scope of telecom industry
o Players of telecom industry
o Major market trends
o Future trends in telecom industry
o Developments in telecom industry
o Conclusion
3. Telecom in the real sense means transfer of information between two distant points in space
Telecom is a huge and varied fastness of technologies, companies, services and politics that is
truly global in nature Telecom stands as one of the most essential elements of the business
world in terms of “ Connecting the World ” Introduction
4. History of Telecom Industries
5. Cont…………..
6. Overview of Telecom Industies
o Indian Telecom sector, like any other industrial sector in the country, has gone
through many phases of growth and diversification. Starting from telegraphic and telephonic
systems in the 19th century, the field of telephonic communication has now expanded to make
use of advanced technologies like GSM, CDMA, and WLL to the great 3G Technology in mobile
phones. Day by day, both the Public Players and the Private Players are putting in their resources
and efforts to improve the telecommunication technology so as to give the maximum to their
customers.
7.
o The Indian telecom sector can be broadly classified into Fixed Line Telephony and
mobile telephony. The major players of the telecom sector are experiencing a fierce competition
in both the segments. The major players like BSNL, MTNL, VSNL in the fixed line and Airtel, Hutch,
Idea, Tata, Reliance in the mobile segment are coming up with new tariffs and discount schemes
to gain the competitive advantage. The Public Players and the Private Players share the fixed line
and the mobile segments. Currently the Public Players have more than 70% of the market share.
8.
o Fixed-line Telephony
o Public Players
o Subscribers
o Private Players
o Subs cribers
Mobile Telephony Public Players Subscribers Private Players Subscribers

9. India
o India has a 700 million people living in 638,000 villages
 per-capita income of $ 0.40 per day)
o As per DoT statistics 500,000 villages have telephone access.
10. Scope of Telecom Industries
o Public & private player
20% 18% 21%

11.
o Divided into 22 circles
 4 metros
 19 circles
 Further divided into A, B and C category based on economic

parameters and revenue potential
o Each circle has a licenses
 Four operators per circle are allowed
 Licenses are saleable
Market structure METRO Circles Gujarat Rajasthan Maharashtra Orissa Andhra Pradesh Karnataka
Tamil Nadu Kerala Madhya Pradesh Uttar Pradesh E Bihar West Bengal Punjab Himachal Pradesh
Haryana Jammu & Kashmir Uttar Pradesh W CHENNAI MUMBAI DELHI KOLKATA C Circles B Circles A
Circles
12. Players of Telecom Industries
o Airtel
o BSNL
o Vodafone
o Reliance
o Idea
13. AIRTEL
o Established in 1995 by Sunil Mittal as a Public Limited Company, Airtel is the largest
telecom service provider in Indian telecom sector. With market capitalization of over Rs. 1,360
billion, Airtel has 31% of total market share of GSM service providers. Providing GSM services in
all the 23 circles, Airtel was the first private player in telecom sector to connect all states of India.
Also, Airtel is the first mobile service provider to introduce the lifetime prepaid services and
electronic recharge systems.
14. BSNL (Bharat Sanchar Nigam Ltd.)
o Founded in 2000, Bharat Sanchar Nigam Ltd. In 2005-06, the BSNL earned revenues
of Rs. 40,177 crore, & In 2007-08, the BSNL earned revenues of Rs.38,053 crores. India's largest
public sector Telecommunications Company providing a wide variety of telecom services. Its
service range covers Wireline, CDMA mobile, GSM Mobile, Internet, Broadband, Carrier service,
MPLS-VPN, VSAT, VoIP services, IN Services, etc.
15. VODAFONE
o Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commenced

operations in 1994 when its predecessor Hutchison Telecom acquired the cellular licence for
Mumbai. Vodafone Essar now has operations in 20 circles with over 54.63 million customers.
Vodafone is the world’s leading international mobile communications company. It now has
operations in 25 countries across 5 continents and 40 partner networks with over 269 million
customers worldwide. Vodafone has partnered with the Essar Group as its principal joint venture
partner for the Indian market.
16. RELIANCE
o Established in 2002, Reliance communication is the wholly owned subsidiary of Anil

Dhirubhai Ambani Group of Companies providing the telecommunication services. Reliance offers
prepaid and postpaid mobile services with R-world and fixed line services with broadband
services. In 673 cities, Reliance Communications offers a wide range of telephony services. With
an optical fiber network of 80,000 kms, the company aims at providing best services to its
customers.
17. IDEA
o Established by AT&T, Aditya Birla Group and Tata Group as joint venture, Idea
Cellular, is a part of Aditya Birla Nuvo, a flagship company of the Aditya Birla Group, Idea is
growing its network in 11 circles. Idea offers both prepaid and post paid services in the GSM
network. Having 13% market share, Idea has a base of 2.3 crores subscribers all over the
country. A three-year contract was signed between Idea cellular and Ericsson for GSM expansion.
The network will now cover Maharashtra, Gujarat, Rajasthan, Madhya Pradesh and Himachal
Pradesh telecom circles (operator-licensed areas).
18. Market Strategy of Vodafone
o Our strategic objective is
o - Innovate and deliver on customer’s total communications needs.
o Vodafone too, needed to educate consumers about cellular telephony:-

o -Can I call std?
o -Can I use my phone in a lift?
o -what is airtime?
19. Commercial Strategy of Vodafone
o Rebranding
o -Stores
o -Mass media coverage
o Innovative distribution to reach the customer
o -Exclusive shops
o -Hub and spoke
o -Associate distributions
o Customer service
o -Shops and call centers
o -Vans
o -Help desks
20. Market Strategy of Airtel
o We positioned Airtel as an inspirational and lifestyle brand, in a way that trivialized

the price in the mind of the consumer. It was pitched not merely as a mobile service, but as
something that gave him a badge value.
o Airtel strategy us to be a leader in
o -Innovations
o -network
o -offers and services
21. Competitive Analysis (Positioning Strategy)
o Vodafone has veered towards warmth and emotions.
o Vodafone used the powerful visual imagery of a dog.
o Airtel is focused on functionally and efficiency.
o Airtel choose to use music, which is not nearly as effective.
22. Competitive Analysis (Target Audience)
o They are targeting middle class person as their target audience.

o It can be justified by their product like chota recharge.
o A group or class of persons enjoying superior intellectual or social or economic

status
o Up market
o professionals
23. Ad-Campaign by AIRTEL (Digital TV)
24. Ad-Campaign by VODAFONE
25. MAJOR MARKET TRENDS MAJOR MARKET TRENDS The telecoms trends in India will have a great
impact on everything from the humble PC, internet, broadband (both wireless and fixed),
cable, handset features, talking SMS, IPTV, soft switches, and managed services to the local
manufacturing and supply chain. This report discusses key trends in the Indian telecom
industry, their drivers and the major impacts of such trends affecting mobile operators,
infrastructure and handset vendors. Higher acceptance for wireless services Indian customers
are embracing mobile technology in a big way (an average of four million subscribers added
every month for the past six months itself). They prefer wireless services compared to wire-line
services, which is evident from the fact that while the wireless subscriber base has increased
at 75 percent CAGR from 2001 to 2006, the wire-line subscriber base growth rate is negligible
during the same period. In fact, many customers are returning their wire-line phones to their
service providers as mobile provides a more attractive and competitive solution. The main
drivers for this trend are quick service delivery for mobile connections, affordable pricing plans
in the form of pre-paid cards and increased purchasing power among the 18 to 40 years age
group as well as sizeable middle class – a prime market for this service. Some of the positive
impacts of this trend are as follows. According to a study, 18 percent of mobile users are
willing to change their handsets every year to newer models with more features, which is good
news for the handset vendors. The other impact is that while the operators have only limited
options to generate additional revenues through value-added services from wire-line services,
the mobile operators have numerous options to generate non-voice revenues from their
customers. Some examples of value-added services are ring tones download, coloured ring
back tones, talking SMS, mobisodes (a brief video programme episode designed for mobile
phone viewing) etc. Moreover, there exists great opportunity for content developers to develop
applications suitable for mobile users like mobile gaming, location based services etc. On the
negative side, there is an increased threat of virus – spread through mobile data connections
and Bluetooth technology – in mobile phones, making them unusable at times. This is good
news for anti-virus solution providers, who will gain from this trend. MERGERS Demand for new
spectrum as the industry grows and the fact the spectrum allocation in done on the basis of
number of subscribers will force companies to merge so as to claim large number of
subscribers to gain more spectrum as a precursor to the launch of larger and expanded
services. However it must also be noted that this may very well never happen on account of
low telecom penetration. NEW CIRCLES As mentioned earlier there is a significant number of
tier-2 and tier 3 cities that can accommodate more players we expect aggressive response by
the companies to such opportunities as and when they are created The telecoms trends in
India will have a great impact on everything from the humble PC, internet, broadband (both
wireless and fixed), cable, handset features, talking SMS, IPTV, soft switches, and managed
services to the local manufacturing and supply chain. This report discusses key trends in the
Indian telecom industry, their drivers and the major impacts of such trends affecting mobile
operators, infrastructure and handset vendors. Higher acceptance for wireless services Indian
customers are embracing mobile technology in a big way (an average of four million
subscribers added every month for the past six months itself). They prefer wireless services
compared to wire-line services, which is evident from the fact that while the wireless
subscriber base has increased at 75 percent CAGR from 2001 to 2006, the wire-line subscriber
base growth rate is negligible during the same period.
26.
o In fact, many customers are returning their wire-line phones to their service
providers as mobile provides a more attractive and competitive solution. The main drivers for this
trend are quick service delivery for mobile connections, affordable pricing plans in the form of
pre-paid cards and increased purchasing power among the 18 to 40 years age group as well as
sizeable middle class – a prime market for this service.
o Some of the positive impacts of this trend are as follows .
o According to a study,18 percent of mobile users are willing to change their handsets
every year to newer models with more features, which is good news for the handset vendors. The
other impact is that while the operators have only limited options to generate additional revenues
through value-added services from wire-line services, the mobile operators have numerous
options to generate non-voice revenues from their customers
27.
o Some examples of value-added services are ring tones download, coloured ringback
tones, talking SMS, mobisodes (a brief video programme episode designed for mobile phone
viewing) etc. Moreover, there exists great opportunity for content developers to develop
applications suitable for mobile users like mobile gaming, location based services etc. On the
negative side, there is an increased threat of virus – spread through mobile data connections and
Bluetooth technology – in mobile phones, making them unusable at times. This is good news for
anti-virus solution providers, who will gain from this trend. they are created
28. Future Trends
o Convergence of technologies & the ability of private players to offer it to the market
faster than the incumbent operator.
o “ The telecom industry in 2012 will be very different from the one we know today.
Developing strong partnership skills, focusing on customer user groups, embracing Internet
services and starting to talk the language of Web 2.0 will enable the carriers to thrive well into
the future,"
29. Developments in telecom industry
o 3G Technology In India
o 3G or Third Generation technology is a convergence of various Second Generation

telecommunication systems. The technology is intended for SMARTPHONES - multimedia cell
phones. Video broadcasting and other e-commerce services such as, stock transactions and e-
learning will now be made possible much faster. It offers 3 Mbps speed for downloading, which is
very high as compared to that of the 2G technology. The 3G technology provides for internet
surfing, downloading, e-mail attachment downloading, audio-video conferencing, fax services and
many other broadband applications.
30. Reliance launched Big TV
31. Airtel has launched digital TV
32. Vodafone +Airtel+ Apple is going to launch iphone.
33. All players are going to launch net usage by USB (plug & surf from anywhere)
34. Conclusion
o In this changing landscape, the winners will be those companies that understand
consumers' needs, focussing on usability and actually giving control back to the users. The losers
will be the ones that focus on overly technical product differentiation that the majority of
consumers will not understand and therefore not use. Inevitably, the global telecom majors are
taking notice and Nokia, LG and Motorola have put up factories to manufacture mobile phones
after years of saying that the Indian market was better supplied from abroad. Nokia’s former
chairman Jorma Ollila was quite clear why the company was finally moving to India. “We estimate
that India will become the world’s second biggest mobile device market when measured by
volumes in the year 2010.” Other market research companies have estimated that India will, in
fact, overtake China when it comes to selling mobile instruments by around 2009.
35.
36. THANK YOU…..
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lecom Sector Thesis - Document Transcript
THE INDIAN INSTITUTE OF PLANNING AND MANAGEMENT, AHMEDABAD THESIS

TOPIC “Critically analyze the customer preference and satisfaction measurement in
Indian Telecom Industry” SUBMITTED BY Naman Shah PGP/SS/06-08 ALUMNI
REFERENCE ID: SS/06-08/AHD/MKTG/2 SUMISSION DATE: 27th August, 2008 GUIDED
BY Prof. Pabitra Ranjan Chakravorty Senior Research Associate (Marketing) IIPM,
Ahmedabad.
I LETTER OF CONSENT IIPM Ahmedabad 19, Inquilab Society, Gulbai Tekra,

Ahmedabad-380015 To, The Dean, IIPM-Ahmedabad Date: November 6, 2007
Respected Sir, Subject: Letter of Consent I, Prof. Pabitra Ranjan Chakravorty, a
faculty of Marketing Management of IIPM-Ahmedabad, expressing my interest in
guiding for a thesis on “To critically analyze the customer preference and
satisfaction measurement in Indian Telecom Industry” to Mr. Naman Shah, a
student of PGP/SS/06-08. This is to inform that I shall support him as a guide for his
thesis on the above mentioned topic and extend my knowledge and help in all ways
possible. Thank You. Yours faithfully, Prof. Pabitra Ranjan Chakravorty.
II LETTER OF APPROVAL
III PREFACE The customers are very important and play a crucial role in any process
of marketing. Today, customers are the kings of the market because the customer
loyalty and customer preference are built by the products and the services offered
to the customers and they seek for the more benefits and money’s worth for the
amount they spend. That is where the concept of customer preference and
consumer behavior comes because the customers make the marketers to rethink
about designing the products and services. They have to think about the market
segmentation, market strategies, consumer behavior, consumer’s tastes,
consumer’s lifestyle etc also. Many marketers are smart enough to understand
consumers’ needs, wants and demands and perform beyond their expectations i.e.
they delight them. It provides them growth, profitability and creativity with lot of
inventions.
IV ACKNOWLEDGEMENT A mammoth thesis of this nature calls for intellectual

nourishment, professional help, and encouragement from many quarters. I would
like to express my gratitude to: The pioneers in the field of marketing management
who have shaped their understanding through their rich and varied contributions.
Professors and seniors for providing the stimulus for making this thesis successful. A
number of academics and practitioners for generously sharing their insight and
experience with me. It is my immense pleasure to work under the guidance of Prof.
Pabitra Ranjan Chakravorty, and we heartily thank them for providing me the
guidance whenever needed. I am also thankful to beloved The Dean and Professor
Dipankar Sarkar, who gave me guidance in each and every matter all the time. My
heuristic approach towards the project was one of the major contributors in the
outcomes that we arrived at. I’d like to thank my institution, IIPM – Ahmedabad, for
providing me this great opportunity and attempting to inculcate the traits needed to
succeed.
V I am also thankful to various industry experts and executives for sharing relevant
information and valuable thoughts with me and helped me in writing my thesis.
VI SYNOPSIS Aim: The aim of this study is to analyze critically the customer
preference and their satisfaction in Telecom Sector. Objectives of the study: • To
understand the improvement and customer preferences in Telecom Sector. • To
study the service providers and their service quality in the Telecom Sector. • To
study the customer satisfaction and understand the current market scenario in
Telecom Sector. Commercial viability of the study: In today’s scenario,
communication has become much faster day by day by telephones, internet, media
etc. One of them is a growth of telecom sector. Today many organizations provide
services for the telecom purpose. This study will help to understand customer
preferences and their satisfaction by the services provided by different
organizations
VII in this sector. It will also help to these organizations to form various strategies
and getting the results from marketing efforts. Research Methodology: This
research consists of primary and secondary research: Primary:- 1. Interaction with
customers by filling up of questionnaires. 2. Interview with Sales or Marketing
Personnel. Secondary:- 1. Books 2. Internet 3. Articles 4. Magazines/ Project Reports
5. Newspapers
VIII EXECUTIVE SUMMARY The development of the telecom sector has experienced a
major process of transformation in terms of its growth, technological content, and
market structure in the last decade through policy reforms introduced by the
Government. The impetus of these changes is expected to continue, and at a much
faster pace. The study aims to analysis that with the increase in competition in
telecom services, higher levels of consumer satisfaction with affordable prices and
improved quality of services achieving or not. Wireless telephony and the Internet
are expected to be the preferred means of communication as convergence of
telecommunications, broadcasting, and information technology progresses. The
study also shows the supportive policy framework needs to be in place during this
period of rapid growth and transformation. The Government has undertaken the
implementation telecom policy with utmost earnestness, in letter and spirit to usher
in competition in almost all the service sectors. The migration package to revenue
sharing in place of a fixed license fee, has led
IX to a virtual ‘take off” in growth of the cellular and basic service sectors. National
and International data connectivity has been opened. Liberalization of telecom
sector of the Indian economy aims at improving accessibility, availability, reliability
and connectivity through private sector participation and to bring about much
needed improvement in the Quality of Service. Through increased competition, the
service providers are expected to become more sensitive and responsive to the
customers needs and choices and endeavor to give him greater satisfaction. The
Telecom Regulatory Authority of India (TRAI) has the mandate to safeguard the
customer’s interests and to set the standards of quality of service. The rapid
technological advances which have taken place in the telecom sector have brought
about significant improvements in the quality of service provided to customers.
With the digitization of exchanges, and upgradation of external network, the fault
rate has come down.
X INDEX PRELIMINARIES Letter of

Consent…………………………………………………………….I Letter of
Approval………………………………………………………......II
Preface……………………………………………………………………. III
Acknowledgement…………………………………………………………IV
Synopsis……………………………………………………………………VI Executive
Summary……………………………………………………...VIII List of
Figures……………………………………………………………..XII List of
Tables……………………………………………………………..XIII LITERATURE REVIEW
Chapter 1: An Introduction to Indian Telecom Sector 1.1: History and reforms in
Indian Telecom Sector…………………1 1.2: Indian Telecom Policy…...
……………………………………...2 Chapter 2: GSM vs. CDMA 2.1: GSM and CDMA
facts………………………………………….8 Chapter 3: Growth Drivers 3.1: Industry
growth drivers……..…………………………………13 3.2: Segmentation of Indian
Telecom Market……………………...14 3.3: Market
factors………………………………………………….17 3.4: Success
factors…………………………………….…………...18 Chapter 4: Telecom operators 4.1:
Introduction...………………………………………………….24 4.2: Mobile service
providers…………...………………………….24 Chapter 5: Different operators segment
5.1: Introduction to various segments……………………………...47 5.2: Public vs.
Private……………………………………………...58 5.3: Licensing issues in
India……………………………………....59 Chapter 6: Rural Market 6.1:
Introduction……………………………………………………60
XI 6.2: Growth of telecom services in rural market…………………...60 Chapter 7:

Foreign Direct Investments in Indian Telecom 7.1:
Introduction……………………………………………………64 7.2: Effects of FDI in Indian
Telecom……………………………..66 Chapter 8: 3G Spectrums 8.1: What is
3G?................................................................................68 8.2: What is
Spectrum?......................................................................69 8.3: Difference between
1G, 2G and 3G…………………………....69 8.4: 3G issues for service providers and
users……………………...70 8.5: Suggestions for spectrum
issues……………………………….70 8.6: 3G
auction/allocation………………………………………….71 Chapter 9: Value Added
Services 9.1: Introduction……………………………………………………73 9.2: Various
Value added services…………………………………73 9.4:
Challenges……………………………………………………..75 9.5: Future
trends…………………………………………………..75 FEASIBILITY STUDY Chapter 10:
Research Methodology 10.1: Research
Objective…………………………………………...77 10.2:
Samples………………………………………………………77 10.3: Observations and
Findings…………………………………...78 Chapter 11: SWOT Analysis of Indian
Telecom………………………111 Chapter 12: Future of Indian
Telecom………………………………...114 Chapter 13: Conclusion and
Recommendations 13.1: Conclusion…………………………………………………..117 13.2:
Recommendations…………………………………………...119
Bibliography…………………………………………………………………………124
Abbreviations……………………………………………………………..126 Annexures: Article
and Questionnaire………………………………………. …129 Response
Sheets…………………………………………………………..142
XII LIST OF FIGURES Figure 1: Growth of subscriber base from 1998 to 2007..
…………........................3 Figure 2: Operator-wise Market Share of GSM service
providers as on 30th September
2007………………………………………………………….10 Figure 3 Operator-wise Market
Share of CDMA Wireless as on 30th September 2007…...
……………………………………………………...10 Figure 4: Wireless including WLL for
October 2007…………………….............11 Figure 5: Segmentation in the Indian
Telecom Consumer Market………...........14 Figure 6: Market
factors…………………………………………………………...18 Figure 7: Success
factors…………………………………………………...............19 Figure 8: Urban+Rural
wireline market share……………………………...........28 Figure 9: Telecom service
providers market shares for 31st March-2007…........31 Figure 10: Private and Public
players market share……………………..............48 Figure 11: India’s telephony tele-
density by March 2008………………………..48 Figure 12: Total wireless subscribers
by September 2007……………………….51 Figure 13: Internet subscriber base for 3rd
quarter in 2007………………..........52 Figure 14: Growing share of private sector by
December 2007…………............58 Figure 15: Urban+Rural tele density by
December 2007………………………...61 Figure 16: Rural wireline subscribers by
September 2007………………............62 Figure 17: Market share of rural wireline
subscribers on 30th September
2007............................................................................…………………..63 Figure 18:
FDI equity inflows in Telecom from April-October for the year 2007-
08………………………………………………………………….65
XIII LIST OF TABLES Table 1: Evolution of telecom
industry……………………………………..............1 Table 2: GSM and CDMA subscription
numbers………………………………....8 Table 3: BSNL’s financial
facts………………………………………………........25 Table 4: Telecom service providers’
financial facts of 4th quarter for the year
2008………………………………………………………………………..26 Table 5:Airtel’s
financial facts for the year March 2007-08……………………..30 Table 6: Reliance
communication’s financial facts by March-2008……………..36 Table 7: Broadband
subscribers’ growth from March-2006 to July-2007……...52
Critically analyze the customer preference and satisfaction measurement in Indian

Telecom Industry 1 Chapter 1: INTRODUCTION 1.1] History and Reforms in Indian
Telecom Sector:- India’s telecom sector has been doing exceptionally well in past
decade. Its structural and institutional reforms have provided tremendous growth
opportunity to this sector. India has nearly 200 million telephone lines making it the
third largest network in the world after China and USA. With a growth rate of 45%,
Indian telecom industry has the highest growth rate in the world. The first reforms
in Indian telecommunications sector began in 1980s when the private sector was
allowed in telecommunications equipment manufacturing. In 1985, Department of
Telecommunications (DOT) was established. Evolution of the industry-Important
Milestones Year History of Indian Telecommunications 1851 First operational land
lines were laid by the government near Calcutta (seat of British power) 1881
Telephone service introduced in India 1883 Merger with the postal system The
Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 2 1923 Formation of Indian Radio Telegraph Company (IRT) 1932
Merger of ETC and IRT into the Indian Radio and Cable Communication Company
(IRCC) 1947 Nationalization of all foreign telecommunication companies to form the
Posts, Telephone and Telegraph (PTT), a monopoly run by the government's
Ministry of Communications 1985 Department of Telecommunications (DOT)
established, an exclusive provider of domestic and long-distance service that would
be its own regulator (separate from the postal system) 1986 Conversion of DOT into
two wholly government-owned companies: the Videsh Sanchar Nigam Limited
(VSNL) for international telecommunications and Mahanagar Telephone Nigam
Limited (MTNL) for service in metropolitan areas. 1997 Telecom Regulatory
Authority of India created. 1999 Cellular Services are launched in India. New
National Telecom Policy is adopted. 2000 DoT becomes a corporation, BSNL 1.2]
Indian Telecom Policy:- After 1991’s liberalization in Government’s policies, the
telecom sector has allowed various private players to enter into the Indian market.
Earlier, sector was operating under public sector giants like Bharat Sanchar Nigam
Limited (BSNL), Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar
Nigam Limited (VSNL) but after the National Telecom Policy (NTP) by Government in
1994 many private players entered in Indian The Indian Institute of Planning &
Management-Ahmedabad

Telecom Industry 3 telecommunication market. But this market is regulated by
Telecommunication Regulatory Authority of India (TRAI). It acts as an independent
regulator of the business of telecommunications in the country which was set up in
1997 by the government of India. (Source: TRAI Report 2006-07) Indian
telecommunications today benefits from among the most enlightened regulation in
the region, and arguably in the world. The sector, sometimes considered the
“poster-boy for economic reforms,” has been among the chief beneficiaries of the
post-1991 liberalization. Unlike electricity, for example, where reforms have been
stalled, telecommunications has generally been seen as removed from “mass
concerns,” and thus less subject to electoral calculations. Market oriented reforms
have also been facilitated by lobbying The Indian Institute of Planning &

Telecom Industry 4 from India’s booming technology sector, whose continued
success of course depends on the quality of communications infrastructure. Despite
several hiccups along the way, the Telecom Regulatory Authority of India (TRAI), the
independent regulator, has earned a reputation for transparency and competence.
With the recent resolution of a major dispute between cellular and fixed operators,
Indian telecommunications already among the most competitive markets in the
world appears set to continue growing rapidly. While telecom liberalization is
usually associated with the post-1991 era, the seeds of reform were actually
planted in the 1980s. At that time, Rajiv Gandhi proclaimed his intention of “leading
India into the 21st century,” and carved the Department of Telecommunications
(DOT) out of the Department of Posts and Telegraph. For a time he also even
considered corporatizing the DOT, before succumbing to union pressure. In a
compromise, Gandhi created two DOT-owned corporations: Mahanagar Telephone
Nigam Limited (MTNL), to serve Delhi and Bombay, and Videsh Sanchar Nigam
Limited (VSNL), to operate international telecom services. He also introduced
private capital into the manufacturing of telecommunications equipment, which had
previously been a DOT monopoly. The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 5 These and other reforms were limited by the unstable coalition
politics of the late 1980s. It was not until the early 1990s, when the political
situation stabilized, and with the general momentum for economic reforms, that
telecommunications liberalization really took off. In 1994, the government released
its National Telecommunications Policy (NTP-94), which allowed private fixed
operators to take part in the Indian market for the first time (cellular operators had
been allowed into the four largest metropolitan centers in 1992). Under the
government’s new policy, India was divided into 20 circles roughly corresponding to
state boundaries, each of which would contain two fixed operators (including the
incumbent), and two mobile operators. As ground-breaking as NTP-94 was, its
implementation was unfortunately marred by regulatory uncertainty and over-
bidding. A number of operators were unable to live up to their profligate bids and,
confronted with far less lucrative networks than they had supposed, pulled out of
the country. As a result, competition in India’s telecom sector did not really become
a reality until 1999. At that time the government’s New Telecommunications Policy
(NTP-99) switched from a fixed fee license to a revenue sharing regime of
approximately 15%. This figure has subsequently been lowered (to 10%- The Indian
Institute of Planning & Management-Ahmedabad

