Telecom Industry

History of Telecom in India- I

First Military Landline from Fort William to Lalbazaar (Calcutta ) by the British Govt Merger with the Postal service Merger of ETC &IRT to form (IRCC) Indian Radio Telegraph Cable Company

1851

1881

1883

1923

1932

1947

First Civil landline service introduced for the British Viceroy and his team

Formation of Indian Radio Telegraph Company (IRT)

Formation of Posts Telephone & Telegraphs under Ministry of Communication

History of Telecom in India- II

DOT established separate from Postal system 1st call on Mobile phone Telecom Minister Sukh Ram(Delhi) to Jyoti Basu (Calcutta) Cellular service launched. New Telecom Policy(NTP) is adopted For 3 months in a row India beats China for the maximum subs added every month

1985

1986

1995

1997

1999

2000

2009

DOT spilt into 3 : MTNL (metros) DOT (others) VSNL (International)

TRAI created (Telecom Regulatory Authority of India)

DOT becomes a corporation = BSNL

Telecom Industry
3rd largest in the world 874.68 million subscribers as of May 2011 Rate of growth(Feb 2011)
Rural: 2.82% Urban: 2.52%

1.25 billion at the end of 2015

http://www.ibef.org/artdispview.aspx?cat_id=470&art_id=29812&in=72 http://teck.in/overall-tele-density-in-india-reaches-may-2011.html

Others 4% Uninor 3%

Market Share
0% 0%

Aircel 7%

Airtel 20%

Tata 11%

BSNL 11%

Reliance 17%

Idea 11%

Vodafone 17%

http://www.ibef.org/artdispview.aspx?cat_id=470&art_id=29812&in=72

Growth Rate
Tata 10% Aircel 11% Vodafone 22%

Idea 16% Reliance 21%

Airtel 20%

http://www.ibef.org/artdispview.aspx?cat_id=470&art_id=29812&in=72 TRAI report May 2011

Recent Updates
Piramal Healthcare has decided to buy a 5.5% stake in Vodafone's India unit for Rs 2,856 crore National MNP No roaming charges Better Consumer Protection VOIP

http://www.ibef.org/artdispview.aspx?cat_id=470&art_id=29812&in=72 The Times of India (11/10/11)

-Intensive competition in the country has made it possible for service providers to offer the services with lowers fare in the world, profitability, -Many new handset have been launched.

Porters Diamond Model

Firm strategy structure and rivalry.

-India has a large middle class of 300 million, -Growing affordability and lifetime free schemes have care a market at the bottom of the pyramid. -Teledensity (~73%) offers huge future potential.

Chance

Factor Conditions

Demand conditions

-The government extends full support to industry through reform processes. -Presence of skilled labour -Rapidly developing telecom infrastructure. -Increasing disposable income of consumers. -Increasing demand due to changing lifestyles and growing attraction for mobiles with new features. - Policies are in place to safeguard the interests of service providers, as well as those of consumers.
Government

Related and supporting industries

-Competent handset manufacturers have produced the lowest priced handsets for the Indian market. -Handset players are setting up manufacturing bases in India for better operation management. -Many telecom and equipment and software companies are based in India.

STP

Market segmentation Geographical segment (Rural and Urban India) Demographic segment All Income groups who can afford an instrument and a connection People age group of 15+ (On the basis of physically and mentally capable to handle a cell phone)

Target marketing People who living in cities and towns and other rural areas. Lower class and above Teens, Youngsters, Adults Homemakers Businessmen Corporates

Positioning Creating brands (Shahrukh khan & Abhishek Bachchan, ZooZoo) Ads and promotions Sponsoring Vodafone Happy to Help Idea What an idea!!

Marketing Mix
Marketing mix Price: competitive price strategy Place: Exclusive Shops, General Stores, Grocery Stores, Internet, and service centres Product (Services): Voice Calls, Texts, VAS Promotion: various schemes for pre-paid and post-paid, VAS, Brand Promotions, Importance of Communications

SERVQUAL

SERVICE QUALITY CRITERIA,FUNCTIONS AND MEASURES FOR BASIC TELEPHONE SERVICE TODAY
FUNCTIONS
Service Quality Criteria Definition Provisioning Technology in Use Operator Services Billing Repair Complaint Handling

Business office answer time; time Access to the public until installation; Availability switched network availability of new numbers, location of pay telephones

Dial tone delay; calls delivered to 911 authority

Inclusiveness of listings; Repair service operator answer time; answer time; time Monthly Bills directory assistance to repair; answer time appointments kept

Speed of access to complaint process

Reliability

Dependability

Installations done correctly; appointments kept; failure-free operation

Central office maintenance; transmission performance; call completions; functioning of pay telephones; backup power; outages

Accuracy

Accuracy

Repeat trouble reports

Complaints handled correctly

Security

Confidentiality of customer information protection against fraud, privacy Ability to offer, adapt or cutomize a function to meet individual needs Ease of understanding or performing a communications function Competence and credibility

Confidentiality

Lack of intelligence crosstalk

Confidentiality of unlisted numbers

Confidentiali ty

Confidentiality

Confidentiality

Flexibility/ Choice

Options offered

Ability to support options offered

Ability to offer options

Accurate, Choice of electronic or informative Scheduling flexibility human complaint breakdown representative of charges