Telecom Industry 6 12%), and is expected to be reduced even further over the
coming years. Still, India continues to derive substantial revenue from license fees
($800 million in 2001-2002), leading some critics to suggest that the government
has abrogated its responsibilities as a regulator to those as a seller. Another,
perhaps even more significant, problem with India’s initial attempts to introduce
competition was the lack of regulatory clarity. Private operators complained that the
licensor – the DOT – was also the incumbent operator. The many stringent
conditions attached to licenses were thus seen by many as the DOT’s attempt to
limit competition. It was in response to such concerns that the government in 1997
set up the Telecom Regulatory Authority of India (TRAI), the nation’s first
independent telecom regulator. Over the years, TRAI has earned a growing
reputation for independence, transparency and an increasing level of competence.
Early on, however, the regulator was beleaguered on all fronts. It had to contend
with political interference, the incumbent’s many challenges to its authority, and
accusations of ineptitude by private players. Throughout the late 1990s, TRAI’s
authority was steadily whittled away in a number of cases, when the courts
repeatedly held that regulatory power lay with the central government. It was not
until 2000, with the passing of the TRAI The Indian Institute of Planning &

Telecom Industry 7 Amendment Act, that the regulatory body really came into its
own. Coming just a year after NTP-99, the act marks something of a watershed
moment in the history of India telecom liberalization. Today, there are many private
players like Vodafone, Airtel, Tata, Reliance, Idea etc. There are basically two areas
in which these players operate: Fixed and Cellular Services. In Fixed line, MTNL and
BSNL have captured major part of the market. Whereas, Cellular Services, can be
further divided into two parts: Global System for Mobile Communications (GSM) and
Code Division Multiple Access (CDMA). The Indian Institute of Planning &
Telecom Industry 8 Chapter 2: GSM vs. CDMA 2.1] GSM and CDMA facts:- GSM
segment consists of players like Airtel, Vodafone, Idea, and BSNL. Whereas, CDMA
segment consists of players like Reliance, Tata etc. GSM and CDMA subscription
numbers: GSM CDMA CDMA GSM Subscribers Year Annual Subscribers Annual
(millions) Growth (millions) Growth 2000 3.1 94% - - 2001 5.05 76% - - 2002 10.5
91% 0.8 - 2003 22.0 110% 6.4 700% 2004 37.4 70% 10.9 70% 2005 58.5 57% 19.1
75% 2006 105.4 80% 44.2 131% 2007 180.0 71% 85.0 92% (Source: COAI report)
As per Cellular Operator Association of India (COAI), India's GSM telecom service
providers added 5.92 millions new subscribers in February, taking their total
customer base up to 184.67 millions. In January, they had added 6.19 millions new
users. At the end of February last year, the total GSM subscriber base stood at
115.29 millions while the same was 178.41 millions The Indian Institute of Planning
& Management-Ahmedabad

Telecom Industry 9 as at January 31, 2008. Customers in the Metro Circle rose by
38.3% from the year earlier to 29.49 millions, while in the A Circle the user base
grew by 64.7% from last year's level to 67.08 millions. Growth in the B Circle
jumped by 63.6% to 67.19 millions and the C Circle subscribers expanded by
71.54% to 20.9 millions. Company wise break-up shows that Bharti Airtel, leader in
the GSM space, added 2.25 millions new customers last month while Vodafone
Essar saw its subscriber base swell by 1.41 millions new users. Idea Cellular added
918,871 new customers and Spice Communications added 141,377 new users.
State-run BSNL added around 0.8mn new customers last month. At the end of
February, Bharti Airtel held a market share of 32.31% with a total of 59.67 millions
customers, while Vodafone Essar had a market share of 23.04% at 42.55 millions
subscribers. BSNL accounted for 18.72% of the GSM market at 34.57 millions
customers and Idea held a market share of 12.39% at 22.87 millions. India presently
follows a CPP model, whereby calling party pays. Incoming calls were made free
since April 1, 2002 and that has substantially boosted the subscriber growth rate in
India. However, making incoming calls free reduced operators’ ARPU. The Indian

Telecom Industry 10 Operator-wise Market Share of GSM service providers as on
30th September 2007 (Source: TRAI Report 2007-08) Operator-wise Market Share of
CDMA Wireless as on 30 September 2007 (Source: TRAI Report 2007-08) 1% 6%
Reliance Tata 36% MTNL 57% BSNL The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 11 According to TRAI report, the total number of mobile
subscribers by the March 31,2008 were 261.08 million as against last year’s 165.09
millions (58.14% increment), which was 56.89 millions subscribers across India. This
figure shows that in just within three years, the number of mobile subscribers has
amplified over 4.5 times. In May 2008, there were 316.97 millions subscribers were
added including 8.5 millions subscribers of wireless market. Total wireless
subscribers 277.92 millions were added in this month. Wireless-including WLL for
October-07 8.9 17.1 Vodafone 9.3 BSNL 1.6 1.4 Airtel Rcom 16.1 MTNL 17.4 Spice
Tata IDEA 23.4 (Source: TRAI Report 2007-08) The Indian Institute of Planning &

Telecom Industry 12 DoT has told to review of call termination charges to TRAI to
make them on cost-based which may fall tariff charges significantly. Termination
charges are the ones paid by a telecom operator from whose network call originates
to a service provider on which call terminates. Currently the charges for that are
0.30 which are very high. They were fixed in 2003. If the charges are reduced, the
service providers would have to forego some portion of their revenues. On the other
hand, high termination charges may smother the competition and may disturb the
level playing field. The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 13 Chapter 3: GROWTH DRIVERS 3.1] Industry Growth Drivers:-
Fixed Line Segment. Capacity expansion of fixed line exchanges helped consumers
avail quick connections. Quick connection availability boosted number of fixed line
connections during 1985 – 1995. Wireless Segment. Vast geographic expanse of
India acted as a catalyst to boost mobility. Low call costs since 2002 fueled the
wireless segment. Narrowing gap of call costs between fixed and wireless convinced
customers to subscribe to wireless connections. Nationwide roaming facilities on
GSM. SMS facility. Internet + Subscription bundling. Reduced cost of handsets
(affordability factor). Customs duties have been reduced from 10% to 5%. The

Telecom Industry 14 In remote areas where providing fixed line connections were
difficult, wireless did the magic. CDMA fixed wireless gave customers 3 in one
advantage – mobility, internet and easy access. Many telecom service providers
provide Global Calling Card (GCC) to their customers. These cards help them to
make calls from the foreign countries and it saves up to 80-90% in international
roaming. 3.2] Segmentation of the Indian Telecom Consumer Market:- With the
proliferation of mobile phone users, several micro segments have also emerged
lately, each with their own specific needs. The Indian Mobile consumer market has
been segmented as follows: (Source: India Cellular) The Indian Institute of Planning

Telecom Industry 15 The rationale behind the above segmentation is to identify
customers on the basis of their stage in life and hence to tailor-make schemes for
each customer segment. The different segments are explained as follows: Youth:-
Over the years, service providers have started giving greater attention to this
segment, as it has emerged as one of the biggest users of mobile phones. For the
youth, mobile phones are not just a necessity, but rather an indispensable
accessory. This segment particularly values prepaid schemes with free SMS
services. It is further differentiated into various micro-segments based on age and
gender. For instance, youngsters in the age group of 19 to 23 years generally have
a large circle of friends and more access to money. Companies thus focus on
providing services like group talk and group SMS to these people. This segment is
very dynamic as its needs keep changing very frequently, driven by the latest
trends and fads. For instance, downloading new ring-tones is the latest fad among
the youth today. This is a huge revenue source for service providers and so they
need to keep up with the changing tastes of this segment. The Indian Institute of
Planning & Management-Ahmedabad

Telecom Industry 16 Young Professionals:- People entering the workforce and thus
moving out of the dependent bracket constitute this market segment. They
generally prefer using post paid schemes with value added services like information
about stock markets, news updates and so on. Small and Medium Enterprise:- This
segment mainly consists of people who are switching over from landlines to mobile
phones, seeking a cost advantage. The focus here is on economy-packages rather
than value added services. Family:- Family as a segment consists of more number
of dependents. These dependants are serviced by prepaid schemes. Geographically
dispersed families tied by the same cellular service providers may get cost
advantages in terms of lower pulse rates. The Indian Institute of Planning &

Telecom Industry 17 Special:- The ‘Special’ category includes a small but growing
segment which requires largely customized services sought by celebrities,
politicians, CEOs and the super-rich. Tailor made schemes for each segment have
been a great success so far. This customization, however, has reached such a stage
that every service provider has numerous schemes being provided at the same
time. Being short term schemes, they keep changing frequently and customers thus
start switching from one service provider to another based on the attractiveness of
the scheme. This has brought down customer loyalty and hence service providers
are finding it difficult to retain existing customers. It is estimated that in the near
future the plethora of schemes provided by the different service providers will stop
being a differentiating factor. 3.3] Market Factors:- There are basically two market
factors which are considered while segmenting the market as well as deciding the
strategic moves for the markets and competition. 1) Strategic Factors 2) Economic
Factors The Indian Institute of Planning & Management-Ahmedabad
Telecom Industry 18 (Source: microsite mobile) 3.4] Success Factors:- It is very
important for any company or service provider to stay in the market for a long
period otherwise it will be out of the market and suffer a lot. To taste the success,
companies have to perform well continuously and make their customers happy all
the time by proper CRM and other techniques. Apart from that, there are two types
of factors for these companies: (1) shall have and (2) must have factors. The Indian

Telecom Industry 19 (Source: Bernhard Goldberger- 19th Bled e-Conference
eValues) 1) Shall Have Factors: Social relationships: Humans are social beings. They
interact constantly with each other and social relationships are a vital part of life.
The mobile phone is perfectly suited to satisfy the need of maintaining social
relationships. Services that support social relationships are likely to be successful.
The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 20 Power: One important aspect of social relations is status which
is strongly related to power. Two types of power can be distinguished: Power to
access and power to execute. The first type of power refers to the possibility to
intervene in other people’s life, as for instance parents influencing the life of their
children. But also the limitation of the power to access can be useful. One famous
example is SMS (Short Message Service). They provide the opportunity to
communicate without giving the receiver the chance to reply directly. This way
unpleasant information can be communicated. EQM (Easier, Quicker, More): Easier
means that solutions that are simpler and/or more convenient are accepted by
customers. One good example for “easier” is the phonebook of cell phones
(compared to typing in the complete number when you call someone). Quicker
refers to the opportunity to fulfill customer needs faster than traditional products.
One of the reasons why e-mails are common nowadays is that they are faster than
traditional letters. The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 21 More is related to the fact that humans tend to maximize their
benefits. Thus they will welcome every new product allowing them to increase their
benefit. Entertainment: There are two types of entertainment: “scheduled”
entertainment, such as visiting a theatre and entertainment during niche times, for
example when waiting for public transport. In such time slots a mobile phone can be
the perfect entertainment or gaming console. Security: Security is one of the most
important needs of humans. Because of security provided by service providers, the
information of users is kept confidential. Apart from that, there can’t be any
manipulation done in case of post-paid bills and various services provided as user
can have an idea specially in case of pre-paid customers where regular balance can
be checked. The Indian Institute of Planning & Management-Ahmedabad
Telecom Industry 22 (2) Must Have Factors: The 3 minute value: The average WAP
application takes five minutes. In Japan the popular i-mode applications last for less
than one and a half minutes on average. The time a customer uses an application
may vary from country to country. However, it is quite evident, that a mobile
application has to produce a clear, perceived value for the customer within a short
period of time. As a rule of thumb the value should be delivered within 3 minutes.
Simplicity: The services provided to the customers should be simple. It should be
easy to understand and the customer should be able to use the services
intuitionally like GPRS, caller tunes etc. Thus the usability has to meet the
customer’s standards. Additional benefit: For a successful service it is essential that
the customer perceives a clear additional value. There are several types of
additional values. For example fun, cost saving, time saving or location based
additional value. The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 23 Customer friendly tariff structure: The willingness to pay for
new technologies and new applications is limited since the customer cannot clearly
judge the additional benefit a new application yields. This is especially true for B2C
markets where the customers tend to be more prices sensitive. For this reason a
customer friendly price structure, preferably with a price model that eases diffusion
of a new application, is essential. The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 24 Chapter 4: TELECOM OPERATORS 4.1] Introduction:- There are
three types of players in telecom services: • State owned companies (BSNL and
MTNL) • Private Indian owned companies (Reliance Infocomm, Tata Teleservices,) •
Foreign invested companies (Vodafone, Bharti Tele-ventures, Escotel, Idea Cellular,
BPL Mobile, Spice Communications) 4.2] Mobile Service Providers:- BSNL: On
October 1, 2000 the Department of Telecom Operations, Government of India
became a corporation and was renamed Bharat Sanchar Nigam Limited (BSNL).
BSNL is now India’s leading Telecommunications Company and the largest public
sector undertaking. It has a network of over 45 million lines covering 5000 towns
with over 35 million telephone connections. The Indian Institute of Planning &

Telecom Industry 25 The state-controlled BSNL operates basic, cellular (GSM and
CDMA) mobile, Internet and long distance services throughout India (except Delhi
and Mumbai).The aim is to provide a telephone density of 9.9 per hundred by March
2007. BSNL, which became the third operator of GSM mobile services in most
circles, is now planning to overtake Bharti to become the largest GSM operator in
the country. BSNL is also the largest operator in the Internet market, with a share of
21 per cent of the entire subscriber base. BSNL's estimated total capital outlay for
2008/09 will rise to 185.91 billion rupees ($4.7 billion) from 140.65 billion rupees in
2007/08. (Amount in lakhs) Profit before tax Rs. 815381 Profit after tax Rs. 780587
Earning per share Rs. 14.03 Turnover Rs. 3461621 (Source: BSNL’s balance sheet
2006-07) Recently, BSNL has done a very good business in last quarter of 2008 i.e.
at the end of the March-2008; it has left behind all other telecom service providers.
It had sales of Rs. 10747.79 crores. The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 26 Telecom service providers at the end of Q4 for the year 2008:-
Company Sales( Rs. in crores) BSNL 10747.79 Bharti 8381 Vodafone 4681.44 Rcom
4318.74 Idea 2150.84 Tata Teleservices 2057.30 (Source: The Economic Times)
BSNL is also operating in landline, WLL, mobile, internet (BSNL broadband) etc. It
has been doing very well in landline and internet connections as it is a leader in
both these segments. BSNL broadband gives following benefits: • High speed
Internet Access: This is the always-on Internet access service with speed ranging
from 256 kbps to 8 Mbps. • Bandwidth on Demand: This will facilitate customer to
change bandwidth as per his / her requirement. For example a customer with The

Telecom Industry 27 256 kbps can change to 1 Mbps during the video Conferencing
session. • Multicasting: This is to provide video multicast services for application in
distance education, telemedicine etc • Dial VPN Service: This service allows remote
users to access their private network securely over the NIB-II infrastructure. For
example, Virgin Mobile and TTSL. • Video and Audio Conferencing • Content based
Services: Like Video on Demand, Interactive Gaming, Live and time shifted TV. The
subscriber base in fixed line telephony segment has been increasing over the last
few years. Whereas, in Feb 2005, there were 45.59 million fixed line subscribers,
79% of which are controlled by BSNL, this number grew by 8% to 49.21 million in
Feb 2006. But mobile substitution is now starting to take gradually hold. In Jan
2007, fixed line subscriber growth was negative, with a loss of 300,000 lines. The
official figure now stands at 40.40 million at the end of Jan 2007. This includes a
correction of WLL subscribers which are now counted towards wireless subscribers.
BSNL held on to 84%, MTNL to 9% and other private sector The Indian Institute of

Telecom Industry 28 operators to 7% of fixed lines. BSNL has an almost 100%
market share of rural fixed (wire) lines. Total (Urban+ Rural) wire line market share
(Source: TRAI report 2007-08) Here, it clearly shows that BSNL is a clear winner of a
fixed line market share with around 86% combining rural and urban area. Recently,
BSNL has reduced STD rates by 50% which will be affected to pre-paid and post
paid customers as well as landline subscribers. BSNL is also going to invest Rs. 5000
crores for the project of WiMax facility across India. The company wants to provide
wireless broadband connectivity through this technology which will start in
Maharashtra (except Mumbai), Gujarat and Andhra The Indian Institute of Planning

Telecom Industry 29 Pradesh initially. BSNL is currently waiting for the required
spectrum frequency to launch this facility. For this technology, BSNL has also tied
up with Soma Networks for the purpose of WiMax technology. BHARTI AIRTEL:
Established in 1985, Bharti has been a pioneering force in the telecom sector with
many firsts and innovations to its credit, ranging from being the first mobile service
in Delhi, first private basic telephone service provider in the country, first Indian
company to provide comprehensive telecom services outside India in Seychelles
and first private sector service provider to launch National Long Distance Services in
India. Bharti Tele-Ventures Limited was incorporated on July 7, 1995 for promoting
investments in telecommunications services. Its subsidiaries operate telecom
services across India. Bharti’s operations are broadly handled by two companies:
the Mobility group, which handles the mobile services in 16 circles out of a total
23circles across the country; and the Infotel group, which handles the National Long
Distance (NLD), International Long Distance (ILD), fixed line, broadband, data, and
satellite-based services. Together they have so far deployed around 23,000 km of
optical fiber cables across the country, coupled with approximately 1,500 nodes,
and presence in around 200 The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 30 locations. The group has a total customer base of 6.45 million,
of which 5.86 million are mobile and 588,000fixed line customers, as of January 31,
2004. In mobile, Bharti’s footprint extends across 15 circles. Recently, Bharti has
planned to merge with MTN and bid was $ 22 billion. It has planned to acquire it
with 60% cash and rest with equity part. MTN is one of the biggest telecom
operators mainly in South Africa and apart from that Iran, Nigeria etc. It has a
network in 21 countries with 6.8 billion customers. This merger will be world’s fifth
largest merger. But right now this merger is abolished as MTN wanted the amount
of $ 50 billion whereas Bharti was ready to buy at $ 45 billion. Bharti has also tied
up with Apple for i-phone. Particulars March 07-08(in US $ million) Income 6658
EBITDA 2803 Net Profit 1669 Net Debt 1042 Debt/Equity 19% Debt/EBITDA 0.37%
(Source: Company Reports & City Investment Research Estimates) The Indian

Telecom Industry 31 Telecom service providers market shares for 31st March-07
BSNL(GSM) 19% 15% Airtel(GSM) 10% Vodafone(GSM) 29% 9% 18% Idea(GSM)
Tata(CDMA) Reliance(CDMA+ GSM) (Source: India-Cellular) Like any other telecom
service provider, Bharti also considers information technology a key driver of its
business. The service provider has a WAN set- up in place; it has a mix of leased
lines and E1 and E3 lines for wide area connectivity. The company also has an
extranet in place through which it extends different applications to its dealers and
partners. In a telecom services company like Bharti, airtime is considered a product.
It is vital for Bharti to manage the expectations of its customers and provide them
with innovative products and services in a manner which makes them loyal. So
Bharti implemented CRM tool. Today Bharti is using the Oracle CRM platform.
Before choosing its CRM tool, Bharti evaluated many options. It considered factors
like proper workflow automation, facilitation of knowledge sharing, and integration
with the billing system. After a thorough evaluation, it decided to go ahead with the
Oracle CRM platform. The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 32 Strategy has also played a major role in improving customer
service at Airtel. After starting its services in Delhi, Bharti acquired lot of circles and
sought new licenses in other circles; whenever they got a new license, they
implemented the CRM tool immediately. But they had to put in a migration strategy
in those acquired circles which had an existing subscriber base. The CRM strategy
at Airtel revolves around two aspects: operational CRM and analytical CRM. The first
is about helping their call centres in the workflow part, helping them in their day-to-
day activities. The second provides staff with the required information on
customers; this is used for business development activities. Together they help
Bharti provide better services to its customers. Apart from that, now Bharti has
come up with new service i.e. if the customer has lost his mobile, still he can get
back his all the data of that mobile including video files, calendar, pictures,
messages, music files, events, tasks etc. This facility will be free of cost. But this
facility can be useful in high-end handsets only and to get the data back, a user
needs to have his user id and PIN number. Bharti has made a deal with companies
of Malaysia and Indonesia for back-up services to get the data back. This way,
Bharti has come up with new innovations with new technologies which ultimately
benefit the end users and CRM increases. The Indian Institute of Planning &

Telecom Industry 33 MTNL: MTNL was set up on 1st April 1986 by the Government
of India to upgrade the quality of telecom services, expand the telecom network,
and introduce new services and to raise revenue for telecom development needs of
India’s key metros – Delhi, the political capital, and Mumbai, the business capital. In
the past 17 years, the company has taken rapid strides to emerge as India’s leading
and one of Asia’s largest telecom operating companies. The company has also been
in the forefront of technology induction by converting 100% of its telephone
exchange network into the state-of-the-art digital mode. The Govt. of India currently
holds 56.25% stake in the company. In the year 2003-04, the company's focus
would be not only consolidating the gains but also to focus on new areas of
enterprise such as joint ventures for projects outside India, entering into national
long distance operation, widening the cellular and CDMA-based WLL customer base,
setting up internet and allied services on an all India basis. The market for fixed
wireline phones is stagnating, MTNL faces intense competition from the private
players—Bharti, Hutchison and Idea Cellular, Reliance Infocomm—in mobile
services. MTNL recorded sales of Rs. 60.2 billion ($1.38 billion) in the year 2002-03,
a decline of 5.8 per cent over the The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 34 previous year’s annual turnover of Rs.63.92 billion. There has
been a tremendous increase in the Cellular subscriber base as MTNL has added a
total of 286971 cellular subscribers and total cellular subscriber had increased to
3241851 as on 31.03.2008. MTNL’s financial performance was also good despite the
competition. Its turnover was Rs. 5582.85 crores in 2006-07. It had Profit before Tax
of Rs. 792.68 crores in the same financial year. Its net profit was Rs. 681.74 crores
in the same year. MTNL has tied up with handset manufacturers Nokia and
Samsung for limited mobility services using wireless in the local loop (WLL-M)
services. RELIANCE INFOCOMM: Reliance Infocomm is now known as Reliance
Communications (RCom). Reliance Communications Limited founded by the late
Shri Dhirubhai H Ambani (1932-2002) is the flagship company of the Reliance Anil
Dhirubhai Ambani Group. The Reliance Anil Dhirubhai Ambani Group currently has
net worth in excess of Rs. 55,000 crores. Reliance Communications corporate
clientele includes 1,850 Indian and multinational The Indian Institute of Planning &

Telecom Industry 35 corporations, and over 250 global carriers. It is also an
integrated telecom service provider with licenses for mobile, fixed, domestic long
distance and international services. Reliance Communications offers a complete
range of telecom services, covering mobile and fixed line telephony including
broadband, national and international long distance services, data services and a
wide range of value added services and applications. Reliance IndiaMobile, the first
of Rcom’s initiatives was launched on December 28, 2002. This marked the
beginning of Reliance's vision of ushering in a digital revolution in India by
becoming a major catalyst in improving quality of life and changing the face of
India. Reliance Infocomm plans to extend its efforts beyond the traditional value
chain to develop and deploy telecom solutions for India's farmers, businesses,
hospitals, government and public sector organizations. Until recently, Reliance was
permitted to provide only “limited mobility” services through its basic services
license. However, it has now acquired a unified access license for 18 circles that
permits it to provide the full range of mobile services. It has rolled out its CDMA
mobile network and enrolled more than 6 million subscribers in one year to become
the country’s largest mobile operator. It now wants to increase its market share and
has recently The Indian Institute of Planning & Management-Ahmedabad
Telecom Industry 36 launched pre-paid services. Having captured the voice market,
it intends to attack the broadband market. Rcom is currently having a subscriber
base of around 4.8 crores. It has got license to operate in Sri Lanka and Uganda.
Rcom will provide telecom coverage to 234000 villages by setting up 8982 sites in
the remotest parts of India by the end of FY 2007. Rcom has recently acquired UK
based VANCO Group and it has also bid for MTN after Airtel. And now it is ready to
acquire it by giving 61% equity share to MTN which is allowed up to 74% to foreign
investors as per the norms. Currently, MTN is having the subscriber base of around
6.8 crores. MTN has an income of $ 9.7 billions and operating profit of $ 4.1 billions
as per FY 2007-08. The financial details of Rcom for March-2008 are as under:
Particulars March-2008 Net Profit Rs. 5401 crores EBITDA Rs. 8199 crores Net
Debt/Equity Ratio 0.39:1 Revenues Rs. 19068 crores (Source: Rcom press release)

Telecom Industry 37 If MTN and Rcom could have got combined, they would have
maximum number of subscribers as well as they would have been the fourth largest
operators and second highest market after China but somehow the deal between
Rcom and MTN mobile could not be executed because of some legal issues. Rcom
has done a joint venture with Alcatel-Lucent to offer Managed Network Services to
Telcos across the globe. Merging company of Rcom and MTN will be listed in
London. o FLAG TELECOM: Flag Telecom is rebranded as Reliance Globalcom.
Reliance Globalcom, a division of Reliance Communications, manages the Global
Telecom operations of India’s largest Integrated Telecom Service Provider. The
company serves a customer base of over 1200 enterprises, 200 carriers and 1.5
million retail customers in 50 countries across 5 continents. The company operates
'Reliance FLAG' which is the world’s largest private undersea cable system spanning
65,000 km. This is seamlessly integrated with 110,000 km of domestic optic fiber of
Reliance Communications connecting it to 40 key business destinations in India, the
Middle East, Asia, The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 38 Europe, and the U.S. Reliance Globalcom’s Enterprise Division
(formerly Yipes Inc.) provides managed Ethernet and application delivery services
for the global enterprise. Reliance Globalcom also recently acquired Global Wimax
operator called Ewaves and a leading Virtual network operator - Vanco Group. TATA
TELESERVICES: Tata Teleservices (TTSL) is a part of the $12 billion Tata Group,
which has 93 companies, over 200,000 employees and more than 2.3 million
shareholders. Tata Teleservices provides basic (fixed line services), using CDMA
technology in six circles: Maharashtra (including Mumbai), New Delhi, Andhra
Pradesh, Tamil Nadu, Gujarat, and Karnataka. It has over 800,000 subscribers. It
has now migrated to unified access licenses, by paying a Rs. 5.45 billion ($120
million) fee, which enables it to provide fully mobile services as well. The company
is also expanding its footprint, and has paid Rs. 4.17 billion ($90 million) to DoT for
11 new licenses under the IUC (Interconnect Usage Charges) regime. The new
licenses, coupled with the six circles in which it already operates, virtually gives the
CDMA mobile operator a national footprint that is almost on par with BSNL and
Reliance The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 39 Infocomm. The company hopes to start off services in these 11
new circles by August 2004. These circles include Bihar, Haryana, Himachal
Pradesh, Kerala, Kolkata, Orissa, Punjab, Rajasthan, Uttar Pradesh (East) & West
and West Bengal. Tata Teleservices’ bouquet of telephony services includes Mobile
services, Wireless Desktop Phones, Public Booth Telephony and Wire line services.
Other services include value added services like voice portal, roaming, post- paid
Internet services, 3-way conferencing, group calling, Wi-Fi Internet, USB Modem,
data cards, calling card services and enterprise services. Tata Indicom redefined the
existing prepaid mobile market in India, by unveiling their offering – Tata Indicom
‘Non Stop Mobile’ which allows customers to receive free incoming calls. Tata
Teleservices today has India’s largest branded telecom retail chain and is the first
service provider in the country to offer an online channel to offer postpaid mobile
connections in the country. TTSL has a 3G-ready telecom infrastructure in
partnership with Motorola, Ericsson, Lucent and ECI Telecom. Recently, Virgin
Mobiles with TTSL by providing them handsets and getting network which is also
known as Mobile Virtual Network Operator (MVNO). It is not a known fact that an
MVNO is a mobile operator that The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 40 owns spectrum nor has its own network infrastructure, instead,
it buys airtime from cellular operators in bulk and resells it under its own branding.
Tata Teleservices is talking with Srei group company Quippo Telecom Infrastructure
Limited (QTIL) to merge its tower arm, Wireless Tata Telecom Infrastructure Limited
(WTTIL). QTIL has emerged as the top bidder for a 49 per cent stake in TTSL’s tower
business. However, as QTIL is an independent tower firm, it can’t compete with
WTTIL, in which it will have a 49 per cent stake. With close to 5,000 towers in its
portfolio, QTIL is valued at Rs 3,000 crores ($700 million). According to analysts,
WTTIL, which has over 10,000 towers under its belt, has an enterprise valuation of
over $3.5 billion. The merged entity will command a valuation of around $ 4.5
billions. As per the Profit & Loss A/C of TTSL, on 31st March, 2007, it is running in
losses. Its loss after tax is Rs. 310.61 crores. Its EPS is -1.94. TTSL had fixed wireless
1.13 millions as on 31st March, 2007. Apart from that, it had mobile subscribers of
1.64 millions as on 31st March, 2007. The Company continued to focus on Value
Added Service (VAS) offerings. The launch of Welcome Tunes (Caller Ringback
Tunes), video streaming and other data services and content brought in improved
revenues. The Indian Institute of Planning & Management-Ahmedabad
Telecom Industry 41 Tata Telecom and Avaya Inc, a global provider of
communications networks, today introduced new software applications and phones
that provide greater control over the growing number of communication devices.
The new converged communications solutions are based on SIP (Session Initiation
Protocol), which enables integration of Internet applications, such as instant
messaging, with voice and telephone features such as conferencing, voice mail and
click-to-dial capabilities. With a significant presence across the telecom value chain
and the possible synergies after the acquisition of VSNL by the TATA group, TATA
Teleservices is planning to expand the range of its coverage and services; the
advanced communication solutions now include seamless integration of voice,
video, data and IP systems. TATA Teleservices is fully equipped to offers a gamut
services to customers with a strong commitment to quality of service and customer
experience. As a basic telephone services provider, TTSL provides the backbone for
India’s corporate leaders such as GE Capital, Wipro, Magnacom Pvt. Limited,
Citicorp Overseas software (now called Orbitech), Dr. Reddy’s The Indian Institute of

Telecom Industry 42 Labs, Standard Chartered Bank, Motorola India Electronics
Limited, TCS and Satyam, in addition to servicing the telecom needs of retail
customers. VSNL: On April 1, 1986, the Videsh Sanchar Nigam Limited (VSNL) - a
wholly Government owned corporation - was born as successor to Overseas
Communication Service (OCS). The company operates a network of earth stations,
switches, submarine cable systems, and value added service nodes to provide a
range of basic and value added services and has a dedicated work force of about
2000 employees. VSNL's main gateway centers are located at Mumbai, New Delhi,
Kolkata and Chennai. The international telecommunication circuits are derived via
Intelsat and Inmarsat satellites and wide band submarine cable systems. The
company's American Depository Receipt (ADR) is listed on the New York Stock
Exchange and its shares are listed on major Stock Exchanges in India. The Indian
Government owns approximately 26 per cent equity, M/s Panatone Finvest Limited
as investing vehicle of Tata Group owns 45 per cent equity and the overseas
holding (inclusive of FIIs, ADRs, Foreign The Indian Institute of Planning &

Telecom Industry 43 Banks) is approximately 13 per cent and the rest is owned by
Indian institutions and the public. The company provides international and Internet
services as well as a host of value-added services. Its revenues have declined from
Rs. 70.89 billion ($1.62 billion) in 2001-02 to Rs. 48.12 billion ($1.1 billion) in 2002-
03, with voice revenues being the mainstay. To reverse the falling revenue trend,
VSNL has also started offering domestic long distance services and is launching
broadband services. For this, the company is investing in Tata Teleservices and is
likely to acquire Tata Broadband. VSNL announced the acquisition of Tyco Global
Network for $130 millions in a cash deal. With the acquisition, VSNL piped to the
post Reliance, another serious bidder, especially after it bought over US-based FLAG
Telecom in January for $211 millions. The acquisition will give the company control
over a 60,000 km cable network spread over three continents. VODAFONE:
Vodafone is basically the biggest telecom service provider of the U.K which has a
market value of 75 billions by June, 2008. Vodafone currently has The Indian

Telecom Industry 44 equity interests in 25 countries and Partner Networks
(networks in which it has no equity stake) in a further 42 countries. The name
Vodafone comes from Voice Data Fone, chosen by the company to “reflect the
provision of voice and data services over mobile phones.” It had agreed to acquire a
controlling interest of 67% in Hutchison Essar Limited (Hutch) for US$11.1 billion. At
the same time, it agrees to sell back 5.6% of Airtel stake back to the Mittals.
Vodafone retained 4.4% stake in Airtel. Vodafone is the world's leading international
mobile communications company. It now has operations in 25 countries across 5
continents and 40 partner networks with over 200 million customers worldwide.
Vodafone has also tied up with Apple’s i-phone. Vodafone’s revenues have been
increased by 50% during the year driven by rapid expansion of the customer base
with an average of 1.5 million net additions per month since acquisition. As on 31st
March, 2008, Vodafone’s customer base was 260 millions. Its turnover was 35478
millions with a profit of 6756 millions. Vodafone has also tied up with Apple’s i-
phone which is going to be launched in India The Indian Institute of Planning &

Telecom Industry 45 by June-2008. i-phone’s 3G version will be launched with a 50%
rate of what it was earlier. IDEA: Indian regional operator IDEA Cellular Ltd. has a
new ownership structure and grand designs to become a national player, but in
doing so is likely to become a thorn in the side of Reliance Communications Ltd.
Idea operates in eight telecom circles or regions in Western India, and has received
additional GSM licenses to expand its network into three circles in Eastern India --
the first phase of a major expansion plan that it intends to fund through an IPO. Idea
has become fifth largest company with a subscriber base of 3.1 crores customers.
Recently, Idea has decided to take over Spice telecom. It has decided to buy 40.8%
share in Spice telecom at Rs. 2176 crores. Apart from that, Idea is going to merge
with Telecom Malaysian International (TMI) and going to give 15% share to TMI out
of 20% open offer. Idea will get $1.7 billions out of that. TMI has 4.4 crores
customers in 10 countries. Idea is also planning The Indian Institute of Planning &

Telecom Industry 46 to invest Rs. 10000 crores for its growth strategy and will start
in other parts of the country like Bombay, Bihar, Orissa and Tamilnadu. On 31st
March, 2008, Idea’s debt was Rs. 6515.40 crores and equity was Rs. 2639 crores.
So, debt-equity ratio was 2.5:1. Idea’s net profit was Rs.10443.62 millions and
Earning per Share (EPS) was 3.96. The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 47 Chapter 5: DIFFERENT OPERATORS SEGMENT 5.1] Introduction
to various segments:- The telecom sector has shown robust growth during the past
few years. It has also undergone a substantial change in terms of mobile versus
fixed phones and public versus private participation. 1) Fixed Line Overview: A
monopoly sector controlled by Government until 1996 Today 6 service providers, 2
State Owned, rest private Subscriber base 40.48 millions (September 2006) Sector
growth slowed since mobile tariffs fell Only 1.83 million subscribers were added in
one year (May 2003-May 2004) Increased competition from CDMA Services The
major players like BSNL, MTNL, and VSNL in the fixed line are coming up with new
tariffs and discount schemes to gain the competitive advantage. The Public Players
and the Private Players share the fixed line The Indian Institute of Planning &

Telecom Industry 48 and the mobile segments. Currently the Public Players have
more than 60% of the market share. 38% Private Players Public Players 62%
(Source: DoT) There were 94.65 millions telephony customers added during the
year of 2007-08. Indian telephony has achieved the growth of 43% from 2007 to
2008. Tele-density can be described as telephones per hundred populations. India’s
telephony tele-density by March-2008. (Source: TRAI) The Indian Institute of

Telecom Industry 49 In India, fixed line service is firstly run by BSNL/MTNL and after
there are several other private players too, such as Reliance Infocomm, Tata
Teleservices and Airtel fixed line is facing stiff competition from mobile telephones.
The competition has forced the fixed line services to become more efficient. The
fixed line network quality has improved and connections are now usually available
on demand, even in high density urban areas. There were 0.24 millions fixed line
subscribers added during March-2008. With this, total 39.42 millions fixed line
subscribers were added in March- 2008. 2) Wireless Overview: 29 million GSM, 9
million CDMA subscribers (June 2004) Both GSM 900 & 1800 present CDMA
operators use 1800 MHz Band Number portability is missing Government is yet to
make decision on 3G spectrum The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 50 India's telecom sector is carved into 23 circles or zones,
classified as "metro" and "A", "B" and "C" circles, based on subscriber potential
Unified licensing introduced in 2004 As a part of Unified license policy, 15% of
operator revenues go to the government To operate, each circle requires a different
license Lowest call tariffs in the world -- as low as one Euro cent a minute on
average The Wireless (Mobile and WLL [F]) Market has reached 129.54 million as on
30th September 2006 against 112.14 million subscribers in the previous quarter.
During this quarter, 17.4 million subscribers were added, thus recording a growth of
15.52%. By the end of March 2007, total wireless subscribers were increased to
1650.11 lakhs. The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 51 Total Wireless Subscribers (Source: TRAI Report 2007-08) 3)
Broadband Overview: Broadband is mainly used for the purpose of internet
connections. BSNL is more popular than any other service providers in this segment.
It carries highest market share. Apart from BSNL, Airtel is also providing this
service. The growth of broadband in India is comparatively slow. After the
announcement of the broadband policy in October 2004 India had just 3.13 millions
broadband connections at the end of December 2007. There were 9.63 millions
wireline Internet Subscribers at the end of September 2007. The Indian Institute of

Telecom Industry 52 (Source: TRAI Report 2007-08) Total Broadband connections in
the country have reached 2.47 millions by the end of July 2007. During July 2007
there is addition of 0.05 millions connections. The broadband subscribers’ growth
from March 2006 to July 2007 is shown below: (Source: TRAI press release) (In
millions) Addition March- June- September- December- March- June- July- during 06
06 06 06 07 07 07 April-07 to July-07 1.35 1.57 1.82 2.10 2.34 2.42 2.47 0.05 The

Telecom Industry 53 Broadband access can be provided using various technologies:
• Digital Subscriber Line: Existing PSTN infrastructure having copper loops up to the
subscriber provides the most cost effective option for broadband delivery. Digital
Subscriber Line (DSL) has become an important technological option for
provisioning broadband services through the copper loop of public switched
telephone network (PSTN). DSL speeds are influenced by the distance between the
subscriber and the local exchange, the gauge of the phone wire, and the type of
DSL technology. This technology offers a dedicated amount of bandwidth that does
not vary with the number of subscribers logged on, in an area. The fixed wireline
subscribers in India have been accounted to a population of around 39 millions (14
millions in rural areas and 25 millions in urban areas) and are mainly owned by
BSNL and MTNL. The existing cable networks need to be suitably upgraded and then
around 50-60% of the cable network can be used for providing broadband services
with varying speeds depending upon the length of the copper cable. The challenge
before BSNL/MTNL is to make use of these copper cables quickly for broadband The

Telecom Industry 54 services, to have a commanding position in the market and to
achieve this, they will have to device various innovative ways. • Cable TV: New
technological developments in cable TV networks have made it possible to send
data in both directions via usage of different channels on separate blocks of 6 MHz
frequencies, making Internet access over cable TV a viable solution. Presently, there
are 71 millions Cable TV subscribers in India, hence one can assume that this last
mile infrastructure reaches more people than even the copper loop infrastructure
(40 millions) and can be leveraged in providing cable operators with a new business
model while giving a stimulus to broadband penetration. However, this cable TV
network requires lot of up-gradation, and, in turn, added cost. In the US and
Canada, the cable TV network is a dominant form of access for broadband services.
• Direct to Home: DTH is another technology that could be used for providing
broadband services. At present, it is being used for TV transmission only; however,
it can be utilized as the downlink path for providing broadband connections. Uplink
(connectivity to the ISP equipment/node) shall have to be through independent
connections, The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 55 may be, through dial up/GPRS/EDGE, but the cost of the uplink
is the main issue to determine success and popularity of this option. • Satellite: The
provision for broadband using satellite is another option but the cost of such a
network is extremely high. Hence, satellite can at best be used in remote and
inaccessible hilly areas but it might not be the most appropriate option where other
technologies can provide cheaper broadband service. • Fiber Optics: The fiber
optics technology can provide unlimited bandwidth and the national long distance
network has major deployment of this technology. This technology has also
replaced the copper network in the intra-city backbone network. The fiber-based
models are capable of providing a huge amount of bandwidth in the last mile, as
well as, provide a true IP and converged network that can deliver high quality voice,
data, and video. Fiber To The Curb (FTTC) and Fiber To The Home (FTTH) networks
make use of fiber cable into the last mile. Such a network is quite suitable for
providing high- speed broadband services. Some operators have implemented
overlay optical fiber networks in big towns for providing large bandwidths to
industrial and big commercial organizations. However, their initial The Indian

Telecom Industry 56 deployment cost is very high, mainly due to the high cost of
laying the cable. • Wireless Technology: Wireless network is another option to
provide wider broadband access solutions. Initially, wireless networks were
considered a solution for providing telecom facilities to harsh landscapes and lightly
populated areas where it was difficult to provide conventional wire-line networks, as
the cost of wireless networks were comparatively higher. Technological
developments in the wireless facility during the last one- decade have completely
changed the telecom scenario. Mobile services have taken over the fixed line
network on account of reduction in the cost of the equipment, ease of installation,
operation and maintenance, flexibility for service providers, and convenience to end
users. Wherever the penetration of copper loops is not widely spread, the laying of
new copper cables and optical fiber cables is an expensive option due to high cost
of right-of-way and high operational cost. Therefore, wireless-based access is an
ideal solution for widespread last mile coverage through a combination of different
technologies like WiMax, Wi-Fi, etc. These technologies have the added advantage
of interoperability and economy of scale due to international standardization.
However, for the deployment of any wireless The Indian Institute of Planning &

Telecom Industry 57 technology, suitable and sufficient spectrum availability and its
efficient utilization is a must. • Wireless fidelity (Wi-Fi) is a term used for a certain
type of wireless local area networks. Wireless LANs are most commonly used in the
last mile to provide coverage for few hundred meters as diffusers of a broadband
connection. This can be used in the office environment for providing connectivity to
portable devices such as laptops, and commercial hotspot solutions for wireless
connectivity for the Internet. For implementing Wi-Fi access networks, a backhaul
network is required; this can be copper cable, optical fiber, or WiMax. Wi-Fi can
operate in unlicensed 2.4 GHz band and 5 GHz band depending upon its version in
the 802.11 family. • WiMax (worldwide interoperability for microwave access) is a
high- speed wireless technology that supports fixed, nomadic, portable, and mobile
access. It is claimed that WiMax can provide speeds up to 14.4 Mbps and is likely to
support much higher speeds with further advancement. Due to the support for
higher speeds, wider coverage and ease of installation, WiMax is considered one of
the most promising technologies to provide high-speed Internet. The Indian Institute
of Planning & Management-Ahmedabad

Telecom Industry 58 5.2] Public vs. Private:- o Private Sector is growing faster than
the public sector. In total telephone connections, the share of private sector
increased to 72.40% in December 2007 compared to 20.9% in 2003. o The private
sector is mainly active in wireless segment than the fixed line segment. Fixed line
segment only consists of about 2%. (Source: DoT) Government has issued new
guidelines and new single license for internet services in the year 2007 instead of
four licenses required earlier. As on December 31, 2007, there were 378 licenses for
internet services and 9.69 internet subscribers. The Indian Institute of Planning &
Telecom Industry 59 5.3] Licensing issues in India:- Different regulatory tariffs and
business models are to be relooked. Different service providers are in different
licensing regime, having different license fees, performance obligation guarantee,
and annual rental and spectrum charges. Mismatch in the rules and regulation
governing cable operators, broadcasting agencies and telecom service providers.
Difference in areas like quality of service, Tariff and subscribers centric codes.
Popularizing of Voice over IP Networks services in managed environment are
creating various licensing issues: o Numbering scheme related issues o
Interconnection between ISPs and traditional telecom service providers for IP
telephony o Security The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 60 Chapter 6: RURAL MARKET 6.1] Introduction:- Access to
telecom services is the key to development and growth and that access in rural
market is one of the most challenging aspects of the growth. Information and
Communication Technologies (ICTs) provide new and exciting opportunities to those
who have access to them. However, existing economic imbalances and social
inequalities will be deepened if access is unequally distributed. Unequal access to
communications, leading to a huge digital divide between the rich and the poor, the
urban and the rural populace only, increases the existing divide. That is why rural
market is very much important in today’s scenario. There are many opportunities
available for development. Low cost wireless solutions are now available for rural
areas at affordable prices. 6.2] Growth of Telecom Services in Rural market:-
Inadequate access in rural India- Over 70% of the population lives has caused
further marginalization of the marginalized. Therefore, it is vital that an enabling
environment through policy and regulatory measures is created The Indian Institute

Telecom Industry 61 for the transformation of the existing digital divide into digital
opportunity. (Source: DoT report 2007-08) These graphs clearly show the huge
success in our policies towards urban telecommunications and perhaps a failure in
replicating the same for rural areas. To drive telecom development, the Indian
Government has imposed a Universal Service Obligation (USO) on operators with
the threat of penalties if they don't reach their rural targets. The average cost of
taking a telephone line to rural areas is almost Rs. 60,000 to 80,000 compared to
about Rs. 20,000 to 25,000. Rural Wireline The Indian Institute of Planning &

Telecom Industry 62 Subscriber base stood at 11.99 millions in quarter ending
September 2007 as compared to 12.27 millions in quarter ending June 2007.
(Source: TRAI Report 2007-08) BSNL is a clear winner in rural market in case of
wireline market. There is no competition in rural market with BSNL. BSNL is leading
with almost 100% market share. Following graph shows the true picture of rural
telephony market: The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 63 (Source: TRAI report 2007-08) Rural telephony is mainly based
on BSNL. BSNL has provided Village Public Telephones (VPTs) in 5.18 lakhs villages
and 241.31 lakhs Direct Exchange Lines (DELs) in rural areas as on December 31,
2007. The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 64 Chapter 7: Foreign Direct Investments in Indian Telecom 7.1]
Introduction:- FDI plays an important role in telecom sector as well as an economy
as a whole. Earlier, there were very few public players like BSNL, MTNL and VSNL in
this sector but as the time progressed and competition increased, the private
players like Airtel, Reliance, Tata, Vodafone and Idea came into play which changed
whole scenario of telecom sector. FDIs are important because they not only bring
capital and technology into the market but they provide employment opportunities
and effective productivity also. The liberalization measures post-1990 have changed
with foreign investments radically, now portfolio as well as Foreign Direct
Investment are not only allowed but also actively encouraged. During the decade of
the nineties, the 'ceilings' on FDI in different sectors were progressively raised. In
2001, 100 per cent foreign investments were allowed in several industrial sectors.
Also, 100 per cent Foreign Direct Investment is allowed in almost all the
infrastructure sectors. The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 65 FDI policy provides the investor friendly environment growth to
the telecom sector. It is one of the sources pf huge funds to meet fast network
expansion. During the year 2007-08, total FDI equity inflow was Rs. 3901 crores in
India. FDI in Indian telecom sector has a bright future ahead. It is the third largest
recipient of FDI after financial and non-financial services and computer hardware
and software, which attract 20.43% and 15.21% respectively. (Source: DoT report
2007-08) The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 66 7.2] Effects of FDI in Indian Telecom:- • Telecom service at
subsidized prices. • FDI inflows will allow multiple benefits such as technology
transfer, market access and organizational skills. • In India where 70% of population
still resides in rural areas, there is a dire need of infrastructure in telecom, which
FDI can provide. • Foreign currency flowing in the country. • Harmonious
relationship with country from which foreign investment is being made. • There will
be increase in competition with local players, which will benefit consumers. • It will
have a multiplier effect. • Telecommunication facility at reasonable price, affordable
to many. • More technological inflow, will improve voice & data quality. • Free flow
of capital is good for Indian consumers. Foreign direct investment in telecom has
been hiked up from 49% to 74%. This move is positive for the sector, as it requires
investments of Rs 700 – 900 million over the next 5 years. There are restrictions
related to remote The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 67 access, transfer of network information outside India and
international transit routing of Indian traffic. It has been decided to enhance the FDI
in telecom services in areas like basic telecom, cellular unified access services,
intranet, long distance vast, public mobile, radio service etc. FII (Foreign
Institutional Investors) holding in Rcom is reduced in last one year. In March-2007,
FII holding in Rcom was around 13% which has gone down to 10% in March-2008
which is around 25% reduction. In Idea, FII holding has increased. In December-
2007, Idea’s FII holding was around 6.6% which has gone up to 7.7% in March-2008.

Telecom Industry 68 Chapter 8: 3G SPECTRUMS 8.1] What is 3G? 3G is 3rd
Generation mobile phones. It is a new concept in Indian telecom market. There are
2G (2nd Generation) and 1G (1st Generation) mobile handsets are available also in
the market. Apart from that, 4G technology stands to be the future standard of
wireless devices. 3G is notable for its ability to support faster and larger quantities
of data, which enables additional service offerings in the form of games, music and
video using voice, video and data (together known as "triple play") and helps to
bring about broadband on mobiles. Japan was the first country to introduce 3G on a
large commercial scale. There are about 60 3G networks across 25 countries. 3G
services are supposed to provide high-speed data rates at a minimum of 144
Kilobits per second in all use scenarios going up to 2 Megabits per second in low
mobility and indoor environments. In addition, it has higher capacity and improved
spectrum efficiency. The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 69 8.2] What is Spectrum? Radio spectrum refers to a range of
radio frequencies. The bandwidth of a radio signal is the difference between the
upper and lower frequencies of the signal. For example, in the case of a voice signal
having a minimum frequency of 200 hertz (Hz) and a maximum frequency of 3,000
Hz, the bandwidth is 2,800 Hz (3 KHz). The amount of bandwidth needed for 3G
services could be as much as 15-20 MHz, whereas for 2G services a bandwidth of
30-200 KHz is used. Hence, for 3G huge bandwidth is required. 8.3] Difference
between 1G, 2G and 3G:- 1G networks used are analog; 2G networks are digital and
3G technology is used to enhance mobile phone standards. 3G helps to
simultaneously transfer both voice data (a telephone call) and non-voice data (such
as downloading information, exchanging e-mail, and instant messaging.) The
highlight of 3G is video telephony. The Indian Institute of Planning & Management-
Ahmedabad
Telecom Industry 70 3G spectrums have been provided to GSM and CDMA players
like BSNL, MTNL, Bharti, Reliance, Tata and Vodafone. GSM players operate on 900
MHz and 1,800 MHz, while CDMA players operate on 800 MHz. 8.4] 3G issues for
service providers and users:- o High spectrum licensing fees for the 3G services o
Huge capital required to build infrastructure for 3G services. o Health impact of
electromagnetic waves. o Prices are very high for 3G mobile services. o Difficulty in
switching from 2G technology to 3G technology o Takes time to catch up as the
service is new. Presently spectrum allocation in India is linked with the issue of
license. Licensees are entitled for frequency bands as per the provisions in the
license and guidelines for spectrum allocation. 8.5] Suggestions for spectrum
issues:- o No discrimination on the basis of technology used. o Equal opportunity for
growth of all technologies. The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 71 o Review of earlier reservations based on experience of
frequency used. o Adequate and appropriate spectrum. o Proper balance between
the securities needs and needs for commercial deployment. o Need for appropriate
measure of efficiency and additional requirements of spectrum (only subscriber
base is not the appropriate criteria). o Frequency allocation in bands in which
equipment and handsets are readily available. o Availability from multiple vendors
and multiple regions to avoid dependence on a single vendor or single country. o No
allocation with the hope that in future some vendor may develop the equipment
/infrastructure/multimode handsets. o International practices are followed. 8.6] 3G
Auction/Allocation:- In 3G auction, local players as well as international players can
take part also. Earlier it was decided that international players can’t take part in
that auction but now rules have been changed by TRAI. It is also decided if The

Telecom Industry 72 international players will be successful in buying these
spectrums then they will be allocated new licenses. For the bidding of the spectrum,
companies have to pay minimum Rs. 2260 crores as a reserve price in which Metro
cities and Circle-A cities have to pay Rs. 160 crores, Circle-B cities have to pay Rs.
80 crores and Circle-C cities have to pay Rs. 30 crores. Now, TRAI has given a green
signal to number portability and 3G spectrum auction. From this auction,
government is expected to earn Rs. 30000-40000 crores. Foreign companies who
want to bid, have to pay Rs. 1651 crores as a bid amount and have to get license
for that. Base price for 3G is set as Rs. 2020 crores and for Wi-Max; it is Rs. 505
crores all over the world. BSNL and MTNL will be allocated spectrums immediately.
Private players will have to wait till the year 2009 for allocation. As per TRAI’s
guidelines, in case of number portability, central agency has to shift the service
provider from one to another within 48 hours of customer’s application. 3G services
will enhance the speed of internet, fast downloading and video calling. The Indian