Simplicity

Ease of choosing among options

Number of digits dialed; adequacy of intercept services

Customer beliefs

Understandable

Understanda ble Customer beliefs

Ease of contact

Ease of contacting, understanding

Assurance

Customer beliefs

Customer beliefs

Customer beliefs

Customer beliefs

1. Introduction Phase

Pricing

From 1995-2000 Incoming & Outgoing calls Priced at Rs14/min Cell phone : A Luxury From 2000-2005 Outgoing calls Rs2/min, Incoming Free New Players Entered With Aggressive Pricing : Reliance Over crowded Market Price wars Tata DoCoMo: Per Second Billing Other players forced to follow

2. Growth Phase

3. Maturity Phase

Innovative Pricing
Pay Per Use: TATA DoCoMo
Pay Per Second Pay Per Character Pay Per Website Browsed

Product Offerings
Talkathon Plans
30 local minutes @ Rs.5 on Tata DOCOMO Network 30 local minutes @Rs.12 across Networks 30 local/National minutes @Rs.14 10 local minutes @Rs.5

Night Birds Plan

60 Free Local Night minutes on Tata DOCOMO Network

GPRS Plan
10MB Free Browsing @Rs.5 only

World Calling Plans

10 minutes to USA/Canada @ Rs.20 5 minutes to USA/Canada @ Rs.10 3 minutes to Gulf @ Rs.20

Entertainment Plans
15 minutes FREE music @Rs.5 Cricket alerts @ Rs.5/day

Issues and Challenges

Rapidly Falling ARPU(Average Revenue Per User) Lack of Telecom Infrastructure Rural Areas Continue to Remain Untapped Excessive Competition Price Wars Between the Service Providers Putting Pressure on Margins Spectrum Allocation Regulatory Charges

1. Innovation on SMS service

Innovations

Free SMS per day Unlimited SMS per month\ Group Calling Night Calling Get paid for incoming (Virgin) CDMA GPRS EDGE 3G Facebook feature on low end mobile phone Download content service

2. Innovation on Call service

3. Innovation on Data Service

4. Innovation on VAS

SWOT

 Huge Customer potential

Teledensity still being 73.11% and Rural tele-density 35.15%(As on May,2011) The broadband subscribers grew from 0.18 million in 2005 to 6.2 million as on 30 April 2009 and about 7.98 million, at the end of the December 2009.

Strengths

High Growth Rate

Wireless subscribers growing at a CAGR of 60 per cent per annum since 2004.

Allowed FDI limit ranging from 74% to 100%

The total FDI equity inflows in telecom sector have been US$ 2,223 million during April-November 2009-10

High return on Investment

Easier to create economies of scale thereby increasing return on investment

Liberalization efforts by Govt.

The share of private sector in total telephone connections is now 82.33% as per the latest statistics available for December 2009 as against a meager 5% in 1999.

Lower capital expenditure

The Indian telecom market is a high density area, which means more population per tower. This means lower capital expenditure cost.
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Weakness
Poor Telecommunication Infrastructure Result : Large number of call drops. Late adopters of New Technology India is among the last countries in the world to get access to 3G technology. Some estimates suggest that nearly 132 countries across the world already have 3G technology and mobile services in one form or the other. Most competitive market 10 to 12 companies offer mobile services in most parts of India, globally, the average is 4. A market strongly regulated by Government. Difficult to enter because of requirement of huge financial resources.

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 3G Telecom services and 4G services More Quality Service

Opportunities

Mobile Number Portability is forcing the Service provider to improve their quality to avoid losing subscribers

Value added Services (VAS)

The mobile value added services include, text or SMS, menu based services, downloading of music or ringtones, mobile TV, videos, streaming,

sophisticated m-commerce applications etc. Mobile banking, Mobile Ticketing etc Boost to Telecom Manufacturing Companies
Production of telecom equipments in value terms has increased from Rs. 4,12,700 million (2007-08) to Rs.4,88,000 million during 2008-09 and Rs. 5,75,840 million during 2009-10.

Telecom Equipment Exports

The Indian telecom industry is expected to reach a size of Rs 3,44,921 crore by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10 million people during the same period. The sector would create direct employment for 2.8 million people and for 7 million 24.1 indirectly, according to a Frost and Sullivan report.

 Horizontal Integration Entry Into other consumer segments leveraging the present channels E.g. DTH service like Reliance BIG TV, Tata SKY, Airtel digital TV by telecom majors like Reliance, Tata and Airtel Respectively. Other examples : Airtel website builder Providing fibre Connectivity to 2,50,000 village panchayat by 2012. More scope in content related services, since, the consumer is influenced by local culture. Local festivals like Baisakhi, Chhath Puja, religious festivals like Diwali, Chrismas etc., National festivals like Independence Day etc.

4.2

Threats
Telecommunication Policies Declining ARPU (Average Revenue per user)
E.g. price wars like per-second billing which is deflating revenues and making sure the survival of the fittest

Partiality on the part of the Govt.

E.g.Allowing 3G service in a PSU (MTNL,BSNL) before auctioning to Private Sector .

Content Piracy

Conclusion
A long way ahead