Telecom Industry 73 Chapter 9: VALUE ADDED SERVICES 9.1] Introduction:- Value
Added Service (VAS) is that service which is not part of the basic voice offer and is
availed off separately by the end user. It is provided by telecom service providers.
These services are used as a tool for differentiation and allow the mobile operators
to develop another stream of revenue. 9.2] Various Value added services:- Here is a
list of some Value Added Services provided by the telecom operators to the end
users. News- e.g. Business, sports, politics etc. Finance- e.g. Share market, foreign
exchange etc. Entertainment- e.g. Games, jokes, films etc. Travel- e.g. Railway,
airlines etc. Download- e.g. Caller tunes, wallpapers etc. Astrology- e.g. Horoscope

Telecom Industry 74 Contest- e.g. Reality shows MMS- e.g. Picture messages, video
clips etc. E-mail- e.g. SMS, e-mail etc. Music- e.g. Ring tones Cricket- e.g. Score,
video clips etc. GPRS- e.g. Internet, chat etc. Call Alert- e.g. Missed call alerts when
mobile is switched off or busy Health- e.g. Health tips, beauty tips etc. M-
Commerce- e.g. mobile transactions like mobile banking Others- e.g. movies, music
etc. As per COAI, in the year 2006-07, the income from VAS out of total income of
service providers was 10%. Out of that, 57% was from SMS, 19% was from other
VAS, 7% from ring tones, 6% from caller line identification, 6% from content
downloads and 5% from GPRS. Normally, service providers make money of around
10-14% as VAS from total income. Value-added services are supplied either in-
house by the mobile network operator themselves or by a third-party Value Added
Service Provider (VASP), also known as a Content Provider (CP). VASPs typically
connect The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 75 to the operator using protocols like Short Message Peer-to-Peer
Protocol (SMPP), connecting either directly to the Short Message Service Centre
(SMSC) or, increasingly, to a messaging gateway that allows the operator to control
and charge of the content better. There are many national and international
investors are ready to invest in this segment of telecom market. 9.3] Challenges:- •
Lack of content localization • Shortage of spectrum • Slow adoption of GPRS
mobiles (Only 6.1 millions GPRS users compared to 200 millions overall subscribers)
9.4] Future trends:- • Location Based Services • Mobile Music update will increase
with better bandwidth • Migration to 3G will result in increased ARPU • Local
content is on the rise - regional/rural Interactive Voice Response (IVR) seen as a
major opportunity The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 76 • Mobile commerce does not look too promising (India is still a
cash and cheque country) • IVR will see large scale adoption, especially in rural
areas. • Mobile E-Mail will primarily be driven by enterprises • Stocks on mobile will
see an uptake The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 77 Chapter 10: RESEARCH METHODOLOGY 10.1] Research
Objectives:- • To understand the improvement and customer preferences in
Telecom Sector. • To study the service providers and their service quality in the
Telecom Sector. • To study the customer satisfaction and understand the current
market scenario in Telecom Sector. 10.2] Samples:- Sample size : 100 Sample
frame : Ahmedabad city Sample unit : West Ahmedabad and East Ahmedabad
Sampling Method : Simple random sampling Constraints : Time, number of
respondents Sampling error : Non-response- 16 Response- 84 Survey :
Questionnaire The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 78 10.3] Observations and Findings:- 1. Age Group: 10-20 15 20-
40 47 Above 40 38 Age Group (East+West) 100 90 No. of respondents 80 70 60 47
50 Series1 38 40 30 20 15 10 0 10-20 20-40 Above 40 Age 2. Gender: Male Female

Telecom Industry 79 Gender (East+West) 32% 68% Male Female 3. Whose
service(s) are you rendering now? East 5% 2% 15% BSNL Airtel Vodafone 9%
Reliance 56% Tata Idea 13% The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 80 West 2% 4% 12% 28% BSNL Airtel 14% Vodafone Reliance
Tata Idea 40% Through the above analysis, we can easily find out that in Eastern
part; majority of the people still prefer BSNL more. But in Western part, people
prefer Airtel as their preferred connection. BSNL is a clear winner with 56% in case
of East region but in case of West region, Airtel is leading with 40%. In both the
regions, there is a huge competition among private players as per the conducted
survey. In Western part, it clearly shows the tough competition between Vodafone
and Reliance but in Eastern part, Reliance is very far from Vodafone. It is because of
Reliance’s different schemes like Reliance to Reliance free talk etc. have helped it
to gain the more market share which is found out from the survey. The Indian

Telecom Industry 81 4. Which technology do you prefer? East+West regions 4.78%
26.44% GSM CDMA 70.33% Both As per the data, it can be analyzed that in spite of
tough competitions between GSM and CDMA service providers, the GSM has earned
a huge market share with 71%. There are only 4% people who are willing to use
both the technologies. Only 26 % people prefer CDMA which is very less compared
to the level of competition and GSM’s market share. 5. How long have you been
using this connection of your service provider? From the below analysis, it can be
found that in the East part, 43% of the total people have kept their connection for
more than 3 years period. Whereas, only 7% of the total people prefer to keep the
existing connection The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 82 for 3-6 months. The graph also reveals that more the duration
is, more people prefer to keep the existing connection. East 50 43 45 40 35
Percentage 30 25 East 20 16 14 15 11 10 10 7 5 0 Less than 3-6 6-12 1-2 years 2-3
years More than 3 months months months 3 years Duration West 60 49 50 40
Percentage 30 West 20 15 16 10 10 6 5 0 Less than 3 3-6 months 6-12 1-2 years 2-
3 years More than 3 months months years Duration The above graph shows that in
West part where mainly urban population is living, 49% people have kept their
connection for more than 3 years which is The Indian Institute of Planning &

Telecom Industry 83 also higher than East part. The data also shows that numbers
of people who keep or want to keep their existing connection for longer period are
more than the short period like 1-2 years, 2-3 years and more than 3 years. 6. Rate
your satisfaction level of your service provider. East Very Bad 4.96% Satisfaction
Level Bad 11.67% Satisfied 28.25% East Good 31.82% Very Good 24.45% 0% 5%
10% 15% 20% 25% 30% 35% Percentage West Very Bad 8.10% Satisfaction Level
Bad 3.40% Satisfied 33.58% West Good 26.33% Very Good 30.78% 0% 5% 10%
15% 20% 25% 30% 35% Percentage The Indian Institute of Planning &

Telecom Industry 84 Customers’ satisfaction plays a crucial role for the service
providers. In the Eastern part, 28.25% people are satisfied with their service
providers whereas in Western part, 33.58% people are satisfied with their service
providers. In Western part, overall satisfaction level i.e. scales of satisfied, good and
very good is higher than the satisfaction level of Eastern region. Though, there are
people who are not happy with their connections. But still in Eastern part bad
experience level is higher than the Western part. In East region around 17% people
have bad and very bad experiences or not satisfied but in West part it is around
12% only. 7. What kind of expectations do you have from your service provider?
East Price 34.17 Voice Quality 5.71 Factors East Netw ork 41.9 Good Services 19.34
0 10 20 30 40 50 Percentage The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 85 As per the research, people of Eastern part of the city are more
inclined towards network of their service providers followed by prices offered by
service providers. Here, the price not only includes amount of the pre-paid or post-
paid connection but it also includes different schemes, tariff plans etc. As per the
data, almost 42% of the total population in the eastern part prefer network as a
priority than the other features. People in Eastern part are mainly looking for the
money’s worth so price is a second highest factor for them. West Price 9.73 Voice
Quality 8.49 Factors West Network 43.27 Good Services 40.43 0 10 20 30 40 50
Percentage In the Western part, people are more inclined towards network and
good services of service providers. From the above graph, it can be seen that two
factors i.e. network and good services are very close to each other having 43.27%
and 40.43% respectively. Though, people prefer more of network just like the East
region but it can be said that services offered by service The Indian Institute of

Telecom Industry 86 providers also matter. Here, the price and the voice quality
factor are comparatively lower. Voice quality, is lowest in both the areas having
5.71% in East region and 8.49% in West region. 8. Are you aware of role of telecom
services in providing broadband without using cable TV network? East 31.27% Yes
69.54% No West 44.13% 57.68% Yes No As per the findings and from the above
chart, it can be found out that Eastern area is not much aware of the broadband
services without using cable TV network. 69.54% people are unaware of this facility
and only The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 87 31.27% people are aware of it. Whereas, in Western area,
57.68% people are aware of this facility and 44.13% people are unaware of it. Both
the charts show a huge difference between them. 9. How much do you spend per
month on your mobile connection? East 100% 4.39% 8.90% 5.61% 90% 15.08%
80% 19.83% 70% More than Rs. 1500 Percentage 60% Rs. 1001- Rs. 1500 40.11%
50% Rs. 501- Rs. 1000 Upto Rs. 500 40% 70.22% 30% 20% 36.23% 10% 0% Post-
paid Pre-paid Connections Spending pattern is also another criterion which is crucial
for any telecom service providers. Customers’ spending habits ultimately help in
deciding their loyalty towards the product. For example, if a customer frequently
spends money on the same product then it shows that he prefers to buy that
product than other products which ultimately leads to his loyalty towards that
brand. The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 88 In Eastern region, maximum spending is between Rs. 501-
Rs.1000 ranges, done by 40.11% of the total Post paid connection users out of
surveyed people. Whereas, the lowest spending is in the range of above Rs. 1500
by 8.9% people. Whereas, in case of Pre-paid connections, highest spending is done
up to Rs. 500 which is done by 72.22% of the total surveyed people and the lowest
is in the range of more than Rs. 1500 which is done only by 3.34% people. Here, it
can be also seen the usage difference in the range of Rs. 501- Rs. 1000. West 100%
4.3% 7.44% 90% 11.59% 80% 32.75% 70% 31.03% Percentage 60% More than Rs.
1500 50% Rs. 1001- Rs. 1500 40% 37.21% Rs. 501- Rs. 1000 30% Upto Rs. 500
53.79% 20% 10% 23.45% 0% Post-paid Pre-paid Connections Above graph shows
that the Western area’s usage pattern is very much different than the Eastern area.
In case of post-paid connections, it can be The Indian Institute of Planning &

Telecom Industry 89 seen that there is a lot of consumption by 37.21% and 32.75%
in the ranges of Rs. 501- Rs.1000 and Rs. 1001- Rs. 1500 respectively. The usage
pattern is very close to each other in these two ranges. There are 23.45%
customers whose usage is up to Rs. 500 and only 7.44% customers in above Rs.
1500 range. Whereas, in case of Pre-paid connections, once again just like Eastern
region maximum usage is up to Rs. 500 by 53.79% people is dominating followed
by Rs. 501- Rs.1000 range which is consumed by 31.03% people. In the range of Rs.
1001- Rs. 1500, only 11.59% customers are spending that much amount and 4.30%
customers above Rs. 1500 are spending. 10. How do you find the behavior of
customer care executives of your service provider? East+West region 100 90
Professional 80 & Prompt 73.38 70 Warm & Percentage 61.12 60 Helpful 50 40 Not
30 27.04 Responding 21.9 20 10 8.53 Lazy & Slow 3.67 1.8 4.29 0 East West Region

Telecom Industry 90 Acceptance or rejection of any product is largely depended on
the services provided by the customer care which is also known as after sales
service or Customer Relationship Management (CRM). If a company provides better
services to the customer by solving their queries, it can be successful to retain
them. Similarly, in case of the telecom service providers play a major role to retain
customers by solving their problems. As per the survey, it was found that in Eastern
area, around 61% of the surveyed people find the executives are professional and
prompt in their approach and only 8.53% customers feel that they are lazy and slow
in their approach and 3.67% customers are not happy with the services which
means customer care executives are not responding to them properly. But in case
of Western area, it was found that 73.38% customers find customer care executives
as professional and prompt. Only 4.29% find them lazy and slow but only 1.80%
customers find that they are not responding. 11. What do you think about the
competition in the market? The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 91 East 3.88% 2% 13.56% No choice 41.67% Some choice Enough
choice Can't say 39.08% Don't know There is a huge competition in the market in
today’s scenario. Many companies try to gain as many customers as they can by
providing them different schemes and try to retain the existing customers with the
same. So competition is an important factor and plays an important role to earn
more market share. As per the survey in the Eastern region, it was found from this
question that there are only 2% customers who do not have any choice to choose
their service providers and change them if they are not satisfied with their services
and facilities. But 41.67% customers said that they have some choice and 39.08%
said that they have enough choice for the same. But 13.56% customers were in
dilemma and 3.88% were not aware of the competition. The Indian Institute of

Telecom Industry 92 West 3.79% 1% 2.5% 12.61% No choice Some choice Enough
choice Can't say Don't know 81.1% In the Western region, as per the graph it was
found that, 81.10% customers feel that they have enough choice in the market in
this competitive market. 12.61% customers feel that they have some choice for
service providers and 3.79% people are not sure. Only 1% customers are unaware
of the competitive scenario in market and 2.5% customers do not have choice. 12.
Given a choice with same number, which service provider will you select? As the
below chart suggests and as per the findings, it can be seen that in the East part, in
majority cases customers prefer to have BSNL having 46.59% preference opinion,
followed by Reliance and Airtel having preferred by 28.18% and 14.26% customers
respectively. Only 1% people prefer to have The Indian Institute of Planning &

Telecom Industry 93 Tata and 3.33% in case of Idea. Vodafone is preferred by
6.84% customers as it is little bit expensive though it has very good network
coverage. East 1% 14.26% 28.18% 6.84% Airtel Vodafone BSNL Idea Reliance Tata
3.33% 46.59% West 6% 1.57% 3.1% 38.25% Airtel 22.34% Vodafone BSNL Idea
Reliance Tata 30.06% The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 94 In the West part, there is a tough competition among Airtel,
Vodafone and BSNL. Airtel is preferred by 38.25% customers and Vodafone by
30.06% customers. BSNL is preferred by 22.34% customers. Reliance is preferred
by 6% people, followed by Idea and Tata with 3.10% 1.57% respectively. So, in the
East part, customers will prefer BSNL more and in the West part, Airtel is preferred
more by customers if they are given a choice with the same number. 13. What is
your purchase intent for news alerts on mobile phone? East+West 100 3.3 2.09 5.21
90 8.16 80 70 Astrological predictions Percentage 51.88 60 54.35 Sports 50
Business 40 Entertainment 30 11.78 25.1 General New s 20 10 22.44 16.15 0 East
West Regions Customers usage is not only dependent on how much he spends on
talking on phone but also on various value added services he uses. As per the The
Telecom Industry 95 survey findings, it can be concluded that there are many
similarities in the usage patterns of the East and the West region customers.
Maximum usage for news alerts on mobile of both the regions is for business news,
54.35% in the Eastern region and 51.88% in the Western region which is very close.
But second preference in case of news alerts is an entertainment in case of the
West region but in case of the East region, it is only 11.78%. In the East region,
22.44% customers prefer General news as their second preference but it is third
preference in case of the West region with 16.15%. Sports and Astrological
predictions are very less preferred by both the region customers, especially
astrological news are the lowest preferences in both the cases. 14. Rate the
following attributes of your service provider. 1) Customer care: As per the survey
conducted and its findings, it was concluded that Airtel is leader in maintaining a
good relations with its customers and it solves customers’ problems efficiently and
effectively. It has got the highest preference by the customers with 73.46%,
followed by Vodafone with The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 96 68.83%. The lowest preference is of BSNL. Its customer care is
not as good as the other players in the market, as per the findings. It is preferred by
only 17.92% customers. Customer care(East+West) 2.81 2.14 100 6.47 7.29 3.17
4.39 8.25 6.21 5.52 14.64 15.78 17.1 17.96 80 14.37 19.22 Very Poor Percentage
28.01 16.49 19.67 Poor 60 30.5 Average 28.31 34.19 Good 40 73.46 30.86 68.83
19.04 Very Good 11.2 20 26.48 26.03 24.6 17.92 0 Airtel Vodafone Idea BSNL Tata
Reliance Companies 2) Per call charges: Per call charges- ISD (East+West) Very
Poor 6.29 9.63 10.6 9.38 18.28 20.84 Per call charges(ISD) Airtel Poor 12.41 19.51
29.06 11.52 33.08 29.7 Vodafone Scale Idea Average 21.37 18.1 27.74 29.36 12.66
17.39 BSNL Good 31.82 29.44 15.54 22.83 19.62 14.69 Tata Reliance Very Good
28.58 23.9 17.38 27.57 16.68 17.95 0% 20% 40% 60% 80% 100% Percentage The

Telecom Industry 97 As per the findings, it was concluded that in both the regions
together, once again Airtel’s ISD charges are very good compared to the other
operators. 28.58% people think that it has very good ISD charges, followed by BSNL
and Vodafone having 27.57% and 23.90% preference respectively. The poorest ISD
call charges are of Reliance which is voted by 20.84% people, followed by Tata with
18.28% voting. Among the average category, highest is 27.74% of Idea which
means 27.74% customers feel that Idea has an average ISD call charges. Per call
charges-STD (East+West) Very Poor 12 6.29 6.93 5.31 14.02 12.64 Per call
charges(STD) Airtel Poor 15.5 9.81 16.99 14.11 12.32 15.08 Vodafone Scale Idea
Average 17.73 31.48 26.57 12.05 35.77 29.31 BSNL Good 24.47 23.85 27.68 31.4
23.72 26.62 Tata Reliance Very Good 30.39 28.66 22.06 37.28 14.42 16.55 0% 20%
40% 60% 80% 100% Percentage As the above graph shows, it can be said that STD
call charges are very good in case of Airtel. 30.39% people prefer that, followed by
Vodafone which is preferred by 28.66% people. In case of very poor category, Tata
is having the poorest STD call rates with 14.02% customers’ preference, The Indian

Telecom Industry 98 whereas, in poor category, Vodafone is poor with 9.81%
customers’ preference. In average and good category, Tata and Idea with 35.77%
and 27.68% preference respectively. Per call charges-Local (East+West) Very Poor
4.26 5 7.02 3.42 9.72 6.74 Per call charges(Local) Airtel Poor 7.35 4.08 18.05 9.38
20.45 13.02 Vodafone Scale Idea Average 21.83 37.69 25.96 18.19 20.98 13.17
BSNL Good 29.68 21.55 22.12 30.04 27.27 26.92 Tata Reliance Very Good 36.91
31.72 26.88 39.2 21.78 40.58 0% 20% 40% 60% 80% 100% Percentage As the
above graph reveals, in local charges of operators in both the regions combined,
Reliance is leading with 40.58% customers’ preference. It is because of its scheme
like Reliance to Reliance free talk. It has become more popular than the other
schemes provided by the other operators. In the poorest local charges, Tata is a
leader with 9.72% voting. In case of average charges, Vodafone is leading with
37.69% voting and preference by customers. The Indian Institute of Planning &

Telecom Industry 99 3) Message service: From the survey, the information related
to message service was found and it was concluded that Vodafone provides the
best messaging services to its customers and it is preferred by 36.20% customers,
followed by Airtel with 30.41% customer preference. In case of the poorest message
service, BSNL is rated highest with 13.89% customers, followed by Idea with
11.63%. There is very close rating in very poor section. Reliance is just behind Idea
with 10.11% rating. In case of average rating, Idea is at the top place with 31.91%
customer preference, followed by Airtel with 31.91% ratings. Message service
(East+West) 100% 20.8 14.66 23.07 10.11 90% 31.6 80% 18.76 16.59 23.84 6.24
Reliance 70% Percentage 24.13 Tata 19.3 10.16 34.65 60% 13.89 BSNL 50% 26.22
12.46 34.01 Idea 40% 32.53 11.63 Vodafone 36.2 25.36 30% 22.12 Airtel 20%
15.72 8.04 10% 30.41 24.78 31.91 8.48 7.23 5.69 0% Very Good Good Average
Poor Very Poor Message service Scale The Indian Institute of Planning &

Telecom Industry 100 4) Network: As per the findings on the basis of this attribute,
it was found that Vodafone has very good network coverage with 43.72% rating,
followed by BSNL with 40.24% rating. It shows very close competition for network.
BSNL got this higher rating because according to the survey, people also take
roaming network into consideration and on the basis of that it was found that BSNL
has got the best network facility in roaming. In case of the poorest network, it was
very close rating. But as per the survey, Idea has the poorest network as it has got
the highest rating by the customers from both the regions together. In case of the
average preference, Idea has got the average rating having 29.07% customers’
rating. Network (East+West) 100% 33.06 30.55 3.12 90% 23 10.28 80% 29.4 27.34
Reliance 8.54 70% 24.65 Percentage Tata 60% 40.24 34.76 10.09 19.66 3.28 BSNL
50% 2.14 27.94 25.5 Idea 40% 29.07 7.59 10 Vodafone 30% 43.72 39.64 20% 9.45
4.4 Airtel 3.16 10% 39.86 32.37 19.2 6.26 2.51 0% Very Good Good Average Poor
Very Poor Network Scale The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 101 5) Schemes: As the graph shows, the customers’ preferences
in case of service providers’ different schemes are maximum in case of BSNL as it is
the cheapest as per the customers’ responses and findings. BSNL is rated highest as
a provider of very good schemes with 36.28% customers’ preferences, followed by
Airtel with 31.80% customers’ preferences. Here, the graph also shows that there is
a close competition between Airtel and Reliance in case of very good rating
category. Reliance is just behind Airtel with 30.77% rating. Schemes (East+West)
100% 15.08 4.76 90% 30.77 32.39 17.08 12.45 80% 20.28 Reliance 70% 21.37
23.82 15.8 30.27 Tata Pecentage 60% 36.28 29.4 BSNL 50% 21.56 6.01 4.71 23.49
Idea 40% 23.72 4.48 32.02 26.91 Vodafone 30% 26.43 22.98 8.37 Airtel 20% 10%
31.8 27.46 10.43 28.01 5.6 7.29 0% Very Good Good Average Poor Very Poor Scale
The graph also reveals about the poorest rating by customers as their lowest
preference. The lowest preference is of Tata with 15.8% customer ratings. It The

Telecom Industry 102 has got the highest rating among all the operators. The
average rating is of Vodafone in case of providing schemes. It has got the average
preference of 32.02% customers’ rating. 6) Talk-time and Validity: Talk-time &
Validity (East+West) 100% 90% 30.53 26.85 28.43 10.39 4.07 80% 28.67 5 2.86
Reliance 27.49 70% 36.17 Percentage Tata 38 11.5 7.35 60% 23.03 BSNL 50%
20.13 6.27 28.38 26.93 Idea 40% 7.58 31.06 9.61 Vodafone 30% 37.46 29.68 20%
19.29 4.09 Airtel 10% 15.68 37.7 28.39 3.51 15 0% Very Good Good Average Poor
Very Poor Scale Customers’ choices differ from area to area. Here, by combining
both the regions, it was found from the gathered information that BSNL has got very
good talk time and validity. In spite of the close competition, BSNL has leaded the
market with 38% customers’ preferences, followed by Airtel and Vodafone with
37.70% and 37.46% ratings respectively. In case of the average customers’
preferences, Tata is a leader with 36.17% ratings The Indian Institute of Planning &

Telecom Industry 103 followed by Idea with 31.06% customer ratings. But among all
the telecom operators, the poorest talk-time and validity provider is Idea with
7.58% customers’ ratings. 7) Value Added Services (VAS): Value Added Services
(East+West) 100% 26.31 25 20.4 10.17 18.2 80% 26.82 22.5 17.92 22.09 9.3 25.16
Reliance Percentqage 60% 23.47 Tata 19.59 29.68 BSNL 27.21 Idea 12.91 40%
Vodafone 25.88 43.96 Airtel 37.07 20.34 20% 11.72 10 7.31 41.76 37.19 17.3 4.62
2.83 0% 2.74 1.29 Very Good Good Average Poor Very Poor VAS Scale As the above
graph clearly depicts that extra benefits i.e. VAS are very well provided by Vodafone
with 43.96% followed by Airtel with 41.76% customers’ preference. There is a tough
competition between Vodafone and The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 104 Airtel in the market. But the poorest and the lowest VAS are
provided by BSNL as per the customers’ preferences survey. It has the highest
rating i.e. the poorest rating of 12.91%. The average VAS preferred by the
customers is of Idea which has the rating of 25.88%. 8) Availability: Availability
(East+West) 100% 32.28 21.38 90% 27.45 11.06 7.97 80% 29.81 28.03 Reliance
70% 3 Percenatge 33.39 Tata 60% 40.68 32.1 5.8 10.92 BSNL 50% 31.79 13.67 3
26.65 Idea 40% 6 3.26 30% 45.21 33.01 32.51 Vodafone 7.59 4.54 20% Airtel 9.82
10% 42.9 32 7.42 5.11 12.86 0% Very Good Good Average Poor Very Poor Scale As
the above graph reveals, the very good availability of the telecom brand is
Vodafone having 45.21% customers’ ratings. Airtel is at the second place with the
minor difference of 42.90%. There is a tough competition going on among
Vodafone, Airtel and BSNL in case of availability as per the data gathered. The
average availability is of Tata with 33.39% followed by Idea with 32.51%. Very poor
availability is of Reliance. It has got 7.97% customers’ ratings. The Indian Institute

Telecom Industry 105 9) Billing system: As the below graph shows, the billing
system is very good of Airtel with 42% customer preferences followed by 41.68% of
Vodafone. As it can be seen from the graph that all the operators are very close to
one another in case of effective billing service. Billing system (East+West) 100%
35.73 25.56 22 5.07 90% 11.82 80% 5.84 32.1 31.46 21.18 Reliance 70% 9.7
Percentage 28.91 22.78 Tata 60% 18.42 BSNL 50% 13.98 37.5 28.18 Idea 40% 27.7
16.2 Vodafone 30% 41.68 32.49 Airtel 4.27 20% 17 2.36 5.71 3.52 10% 42 36.97
14.3 3.48 3.27 0% Very Good Good Average Poor Very Poor Billing system Scale The
graph also depicts that average billing system is of Idea which has got 27.70%
highest customers’ ratings followed by Reliance with 22% ratings. The Indian

Telecom Industry 106 But the poorest billing system among all is of BSNL which has
got highest 13.98% customers’ ratings. 10) Voice clarity: Voice clarity (East+West)
100% 1.13 90% 34.83 31.18 22.65 10.55 3.75 80% 32.29 33.92 Reliance 70% 23.1
Percentage 30.66 6.98 Tata 60% 32.62 7.13 BSNL 50% 35.94 22.3 7.48 Idea 31.85
40% 3.79 Vodafone 30% 48.19 23.12 5.38 33.07 Airtel 20% 4 3.1 11.83 10% 44.61
36.74 10.29 5.42 3.02 0% Very Good Good Average Poor Very Poor Voice clarity
Scale From the survey conducted and from the above graph, it was concluded that
voice clarity is much better of Vodafone which is rated highest having 48.19%
customers’ preferences. At the second place, it is Airtel with 44.61% rating. The
average quality of voice clarity is of Idea with 23.12% ratings. It is very close to Tata
having 23.10% customers’ preference as average voice clarity. BSNL has the
poorest voice clarity and rated as the worst operator by 7.13% people. The Indian

Telecom Industry 107 15. How do you find ISD rates of your service provider? ISD
rates (East) 24.82% Costly affordable 36.73% Economical Costly 38.52%
unaffordable As the above chart shows, the customers in the Eastern area think that
the services they are rendering are economical. 38.52% customers think like that.
Though, there is a close rating between Economical and Costly affordable but it
shows that there are 36.73% people who think that the services they are offered
are costly but can be afforded and only 24.82% people think that they are too costly
to afford. Whereas, in case of the Western area, it was found that 48.37%
customers think that their service providers are economical. But 30.61% customers
think that it is costly affordable and 21.14% customers think that it is costly
unaffordable. So compared to Eastern area customers, Western area The Indian

Telecom Industry 108 customers are less who think that their operators are costly
affordable and more in terms of economical. ISD rates (West) 21.14% 30.61% Costly
affordable Econom ical Costly unaffordable 48.37% 16. How long do you have to
wait in customer care? East+West 6.78% 10.27% 20.94% Upto 1 minute 2 minutes
3-5 minutes 6-10 minutes 23.84% 11 minutes or more 38.21% The Indian Institute

Telecom Industry 109 The customer’s liking about a particular service provider is
also depended on how the customer care executive solves his problem and how
much time he takes to reach the customer. So, here the data is collected on the
basis of how much a customer has to wait while calling the customer care. The data
reveals that in both the regions together, majority of the customers’ i.e. 38.21%
have to wait for an average time of 3-5 minutes. The second highest rating is for 2
minutes which is rated by 23.84% of the customers which is quite fair. There are
6.78% customers who have to wait for 11 minutes or more which is not bad.
Surprisingly, there are 20.94% customers who have to wait up to 1 minute time to
reach to the customer care executive which is very good. 17. Are you aware of 3G
technology? There are new inventions and technologies come up in the market to
enhance the competition and make the usage much faster and also useful as well
as easy to use. 3G technology is one of those technologies. In the survey, it was
asked to the customers whether they are aware of new 3G technology or not. The

Telecom Industry 110 3G technology (East+West) 100 82.3% 80 Percentage
64.28% 60 Yes 40 35.72% No 20 17.7% 0 East West Regions The results are
mentioned in the above chart. In the Eastern part, 64.28% people are aware of this
technology and 35.72% people are not aware of it. But in case of the Western part,
82.3% people are aware of that technology and 17.70% people are unaware of it. It
can be seen that there is a huge difference between the awareness of 3G
technology in the Eastern and the Western part of the city. So, this is the primary
information which was collected through the survey in both the regions of the city.

Telecom Industry 111 Chapter 11: SWOT ANALYSIS OF INDIAN TELECOM Strengths:
Huge wireless subscriber potential One of the fastest growing sectors Consumers
are ready to pay for cutting edge services FDI limits are 74% Unified license regime
Weaknesses; Lowest call tariffs Market is regulated by Government bodies Too
many authorities are ruling this sector Wide scales of consumer churn in this sector.
Now the number portability is coming up so it will increase the consumer churn rate
Value Added Services (VAS) is restricted because of literacy and language problems

Telecom Industry 112 It is difficult to make into the semi-rural and rural areas
because of the lack of infrastructure. Problem of limited spectrum availability and
the issue of interconnection charges between the private and state operators.
Opportunities: To offer more VAS on GSM, CDMA and Internet Service Providers
(ISP) Language independent services. E.g. sending the message in local language,
information available in local language etc. New innovations in service providers
Huge content providing to local culture as well as globally Foreign investments in
form of equity or technology Unified messaging platforms Threats: Weak Intellectual
Property Rights (IPR) Threat of low cost service providers The Indian Institute of

Telecom Industry 113 Political instability Regulator interference The service
providers have to incur a huge initial fixed cost to make a mark in rural markets.
Achieving break-even under these circumstances may prove to be difficult. The

Telecom Industry 114 Chapter 12: FUTURE OF INDIAN TELECOM Indian Telecom is
advancing day by day in every aspect. Everyday new technology emerges which
helps to solve lot of problems and makes the process smoother for the telecom
service providers as well as customers. The competition is increasing and many
players are ready to grasp the hands of customers by using CRM techniques.
Different VAS (Value Added Services) will play a crucial role in future development.
Indian telecom’s total mobile subscriber base is around 160 millions but still there
are lots of opportunities in rural areas as well. Government is also supporting the
service providers. Apart from that, many telecom operators like Reliance, Bharti and
MTNL have decided to enter into different countries like Bharti is planning to launch
in Sri Lanka. Reliance is planning to move into Uganda and Sri Lanka also. MTNL is
planning to start its proceedings in Mauritius. Apart from that, it is also planning to
grow in other markets like Kenya, whereas MTNL is already into the joint venture in
wireless market in Nepal. Launch of new 3G i-phone will change the telecom
scenario completely. Government has also taken some steps for the 3G telecom
companies for the The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 115 improvement of rural market. Future technology projections
in broadband indicate that microprocessors will run one thousand times as many
computations as are being done today, which mean enormous gain in productivity
and efficiency, giving people unimaginable power to access, organize, and
transform information. The road for India achieving the top most position in
telecommunication is no longer a dream as India is moving towards its milestone
and in few years India will over power all countries and achieve its target of top
most position in telecom industry. Number portability is another technology which
will enhance the competition as well as it will benefit the consumers more. In this
technology, a consumer can change the service provider without changing the
number. This technology is likely to come by 2009. The proposed merger of BSNL
and MTNL is consuming a lot of ink. There have been various suggestions floated in
the media about the ways and means the “synergies” could be obtained. BSNL
should concentrate more on rural spread and better Internet connectivity. MTNL
should be divested totally. In case of Broadband, there is a late non-starter here. In
terms of pricing and download limits, this is pathetic for users who wish to consume
bandwidth for file sharing or extensive web surfing for any reason. The Indian

Telecom Industry 116 The emergence of VAS is one trend that is being followed
closely and with great interest by industry analysts and policy makers worldwide. In
India, the mobile phone has emerged as the most prevalent device to access the
Internet. Most of the industry up till now has been focused on investments in
wireless infrastructure. Now that a large part of that investment is behind us,
attention is inevitably shifting to VAS. The consumer is asking for the next set of
services-beyond ring-tones, wallpaper, games, SMS. However, few VAS providers
have realized that simply taking the web experience and miniaturizing it for mobile
delivery doesn’t work. The consumer is left with a poor experience and abandons
the service quickly. These range from applications in social media to dynamic
widgets scaled down to fit the way people actually interact with information on the
go. People want to buy train or movie tickets, read their horoscopes and catch up
on the gossip about their favorite Bollywood or Hollywood stars. The Indian Institute

Telecom Industry 117 Chapter 13: CONCLUSIONS AND RECOMMENDATIONS 13.1]
Conclusion:- India has one of the world’s largest telecommunication networks. The
telecom story continues to be the best evidence of the efficacy of the reforms
process. In just six years, the number of mobile subscribers has gone up from just
about one million to 100 million, a subscriber base that only four other countries
China, the US, Japan and Russia can boast of. None can doubt the correlation
between this explosive growth in numbers and the steep decline in the cost of the
mobile phone and of its usage. Effective tariffs have dropped from over Rs 14 a
minute to Re 1, bringing the phone within reach of people even below the middle-
class. The Government may have, therefore, landed itself a winner in the mobile
phone service providers, but the task of taking telecom to the other 90 per cent of
the population will call for even greater innovation in policymaking, technology and
marketing. Still three-fourths of the land mass is not illuminated by a cellular signal
and the price of the instrument is beyond the The Indian Institute of Planning &

Telecom Industry 118 reach of a substantial section of the population let alone the
charges for its use. These issues, of course, can be resolved by decisive policy
action, such as a creative use of the Universal Services Obligation fund that now has
over Rs 70 billion, releasing adequate spectrum to operators in the metros, and a
proactive investment policy that invites many more equipment manufacturers to set
up base in this country. The number portability issues will solve many problems and
will help the end users, which will change the whole scenario of competition and will
make the game tougher for the service providers. Looking at the competition trend,
it seems that soon in future, rural schools will be having broadband and internet
facilities as their part of studies as well as routine lives. There is availability of
internet facility in many villages. But soon it will be taught in secondary and higher
secondary schools in all villages and various technologies like 3G and various VAS
have made the market more competitive and made easy for the users.
Implementation of number portability and 3G technology have solved many
problems and made easy and comfortable for the customers. The Indian Institute of

Telecom Industry 119 13.2] Recommendations:- As mentioned in the future of
Indian telecom and on the basis of the primary research and secondary research,
the following recommendations can be concluded: Lowering the tariff plans of
service providers will increase more competition. In order to allow technological
upgradation, segment policies should be technology-neutral, and not specifically
prescriptive. Resolve spectrum allocation and create need-based licensing of
spectrum bandwidth to facilitate the policy of unlimited new entrants in basic
services. Pass rules on number portability (service migration) to allow free market
conditions for fixed line consumers, without taxing new entrants or consumers for
moving away from a monopoly service provider. Bringing more upgradation in VAS
for the betterment of the users. Improvement of network infrastructure in both the
urban and the rural areas. The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 120 Reducing the STD and ISD charges for the users. More FDI
inflows can be enhanced. More Direct To Home (DTH) services will give benefits to
the customers. CDMA technology providers i.e. Tata and Reliance are slowly coping
up with the competition with GSM operators which gives a good benefit to the end
users. These operators should also indulge into providing various services. Mobile
banking is a new concept which is recently adopted by Airtel and it provides
recharge from mobile phone by tie ups with banks. This new concept will bring a
new revolution in case of inventions. Broadband services can be more focused more
if the spectrum issues are solved. Still there are many rural areas where broadband
services are not available. Companies can provide new and different schemes to
their customers. Enhance data services on fixed and wireline services. Increase in
internet speed on mobile can be the criteria for the operators. The Indian Institute

Telecom Industry 121 The above recommendations for customer’s satisfaction can
be shown from the chart below: Branding recommendation model in Indian telecom
sector Upgradation of technology Increase internet Better Network speed Mobile
Banking Provide different schemes Customer More Value Added Services Reduce
STD and ISD rates Lowering Tariff Plans More Direct To Home Services Improve
Broadband Services Satisfaction The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 122 After talking to customer care executives of telecom sector,
the following recommendations can be concluded as a part of their strategies for
acquiring or retaining new customers: The telecom operators should take less time
for the solving customer’s queries. Majority of the operators focus on the special
occasions to launch new schemes but they can also launch schemes on weekly or
monthly basis to attract new customers. TV media is more effective for the
operators as per the findings. But they should also focus on radio and newspapers
for more effectiveness. Customer care executives should concentrate more on pre-
paid connections for the price sensitive customers and post-paid connections for
business class people or high class people. They should use their media tools
accordingly. They should concentrate more on the attributes like talk-time facility,
network, voice clarity etc apart from SMS, VAS and schemes. They should focus
more on VAS like GPRS facilities, games, astrology, and music for young people and
business news for business people. The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 123 They should also focus on new technologies like 3G. They
should also focus on pilot projects before launching a product, especially in case of
rural areas. The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 124 BIBLIOGRAPHY Books: 1. Mobile Communications by Jochen
Schiller-Second Edition Reports: 1. DoT Report 2007-08 2. Indiainfoline teleline
newsletter 3. Telecom Sector Annual Report 2005-06 4. TRAI Report 2006-07 5.
TRAI Report 2007-08 Articles: 1. Bernhard Goldberger- 19th Bled e-Conference
eValues 2. Business & Economy 3. Business Standard 4. DNA Newspaper 5. MTNL
press release The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 125 6. RCom press release 7. The Economic Times Websites: 1.
www.bsnl.co.in 2. www.dot.gov.in 3. www.google.com 4. www.iloveindia.com 5.
www.micrositemobile.com 6. www.trai.gov.in The Indian Institute of Planning &

Telecom Industry 126 ABBREVIATIONS VAS- Value Added Service WAP- Wireless
Application Protocol DoT- Department of Telecom TRAI- Telecom Regulatory
Authority of India EPS- Earning Per Share TTSL- Tata Teleservices Limited RCom-
Reliance Communications EQM- Easier, Quicker, More IRT- Indian Radio Telegraph
Company IRCC- Indian Radio and Cable Communication Company PTT- Posts,
Telephone and Telegraph VSNL- Videsh Sanchar Nigam Limited MTNL- Mahanagar
Telephone Nigam Limited BSNL- Bharat Sanchar Nigam Limited NTP- National
Telecommunications Policy IUC- Interconnect Usage Charges GSM- Global System
for Mobile communications CDMA- Code Division Multiple Access The Indian Institute

Telecom Industry 127 COAI- Cellular Operators Association of India GCC- Global
Calling Card WLL- Wireless Local Loop VPN- Virtual Private Network NIB- Non
Interference Basis NLD- National Long Distance ILD- International Long Distance
WAN- Wide Area Network MVNO- Mobile Virtual Network Operator CRM- Customer
Relationship Management QTIL- Quippo Telecom Infrastructure Limited WTTIL-
Wireless Tata Telecom Infrastructure Limited IPR- Intellectual Property Rights ISP-
Internet Service Provider GPRS- General Packet Radio Service SIP- Session Initiation
Protocol ADR- American Depository Receipts OCS- Overseas Communication Service
USB- Universal Serial Bus TMI- Telecom Malaysian International The Indian Institute

Telecom Industry 128 EPS- Earning Per Share WiMax- Worldwide interoperability for
Microwave Access PSTN- Public Switched Telephone Network DSL- Digital Subscriber
Line Wi-Fi- Wireless Fidelity USO- Universal Service Obligation VPT- Village Public
Telephone DEL- Direct Exchange Line FTTC- Fiber To The Curb FTTH- Fiber To The
Home ICT- Information and Communication Technology FDI- Foreign Direct
Investment IP- Internet Protocol VAS- Value Added Services VASP- Value Added
Service Provider CP- Content Provider SMPP- Short Message Peer-to-Peer Protocol
SMSC- Short Message Service Centre FII- Foreign Institutional Investor IVR-
Interactive voice response The Indian Institute of Planning & Management-
Ahmedabad

Telecom Industry 129 ANNEXURES Annexure 1: Telecom ministry unveils 3G policy
in India, fierce bidding Seen By Vinita Ganju 4th August, 2008 The Indian
Government has unveiled norms for distribution of high-speed 3G (third generation)
spectrum, saying it will hold a global auction in which all mobile operators, including
eligible foreign operators, can participate. Communications and Information
Technology Minister Andimuthu Raja said India has 60 MHz of 3G spectrums
available and plans to let five operators initially avail of the service. Mobile services
providers holding a Unified Access Service License (UASL), and any operator who
qualifies for an UASL in India and has experience in 3G services will be allowed to
participate in the auction, the telecom ministry said. Foreign operators, which fall in
the second category, will require forming joint ventures (JVs) with Indian firms, and,
according to The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 130 Indian FDI rules, in telecom sector, their stakes in the JVs
cannot be more than 74 percent. New and foreign players such as AT&T (US),
Deutsche Telekom AG (Germany) and NTT DoCoMO (Japan), which are keen on
entering the Indian market, will also have to pay an additional entry fee of Rs.1650
crores to acquire the UASL to qualify for 3G services. Spectrum will be auctioned in
blocks of 2x5 MHz, and the number of blocks to be auctioned will range from 5 to 10
depending on the availability of spectrum in each circle, the telecom ministry said.
Each bidder will be allocated only one block in each circle, and the license for the
3G spectrum will be for period of 20 years, it added. "The actual number of blocks
to be auctioned in a service area will be announced well before the auction," the
Department of Telecommunications (DoT) said in a statement. Raja said both GSM
and CDMA players can bid at the auction but CDMA platform-based mobile
operators have the option of getting the spectrum without having to participate in
the auction. The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 131 According to the policy announced on Friday, CDMA operators
can seek one slot in the 800 MHz, which is the most efficient and cost effective
frequency band for 3G services as far as CDMA is concerned. The catch, however, is
that spectrum in this band will be allocated to the operator with most number of
subscribers in a circle. There are only two slots available in the 800 MHz frequency
band and 4 pan-India CDMA operators - state-run BSNL (MTNL in Mumbai and Delhi),
Reliance Communications, Tata Teleservices and Sistema-backed Shyam Telecom.
As BSNL will get one slot, the other slot is expected to go to either Reliance or Tata
as Shyam Telecom is a new player. And, between Reliance and Tata, Reliance is
expected to get the lucrative bandwidth in most circles, as it has more subscribers
in almost all the circles except Delhi and Maharashtra where Tata is the No.1 CDMA
operator. There are 22 circles in India. The CDMA player will also have to pay a fee
proportionate to the amount quoted by the highest bidder during the auction for
GSM-based 3G services. BSNL and MTNL have also been allowed a 4-6 months head
start ahead of private sector rivals for the launch of 3G mobile services. The Indian

Telecom Industry 132 The winning bidders will be exempted from paying any
annual fee in the first year of operations, but they will have to pay 1 percent of their
adjusted gross revenue as an annual spectrum charge from the second year
onwards. Raja said talks are also going on to allow the Defense Ministry to release
additional spectrum. "The number of operators (in the 3G spectrum) can go up to
10 in the circles...when more spectrums become available," he said. However, in
regions like Mumbai or Delhi, due to lack of spectrum, only 2-3 operators can be
accommodated at the moment, he added. The complete details of auctioning of the
spectrum and the number of players allowed in each circle will be finalized in 3-4
months, the telecom minister said. An agency will be appointed to supervise the
auction which will be "fully transparent," Raja said, adding that the auction will help
the government earn around Rs.30, 000 crores to Rs.40, 000 crores. The
government has imposed a floor reserve price of Rs.2020 crores for the 3G licenses.

Telecom Industry 133 "Quality of voice telephony will be improved" with 3G
spectrum that would allow operators to "provide good quality services to a larger
number of subscribers," the government said in a statement. "We welcome the
government's announcement of its 3G policy and believe this will benefit the entire
wireless communications ecosystem," said Kanwalinder Singh, president for India
operations of Qualcomm - a major player in 3G industry. "3G will bring efficient
voice and rich data services to Indian consumers," Singh said. "The government's
3G licensing plans represent a major boost to India's economy," GSMA, the global
trade body for the mobile industry, and the Cellular Operators Association of India
(COAI) said in a joint statement. According to Madhusudan Gupta, analyst at
industry research firm Gartner, 3G mobile services will enable operators to be more
competitive. "Users can expect more contract based subsidized, and hence
cheaper, 3G handsets from service providers and we estimate that by 2012 every
fifth handset in India will be 3G enabled," Gupta said. The Indian Institute of

Telecom Industry 134 The auction ensures that only "a few serious players will
come in," noted Prashant Singhal, head of telecom practice at Ernst & Young. Top
industry chamber, the Federation of Indian Chambers of Commerce and Industry
(FICCI) said the 3G policy will attract huge investments in the country to the tune of
$8-10 billion over the next three years. It also spell opportunities for network gear
makers such as Nokia Siemens, Ericsson, Motorola, and Huawei, as successful
bidders are expected to spend billion of dollars building 3G networks. The launch of
3G spectrum (radio frequencies that enable wireless communication) in India is a
significant step as it allows the country to join many others in moving to the next-
generation high-end services which give users a chance to enjoy fast Internet
access (Internet speed on 3G bandwidth is at least 30 times faster than the present
2G bandwidth), games, music, video and other multimedia content on their mobile
phones. Meanwhile, in a separate development, the government has decided to
allow number portability which has left many mobile services providers worried.
Number portability will allow any mobile subscriber to change his mobile services
provider, without having to change his mobile number. This system The Indian

Telecom Industry 135 is a boon to new entrants in the telecom sector as it gives
them an opportunity to poach on subscribers from existing mobile services
providers. Two clearinghouses will be given licenses to handle the backend work for
number portability, the government said, adding the new system will be launched
by year. DoT has also outlined guidelines for auction of broadband wireless
spectrum using protocols such as Wimax, short for worldwide interoperability for
microwave access, a standard that is capable of data speeds of 10 megabytes per
second up to 2 km away from a radio transmitter. Spectrum rights for such services
will be given at one-fourth the price of 3G licenses but the winning bidders will be
offered 20 MHz spectrum each, DoT said. Thanks to call rates of as low as $0.01 a
minute, availability of cheaper handsets and expansion of networks to smaller
towns and rural areas, the Indian mobile market has leapfrogged the US to become
the second largest (after China) and the world's fastest growing mobile market in
the world. With Indian operators adding 8-9 million subscribers a month, at the end
of June, total number of mobile users stood at 287 million and research firm Gartner
expects the number to touch 737 million by 2012. The Indian Institute of Planning &

Telecom Industry 136 According to market analysts, mobile users in India have
jumped 25 times between 2002 and 2007, but the potential for growth remains
huge as just 23 percent of the billion-plus population has a mobile phone. Though
India's mobile revolution is mainly confined to the cities, the real prize for phone
companies is the vast rural market, where nearly 70 percent of India's 1.1 billion
populations live. In India, the top GSM players are Bharti Airtel, Vodafone-Essar,
BSNL, Idea and Aircel while top CDMA players are Reliance Communications and
Tata Teleservices. The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 137 Annexure 2: Questionnaire for Customers This survey is
conducted for the purpose of finding out the feasibility of the telecom service
providers by students of IIPM, Ahmedabad and whatever information we get will be
kept confidential and used for research purpose only. Put a tick (√) for the right
options. 1. Age Group: 10-20 20-40 Above 40 2. Occupation:
_________________________________ 3. Designation: _________________________________ 4.
Gender: Male Female 5. Which type of connection do you prefer? Pre-paid Post-paid
6. Whose service(s) are you rendering now? BSNL Tata Reliance Vodafone Airtel
Idea 7. Which technology do you prefer? CDMA GSM Both 8. How long have you
been using this connection of your service provider? Less than 3 months 6-12
months 3-6 months 1-2 years 2-3 years More than 3 years 9. Rate your satisfaction
level of your service provider. Very Good Good Satisfied Bad Very Bad The Indian

Telecom Industry 138 10. What kind of expectations do you have from your service
provider? Good service Network Voice quality Schemes Price 11. Are you aware
about the role of telecom services in providing broadband without using cable TV
network? Yes No 12. How much do you spend per month on your mobile
connection? Up to Rs. 500 Rs. 501- Rs. 1000 Rs. 1001- Rs. 1500 More than Rs. 1500
13. How do you find the behavior of customer care executives of your service
provider? Professional & prompt Not Responding Warm & helpful Lazy & slow 14.
What do you think about the competition in the market? No choice Some Choice
Enough Choice Can’t Say Don’t Know 15. Given a choice with same number, which
service provider will you select? Tata BSNL Airtel Reliance Idea Vodafone 16. What
is your purchase intent for news alerts on mobile phone? General News
Entertainment Business Sports Astrological Predictions The Indian Institute of
Telecom Industry 139 17. How will you rate the following attributes for your service
providers? Please tick (√) the appropriate. No. Attributes Very Good Good Average
Poor Very Poor 1. Customer care Per call charges ISD 2. STD Landline 3. Message
service 4. Network 5. Schemes 6. Talk-time & validity 7. Value added service 8.
Availability 9. Billing system 10. Voice clarity 18. How do you find ISD rates of your
service provider? Costly affordable Economical Costly unaffordable 19. How long do
you have to wait in customer care? Up to 1 minute 3-5 minutes 2 minutes 6-10
minutes 11 minutes or more 20. Are you aware of 3G technology? Yes No Thank You

Telecom Industry 140 Annexure 3: Questionnaire for Marketers This survey is
conducted for the purpose of finding out the feasibility of the telecom service
providers by students of IIPM, Ahmedabad and whatever information we get will be
kept confidential and used for research purpose only. Put a tick (√) for the right
options. 1. Age Group: 10-20 20-40 Above 40 2. Gender: Male Female 3. Company
Name: BSNL Tata Reliance Vodafone Airtel Idea 4. Designation:
_________________________________ 5. On which type of connection do you concentrate
more? Pre-paid Post-paid 6. When do you launch new schemes?
____________________________ 7. What factors do you consider while launching a new
scheme? __________________________________________________ 8. Which Strategy do
you implement to acquire new customers?
___________________________________________ 9. Which strategy do you implement to
retain customers? ____________________________________________ 10. Do you do any
pilot project before launching any product to know customers preference? Yes No
11. How do you solve problems of customers? The Indian Institute of Planning &

Telecom Industry 141 12. Do you have any grievance handling department to solve
customer’s problems? Yes No 13. On which Value Added Service do you focus
more? 14. According to you, How does a technology and network play role in
customer’s satisfaction? 15. How does a media tool can play a role in branding your
product and providing customer’s satisfaction? Thank You The Indian Institute of

Telecom Industry 142 RESPONSE SHEETS Response Sheet-1 1. Name: - Naman Shah
Centre: - IIPM, Ahmedabad 2. ID No:- SS/06-08/AHD/MKTG/2 3. The topic of Study: -
Telecom Industry 4. Details of Meeting: - Guide explained how to start thesis and to
start with secondary data collection. 5. Date when the Guide was consulted:-
7/4/2008 6. The outcome of the meeting/discussion: - Secondary data collection
through books, internet and articles started. 7. The Progress of the thesis: - Basic
details about telecom details found through secondary sources. Signature of thesis
guide The Indian Institute of Planning & Management-Ahmedabad

Telecom Industry 143 Response Sheet-2 1. Name: - Naman Shah 2. Centre: - IIPM,
Ahmedabad 3. ID No:- SS/06-08/AHD/MKTG/2 4. The topic of Study: - Critically
analyze the customer preference and satisfaction measurement in Indian Telecom
Industry 5. Details of Meeting: - Gathered some secondary data related to Indian
telecom and showed to the guide and got suggestions from the guide to find out
company and its market share details. 6. Date when the Guide was consulted:-
2/5/2008 7. The outcome of the meeting/discussion: - Started collection of data
according to the suggestions received. 8. The Progress of the thesis: - Data
collected related to market share and companies profile through secondary data.
Signature of thesis guide The Indian Institute of Planning & Management-
Ahmedabad

Industry 5. Details of Meeting: - To search about telecom in rural area and
comparisons between GSM and CDMA. Apart from that, also to find about recent
updates and issues. 6. Date when the Guide was consulted:- 28/6/2008 7. The
outcome of the meeting/discussion: - Suggestions about GSM and CDMA received
and how to find out details on the basis of that. 8. The Progress of the thesis: -
Recent issues were found out as explained by guide. Also found out latest updates
in Indian telecom and also data related to rural area. GSM and CDMA comparison
was done. Signature of thesis guide The Indian Institute of Planning & Management-
Ahmedabad

Industry 5. Details of Meeting: - The guide told me to start with primary research
and to prepare questionnaires about that. 6. Date when the Guide was consulted:-
6/8/2008 7. The outcome of the meeting/discussion: - Asked the guide about the
questionnaire details to include. 8. The Progress of the thesis: - Prepared
questionnaire as per the guidelines. Signature of thesis guide The Indian Institute of

Industry 5. Details of Meeting: - Showed the questionnaires if there are any changes
required and if not then to get approval for the same to proceed with the primary
details. 6. Date when the Guide was consulted:- 11/8/2008 7. The outcome of the
meeting/discussion: - Got approval from the guide to proceed with the primary
research. 8. The Progress of the thesis: - Started primary research and after
completion of analysis decided to show it to the guide. Signature of thesis guide The

Industry 5. Details of Meeting: - Meeting after final analysis is done and if any
changes are required. 6. Date when the Guide was consulted:- 23/8/08 7. The
outcome of the meeting/discussion: - Changes are done as per the guide’s
suggestions. 8. The Progress of the thesis: - Final thesis is to be submitted.
Signature of thesis guide The Indian Institute of Planning & Management-
Ahmedabad
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Report on telecom sector - Document Transcript
IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 1
Page no. Acknowledgement 04 Executive summary 05 Introduction about Telecom

Industry 06 History 07 Global Scenario 08 National Scenario 09 Demographic
characteristic 10 Market size, Trends & Players 11 Telecom turn over/ Subscribers
12 Opportunities /Competitive landscape 13 Porters generic strategy 14 Progress
/Acquiring Subscribers 15 Rural India 15 Government Initiatives / MVAS 16 VAS 18
Mobile VAS in Rural Market 19 Access Device /3G Handset 20 Key trends in Telecom
Industry 21 Inhibitors 22 MNP Implementation Globally 24 Wimax Vs. 3G 26 Mobile
virtual network operator 27 Regulation for MVN O / IPTV 28 Companies overview 29
4P’s Analysis 43 IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 2
Advertisement 44 Industry updates 46 Major challenges for Mergers 49 FDI

Investment in Telecom sector 50 Outsourcing by Telecom company 51 Future
Trends 53 4G Technology 56 Conclusion/ References 56 IIPM – AHMEDABAD SALES
AND DISTRIBUTION Page 3
This project work would never have been an achievable task, had we not been
under the great shelter of guidance of respected Professor Mukta Rae. Her
simplified teaching technique based on examples has helped us gain more
understanding of the subject. The very essence of the project work is the linguistic
precision which has an impact of conveying more details in least possible words. An
ample use of various reference readings has been very frequently made while
compiling data for this project. Such rich reading has been made available at hand
by the treasure-like well-maintained library of the IIPM, Ahmedabad. I am very much
under obligation to mention here, the contributions of my batch mates who have,
knowingly or unknowingly, provided me the competitive edge which is the driving
force of the whole labor and extra labor put into the project. I would also take an
opportunity to thank all the respondents, who have taken pains in answering the
questions and filled the place of true representatives for deciding the nature of the
problem. Finally, I feel very much gratified to the administration of IIPM, Ahmedabad
for providing comfortable environment. - JONTY MOHTA IIPM – AHMEDABAD SALES
The rapid growth in Indian telecom industry has been contributing to India‟s GDP at
large. Telecom Regulatory Authority of India was established to regulate and deal
with competition among the service providers. Upcoming services like 3G and
Portability will help to further increase the growth rate. The Indian
telecommunication industry is one of the fastest growing in the world and India is
expected to become the second largest telecom market in the world by 2010. India
added 113.26 million new customers in 2008, the largest globally. The country‟s
cellular base witnessed close to 50% growth in 2008, with an average 9.5 million
customers added every month. It is estimated that telecom industry will generate
revenues worth US$ 43 billion in 2009- 10. IN this we have tried to capture the most
of areas of telecom industry. Like, History of Telecom Industry, TRAI role and
functions, new trends in industry and latest updates.  To find the reason of
tremendous growth in Indian Telecom Industry  To study the role of TRAI  To
study upcoming trends in Telecom industry IIPM – AHMEDABAD SALES AND
DISTRIBUTION Page 5
The exactly ten years ago, Jyoti Basu in culcutta called Sukh Ram in Delhi Sukh Ram
in Delhi was the first mobile phone call in India. Brick sized cell phone used to cost
Rs.45000 and each call coasted Rs.16.50/minute. Back then, cell phones was a
status symbol. Today, there are over 60 million mobile connections in India
(expected to double in number in next 12 months.). A local call costs around less
then Rs.50paisa/min and a cell phone can be purchased for less than Rs.1500. India
growth story has already got the world to sit up and take a note of the changing
economic scenario. The Indian government is doing everything that is possible to
ensure that this story remains intact. Factors, like the liberalization in the
government stance and the daring entrepreneurs of the Indian soils, have helped
the sectors achieve the highs like never before. And currently, the flavor of the
month seems to be the telecom industry. IIPM – AHMEDABAD SALES AND
DISTRIBUTION Page 6
History of Indian Telecommunications started in 1851 when the first operational

land lines were laid by the government near Calcutta (seat of British power). In
1883 telephone services were merged with the postal system. Indian Radio
Telegraph Company (IRT) was formed in 1923. After independence in 1947, all the
foreign telecommunication companies were nationalized to form the Posts,
Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of
Communications. Telecom sector was considered as a strategic service and the
government considered it best to bring under state's control. The first wind of
reforms in telecommunications sector began to flow in 1980s when the private
sector was allowed in telecommunications equipment manufacturing. In 1985,
Department of Telecommunications (DOT) was established. It was an exclusive
provider of domestic and long- distance service that would be its own regulator
(separate from the postal system). In 1986, two wholly government-owned
companies were created: „Videsh Sanchar Nigam Limited‟ (VSNL) for international
telecommunications & „Mahanagar Telephone Nigam Limited‟ (MTNL) for service in
metropolitan areas. In 1990s, telecommunications sector benefited from the general
opening up of the economy. National Telecom Policy (NTP) 1994 was the first
attempt to give a comprehensive roadmap for the Indian telecommunications
sector. In 1997, Telecom Regulatory Authority of India (TRAI) was created. TRAI was
formed to act as a regulator to facilitate the growth of the telecom sector. New
National Telecom Policy was adopted in 1999 and cellular services were also
launched in the same year. Indian telecom industry has the highest growth rate in
the world. A record 5.9 Million new mobile phone subscribers were drawn by the
Telecom sector in India in the month of August 2006, according to the COAI (Cellular
Operators Association of India). India, which is seeing over 8 million wireless
subscribers being added every month (8.62 million in May 2008), is the fastest
growing telephone market in the world. The government has reiterated the target of
500 million telecom subscribers and 20 million broadband connections by 2010.
The Indian telecom market has been displaying sustained high growth rates. Riding
on expectations of overall high economic growth and consequent rising income
levels, it offers an unprecedented opportunity for foreign investment. A combination
of factors is driving growth in the telecom market, promising rich returns on
investments. Example: TATA DOCOMO  It generated US $1.4 trillion in the year of
2009 when recession is everywhere.  India is the fourth largest telecom market in
Asia after China, Japan and South Korea.  Asia pacific region: expecting highest
growth in next 5years.  The Indian telecom network is the eighth largest in the
world and the second largest among emerging economies.  The Indian telecom
market size of over US $ 8 billion is expected to increase three fold by 2012. The
expansion of the telecom industry in India has been fuelled by a massive growth in
mobile phone users, which has reached a level of 10 million users in December
2002, an increase of nearly 100 per cent in 2002.  This exponential growth of
mobile telephony can be attributed to the introduction of digital cellular technology
and decrease in tariffs due to competitive pressures. For the first time in India, the
growth of cellular subscriber base has exceeded the fixed line subscriber base.
However, cellular penetration is still 1 per cent as compared to world average of
around 16 per cent. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 8
19% China 12% India 62% USA 7% Others Source: EIU (Economist Intelligence Unit)
Indian Telecom sector, like any other industrial sector in the country, has gone
through many phases of growth and diversification. Starting from telegraphic and
telephonic systems in the 19th century, the field of telephonic communication has
now expanded to make use of advanced technologies like GSM, CDMA, and WLL to
the great 3G Technology in mobile phones. Day by day, both the Public Players and
the Private Players are putting in their resources and efforts to improve the
telecommunication technology so as to give the maximum to their customers. 
The Indian telecom sector can be broadly classified into Fixed Line Telephony and
mobile telephony. The major players of the telecom sector are experiencing a fierce
competition in both the segments.  The major players like BSNL, MTNL, VSNL in
the fixed line and Airtel, Vodafone (Hutch), Idea, Tata, Reliance in the mobile
segment are coming up with new tariffs and discount schemes to gain the
competitive advantage. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 9
 The Public Players and the Private Players share the fixed line and the mobile
segments. Currently the Public Players have more than 60% of the market share. 
Internet/Broadband subscribers are 14.05m internet subscribers & 6.62m
broadband subscribers (June 2009)  Advanced Technologies – GSM, CDMA, WLL,
3G and upcoming 4G  Telecom sector Contribution of nearly 1% to India‟s GDP
GSM CDMA/WLL Fixed LINE •VODAFONE •BSNL •BSNL •AIRTEL •MTNL •MTNL •BSNL
•TATA INDICOM •BHARTI •IDEA •TATA DOCCOMO •TATA TELECOM •SPICE •VIRGIN
MOBILE •VODAFONE •AIRCELL •RELIANCE •RELIANCE •RELIANCE •VIDEOCON
•TATA DOCCOMO •TATA INDICOM •VIDEOCON  Total Tele-density stood at 39.86
per cent.  Wire line Tele-density came in at mere 3.22 % whereas wireless
subscription contributed 91.9 % of overall Tele-density.  Subscription in Urban
Areas was at 328.55 Million and Rural subscribers increased to 136.27 Million. 
According to the Vision 2020 document of the Planning Commission of India, the
country will witness continued urbanization. The urban population is expected to
rise from 28 per cent to 40 per cent of total population by 2020.  Future growth is
likely to be concentrated in and around 60 to 70 large cities having a population of
one million or more. This profile of concentrated urban population will IIPM –
AHMEDABAD SALES AND DISTRIBUTION Page 10
facilitate customized telecom offerings from operators. Both fixed line and mobile
segments serve the basic needs of local calls, long distance calls and the
international calls, with the provision of broadband services in the fixed line
segment and GPRS in the mobile arena. Traditional telephones have been replaced
by the codeless and the wireless instruments.  Every month 8-10 million
subscribers are adding in the market.  We have mobile 350 million subscribers,
next to China  Tata Teleservices – invest an additional US $ 1 billion in TATA
DoCoMo  BSNL – will put US $ 1.16 billion in WiMax Project  Vodafone Essar –
invest US $ 6 billion next 3 years to increase mobile subscriber base  Bharti Airtel
– US $ 126.5 million to strengthen Assam & Northeast Circles.  Mobile phone
providers have also come up with GPRS enabled multimedia messaging, Internet
surfing, and mobile commerce.  The much-awaited 3G mobile technology has
entered in the Indian telecom market.  The GSM, CDMA, WLL service providers are
all upgrading them to provide 3G mobile services.  Radio services have also been
incorporated in the mobile handsets, along with other applications like high storage
memory, multimedia applications, multimedia games, MP3, Players, video
generators, Camera's, etc. The value added services provided by the mobile service
operators contribute more than 10% of the total revenue.  The 2009 budget has
brought further relief to the customers with the reduction in the tariffs, both local
and long distance, and with slashing down the roaming rentals. This is likely to IIPM
– AHMEDABAD SALES AND DISTRIBUTION Page 11
lead to even more people going for cellular services and more and more use of the
value added services.  However, landline telephony is likely to remain popular,
too, in the foreseeable future. MTNL, the largest landline service provider, has
recently taken some bold initiatives to retain its market share and, if possible,
expand it. :  Gross Revenue (GR) stood at Rs 39,108.33 Crore and Adjusted Gross
Revenue (AGR) of Telecom Sector came in at Rs. 29,732.52 Crores.  GR has
registered a decline of 3.3% compared to previous quarter whereas AGR increased
slightly.  Average license fee as percentage of AGR was 8.43% in June-09 as
against 8.4% in previous quarter.  The less outgo in terms of licensing fees is a big
positive for Telecom industry and as such for telecom subscribers in general as this
will allow further scope of reduction in telecom tariffs. 464.82 325.79 225.01 153.42
104.22 76.53 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Source: TRAI IIPM –
India offers an unprecedented opportunity for telecom service operators,

infrastructure vendors, manufacturers and associated services companies. A host of
factors are contributing to enlarged opportunities for growth and investment in
telecom:  an expanding Indian economy with increased focus on the services
sector  population mix moving favourably towards a younger age profile 
urbanization with increasing incomes  Investors can look to capture the gains of
the Indian telecom boom and diversify their operations outside developed
economies that are marked by saturated telecom markets and lower GDP growth
rates.  Demand is driven by technological innovation and by growth in business
activity. The profitability of individual companies depends on efficient operations
and good marketing.  Large companies have big economies of scale in providing a
highly automated service to large numbers of customers, and have the financial
resources required building and maintaining a large network.  Smaller companies
can compete effectively only in small markets or by providing specialty services.
Porter has identified three types of generic strategies that help a firm to cope with
competitive forces and outperform other firms in the industry. These strategies are:-
1. Overall Cost leadership strategy 2. Differentiation strategy, and 3. Focus strategy
 The Overall Cost leadership strategy is aimed at gaining a competitive advantage
through lower costs.  The low cost leader in any market gains competitive
advantage from being able to many to produce at the lowest cost. Factories are
built and maintained; labor is recruited and trained to deliver the lowest possible
costs of production. 'cost advantage' is the focus.  Financial considerations and
budgetary constraints play a critical role here in shaping competitive price of the
products.  Besides the production effiency, brand and marketing skills plays a
important role in this kind of competition. For example:--Some organizations, such
as Toyota, are very good not only at producing high quality autos at a low price, but
have the brand and marketing skills to use a premium pricing policy.  A firm with
a differentiation strategy attempts to achieve a competitive advantage by creating
a product or service that is perceived as unique.  Differentiated goods and
services satisfy the needs of customers through a sustainable competitive
advantage. This allows companies to desensitize prices and focus on value that
generates a comparatively higher price and a better margin.  The benefits of
differentiation require producers to segment markets in order to target goods and
services at specific segments, generating a higher than average price.  For
example, British Airways differentiates its service by providing focus on IIPM –
exceptional good quality of service rather than focusing on low price.   The
differentiating organization will incur additional costs in creating their competitive
advantage. These costs must be offset by the increase in revenue generated by
sales.  There is also the chance that any differentiation could be copied by
competitors. Therefore there is always an incentive to innovated and continuously
improve.  The focus strategy is also known as a 'niche' strategy. Where an
organization can afford neither a wide scope cost neither leadership nor a wide
scope differentiation strategy, a niche strategy could be more suitable.  Here an
organization focuses effort and resources on a narrow, defined segment of a
market. Competitive advantage is generated specifically for the niche.  A niche
strategy is often used by smaller firms. A company could use either a cost focus or
a differentiation focus.--  With a cost focus a firm aims at being the lowest cost
producer in that niche or segment.  With a differentiation focus a firm creates
competitive advantage through differentiation within the niche or segment.  There
are potentially problems with the niche approach. Small, specialist niches could
disappear in the long term. Cost focus is unachievable with an industry depending
upon economies of scale e.g. telecommunications. The target for the 11th Plan
period (2007-12) is 600 million phone connections with an investment of US$ 73
billion. Apart from the basic telephone service, there is an enormous potential for
various value-added services. In fact, the real potential for telecom service growth
is still lying untapped. According to the CII Ernst & Young report titled 'India 2012:
Telecom growth continues', revenue from India's telecom services industry is
projected to reach US$ 54 billion in 2012, as against US$ 31 billion in 2008 IIPM –
Source: COAI The progression chart below depicts the major regulations and events
driving the extra ordinary growth of Telecom sector from year 1999 to 2008. In
order to capitalize this opportunity of meeting the consumer needs in highly
competitive market the operators have reduced the tariffs to attract consumers
with low purchasing power primarily in semi urban and rural India. In fact lucrative
offers like being paid for incoming calls have transformed the scenario completely.
Through these changing regulations and events, the Industry players are aiming to
achieve the following  Acquiring new subscribers by expanding in Semi Urban and
Rural India  Selling more services to existing subscribers The recent TRAI
recommendation permitting PC-to-phone calls where ISPs can offer cheaper STD
calls and even free local calls. This would result in further reduction of voice tariffs.
This would lead to increased focus on MVAS by mobile operators. Acquiring
customers have always been a great challenge for companies. Given the current
level of saturation in Metros and Urban Market and cut throat competition among
operators, increasing subscriber base in urban market would be all the more
challenging. Therefore a lot of operators with adequate support from Government
are eyeing the rural market for future growth. Big operators like Airtel have claimed
that soon mobile connections and recharge IIPM – AHMEDABAD SALES AND
DISTRIBUTION Page 16
vouchers etc will be available at all such places from where people buy match
boxes. This certainly explains the future penetration of these services in remotest of
villages. This is relatively easier as compared to acquiring new customers. Also
since now the new subscriptions will largely happen at the bottom of the pyramid
therefore the new subscriptions will further lower the average revenue per user. In
such a scenario mobile VAS sector is a potential long- term revenue stream as it will
be easier to sell more to the existing customers. Government also has supported
the growth of this sector by coming out with a number of initiatives for the low end
subscribers of rural India, and Universal Service Obligation (USO) fund was one such
initiatives. The USO fund was an initiative taken up by the government to increase
rural teledensity. In recent developments, BSNL and two private operators will erect
427 towers in remote areas offering over four lakh mobile connections. All the
towers are expected to be erected and commissioned by December 2008. Under
the second phase, DoT aims at erecting 11,000 towers throughout the country to
offer over 11 million mobile connections ADC was levied by Telecom Regulatory
Authority of India (TRAI) in 2003 to provide support for BSNL's rural telephone
obligation. Telecom Regulatory Authority of India (TRAI) has recently given orders
for the withdrawal of the ADC (Access Deficit Charge) and the subsequent passing
of the benefit to the consumers by the telecom operators.  Decrease in ARPU
despite increase in MOU: Though the subscriber base is growing at a rapid pace and
has positively impacted industry revenues, operator margins also have shrunk
owing to competition and lower “Average Revenue per User” (ARPU) as the major
growth is coming from bottom of the pyramid. As ARPU declines and voice gets
commoditized, the challenge is to develop alternative revenue streams and retain
customers by creating a basis for differentiation in high-churn markets. Need for
differentiation: There is a greater need among the telecom operators to
differentiate themselves from each other.  Number of Licensees: With increasing
number of licensees (98 UASL, and 37 cellular licenses) in the telecom space the
average numbers of operators in many circles have increased to 5-6 operators
offering more choices to the consumer. Thus the competition among the IIPM –
operators has increased tremendously. Therefore it is very important for them to

differentiate themselves from the others. Now that voice has got commoditized
these operators are using MVAS for their differentiation and marketing these
services heavily for creating awareness among the consumers.  Decreasing Call
Rates: In order to attract consumers with relatively low purchasing powers primarily
from Semi Urban and Rural India the operators have drastically reduced the call
rates making it affordable to even the lower segment of society. The tariff in India is
one of the lowest at Rs.1 per minute as compared to the tariff in developed nations
like USA and UK where the call rates are Rs.13 and Rs7-8 respectively.  3G
bidders who are non-operators: The arrival of new technologies will give rise to
greater competition as many non-operators are also bidding for the 3G licenses.
Department of Telecom  has planned to allow five 3G operators in each circle
depending on the availability of spectrum. Therefore there would be a greater need
to differentiate oneself in order to attract new customers and retain the existing
ones.  Saturation in Metro and Urban Market: The metro/urban areas offer high
level of penetration and have significant mobile subscribers. In such a highly
saturated market with the entry of MVNO‟s the competition will get fierce.
Therefore capitalizing on value added services will give operators opportunity to
increase ARPU by providing premium services.  Increasing need and demand from
consumers: In addition to the above supply side reasons the „pull effect‟ from
consumers asking for more than just basic telephony is also a key driver for MVAS
services. Today most of the consumers are seeking more from their communication
device apart from just mobility and desire to stay connected. As we have seen,
Telecommunication has moved beyond providing just basic voice calls. The mobile
phone has evolved from a mere communication device to an access mode with an
ability to tap a plethora of information and services available in the ecosystem. This
is the reason why it is now being referred to as the „fourth screen‟, after Cinema
halls, Television and PC. But the fundamental question that remains is how VAS is
defined. A clear MVAS definition is not only required to clear the air among the
MVAS providers but it will also have an impact on IIPM – AHMEDABAD SALES AND
the dynamics of the Value chain. A detailed definition of VAS might have an impact
on the licensing issues surrounding VAS. Let‟s look at different VAS definitions
floating in the market.  Value Added Service (VAS) in telecommunication industry
refers to non-core services, the core or basic services being standard voice calls and
fax transmission including bearer services. The value added services are
characterized as under:-  Not a form of core or basic service but adds value in
total service offering.  Stands alone in terms of profitability and also stimulates
incremental demand for core or basic services  Can sometimes be provided as
standalone.  Do not cannibalize core or basic service.  Can be add-on to core or
basic service and as such can be sold at premium price.  May provide operational
synergy with core or basic services. A value added service may demonstrate one or
more of these characteristics and not necessarily all of them. In some cases, the
value added service becomes so closely integrated with the basic offering that
neither the user nor the provider acknowledge or realize the difference. A classic
example is of P2P SMS. Some of the operators do not consider P2P SMS as part of
their VAS revenue. The Government of India issues licenses for the following Value
Added Services:-  Public mobile trunking service Voice mail service  Closed
users group domestic 64 kbps data network via INSAT satellites system  Videotex
service  GMPCS  Internet  Audiotex  Unified messaging service The next
wave of Telecom growth will come from the bottom of the pyramid. For majority of
the population in the rural segment, the mobile phone is the first communication
device. Rural IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 19
should not always be interpreted as poor and therefore some categories of MVAS
might apply directly to them. But whether the statement can be extended to MVAS
depends on some key factors. One is to clearly identify the need of the rural
segment, second is to communicate the services to them i.e. generate awareness
and thirdly, to provide an easy and cheap access mode to the rural consumers. All
these 3 are quite big challenges and therefore needs to be addressed adequately
for MVAS to take off in Rural India. Apart from the identification of rural consumer
needs and development of relevant content, communication of these services to the
rural population would be a bigger challenge. One way to do this is to communicate
through regional SMS for which a separate SMS gateway needs to be installed.
Literacy level of the geographical area will be another limitation. Therefore the
better communication option is Voice in regional languages. The challenge with
regional voice is not only investment but also blockage of the already scarce
spectrum. Marketing the content in rural market is going to be all the more
challenging. This would require right packaging and pricing of MVAS. Providing
cheap access mode to end consumer would be another key booster to rural MVAS.
Current voice MVAS charges are expensive from a rural consumer perspective
therefore that also would need to be addressed for e.g. the „sachet model‟ could
prove to be successful here. MVAS is going to address two main needs of rural
consumers- connectivity and entertainment mode. Connectivity will provide
Information VAS on Agriculture necessary for the farmer‟s livelihood e.g. mandi
rates, weather, etc. Health, finance, job opportunities etc are potential areas. Mobile
also has the potential to evolve as a key entertainment mode considering lack of
other entertainment options in rural areas. The industry has witnessed some type of
content being downloaded more in small towns of UP and Bihar rather than in
metros like Delhi and Mumbai. Therefore by leveraging on these two aspects MVAS
can be a success in rural area. GPRS Handsets IIPM – AHMEDABAD SALES AND
Currently the penetration of GPRS enabled handsets are close to 26% in India as
against 99% in South Korea and 76% in Japan. Of the total mobile subscribers in
India 65 million possess GPRS-enabled handsets. Of all those who possess GPRS
enabled handsets only 20-25% of them have got the GPRS activated and only about
15% use it. Even in case of developed nations like South Korea and Japan not more
than 50% of the subscribers owning GPRS enabled handsets use it. Population of
india 1130mn Mobile subscriber base 426Mn GPRS Enable 65 Mn. GPRS Activated
15-16 Mn. GPRS USERS 9Mn Source: TRAI REPORT,E Technology This clearly
indicates that the consumer today engage more in text based services than the web
based applications. Therefore for MVAS to grow to its full potential the handset
manufacturers will have to look at ways to manufacture GPRS enabled phones
which are affordable and user friendly. Moreover they would also need to increase
its awareness and educate the consumers on how to use GPRS. The market for 3G
in the country is expected to be huge with over 65 million wireless subscribers, who
use their handsets to access data services on the Web. These subscribers are
currently using mobile handsets which are internet-enabled and are potential
broadband IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 21
subscribers with the deployment of advanced wireless technologies such as 3G.

According to Indian Cellular Association (ICA) about 5% of mobile users already
have handsets that can work on 3G spectrum. In addition, out of all those
possessing the 3G enabled handsets the number of people who would use 3G
services would be determined by the quality of content available. Unlike most other
countries, we are looking at 3G services not only as premium services but also as an
extension of 2G. Since our broadband penetration is abysmal, 3G would provide a
much required boost to it. Given that mobile phones are much cheaper as
compared to PCs, the demand for broadband on mobile is expected to be much
greater. More importantly, 3G will solve problems more in rural India. Therefore the
shift towards 3G would depend on affordability of handsets along with the quality of
content available. One of the most frequent definitions that prevail in the telecom
circles for number portability is: "Number portability is a circuit-switch
telecommunications network feature that enables end users to retain their
telephone numbers when changing service providers, service types, and or
locations." Why mobile number portability (MNP)? When fully implemented
nationwide by both wire line and wireless providers, portability will remove one of
the most significant deterrents to changing service, providing unprecedented
convenience for consumers and encouraging unrestrained competition in the
telecommunications industry. In short, this is the best method to increase the
efficiency of the service provider by increasing the competition, thereby ensuring
better services in all respects. From the subscribers’ perspective, this is a
deceptively simple and very welcome change, because they can change wireless
service providers without worrying about notifying friends, family and business
contacts that their wireless number is changing. In addition, being able to ‘port’ a
number from one provider to another eliminates the hassle and expenses of
changing business cards, stationery, invoices and other materials for businesses.
From the wireless carrier’s perspective the change is anything, but simple. Virtually
all of wireless carriers’ systems are affected. Especially any system that relies on
mobile identity numbers (MINs) or mobile directory numbers (MDNs) will be
affected. Examples of critical systems and processes that would be affected are:
billing, customer service, order activation, call delivery, roamer registration and
support, short messages service center, directory assistance, caller ID, calling name
presentation, switches, maintenance and CSC systems, home location registers
(HLRs), and visiting location registers (VLRs). IIPM – AHMEDABAD SALES AND
: One of the most common barriers in MNP implementation, within any country, has
been the implementation cost. Service Providers have been constantly bargaining
for time, based on the cost factor, from their respective governments. Referring to
the recent example of the US, where each of the large carriers would need to spend
$50–60 million to institute the service and an equivalent sum to maintain it. The
FCC on this plea gave wireless carriers in the US another year, i.e., till November
2003, for resolving implementation issues. The experience of developed countries
exhibits that local number portability for fixed wireline was introduced within two to
three years of introduction of competition to incumbent state telcos. The cost
estimate for the implementation of WNP in developed nations like the US can be
very helpful for the other countries, who wish to think on the lines of number
portability. To add on increased marketing costs are to be realized as the carriers
look to lock up their current base before number portability is implemented, and
then aggressively pursue the customers of other carriers thereafter. : Every
subscriber in a race to retain its customer would like to offer its customers best
services so as to save them from porting. It‟s like a blessing in disguise for the
customers, as they would get better service irrespective of the carrier, albeit with
the same number. Infrastructure Upgrade: To support WNP, a company has to
upgrade both its hardware and software capabilities, which will amount to some
cost. Softwares need to be upgraded to provide proper routing of calls. The carriers
need to upgrade their networks to handle portability requests. The provider, which
has its portability compatible would be expected to attract maximum customers
and will emerge the winner. Cost Recovery and Bill Reconciliation/Query Processing:
When a customer plans to shift, the old service provider (OSP) has to perform a
query to identify if there are any billing amounts pending, which they need to
recover before the subscriber moves to the new service provider (NSP). Globally,
Singapore was the first country to implement MNP in 1997, followed by Hong Kong
in 1999 and Australia in 2001. Off late, many countries have adopted the MNP
model to prevent IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 23
market doldrums and putting pressure on service providers to furnish more services
at a competitive price level. However, it has not been able to produce any
significant results in these markets. While it has worked in markets like Hong Kong
and Australia, it failed to bear fruit in the UK, France, Germany, Pakistan, Ireland,
Malta, among others. MNP worked in Hong Kong due to the speedy porting process
and the availability of already implemented solution (for fixed- line services). In
Australia, the regulator effectively promoted number portability and was able to
maintain the maximum porting time of just under three hours. Furthermore, in
Finland, where initially the implementation was viewed as a success due to dearth
of minimal contract periods and high migration incentives, operators failed to
sustain the momentum. The failure in most markets where MNP was implemented is
attributed to factors like half- hearted implementation, issues related to contract,
lack of consumer awareness, overboard of paperwork, technical difficulties and poor
customer service. The WiMAX vs. 3G cellular showdown is poised to become one of
the next great market battles in the telecom industry. Fortunes will be made and
lost in this battle, and the user experience of the Internet will be irreversibly
changed in the process. 3G scores for voice; Wimax may lead to increased
broadband penetration. With the Department of Telecommunications gearing up for
simultaneous release of 3G and WiMax spectrum, analysts expect the two emerging
wireless technologies to battle it out for supremacy. WiMax or Worldwide
Interoperability for Microwave Access is a telecom technology that enables wireless
transmission of data. The technology is available as IEEE 802.16D (fixed) and IEEE
802.16E (mobile). It offers downloads of up to 70 Mbps as compared to the 15 Mbps
that 3G provides. Mobile WiMax offers download speeds of around 20 Mbps. In India,
companies like Tata Communications Internet Services, Intel, Bharat Sanchar Nigam
Ltd, Bharti Airtel and Reliance Communications are the proponents of WiMax. Most
of the companies have had beta- runs of the technology. According to a top official
with a service provider, telecom service providers are in various stages of WiMax
implementation. Some companies have commercially launched fixed WiMax
services in certain cities. While opponents of WiMax say currently it cannot be used
for mobile applications, the first mobile WiMax network was introduced in Italy this
July. Another reason for the industry pinning its hopes on WiMax is its ability to
increase the broadband penetration. WiMax makes huge sense for companies as it
enables them to provide cheaper mobile internet and broadband IIPM –
services, in turn, increasing the internet penetration. However, this will adversely
impact services like GPRS and e-mail on mobile as users might move over to
WiMax-enabled devices for data, even though they might stick with 3G or 2G
spectrum for voice. The Telecom Regulatory Authority of India has set a target of 20
million broadband connections by 2010 from the current 4.3 million. The industry
expects WiMax to bridge the gap. According to a consultant of Ernst & Young
service providers would mainly use the technology for gaining traction with the
customers, as providing the last mile over the conventional digital subscriber lines
would be time-consuming and costly. Operators will have to use 3G spectrum to
revive voice services that are being choked by a dearth of 2G spectrum, Patel
added. The WiMax customer premise equipment (CPE) is priced at Rs 5,000-10,000,
while the CPEs for 3G would be cost Rs 10,000 and above. The industry will know
the winner in the next six months, when the spectrum allocation is complete. Mobile
Virtual Network Operator (MVNO) is a GSM phenomenon where an operator or
company which does not own a licensed spectrum and generally with out own
networking infrastructure. Instead MVNOs resell wireless services under their brand
name, using regular telecom operator's network with which they have a business
arrangements. Usually they they buy minutes of use from the licensed telecom
operator and then resell minutes of usage to their customers of MVNO. Currently
MVNOs are emerging in fast pace in European markets and beginning in USA also.
Slowly MVNO phenomenon catching up in Asia and other parts of the world also. An
example for MVNO is Virgin Mobile. Virgin Mobile plc is a mobile phone service
provider operating in the UK, Australia and Canada, and the US. The company was
the world's first IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 25
Mobile Virtual Network Operator, launched in the UK in 1999. It does not maintain
its own network, and instead has contracts to use the existing network(s) of other
providers. In the UK, Virgin Mobile uses the T-Mobile network. In the US, the Sprint
network is the carrier. In Australia, Virgin Mobile operates on the Optus network. In
Canada, it uses the Bell Mobility network. These networks use different technology
(GSM in the UK and Australia and CDMA in the US and Canada). Usually MVNO's do
not have their own infrastructure, some providers are actually deploying their own
Mobile Switching Centers (MSC) and even Service Control Points (SCP) in some
cases. Some MVNO's deploy their own mobile Intelligent Network (IN) infrastructure
in order to facilitate the means to offer value-added services. In this way, MNVO's
can treat incumbent infrastructure such as radio equipment as a commodity, while
the MVNO offers its own advanced and differentiated services based on exploitation
of their own IN infrastructure. The goal of offering value-added services is to
differentiate versus the incumbent mobile operator, allowing for customer
acquisition and preventing the MVNO from needing to compete on the basis of price
alone. MVNO's have full control over the SIM card, branding, marketing, billing, and
customer care operations. While sometimes offering operational support systems
(OSS) and business support systems (BSS) to support the MVNO, the incumbent
mobile operators most keep their own OSS/BSS processes and procedures separate
and distinct from those of the MVNO. In the future a cell phone user may be able to
subscribe to a network operator plus multiple MVNOs for specific data services over
the same phone. One MVNO could provide sports news, another weather and traffic
and still another could provide instant messaging capabilities. In this way, each
MVNO and the network operator could focus on their own niche markets and form
customized detailed services that would expand their customer reach and brand. So
far MVNOs have not been regulated in any country. The ITU has received several
requests to study the issue, specifically to provide input on whether government
intervention is necessary to allow MVNOs to offer services and applications at a
lower price to consumers. This would IIPM – AHMEDABAD SALES AND DISTRIBUTION
Page 26
help to ensure a more efficient use of the spectrum but some incumbent providers
argue that the market is already competitive and intervention is not necessary. IPTV
(Internet Protocol Television) delivers television programming to households via a
broadband connection using Internet protocols. It requires a subscription and IPTV
set-top box, and offers key advantages over existing TV cable and satellite
technologies. IPTV is typically bundled with other services like Video on Demand
(VOD), voice over IP (VOIP) or digital phone, and Web access, collectively referred to
as Triple Play. Because IPTV arrives over telephone lines, telephone companies are
in a prime position to offer IPTV services initially, but it is expected that other
carriers will offer the technology in the future. IPTV promises more efficient
streaming than present technologies, and therefore theoretically reduced prices to
operators and subscribers alike. However, it also adds many advantages that may
play into market pricing. One of the advantages of IPTV is the ability for digital video
recorders (DVRs) to record multiple broadcasts at once. According to Alcatel, one
leading provider, it will also be easier to find favorite programs by using "custom
view guides." IPTV even allows for picture-in-picture viewing without the need for
multiple tuners. You can watch one show, while using picture-in-picture to channel
surf! IPTV viewers will have full control over functionality such as rewind, fast-
forward, pause, and so on. Using a cell phone or PDA, a subscriber might even
utilize remote programming for IPTV. For example, if a dinner function runs longer
than expected, you don't have to miss your favorite program. Just call home and
remotely set the IPTV box to record it. However, the real advantage of IPTV is that it
uses Internet protocols to provide two-way communication for interactive television.
One application might be in game shows in which the studio audience is asked to
participate by helping a contestant choose between answers. IPTV opens the door
to real-time participation from people watching at home. Another application would
be the ability to turn on multiple angles of an event, such as a touchdown, and
watch it from dual angles simultaneously using picture-in-picture viewing. One can
also receive Web service notifications while watching IPTV for things such as
incoming email and instant messages. If you IPTV is packaged with digital phone,
Caller ID might pop up on screen as your telephone rings. IPTV is already growing in
the international market, with providers in many countries including Japan, Hong
Kong, Italy, France, Spain, Ireland, and the United Kingdom. In the United States
SBC, reportedly purchased a software delivery system for IPTV services from
Microsoft in 2004 IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 27
for $400 million dollars. Alcatel is working with Microsoft to develop a "global
solution" for IPTV services, and Verizon has also made a deal with Microsoft for IPTV
software. Bharti Airtel is one of Asia‟s leading providers of telecommunication
services with presence in all the 22 licensed jurisdictions (also known as Telecom
Circles) in India, and in Srilanka. They served an aggregate of 105,195,762
customers as of June 30, 2009; of whom 102,367,881 subscribe to their GSM
services and 2,827,881 use Telemedia Services either for voice and/or broadband
access delivered through DSL.  They also offer an integrated suite of telecom
solutions to their enterprise customers, in addition to providing long distance
connectivity both nationally and internationally. They have launched DTH and IPTV
Services also. All these services are rendered under a unified brand “Airtel”.  The
company also deploys, owns and manages passive infrastructure pertaining to
telecom operations under its subsidiary Bharti Infratel Limited. Bharti Infratel owns
42% of Indus Towers Limited.  Bharti Infratel and Indus Towers are the two top
providers of passive infrastructure services in India.  Telecom giant Bharti Airtel is
the flagship company of Bharti Enterprises.  Airtel comes to you from Bharti Airtel
Limited, India‟s largest integrated and the first private telecom services provider
with a footprint in all the 23 telecom circles.  Bharti Airtel is structured into three
strategic business units - Mobile services, Telemedia services and Enterprise
services.  The mobile business provides mobile & fixed wireless services using
GSM technology.  Airtel was voted as the „Best Cellular Service‟ in the country for
four consecutive years. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 28
The Stock Exchange, Mumbai (BSE) The National Stock Exchange of India Type
Limited (NSE) Founded 1985 Headquarters New Delhi, India Key people Sunil Mittal
Industry Telecom Products Mobile and Fixed-Line Telecommunication operator,
Airtel DTH Revenue $6 Billion Slogan Express Yourself Website www.airtel.in
Shahrukh Khan, Karina Kapoor,Sachin Tendulkar,A.R.Rahman, Brand Ambassador
Saifali Khan, Madhvan,Vidhya Balan,Anandi (Avika guar) Balika vadhu. Shares in
Issue: 1,898,373,280 as at June 30, 2009 Company Vision: By 2010 Airtel will be the
most admired brand in India.  Loved by more customers.  Targeted by top
talent.  Benchmarked by more businesses. Leading Competitors- VODAFONE,
IDEA, BSNL, RELIANCE, TATA, AIRCEL IIPM – AHMEDABAD SALES AND DISTRIBUTION
Page 29
Vodafone is a British multinational mobile network operator headquartered in

Newbury, United Kingdom. Vodafone is the world's largest mobile
telecommunication network company, based on revenue, and has a market value of
about £71.2 billion (November 2009). Vodafone is the world's largest mobile
telecommunications community, employing over 65,000 staff and with over 130
million customers. The business operates in 26 countries worldwide. Vodafone is a
public limited company with listings on the London and New York stock exchanges.
Global recognition of the Vodafone brand is growing as the company rolls out its
identity into new markets. However, it retains local names and imagery in markets
where this is essential to maintaining the trust of customers. To help promote its
image worldwide, Vodafone uses leading sports stars from high profile global sports,
including David Beckham and Michael Schumacher. This Case Study concentrates
on how such promotion can help to keep a leading brand at the forefront of public
awareness For that reason our team decided to work on few steps which were
basically to get the feed back from the market as fallow. Basically our objectives
were to find out the behaviors of the consumers or the customers towards the
product available in the market that either consumer or the customer is after the 
Quality of the product.  After the price of the product.  After the good
presentation of the product which includes the servicing.  If the consumer is after
or comes for particular product and why, either because of effective advertisement
on the media like television or news papers or other means of advertisement. IIPM –
LOGO: Founded 1983 as Racal Telecom, independent 1991 Headquarters Newbury,

England, UK Arun Sarin, CEO Sir John Bond, Chairman Key people John Buchanan,
Deputy Chairman Andy Halford, CFO Industry Mobile telecommunications Products
Mobile networks, Telecom services, Etc. Revenue ▲ £31.104 billion GBP (2007) Net
income ▼ £-1.564 billion GBP (2007) Slogan Happy to help Website
www.vodafone.com Main Attractions of advertisement Dog, Zoo zoos IIPM –
Idea Cellular is a wireless telephony company operating in all the 22 telecom circles
in India. It initially started in 1995 as a joint venture among the Tatas, Aditya Birla
Group and AT&T by merging "'Wings Cellular'" operating in Madhya Pradesh, Uttar
Pradesh (UP) West, Rajasthan and Tata Cellular as well as Birla AT&T
Communications. Initially having a very limited footprint in the GSM arena, the
acquisition of Escotel in 2004 gave Idea a truly pan-India presence covering
Maharashtra, Goa, Gujarat, Andhra Pradesh, Madhya Pradesh, Chhattisgarh, Uttar
Pradesh (East and West), Haryana, Kerala, Rajasthan, Delhi (inclusive of NCR) and
West Bengal. The company has its retail outlets under the "Idea n' U" banner. The
company has also been the first to offer flexible tariff plans for prepaid customers. It
also offers GPRS services in urban areas. Idea Cellular won the GSM Association
Award for "Best Billing and Customer Care Solution" for 2 consecutive years. Type
Spice: Public, Listed on BSE IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 32
Idea: Subsidiary Spice: 1997 Founded Idea: 1995 Spice: Mohali, India Headquarters
Idea: Indore, Delhi, Pune, India Spice: Dilip Modi Key people Idea: Chairman: Kumar
Mangalam Birla ; MD: Sanjeev Aga Industry Telecom Products Mobile operator
http://www.moneycontrol.com/india/news/business/idea-cellulars- Revenue
revenue479-/394751 Spice: Spice Hai toh life hai (If there's Spice then there's Life.)
Slogan Idea: An !dea can change your life. Spice: Spice Telecom ; Website Idea:
www.ideacellular.com Brand Ambassador Abhishek Bachan RELIANCE OVERVIEW
Reliance Communications, formerly known as Reliance Info comm, along with

Reliance Telecom and Flag Telecom, is part of Reliance Communications Ventures.
It is an Indian telecommunications company. According to National Stock Exchange
data, Anil Dhirubhai Ambani controls 66.77 per cent of the company, which
accounts for more than 1.36 billion shares.[3] It is the flagship company of the
Reliance-Anil Dhirubhai Ambani Group, comprising of power (Reliance Energy),
financial services (Reliance Capital) and telecom initiatives of the Reliance ADAG. It
uses CDMA2000 1x technology for its existing CDMA mobile services, and GSM-
900/GSM-1800 technology for its existing/newly launched GSM services. RelCom is
also into Wire line Business throughout India and has the largest optical fiber
communication (OFC) backbone architecture [roughly 110,000 km] in the country.
Reliance Communications has launched its Direct To Home (DTH) TV also, known as
"Big TV". RelCom have presence across all B2C communications channel in one of
the fastest growing markets in the world. BID FOR HUTCH: In 2007, Reliance
Communications had bid for 67% of Hutch but lost to Vodafone, which had been led
by its CEO at the time Mr.PIYUSH.P. ACQUISITIONS In July 2007, the company
announced it is buying US-based managed Ethernet and application delivery
services company Yipes Enterprise Services for a cash amount of Rs. 1200 crore
rupees (equivalent of USD 300 million). The deal was announc overseas acquisition,
the Reliance group has amalgamated the United States-based Flag Telecom for $
211 million [roughly Rs 950 crore (Rs 9.50 billion)]. Type Public (BSE: RCOM) IIPM –
Founded 2004 Headquarters Navi Mumbai, Maharashtra, India Key people Anil
Ambani (Chairman) & (MD) Vice-Chairman Reliance-ADA Group Industry
Telecommunications Products Wireless Telephone Internet Television Revenue US$
4.26 billion (2008) Net income US$ 1.35 billion (2008) Total assets US$ 19.31 billion
(2008) Employees 33,000 Brand ambassador Hritik Roshan TATA: AN OVERVIEW
Tata Comm. is India's leading international telecom service provider. It is today part
of the Tata Group. It started as a successor to the erstwhile Overseas
Communication Services, and went on to become the premier provider of
international voice and data services. Tata Teleservices Limited (TTSL) is a part of
the Tata Group of companies, an Indian conglomerate. It operates under the brand
name Tata Indicom in various telecom circles of India. In Nov 2008, Japanese
telecom giant NTT Docomo picked up a 26 per cent equity stake in Tata
Teleservices for about Rs 13,070 crore ($2.7 billion) or an enterprise value of Rs
50,269 crore ($10.38 billion).[1] In Feb 2008, TTSL announced that it would provide
CDMA mobile services targeted towards the youth, in association with the Virgin
Group on a Franchisee model basis. Tata Teleservices Provides mobile services
under 3 Brand names:  Tata Indicom  Tata DoCoMo  Virgin Mobile Tata
Teleservices Limited (TTSL) IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 36
Type Private Founded 2000 Headquarters Navi Mumbai, India Mr. Ratan N. Tata
(Chairman) Key people Anil Kumar Sardana (MD) Industry Telecommunications
Wireless Telephone Products Internet Television Employees 350,000 Parent Tata
Group IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 37
BSNL OVERVIEW Bharat Sanchar Nigam Limited (known as BSNL) is a public sector
telecommunication company in India. It is India's largest telecommunication
company with, 24% market share as on March 31, 2008. Its headquarters are at
Bharat Sanchar Bhawan, Harish Chandra Mathur Lane, Janpath, New Delhi. It has
the status of Mini Ratna, a status assigned to reputed public sector companies in
India. BSNL is India's oldest and largest Communication Service Provider (CSP).
Currently has a customer base of 90 million as of June 2008. It has footprints
throughout India except for the metropolitan cities of Mumbai and New Delhi which
are managed by MTNL. As mon March 31, 2008 BSNL commanded a customer base
of 31.55 million Wire line, 4.58 million CDMA- WLL and 54.21 million GSM Mobile
subscribers. BSNL's earnings for the Financial Year ending March 31, 2007 stood at
INR 397.15b (US$ 9.67 b) with net profit of INR 78.06b (US$ 1.90 billion). BSNL has
an estimated market value of $ 100 Billion. The company is planning an IPO within 6
months to offload 10% to public in the Rs 300-400 range valuing the company at
over $100 billion. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 38
Founded 19th century, incorporated 2000 Headquarters Bharat Sanchar Bhawan,

Harish Chandra Mathur Lane, Janpath, New Delhi Kuldeep Goyal Key people (CMD)
Industry Telecommunications Wireless Telephone Products Internet Television
Revenue US$ 9.67 billion (2007) Owner(s) The Government of India IIPM –
Type Joint Venture Industry Telecommunications Founded 2009 Headquarters

Gurgaon, India Stein-Erik Vellan (CEO) Key people Sanjay Chandra (Chairman)
Wireless Products Telephone Internet Employees 2,000 Telenor (67.25%) Parent
Unitech Group (32.75%) Website Uninor.in IIPM – AHMEDABAD SALES AND
Type Public (BSE: 511389) Industry Conglomerate Founded 1979 Founder(s) Nandlal
Madhavlal Dhoot Headquarters Aurangabad, Maharashtra, India Venugopal Dhoot
(Chairman) Key people K. R. Kim (CEO) Consumer Electronics Home Appliances
Components Office Automation Mobile phones Products Wireless Internet Petroleum
Satellite television Power Revenue ▲ US$4 billion (2010) Net income ▲ US$276
million (2010) Employees 5,000 (2010) Website Videocon.com IIPM – AHMEDABAD
SALES AND DISTRIBUTION Page 41
FOUR P‟S ARE:- 1) PRODUCT 2) PRICE 3) PLACE 4) PROMOTION  Product- Sim

cards, Plug to surf devices, Handsets for CDMA  Price- Offers, Schemes 
Promotion: Print media, Electronic media, Outdoor media, Sales promotion  Place:
Every retail shop, Offices, Home, Institutions The study shows it clearly that
Vodafone have a huge market share due to its better service and good network. But
the thing that differentiate it from the competitors that it provide the more and
more number of the value added services.  Latest advertisement of Vodafone:
Zoo zoos” is very attracting and it increases the  sales of the Vodafone , the
marketing manager of Vodafone reveals that statement.  Study clearly shows that
Vodafone is a has a brand image in the mind of public due to their willingness to
provide the best service. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 42
Vodafone focused more and more on the value added service and marketing.
Recently Vodafone gave its whole concentration by a series of advertisements of
ZOOZOO series. This move of Vodafone proved very successful to attract the more
and more number of the customers .  Airtel basically uses two appeal to connect
to the users  Emotional  Humorous  attracting  In 2002, Airtel signed on
music composer A.R.Rehman and changed its tune to "live every moment": rah
man’s signature tune for Airtel is the most downloaded ringbone in India. But that
was just part of the ongoing communication.  The following year Airtel adopted
the "express yourself" positioning, which is also its current tagline.  Youth icons
like Shahrukh khan and Sachin Tendulakar were brought in as brand ambassadors
to attract youngsters  Add campaign with an eye on the rural market IIPM –
The whole advertisement and promotion is designed by taking urban youth in focus
but there are large no of youths in rural sector as well and they can be their future
consumers. Taking big stars as brand ambassador is good decision. But
organizations can further use recent bronze medallist Boxer Vijendra kumar as
there endorsement. Vijendra is having good looking personality and he belongs to
rural area so in this way rural people will start associating themselves with that
brand “SABKA AIRTEL”. Airtel can also use BALIKA VADHU fame “ANANDI” (Avika
gaur) targeting rural women and rural youth Youth to Drive Growth:--Airtel should
more concentrate towards the youth. As the increasing market share of rivalry
brand Virgin, clearly shows that youth can play a major role in this competition.
Attracting the Youth:-- To attract more youth community Airtel can go for more and
more plans for youth under the same brand “SABKA AIRTEL”. In this plan Airtel can
give SMS pack (it‟s for SMS generation), cheaper call rates schemes only for school
and college going students. In this plan Airtel should go for the heavy youth promo
with fast dance track and cute guys and gals.  Mobile service providers should
provide the facility of portability of number.  Mobile service providers should
provide the web access at cheaper cost.  Telecom market is quite competitive so
mobile service providers should provide the services at cheaper cost.  Mobile
service providers should focus on providing better network coverage Especially
BSNL.  Mobile service providers should provide various schemes for their existing
customers.  BSNL have to make more attractive ads.  Add some other
promotional offers.  Makes some sense full ads for Tata Doccomo  For making
interactive add to connect with customers.  Consolidation in Industry. IIPM –
Telecom players are looking to tap into global funds to finance their aggressive
growth plans. This will result in partnerships joint ventures and equity sellout to
foreign players. New license holders will continue to look to sell their stake at a
premium. New policies will seek to curb this license arbitrage. Smaller players with
operations in only a few circles will find in difficult to compete with the nationwide
players. The industry may see consolidation with these smaller operators being
acquired by the larger ones. “Unbundling of the corporation” will continue as
companies will seek f or economies of scale and lower startup cost by infrastructure
sharing. 3G and WiMax license will spur M&A and partnership activity.  Idea
Cellular’s Acquisition of Spice Telecom There were three transactions as part of this
acquisition; acquisition of shares of Spice, a non- compete fee and a capital infusion
of about Rs 7300 crores received from TM International Bhd (TMI). With respect to
shares, Idea acquired 40.8% stake of Spice Communications at Rs 77.30 a share for
Rs 2,716 crore. There was a share swap in which Spice shareholders got 49 Idea
shares for every 100 Spice shares held. An additional Rs 544 crore was paid to the
promoters of Spice group as 'non-compete fee'. The deal was strategically
important for Idea Cellular as it was looking forward to transfer itself into a pan-
India telecom service provider. The spectrum auctioned by GoI is a scarce resource
nowadays and cost a premium. Also there‟s restriction by TRAI with respect to
number of operators per telecom circle. So it makes sense to acquire a small
telecom operator. Small players like Spice Telecom operating at only a few
circles(Karnataka and Punjab) will find difficult to compete with the nationwide
players in the long run. So it was a win-win deal for both companies. 
VODAFONE’S ENTRY INTO INDIA Vodafone paid a discounted price of $10.9 billion in
cash for acquiring the 52% stake held by Hutchison Telecom International (HTIL) in
Indian mobile firm Hutch-Essar. HTIL declared a special dividend of 6.75 HK dollars
per share following the completion of the formalities. The final price was a reduction
of $180 million from the originally agreed price of $11.08 billion. Vodafone is the
largest mobile telecommunications network company in the world. The deal gave
them access to one of the fastest growing mobile markets in the world.  Telenor-
Unitech Deal IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 45
Norwegian Telecom major Telenor is in the process of acquiring controlling stake of

67.25% in Unitech wireless via equity infusion. The enterprise valuation of Unitech
Wirelsss is about Rs 10,900 crore. As per the deal, Telenor will infuse cash in four
stages and at each phase, by increasing its stake in Unitech Wireless. In the first
phase, they got 33.5% ownership in Unitech Wireless. In the second phase they
completed the acquisition for a 49 per cent stake in Unitech Wireless by paying Rs
1,130 crore for a further 15.5 per cent stake in the company. The acquisition is
expected to be completed by end of this quarter.  TTSL – DoCoMo Deal. Japanese
carrier NTT DoCoMo acquired 26 per cent stake in Tata Teleservices (TTSL). The
Tata DoCoMo-branded GSM service has already started in Southern India and
gradually will be expanded nationwide. DoCoMo‟s international expansion plans
have not always proven successful, with the firm historically preferring to take small
stakes in firms and then try to influence their strategy. It has been less prepared to
take majority stakes and impose its will, as other leading carriers have chosen to
do. The difficulties faced by the firm in spreading its domestically successful i-mode
service internationally typify the obstacles it has faced overseas. With Tata,
DoCoMo had said “participating proactively in TTSL‟s management by providing
human resources and technical assistance to help realise improved network quality
and the possible introduction of leading- edge, value-added services.”  Bharti-MTN
deal (in talks). Recently Bharti Airtel has re-started its audacious merger bid with
MTN that could create a $61- billion transnational telecom goliath with combined
revenues of $20 billion and over 200 million subscribers across Africa, Asia and
Middle East, will be among the world's 10 biggest telecom companies. The deal
could be win-win for both parties. Bharti is under pressure in its home country due
to severe competition and looking forward to spread its risk across geographies.
Meanwhile, the African telecom operator is also encountering some of the problems
that its counterpart in India is confronting. MTN may have higher ARPUs (in the
range of $12-20), but they are also falling fast.  Strategic benefits to both players
Synergies would be sought from a number of areas, including procurement,
operational best practice, R&D and international network sharing. The two
companies will not overlap in each other‟s business operations: Bharti Airtel will be
the primary vehicle for Bharti and MTN to pursue further expansion in Africa and the
Middle East. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 46
With both Bharti and MTN operating in high-growth geographies, it would be

imperative for them to incrementally expand into untapped areas. Collaborating
with each other would seem the logical way ahead. The most important, and visible
fallout of the deal, if it materializes, will be the advantage of economies of scale for
the new entity. In recent times, companies are more amenable to mergers and
acquisitions. Of late, companies are finding it tough to obtain easy funds for
expansion, which calls for more collaboration if corporate intend to expand. Bharti
would not be involved only in MTN‟s day-to-day activities, but it would also have a
say while making bigger strategic decisions, such as those pertaining to
investments in other geographies or sourcing of equipment. The high subscriber
base and financial muscle will give Bharti-MTN the desired edge while dealing with
vendors. Once the merger happens, the economies of scale of the complete outfit
(Bharti-MTN) would be taken into account. For instance, even if the company places
an order worth just $1 million, the vendor would not hesitate to lap it up, as there
could be orders worth a billion dollars in other projects. This would offset whatever
concerns there may be with respect to the small population size in countries where
MTN operates.  Takeaways for Bharti The biggest takeaway for Bharti is in the
form of access to new geographies with high growth potential. Without a partner,
Bharti would have to embark on a Greenfield project, which would be time-
consuming and capital intensive. Besides, without local knowledge (with respect to
the market and government regulations), Bharti could be on a sticky wicket. The
Indian telco does not have the expertise in running multi-country operations. MTN
has operations in 21 countries across Africa and the Middle East and is one of the
largest emerging market mobile operators globally. While Africa has one-third of the
world‟s population, its telephonic density is just 30 per cent. This offers plenty of
room for expansion. The fact that 95 percent of Africa is prepaid, which ensures all
cash operations, fits perfectly into Bharti‟s plans. The options for Bharti were to go
either the Greenfield way or with an experienced partner. MTN‟s strong foothold in
some growing markets such as South Africa, Botswana, Iran and Nigeria ensures
that when the growth in India starts to slow down, Bharti would be ready to take off
in other geographies. Besides, there is a lot of potential in Africa as three-fourths of
the continent is still untapped. IIPM – AHMEDABAD SALES AND DISTRIBUTION Page
47
Africa is quite like rural India and from that perspective; Bharti could learn how to
roll out infrastructure in rural India. In addition, MTN is strong in the value-added
services (VAS) and mobile commerce space. So, as and when mobile commerce
picks up in India (after RBI‟s approval), Bharti would be able to tap this market
through MTN‟s expertise. MTN has a vast experience in running multi-country
operations and overcoming regulatory hurdles. By working with MTN, life for Bharti
will get a lot of easier.  One of the major challenges would be the integration of
the company on the ground. It is tough for intercontinental companies to merge
seamlessly because of cultural divide.  Alcatel-Lucent for instance is still trying to
adjust to cultural divide. Although Nokia-Siemens has bridged this divide faster, it
was because both the companies were European.  The Black Empowerment Act
could pose a challenge, as it is meant to safeguard the rights of the black
population. As per this Act, blacks are ensured a minimum shareholding
management seats and voting rights.  The country’s strong trade union, Congress
of South African Trade Unions (COSATU), which has influence over President Jacob
Zuma, had almost wrecked the Vodafone-Vodacom deal.  The Indian telecom
industry has always allured foreign investors. In fact, the cumulative FDI inflow,
from August 1991 to March 2007, in the telecommunication sector amounted to
US$ 7,513.22 million. This makes telecommunication the third-largest sector to
attract FDI in India in the post liberalization era. The investment was majorly in
handset manufacturing and telecom service provider. IIPM – AHMEDABAD SALES
With stable macroeconomic impetus and numerous other advantages, India has the
potential to become the electronics manufacturing hub of the world. Excited by the
record-breaking industry growth, investors have outlaid US$ 1.5 billion in the past
two and a half years in the Indian telecom sector. India will receive an additional
US$ 2 billion investment in the next one year. With the world now recognizing
India‟s manufacturing potential, the Indian telecom handset manufacturing market
is likely touch US$ 7 billion by 2010. An example is Nokia. The company has already
produced 25 million handsets in its Chennai facility. It will pump in an additional
US$ 150 million to this set up. The company exports around 20 per cent of its
volume to South- east Asia, the Middle East and Africa. Local manufacturing allows
companies to avoid 4 per cent countervailing duties on imported handsets, thereby
further reducing the cost. Managed service is another segment that is attracting
telecom companies. On account of the rapidly growing subscriber base, service
providers find it difficult to manage their infrastructure and network. In such cases,
they completely or partially outsource their infrastructure or network management
operations. Hutchitson Essar (now Vodafone) and Nokia Deal: A case in point is
Nokia which is managing the network for Hutchison Essar Limited in 19 circles in
India. Having successfully capitalized on the business potential of managed service,
Nokia is already earning 30 per cent of its total revenue from this segment. The
company has also shifted its first Global Network Solutions Centre (GNSC) to India.
The company manages 39 cellular networks in 30 countries. Its Indian center will
act as a global hub for other Nokia operation centers. Advantages of Managed
Service • Smooth management of technological complexity • Opportunity to
strengthen core competency • Reduction in financial outlay • Touching base with
new processes and technologies Another dimension of managed service is telecom,
communication and network management solutions for enterprises. Bharti
Televentures and IBM, together offer telecom and IT solutions in India. The solutions
and services portfolio comprises of the remote monitoring of servers, security
operations and network operations, providing data center services (including server
hosting, server management and storage management), IT help desk services and
end-to-end connectivity and fulfilling all telecom and communication requirements.
This information technology outsourcing deal with infotech major IBM is estimated
to be in the range of $700- 750 million for a ten-year period. The deal involved
outsourcing of BTVL's hardware, software and IT service requirements to IBM. The
agreement specifies that payments made to IBM India will be linked to the
percentage of revenue generation by BTVL and pre-defined service level
agreements. The percentage-linked revenue payment is modeled to decrease with
BTVL's increase in revenue. The deal includes all customer-facing IT applications
like billing, customer relationship management and data warehousing. In addition,
Internet, e-mail and online collaborations are included in it. On the infrastructure
front, IBM will consolidate BTVL's data center, IT helpdesk and enhance its disaster
recovery center capabilities, he said. Bharti’s Outsourcing to Alcatel-Lucent:
Telecom major Bharti Airtel has a $500-million deal to Alcatel-Lucent for outsourcing
the management and servicing of its broadband and fixed line network for five
years. The deal involves the creation of a joint venture with Alcatel-Lucent holding
76 per cent of the equity, and Bharti having the remainder 24 percent. The joint
venture will help accelerate performance as Bharti migrates to the next generation
networks for the broadband and telephone customers. IIPM – AHMEDABAD SALES
Bharti Outsourcing Deal with Nokia & Ericsson Bharti Airtel awarded a $400m
contract to Nokia for expanding its managed GSM networks in eight circles. This
also marks Bharti‟s third major deal with Nokia in the last two years. Bharti would
have 100% ownership of the networks supplied by Nokia, with the actual payment
being linked to utilization of capacity and fulfillment of agreed quality of service
parameters. This comes close on the heels of Bharti‟s recent signing of a $1bn
three-year service contract with Ericsson towards design, planning, supply,
installation, commissioning and upgrading of its network in 15 telecom circles. This
emphasizes Bharti‟s policy towards outsourcing all operational activities, including
customer services to global majors. This has enabled Bharti to focus on its core
areas: product innovation, value added services, marketing, branding and pricing. It
has enabled Bharti to concentrate on customers, finances and regulation. As per the
three-year contract, Nokia will provide managed services and expand Airtel‟s
GSM/GPRS/EDGE networks in eight circles of Mumbai, Maharashtra & Goa, Gujarat,
Bihar, Orissa, Kolkata, West Bengal and Madhya Pradesh. The network monitoring
operations will be carried out from Nokia‟s state-of-the-art Global Network Services
Center in Chennai. The deal also envisages Nokia to deploy its WAP solution across
Bharti‟s national network to enhance its mobile packet core network capabilities.
This will make usage of data services easy, thereby increasing the consumption of
content on the Bharti network. Future Technology Trends In this section we have
listed down the future technologies which are in roadmap and are speculated to
make an impact on current business model of telcos. IP Multimedia Subsystem (IMS)
IP Multimedia Subsystem (IMS) is a generic architecture for offering multimedia and
voice over IP services, defined by 3rd Generation Partnership Project (3GPP). IMS is
access independant as it supports multiple access types including GSM, WCDMA,
CDMA2000, WLAN, Wireline broadband and other packet data applications. IMS will
make Internet technologies, such as web browsing, e-mail, instant messaging and
video conferencing available to everyone from any location. It is also intended to
allow operators to introduce new services, such as web browsing, WAP and MMS, at
the top level of their packet-switched networks. IP Multimedia Subsystem is
standardized reference architecture. IMS consists of session control, connection
control and an applications services framework along with subscriber and services
data. It enables new IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 51
converged voice and data services, while allowing for the interoperability of these
converged services between internet and cellular subscribers. IMS uses open
standard IP protocols, defined by the IETF. So users will be able to execute all their
services when roaming as well as from their home networks. So, a multimedia
session between two IMS users, between an IMS user and a user on the Internet,
and between two users on the Internet is established using exactly the same
protocol. Moreover, the interfaces for service developers are also based on IP
protocols. Some of the possible applications where IMS can be used are:  Presence
services  Full Duplex Video Telephony  Instant messaging  Unified messaging
 Multimedia advertising  Multiparty gaming  Video streaming 
Web/Audio/Video Conferencing  Push-to services, such as push-to-talk, push-to-
view, push-to-video Effectively, IMS provides a unified architecture that supports a
wide range of IP-based services over both packet- and circuit-switched networks,
employing a range of different wireless and fixed access technologies. A user could,
for example, pay for and download a video clip to a chosen mobile or fixed device
and subsequently use some of this material to create a multimedia message for
delivery to friends on many different networks. A single IMS presence-and-
availability engine could track a user's presence and availability across mobile,
fixed, and broadband networks, or a user could maintain a single integrated contact
list for all types of communications. A key point of IMS is that it is intended as an
open-systems architecture: Services are created and delivered by a wide range of
highly distributed systems (real-time and non-real-time, possibly owned by different
parties) cooperating with each other. It is a different approach to the more
traditional telco architecture of a set of specific network elements implemented as a
single telco-controlled infrastructure. High Speed Downlink Packet Access (HSDPA)
High Speed Downlink Packet Access (HSDPA) is a packet based technology for W-
CDMA downlink with data transmission rates of 4 to 5 times that of current
generation 3G networks IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 52
(UMTS) and 15 times faster than GPRS. The latest release boosts downlink speeds
from the current end-user rate of 384 kbps (up to 2 Mbps according to standards) to
a maximum value according to standards of 14.4 Mbps. Real life end-user speeds
will be in the range of 2 to 3 Mbps. HSDPA provides a smooth evolutionary path for
Universal Mobile Telecommunications System (UMTS) networks to higher data rates
and higher capacities, in the same way as Enhanced Data rates for GSM Evolution
(EDGE) does in the Global System for Mobile communication (GSM) world. The
introduction of shared channels for different users will guarantee that channel
resources are used efficiently in the packet domain, and will be less expensive for
users than dedicated channels. 4G or Fourth Generation Networks 4G or Fourth
Generation is future technology for mobile and wireless comunications. It will be the
successor for the 3Rd Generation (3G) network technology. Currently 3G networks
are under deployement. Approximatly 4G deployments are expected to be seen
around 2010 to 2015. The basic voice was the driver for second-generation mobile
and has been a considerable success. Currently , video and TV services are driving
forward third generation (3G) deployment. And in the future, low cost, high speed
data will drive forward the fourth generation (4G) as short-range communication
emerges. Service and application ubiquity, with a high degree of personalization
and synchronization between various user appliances, will be another driver. At the
same time, it is probable that the radio access network will evolve from a
centralized architecture to a distributed one. The evolution from 3G to 4G will be
driven by services that offer better quality (e.g. multimedia, video and sound)
thanks to greater bandwidth, more sophistication in the association of a large
quantity of information, and improved personalization. Convergence with other
network (enterprise, fixed) services will come about through the high session data
rate. It will require an always-on connection and a revenue model based on a fixed
monthly fee. The impact on network capacity is expected to be significant. Machine-
to-machine transmission will involve two basic equipment types: sensors (which
measure parameters) and tags (which are generally read/write equipment). It is
expected that users will require high data rates, similar to those on fixed networks,
for data and streaming applications. Mobile terminal usage (laptops, Personal digital
assistants, handhelds) is expected to grow rapidly as they become more user
friendly. Fluid high quality video and network reactivity are important user
requirements. Key infrastructure design requirements include: fast response, high
session rate, high capacity, low user charges, rapid return on investment for
operators, investment that is in line with the growth IIPM – AHMEDABAD SALES AND
in demand, and simple autonomous terminals. The infrastructure will be much more
distributed than in current deployments, facilitating the introduction of a new
source of local traffic: machine-to-machine. The Indian Telecom Service provider
industry is gearing for a revolution. The customer is driving this revolution and will
see more unique and sophisticated offerings coming his way. The 3G which will
pave the way for 3.5G, 3.75G and the next big thing-4G and the VAS services will
keep the customer asking for more. The rural areas which have remained untapped
will see an insurgence of services. Also the easing of the regulations by TRAI ,the
ease of spectrum licensing, the FDI influx will make the telecom space in India a
must watch in the coming years. REFERENCES [1} IBEF report 2007-08/08-09 :
Telecommunication - MARKET & OPPORTUNITIES. [2] Cellular Statistics – Cellular
Operator Association of India [3] IAMAI & eTechnology Group@IMRB: MOBILE VALUE
ADDED SERVICES IN INDIA- A Report. [4] Telenor Entering India: Investment Update
[5] Voice and Data(May 2009): Mobile Number Portability - Poaching with Portability.
[6] Business India : Telecom Takeover, Bharti-MTN deal [7] Moneycontrol.com: Idea
Spice deal [8] Business Standard: Vodafone Hutch deal *9+ IntoMobile: India’s 3G
License Plans Updated. [10] World Bank Report: Spectrum auctions in India: lessons
from experience WEBSITES USED:  http://www.airtel.in 
http://en.wikipedia.org/wiki/Idea_Cellular 
http://en.wikipedia.org/wiki/Spice_Telecom  http://www.pluggd.in/indian-telecom-
industry/idea-tmi-acquires-spice-telecom-1805/ IIPM – AHMEDABAD SALES AND
 http://www.adityabirlanuvo.com/media/features/features.aspx?ID=1d95UDdxCdM
 http://www.mobiles.in/mobile-service-providers.htm 
http://www.bsnl.co.in/about.htm  www.vodafone.co.in  www.ideacellular.com 
www.google.com MAGAZINES USED:  4PS  Business Economics  Times of India
 Industrial Handbook 2009 IIPM – AHMEDABAD SALES AND DISTRIBUTION Page 55
IIPM – AHMEDABAD SALES AND DISTRIBUTION Page
Telecom final - Presentation Transcript
IIPM AHMEDABAD (09-12) 1

Flow Of Presentation 2  Industrial Scenario – Global  National scenario  Market
scenario  Telecommunication services  Future trends  Regulatory in INDIA IIPM
AHMEDABAD (09-12)
Industrial Scenario - Global 3  Generate – USD 1.4 trillion (Year 2009) – Recession
times  Asia – Pacific Region : expecting highest growth in next 5 years.  16% -
India & China  Latin America & Caribbean – 12%  China (largest telecom
operator) – 50% to rural areas  Asia – booming market  Japan 3rd largest – 30
million broadband users after US & China. IIPM AHMEDABAD (09-12)
Mobile Subscriber Base (% Share Of World) 4 19% China India 12% 62% USA 7%
Others Source: EIU (Economist Intelligence Unit) IIPM AHMEDABAD (09-12)
National Scenario 5  Emerged – largest & fastest economy  Recession – but

growth in economy  Service Sector – primary engine growth  Telecom Sector –
significant contribution Private players  Indian Mobile Market – attractive across
the globe  Internet/Broadband subscribers - 14.05m internet subscribers & 6.62m
broadband subscribers (June 2009)  Advanced Technologies – GSM, CDMA, WLL,
3G , 4G and upcoming 5G IIPM AHMEDABAD (09-12)
Contd… 6  Contribution of nearly 1% to India’s GDP  Broadband Policy 2004 –

Government of India aims at 10 million broadband connections & 20 million internet
connections by 2008.  9 GSM and 5CDMA operators providing mobile services in
19 telecom circles and 4 metro cities, covering 2000 towns across the country GSM
CDMA/WLL Fixed LINE • VODAFONE • BSNL • BSNL • AIRTEL • MTNL • MTNL • BSNL
• TATA INDICOM • BHARTI • IDEA • TATA DOCCOMO • VIRGIN MOBILE • TATA
TELECOM • SPICE • AIRCELL • RELIANCE • RELIANCE • TATA DOCCOMO • TATA
INDICOM IIPM AHMEDABAD (09-12)
Market Scenario 7  Adding 8-10 million subscribers every month  Potential of

700 million subscribers in next 5 years.  Mobile subscribers – 350 million, 2nd only
to China.  MVAS accounts for 10% of the total revenue.  Stanford University
Study – MVAS touch US $ 2.74 billion by 2010.  Tata Teleservices – invest an
additional US $ 1 billion in TATA DoCoMo  BSNL – will put US $ 1.16 billion in
WiMax Project  Vodafone Essar – invest US $ 6 billion next 3 years to increase
mobile subscriber base  Bharti Airtel – US $ 126.5 million to strengthen Assam &
Northeast Circles. IIPM AHMEDABAD (09-12)
Telecom Subscriber Base In India 8 464.82 325.79 225.01 153.42 104.22 76.53 Jan-
04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 IIPM AHMEDABAD (09-12) Source: TRAI
Connecting Rural India 9  Contributes 45% of GDP  76.65 million fixed & WLL. 
551,064 Village Public Telephones  92% of the villages covered  Highest in
Punjab (20.69%), H.P (17.09%), Kerala (10.63) & Haryana (10.20%)  TRAI released
recommendations for accelerating growth “THE LARGELY UNTAPPED RURAL
MARKET WILL DRIVE THE NEXT PHASE OF TELECOM GROWTH IN THE COUNTRY,
SUPPORTED BY AN ENABLING ENVIRONMENT AND FOCUSED INITIATIVES BY
TELECOM PLAYERS” IIPM AHMEDABAD (09-12)
Market Share Of Wireless Service Operators In India (June 2009) 10 1% 1% Bharti

5% Reliance 11% 23% Vodafone BSNL 9% Tata Idea Aircel 13% 19% MTNL Others
18% IIPM AHMEDABAD (09-12) Source: TRAI
Market Share Of Mobile Handset Companies 11 MARKET SHARE OF MOBILE

HANDSET COMPANIES 3.60% 1.30% 1.50% 3.50% 5.60% Nokia Sony Ericsson 4.50%
Samsung LG 10% Motorola 64% ZTE 6% Huawei Haier Others Source: TRAI IIPM
AHMEDABAD (09-12)
Market Share Of Network Provider 12 IIPM AHMEDABAD (09-12) Source: TRAI
Market Share – Rural & Urban 13 Rural Urban 73% 71.60% 70.70% 74.80% 74.40%
27% 28.40% 29.30% 25.20% 25.60% Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 IIPM
AHMEDABAD (09-12) Source: TRAI
Value Added Services in India 14 Person-to-Person SMS 4% 10% Ringtone Download

17% 44% Person to Application & Application to Person SMS Games & Data 25%
Others (MMS, etc. ) IIPM AHMEDABAD (09-12) Source: TRAI
Contd… 15  As per COAI, income from VAS was 10% of total income of service
providers in 06-07  SMS 57%  Caller line identification 6%  Other VAS 19% 
Ring tones 7%  Content download 6%  GPRS 5%  VAS supplied by mobile
network operators or VASP/CP  Many national and international investors ready to
invest in this segment of telecom market. IIPM AHMEDABAD (09-12)
GSM/CDMA/GPRS 16  GSM - GSM (Global System for Mobile Communications) 

Code division multiple Access (CDMA)  GPRS - General packet radio service (GPRS)
 charged per megabyte of traffic transferred  Traditional circuit switching 
MMS  PUSH TO TALK use cell phone as a WALKIE TALKIE  INSTANT MESSAGING
 INTERNET BROWSING IIPM AHMEDABAD (09-12)
3G Technology 17  Supports diverse multimedia applications  Enables triple play

and broadband services  Requires huge bandwidth (15-20 MHz)  Providing high-
speed internet, fast downloading and video calling.  More than 60 3G networks
present across 25 countries.  Transfers both voice data and non-voice data IIPM
AHMEDABAD (09-12)
Contd… 18  BSNL and MTNL spectrums allotted immediately and private co. to get
spectrum allocations by 2009-10  Main highlight – video calling  Finance Ministry
decided of reserve price to be Rs. 4040cr in 2008 but it has been recently brought
down by DOT to Rs. 3500cr. Metro & Circle A Rs. 160cr. Circle B Rs. 80cr. Circle
C Rs. 30cr.  Govt. to earn about Rs. 30k-40k cr. for 4 spectrum blocks IIPM
AHMEDABAD (09-12)
Future Trends 19  Location based services  Mobile music will increase with
better bandwidth  Migration to 3G will increase ARPU  Mobile commerce might
be developed further  Mobile email will be driven by enterprises  Stocks on
mobile will see an uptake IIPM AHMEDABAD (09-12)
Telecom Regulatory Authority of INDIA 20  MISSION –  “To create and nurture

conditions for growth of telecommunications in the country in a manner and at a
pace which will enable India to play a leading role in emerging global information
society.”  OBJECTIVES –  Fair and transparent policy environment  Issue of
regulations, orders and directives from time to time  Which covers tariff,
interconnection and quality of service IIPM AHMEDABAD (09-12)
The Cellular Operators Association of India 21  COAI – registered, non-profit, non-

governmental society  Dedicated to the advancement of communication,
particularly modern communication  VISION – “To establish and sustain a world-
class cellular infrastructure and facilitate affordable mobile communication services
in India.”  OBJECTIVES – To protect the common & collective interests of its
members. IIPM AHMEDABAD (09-12)
Department of Telecom 22  Grant licenses for various telecom services  Unified

Access Service Internet and VSAT service  Frequency management in the field of
radio communication  Enforces wireless regulatory measures by monitoring wireless
transmission in the country. IIPM AHMEDABAD (09-12)
23 IIPM AHMEDABAD (09-12)
24 IIPM AHMEDABAD (09-12
…………………………………………………

A Study of Telecom

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A Study Of Telecom - Presentation Transcript

1. A Study of Telecom Industry Presented by: Swati Tiwari Priyanka Singh

o Overview of telecom industry

o History of telecom industry

o Scope of telecom industry

o Players of telecom industry

o Major market trends

o Future trends in telecom industry

o Developments in telecom industry

4. History of Telecom Industries

6. Overview of Telecom Industies

Mobile Telephony Public Players Subscribers Private Players Subscribers

o India has a 700 million people living in 638,000 villages

 per-capita income of $ 0.40 per day)

o As per DoT statistics 500,000 villages have telephone access.

10. Scope of Telecom Industries

o Public & private player

20% 18% 21%

 Further divided into A, B and C category based on economic

o Each circle has a licenses

 Four operators per circle are allowed

 Licenses are saleable

14. BSNL (Bharat Sanchar Nigam Ltd.)

o Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commenced

o Established in 2002, Reliance communication is the wholly owned subsidiary of Anil

18. Market Strategy of Vodafone

o Our strategic objective is

o - Innovate and deliver on customer’s total communications needs.

o Vodafone too, needed to educate consumers about cellular telephony:-

o -Can I use my phone in a lift?

19. Commercial Strategy of Vodafone

o -Mass media coverage

o Innovative distribution to reach the customer

o -Hub and spoke

o -Shops and call centers

20. Market Strategy of Airtel

o We positioned Airtel as an inspirational and lifestyle brand, in a way that trivialized

o Airtel strategy us to be a leader in

o -offers and services

21. Competitive Analysis (Positioning Strategy)

o Vodafone has veered towards warmth and emotions.

o Vodafone used the powerful visual imagery of a dog.

o Airtel is focused on functionally and efficiency.

o Airtel choose to use music, which is not nearly as effective.

22. Competitive Analysis (Target Audience)

o They are targeting middle class person as their target audience.

o A group or class of persons enjoying superior intellectual or social or economic

23. Ad-Campaign by AIRTEL (Digital TV)

24. Ad-Campaign by VODAFONE

o Some of the positive impacts of this trend are as follows .

28. Future Trends

29. Developments in telecom industry

o 3G or Third Generation technology is a convergence of various Second Generation

30. Reliance launched Big TV

31. Airtel has launched digital TV

32. Vodafone +Airtel+ Apple is going to launch iphone.

36. THANK YOU…..

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